Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/fed/cfr2635c.asc

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    (5)    Cost provided by sponsor of event. The cost of the
employee's attendance will not be considered to be provided by
the sponsor where a person other than the sponsor designates the
employee to be invited and bears the cost of the employee's
attendance through a contribution or other payment intended to
facilitate that employee's attendance. Payment of dues or a
similar assessment to a sponsoring organization does not
constitute a payment intended to facilitate a particular
employee's attendance.

    (6)    Accompanying spouse. When others in attendance will
generally be accompanied by spouses, the agency designee may
authorize an employee to accept a sponsor's invitation to an
accompanying spouse to participate in all or a portion of the
event at which the employee's free attendance is permitted under
paragraph (g)(1) or (2) of this section. The authorization
required by this paragraph may be provided orally or in writing.

    Example 1: An aerospace industry association that is a
prohibited source sponsors a seminar for which it charges a fee
of $100. An Air Force contractor pays $500 to the association so
that the association can extend free invitations to five Air
Force officials designated by the contractor.  The Air Force
officials may not accept the gifts of free attendance. Because
the contractor specified the invitees and bore the cost of their
attendance, the gift of free attendance is considered to be
provided by the company and not by the sponsoring association.
Had the contractor paid $500 to the association in order that it
might invite any five Federal employees, an Air Force official to
whom the sponsoring association extended one of the five
invitations could attend if his participation were determined to
be in the interest of the agency.

    Example 2: An employee of the Department of the Treasury

authorized to participate in a panel discussion of economic
issues as part of a one-day conference may accept the sponsor's
waiver of the conference fee. Under the separate authority of
2635.204(a), he may accept a token of appreciation for his speech
having a market value of $20 or less.

    Example 3: An Assistant U.S. Attorney is invited to
attend a luncheon meeting of a local bar association to hear a
distinguished judge lecture on cross-examining expert witnesses.
Although members of the bar association are assessed a $15 fee
for the meeting, the Assistant U.S.  Attorney may accept the bar
association's offer to attend for free, even without a
determination of agency interest. The gift can be accepted under
the $20 de minimis exception at 2635.204(a).

    Example 4: An employee of the Department of the Interior
authorized to speak on the first day of a four-day conference on
endangered species may accept the sponsor's waiver of the
conference fee for the first day of the conference. If the
conference is widely attended, he may be authorized, based on a
determination that his attendance is in the agency's interest, to
accept the sponsor's offer to waive the attendance fee for the
remainder of the conference.

    (h)    Social invitations from persons other than prohibited
sources.  An employee may accept food, refreshments and
entertainment, not including travel or lodgings, at a social
event attended by several persons where:

    (1)    The invitation is from a person who is not a
prohibited source; and

    (2)    No fee is charged to any person in attendance.

    Example 1: Along with several other Government officials
and a number of individuals from the private sector, the
Administrator of the Environmental Protection Agency has been
invited to the premier showing of a new adventure movie about
industrial espionage. The producer is paying all costs of the
showing. The Administrator may accept the invitation since the
producer is not a prohibited source and no attendance fee is
being charged to anyone who has been invited.

    Example 2: An employee of the White House Press Office
has been invited to a cocktail party given by a noted Washington
hostess who is not a prohibited source. The employee may attend
even though he has only recently been introduced to the hostess
and suspects that he may have been invited because of his
official position.
    (i)    Meals, refreshments and entertainment in foreign
areas. An employee assigned to duty in, or on official travel to,
a foreign area as defined in 41 CFR 301 - 7.3(c) may accept food,
refreshments or entertainment in the course of a breakfast,
luncheon, dinner or other meeting or event provided:

    (1)    The market value in the foreign area of the food,
refreshments or entertainment provided at the meeting or event,
as converted to U.S.  dollars, does not exceed the per diem rate
for the foreign area specified in the U.S. Department of State's
Maximum Per Diem Allowances for Foreign Areas, Per Diem
Supplement Section 925 to the Standardized Regulations (GC,FA)
available from the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402;

    (2)    There is participation in the meeting or event by
non-U.S.  citizens or by representatives of foreign governments
or other foreign entities;

    (3)    Attendance at the meeting or event is part of the
employee's official duties to obtain information, disseminate
information, promote the export of U.S. goods and services,
represent the United States or otherwise further programs or
operations of the agency or the U.S. mission in the foreign area;
and

    (4)    The gift of meals, refreshments or entertainment is
from a person other than a foreign government as defined in 5
U.S.C. 7342(a)(2).

    Example 1: A number of local businessmen in a developing
country are anxious for a U.S. company to locate a manufacturing
facility in their province. An official of the Overseas Private
Investment Corporation may accompany the visiting vice president
of the U.S. company to a dinner meeting hosted by the businessmen
at a province restaurant where the market value of the food and
refreshments does not exceed the per diem rate for that country.


    (j)    Gifts to the President or Vice President. Because of
considerations relating to the conduct of their offices,
including those of protocol and etiquette, the President or the
Vice President may accept any gift on his own behalf or on behalf
of any family member, provided that such acceptance does not
violate 2635.202(c) (1) or (2), 18 U.S.C. 201(b) or 201(c)(3), or
the Constitution of the United States.

    (k)    Gifts authorized by supplemental agency regulation. An
employee may accept any gift the acceptance of which is
specifically authorized by a supplemental agency regulation.

    (l)    Gifts accepted under specific statutory authority. The
prohibitions on acceptance of gifts from outside sources
contained in this subpart do not apply to any item, receipt of
which is specifically authorized by statute. Gifts which may be
received by an employee under the authority of specific statutes
include, but are not limited to:

    (1)    Free attendance, course or meeting materials,
transportation, lodgings, food and refreshments or reimbursements
therefor incident to training or meetings when accepted by the
employee under the authority of 5 U.S.C. 4111 from an
organization with tax-exempt status under 26 U.S.C.  501(c)(3) or
from a person to whom the prohibitions in 18 U.S.C. 209 do not
apply. The employee's acceptance must be approved by the agency
in accordance with 410.701 through 410.706 of this title; or

    Note: 26 U.S.C. 501(c)(3) is authority for tax-exempt
treatment of a limited class of nonprofit organizations,
including those organized and operated for charitable, religious
or educational purposes. Many nonprofit organizations are not
exempt from taxation under this section.

    (2)    Gifts from a foreign government or international or
multinational organization, or its representative, when accepted
by the employee under the authority of the Foreign Gifts and
Decorations Act, 5 U.S.C. 7342. As a condition of acceptance, an
employee must comply with requirements imposed by the agency's
regulations or procedures implementing that Act.

[57 FR 35041, Aug. 7, 1992; 57 FR 48557, Oct. 27, 1992]

2635.205 Proper disposition of prohibited gifts.

    (a)    An employee who has received a gift that cannot be
accepted under this subpart shall, unless the gift is accepted by
an agency acting under specific statutory authority:

    (1)    Return any tangible item to the donor or pay the donor
its market value. An employee who cannot ascertain the actual
market value of an item may estimate its market value by
reference to the retail cost of similar items of like quality.
See 2635.203(c).

    Example 1: To avoid public embarrassment to the seminar
sponsor, an employee of the National Park Service did not decline
a barometer worth $200 given at the conclusion of his speech on
Federal lands policy. The employee must either return the
barometer or promptly reimburse the sponsor $200.

    (2)    When it is not practical to return a tangible item
because it is perishable, the item may, at the discretion of the
employee's supervisor or an agency ethics official, be given to
an appropriate charity, shared within the recipient's office, or
destroyed.

    Example 1: With approval by the recipient's supervisor, a
floral arrangement sent by a disability claimant to a helpful
employee of the Social Security Administration may be placed in
the office's reception area.

    (3)    For any entertainment, favor, service, benefit or
other intangible, reimburse the donor the market value.
Subsequent reciprocation by the employee does not constitute
reimbursement.

    Example 1: A Department of Defense employee wishes to
attend a charitable event to which he has been offered a $300
ticket by a prohibited source. Although his attendance is not in
the interest of the agency under 2635.204(g), he may attend if he
reimburses the donor the $300 face value of the ticket.
    (4)    Dispose of gifts from foreign governments or
international organizations in accordance with 41 CFR part 101 -
49, and dispose of materials received in conjunction with
official travel in accordance with 41 CFR 101 - 25.103.

    (b)    An agency may authorize disposition or return of gifts
at Government expense. Employees may use penalty mail to forward
reimbursements required or permitted by this section.

    (c)    An employee who, on his own initiative, promptly
complies with the requirements of this section will not be deemed
to have improperly accepted an unsolicited gift. An employee who
promptly consults his agency ethics official to determine whether
acceptance of an unsolicited gift is proper and who, upon the
advice of the ethics official, returns the gift or otherwise
disposes of the gift in accordance with this section, will be
considered to have complied with the requirements of this section
on his own initiative.

Subpart C -- Gifts Between Employees

2635.301 Overview.

    This subpart contains standards that prohibit an employee
from giving, donating to, or soliciting contributions for, a gift
to an official superior and from accepting a gift from an
employee receiving less pay than himself, unless the item is
excluded from the definition of a gift or falls within one of the
exceptions set forth in this subpart.

2635.302 General standards.

    (a)    Gifts to superiors. Except as provided in this
subpart, an employee may not:

    (1)    Directly or indirectly, give a gift to or make a
donation toward a gift for an official superior; or

    (2)    Solicit a contribution from another employee for a
gift to either his own or the other employee's official superior.

    (b)    Gifts from employees receiving less pay. Except as
provided in this subpart, an employee may not, directly or
indirectly, accept a gift from an employee receiving less pay
than himself unless:

    (1)    The two employees are not in a subordinate-official
superior relationship; and

    (2)    There is a personal relationship between the two
employees that would justify the gift.

    (c)    Limitation on use of exceptions. Notwithstanding any
exception provided in this subpart, an official superior shall
not coerce the offering of a gift from a subordinate.

2635.303 Definitions.
    For purposes of this subpart, the following definitions
shall apply:

    (a)    Gift has the meaning set forth in 2635.203(b). For
purposes of that definition an employee will be deemed to have
paid market value for any benefit received as a result of his
participation in any carpool or other such mutual arrangement
involving another employee or other employees if he bears his
fair proportion of the expense or effort involved.

    (b)    Indirectly, for purposes of 2635.302(b), has the
meaning set forth in 2635.203(f). For purposes of 2635.302(a), it
includes a gift:

    (1)    Given with the employee's knowledge and acquiescence
by his parent, sibling, spouse, child, or dependent relative; or

    (2)    Given by a person other than the employee under
circumstances where the employee has promised or agreed to
reimburse that person or to give that person something of value
in exchange for giving the gift.

    (c)    Subject to paragraph (a) of this section, market value
has the meaning set forth in 2635.203(c).

    (d)    Official superior means any other employee, other than
the President and the Vice President, including but not limited
to an immediate supervisor, whose official responsibilities
include directing or evaluating the performance of the employee's
official duties or those of any other official superior of the
employee. For purposes of this subpart, an employee is considered
to be the subordinate of any of his official superiors.

    (e)    Solicit means to request contributions by personal
communication or by general announcement.

    (f)    Voluntary contribution means a contribution given
freely, without pressure or coercion. A contribution is not
voluntary unless it is made in an amount determined by the
contributing employee, except that where an amount for a gift is
included in the cost for a luncheon, reception or similar event,
an employee who freely chooses to pay a proportionate share of
the total cost in order to attend will be deemed to have made a
voluntary contribution. Except in the case of contributions for a
gift included in the cost of a luncheon, reception or similar
event, a statement that an employee may choose to contribute less
or not at all shall accompany any recommendation of an amount to
be contributed for a gift to an official superior.

    Example 1: A supervisory employee of the Agency for
International Development has just been reassigned from
Washington, DC to Kabul, Afghanistan. As a farewell party, 12 of
her subordinates have decided to take her out to lunch at the
Khyber Repast. It is understood that each will pay for his own
meal and that the cost of the supervisor's lunch will be divided
equally among the twelve. Even though the amount they will
contribute is not determined until the supervisor orders lunch,
the contribution made by those who choose to participate in the
farewell lunch is voluntary.

2635.304 Exceptions.
    The prohibitions set forth in 2635.302(a) and (b) do not
apply to a gift given or accepted under the circumstances
described in paragraph (a) or (b) of this section. A contribution
or the solicitation of a contribution that would otherwise
violate the prohibitions set forth in 2635.302(a) and
(b)    may only be made in accordance with paragraph (c) of this
section.

    (a)    General exceptions. On an occasional basis, including
any occasion on which gifts are traditionally given or exchanged,
the following may be given to an official superior or accepted
from a subordinate or other employee receiving less pay:

    (1)    Items, other than cash, with an aggregate market value
of $10 or less per occasion;

    (2)    Items such as food and refreshments to be shared in
the office among several employees;

    (3)    Personal hospitality provided at a residence which is
of a type and value customarily provided by the employee to
personal friends;

    (4)    Items given in connection with the receipt of personal
hospitality if of a type and value customarily given on such
occasions; and

    (5)    Leave transferred under subpart I of part 630 of this
title to an employee who is not an immediate supervisor, unless
obtained in violation of 630.912 of this title.

    Example 1: Upon returning to work following a vacation at
the beach, a claims examiner with the Department of Veterans
Affairs may give his supervisor, and his supervisor may accept, a
bag of saltwater taffy purchased on the boardwalk for $8.

    Example 2: An employee of the Federal Deposit Insurance
Corporation whose bank examination responsibilities require
frequent travel may not bring her supervisor, and her supervisor
may not accept, souvenir coffee mugs from each of the cities she
visits in the course of performing her duties, even though each
of the mugs costs less than $5. Gifts given on this basis are not
occasional.

    Example 3: The Secretary of Labor has invited the
agency's General Counsel to a dinner party at his home. The
General Counsel may bring a $15 bottle of wine to the dinner
party and the Secretary may accept this customary hostess gift
from his subordinate, even though its cost is in excess of $10.

    Example 4: For Christmas, a secretary may give his
supervisor, and the supervisor may accept, a poinsettia plant
purchased for $10 or less. The secretary may also invite his
supervisor to a Christmas party in his home and the supervisor
may attend.

    (b)    Special, infrequent occasions. A gift appropriate to
the occasion may be given to an official superior or accepted
from a subordinate or other employee receiving less pay:

    (1)    In recognition of infrequently occurring occasions of
personal significance such as marriage, illness, or the birth or
adoption of a child; or

    (2)    Upon occasions that terminate a subordinate-official
superior relationship, such as retirement, resignation, or
transfer.

    Example 1: The administrative assistant to the personnel
director of the Tennessee Valley Authority may send a $30 floral
arrangement to the personnel director who is in the hospital
recovering from surgery. The personnel director may accept the
gift.

    Example 2: A chemist employed by the Food and Drug
Administration has been invited to the wedding of the lab
director who is his official superior. He may give the lab
director and his bride, and they may accept, a place setting in
the couple's selected china pattern purchased for $70.

    Example 3: Upon the occasion of the supervisor's
retirement from Federal service, an employee of the Fish and
Wildlife Service may give her supervisor a book of wildlife
photographs which she purchased for $19. The retiring supervisor
may accept the book.

    (c)    Voluntary contributions. An employee may solicit
voluntary contributions of nominal amounts from fellow employees
for an appropriate gift to an official superior and an employee
may make a voluntary contribution of a nominal amount to an
appropriate gift to an official superior:

    (1)    On a special, infrequent occasion as described in
paragraph (b) of this section; or

    (2)    On an occasional basis, for items such as food and
refreshments to be shared in the office among several employees.

    An employee may accept such gifts to which a subordinate
or other employee receiving less pay than himself has
contributed.

    Example 1: To mark the occasion of his retirement,
members of the immediate staff of the Under Secretary of the Army
would like to give him a party and provide him with a gift
certificate. They may distribute an announcement of the party and
include a nominal amount for a retirement gift in the fee for the
party.

    Example 2: The General Counsel of the National Endowment
for the Arts may not collect contributions for a Christmas gift
for the Chairman.  Christmas occurs annually and is not an
occasion of personal significance.

    Example 3: Subordinates may not take up a collection for
a gift to an official superior on the occasion of the superior's
swearing in or promotion to a higher grade position within the
supervisory chain of that organization. These are not events that
mark the termination of the subordinate-official superior
relationship, nor are they events of personal significance within
the meaning of 2635.304(b). However, subordinates may take up a
collection and employees may contribute $3 each to buy
refreshments to be consumed by everyone in the immediate office
to mark either such occasion.

    Example 4: Subordinates may each contribute a nominal
amount to a fund to give a gift to an official superior upon the
occasion of that superior's transfer or promotion to a position
outside the organization.

    Example 5: An Assistant Secretary at the Department of
the Interior is getting married. His secretary has decided that a
microwave oven would be a nice gift from his staff and has
informed each of the Assistant Secretary's subordinates that they
should contribute $5 for the gift. Her method of collection is
improper. Although she may recommend a $5 contribution, the
recommendation must be coupled with a statement that the employee
whose contribution is solicited is free to contribute less or
nothing at all.

Subpart D -- Conflicting Financial Interests

2635.401 Overview.

    This subpart contains two provisions relating to
financial interests. One is a disqualification requirement and
the other is a prohibition on acquiring or continuing to hold
specific financial interests.  An employee may acquire or hold
any financial interest not prohibited by 2635.403.
Notwithstanding that his acquisition or holding of a particular
interest is proper, an employee is prohibited in accordance with
2635.402 of this subpart from participating in an official
capacity in any particular matter in which, to his knowledge, he
or any person whose interests are imputed to him has a financial
interest, if the particular matter will have a direct and
predictable effect on that interest.

2635.402 Disqualifying financial interests.

    (a)    Statutory prohibition. An employee is prohibited by
criminal statute, 18 U.S.C. 208(a), from participating personally
and substantially in an official capacity in any particular
matter in which, to his knowledge, he or any person whose
interests are imputed to him under this statute has a financial
interest, if the particular matter will have a direct and
predictable effect on that interest.

    Note: Standards applicable when seeking non-Federal
employment are contained in subpart F of this part and, if
followed, will ensure that an employee does not violate 18 U.S.C.
208(a) or this section when he is negotiating for or has an
arrangement concerning future employment. In all other cases
where the employee's participation would violate 18 U.S.C.
208(a), an employee shall disqualify himself from participation
in the matter in accordance with paragraph (c) of this section or
obtain a waiver, as described in paragraph (d) of this section.

    (b)    Definitions. For purposes of this section, the
following definitions shall apply:

    (1)    Direct and predictable effect. (i) A particular matter
will have a direct effect on a financial interest if there is a
close causal link between any decision or action to be taken in
the matter and any expected effect of the matter on the financial
interest. An effect may be direct even though it does not occur
immediately. A particular matter will not have a direct effect on
a financial interest, however, if the chain of causation is
attenuated or is contingent upon the occurrence of events that
are speculative or that are independent of, and unrelated to, the
matter. A particular matter that has an effect on a financial
interest only as a consequence of its effects on the general
economy does not have a direct effect within the meaning of this
subpart.

    (ii) A particular matter will have a predictable effect
if there is a real, as opposed to a speculative possibility that
the matter will affect the financial interest. It is not
necessary, however, that the magnitude of the gain or loss be
known, and the dollar amount of the gain or loss is immaterial.

    Note: If a particular matter involves a specific party or
parties, generally the matter will at most only have a direct and
predictable effect, for purposes of this subpart, on a financial
interest of the employee in or with a party, such as the
employee's interest by virtue of owning stock.  There may,
however, be some situations in which, under the above standards,
a particular matter will have a direct and predictable effect on
an employee's financial interests in or with a nonparty. For
example, if a party is a corporation, a particular matter may
also have a direct and predictable effect on an employee's
financial interests through ownership of stock in an affiliate,
parent, or subsidiary of that party. Similarly, the disposition
of a protest against the award of a contract to a particular
company may also have a direct and predictable effect on an
employee's financial interest in another company listed as a
subcontractor in the proposal of one of the competing offerors.

    Example 1: An employee of the National Library of
Medicine at the National Institutes of Health has just been asked
to serve on the technical evaluation panel to review proposals
for a new library computer search system. DEF Computer
Corporation, a closely held company in which he and his wife own
a majority of the stock, has submitted a proposal. Because award
of the systems contract to DEF or to any other offeror will have
a direct and predictable effect on both his and his wife's
financial interests, the employee cannot participate on the
technical evaluation team unless his disqualification has been
waived.

    Example 2: Upon assignment to the technical evaluation
panel, the employee in the preceding example finds that DEF
Computer Corporation has not submitted a proposal. Rather, LMN
Corp., with which DEF competes for private sector business, is
one of the six offerors. The employee is not disqualified from
serving on the technical evaluation panel. Any effect on the
employee's financial interests as a result of the agency's
decision to award or not award the systems contract to LMN would
be at most indirect and speculative.