Federal Register Notice -- 68 FR 23875 -- 05/05/2003 -- Implementation of Office of Government Ethics Statutory Gift Acceptance Authority; Proposed Rule[Federal Register: May 5, 2003 (Volume 68, Number 86)]
[Proposed Rules]               
[Page 23875-23883]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05my03-47]                         


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Part VII





Office of Government Ethics





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5 CFR Part 2601



Implementation of Office of Government Ethics Statutory Gift Acceptance 
Authority; Proposed Rule


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OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2601

RIN 3209-AA21

 
Implementation of Office of Government Ethics Statutory Gift 
Acceptance Authority

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Government Ethics is issuing a proposed 
regulation that would implement the agency gift acceptance authority 
contained in section 2 of the Office of Government Ethics Authorization 
Act of 1996, which authorizes OGE to accept gifts and certain other 
items for the purpose of aiding or facilitating the work of the agency 
and which requires the Director of OGE to issue regulations 
establishing criteria for determining whether the exercise of this gift 
acceptance authority is appropriate. The proposed rule would state the 
policy regarding the use of this authority, provide definitions of key 
terms, establish guidelines for the solicitation and acceptance of 
gifts, state certain conditions for acceptance and use of gifts, and 
establish accounting requirements.

DATES: Written comments by executive branch agencies and other 
interested persons are invited and are due on or before August 4, 2003.

ADDRESSES: Office of Government Ethics, Suite 500, 1201 New York Avenue 
NW., Washington, DC 20005-3917, Attention: Ms. Allison C. George. 
Comments also may be sent electronically to OGE's Internet E-mail 
address at usoge@oge.gov. For E-mail messages, the subject line should 
include the following reference--``Comments Regarding Proposed Gift 
Acceptance Authority Regulations.''

FOR FURTHER INFORMATION CONTACT: Allison C. George, Associate General 
Counsel, Office of Government Ethics, Telephone: 202-208-8000; TDD: 
202-208-8025; FAX 202-208-8037.

SUPPLEMENTARY INFORMATION: 

I. Background

    This proposed rule, to be codified once finalized in a new part 
2601 of 5 CFR, would implement section 2 of the Office of Government 
Ethics Authorization Act of 1996 (the 1996 Reauthorization Act), Pub. 
L. 104-179, 110 Stat. 1566, which amended the Ethics in Government Act 
of 1978 (the Ethics Act), as codified at 5 U.S.C. app. Sec.  403(b).
    Section 403(b)(1) of the Ethics Act as amended authorizes the 
Director of OGE to accept and utilize on behalf of the United States, 
any gift, donation, bequest or devise of money, use of facilities, 
personal property, or services, for the purpose of aiding or 
facilitating the work of OGE.
    Section 403(b)(2) of the Ethics Act as amended prohibits the 
acceptance of any gift that attaches conditions inconsistent with 
applicable laws or regulations. It also prohibits acceptance of any 
gift that is conditioned upon or will require the expenditure of 
appropriated funds that are not available to OGE.
    Section 403(b)(3) of the Ethics Act as amended requires the 
Director of OGE to establish written rules that set forth criteria for 
determining whether the acceptance of a particular gift is appropriate. 
The statutory standard for this determination is whether acceptance 
would ``reflect unfavorably upon the ability of the Office of 
Government Ethics, or any employee of such Office, to carry out its 
responsibilities or official duties in a fair and objective manner, or 
would compromise the integrity or the appearance of the integrity of 
its programs or any official involved in those programs.''
    The legislative history of the 1996 Reauthorization Act indicates 
that OGE sought this authority only ``to support OGE's education and 
training program in carrying out its training mission.'' H.R. Rep. No. 
104-595 at 7 (1996) (House Report). See also S. Rep. No. 104-244 at 5 
(1996) (Senate Report). However, by its terms the law confers broad 
gift acceptance authority--similar to that bestowed upon other 
executive branch agencies--that may be used for any activity that 
furthers the work of the Office. The 1996 Reauthorization Act requires 
the Director to promulgate implementing regulations in order to ensure 
that this grant of broad authority is not used in a manner that would 
compromise the integrity of OGE or its employees. The House Report 
states:

    It is the intention of the Committee that these rules will 
safeguard against not only conflicts of interest, but any appearance 
of a conflict of interest in the acceptance of gifts by OGE.

House Report at 7. See also Senate Report at 5.

    The legislative history further notes that many executive branch 
agencies and departments that have statutory gift acceptance authority 
are not required to prescribe rules governing its use:

    Moreover, those agencies and departments that have gift 
acceptance authority are not required to prescribe regulations 
governing its use. While other agencies will not be required to 
follow the example of OGE's regulations in making determinations 
about their gift acceptance authority, OGE believes that its 
regulations will provide useful guidance to agencies.

House Report at 7-8. See also Senate Report at 6.

    Finally, in the discussion of this legislation on the Senate floor, 
Senator William Cohen, a sponsor of the Senate bill, noted:

    Currently, other agencies that have gift acceptance authority do 
not have to prescribe regulations governing its use. While other 
agencies would not be required to follow the example of OGE's 
regulations in making their own determinations about their gift 
authority, OGE's regulations would provide useful guidance to other 
agencies.

142 Congressional Record S8739, July 24, 1996.
    Executive branch agency gift authorities differ widely in their 
terms. In some cases the authority may be agencywide, while in others 
it may be limited to a particular component or activity. Some agency 
authorities permit the acceptance of virtually any kind of gift; others 
limit gifts to a particular type. Some authorities permit the use of 
gifts for a broad range of purposes; others limit use of gifts to some 
particular purpose. The practice with regard to implementing 
regulations also differs widely among executive branch agencies. Some 
agencies have comprehensive directives, orders, or policy statements 
regarding the use of their gift acceptance authority. Other agencies 
have no written guidelines and make agency gift acceptance 
determinations on a case-by-case basis.
    Although this proposed rule would implement authority that is 
specific to OGE, it addresses several agency gift acceptance issues of 
general concern to executive branch agencies. Therefore, it could 
provide guidance to other agencies in administering their gift 
authority. In order to develop a final rule that would have the 
greatest degree of utility in this regard, OGE invites comments by 
executive branch agencies and other interested persons on this proposed 
rule, in particular with respect to these issues of more general 
concern.
    As noted above, however, there is great variation among existing 
agency gift acceptance authorities. Agencies also differ in terms of 
the frequency and amount of gifts they receive. Agencies also may have 
gift issues that are unique to their programs and missions. Thus, an 
agency that wishes to use the OGE rule as a model may need to modify 
the rule as proposed to meet its particular needs and circumstances.

[[Page 23877]]

II. Section-By-Section Analysis

    The following section-by-section analysis discusses each section of 
the new proposed part 2601 regulation.

A. General Provisions

    1. Proposed Sec.  2601.101 would set forth the legal authority 
under section 2 of the Office of Government Ethics Authorization Act of 
1996 for the promulgation of this rule.
    2. Proposed Sec.  2601.102 would state that the purpose of this 
rule is to establish written guidelines regarding OGE's implementation 
of its statutory gift authority.
    3. Proposed Sec.  2601.103 would set forth the policies that would 
guide OGE's interpretation and use of its gift authority. These 
policies deal with the scope of OGE's gift acceptance authority, 
permitted uses of gifts, sources of gifts, endorsement issues arising 
from the agency's acceptance of a gift, and types of gifts.
    Proposed Sec.  2601.103(a) would reflect OGE's interpretation that 
its statutory authority to ``accept and utilize'' gifts embraces the 
authority to accept, receive, hold, retain, utilize, use, administer, 
manage, sell, spend, liquidate, and dispose of a gift. It also includes 
the authority to destroy a gift, provided that such action is otherwise 
in accordance with Federal regulations, as for example, Federal 
property management regulations contained in chapters 101 and 102 of 41 
CFR.
    OGE also interprets the ``accept and utilize'' language as 
embracing the authority to invest or reinvest gifts. A number of 
agencies have express statutory language authorizing the agency to 
invest or reinvest gifts. However, even in the absence of such express 
language, the authority to ``utilize'' gifts includes the authority to 
properly manage property obtained by gift. In the case of monetary 
gifts or the proceeds of the sale of tangible gifts, this would include 
prudent investment or reinvestment. OGE will invest any available gift 
funds in interest bearing securities of the United States, as is the 
customary practice of executive branch agencies.
    In addition, OGE interprets the authority to ``accept and utilize'' 
gifts as encompassing the authority to exchange one tangible gift for 
another. At least one agency has express statutory authority to ``deal 
with'' gifts. OGE might, for example, exchange or trade in donated 
equipment for other more useful equipment. Or, for example, if OGE were 
given a gift of common stock in a publicly traded company, it could 
convert that gift of stock to Government securities. OGE believes that 
such trading or exchange of gifts would be rare. Other Federal entities 
might have more occasion to exchange or trade gifts. For example, an 
agency authorized to accept real property might exchange a particular 
parcel of donated land for another parcel that abuts other land for 
which the agency is responsible. Or a Federal museum that received 
gifts of art objects, gems or other items for its collections, or a 
Federal visitors center that had exhibits, might apply its authority to 
utilize gifts to trade or exchange a gift for another item that was 
more appropriate or relevant to its collection.
    The authority to ``accept and utilize'' gifts also encompasses the 
authority to solicit gifts. The legislative history indicates that a 
primary purpose for granting this authority was to further OGE's 
training activities. In order to utilize effectively this authority for 
this purpose, it would be necessary for authorized employees to be able 
to contact persons who may be able to provide training facilities and 
services. OGE may also use this authority, e.g., to seek gifts of 
transportation and travel-related expenses. However, under the 
regulations as proposed, an employee would not be permitted to engage 
in an official capacity in activities on behalf of a private entity, to 
raise funds for future donation to the Office of Government Ethics.
    Proposed Sec.  2601.103(b) would state the purposes or activities 
for which gifts may be used. The statute authorizes OGE to use gifts 
``for the purpose of aiding or facilitating the work of the Office of 
Government Ethics.'' Although support of training activities is 
expected to be one of the most common uses, OGE envisions that this 
authority may be used for other activities as well. This is consistent 
with the broad language of section 403(b)(1) of the Ethics Act.
    Although the gift statutes of other agencies use somewhat different 
language, the various agency authorities describe a link to, or 
connection with, the work of an agency, its programs, activities or 
functions. Similarly, OGE interprets the language of ``aiding or 
facilitating the work of'' OGE to mean that gifts may be utilized to 
further any activity that has a relationship to the programs, functions 
or activities of OGE.
    Gifts may be used by or for the benefit of OGE employees, provided 
that such use is otherwise permitted. For example, gifts may be used in 
accordance with this part as proposed to enhance employee morale or to 
recruit new employees.
    Gifts may also be used for official travel other than travel that 
is covered by section 1353 of title 31, United States Code. For 
example, when an OGE employee is engaged in carrying out a core agency 
function that is outside the scope of section 1353, OGE's statutory 
authority could be used. See, for example, OGE Informal Advisory Letter 
98 x 8 (dealing with acceptance of a gift of ground transportation), 
which is included in The Informal Advisory Letters and Memoranda and 
Formal Opinions of the United States Office of Government Ethics, as 
published by the U.S. Government Printing Office, and is also available 
in the Advisory Opinions section of OGE's Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.usoge.gov
.
    Proposed Sec.  2601.103(c) would state OGE policy with regard to 
the sources from which gifts may be accepted. The Ethics Act does not 
impose any restriction with regard to any particular source of a gift. 
The main concern with regard to the source of a gift is raised by a 
source that would be a ``prohibited source'' for the purpose of gifts 
to an agency employee. As defined by the statute on gifts to Federal 
employees, at 5 U.S.C. 7353(a), and OGE's regulation implementing the 
Standards of Ethical Conduct for executive branch employees, at 5 CFR 
2635.203(d), a prohibited source is any person who is seeking official 
action from, doing business with (or, under the Standards, seeking to 
do business with), or conducting activities regulated by, the 
employee's agency, or any person whose interests may be substantially 
affected by the performance or nonperformance of the employee's 
official duties. The Standards of Ethical Conduct further clarify that 
an organization made up of a majority of prohibited sources is itself a 
prohibited source of gifts. See 5 CFR 2635.203(d)(5). Some agencies do 
bar the acceptance of a gift to the agency from donors who would be 
considered prohibited sources for gifts to its employees. OGE, however, 
has determined that barring the acceptance of a gift from a prohibited 
source or from any other particular class of donors would be unduly 
restrictive. When a gift is from a prohibited source, there are 
different considerations if the gift is made to an agency rather than 
to an individual employee. Accordingly, the identity of the source is 
evaluated as one key factor in applying the conflict of interest 
standard to determine whether acceptance of a gift is appropriate. 
Although the proposed rule would not preclude OGE's acceptance of gifts 
from prohibited sources, such gifts would be scrutinized to try to 
ensure that their acceptance would not reflect unfavorably upon OGE or 
its employees.

[[Page 23878]]

    Other kinds of sources may also raise special concerns. For 
example, gifts from intermediaries, including foundations and other 
organizations, may require additional analysis and evaluation. Although 
gifts generally should be made directly to OGE, the proposed rule would 
not preclude gifts from intermediaries. However, where a gift is made 
through an intermediary, it is relevant to the conflict analysis to 
consider both the intermediary and the ultimate source of the gift. In 
addition, the intermediary, such as a foundation or association, may 
itself be a prohibited source, as noted above, and call for the same 
degree of scrutiny. Gifts from intermediaries should also be examined 
in terms of the nature of the conditions that may be attached to the 
gift. However, rather than bar any source as a class, the proposed rule 
would resolve these special issues through application of the conflict 
of interest analysis.
    Proposed Sec.  2601.103(d) would state that acceptance of a gift 
should not in any way be construed to be an endorsement of the donor or 
the donor's products, services, activities or policies.
    Proposed Sec.  2601.103(e) would state that, with the exception of 
gifts of actual currency, OGE will not preclude the solicitation or 
acceptance of any kind of gift that is within its authority.
    Although OGE's statutory authority does not bar gifts of currency, 
OGE believes that it is prudent to decline a gift in the form of actual 
currency. This approach is consistent with that taken by many agencies 
that have addressed the question in their policy guidelines. The 
reasons for this self-limitation are the greater risks that currency 
presents in terms of appearance problems and in terms of accountability 
of funds. Generally, there should be sufficient time to advise a donor 
to provide a gift by some alternative to currency, such as by check, by 
reimbursement of expenses, or by an in-kind gift. This should not 
unduly limit the use of this authority and will provide greater 
protection for OGE.
    4. Proposed Sec.  2601.104 would set forth the relationship of the 
authority implemented by this subpart to other authorities that provide 
for the acceptance of gifts either by OGE or by an OGE employee. The 
authority that would be implemented by this proposed regulation is 
general authority for OGE to accept gifts. There are other authorities 
that are more specific and that provide for the acceptance of gifts by 
either the agency or by an individual employee in a personal capacity. 
In some cases, an authority, by law, is the exclusive authority for 
agency acceptance of a gift. In such a case, that authority would be 
the exclusive authority for acceptance by the agency. In other cases, a 
particular authority does not expressly state that it is exclusive. As 
a matter of policy, however, OGE will utilize the more specific 
authority for situations in which it is applicable. This would not, 
however, preclude use of OGE's authority for activities or purposes 
that are collateral to, or occur in conjunction with, but are not 
expressly covered by some specific authority.
    Proposed Sec.  2601.104(a)(1) would state the relationship of OGE's 
gift authority to the authority to accept payments made to the agency 
pursuant to 31 U.S.C. 1353. As mentioned, section 1353 is the exclusive 
authority by which executive branch agencies can accept certain travel 
reimbursements relating to an activity that is covered by that statute. 
Section 1353 applies to any payment ``from non-Federal sources for 
travel, subsistence, and related expenses with respect to attendance of 
the employee (or the spouse of such employee) at any meeting or similar 
function relating to the official duties of the employee.'' 31 U.S.C. 
1353(a). Implementing regulations of the General Services 
Administration define the term ``meeting or similar function'' as ``a 
conference, seminar, speaking engagement, symposium, training course, 
or similar event that takes place away from the employee's official 
station, and is sponsored or cosponsored by a non-Federal source.'' 41 
CFR 304-1.2(c)(3).
    Where section 1353 is applicable, that statute preempts the use of 
agency gift acceptance authority. This is made clear by the rules 
implementing section 1353 at 41 CFR 304-1.8(a), which state that an 
agency ``may not accept, under an agency gift statute or other similar 
authority, payment for travel, subsistence, and related expenses 
incurred by an employee and/or accompanying spouse to attend a meeting 
or similar function.'' In other words, OGE's gift authority could not 
be used to accept payments in connection with attendance at a meeting 
or similar function that is within the scope of section 1353. However, 
using OGE gift acceptance authority would not be precluded in 
situations that are not covered by section 1353 that might occur in 
conjunction with a section 1353 event. Section 1353 does not apply to 
certain peripheral activities that may occur in connection with a 
section 1353 activity. Use of OGE gift acceptance authority may be 
appropriate in such cases, provided there is a connection to some 
official activity.
    Section 1353 does not cover a meeting or other event required to 
carry out the agency's statutory or regulatory functions. OGE could use 
its own gift authority to cover transportation and travel related 
expenses connected with carrying out such core functions. For example, 
OGE could use its gift authority in conducting a regional ethics 
training event which would be in furtherance of one of OGE's core 
functions. Section 1353 also does not cover gifts of transportation 
when the employee is not in a travel status. OGE could use its 
authority to accept local transportation for an employee on official 
duty.
    Proposed Sec.  2601.104(a)(2) would state the relationship of this 
authority to the receipt of gifts of volunteer service accepted by the 
agency pursuant to 5 U.S.C. 3111. Section 3111 provides for an 
exception from the prohibition on acceptance of voluntary services 
contained in 31 U.S.C. 1342. It permits the acceptance of the services 
of student volunteers who are participating in an agency program 
established for the purpose of providing educational experiences for 
the student. The statute and its implementing regulations at 5 CFR part 
308 contain criteria that must be met in order to accept student 
volunteer services.
    Proposed Sec.  2601.104(a)(2) provides that the acceptance of 
services by student volunteers that comes within the authority of 5 
U.S.C. 3111 shall be accepted by the agency under that authority. 
Unlike section 1353, section 3111 does not expressly state that it is 
the exclusive authority for the acceptance of student volunteer 
services. However, OGE will use that authority for student volunteer 
services that are covered by the terms of that statute. On the other 
hand, OGE authority may be used in cases where the services to be 
volunteered by a student do not meet the terms of section 3111. For 
example, a person with more than a five-month interim between school 
years who would not qualify under the student volunteer program could 
provide volunteer services under the OGE gift acceptance authority. 
More importantly, the OGE authority would be available for acceptance 
of a broad array of other volunteer services that are not covered by 
the limited scope of section 3111.
    There are also a number of authorities under which employees as 
individuals may accept gifts, such as gifts of training, gifts received 
from certain foreign governmental entities, and gifts that may be 
accepted in accordance with the provisions in the Standards of Ethical 
Conduct. In some cases, a gift

[[Page 23879]]

might be accepted either by an individual employee or by the agency. A 
choice of authorities would then be available.
    Proposed Sec.  2601.104(b)(1) would state the relationship of this 
authority to gifts of training, expenses for training and other 
benefits made to an employee pursuant to 5 U.S.C. 4111. Section 4111 
permits employees to accept payments from certain qualifying 
organizations without regard to the supplementation of salary 
restrictions contained in 18 U.S.C. 209. Regulations implementing the 
statute are found at 5 CFR 410.501-410.503. The regulation at 5 CFR 
410.501(b) provides that:

    This subpart does not limit the authority of an agency head to 
establish procedures on the acceptance of contributions, awards, and 
payments in connection with any training and meetings that are 
outside the scope of this subpart in accordance with laws and 
regulations governing Government ethics and governing acceptance of 
travel reimbursements from non-Federal sources.

    Thus, in a case where the payment qualifies under section 4111 and 
is made to an individual employee, OGE's agency gift authority and this 
proposed regulation would not apply because they concern gifts to the 
agency. See also the gift exception in the Standards of Ethical 
Conduct, at 5 CFR 2635.204(l)(1), for such gifts. However, section 4111 
would not preclude OGE, as an agency, from accepting gifts of training 
for its employees that were outside the scope of that provision. Where 
such a gift is made to the agency, this proposed part would apply. Or 
OGE may elect to use this authority in instances where a gift could not 
be accepted by an employee because it is outside the scope of section 
4111. For example, section 4111 applies only if the source is a tax 
exempt organization described in section 501(c)(3) of title 26 of the 
United States Code; other tax exempt organizations (described in other 
subparagraphs of 26 U.S.C. 501) are not within the scope of section 
4111. Moreover, OGE's authority could be used in conjunction with, or 
as a supplement to, the payments to individual OGE employees for 
training.
    Proposed Sec.  2601.104(b)(2) would state the relationship of this 
authority to gifts to an agency employee made by a foreign government 
or organization, or representative thereof, and accepted in accordance 
with the Foreign Gifts and Decorations Act, 5 U.S.C. 7342. Section 7342 
provides an exception by consent of Congress which permits employees to 
accept certain gifts that would otherwise be barred by the Emoluments 
Clause of the Constitution (Article I, Section 9, Clause 8). This 
agency gift acceptance authority would not alter the authority 
conferred by section 7342; see also the gift exception in the Standards 
of Ethical Conduct, at 5 CFR 2635.204(l)(2), for such gifts.
    Proposed Sec.  2601.104(b)(3) would state the relationship of this 
authority to gifts made to an employee in accordance with the Hatch 
Act, as revised, in subchapter III of 5 U.S.C. chapter 73. Gifts of 
meals, lodging, transportation, attendance at events, and other 
benefits given to an employee who is permitted to accept them under the 
Hatch Act are accepted by the employee in a personal capacity. This 
authority would not alter the authority of the Hatch Act; see also the 
gift exception in the Standards of Ethical Conduct, at 5 CFR 
2635.204(f), for such gifts.
    Proposed Sec.  2601.104(b)(4) would state the relationship of this 
authority to gifts made to an employee personally that may be accepted 
under the gift rules of the Standards of Ethical Conduct, as codified 
at subparts B and C of 5 CFR part 2635. Whenever a gift is accepted by 
an employee personally pursuant to any particular gift exception, this 
part does not apply. There may be situations where alternatively the 
gift could be made to the agency; in such a case, the OGE gift 
authority might apply. For example, the sponsor of a conference at 
which an OGE employee is a speaker might give the OGE employee a book 
about ethics in government (with a market value of $20 or less), which 
the OGE employee could accept under the gift exception in the Standards 
of Ethical Conduct, at 5 CFR 2635.204(a), for such gifts.
    Alternatively, the sponsor of the conference might give the book to 
OGE, for OGE to place in its library.
    5. Proposed Sec.  2601.105 would set forth definitions applicable 
to this part.
    Proposed Sec.  2601.105 would define the term ``Administration 
Division'' to mean the Administration Division of the Office of 
Government Ethics.
    Proposed Sec.  2601.105 would define the term ``agency'' to mean 
the Office of Government Ethics (OGE).
    Proposed Sec.  2601.105 would define the term ``authorized agency 
official'' to mean the Director or the Director's delegatee.
    Proposed Sec.  2601.105 would define the terms ``Director'' to mean 
the Director of OGE, and the term ``employee'' to mean an employee of 
OGE.
    Proposed Sec.  2601.105 would define the term ``gift.'' The 
definition would follow the definition set forth in the Act. Particular 
categories of gifts referenced in the definition in the Act are 
proposed to be further defined.
    Proposed Sec.  2601.105 would define ``money'' to include currency, 
checks, money orders or other forms of negotiable instruments. Note 
that although the Act authorizes the acceptance of money without 
limitation, as a matter of policy as set forth in proposed Sec.  
2601.103(e), OGE would not accept gifts of currency.
    Proposed Sec.  2601.105 would define ``personal property.'' The 
definition of personal property is intended to cover all forms of 
personal property. It would include both tangible and intangible 
property. Some of the types of tangible personal property that might be 
accepted by OGE would include books, videotapes, training media, 
electronic training games and other educational materials, office and 
other supplies, as well as equipment such as computers, printing and 
copying equipment, cameras and recording equipment, visual and graphics 
materials, and exhibits. The definition would also cover tangible gifts 
of consumable or perishable products. The definition would also cover 
all forms of intangible property, including securities, options and 
warrants. It would also cover, for example, permission to use 
copyrighted material without payment of a fee. An example of such use 
would be use of music or visual material in the production of ethics 
training videos.
    Proposed Sec.  2601.105 would define ``prohibited source'' by 
referencing the definition contained in the Standards of Ethical 
Conduct, at 5 CFR 2635.203(d).
    Proposed Sec.  2601.105 would define ``services'' to cover 
virtually any type of personal service. Some typical types of services 
that OGE might expect to accept and use as furthering the work of the 
agency would include communication-related services to conduct 
training. These might include broadcast studio services, technicians, 
and global uplink technicians in connection with training via satellite 
broadcasts. Training might also call for audio visual services, design 
and graphics services, and planning services. For retreats, this 
authority could be used to accept gifts of the services such as 
motivational speakers or management consultants. Other professional 
services such as instructional, consulting and advisory services might 
also be accepted. In connection with a conference, there might be a 
gift of food and catering services.
    Proposed Sec.  2601.105 would also define ``use of facilities'' to 
encompass every type of use of facility. It would cover, for example, 
the use of space such as a hotel ballroom or lodging, conference 
center, retreat center,

[[Page 23880]]

conference room, auditorium, seminar or classroom, banquet room or 
other meeting or training space. It would also include the use of 
exhibit space, storage facilities, and broadcast or production studios. 
Use of facilities would also encompass use of the equipment associated 
with the facility, such as video production equipment and satellite 
broadcasting equipment.

B. Guidelines for Acceptance

    1. Proposed Sec.  2601.201 would provide for delegation of the OGE 
Director's general authority to solicit, accept, and utilize gifts.
    2. Proposed Sec.  2601.202 would set forth the procedures for 
handling gift offers.
    Proposed Sec.  2601.202(a) would provide that only an authorized 
agency official shall have the authority to solicit, accept, refuse, 
return or negotiate the terms of a gift.
    Proposed Sec.  2601.202(b) would provide that OGE employees who are 
not authorized to accept a gift are to forward all gift offers to an 
authorized agency official. Agency employees could respond to potential 
donors and inform them of OGE's gift authority but they should not 
engage in further discussions of the possibility of a gift without 
direction from an authorized agency official. OGE employees may also 
put a potential donor in touch with an authorized agency official. In 
any event, employees must not make any commitments to extend 
preferential treatment to any potential donor in connection with a gift 
offer.
    Proposed Sec.  2601.202(c) would provide that while gifts generally 
may be solicited or accepted only after an evaluation has been made 
under the conflict of interest standard of Sec.  2601.203 as proposed, 
in exceptional circumstances, a gift in-kind could be accepted prior to 
an evaluation under the conflict standard. An example of such a 
situation might be an employee on official travel in a remote location 
who is offered a gift of local transportation. Although it would be 
preferable to anticipate such situations and make appropriate 
arrangements in advance, exceptional circumstances may warrant 
subsequent authorization. If subsequent authorization is determined not 
to be appropriate, then it may be necessary to return the gift, or make 
reimbursement to the donor.
    Proposed Sec.  2601.202(d) would provide that gifts may be 
acknowledged in writing in the form of a letter of acknowledgment, and 
describes the contents of such a letter to a donor or an intermediary. 
Gifts to the agency are considered gifts to the United States for the 
purposes of Federal tax laws. Sections 170(c)(1), 2055, and 2522, 
respectively, of title 26 of the United States Code establish the 
status of such gifts for purposes of Federal income, gift, and estate 
taxes. The tax consequences or implications of any gift transaction are 
the responsibility of the donor. Therefore, donors should consult their 
own tax professionals for specific advice on permissible deductions. 
OGE will not estimate or place any value on a nonmonetary gift, for tax 
purposes.
    Proposed Sec.  2601.202(e) would provide that gifts may be declined 
orally or in writing. Donors generally may be advised of the reason for 
declining the gift but a gift may be declined solely as a matter of 
discretion.
    Proposed Sec.  2601.202(f) would provide that gifts of money (other 
than currency) and proceeds shall be placed in an OGE trust fund 
account. The Act does not specify where funds should be held when they 
are not being utilized. But following the practice of other executive 
branch agencies, OGE would establish the trust fund account through the 
Department of the Treasury. Disbursements would be available from the 
account upon order of OGE without fiscal year limitations.
    3. Proposed Sec.  2601.203 would set forth the analysis to be used 
for making the determination required by the Act as to whether the 
solicitation or acceptance of a gift would reflect unfavorably upon the 
ability of the Office of Government Ethics, or any employee of such 
Office, to carry out its responsibilities or official duties in a fair 
and objective manner, or would compromise the integrity or the 
appearance of the integrity of its programs or any official involved in 
those programs.
    Proposed Sec.  2601.203(a) would restate the language of the Act 
that sets forth the standard for determining whether it is appropriate 
for OGE to solicit or accept a gift.
    Proposed Sec.  2601.203(b) would provide a list of factors to be 
considered in making the determination as to whether solicitation or 
acceptance of a gift would be appropriate under this standard. The 
first of these factors, at proposed Sec.  2601.203(b)(1), would require 
an evaluation of the identity of the source of the gift. As noted 
above, the proposed rule does not prohibit the solicitation or 
acceptance of gifts from any particular type of source, including 
persons who would be considered ``prohibited sources'' of gifts to 
agency employees. Evaluation of the source of the gift nonetheless is a 
critical element in the analysis of whether a gift may be solicited or 
accepted.
    The second factor, in proposed Sec.  2601.203(b)(2), would require 
an evaluation of the estimated market value or cost to the donor of a 
gift, or the amount if it is a gift of money.
    The third factor, in proposed Sec.  2601.203(b)(3), would require 
an evaluation of the donor's stated purpose of the gift.
    The fourth factor, in proposed Sec.  2601.203(b)(4), would require 
an evaluation of any other expected recipients of the gift on the same 
occasion. This may be particularly relevant in activities with a number 
of sponsors. Identifying other recipients can avoid situations that 
might reflect unfavorably upon the agency.
    The fifth factor, in proposed Sec.  2601.203(b)(5), would require 
an evaluation of the timing of the gift, to avoid situations that might 
reflect unfavorably upon OGE. Evaluation of timing is also necessary in 
order to avoid any impression that the agency is pressuring a potential 
donor to make a gift.
    The sixth factor, in proposed Sec.  2601.203(b)(6), would require 
an evaluation of any matter pending at OGE that might affect the 
interests of the donor. In addition to actual pending matters, it is 
relevant to consider any anticipated dealings between the agency and 
the donor and the significance of those dealings to a potential donor's 
revenues or business.
    The seventh factor, in proposed Sec.  2601.203(b)(7), would require 
an evaluation of the significance of an individual employee's role in 
any matter affecting the donor, if benefits of the gift will accrue to 
that employee.
    The eighth factor, in proposed Sec.  2601.203(b)(8), would require 
an evaluation of the nature or character of a gift. If it is a gift in-
kind, then the nature of the gift must be evaluated. Because this part 
as proposed would not prohibit any particular type of gift (other than 
gifts of currency), evaluation of the nature of the gift is important.
    The ninth factor, in proposed Sec.  2601.203(b)(9), would require 
an evaluation of the frequency of gifts from the same source. Frequent 
gifts could create an appearance of a relationship between the agency 
and the donor as part of which favors might be granted.
    The tenth factor, in proposed Sec.  2601.203(b)(10), would require 
an evaluation of whether the purpose of the gift aids or facilitates 
the work of OGE, consistent with the terms of the statutory authority 
for OGE to accept gifts.
    Proposed Sec.  2601.203(c) would note that the agency may request 
additional information from the donor to assist in

[[Page 23881]]

determining whether acceptance is appropriate.
    4. Proposed Sec.  2601.204 would set forth the conditions for 
acceptance of gifts.
    Proposed Sec.  2601.204(a)(1) would restate the language of the Act 
that provides that no gift may be accepted that attaches conditions 
inconsistent with applicable laws or regulations. This prohibition 
would not bar acceptance of a gift that was donated for a specific 
purpose as, for example, to support OGE training. Nor would the fact 
that a donor expressed some nonbinding preference as to how the donor 
wished a gift be used preclude acceptance.
    Proposed Sec.  2601.204(a)(2) would restate the language of the Act 
that provides that no gift may be accepted that is conditioned upon or 
will require the expenditure of appropriated funds that are not 
available to OGE.
    Proposed Sec.  2601.204(a)(3) would bar acceptance of a gift that 
is given in exchange or return for some privilege, concession or other 
present or future benefit. Such an exchange could imply that the gift 
would compromise the integrity of the agency's programs.
    Proposed Sec.  2601.204(a)(4) would bar acceptance of a gift that 
would require OGE to adhere to particular requirements as to deposit, 
investment, or management of funds donated.
    Proposed Sec.  2601.204(a)(5) would bar acceptance of a gift that 
would require OGE to undertake activities that are not related to the 
agency's mission, programs or statutory authority.
    Proposed Sec.  2601.204(a)(6) would bar acceptance of a gift that 
would reflect unfavorably upon the ability of the agency, or any of its 
employees, to carry out its responsibilities or official duties in a 
fair and objective manner, or would compromise the integrity or the 
appearance of the integrity of its programs or any official involved in 
those programs.

C. Accounting Requirements

    Proposed Sec.  2601.301 would set forth guidance for the accounting 
of gifts. Accounting requirements may help ensure that OGE's gift 
acceptance authority is used in a way that does not reflect unfavorably 
on OGE or its employees.
    Proposed Sec.  2601.301(a) would provide for the regular accounting 
of gifts received. Money gifts must be accounted for under the same 
standards as are applicable to appropriated funds.
    Proposed Sec.  2601.301(b) would require OGE to maintain an 
inventory of donated personal property valued at over $500.
    Proposed Sec.  2601.301(c) would require OGE to maintain a log of 
accepted gifts valued at over $500.
    The proposed rule does not expressly provide for any type of 
regular audit of gift funds. Some agencies provide for audits at such 
intervals as the Comptroller General, in his discretion, deems to be 
appropriate. Given the size of OGE and the expected relatively low 
volume of gifts, it is not believed that it is necessary to provide for 
any regular audit. Such audits could, however, be done as appropriate.

Matters of Regulatory Procedure

Administrative Procedure Act

    Interested persons are invited to submit written comments to OGE on 
this proposed regulation, to be received on or before August 4, 2003. 
The Office of Government Ethics will review all comments received and 
consider any modifications to this proposal which appear warranted in 
issuing its final rule.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply 
because this regulation does not contain information collection 
requirements that require the approval of the Office of Management and 
Budget.

Congressional Review Act

    The Office of Government Ethics has determined that this proposed 
rulemaking involves a nonmajor rule under the Congressional Review Act 
(5 U.S.C. chapter 8) and will, before the future final rule takes 
effect, submit a report thereon to the U.S. Senate, House of 
Representatives and General Accounting Office in accordance with that 
law.

Regulatory Flexibility Act

    As Director of the Office of Government Ethics, I certify under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) that this regulation 
will not have a significant economic impact on a substantial number of 
small entities because it primarily affects OGE itself and OGE 
employees.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
chapter 25, subchapter II), the proposed rule would not significantly 
or uniquely affect small governments and would not result in increased 
expenditures by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more (as adjusted for 
inflation) in any one year.

Executive Order 12866

    In issuing this proposed regulation, the Office of Government 
Ethics has adhered to the regulatory philosophy and the applicable 
principles of regulation as set forth in section 1 of Executive Order 
12866, Regulatory Planning and Review. This proposed rule has not been 
reviewed by the Office of Management and Budget under that Executive 
order since it is not a significant regulatory action within the 
meaning of the Executive order.

Executive Order 12988

    As Director of the Office of Government Ethics, I have reviewed 
this proposed regulation in light of section 3 of Executive Order 
12988, Civil Justice Reform, and certify that it meets the applicable 
standards provided therein.

List of Subjects in 5 CFR Part 2601

    Conflict of interests, Government employees, Government property.

    Approved: April 28, 2003.
Amy L. Comstock,
Director, Office of Government Ethics.

    Accordingly, for the reasons set forth in the preamble, the Office 
of Government Ethics proposes to add a new part 2601 to 5 CFR to read 
as follows:

PART 2601--IMPLEMENTATION OF OFFICE OF GOVERNMENT ETHICS STATUTORY 
GIFT ACCEPTANCE AUTHORITY

Subpart A--General Provisions
Sec.
2601.101 Authority.
2601.102 Purpose.
2601.103 Policy.
2601.104 Relationship to other authorities.
2601.105 Definitions.
Subpart B--Guidelines for Solicitation and Acceptance of Gifts
2601.201 Delegation.
2601.202 Procedure.
2601.203 Conflict of interest analysis.
2601.204 Conditions for acceptance.
Subpart C--Accounting Requirements
2601.301 Accounting of gifts.

    Authority: 5 U.S.C. App. (Ethics in Government Act of 1978).

Subpart A--General Provisions


Sec.  2601.101  Authority.

    Section 2 of the Office of Government Ethics Authorization Act of 
1996, amending the Ethics in Government Act of 1978, as codified at 5 
U.S.C. app. Sec.  403(b), authorizes the Office of Government Ethics 
(OGE) to accept and utilize gifts for the purpose of aiding or 
facilitating the work of OGE.

[[Page 23882]]

Sec.  2601.102  Purpose.

    The purpose of this part is to establish guidelines governing the 
implementation of OGE's gift authority by defining its scope and 
application, by prescribing the policies, standards and procedures that 
govern the solicitation, acceptance and use of gifts, and by setting 
forth accounting requirements related to the use of this authority.


Sec.  2601.103  Policy.

    (a) Scope. The Office of Government Ethics may use its statutory 
authority to solicit, accept and utilize gifts to the agency that aid 
or facilitate the agency's work. The authority to solicit, accept and 
utilize gifts includes the authority to receive, administer, spend, 
invest and dispose of gifts. Gifts to the agency from individuals or 
organizations can be a useful adjunct to appropriated funds and may 
enhance the agency's ability to fulfill its mission, as well as further 
mutually beneficial public/private partnerships, or other useful 
arrangements or relationships. Such uses of this authority are 
appropriate provided that solicitation or acceptance of a gift does not 
compromise the integrity of OGE, its programs or employees.
    (b) Use of gifts. Gifts to OGE may be used to carry out any 
activity that furthers the mission, programs, responsibilities, 
functions or activities of the agency. Gifts may be used to carry out 
program functions whether or not appropriated funds are available for 
that purpose, provided that such expenditures are not barred by law or 
regulation. Gifts may also be used for official travel by employees to 
events or activities required to carry out the agency's statutory or 
regulatory functions. Gifts to the agency may also be used for the 
travel expenses of spouses accompanying employees on official travel, 
if such travel could be paid for by appropriated funds.
    (c) Sources. Generally, gifts may be solicited or accepted from any 
source, including a prohibited source, provided that the standards of 
this part are met. Gifts generally should be made directly to the 
agency and not through intermediaries. However, where a gift is offered 
by an intermediary, both the intermediary and the ultimate source of 
the gift should be analyzed to determine whether acceptance would be 
appropriate.
    (d) Endorsement. Acceptance of a gift pursuant to this part shall 
not in any way be deemed to be an endorsement of the donor, or the 
donor's products, services, activities, or policies. Letters to a donor 
expressing appreciation of a gift are permitted.
    (e) Type of gift. The agency may solicit or accept any gift that is 
within its statutory authority. However, as a matter of policy, OGE 
will not solicit or accept gifts of currency pursuant to this part. 
Donors who offer currency should be advised that the gift may be made 
by check or money order payable to the U.S. Office of Government 
Ethics.


Sec.  2601.104  Relationship to other authorities.

    (a) This part does not apply to gifts to the agency of:
    (1) Travel and travel-related expenses made pursuant to the 
authority set forth in 31 U.S.C. 1353; or
    (2) Volunteer services made pursuant to the authority set forth in 
5 U.S.C. 3111.
    (b) This part does not apply to gifts to an individual agency 
employee, including:
    (1) Gifts of contributions, awards or other expenses for training 
made pursuant to the authority set forth in the Government Employees 
Training Act, 5 U.S.C. 4111;
    (2) Gifts made by a foreign government or organization, or 
representative thereof, pursuant to the authority set forth in 5 U.S.C. 
7342;
    (3) Gifts made by a political organization that may be accepted by 
an agency employee who, in accordance with the terms of the Hatch Act 
Reform Amendments of 1993, at 5 U.S.C. 7323, may take an active part in 
political management or in political campaigns; or
    (4) Gifts made directly or indirectly that an employee may accept 
in a personal capacity pursuant to the authority set forth in 5 CFR 
part 2635, subpart B or subpart C.


Sec.  2601.105  Definitions.

    For the purposes of this part:
    Administration Division means the Administration Division of the 
Office of Government Ethics.
    Agency means the Office of Government Ethics (OGE).
    Authorized agency official means the Director of the Office of 
Government Ethics or the Director's delegatee.
    Director means the Director of the Office of Government Ethics.
    Employee means an employee of the Office of Government Ethics.
    Gift means any gift, donation, bequest or devise of money, use of 
facilities, personal property, or services and may include travel 
reimbursements or payments for attendance at or participation in 
meetings or events.
    Money means currency, checks, money orders or other forms of 
negotiable instruments.
    Personal property means all property, tangible or intangible, not 
defined as real property, and includes stocks and bonds.
    Prohibited source means any source described in 5 CFR 2635.203(d).
    Services means all forms of voluntary and uncompensated personal 
services.
    Use of facilities means use of space, equipment and all other 
facilities.

Subpart B--Guidelines for Acceptance


Sec.  2601.201  Delegation.

    (a) The authority to solicit, accept, and utilize gifts in 
accordance with this part resides with the Director.
    (b) The Director may delegate this authority.
    (c) Authorities delegated in accordance with paragraph (b) of this 
section may be redelegated only through a written delegation 
authorizing an agency employee to solicit or accept specific types of 
gifts, or a gift for a specific purpose, function, or event.


Sec.  2601.202  Procedure.

    (a) The authorized agency official shall have the authority to 
solicit, accept, refuse, return, or negotiate the terms of acceptance 
of a gift.
    (b) An employee, other than an authorized agency official, shall 
immediately forward all offers of gifts covered by this part regardless 
of value to an authorized agency official for consideration and shall 
provide a description of the gift offered. An employee shall also 
inform an authorized agency official of all discussions of the 
possibility of a gift. An employee shall not provide a donor with any 
commitment, privilege, concession or other present or future benefit 
(other than an appropriate acknowledgment) in return for a gift.
    (c) Only an authorized agency official may solicit, accept or 
decline a gift after making the determination required under the 
conflict of interest standard in Sec.  2601.203. An authorized agency 
official may find that, while acceptance of an offered gift is 
permissible, it is in the interest of the agency to qualify acceptance 
by, for example, limiting the gift in some way. Approval of acceptance 
of a gift in-kind after receipt of the gift may be granted as deemed 
appropriate by the authorized agency official.
    (d) Gifts may be acknowledged in writing in the form of a letter of 
acceptance to the donor. The amount of a monetary gift shall be 
specified. In the case of nonmonetary gifts, the letter shall not make 
reference to the value of the gift. Valuation of nonmonetary gifts is 
the responsibility of the donor. Letters

[[Page 23883]]

of acceptance shall not include any statement regarding the tax 
implications of a gift, which remain the responsibility of the donor. 
No statement of endorsement should appear in a letter of acceptance to 
the donor.
    (e) A gift may be declined by an authorized official orally or in 
writing. A donor may be advised of the reason why the gift has been 
declined. A gift may be declined solely as a matter of agency 
discretion, even though acceptance would not be precluded under the 
conflict of interest standard in Sec.  2601.203.
    (f) A gift of money or the proceeds of a gift shall be deposited in 
an appropriately documented agency fund. A check or money order should 
be made payable to the ``U.S. Office of Government Ethics.''


Sec.  2601.203  Conflict of interest analysis.

    (a) A gift shall not be solicited or accepted if the authorized 
agency official determines that such solicitation or acceptance of the 
gift would reflect unfavorably upon the ability of the agency, or any 
employee of the agency, to carry out OGE responsibilities or official 
duties in a fair and objective manner, or would compromise the 
integrity or the appearance of the integrity of its programs or any 
official involved in those programs.
    (b) In making the determination required under paragraph (a) of 
this section, an authorized agency official may be guided by all 
relevant considerations, including, but not limited to the following:
    (1) The identity of the donor;
    (2) The monetary or estimated market value or the cost to the 
donor;
    (3) The purpose of the gift as described in any written statement 
or oral proposal by the donor;
    (4) The identity of any other expected recipients of the gift on 
the same occasion, if any;
    (5) The timing of the gift;
    (6) The nature and sensitivity of any matter pending at the agency 
affecting the interests of the donor;
    (7) The significance of an individual employee's role in any matter 
affecting the donor, if benefits of the gift will accrue to the 
employee;
    (8) The nature of the gift offered;
    (9) The frequency of other gifts received from the same donor; and
    (10) The agency activity, purpose or need that the gift will aid or 
facilitate.
    (c) An authorized agency official may ask the donor to provide in 
writing any additional information needed to assist in making the 
determination under this section. Such information may include a 
description of the donor's business or organizational affiliation and 
any matters that are pending or are expected to be pending before the 
agency.


Sec.  2601.204  Conditions for acceptance.

    (a) No gift may be accepted that:
    (1) Attaches conditions inconsistent with applicable laws or 
regulations;
    (2) Is conditioned upon or will require the expenditure of 
appropriated funds that are not available to the agency;
    (3) Requires the agency to provide the donor with some privilege, 
concession or other present or future benefit in return for the gift;
    (4) Requires the agency to adhere to particular requirements as to 
deposit, investment, or management of funds donated;
    (5) Requires the agency to undertake or engage in activities that 
are not related to the agency's mission, programs or statutory 
authorities; or
    (6) Would reflect unfavorably upon the ability of the agency, or 
any of its employees, to carry out its responsibilities or official 
duties in a fair and objective manner, or would compromise or appear to 
compromise the integrity or the appearance of the integrity of its 
programs or any official involved in those programs.

    Note to Sec.  2601.204: Nothing in this part shall prohibit the 
agency from offering or providing the donor an appropriate 
acknowledgment of its gift in a publication, speech or other medium.

Subpart C--Accounting Requirements


Sec.  2601.301  Accounting of gifts.

    (a) The Administration Division shall ensure that gifts are 
properly accounted for by following appropriate internal controls and 
accounting procedures.
    (b) The Administration Division shall maintain an inventory of 
donated personal property valued at over $500. The inventory shall be 
updated each time an item is sold, excessed, destroyed or otherwise 
disposed of or discarded.
    (c) The Administration Division shall maintain a log of all gifts 
valued at over $500 accepted pursuant to this part. The log shall 
include, to the extent known:
    (1) The name and address of the donor;
    (2) A description of the gift; and
    (3) The date the gift is accepted.

[FR Doc. 03-11043 Filed 5-2-03; 8:45 am]

BILLING CODE 6345-02-P