[Federal Register: May 16, 2006 (Volume 71, Number 94)]
[Rules and Regulations]
[Page 28229-28239]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16my06-1]
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Rules and Regulations
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[[Page 28229]]
OFFICE OF GOVERNMENT ETHICS
5 CFR Parts 2634 and 2640
RINs 3209-AA00 and 3209-AA09
Revisions to the Executive Branch Confidential Financial
Disclosure Reporting Regulation
AGENCY: Office of Government Ethics (OGE).
ACTION: Final rule.
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SUMMARY: The Office of Government Ethics is issuing a final rule
amending the executive branch regulation regarding confidential
financial disclosure. The amendments, once effective January 1, 2007,
will change the dates of the annual reporting period; change the annual
filing date; clarify the criteria for designating confidential filers;
narrow the information required to be reported; create a separate
``report contents'' section for confidential reports; and highlight an
existing provision regarding alternative financial conflict of interest
review systems. In addition, the final rule includes new examples to
illustrate these changes, and some technical amendments. This rule also
makes one minor conforming amendment to the OGE branchwide financial
interests regulation.
DATES: Effective Date: January 1, 2007.
FOR FURTHER INFORMATION CONTACT: Ira S. Kaye, Associate General
Counsel, or Amy E. Braud, Attorney-Advisor, Office of Government
Ethics; Telephone: 202-482-9300; TDD: 202-482-9293; Fax: 202-482-9237.
SUPPLEMENTARY INFORMATION:
I. Analysis of Amendments
OGE received comments from 13 executive branch agencies and one
individual Federal employee about the proposed amendments that were
published at 70 FR 47138-47147 (August 12, 2005). As discussed below,
we have incorporated some of these comments into this final rule.
A. Reporting Period: We have decided to finalize our proposal to
change the annual confidential financial disclosure reporting period,
specified in 5 CFR 2634.903(a) and 2634.908(a), from a fiscal year to a
calendar year cycle.
One agency suggested that OGE allow each agency to establish its
own reporting period for its employees. We have not adopted this
suggestion because we believe that it is important to maintain
consistency in the application of the executive branchwide confidential
financial disclosure system.
Two agencies expressed concern about the burden of having to review
both incumbent OGE Form 450 Confidential Financial Disclosure Reports
and incumbent SF 278 Executive Branch Personnel Public Financial
Disclosure Reports during the first half of the calendar year. Although
we are sensitive to this concern, we also believe that adopting a
calendar year reporting period for annual confidential reports would
make filing more convenient for filers because they would be able to
rely on their year-end financial statements to gather the required
data. A calendar year reporting period also is more consistent with the
public financial disclosure reporting system. Thus, we believe that, on
balance, adopting a calendar year confidential annual reporting period
is warranted.
In order to transition to a calendar year reporting period, we
expect to waive the forthcoming fiscal year 2005 (10/01/05-09/30/06)
annual confidential financial disclosure report filing season, with
reports normally due at the end of October 2006. Instead, OGE will
require confidential filers to submit their next annual reports, using
the forthcoming new reporting format, by February 15, 2007. This first
annual confidential financial disclosure report filing under the new
system will cover the 15-month period from October 1, 2005 to December
31, 2006 to avoid a gap in reporting period coverage. Subsequent annual
reports will cover only the preceding calendar year. New entrant
confidential filers will continue to file the current OGE Form 450
reports for the remainder of 2006, but starting January 1, 2007, new
entrants will start using the new reporting format with the modified
450 report form.
B. Filing Date: Our proposal to change the annual filing date for
incumbent filers from October 31 to February 15 engendered a wide range
of comments. Four agencies believed that a filing deadline later than
February 15 would be more appropriate, in order to allow filers more
time to collect and compile their year-end tax forms (e.g., Form
1099s), which typically are not received until about February 1.
Conversely, two agencies expressed a preference for an earlier filing
date in order to permit their reviewers more time to review the annual
incumbent OGE Form 450 confidential reports before having to collect
their employees' annual incumbent SF 278 public reports on May 15. One
agency, at which the OGE Form 450s and the SF 278s are reviewed by
separate ethics officials, suggested adopting May 15 as the filing
deadline for both reports. Another suggested that OGE allow each agency
to establish its own filing deadline for its employees.
We have decided to adopt our proposal to set February 15 as the
annual incumbent report filing date because we believe that it best
strikes the balance between affording filers time to compile their
year-end financial data and giving reviewers adequate time to finish
reviewing their agencies' OGE Form 450s before the SF 278 annual report
due date of May 15. Although we understand that year-end tax documents
are not typically received until the beginning of February, filers
generally do not need these tax documents in order to complete their
OGE Form 450s. Unlike the SF 278 public financial disclosure report,
the OGE Form 450 confidential report (for both the current and new
form) does not require the filers to report any dollar values.
Therefore, filers' year-end statements from banks, brokers, and
investment managers, which typically are received in early January,
generally will provide all of the information necessary to acquire a
``snapshot'' of their holdings on December 31, and to complete their
OGE Form 450s by February 15.
We have not adopted the suggestion that we allow each agency to
establish its own filing deadline because, as stated above, we believe
that it is important to maintain consistency in the application of the
executive branchwide confidential financial disclosure system. We also
have not adopted the suggestion to set May 15 as
[[Page 28230]]
the filing deadline because we believe that this would cause
difficulties for most agencies which process the SF 278s, and because
we believe that OGE Form 450 filers generally do not need more than 45
days to complete their reports after the close of the reporting period.
C. Termination Reports Not Required: We are adding new paragraph
(e) to Sec. 2634.903 to make clear that, unlike a public filer, a
confidential filer leaving his filing position is not required to file
a termination report. We received no substantive comments on this
proposal.
D. Confidential Filer Definition: We received five comments
supporting our proposal to amend Sec. 2634.904, the provision that
defines a confidential filer, by incorporating into it the filing
exclusion provisions currently found at Sec. 2634.905(a) and (b). All
of these commenters agreed with our belief that, because the exclusion
provision helps to determine who is required to file, it would be
better to incorporate it into the definition of a confidential filer.
One agency suggested that we retain the provision, currently found
at Sec. 2634.905(b)(2), that allows an agency to exclude from the
filing requirement an individual the duties of whose position involve
such a low level of responsibility that any potential conflict would
have an ``inconsequential effect'' on the Government's integrity. We
declined to incorporate the precise language of this provision into
proposed Sec. 2634.904 because we believe that its concept is
adequately expressed elsewhere in the section.
It is difficult to imagine a situation in which an employee whose
duties involve a very low level of responsibility would be required to
file an OGE Form 450. The definition of ``filer'' at new Sec.
2634.904(a)(1)(i) (and current Sec. Sec. 2634.904(a)(1) and
2634.905(b)(1)) states clearly that an employee should only be
designated a filer if the agency determines that the duties and
responsibilities of his position require him to exercise ``significant
judgment,'' and to do so without ``substantial supervision and
review.'' Even if, hypothetically, an agency could determine that an
employee with a very low level of responsibility exercises significant
judgment, and does so without substantial supervision and review, new
Sec. 2634.904(b) retains the agency ethics official's authority to
exclude that individual from the filing requirement on the ground that
the duties of his position ``make remote the possibility that [he] will
be involved in a real or apparent conflict of interest.'' Thus, we
continue to believe that the language contained in current Sec.
2634.905(b)(2) does not meaningfully contribute to an agency's
determination whether a particular employee should file a confidential
report.
Another agency suggested that we require each agency to publish the
position titles that it designates as filing positions, and to state
the criteria upon which this determination was made. We have not
adopted this suggestion because we believe that this requirement would
be unduly burdensome on agency ethics officials, and because we have
not identified any policy reason for requiring that this determination
be made publicly.
One agency suggested that we add an example to illustrate new Sec.
2634.904(a)(1)(ii), regarding requiring an employee to file an OGE Form
450 in order ``to carry out the purposes behind any statute, Executive
order, rule, or regulation applicable to or administered by the
employee.'' We have not adopted this suggestion because this provision,
which is identical to current Sec. 2634.904(a)(2), itself contains an
example (``Positions which might be subject to a reporting requirement
under this subparagraph include those with duties which involve
investigating or prosecuting violations of criminal or civil law.'').
E. Alternative Procedures: By renaming Sec. 2634.905 ``Use of
Alternative Procedures'', OGE hopes to highlight this provision, which
permits an agency to seek OGE approval to use an alternative system in
lieu of requiring employees to file an OGE Form 450 or an OGE Optional
Form 450-A Confidential Certificate of No New Interests (Executive
Branch). One agency suggested that we clarify that any alternative
procedure established under this provision would apply only to those
employees who meet the definition of a ``confidential filer'' in Sec.
2634.904. We have not adopted this suggestion because we do not believe
that it is necessary. We remind agency ethics officials that any
procedure used as an alternative to filing would apply only to
designated filers.
F. Report Contents:
a. Diversified Mutual Funds: We have decided to adopt as final our
proposal to eliminate the requirement for confidential filers to report
diversified mutual funds because 5 CFR 2640.201(a) exempts these
financial interests from the conflict of interest law on personal
financial interests (18 U.S.C. 208). Also as proposed, the regulation
will continue to require filers to report all sector mutual funds which
they, their spouses, or their dependent children own.
Three agencies expressed concern that these provisions will cause
confusion and lead to underreporting on the part of filers, who often
have difficulty distinguishing between diversified funds and sector
funds. Similarly, one agency suggested that we incorporate or cross-
reference the definition of ``diversified'' at 5 CFR 2640.102(a) in
order to help filers better distinguish between diversified funds and
sector funds.
We are aware that some filers may need assistance to determine
whether a particular mutual fund is diversified. We continue to
believe, however, that the burden of providing such assistance to
filers is outweighed by the benefit to filers of not having to report
most of their mutual fund holdings. To the extent that agencies are
concerned about underreporting, we suggest that they encourage their
filers to report or seek advice about any funds that they are not
certain are ``diversified.'' In this final rule, we have also accepted
the suggestion that we incorporate the definition of ``diversified''
into Sec. 2634.907(c)(3)(vii), and we have cross-referenced, in Sec.
2634.907(c)(2)(viii), the definition of ``sector mutual fund'' at 5 CFR
2640.102(q). Finally, we plan to issue updated advice to reviewing
officials about how to determine whether a particular mutual fund is
``diversified.''
One agency suggested that, instead of exempting diversified mutual
funds from the reporting requirement, we simply require the reporting
of any mutual fund holding valued at over $50,000. Because one
regulatory exemption, 5 CFR 2640.201(a), exempts diversified mutual
funds regardless of value, and a second, Sec. 2640.201(b)(2)(i),
exempts sector mutual funds valued at $50,000 or less, this agency
argues that there is no reason to report any mutual fund valued at
$50,000 or less. Adopting a $50,000 reporting threshold for all mutual
funds would eliminate the need for filers to distinguish between
diversified funds and sector funds while still dramatically reducing
the number of mutual funds that would be reportable.
We have not adopted this recommendation in this final rule. Because
the regulatory exemption for interests in sector funds applies only
when the aggregate market value of an employee's interests in sector
funds affected by the particular matter is $50,000 or less, an employee
who owns interests in more than one fund concentrating in the same
sector may have a disqualifying financial interest that would not be
required to be reported on the OGE Form 450 under
[[Page 28231]]
this suggestion. Accordingly, we believe that it would be unwise to
establish a $50,000 reporting threshold for all mutual fund interests.
One agency also expressed concern that the second example after
proposed Sec. 2634.907(c)(3) describes a mutual fund as ``widely
diversified,'' rather than ``diversified.'' We agree that the term
``widely diversified'' should not appear in this example. The term
``widely diversified'' is used to determine whether a particular asset
is an excepted investment fund (EIF), rather than to determine whether
an asset is a diversified mutual fund. Thus, we have modified the
wording of this example in the final rule by deleting the word
``widely.''
b. Liabilities: We are adopting as final our proposal to eliminate
the requirement to report student loans, credit card debts, and loans
from financial institutions which are based on terms generally
available to the public because these types of loans do not present
conflicts of interest for most confidential filers.
One agency commented that these liabilities should not be excepted
from the filing requirement because they can raise significant
conflicts of interest for the employees of some agencies. We note that,
to the extent that an agency needs additional information in order to
perform a conflict of interest review, that agency can request the
authority to collect this information supplementally, in accordance
with Sec. 2634.901(b).
c. Type of Income: We are also finalizing our proposal to eliminate
the requirement to report the type of income earned on reportable
assets. The two agencies that commented on this proposal both agreed
with our determination, based on experience with the confidential
disclosure system over the years, that this information does not add
sufficient value to the conflict of interest review process, executive
branchwide, to justify continuation of the resulting burden on filers
and their agencies.
d. Dates of Agreements and Arrangements: We also are adopting our
proposal to eliminate the requirement to report the dates on which
agreements and arrangements, other than for future employment, were
entered. One agency commented that we should continue to require filers
to report these dates because this information can help agency ethics
officials determine whether the employee was in a particular ``covered
relationship'' at a particular point in time. We are sensitive to this
concern, but our understanding is that this information does not
contribute to the conflict of interest analysis conducted by most
reviewing officials.
Many filers do not remember, and have difficulty acquiring
information about, the dates on which they entered into long-term
arrangements such as pension plans sponsored by former employers. In
contrast, a reviewing official who needs this information in a
particular case simply can seek it from the filer. Alternatively,
agencies that have a need for this information in all or most cases can
request the authority to collect this information from their employees
supplementally, in accordance with Sec. 2634.901(b). Thus, we continue
to believe based on our experience with the confidential system that
the burden of reporting this information outweighs its usefulness on an
executive branchwide basis in determining conflicts of interest.
Another agency suggested that we add an example to this subsection
illustrating the reporting of an employee's continued participation in
a Teachers Insurance and Annuity Association--College Retirement
Equities Fund (TIAA/CREF) pension plan. We have not accepted this
suggestion because there is no special method for reporting a
continuing agreement regarding a TIAA/CREF pension. It should be
reported in the same manner as any other continuing participation in a
pension plan.
e. Report Form: OGE also will publish in the Federal Register a
second round paperwork notice of the proposed modified version of the
OGE Form 450 Executive Branch Confidential Financial Disclosure Report.
The new proposed report form will reflect pertinent regulatory changes
being made in this final rule. It also has been modified in large
measure based on the significant comments received in response to the
original first round paperwork notice OGE published at 70 FR 47204-
47206 (August 12, 2005), the same day OGE published the proposed rule
amendments on confidential disclosure (see 70 FR 47138-47147). Based on
the paperwork comments, OGE decided to publish an additional first
round paperwork notice (see 71 FR 13848-13850 (March 17, 2006)), in
which OGE announced important changes to the proposed modified
reporting format in response to the comments on the original notice and
provided another 75-day comment period for the public and the agencies.
As noted, OGE will separately publish a second round paperwork notice
reflecting the comments received in response to both first round
notices, once the additional comment period closes. At that time, OGE
will also seek three-year clearance from the Office of Management and
Budget (OMB) under the Paperwork Reduction Act approval for the OGE
Form 450 form as proposed for modification. OGE plans to make effective
on January 1, 2007 both the final regulatory amendments in this
rulemaking and the mandatory use of the new modified OGE Form 450, once
approved by OMB. OGE already has requested from OMB a one-year
extension of the Paperwork Reduction Act clearance for the current
version of the 450 form to allow its continued use by new entrant
confidential filers for the remainder of 2006. See 71 FR 16158-16160
(March 30, 2006). In the future, OGE will make available an
electronically fillable version of the new form. We also will allow
employees to sign the form digitally, and to file it electronically.
G. Other Amendments Considered:
a. Special Government Employees: One commenter expressed the view
that proposed Sec. 2634.904 was unclear as to whether agency ethics
officials would continue to have the authority to exclude special
Government employees (SGEs) from the confidential filing requirements.
This is because current Sec. 2634.905 provides that any individual or
class of individuals ``including special Government employees'' may be
excluded from the filing requirement, while new Sec. 2634.904(b) as
proposed did not include this specific reference to SGEs. We have
revised the wording of that provision in this final rule to add
specific reference to SGEs.
Two agencies also expressed confusion about the filing requirements
for SGEs. Section 2634.903(b) requires SGEs to file new entrant
reports, but Sec. 2634.903(a) excludes them from the requirement to
file incumbent reports. Thus, these commenters ask whether an SGE who
serves on an appointment of over one year (without being reappointed)
is required to file a second nominee OGE Form 450 at any point in time.
As we stated in DAEOgram DO-03-021 of October 23, 2003 (at p. 3
thereof), which is posted on OGE's Web site (http://www.usoge.gov),
``[a]n SGE confidential filer is never required to file an annual OGE
Form 450. Instead, the SGE confidential filer will file a new entrant
report either upon his reappointment or redesignation as an SGE or upon
the anniversary of his initial appointment.'' In order to avoid the
administrative burden of managing these potentially numerous due dates,
OGE recommended in that DAEOgram that agencies use May 15 for their SGE
report filing anniversary date. Choosing this date gives confidential
OGE Form
[[Page 28232]]
450 SGE filers the same reporting deadline as public SF 278 SGE filers.
It also places all SGE reporting deadlines on the same date as all non-
SGE annual public report filers. If an agency chooses not to implement
this recommendation, then it will collect new entrant OGE Form 450s
from its SGEs on the variously occurring anniversary/reappointment
dates throughout each year.
Thus, in this final rule we have not modified Sec. 2634.903 in
this regard.
b. Reporting Underlying Holdings of Investment Vehicles: The
proposed rule included a note to Sec. 2634.907(c)(1) and (c)(2)
clarifying that the underlying holdings of certain investment vehicles
must be reported separately. Although we intended to duplicate in this
note a provision that currently appears within the text of Sec.
2634.301(a), we had proposed slightly revising its language in the
proposed rule amendment. Because one agency noted that the language as
proposed might make this note's meaning less clear, we have modified
the note to reflect the exact language contained in Sec. 2634.301(a).
c. Gift waiver: Pursuant to Sec. 2634.304(f) of 5 CFR, OGE has the
authority to issue to a public filer a waiver from the requirement to
report certain gifts. One agency has suggested that we also apply this
provision to confidential filers. We have not accepted this
recommendation because we do not believe that such an amendment is
needed. The waiver provision was promulgated in order to safeguard the
personal privacy of individuals who present personal gifts to public
filers in particular circumstances (such as upon the occasion of the
filer's marriage). Because the OGE Form 450 is not publicly available,
this provision is not needed for confidential filers.
d. Exception to Requirement to Report Spouse's or Dependent Child's
Assets and Income: Section 2634.907(h)(2) as proposed, which is now
being adopted as final, provides an exception to the general
requirement that a filer report his or her spouse's and dependent
child's assets and investment income. One commenter suggested that we
add an example to illustrate a scenario in which this exception
properly would be applied. We have not accepted this suggestion because
this provision is used so infrequently that we do not believe that it
justifies the addition of a specific example.
e. Discussing Assets and Investment Income Separately From
Noninvestment Income: New Sec. 2634.907(b), both as proposed and as
being adopted as final in this rulemaking, lists the kinds of
``noninvestment'' (i.e., ``earned'') income that must be reported on
the confidential OGE Form 450. New Sec. 2634.907(c), also both as
proposed and as final, lists the kinds of ``assets and investment
income'' that must be reported on the confidential report. This
reflects a change from current Sec. 2634.301(b), which will now just
apply for public reports, that lists the ``types of property
reportable'' in a single paragraph. We believe that separating this
provision into two paragraphs for confidential reporting makes it
clearer, whether or not we ultimately decide that investment and
noninvestment income should be reported in separate sections of the
amended OGE Form 450. Thus, we have not accepted one agency's
recommendation that we recombine these provisions into a single
paragraph and instead are adopting them as final as proposed.
Finally, as referenced in the proposed rule preamble, OGE is making
in this final rule a couple of additional conforming cross-references
amendments, one in part 2634 and one in part 2640 (personal financial
interests) of this chapter, in order to reflect the renumbering of
certain sections in part 2634. Moreover, in this final rule, OGE has
corrected a few minor errors in amendatory paragraphs of the proposed
rule and the regulatory text as proposed to reflect the correct
revisions that OGE intended.
II. Matters of Regulatory Procedure
Regulatory Flexibility Act
As Acting Director of the Office of Government Ethics, I certify
under the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this
final amendatory rule will not have a significant economic impact on a
substantial number of small entities because it primarily affects
Federal executive branch employees and members of their immediate
families.
Paperwork Reduction Act
As noted above, OGE will separately publish in the Federal Register
a new second round notice under the Paperwork Reduction Act (44 U.S.C.
chapter 35) for the information collection requirements in this
regulation--a proposed modified OGE Form 450 Executive Branch
Confidential Financial Disclosure Report form (OMB control
3209-0006) to reflect the pertinent changes made in this final
rule. At that time, OGE will also seek three-year paperwork clearance
from OMB for the modified form, which would be used starting in 2007.
As explained in the preamble above, OGE has previously published two
first round notices for the proposed modified version of the OGE Form
450 and has considered, and is continuing to consider, the public
comments received on the proposed new version of the form. See 70 FR
47204-47206 (August 12, 2005) and 71 FR 13848-13850 (March 17, 2006).
In addition, as also noted above, OGE has already requested from OMB a
one-year extension of the paperwork clearance for the current version
of the OGE Form 450, to allow its continued use by new entrant filers
(including SGEs filing upon their reappointment/redesignation or
appointment anniversary dates) for the remainder of 2006. See 71 FR
16158-16160 (March 30, 2006). OGE plans to dispense with the annual
fiscal year (FY06) incumbent report filing using the current version of
the OGE Form 450 that is otherwise due on October 31, 2006. Instead, we
will require annual filers to file the new form by the new filing
deadline of February 15, 2007. This first annual filing using the new
OGE Form 450 will reflect a 15-month reporting period (October 2005-
December 2006). Thereafter, the new annual confidential reports due
each February will just cover the prior calendar year.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
chapter 25, subchapter II), this amendatory rule will not significantly
or uniquely affect small governments and will 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.
Congressional Review Act
The Office of Government Ethics has determined that this rulemaking
involves a nonmajor rule under the Congressional Review Act (5 U.S.C.
chapter 8) and submitted a report thereon to the U.S. Senate, House of
Representatives and Government Accountability Office in accordance with
that law at the same time this rulemaking document was sent to the
Office of the Federal Register for publication in the Federal Register.
Executive Order 12866
In promulgating these final rule amendments, the Office of
Government Ethics has adhered to the regulatory philosophy and the
applicable principles of regulation set forth in section 1 of Executive
Order 12866, Regulatory Review and Planning. In
[[Page 28233]]
addition, these amendments have been reviewed by the Office of
Management and Budget under that Executive order. Moreover, in
accordance with section 6(a)(3)(B) of E.O. 12866, the preamble to these
final revisions, which are being codified in a revised 5 CFR part 2634,
notes the legal basis and benefits of, as well as the need for, the
regulatory action. There should be no appreciable increase in costs to
OGE or the executive branch of the Federal Government in administering
this amended regulation, since the revisions only clarify and improve
the confidential financial disclosure system. Finally, this rulemaking
is not economically significant under the Executive order and will not
interfere with State, local or tribal governments.
Executive Order 12988
As Acting Director of the Office of Government Ethics, I have
reviewed this amendatory 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
5 CFR Part 2634
Certificates of divestiture, Conflict of interests, Financial
disclosure, Government employees, Penalties, Privacy, Reporting and
recordkeeping requirements, Trusts and trustees.
5 CFR Part 2640
Conflict of interests, Government employees.
Approved: May 5, 2006.
Marilyn L. Glynn,
Acting Director, Office of Government Ethics.
0
Accordingly, for the reasons set forth in the preamble, the Office of
Government Ethics is amending 5 CFR parts 2634 and 2640 as follows:
PART 2634--EXECUTIVE BRANCH FINANCIAL DISCLOSURE, QUALIFIED TRUSTS,
AND CERTIFICATES OF DIVESTITURE
0
1. The authority citation for part 2634 continues to read as follows:
Authority: 5 U.S.C. App. (Ethics in Government Act of 1978); 26
U.S.C. 1043; Pub. L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note
(Federal Civil Penalties Inflation Adjustment Act of 1990), as
amended by Sec. 31001, Pub. L. 104-134, 110 Stat. 1321 (Debt
Collection Improvement Act of 1996); E.O. 12674, 54 FR 15159, 3 CFR,
1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR,
1990 Comp., p. 306.
Subpart A--General Provisions
0
2. Section 2634.102 is amended by revising paragraph (b) to read as
follows:
Sec. 2634.102 Purpose and overview.
* * * * *
(b) The rules in this part govern both public and confidential
(nonpublic) financial disclosure systems. Subpart I of this part
contains the rules applicable to the confidential disclosure system.
Subpart B--Persons Required To File Public Financial Disclosure
Reports
Sec. 2634.203 [Amended]
0
3. Section 2634.203 is amended by removing the citation ``Sec.
2634.904(d)'' in the last sentence of paragraph (b) and adding in its
place the citation ``Sec. 2634.904(a)(4)''.
Sec. 2634.204 [Amended]
0
4. Section 2634.204 is amended by removing the citation ``Sec.
2634.904(b)'' at the end of the last sentence of paragraph (b) and
adding in its place the citation ``Sec. 2634.904(a)(2)''.
Subpart C--Contents of Reports
0
5. The heading for Subpart C is revised to read as follows:
Subpart C--Contents of Public Reports
Sec. 2634.301 [Amended]
0
6. Section 2634.301 is amended by:
0
a. Removing the phrase ``part, whether public or confidential,'' in the
first sentence of paragraph (a) and adding in its place the word
``subpart'';
0
b. Removing the beginning phrase ``In the case of public financial
disclosure reports, the'' in the second sentence of paragraph (a) and
adding in its place the word ``The'';
0
c. Removing the phrase ``on public financial disclosure reports'' in
the introductory text of paragraph (d);
0
d. Removing the phrase ``, and if he is a public filer the amount,'' in
the fourth sentence of Example 1 following paragraph (e)(7) and adding
in its place the phrase ``and the amount''; and
0
e. Removing the word ``also'' and the ending phrase ``if she is a
public filer'' in the second sentence of Example 3 following paragraph
(e)(7).
Sec. 2634.302 [Amended]
0
7. Section 2634.302 is amended by:
0
a. Removing the phrase ``part, whether public or confidential,'' in the
introductory text of paragraph (a)(1) and adding in its place the word
``subpart'';
0
b. Removing the phrase ``in the case of public financial disclosure
reports'' in the introductory text of paragraph (a)(1);
0
c. Removing the phrase ``if he is a public filer'' in the third
sentence of Example 2 following paragraph (a)(1)(iv);
0
d. Removing the phrase ``part, whether public or confidential,'' in the
introductory text of paragraph (b) and adding in its place the word
``subpart'';
0
e. Removing the beginning phrase ``For public financial disclosure
reports, the'' in the fourth sentence of paragraph (b)(1) and adding in
its place the word ``The'';
0
f. Removing the phrase ``in the case of public financial disclosure
reports'' and the comma between the words ``value'' and ``of'' in
paragraph (b)(2);
0
g. Removing the phrase ``if he is a public filer'' in the third
sentence of Example 1 following paragraph (b)(2);
0
h. Removing the phrase ``if he is a public filer,'' in the fifth
sentence of Example 2 following paragraph (b)(2); and
0
i. Removing the phrase ``if she is a public filer'' in the second
sentence of Example 3 following paragraph (b)(2).
Sec. 2634.303 [Amended]
0
8. Section 2634.303 is amended by removing the word ``public'' and the
phrase ``subpart B of this part'' and adding the phrase ``this
subpart'' in its place in the introductory text of paragraph (a).
Sec. 2634.304 [Amended]
0
9. Section 2634.304 is amended by:
0
a. Removing the citation ``Sec. Sec. 2634.308(b) and 2634.907(a)'' in
the first sentence of paragraph (a) and adding in its place the
citation ``Sec. 2634.308(b)'';
0
b. Removing the phrase ``part, whether public or confidential,'' in the
first sentence of paragraph (a) and adding in its place the word
``subpart''
0
c. Removing the phrase ``in the case of public financial disclosure
reports'' and the comma between the words ``value'' and ``of'' in the
first sentence of paragraph (a);
0
d. Removing the citation ``Sec. Sec. 2634.308(b) and 2634.907(a)'' in
paragraph (b) and adding in its place the citation ``Sec.
2634.308(b)'';
0
e. Removing the phrase ``part, whether public or confidential,'' in
paragraph (b) and adding in its place the word ``subpart'';
0
f. Removing the phrase ``in the case of public financial disclosure
reports'' and the comma between the words ``value'' and ``of'' in
paragraph (b); and
0
g. Removing the phrase ``by public filers'' in the introductory text of
paragraph (f)(1).
Sec. 2634.305 [Amended]
0
10. Section 2634.305 is amended by:
[[Page 28234]]
0
a. Removing the phrase ``part, whether public or confidential,'' in the
first sentence of paragraph (a) and adding in its place the word
``subpart'';
0
b. Removing the beginning phrase ``For public financial disclosure
reports, the'' in the second sentence of paragraph (a) and adding in
its place the word ``The''; and
0
c. Adding the word ``also'' between the words ``report'' and ``shall''
in the second sentence of paragraph (a).
Sec. 2634.306 [Amended]
0
11. In Sec. 2634.306, the undesignated introductory text is amended by
removing the phrase ``part, whether public or confidential,'' and
adding in its place the word ``subpart'';
Sec. 2634.307 [Amended]
0
12. In Sec. 2634.307, the text of paragraph (a) is amended by removing
the phrase ``part, whether public or confidential,'' and adding in its
place the word ``subpart''.
Sec. 2634.308 [Amended]
0
13. Section 2634.308 is amended by:
0
a. Removing the word ``public'' in paragraph (a);
0
b. Removing the word ``public'' in the first sentence of the
introductory text of paragraph (b);
0
c. Removing the word ``public'' between the words ``Each'' and
``financial'' in paragraph (c); and
0
d. Removing the word ``public'' between the words ``recent'' and
``financial'' in paragraph (c).
Sec. 2634.309 [Amended]
0
14. Section 2634.309 is amended by:
0
a. Removing the word ``either'' and the phrase ``or subpart I'' from
the introductory text of paragraph (a);
0
b. Removing the comma between the words ``source'' and ``and'', the
phrase ``for a public financial disclosure report'', and the comma
between the words ``value'' and ``of'' in paragraph (a)(1)(ii);
0
c. Removing the phrase ``for a public financial disclosure report'' in
paragraph (a)(1)(iii);
0
d. Removing the ending phrase ``, either on a public or confidential
financial disclosure report'' in the third sentence of Example 1
following paragraph (a)(1)(iii);
0
e. Removing the ending phrase ``, either on a public or confidential
financial disclosure report'' in the second sentence of Example 2
following paragraph (a)(1)(iii);
0
f. Removing the parenthetical phrase ``(applicable only to public
filers)'' in the introductory text of paragraph (a)(3); and
0
g. Removing the phrase ``or as a new entrant under Sec. 2634.908(b),''
in paragraph (b).
Sec. 2634.310 [Amended]
0
15. Section 2634.310 is amended by:
0
a. Removing the phrase ``or subpart I of this part'' in paragraph
(a)(1); and
0
b. Removing the beginning phrase ``Public financial disclosure
reports'' in the second sentence of paragraph (c)(1) and adding in its
place the word ``Filers''.
Sec. 2634.311 [Amended]
0
16. Section 2634.311 is amended by:
0
a. Removing the phrase ``public financial disclosure'' in the first
sentence of paragraph (b);
0
b. Removing the word ``part'' in the first sentence of paragraph (b)
and adding in its place the word ``subpart'';
0
c. Removing the phrase ``public financial disclosure'' in paragraph
(c)(2); and
0
d. Removing the word ``part'' in paragraph (c)(2) and adding in its
place the word ``subpart''.
Subpart F--Procedure
Sec. 2634.601 [Amended]
0
17. Section 2634.601 is amended by:
0
a. Removing the citation ``Sec. 2634.905(d)'' in the second sentence
of paragraph (a) and adding in its place the citation ``Sec.
2634.905(b)''; and
0
b. Removing the last sentence (in parentheses) in paragraph (a).
Subpart I--Confidential Financial Disclosure Reports
0
18. Section 2634.903 is amended by:
0
a. Removing the citation ``Sec. 2634.904'' in the first sentence of
paragraph (a) and adding in its place the citation ``Sec.
2634.904(a)'';
0
b. Removing the phrase ``twelve-month period ending September 30'' in
the first sentence of paragraph (a) and adding in its place the phrase
``calendar year'';
0
c. Removing the phrase ``October 31 immediately following that period''
in the first sentence of paragraph (a) and adding in its place the
phrase ``February 15 of the following year'';
0
d. Removing the citation ``Sec. 2634.904(b)'' in the third sentence of
paragraph (a) and adding in its place the citation ``Sec.
2634.904(a)(2)'';
0
e. Removing the citation ``Sec. 2634.904(c)'' in the fourth sentence
of paragraph (a) and adding in its place the citation ``Sec.
2634.904(a)(3)'';
0
f. Removing the citation ``Sec. 2634.904'' in the first sentence of
paragraph (b)(1) and adding in its place the citation ``Sec.
2634.904(a)'';
0
g. Removing the citation ``Sec. 2634.904(c)'' in the second sentence
of paragraph (b)(1) and adding in its place the citation ``Sec.
2634.904(a)(3)'';
0
h. Removing the citation ``Sec. 2634.904'' in paragraph (b)(2)(i) and
adding in its place the citation ``Sec. 2634.904(a)'';
0
i. Removing the citation ``Sec. 2634.904'' in the first sentence of
paragraph (b)(2)(iii) and adding in its place the citation ``Sec.
2634.904(a)'';
0
j. Removing the citation ``Sec. 2634.904(a)'' in the second sentence
of paragraph (b)(2)(iii) and adding in its place the citation ``Sec.
2634.904(a)(1)'';
0
k. Removing the citation ``Sec. 2634.904(b)'' in the fourth sentence
of paragraph (b)(2)(iii) and adding in its place the citation ``Sec.
2634.904(a)(2)'';
0
l. Removing the citation ``Sec. 2634.904'' in the first sentence of
paragraph (b)(3) and adding in its place the citation ``Sec.
2634.904(a)''; and
0
m. Adding a new paragraph (e) at the end of the section to read as
follows:
Sec. 2634.903 General requirements, filing dates, and extensions.
* * * * *
(e) Termination reports not required. An employee who is required
to file a confidential financial disclosure report is not required to
file a termination report upon leaving the filing position.
0
19. Section 2634.904 is revised to read as follows:
Sec. 2634.904 Confidential filer defined.
(a) The term confidential filer includes:
(1) Each officer or employee in the executive branch whose position
is classified at GS-15 or below of the General Schedule prescribed by 5
U.S.C. 5332, or the rate of basic pay for which is fixed, other than
under the General Schedule, at a rate which is less than 120% of the
minimum rate of basic pay for GS-15 of the General Schedule; each
officer or employee of the United States Postal Service or Postal Rate
Commission whose basic rate of pay is less than 120% of the minimum
rate of basic pay for GS-15 of the General Schedule; each member of a
uniformed service whose pay grade is less than 0-7 under 37 U.S.C. 201;
and each officer or employee in any other position determined by the
designated agency ethics official to be of equal classification; if:
(i) The agency concludes that the duties and responsibilities of
the employee's position require that employee to participate personally
and substantially (as defined in Sec. Sec. 2635.402(b)(4) and
2640.103(a)(2) of this chapter) through decision or the exercise of
significant judgment, and
[[Page 28235]]
without substantial supervision and review, in taking a Government
action regarding:
(A) Contracting or procurement;
(B) Administering or monitoring grants, subsidies, licenses, or
other federally conferred financial or operational benefits;
(C) Regulating or auditing any non-Federal entity; or
(D) Other activities in which the final decision or action will
have a direct and substantial economic effect on the interests of any
non-Federal entity; or
(ii) The agency concludes that the duties and responsibilities of
the employee's position require the employee to file such a report to
avoid involvement in a real or apparent conflict of interest, and to
carry out the purposes behind any statute, Executive order, rule, or
regulation applicable to or administered by the employee. Positions
which might be subject to a reporting requirement under this
subparagraph include those with duties which involve investigating or
prosecuting violations of criminal or civil law.
Example 1 to paragraph (a)(1). A contracting officer develops
the requests for proposals for data processing equipment of
significant value which is to be purchased by his agency. He works
with substantial independence of action and exercises significant
judgment in developing the requests. By engaging in this activity,
he is participating personally and substantially in the contracting
process. The contracting officer should be required to file a
confidential financial disclosure report.
Example 2 to paragraph (a)(1). An agency environmental engineer
inspects a manufacturing plant to ascertain whether the plant
complies with permits to release a certain effluent into a nearby
stream. Any violation of the permit standards may result in civil
penalties for the plant, and in criminal penalties for the plant's
management based upon any action which they took to create the
violation. If the agency engineer determines that the plant does not
meet the permit requirements, he can require the plant to terminate
release of the effluent until the plant satisfies the permit
standards. Because the engineer exercises substantial discretion in
regulating the plant's activities, and because his final decisions
will have a substantial economic effect on the plant's interests,
the engineer should be required to file a confidential financial
disclosure report.
Example 3 to paragraph (a)(1). A GS-13 employee at an
independent grant making agency conducts the initial agency review
of grant applications from nonprofit organizations and advises the
Deputy Assistant Chairman for Grants and Awards about the merits of
each application. Although the process of reviewing the grant
applications entails significant judgment, the employee's analysis
and recommendations are reviewed by the Deputy Assistant Chairman,
and the Assistant Chairman, before the Chairman decides what grants
to award. Because his work is subject to ``substantial supervision
and review,'' the employee is not required to file a confidential
financial disclosure report unless the agency determines that filing
is necessary under Sec. 2634.904(a)(1)(ii).
Example 4 to paragraph (a)(1). As a senior investigator for a
criminal law enforcement agency, an employee often leads
investigations, with substantial independence, of suspected
felonies. The investigator usually decides what information will be
contained in the agency's report of the suspected misconduct.
Because he participates personally and substantially through the
exercise of significant judgment in investigating violations of
criminal law, and because his work is not substantially supervised,
the investigator should be required to file a confidential financial
disclosure report.
Example 5 to paragraph (a)(1). An investigator is principally
assigned as the field agent to investigate alleged violations of
conflict of interest laws. The investigator works under the direct
supervision of an agent-in-charge. The agent-in-charge reviews all
of the investigator's work product and then uses those materials to
prepare the agency's report which is submitted under his own name.
Because of the degree of supervision involved in the investigator's
duties, the investigator is not required to file a confidential
disclosure report unless the agency determines that filing is
necessary under Sec. 2634.904(a)(1)(ii).
(2) Unless required to file public financial disclosure reports by
subpart B of this part, all executive branch special Government
employees.
Example 1 to paragraph (a)(2). A consultant to an agency
periodically advises the agency regarding important foreign policy
matters. The consultant must file a confidential report if he is
retained as a special Government employee and not an independent
contractor.
Example 2 to paragraph (a)(2). A special Government employee
serving as a member of an advisory committee (who is not a private
group representative) attends four committee meetings every year to
provide advice to an agency about pharmaceutical matters. No
compensation is received by the committee member, other than travel
expenses. The advisory committee member must file a confidential
disclosure report because she is a special Government employee.
(3) Each public filer referred to in Sec. 2634.202 on public
disclosure who is required by agency regulations and forms issued in
accordance with Sec. Sec. 2634.103 and 2634.601(b) to file a
supplemental confidential financial disclosure report which contains
information that is more extensive than the information required in the
reporting individual's public financial disclosure report under this
part.
(4) Any employee who, notwithstanding his exclusion from the public
financial reporting requirements of this part by virtue of a
determination under Sec. 2634.203, is covered by the criteria of
paragraph (a)(1) of this section.
(b) Any individual or class of individuals described in paragraph
(a) of this section, including special Government employees unless
otherwise noted, may be excluded from all or a portion of the
confidential reporting requirements of this subpart, when the agency
head or designee determines that the duties of a position make remote
the possibility that the incumbent will be involved in a real or
apparent conflict of interest.
Example 1 to paragraph (b). A special Government employee who is
a draftsman prepares the drawings to be used by an agency in
soliciting bids for construction work on a bridge. Because he is not
involved in the contracting process associated with the
construction, the likelihood that this action will create a conflict
of interest is remote. As a result, the special Government employee
is not required to file a confidential financial disclosure report.
Example 2 to paragraph (b). An agency has just hired a GS-5
Procurement Assistant who is responsible for typing and processing
procurement documents, answering status inquiries from the public,
performing office support duties such as filing and copying, and
maintaining an on-line contract database. The Assistant is not
involved in contracting and has no other actual procurement
responsibilities. Thus, the possibility that the Assistant will be
involved in a real or apparent conflict of interest is remote, and
the Assistant is not required to file.
0
20. Section 2634.905 is amended by:
0
a. Revising the section heading;
0
b. Removing the undesignated introductory text of the section,
paragraphs (a), (b) and (c), and Examples 1, 2 and 3 following
paragraph (d);
0
c. Adding a new paragraph (a) and a new example following paragraph
(a);
0
d. Redesignating paragraph (d) as paragraph (b), including
redesignating paragraphs (d)(1) through (d)(6) as paragraphs (b)(1)
through (b)(6), respectively;
0
e. Revising the first sentence of newly redesignated paragraph (b)
introductory text;
0
f. Removing the two references to ``paragraph (d)(5)'' in the first and
second sentences of newly redesignated paragraph (b)(4) and adding in
their place in each instance references to ``paragraph (b)(5)''; and
0
g. Removing the reference to ``paragraph (d)(4)'' in newly redesignated
paragraph (b)(5) and adding in its place a reference to ``paragraph
(b)(4)''.
The addition and revisions read as follows:
[[Page 28236]]
Sec. 2634.905 Use of alternative procedures.
(a) With the prior written approval of OGE, an agency may use an
alternative procedure in lieu of filing the OGE Form 450 or OGE
Optional Form 450-A. The alternative procedure may be an agency-
specific form to be filed in place thereof. An agency must submit for
approval a description of its proposed alternative procedure to OGE.
Example to paragraph (a). A nonsupervisory auditor at an agency
is regularly assigned to cases involving possible loan improprieties
by financial institutions. Prior to undertaking each enforcement
review, the auditor reviews the file to determine if she, her
spouse, minor or dependent child, or any general partner,
organization in which she serves as an officer, director, trustee,
employee, or general partner, or organization with which she is
negotiating or has an agreement or an arrangement for future
employment, or a close friend or relative is a subject of the
investigation, or will be in any way affected by the investigation.
Once she determines that there is no such relationship, she signs
and dates a certification which verifies that she has reviewed the
file and has determined that no conflict of interest exists. She
then files the certification with the head of her auditing division
at the agency. On the other hand, if she cannot execute the
certification, she informs the head of her auditing division. In
response, the division will either reassign the case or review the
conflicting interest to determine whether a waiver would be
appropriate. This alternative procedure, if approved by the Office
of Government Ethics in writing, may be used in lieu of requiring
the auditor to file a confidential financial disclosure report.
(b) An agency may use the OGE Optional Form 450-A (Confidential
Certificate of No New Interests) in place of the OGE Form 450 if the
agency head or designee determines it is adequate to prevent possible
conflicts of interest. * * *
* * * * *
0
21. Section 2634.907 is revised to read as follows:
Sec. 2634.907 Report contents.
(a) Other than the reports described in Sec. 2634.904(a)(3) of
this subpart, each confidential financial disclosure report shall
comply with instructions issued by the Office of Government Ethics and
include on the standardized form prescribed by OGE (see Sec. 2634.601
of subpart F of this part) the information described in paragraphs (b)
through (g) of this section for the filer. Each report shall also
include the information described in paragraph (h) of this section for
the filer's spouse and dependent children.
(b) Noninvestment income. Each financial disclosure report shall
disclose the source of earned or other noninvestment income in excess
of $200 received by the filer from any one source or which has accrued
to the filer's benefit during the reporting period, including:
(1) Salaries, fees, commissions, wages and any other compensation
for personal services (other than from United States Government
employment);
(2) Any honoraria, including payments made or to be made to
charitable organizations on behalf of the filer in lieu of honoraria;
and
Note to paragraph (b)(2): In determining whether an honorarium
exceeds the $200 threshold, subtract any actual and necessary travel
expenses incurred by the filer and one relative, if the expenses are
paid or reimbursed by the filer. If such expenses are paid or
reimbursed by the honorarium source, they shall not be counted as
part of the honorarium payment.
(3) Any other noninvestment income, such as prizes, scholarships,
awards, gambling income or discharge of indebtedness.
Example to paragraphs (b)(1) and (b)(3). A filer teaches a
course at a local community college, for which she receives a salary
of $1,000 per year. She also received, during the previous reporting
period, a $250 award for outstanding local community service. She
must disclose both.
(c) Assets and investment income. Each financial disclosure report
shall disclose separately:
(1) Each item of real and personal property having a fair market
value in excess of $1,000 held by the filer at the end of the reporting
period in a trade or business, or for investment or the production of
income, including but not limited to:
(i) Real estate;
(ii) Stocks, bonds, securities, and futures contracts;
(iii) Livestock owned for commercial purposes;
(iv) Commercial crops, either standing or held in storage;
(v) Antiques or art held for resale or investment;
(vi) Vested beneficial interests in trusts and estates;
(vii) Pensions and annuities;
(viii) Sector mutual funds (see definition at Sec. 2640.102(q) of
this chapter);
(ix) Accounts or other funds receivable; and
(x) Capital accounts or other asset ownership in businesses.
(2) The source of investment income (dividends, rents, interest,
capital gains, or the income from qualified or excepted trusts or
excepted investment funds (see paragraph (i) of this section)), which
is received by the filer or accrued to his benefit during the reporting
period, and which exceeds $200 in amount or value from any one source,
including but not limited to income derived from:
(i) Real estate;
(ii) Collectible items;
(iii) Stocks, bonds, and notes;
(iv) Copyrights;
(v) Vested beneficial interests in trusts and estates;
(vi) Pensions;
(vii) Sector mutual funds (see definition at Sec. 2640.102(q) of
this chapter);
(viii) The investment portion of life insurance contracts;
(ix) Loans;
(x) Gross income from a business;
(xi) Distributive share of a partnership;
(xii) Joint business venture income; and
(xiii) Payments from an estate or an annuity or endowment contract.
Note to paragraphs (c)(1) and (c)(2): For Individual Retirement
Accounts (IRAs), brokerage accounts, trusts, mutual or pension
funds, and other entities with portfolio holdings, each underlying
asset must be separately disclosed, unless the entity qualifies for
special treatment under paragraph (i) of this section.
(3) Exemptions. The following assets and investment income are
exempt from the reporting requirements of paragraphs (c)(1) and (c)(2)
of this section:
(i) A personal residence, as defined in Sec. 2634.105(l), of the
filer or spouse;
(ii) Accounts (including both demand and time deposits) in
depository institutions, including banks, savings and loan
associations, credit unions, and similar depository financial
institutions;
(iii) Money market mutual funds and accounts;
(iv) U.S. Government obligations, including Treasury bonds, bills,
notes, and savings bonds;
(v) Government securities issued by U.S. Government agencies;
(vi) Financial interests in any retirement system of the United
States (including the Thrift Savings Plan) or under the Social Security
Act; and
(vii) Diversified mutual funds. (``Diversified'' means that the
fund does not have a stated policy of concentrating its investments in
any industry, business, single country other than the United States, or
bonds of a single State within the United States and, in the case of an
employee benefit plan, means that the plan's trustee has a written
policy of varying plan investments. Whether a
[[Page 28237]]
mutual fund meets this standard may be determined by checking the
fund's prospectus or by calling a broker or the manager of the fund.)
Example 1 to paragraph (c). A filer owns a beach house which he
rents out for several weeks each summer, receiving annual rental
income of approximately $5,000. He must report the rental property,
as well as the city and state in which it is located.
Example 2 to paragraph (c). A filer's investment portfolio
consists of several stocks, U.S. Treasury bonds, several cash bank
deposit accounts, an account in the Government's Thrift Savings
Plan, and shares in sector mutual funds and diversified mutual
funds. He must report the name of each sector mutual fund in which
he owns shares, and the name of each company in which he owns stock,
valued at over $1,000 at the end of the reporting period or from
which he received income of more than $200 during the reporting
period. He need not report his diversified mutual funds, U.S.
Treasury bonds, bank deposit accounts, or Thrift Savings Plan
holdings.
(d) Liabilities. Each financial disclosure report filed pursuant to
this subpart shall identify liabilities in excess of $10,000 owed by
the filer at any time during the reporting period, and the name and
location of the creditors to whom such liabilities are owed, except:
(1) Personal liabilities owed to a spouse or to the parent,
brother, sister, or child of the filer, spouse, or dependent child;
(2) Any mortgage secured by a personal residence of the filer or
his spouse;
(3) Any loan secured by a personal motor vehicle, household
furniture, or appliances, provided that the loan does not exceed the
purchase price of the item which secures it;
(4) Any revolving charge account;
(5) Any student loan; and
(6) Any loan from a bank or other financial institution on terms
generally available to the public.
Example to paragraph (d). A filer owes $2,500 to his mother-in-
law and $12,000 to his best friend. He also has a $15,000 balance on
his credit card, a $200,000 mortgage on his personal residence, and
a car loan. Under the financial disclosure reporting requirements,
he need not report the debt to his mother-in-law, his credit card
balance, his mortgage, or his car loan. He must, however, report the
debt of over $10,000 to his best friend.
(e) Positions with non-Federal organizations--(1) In general. Each
financial disclosure report filed pursuant to this subpart shall
identify all positions held at any time by the filer during the
reporting period, other than with the United States, as an officer,
director, trustee, general partner, proprietor, representative,
executor, employee, or consultant of any corporation, company, firm,
partnership, trust, or other business enterprise, any nonprofit
organization, any labor organization, or any educational or other
institution.
(2) Exemptions. The following positions are exempt from the
reporting requirements of paragraph (e)(1) of this section:
(i) Positions held in religious, social, fraternal, or political
entities; and
(ii) Positions solely of an honorary nature, such as those with an
emeritus designation.
Example to paragraph (e). A filer holds outside positions as the
trustee of his family trust, the secretary of a local political
party committee, and the ``Chairman emeritus'' of his town's Lions
Club. He also is a principal of a tutoring school on weekends. The
individual must report his outside positions as trustee of the
family trust and as principal of the school. He does not need to
report his positions as secretary of the local political party
committee or ``Chairman emeritus'' because each of these positions
is exempt.
(f) Agreements and arrangements. Each financial disclosure report
filed pursuant to this subpart shall identify the parties to, and shall
briefly describe the terms of, any agreement or arrangement of the
filer in existence at any time during the reporting period with respect
to:
(1) Future employment (including the date on which the filer
entered into the agreement for future employment);
(2) A leave of absence from employment during the period of the
filer's Government service;
(3) Continuation of payments by a former employer other than the
United States Government; and
(4) Continuing participation in an employee welfare or benefit plan
maintained by a former employer.
Example 1 to paragraph (f). A filer plans to retire from
Government service in eight months. She has negotiated an
arrangement for part-time employment with a private-sector company,
to commence upon her retirement. On her financial disclosure report,
she must identify the future employer, and briefly describe the
terms of, this agreement and disclose the date on which she entered
into the agreement.
Example 2 to paragraph (f). A new employee who has entered a
position which requires the filing of a confidential form is on a
leave of absence from his private-sector employment. During his
Government tenure, he will continue to receive deferred compensation
from this employer, and will continue to participate in its pension
plan. He must report and briefly describe his arrangements for a
leave of absence, for the receipt of deferred compensation, and for
participation in the pension plan.
(g) Gifts and travel reimbursements--(1) Gifts. Each annual
financial disclosure report filed pursuant to this subpart shall
contain a brief description of all gifts aggregating more than $305 in
value which are received by the filer during the reporting period from
any one source, as well as the identity of the source. For in-kind
travel-related gifts, the report shall include a travel itinerary, the
dates, and the nature of expenses provided.
(2) Travel reimbursements. Each annual financial disclosure report
filed pursuant to this subpart shall contain a brief description
(including a travel itinerary, dates, and the nature of expenses
provided) of any travel-related reimbursements aggregating more than
$305 in value which are received by the filer during the reporting
period from any one source, as well as the identity of the source.
(3) Aggregation exception. Any gift or travel reimbursement with a
fair market value of $122 or less need not be aggregated for purposes
of the reporting rules of this section. However, the acceptance of
gifts, whether or not reportable, is subject to the restrictions
imposed by Executive Order 12674, as modified by Executive Order 12731,
and the implementing regulations on standards of ethical conduct.
(4) Valuation of gifts and travel reimbursements. The value to be
assigned to a gift or travel reimbursement is its fair market value.
For most reimbursements, this will be the amount actually received. For
gifts, the value should be determined in one of the following manners:
(i) If the gift has been newly purchased or is readily available in
the market, the value shall be its retail price. The filer need not
contact the donor, but may contact a retail establishment selling
similar items to determine the present cost in the market.
(ii) If the item is not readily available in the market, such as a
piece of art, a handmade item, or an antique, the filer may make a good
faith estimate of the value of the item.
(iii) The term ``readily available in the market'' means that an
item generally is available for retail purchase in the metropolitan
area nearest to the filer's residence.
(5) New entrants, as described in Sec. 2634.903(b) of this
subpart, need not report any information on gifts and travel
reimbursements.
(6) Exemptions. Reports need not contain any information about
gifts and travel reimbursements received from relatives (see Sec.
2634.105(o)) or during a period in which the filer was not an
[[Page 28238]]
officer or employee of the Federal Government. Additionally, any food,
lodging, or entertainment received as ``personal hospitality of any
individual'', as defined in Sec. 2634.105(k), need not be reported.
See also exclusions specified in the definitions of ``gift'' and
``reimbursement'' at Sec. 2634.105(h) and (n).
Example to paragraph (g). A filer accepts a briefcase, a pen and
pencil set, a paperweight, and a palm pilot from a community service
organization he has worked with solely in his private capacity. He
determines that the value of these gifts is:
Gift 1--Briefcase: $200
Gift 2--Pen and Pencil Set: $35
Gift 3--Paperweight: $5
Gift 4--Palm Pilot: $275
The filer must disclose gifts 1 and 4 since, together, they
aggregate more than $305 in value from the same source. He need not
aggregate or report gifts 2 and 3 because each gift's value does not
exceed $122.
(h) Disclosure rules for spouses and dependent children--(1)
Noninvestment income. (i) Each financial disclosure report required by
the provisions of this subpart shall disclose the source of earned
income in excess of $1,000 from any one source, which is received by
the filer's spouse or which has accrued to the spouse's benefit during
the reporting period. If earned income is derived from a spouse's self-
employment in a business or profession, the report shall also disclose
the nature of the business or profession. The filer is not required to
report other noninvestment income received by the spouse such as
prizes, scholarships, awards, gambling income, or a discharge of
indebtedness.
(ii) Each report shall disclose the source of any honoraria
received by or accrued to the spouse (or payments made or to be made to
charity on the spouse's behalf in lieu of honoraria) in excess of $200
from any one source during the reporting period.
Example to paragraph (h)(1). A filer's husband has a seasonal
part-time job as a sales clerk at a department store, for which he
receives a salary of $1,000 per year. He also received, during the
previous reporting period, a $250 award for outstanding local
community service, and an honorarium of $250 from the state
university. The filer need not report either her husband's outside
earned income or award because neither exceeded $1,000. She must,
however, report the source of the honorarium because it exceeded
$200.
(2) Assets and investment income. Each confidential financial
disclosure report shall disclose the assets and investment income
described in paragraph (c) of this section and held by the spouse or
dependent child of the filer, unless the following three conditions are
satisfied:
(i) The filer certifies that the item represents the spouse's or
dependent child's sole financial interest, and that the filer has no
specific knowledge regarding that item;
(ii) The item is not in any way, past or present, derived from the
income, assets or activities of the filer; and
(iii) The filer neither derives, nor expects to derive, any
financial or economic benefit from the item.
Note to paragraph (h)(2): One who prepares a joint tax return
with his spouse will normally derive a financial or economic benefit
from assets held by the spouse, and will also be charged with
knowledge of such items; therefore, he could not avail himself of
this exception. Likewise, a trust for the education of one's minor
child normally will convey a financial benefit to the parent. If so,
the assets of the trust would be reportable on a financial
disclosure report.
(3) Liabilities. Each confidential financial disclosure report
shall disclose all information concerning liabilities described in
paragraph (d) of this section and owed by a spouse or dependent child,
unless the following three conditions are satisfied:
(i) The filer certifies that the item represents the spouse's or
dependent child's sole financial responsibility, and that the filer has
no specific knowledge regarding that item;
(ii) The item is not in any way, past or present, derived from the
activities of the filer; and
(iii) The filer neither derives, nor expects to derive, any
financial or economic benefit from the item.
(4) Gifts and travel reimbursements. (i) Each annual confidential
financial disclosure report shall disclose gifts and reimbursements
described in paragraph (g) of this section and received by a spouse or
dependent child which are not received totally independently of their
relationship to the filer.
(ii) A filer who is a new entrant as described in Sec. 2634.903(b)
of this subpart is not required to report information regarding gifts
and reimbursements received by a spouse or dependent child.
(5) Divorce and separation. A filer need not report any information
about:
(i) A spouse living separate and apart from the filer with the
intention of terminating the marriage or providing for permanent
separation;
(ii) A former spouse or a spouse from whom the filer is permanently
separated; or
(iii) Any income or obligations of the filer arising from
dissolution of the filer's marriage or permanent separation from a
spouse.
Example to paragraph (h)(5). A filer and her husband are living
apart in anticipation of divorcing. The filer need not report any
information about her spouse's sole assets and liabilities, but she
must continue to report their joint assets and liabilities.
(i) Trusts, estates, and investment funds--(1) In general. (i)
Except as otherwise provided in this section, each confidential
financial disclosure report shall include the information required by
this subpart about the holdings of any trust, estate, investment fund
or other financial arrangement from which income is received by, or
with respect to which a beneficial interest in principal or income is
held by, the filer, his spouse, or dependent child.
(ii) No information, however, is required about a nonvested
beneficial interest in the principal or income of an estate or trust. A
vested interest is a present right or title to property, which carries
with it an existing right of alienation, even though the right to
possession or enjoyment may be postponed to some uncertain time in the
future. This includes a future interest when one has a right,
defeasible or indefeasible, to the immediate possession or enjoyment of
the property, upon the ceasing of another's interest. Accordingly, it
is not the uncertainty of the time of enjoyment in the future, but the
uncertainty of the right of enjoyment (title and alienation), which
differentiates a ``vested'' and a ``nonvested'' interest.
Note to paragraph (i)(1): Nothing in this section requires the
reporting of the holdings of a revocable inter vivos trust (also
known as a ``living trust'') with respect to which the filer, his
spouse or dependent child has only a remainder interest, whether or
not vested, provided that the grantor of the trust is neither the
filer, the filer's spouse, nor the filer's dependent child.
Furthermore, nothing in this section requires the reporting of the
holdings of a revocable inter vivos trust from which the filer, his
spouse or dependent child receives any discretionary distribution,
provided that the grantor of the trust is neither the filer, the
filer's spouse, nor the filer's dependent child.
(2) Qualified trusts and excepted trusts. (i) A filer should not
report information about the holdings of any qualified blind trust (as
defined in Sec. 2634.403) or any qualified diversified trust (as
defined in Sec. 2634.404).
(ii) In the case of an excepted trust, a filer should indicate the
general nature of its holdings, to the extent known, but does not
otherwise need to report information about the trust's holdings. For
purposes of this part, the term ``excepted trust'' means a trust:
(A) Which was not created directly by the filer, spouse, or
dependent child; and
[[Page 28239]]
(B) The holdings or sources of income of which the filer, spouse,
or dependent child have no specific knowledge through a report,
disclosure, or constructive receipt, whether intended or inadvertent.
(3) Excepted investment funds. (i) No information is required under
paragraph (i)(1) of this section about the underlying holdings of an
excepted investment fund as defined in paragraph (i)(3)(ii) of this
section, except that the fund itself shall be identified as an interest
in property and/or a source of income.
(ii) For purposes of financial disclosure reports filed under the
provisions of this subpart, an ``excepted investment fund'' means a
widely held investment fund (whether a mutual fund, regulated
investment company, common trust fund maintained by a bank or similar
financial institution, pension or deferred compensation plan, or any
other investment fund), if:
(A)(1) The fund is publicly traded or available; or
(2) The assets of the fund are widely diversified; and
(B) The filer neither exercises control over nor has the ability to
exercise control over the financial interests held by the fund.
(iii) A fund is widely diversified if it holds no more than 5% of
the value of its portfolio in the securities of any one issuer (other
than the United States Government) and no more than 20% in any
particular economic or geographic sector.
(j) Special rules. (1) Political campaign funds, including campaign
receipts and expenditures, need not be included in any report filed
under this subpart. However, if the individual has authority to
exercise control over the fund's assets for personal use rather than
campaign or political purposes, that portion of the fund over which
such authority exists must be reported.
(2) In lieu of entering data on a part of the report form
designated by the Office of Government Ethics, a filer may attach to
the reporting form a copy of a brokerage report, bank statement, or
other material, which, in a clear and concise fashion, readily
discloses all information which the filer would otherwise have been
required to enter on the concerned part of the report form.
(k) For reports of confidential filers described in Sec.
2634.904(a)(3) of this subpart, each supplemental confidential
financial disclosure report shall include only the supplemental
information:
(1) Which is more extensive than that required in the reporting
individual's public financial disclosure report under this part; and
(2) Which has been approved by the Office of Government Ethics for
collection by the agency concerned, as set forth in supplemental agency
regulations and forms, issued under Sec. Sec. 2634.103 and 2634.601(b)
(see Sec. 2634.901(b) and (c) of this subpart).
Sec. 2634.908 [Amended]
0
22. Section 2634.908 is amended by removing the phrase ``twelve months
ending September 30,'' in paragraph (a) and adding in its place the
phrase ``calendar year,''.
PART 2640--INTERPRETATION, EXEMPTIONS AND WAIVER GUIDANCE
CONCERNING 18 U.S.C. 208 (ACTS AFFECTING A PERSONAL FINANCIAL
INTEREST)
0
23. The authority citation for part 2640 continues to read as follows:
Authority: 5 U.S.C. App. (Ethics in Government Act of 1978); 18
U.S.C. 208; E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as
modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306.
Subpart A--General Provisions
Sec. 2640.102 [Amended]
0
24. Section 2640.102 is amended by adding the phrase ``and
2634.907(i)(3)'' after the citation ``5 CFR 2634.310(c)'' at the end of
the fifth sentence in the note to paragraph (a).
[FR Doc. 06-4529 Filed 5-15-06; 8:45 am]
BILLING CODE 6345-02-P