[Federal Register: August 12, 2005 (Volume 70, Number 155)]
[Proposed Rules]
[Page 47138-47147]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12au05-27]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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[[Page 47138]]
OFFICE OF GOVERNMENT ETHICS
5 CFR Part 2634
RIN 3209-AA00
Proposed Revisions to the Executive Branch Confidential Financial
Disclosure Reporting Regulation
AGENCY: Office of Government Ethics (OGE).
ACTION: Proposed rule.
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SUMMARY: The Office of Government Ethics proposes to amend the
executive branch regulation regarding confidential financial
disclosure. The proposed amendments would 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. The rule
also would include new examples to illustrate these changes, a
technical amendment to delete an obsolete provision, and minor
conforming amendments.
DATES: Public comments on these proposed rule amendments are welcome
and must be received in writing on or before October 11, 2005.
ADDRESSES: You may submit comments to OGE on this proposed rule,
identified by RIN 3209-AA00, by any of the following methods:
E-mail: usoge@oge.gov. Include RIN 3209-AA00 in the
subject line of the message.
Fax: 202-482-9237.
Mail: Office of Government Ethics, Suite 500, 1201 New
York Avenue, NW., Washington, DC 20005-3917, Attention: Amy E. Braud,
Attorney-Advisor.
Hand Delivery/Courier: Office of Government Ethics, Suite
500, 1201 New York Avenue, NW., Washington, DC 20005-3917, Attention:
Amy E. Braud, Attorney-Advisor.
Instructions: All submissions must include OGE's agency name and
the Regulation Identifier Number (RIN), 3209-AA00, for this rulemaking.
FOR FURTHER INFORMATION CONTACT: Amy E. Braud, Attorney-Advisor, Office
of Government Ethics; Telephone: 202-482-9300; TDD: 202-482-9293; Fax:
202-482-9237.
SUPPLEMENTARY INFORMATION:
I. Background: History of the Executive Branch Confidential Financial
Disclosure System
The first executive branchwide confidential financial disclosure
requirement was established by President Johnson on May 8, 1965, in
Executive Order 11222 (``Prescribing Standards of Ethical Conduct for
Government Officers and Employees''), 30 FR 6469. Part IV of that order
required any agency head, Presidential appointee in the Executive
Office of the President who was not subordinate to the head of an
agency in that office, and full-time member of a committee, board or
commission appointed by the President, to file a financial statement
with the Civil Service Commission. It also directed the Civil Service
Commission to prescribe financial disclosure regulations requiring the
submission of financial disclosure statements by a body of lower level
employees to be designated by the Commission.
The confidential financial disclosure regulation implementing
Executive Order 11222 was codified at 5 CFR part 735, subpart D, and
became effective on October 1, 1965, 30 FR 12529. This regulation
required certain executive branch employees (including those
compensated pursuant to the executive salary schedule, certain other
executive branch employees compensated at GS-16 and above, hearing
examiners, and others designated by their agencies as persons who
exercise judgment in making or recommending certain decisions) to file
financial disclosure statements with their agency heads, and to update
them quarterly. This regulation did not cover any agency head,
Presidential appointee in the Executive Office of the President who was
not subordinate to the head of an agency in that office, or full-time
member of a committee, board or commission appointed by the President.
Rather, these officials remained subject to the reporting requirement
of Part IV of Executive Order 11222. Part 735 also directed each agency
to issue financial disclosure regulations governing the disclosure
responsibilities of its own employees and special Government employees
containing at minimum the provisions set forth at that time in prior
Sec. Sec. 735.403-735.412 of 5 CFR (see 1989 edition).
This agency-by-agency system of regulating financial disclosure
continued for over a decade. In the aftermath of the Watergate scandal,
however, some began to criticize the financial disclosure regulation as
ineffective. On February 28, 1977, the United States Comptroller
General submitted a report to Congress entitled ``Action Needed to Make
the Executive Branch Financial Disclosure System Effective.'' The
General Accounting Office study found that many employees who were
required to file financial disclosure reports failed to do so or filed
late; that the procedures and criteria for collecting, processing,
reviewing, and controlling financial disclosure statements were
ineffective; that many potential conflicts of interest were not being
identified and resolved; and that agencies had not developed sufficient
methods for enforcing disqualifications and exacting remedial actions
for violations. The Comptroller General recommended that a central
executive branch office of ethics be created to implement the financial
disclosure system, and that President Carter issue a statement to
agency and department heads setting forth a firm commitment to the
highest standards of ethical conduct.
On October 26, 1978, President Carter signed into law the Ethics in
Government Act of 1978 (Pub. L. 95-521, 92 Stat. 1824). This sweeping
legislation established the Office of Government Ethics within the
Civil Service Commission (which became the Office of Personnel
Management in 1979), and charged it with providing the overall
direction of executive branch policies related to the prevention of
conflicts of interest. 5 U.S.C. app., sec. 402(a). It also created the
first public financial disclosure requirement. With respect to
confidential financial disclosure, however, the Ethics Act merely
provided that the President could require executive branch officers and
employees to submit confidential
[[Page 47139]]
reports in such form as the President might prescribe by regulation. 5
U.S.C. app., sec. 207(a), as amended.
For more than another decade, the public financial disclosure
system that was established by the Ethics in Government Act of 1978
operated separately from the confidential financial disclosure system,
which continued under authority of Executive Order 11222 and 5 CFR part
735. On September 25, 1986, President Reagan issued Executive Order
12565 (later revoked), 51 FR 34437, directing OGE to create an
executive branchwide system of confidential financial disclosure that
would ``complement'' the public financial disclosure system. On
December 2, 1986, OGE published a significant proposed amendment to
part 735, subpart D, that would have required each agency to issue its
own regulations, implementing specified general standards, subject to
OGE approval. 51 FR 43359. The proposal was poorly received, largely
because it would have created a confidential filing system differing
substantially from the public filing system. Thus, OGE decided not to
implement it.
On April 12, 1989, President Bush issued Executive Order 12674, 54
FR 15159 (later modified by E.O. 12731 of October 17, 1990, 55 FR
42547), revoking the above-noted Executive orders. Among other things,
this new Executive order directed OGE to establish a new, uniform
branchwide confidential financial disclosure system to complement the
public financial disclosure system that had been established by the
Ethics Act. Sec. 201(d) of E.O. 12674. Also, on November 30, 1989,
President Bush signed into law the Ethics Reform Act of 1989 (Pub. L.
101-194, 103 Stat. 1716), which contained a modified provision for
confidential disclosure as prescribed by each supervising ethics
office, OGE for the executive branch. 5 U.S.C. app., sec. 107(a). In
response, OGE published, on April 7, 1992, an interim regulation
covering both the public and confidential financial disclosure systems
in a revised part 2634 of 5 CFR. 57 FR 11800, as corrected at 57 FR
21854 and 62605. Unlike OGE's 1986 proposal, the new confidential
filing system was executive branchwide and based on, and linked to, the
public financial disclosure rules. The provisions regarding
confidential disclosure were published at subpart I of part 2634.
Effective October 5, 1992, this regulation superseded old subpart D of
5 CFR part 735 and implementing agency regulations.
The confidential financial disclosure regulation at subpart I of
part 2634 differed in many substantive ways from the superseded subpart
D of part 735. For example, unlike the part 735 system, which required
only the disclosure of financial interests existing on the filing date,
the new regulation required that data be supplied for a twelve-month
reporting period. 5 CFR 2634.908. The new regulation also described the
purpose and policy behind executive branch confidential financial
disclosure (Sec. 2634.901), provided direction for the transition to
the new system (Sec. 2634.902), specified criteria to be used by
agencies in determining which of their employees should be required to
file (Sec. 2634.904), provided that a standardized reporting form
would be issued (Sec. 2634.907), and established filing procedures
(Sec. 2634.909). Additionally, this regulation made applicable to
confidential filers the same general provisions that applied to public
filers regarding review and custody, treatment of ethics agreements,
penalties (other than the late filing fee), and other procedural
matters. Unlike the prior part 735, subpart D regulations, the new
regulation's filer definition contained no general GS-13 floor. Rather,
agencies were instructed to determine, for each employee position
classified at GS-15 or below, whether its duties required the exercise
of significant judgment in one or more of several listed areas. Subpart
I of part 2634 remains substantially identical today, although OGE made
several minor amendments during the next decade. See 58 FR 38911 (July
21, 1993); 58 FR 46096 (September 1, 1993--proposed); 58 FR 63023
(November 30, 1993); 63 FR 15273 (March 31, 1998); 63 FR 69991
(December 18, 1998); 64 FR 2421 (January 14, 1999); and 66 FR 55871
(November 5, 2001).
By paperwork notice dated April 13, 1992, 57 FR 12845, OGE
announced that it had submitted to the Office of Management and Budget
for approval, a new proposed Confidential Financial Disclosure Report
form, the Standard Form 450. Although this report form has undergone
several minor modifications, it remains substantially similar today.
See 60 FR 34258 (June 30, 1995), 60 FR 45722 (September 1, 1995) (to
replace the Standard Form 450 with the OGE Form 450); 60 FR 62469
(December 6, 1995); 63 FR 56189 (October 21, 1998); 64 FR 10151 (March
2, 1999); 67 FR 47804 (July 22, 2002); and 67 FR 61761 (October 2,
2002).
On June 24, 1997, OGE amended part 2634 to include a provision that
would authorize all executive branch agencies to use a standardized
``certificate of no new interests'' (OGE Optional Form 450-A) as an
alternative reporting procedure for filers who could certify that they
(and their spouses and dependent children) had acquired no new
reportable financial interests since filing their most recent previous
OGE Form 450, and that they had not changed jobs at their agencies
since filing that same previous report. See 62 FR 33972 (a proposed
rule was published at 62 FR 2048 (January 15, 1997)). This provision
was codified at Sec. 2634.905(d) of 5 CFR.
II. Analysis of Proposed Amendments
Since 1997, the last time that OGE substantively amended the
confidential financial disclosure regulation, OGE has continued to
reexamine the confidential financial disclosure system in an effort to
improve it. In March of 2003, OGE distributed a survey to executive
branch ethics officials which sought input on possible improvements to
the financial disclosure system, the results of which proved beneficial
in identifying what information needs to be reported in order for an
agency ethics official to perform a thorough conflict of interest
review. After reviewing the results of the survey, and re-examining the
current reporting requirements, we have determined that both the
confidential report form and filing process should be improved in
several ways. In accordance with section 402 of the Ethics Act and
section 201(d) of E.O. 12674, as modified, OGE has consulted with the
Department of Justice and the Office of Personnel Management on these
proposed amendments. An analysis of the changes proposed follows.
A. General Requirements: OGE is proposing to change the annual
confidential financial disclosure reporting period, specified in
Sec. Sec. 2634.903(a) and 2634.908(a), from a fiscal year to a
calendar year cycle. We believe that this amendment would make filing
more convenient, as filers 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. OGE also proposes changing the annual
filing deadline, specified in Sec. 2634.903(a), from October 31 to
February 15. This would allow filers sufficient time, after the close
of the proposed new reporting period, to submit their reports and to
compile their year-end financial data. We decided against proposing a
filing deadline later than February 15 because we want to give agency
ethics officials sufficient time to review and certify their annual
confidential filers' reports
[[Page 47140]]
before having to begin reviewing their annual public filers' reports,
which are due on May 15 each year.
Finally, we are proposing to add a new paragraph (e) to Sec.
2634.903 to make clear that, unlike a public filer, a confidential
filer leaving his filing position need not file a termination report.
B. Confidential Filer Definition: OGE is proposing to amend Sec.
2634.904, the provision that defines a confidential filer, by
incorporating into it the language of current Sec. 2634.905(a) and
(b). Section 2634.905(b)(1) currently provides an exclusion for
positions with low levels of responsibility and substantial degrees of
supervision and review. We believe this provision would more accurately
define who is not required to file and therefore would be better
applied in the definition of confidential filer. Thus, we are proposing
to incorporate this subsection and the standard it expresses into the
confidential filer definition in Sec. 2634.904. Specifically, we are
proposing to add the phrase ``and without substantial supervision and
review'' to the general standard that is currently in Sec.
2634.904(a)(1). Next, we are proposing to move the standard for
excluding individuals from the filing requirement, currently found in
Sec. 2634.905(a), into a provision of Sec. 2634.904, thereby
combining into one section all of the provisions related to the
determination of who should be required to file a confidential report.
We believe that combining the exclusion provisions currently under
Sec. 2634.905(a) and (b) with the definition of a confidential filer
under Sec. 2634.904 is consistent with the current practice, at most
agencies, of reading these sections together in determining which
employees should file. We also propose to delete 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 integrity of the
Government, because we believe that this concept is adequately
expressed in the text of new section 2634.904(b). Finally, to better
explain how to apply these standards for designating confidential
filers, we propose to amend Example 1 to paragraph (a) of Sec.
2634.904 and to add several additional examples following Example 2.
The remaining provisions under Sec. 2634.905 provide alternatives
to filing the OGE Form 450; therefore, we are proposing to rename Sec.
2634.905 ``Use of Alternative Procedures''.
C. Alternative Procedures: By proposing to rename Sec. 2634.905
``Use of Alternative Procedures'' and to renumber Sec. 2634.905(c) as
Sec. 2634.905(a), 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 Form 450-A. OGE
has already approved alternative procedures for several agencies under
the existing regulation.
Although we are not proposing to change this provision
substantively, agencies should be aware that OGE is receptive to
proposals for alternatives to the use of the OGE Forms 450 and 450-A.
Some agencies have developed disclosure forms that are more
specifically tailored to the types of conflicts of interest and ethics
issues that arise at their particular agencies. For example, the use of
an alternative form might be especially appropriate for advisory
committee members. Similarly, an alternative form might be practical
for employees who work solely on individual cases or other matters that
involve parties. Additionally, it may be possible for an agency to
develop a program of activities, such as training, counseling, and
other communications with employees that would make the use of a
confidential financial disclosure form unnecessary.
D. Report Contents: The proposed amendment would revise Sec.
2634.907 substantially, by incorporating into this section a complete
description of the information required to be included on a
confidential financial disclosure report. Currently, this section
primarily cross-references subpart C of part 2634 (``Contents of
Reports''), which describes the required content of both the public and
the confidential financial disclosure reports. As discussed below, this
proposed amendment would create a number of additional differences
between the required content of the public report and the required
content of the confidential report. Thus, we believe that it makes
sense, at this point, to create a separate substantive ``report
contents'' section for the confidential report within subpart I.
The proposed amendment also narrows in several ways the body of
information required to be reported by Sec. 2634.907(a). The proposed
rule would eliminate the requirement for confidential filers to report
diversified mutual funds because 5 CFR 2640.201(a) establishes an
exemption from the conflict of interest laws for these assets. Filers
would still be required to report all sector mutual funds which they,
their spouses, or their dependent children own.
The proposed amendment also would expand the exceptions to the
liability reporting requirements. Under the proposed rule, confidential
report filers would no longer be required to report any student loan,
credit card debt, or loan from a financial institution which is based
on market terms. Because these types of loans do not present conflicts
of interest for most confidential filers, we propose to add these to
the current list of exceptions. Filers would still be required to
report loans from financial institutions that are not based on market
terms and loans from most individuals.
Finally, the proposed amendment also would eliminate the
requirements to report the type of income earned on reportable assets;
the dates on which honoraria were received; and the dates on which
agreements or arrangements (other than for future employment) were
entered.
We are proposing to eliminate the reporting requirement for the
items listed above because, in light of experience over the years, we
do not believe that their continued inclusion would add sufficient
value to the conflict of interest review process, executive branchwide,
to justify the resulting burden on filers and their agencies. As
provided in Sec. 2634.901(b), ``[t]he confidential reporting system
seeks from employees only that information which is relevant to the
administration and application of criminal conflict of interest laws,
administrative standards of conduct, and agency-specific statutory and
program-related restrictions.'' To the extent that an agency needs any
of this information in order to perform a conflict of interest review,
that agency could collect this information supplementally, in
accordance with Sec. 2634.901(b).
OGE is also publishing in today's issue of the Federal Register a
first round paperwork notice of a proposed modified version of the OGE
Form 450, with comments due by October 26, 2005. The proposed modified
version of the confidential report form would reflect various of the
changes proposed in this rule. Once comments are received and
considered, OGE will seek three-year clearance from the Office of
Management and Budget (OMB) under the Paperwork Reduction Act for the
modified form.
E. Technical Amendment: Currently, Sec. 2634.601(a) contains an
obsolete provision regarding the continued use of a former version of
the confidential financial disclosure report form. This section would
be deleted. Guidance regarding the phase-in time for mandatory use of
the new version of the
[[Page 47141]]
form, which would reflect the changes in the financial disclosure
regulation once they are adopted as final, would be issued
administratively by OGE before the effective date of any final rule. It
is anticipated that the new form would be available for use by new
entrant confidential filers beginning in January 2006 and by incumbent
annual filers in February 2007 for calendar year 2006. In that event,
OGE likely would waive the old fiscal year annual filing requirement
otherwise due in October 2006.
F. Conforming Amendments: The proposed amendments discussed above
would necessitate several conforming amendments to subpart C of part
2634, proposed to be renamed ``Contents of Public Reports,'' which
currently establishes the required content of both the public and
confidential financial disclosure reports, as well as the differences
between them. In addition, if these proposed changes are adopted as
final, various cross-references in other sections of part 2634 will
have to be amended, in addition to at least one cross-reference in
another OGE regulation. These technical cross-reference amendments
would be included in the final rule stage of this rulemaking.
III. 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 October 11, 2005.
The Office of Government Ethics will review all comments received and
will consider any modifications to this proposed rule that appear
warranted before adopting the rule as final.
Regulatory Flexibility Act
As General Counsel of the Office of Government Ethics, I certify
under the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this
proposed amendatory rule, once adopted as final, 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 is separately publishing in today's issue of
the Federal Register a first round notice under the Paperwork Reduction
Act (44 U.S.C. chapter 35) for the information collection requirements
in this regulation--a modified confidential financial disclosure report
form (OMB control 3209-0006) to reflect the pertinent changes
proposed in this rule. Once comments are received on the proposed
regulatory changes and modified report form, OGE will seek a three-year
extension of paperwork clearance from OMB for the modified form at the
same time that a final rule is issued.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
chapter 25, subchapter II), this proposed rule, once finalized, 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 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.
Executive Order 12866
In promulgating this proposed rule, 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 addition, these proposed 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 proposed revisions, to be codified
once finalized 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 regulation, once
finalized, since the proposed provisions would only clarify and improve
the confidential financial disclosure system. Finally, this proposed
rulemaking is not economically significant under the Executive order
and will not interfere with State, local or tribal governments.
Executive Order 12988
As General Counsel of the Office of Government Ethics, I have
reviewed this proposed 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 in 5 CFR Part 2634
Certificates of divestiture, Conflict of interests, Financial
disclosure, Government employees, Penalties, Privacy, Reporting and
recordkeeping requirements, Trusts and trustees.
Approved: July 25, 2005.
Marilyn L. Glynn,
General Counsel, Office of Government Ethics.
Accordingly, for the reasons set forth in the preamble, the Office
of Government Ethics proposes to amend 5 CFR part 2634 as follows:
PART 2634--EXECUTIVE BRANCH FINANCIAL DISCLOSURE, QUALIFIED TRUSTS,
AND CERTIFICATES OF DIVESTITURE
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 B--Persons Required To File Public Financial Disclosure
Reports
Sec. 2634.203 [Amended]
2. 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]
3. Section 2634.204 is amended by removing the citation ``Sec.
2634.904(b)'' in the last sentence of paragraph (b) and adding in its
place the citation ``Sec. 2634.904(a)(2)''.
Subpart C--Contents of Reports
4. The heading for Subpart C is revised to read as follows:
Subpart C--Contents of Public Reports
Sec. 2634.301 [Amended]
5. Section 2634.301 is amended by:
a. Removing the phrase ``part, whether public or confidential,'' in
the first sentence of paragraph (a) and adding in their place the word
``subpart'';
b. Removing the phrase ``In the case of public financial disclosure
reports, the'' in the second sentence of
[[Page 47142]]
paragraph (a) and adding in their place the word ``The'';
c. Removing the phrase ``on public financial disclosure reports''
in the introductory text of paragraph (d);
d. Removing the phrase '', if he is a public filer the amount,'' in
the fourth sentence of Example 1 following paragraph (e)(7) and adding
in their place the words ``and the amount''; and
e. Removing the word ``also'' and the phrase ``if she is a public
filer'' in the second sentence of Example 3 following paragraph (e)(7).
Sec. 2634.302 [Amended]
6. Section 2634.302 is amended by:
a. Removing the phrase ``part, whether public or confidential,'' in
the introductory text of paragraph (a)(1) and adding in their place the
word ``subpart'';
b. Removing the phrase ``in the case of public financial disclosure
reports'' in the introductory text of paragraph (a)(1);
c. Removing the phrase ``if he is a public filer'' in third
sentence of Example 2 following paragraph (a)(1)(iv);
d. Removing the phrase ``part, whether public or confidential,'' in
the introductory text of paragraph (b) and adding in their place the
word ``subpart'';
e. Removing the phrase ``For public financial disclosure reports,
the'' in the fourth sentence of paragraph (b)(1) and adding in their
place the word ``The'';
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);
g. Removing the phrase ``if he is a public filer'' in the third
sentence of Example 1 following paragraph (b)(2);
h. Removing the phrase ``if he is a public filer,'' in the fifth
sentence of Example 2 following paragraph (b)(2); and
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]
7. Section 2634.303 is amended by removing the words ``public
financial disclosure'' in the introductory text of paragraph (a).
Sec. 2634.304 [Amended]
8. Section 2634.304 is amended by:
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)'';
b. Removing the phrase ``part, whether public or confidential,'' in
the first sentence of paragraph (a) and adding in their place the word
``subpart'';
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);
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)'';
e. Removing the phrase ``part, whether public or confidential,'' in
paragraph (b) and adding in their place the word ``subpart'';
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
g. Removing the phrase ``by public filers'' in the introductory
text of paragraph (f)(1).
Sec. 2634.305 [Amended]
9. Section 2634.305 is amended by:
a. Removing the phrase ``part, whether public or confidential,'' in
the first sentence of paragraph (a) and adding in their place the word
``subpart'';
b. Removing the phrase ``For public financial disclosure reports,
the'' in the second sentence of paragraph (a) and adding in their place
the word ``The''; and
c. Adding the word ``also'' between the words ``report'' and
``shall'' in the second sentence of paragraph (a).
Sec. 2634.306 [Amended]
10. In Sec. 2634.306, the undesignated introductory text is
amended by removing the phrase ``part, whether public or
confidential,'' and adding in their place the word ``subpart'';
Sec. 2634.307 [Amended]
11. In Sec. 2634.307, the introductory text of paragraph (a) is
amended by removing the phrase ``part, whether public or
confidential,'' and adding in their place the word ``subpart''.
Sec. 2634.308 [Amended]
12. Section 2634.308 is amended by:
a. Removing the word ``public'' in paragraph (a);
b. Removing the word ``public'' in the first sentence of the
introductory text of paragraph (b);
c. Removing the word ``public'' between the words ``Each'' and
``financial'' in paragraph (c); and
d. Removing the word ``public'' between the words ``recent'' and
``financial'' in paragraph (c).
Sec. 2634.309 [Amended]
13. Section 2634.309 is amended by:
a. Removing the words ``either'' and ``or subpart I'' from the
introductory text of paragraph (a);
b. Removing the comma between the words ``source'' and ``and'', the
words ``for a public financial disclosure report'', and the comma
between the words ``value'' and ``of'' in paragraph (a)(1)(ii);
c. Removing the phrase ``for a public financial disclosure report''
in paragraph (a)(1)(iii);
d. Removing the phrase ``, either on a public or confidential
financial disclosure report'' in the third sentence of Example 1
following paragraph (a)(1)(iii);
e. Removing the phrase ``, either on a public or confidential
financial disclosure report'' in the second sentence of Example 2
following paragraph (a)(1)(iii);
f. Removing the phrase ``(applicable only to public filers)'' in
the introductory text of paragraph (a)(3); and
g. Removing the phrase ``or as a new entrant under Sec.
2634.908(b),'' in paragraph (b).
Sec. 2634.310 [Amended]
14. Section 2634.310 is amended by:
a. Removing the words ``or subpart I of this part'' in paragraph
(a)(1); and
b. Removing the beginning words ``Public financial disclosure
reports'' in the second sentence of paragraph (c)(1) and adding in
their place the word ``Filers''.
Sec. 2634.311 [Amended]
15. Section 2634.311 is amended by:
a. Removing the words ``public financial disclosure'' in the first
sentence of paragraph (b);
b. Removing the word ``part'' in the first sentence of paragraph
(b) and adding in its place the word ``subpart'';
c. Removing the words ``public financial disclosure'' in paragraph
(c)(2); and
d. Removing the word ``part'' in paragraph (c)(2) and adding in its
place the word ``subpart''.
Subpart F--Procedure
Sec. 2634.601 [Amended]
16. Section 2634.601 is amended by:
(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
b. Removing the last sentence (in parentheses) in paragraph (a).
Subpart I--Confidential Financial Disclosure Reports
17. Section 2634.903 is amended by:
[[Page 47143]]
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)'';
b. Removing the words ``twelve-month period ending September 30''
in the first sentence of paragraph (a) and adding in their place the
words ``calendar year'';
c. Removing the words ``October 31 immediately following that
period'' in the first sentence of paragraph (a) and adding in their
place the words ``February 15 of the following year'';
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)'';
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)'';
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)'';
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)'';
h. Removing the citation ``Sec. 2634.904'' in paragraph (b)(2)(i)
and adding in its place the citation ``Sec. 2634.904(a)'';
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)'';
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)'';
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) of this subpart'';
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
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.
18. 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 O-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 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
[[Page 47144]]
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 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 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.
19. Section 2634.905 is amended by:
a. Revising the section heading to read as set forth below;
b. Removing the undesignated introductory text of the section,
paragraphs (a), (b) and (c), and Examples 1, 2, and 3 following
paragraph (d);
c. Adding a new paragraph (a) and a new example following paragraph
(a);
d. Redesignating paragraph (d) as paragraph (b), including
redesignating paragraphs (d)(1) through (d)(4) as paragraphs (b)(1)
through (b)(4), respectively;
e. Revising the first sentence of newly redesignated paragraph (b);
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
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:
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. * * *
* * * * *
20. 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
[[Page 47145]]
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;
(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;
(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 entities with
portfolio holdings, such as Individual Retirement Accounts (IRAs),
brokerage accounts, trusts, and mutual or pension funds, each
underlying asset must be disclosed separately, unless the entity
qualifies for special treatment as a qualified blind or qualified
diversified trust, an excepted trust, or an excepted investment fund
under the regulations of the Office of Government Ethics.
(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.
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 widely 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 $200 or more 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 $10,000 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.
[[Page 47146]]
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 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 non-investment 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 referred to by
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 (as
described in paragraph (g) of this section) 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:
[[Page 47147]]
(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
(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]
21. Section 2634.908 is amended by removing the phrase ``twelve
months ending September 30,'' in paragraph (a) and adding in their
place the phrase ``calendar year,''.
[FR Doc. 05-15927 Filed 8-11-05; 8:45 am]
BILLING CODE 6345-02-P