October 19, 1992
MEMORANDUM FOR DESIGNATED AGENCY ETHICS OFFICIALS
FROM: STEPHEN D. POTTS
DIRECTOR
SUBJECT: Additional guidance on confidential disclosure
The new confidential financial disclosure system became
effective on October 5, 1992, by the terms of our regulation which
was published at 57 Federal Register 11800-11830 on April 7, 1992.
The new reporting form, SF 450, which is now stocked and available
through the Federal Supply Service, is the only form authorized
for general use by executive branch employees in confidential
filing positions. Details on ordering supplies of the SF 450 were
contained in our DAEO-gram of September 2, 1992.
THE ANNUAL REPORTING PERIOD
At our recent Ethics Conference in Virginia Beach, some
agencies expressed reservations about the new period of coverage
for annual incumbent confidential filers, which is October 1
through September 30 (see § 2634.908(a) of the regulation).
Previously, we had received written comments from only nine
agencies on this issue. In response to the renewed concern, we
have again reviewed the circumstances to determine whether a
calendar year alternative should be permitted. After careful
consideration, we have decided that the new fiscal year period of
coverage should remain uniformly applicable for at least the 1992
cycle of incumbent filings.
The uniform coverage period deserves a fair trial period
before being discarded or modified. It was established to
eliminate concerns of several agencies about the administrative
burdens associated with collecting and reviewing both public and
confidential disclosure reports simultaneously. That legitimate
goal remains; however, we invite your additional feedback on this
matter after you have completed the current annual filing cycle, so
that we can determine whether any significant difficulties actually
do arise and whether changes might still be warranted.
We are attempting to establish uniformity in all our various
ethics programs, including the financial disclosure system. While
that may involve short-term disruptions for some agencies, it
should be beneficial in the long run. If events prove otherwise,
we stand ready to reexamine this issue next year.
NEWLY DESIGNATED POSITIONS
Some agencies have voiced confusion over how to classify
employees already serving in positions which are being designated
for the first time as requiring confidential reports. Should they
be considered new entrant or incumbent filers? Even though the
regulation in § 2634.903(b) defines new entrants as those assuming
a covered position, our intent was to include employees whose
positions are designated subsequent to their position assignment.
To view them instead as incumbents could delay their initial
reports for several months in some instances, which would ill-serve
the purposes of financial disclosure.
We recognize that a few agencies may find it less confusing
during this year of transition into the new system to treat such
employees as incumbent filers for the current filing cycle, along
with employees occupying positions of longstanding designation.
Therefore, for purposes of this transition year only, we have no
objection if an agency chooses to characterize these employees as
incumbent filers. As a practical matter, the due date and coverage
for reports from employees who occupy positions which were first
designated when the regulation became effective on October 5 will
nearly coincide with the due date and coverage for reports from
employees in previously designated positions.
However, for the future, employees serving in a position which
is newly designated for confidential filing after they enter the
position should be reporting as a new entrant, within 30 days of
the designation. This will comport with the spirit of the
regulation and our intent in defining the term new entrant. It
will also help ensure that potential conflicts of those serving in
sensitive positions are detected in a timely manner.
SPECIAL GOVERNMENT EMPLOYEES (SGE'S)
Section 2634.903(b) of the regulation requires SGE's to file
a new entrant report at the time of their initial one-year
appointment and again upon any reappointment or redesignation for
an additional year as an SGE. This requirement was established
because SGE's generally perform the duties of their position for
less than 60 days in a year, and therefore they do not trigger the
annual reporting requirement of § 2634.903(a) as an incumbent.
However, for those SGE's who do perform the duties of their
position for more than 60 days in a year and are subsequently
reappointed, this would result in two filings during a one-year
period, a burden more onerous than for regular employees. In order
to eliminate that unintended result, we plan to amend the final
regulation to exempt all SGE's from the annual incumbent reporting
requirement of § 2634.903(a). Agencies may cite this DAEO-gram as
authority to immediately begin applying that exemption.
This change will ensure that confidential disclosure reporting
applies equally to all SGE's, without regard to the number of days
on which they actually perform the duties of their position. They
will file a new entrant report at the time of initial appointment
and another new entrant report under § 2634.903(b) if they are
reappointed or redesignated to serve beyond their initial one-year
appointment, but they will not be required to file incumbent
reports.
TERM APPOINTEES
We understand that some employees who perform the duties of
their position for only a few days each year are nonetheless not
reappointed or redesignated annually as SGE's, because they serve
under a statute or other authority for a fixed term exceeding one
year. Certain commissioners and board members appointed by the
President may be serving in this manner. The same confidential
disclosure requirements should apply to these term appointees as to
any other SGE. Therefore, we plan to amend the final regulation to
require that term appointees who serve as SGE's (that is, they are
not expected to perform the duties of their position for more than
130 days in a year) must file additional new entrant reports each
year throughout their term of service upon the anniversary of their
initial appointment, even though they are not formally reappointed
or redesignated. Agencies may cite this DAEO-gram as authority to
immediately begin applying that requirement. Like all other SGE's,
they will be exempt from filing incumbent reports under
§ 2634.903(a) of the regulation, even if they perform their duties
for more than 60 days in a year, as discussed above.
EMPLOYEES ASSIGNED TO FILL POSITIONS IN AN ACTING CAPACITY
Employees assigned in an acting capacity to fill a position
are subject to any financial disclosure reporting requirements of
that position. See example 2 following § 2634.201(a) of the
regulation, and § 2634.903(a). For incumbent filers in both public
and confidential reporting positions, the regulation clearly
excludes those who perform the duties of a position for 60 days or
less during the reporting period. For new entrant filers,
expectation of service in a position for more than 60 days during
a twelve month period should likewise be a prerequisite, so that
those who serve for short periods, such as in an acting capacity,
will not be subjected to the filing requirement. That triggering
event is clearly stated for public filers in § 2634.204(a). It was
intended but not clearly stated in Subpart I of the regulation for
confidential filers.
Therefore, we plan to amend Subpart I to specifically exempt
regular employees from the new entrant confidential filing
requirement if the agency determines that they are not reasonably
expected to perform the duties of a confidential filing position
for more than 60 days in the ensuing twelve month period. Agencies
may cite this DAEO-gram as authority to immediately begin applying
that exemption. Note that SGE's may not avail themselves of this
exemption; all SGE's are required to file new entrant confidential
reports without regard to anticipated length of service, because of
their unique status (unless excluded under § 2634.904(b) or
§ 2634.905).
THE SF 450: BREVITY VERSUS COMPREHENSIVENESS; GIFT GUIDANCE
One of the major objectives in crafting a standard form for
confidential financial disclosure was to maintain the simple,
straightforward structure of agency forms which were in use
previously. An early draft of the SF 450 contained comprehensive
instructions similar to those on the standard public disclosure
form. That concept was ultimately rejected as too expansive and
unnecessary for the middle grade employees who would be filing
confidential forms. This characteristic brevity of the SF 450 may,
in some instances, require agency ethics officials to offer
supplementary guidance to their filers on particular aspects of
confidential disclosure. In doing so, the new regulation provides
a primary source of information.
One matter which has already come to our attention concerns
disclosure of gifts and reimbursements. Only partial guidance on
the numerous exclusions could be included in the instructional
notes which accompany Part V of the SF 450. You may want to
supplement filers' knowledge by disseminating more complete
information on the definitional limits of the terms gift and
reimbursement from §§ 2634.105(h) and (n) of the new regulation.
Additionally, the regulation states exclusions at § 2634.304(c),
valuation methods (for determining thresholds) at § 2634.304(e), a
waiver rule in unusual circumstances at § 2634.304(f), and an
exception for certain items received by a spouse or dependent child
at § 2634.309(a)(2).
The latter exception may be of particular interest, since it
excludes from required disclosure any gifts or reimbursements of a
spouse which are received totally independent of the relationship
to the filer. For example, gifts or reimbursements which spouses
receive solely because of their own professional pursuits need not
be reported.
DETAILEES
The new regulation requires in § 2634.602(a) that detailees
file confidential financial disclosure reports with their primary
agency, and § 2634.605(b) directs that reports of employees
detailed to another agency in excess of 60 days during a reporting
period shall be referred for intermediate review to the agency
where the employee serves as a detailee. These provisions rest on
the assumption that it is the detailee's position at the parent
agency which is designated for confidential disclosure.
However, it is possible that a detailee to another agency may
become a confidential filer solely by reason of a position occupied
at the receiving agency. An employee in that situation should file
with the receiving agency, since it is there that the filing
obligation has arisen and that the report will be most meaningfl.
Such reports may, at the discretion of the receiving agency, be
referred to the parent agency for additional review.
We believe that the receiving agency's authority to designate
a detailee's position for confidential filing is fully supported by
the new regulation. Section 2634.904(a) specifies that it is the
position, not an individual incumbent, which is subject to
designation for confidential filing, based on the duties and
responsibilities of that position. Any occupant of a designated
position, whether primarily employed by the agency which controls
the position or detailed from another agency, should be required to
file. An agency does not relinquish control over the requirements
of a position simply because it chooses to accept a detailee as an
incumbent.
ADDITIONAL GUIDANCE
For additional guidance on implementing the new confidential
disclosure system, please see our DAEO-grams earlier this year,
dated April 9, June 25, and August 25, or consult your OGE desk
officer or our general counsel staff.