• General Principles
• Gifts From Outside Sources
• Gifts Between Employees
• Conflicting Financial Interests
• Impartiality in Performing Official Duties
• Seeking Other Employment
• Misuse of Position
• Outside Activities
• Honoraria
• Post-Employment
• Representation to Government Agencies and Courts
• Supplementation of Salary
• Financial Disclosure
  • Public Financial Disclosure
  • Confidential Financial Disclosure
  • Recusals
  • Waivers
  • Certificates of Divestiture
  • Trusts
• Informal Advisory Letters and Memoranda and Formal Opinions
• Presidential Appointment Process
  

General Principles

Executive branch employees hold their positions as a public trust and American citizens have a right to expect that all employees will place loyalty to the Constitution, laws and ethical principles above private gain. Employees fulfill that trust by adhering to general principles of ethical conduct as well as specific ethical standards.

Executive Order 12674 (HTML - PDF - TXT) issued by President Bush in 1989 and modified in 1990 by Executive Order 12731 (HTML - PDF - TXT) states 14 general principles that broadly define the obligations of public service. Underlying these 14 principles are two core concepts - -

• employees shall not use public office for private gain, and
  
• employees shall act impartially and not give preferential treatment to any private organization or individual.

In addition, employees must strive to avoid any action that would create the appearance that they are violating the law or ethical standards.

By observing these general principles, employees help to ensure that citizens have complete confidence in the integrity of Government operations and programs.

Reference: Executive Order (E.O.) 11222, E.O. 12674, as modified by E.O. 12731, 3 C.F.R., 1990 Comp., pp. 306-311; 5 C.F.R. § 2635.101.

Gifts From Outside Sources

Executive branch employees are subject to restrictions on the gifts that they may accept from sources outside the Government. Generally they may not accept gifts that are given because of their official position or that come from certain interested sources ("prohibited sources"). Those sources include persons (or an organization made up of such persons) who --

• are seeking official action by the employee's agency
• are doing or seeking to do business with the employee's agency
• are regulated by the employee's agency, or
• have interests that may be substantially affected by performance or nonperformance of the employee's official duties.

There are a number of exceptions to the ban on gifts from outside sources. These exceptions would allow the acceptance of gifts in the following circumstances --

• where the value of the gift is $20 or less
• where the gift is based solely on a family relationship or personal friendship
• where the gift is based on an outside business or employment relationship
• where the gift is in connection with certain political activities.

Employees may accept gifts of free attendance at certain widely attended gatherings provided that there has been a determination that attendance is in the interest of the agency. Invitations from non-sponsors of the event may be accepted provided that certain additional conditions are met.

There are also exceptions for discounts, awards and honorary degrees, certain social events, and meals, refreshments and entertainment in foreign countries.

These exceptions are subject to some limitations on their use. For example, an employee can never solicit or coerce the offering of a gift. Nor can an employee use exceptions to accept gifts on such a frequent basis that a reasonable person would believe that the employee was using public office for private gain.

Some other things are not treated as gifts and may be accepted without any limitations. Modest refreshments (such as coffee and donuts), greeting cards, plaques and other items of little intrinsic value, rewards and prizes open to the general public, and pension benefits from a former employer are just a few examples.

If an employee has received a gift that cannot be accepted, the employee may return the gift or pay its market value. If the gift is perishable and it is not practical to return it, the gift may, with approval, be given to charity or shared in the office.

Reference: 5 C.F.R. § § 2635.201-205.

Gifts Between Employees

Executive branch employees may not make a gift to an official superior nor can an employee accept a gift from another employee who receives less pay except in certain circumstances or on certain occasions.

On an occasional basis, including occasions when gifts are traditionally given or exchanged, the following individual gifts to a supervisor are permitted --

• gifts other than cash that are valued at no more than $10
• food and refreshments shared in the office among employees
• personal hospitality in the employee's home that is the same as that customarily provided to personal friends
• gifts given in connection with the receipt of personal hospitality that is customary to the occasion, and
• transferred leave provided that it is not to an immediate superior.

On certain special infrequent occasions a gift may be given that is appropriate to that occasion. These occasions include --

• events of personal significance such as marriage, illness or the birth or adoption of a child, or
• occasions that terminate the subordinate-official superior relationship such as retirement, resignation or transfer.

Employees may solicit or contribute, on a strictly voluntary basis, nominal amounts for a group gift to an official superior on special infrequent occasions and occasionally for items such as food and refreshments to be shared among employees at the office.

Reference: 5 C.F.R. § § 2635.301-304.

Conflicting Financial Interests

Executive branch employees are prohibited by a Federal criminal statute from participating personally and substantially in a particular matter that will affect certain financial interests. Those include the financial interests of --

• the employee
• the employee's spouse or minor child
• the employee's general partner
• an organization in which the employee serves as an officer, director, trustee, general partner or employee, and
• a person with whom the employee is negotiating for or has an arrangement concerning prospective employment.

There are a number of ways in which an employee may deal with a potential conflict of interest. The employee may simply not participate in the matter that would pose the conflict. This is called "recusal." The employee may also obtain a waiver from the agency, sell off or "divest" the conflicting interest, or resign from the conflicting position. Which remedy is appropriate will depend upon the particular circumstances.

Agencies, may by supplemental regulation, prohibit or restrict the holding of certain financial interests by all agency employees or a group of employees, and a few extend such restrictions to the employee's spouse and minor children.

Reference: 18 U.S.C. § 208; 5 C.F.R. § § 2635.401-403.

Impartiality in Performing Official Duties

Executive branch employees are required to consider whether their impartiality may be questioned whenever their involvement in a particular matter involving specific parties might affect certain personal and business relationships. A pending case, contract, grant, permit, license or loan are some examples of particular matters involving specific parties. A general rulemaking, on the other hand, is not.

If such a matter would have an effect on the financial interest of a member of the employee's household, or if a person with whom the employee has a "covered relationship" is or represents a party to such a matter, then the employee must consider whether a reasonable person would question the employee's impartiality in the matter. If the employee concludes that there would be an appearance problem, then the employee should not participate in the matter unless authorized by the agency.

An employee has a "covered relationship" with the following persons --

• a person with whom the employee has or seeks a business, contractual or other financial relationship
• a person who is a member of the employee's household or with whom the employee has a close personal relationship
• a person for whom the employee's spouse, parent or dependent child serves as an officer, director, trustee, general partner, agent, attorney, consultant, contractor or employee
• any person for whom the employee has within the last year served as officer, director, trustee, general partner, agent, attorney, consultant, contractor or employee, or
• any organization in which the employee is an active participant.

An employee may have a concern that circumstances other than those expressly described in the regulation may raise a question regarding the employee's impartiality. In such a situation, the employee should follow the procedures described in the regulation to determine whether or not participation in the particular matter would be appropriate.

Some persons who enter Government service may receive a special severance payment or other benefit which their former employer does not make to other departing employees not entering into Federal service. If such a payment made prior to entering Government service is in excess of $10,000 and if certain other factors are present, then the employee is disqualified for two years from participating in any particular matter in which the former employer is a party or represents a party. The agency may waive or shorten the disqualification period.

Reference: 5 C.F.R. § § 2635.501-503.

Seeking Other Employment

An executive branch employee may not participate in any particular Government matter that will affect the financial interests of a person or entity with whom he is seeking employment. An employee is considered to be seeking employment if --

• the employee is engaged in actual negotiations for employment
• a potential employer has contacted the employee about possible employment and the employee makes a response other than rejection, and
• the employee has contacted a prospective employer about possible employment (unless the sole purpose of the contact is to request a job application or if the person contacted is affected by the performance of the employee's duties only as part of an industry).

An employee is considered no longer seeking employment if --

• either the employee or the prospective employer rejects the possibility of employment and all discussions of possible employment have ended, or
• two months have elapsed since the employee's dispatch of an unsolicited resume and the employee has received no expression of interest from the prospective employer.

In some cases, you may be authorized by an agency official to participate in particular matters from which you would otherwise have to be disqualified due to your job search.

If a search firm or other intermediary is involved, the employee is not disqualified unless the intermediary identifies the prospective employer to the employee.

Reference: 18 U.S.C. § 208; 5 C.F.R. § § 2635.601-606.

Misuse of Position

Executive branch employees must not use their public office for their own or another's private gain. Employees are not to use their position, title or any authority associated with their office to coerce or induce a benefit for themselves or others.

Employees also are not to use or allow the improper use of nonpublic information to further a private interest, either their own or another's.

Employees may not use Government property for other than authorized purposes. Government property includes office supplies, telephones, computers, copiers and any other property purchased with Government funds.

Employees may not misuse official time. This includes the employee's own time as well as the time of a subordinate.

Reference: 5 C.F.R. § § 2635.701-705.

Outside Activities

Executive branch employees are subject to a number of limitations on the outside activities in which they may be involved. An employee may not have outside employment or be involved in an outside activity that conflicts with the official duties of the employee's position. An activity conflicts with official duties --

• if it is prohibited by statute or by the regulations of the employee's agency, or
• if the activity would require the employee to be disqualified from matters so central to the performance of the employee's official duties as to materially impair the employee's ability to carry out those duties.

Employees of some agencies may be required by their agency's own supplemental conduct regulations to obtain prior approval before engaging in certain outside employment or activities.

Employees generally may not be paid for outside teaching, speaking and writing if the activity relates to the employee's official duties. However, there is an exception that would allow an employee to be paid for teaching certain courses at accredited educational institutions. Employees may not use their official title or position (except as part of a biography or for identification as the author of an article with an appropriate disclaimer) to promote a book, seminar, course, program or similar undertaking.

Employees may engage in fundraising in a personal capacity subject to several restrictions. An employee cannot solicit funds from subordinates. And an employee cannot solicit funds from persons who have interests that may be affected by the employee's agency such as those who are regulated by, seeking official action from, or doing business with the agency. Also an employee cannot use or permit the use of the employee's official title, position or authority to promote the fundraising effort.

Reference: 5 C.F.R. § § 2635.801-809.

Honoraria

Executive branch employees are no longer subject to the prohibitions on the acceptance of honoraria contained in the Ethics Reform Act of 1989. The 1989 Act had banned the receipt of any honoraria for an appearance, speech or article whether or not there was any connection to the employee's official duties. A later amendment to the 1989 Act had the effect of allowing payment for a series of such activities provided that the activity did not relate to the employee's official duties.

This provision of the 1989 Act was challenged in court and eventually found by the Supreme Court to be an unconstitutional infringement of the First Amendment. Subsequently, the Department of Justice, in an opinion issued on February 26, 1996, determined that the law was "effectively eviscerated" by the Supreme Court's decision and that there were no remaining applications of the law.

The result is that executive branch employees generally may accept honoraria for an appearance, speech or article, provided that the activity does not relate to the employee's official duties. Any employee who had kept honoraria in an escrow account during the litigation is now free to receive those funds. Employees are still subject to other restrictions on the receipt of honoraria in certain circumstances, including the prohibition on receiving compensation for teaching, speaking and writing that relates to their official duties (subject to an exception for teaching certain courses).

Reference: Section 501(b), of the Ethics In Government Act, as added by section 601(a) of the Ethics Reform Act of 1989; United States v. National Treasury Employees Union, 115 S. Ct. 1003 (1995).

Post-Employment

Executive branch employees are subject to certain restrictions on their activity after they leave Government service. Two of the restrictions apply with respect to particular matters involving specific parties that were involved with while in Government service. If the employee's involvement in such a matter was personal and substantial, then the employee is permanently barred from representing anyone back to any Federal department, agency, or court on that same matter. If the matter was under the employee's official responsibility during the last year of Government service, then the employee is barred for two years after leaving Government service from representing anyone back to the Government on that same matter.

In addition, certain high level officials are subject to a so-called "one-year cooling off period." For a period of one year after leaving a "senior" position, these officials may not make any appearance on behalf of any person (other than the United States) before his former agency with the intent to influence the agency on any matter in which that person seeks official action.

Employees who participated personally and substantially in an ongoing trade or treaty negotiation and had access to certain information are subject to a one year restriction on representing, aiding or advising anyone concerning that ongoing trade or treaty negotiation after they leave Government service.

Former very senior employees are subject to an additional restriction on the persons throughout the executive branch who may be contacted during the first year after they have left Government.

Former senior and very senior employees are restricted for one year after leaving Government service from representing, aiding or advising foreign governments or foreign political parties before an agency or department of the United States.

Additionally, the Clinton Administration mandated that certain persons appointed on or after January 20, 1993, sign an ethics pledge which establishes a contractual commitment regarding their activities after they have been employed as "senior appointee" or after they have participated personally and substantially in trade negotiations.

Reference: 18 U.S.C. § 207; Executive Order 12834, 3 C.F.R., 1993 Comp., pp. 580-586; 5 C.F.R. parts 2637 and 2641; OGE Forms 203 and 204.

Representation to Government Agencies and Courts

Executive branch employees are subject to criminal statutes that prohibit the representation of private interests before the Government. One of these laws prohibits an employee from prosecuting a claim against the United States or representing a private party before the Government in connection with a particular matter in which the United States is a party or has a direct and substantial interest. This prohibition applies whether or not the employee receives compensation for the representation.

There are exceptions that would allow an employee to represent with or without compensation --

• the employee (self-representation)
• a parent, spouse or child of the employee
• a person or estate that the employee serves as a guardian, executor, administrator, trustee or personal fiduciary.

The matter involved may not be one in which the employee participated personally and substantially or which was the subject of the employee's official responsibility. Also the employee must obtain approval for the activity from the employee's appointing official.

An employee may represent employee nonprofit organizations (such as child care centers, recreational associations, professional organizations, credit unions or other similar groups) before the U.S. Government under certain circumstances. The employee may not be compensated. And the employee may not represent an employee group in claims against the Government, in seeking grants, contracts or cash from the Government, or in litigation where the group is a party.

An employee may take on uncompensated representation of a person who is the subject of disciplinary, loyalty, or personnel administration proceedings.

Another law governing representational activity prohibits an employee from accepting compensation for certain representational services before the Government whether or not those services were provided by the employee personally or by some other person. Again, there are exceptions to this law that would allow for the representation of a parent, spouse, child or person served in a fiduciary capacity.

Reference: 18 U.S.C. § § 205, 203.

Supplementation of Salary

Executive branch employees may not be paid by someone other than the United States for doing their Government job. Thus, for example, a highly paid executive of a corporation upon entering Government service could not accept an offer from her former employer to make up the difference between her Government salary and the compensation she received from her former employer.

This prohibition does not apply to --

• certain special Government employees and employees serving without compensation
• funds contributed out of the treasury of any State, county, or municipality
• continued participation in a bona fide pension, retirement, group life, health or accident insurance, profit-sharing, stock bonus, or other employee welfare or benefit plan maintained by a former employer
• payments for travel, subsistence and other expenses made to an employee by a tax-exempt nonprofit organization incurred in connection with training, and
• moving expenses incurred in connection with participation in an executive exchange or fellowship program in an executive agency.

Reference: 18 U.S.C. § 209.

Financial Disclosure

The Office of Government Ethics oversees the administration of the public and confidential financial disclosure systems for the executive branch. It also administers the blind trust and certificate of divestiture programs in the executive branch.

Reference: Section 102(f), Ethics in Government Act of 1978; 5 C.F.R. part 2634

Public Financial Disclosure

Certain senior officers and employees of the executive branch are required to file a public report (SF 278) disclosing their financial interests as well as the interests of their spouse and minor children. Public filers must report --

• any interest in property held in a trade or business or for investment or the production of income (real estate, stocks, bonds, securities, futures contracts, beneficial interests in trusts or estates, pensions and annuities, mutual funds, etc.) that meet reporting thresholds
• earned income, retirement benefits, honoraria and any other non-investment income
• gifts and reimbursements that meet reporting thresholds
• liabilities (personal loans from certain family members, a mortgage on a personal residence, automobile, furniture and appliance loans, revolving charge accounts that do not exceed $10,000 at the close of the reporting period are excluded from reporting)
• agreements or arrangements with respect to future employment, leaves of absence and continuation of payments or benefits from a former employer, and
• outside positions such as an officer, director, trustee, general partner, proprietor, employee, consultant, etc. of any organization (but positions with religious, social, fraternal or political entities are excluded, as are solely honorary positions).

Confidential Financial Disclosure

Certain other less senior executive branch employees whose duties involve the exercise of discretion in sensitive areas such as contracting, procurement, administration of grants and licenses, and regulating or auditing non-Federal entities are required to file confidential financial disclosure reports (OGE Form 450). This reporting system generally tracks the approach of the public disclosure system with some differences. Ranges of values of assets and income from assets are not required to be reported nor are interests in or income from bank accounts, money market mutual funds, U.S. obligations and Government securities. The most notable difference is that confidential reports are not available to the public.

Recusals

One remedy that is often appropriate for avoiding a potential conflict of interest is recusal or disqualification. This simply means that the employee does not participate in a matter that could affect the employee's financial interest.

Waivers

Another remedy for dealing with conflicts of interest is the use of waivers. An individual waiver of the statutory bar may be granted by an authorized official when the conflicting financial interest is not substantial. For example, an official might grant a waiver where the employee owned only a few shares of a particular stock. Waivers may also be granted to special Government employees serving on advisory committees. OGE is authorized to issue regulatory waivers for certain classes of financial interests and such a regulation was recently issued as a final rule. Finally, waivers are available for dealing with conflicts that arise from financial interests derived from Native American birthrights.

Certificates of Divestiture

Section 1043 of the Internal Revenue Code provides for the deferral of capital gains taxes on assets that must be sold to comply with ethics program requirements. Proceeds from divested assets must be reinvested in certain specified categories of investments. This change allows for a more flexible remedy to conflicts that avoid subjecting an executive branch employee to costly tax consequences that would otherwise result from the sale. In order to take advantage of the tax deferral mechanism, a Certificate of Divestiture must be obtained from OGE before the sale occurs. Certificates of Divestiture are issued by the Office of Government Ethics in accordance with its procedures and policies.

Trusts

Finally, a blind trust may be available as a remedy for a potential conflict of interest. In order to be recognized, the trust must include certain required provisions in the trust instrument and have an approved independent trustee. A blind trust must be approved by the Director of the Office of Government Ethics before it is executed.

There is no requirement that a person utilize a blind trust as a means of resolving potential conflicts of interest. Generally, a blind trust will be appropriate where the holdings are of such an array and magnitude that creation of a qualified trust would be the most practical means of avoiding conflicts.

Informal Advisory Letters and Memoranda and Formal Opinions

The Office of Government Ethics provides both informal advisory letters and memoranda and formal opinions concerning the application of the Ethics in Government Act of 1978 (including its financial disclosure provisions), the criminal conflict of interest laws, the administrative standards of ethical conduct and related Executive orders, and other administrative regulations issued by OGE.

At the discretion of the Director, formal advisory opinions will be rendered on matters of general applicability or on important matters of first impression. Where a request does not meet the requirements for a formal advisory opinion, the Office of Government Ethics may respond by way of an informal advisory letter or memorandum.

The informal advisory letters and memoranda and formal opinions for the period 1979-1988 have been published in a bound volume by the Government Printing Office. Annual supplements to the bound volume have been published in a loose-leaf format and are current through calendar year 1998. These opinions are also available in the Advisory Opinions section of this web site.

Reference: 5 C.F.R. § § 2638.301-313; OGE Informal Advisory Letters and Memoranda and Formal Opinions 1979-1995.

Presidential Appointment Process

Persons who are nominated by the President for positions requiring confirmation by the Senate are required by law to file public financial disclosure reports. These nominee reports are reviewed prior to confirmation hearings by the White House Counsel's Office, by the agencies in which the nominees will serve, and by the Office of Government Ethics. OGE is responsible for the final certification of the reports before they are transmitted to the Senate.

The information on the reports is carefully analyzed, potential conflicts are discussed, and appropriate remedial measures are agreed to. These remedial measures include recusal agreements, divestitures, resignations, waivers, and qualified trusts.

OGE tracks a Presidential appointee's compliance with any ethics agreement that the appointee made during the confirmation process. These agreements may concern the financial interests of the appointee, as well as the appointee's spouse or dependent children. An appointee is to certify, with documentation to OGE, that such agreements have been satisfied within 90 days of confirmation.

Reference: 5 C.F.R. part 2634.