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Federal Register / Vol. 57, No. 153 / Friday, August 7, 1992 /
Rules and Regulations

5 CFR Part 2635

RIN 3209-AA04

Standards of Ethical Conduct for Employees of the Executive
Branch

AGENCY: Office of Government Ethics.

ACTION: Final rule.

SUMMARY: The Office of Government Ethics is issuing a final rule
which establishes uniform standards of ethical conduct for
officers and employees of the executive branch of the Federal
Government (hereinafter Government). When effective in 180 days,
part 2635 will supersede most of subparts A, B and C of 5 CFR
part 735 and agency regulations thereunder, as well as 5 CFR
2635.101 of the Office of Government Ethics regulations.

The final rule establishes standards relating to the receipt of
gifts, whether from prohibited sources, because of official
position, or between employees. It establishes standards for
dealing with the employee's own and other financial interests
that conflict with an employee's official duties. These include
disqualification requirements that apply when a matter to which
the employee is assigned affects a person with whom he or she is
seeking employment. In addition to standards relating to use of
official position and time, Government property and nonpublic
information, it establishes specific standards for application to
outside activities in which an employee may participate,
including fundraising and outside employment.

EFFECTIVE DATE: February 3, 1993.

FOR FURTHER INFORMATION CONTACT: Leslie L. Wilcox, Office of
Government Ethics, telephone (202/FTS) 523-5757, FAX (202/FTS)
523-6325.

Accordingly, for the reasons set forth in the preamble, the
Office of Government Ethics is amending title 5, chapter XVI,
subchapter B of the Code of Federal Regulations by revising part
2635 to read as follows:

PART 2635-STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE
EXECUTIVE BRANCH

Subpart A-General Provisions

Sec.

2635.101 Basic obligation of public service.

2635.102 Definitions.

2635.103 Applicability to members of the uniformed services.

2635.104 Applicability to employees on detail.

2635.105 Supplemental agency regulations.

2635.106 Disciplinary and corrective action.

2635.107 Ethics advice.

Subpart B-Gifts From Outside Sources

2635.201 Overview.

2635.202 General standards.

2635.203 Definitions.

2635.204 Exceptions.

2635.205 Proper disposition of prohibited gifts.

Subpart C-Gifts Between Employees

2635.301 Overview.

2635.302 General standards.

2635.303 Definitions.

2635.304 Exceptions.

Subpart D-Conflicting Financial Interests

2635.401 Overview.

2635.402 Disqualifying financial interests.

2635.403 Prohibited financial interests.

Subpart E-Impartiality in Performing Official Duties

2635.501 Overview.

2635.502 Personal and business relationships.

2635.503 Extraordinary payments from former employers.

Subpart F-Seeking Other Employment

2635.601 Overview.

2635.602 Applicability and related considerations.

2635.603 Definitions.

2635.604 Disqualification while seeking employment.

2635.605 Waiver or authorization permitting participation while
seeking employment.

2635.606 Disqualification based on an arrangement concerning
prospective employment or otherwise after negotiations.

Subpart G-Misuse of Position

2635.701 Overview.

2635.702 Use of public office for private gain.

2635.703 Use of nonpublic information.

2635.704 Use of Government property.

2635.705 Use of official time.

Subpart H-Outside Activities

2635.801 Overview.

2635.802 Conflicting outside employment and activities.

2635.803 Prior approval for outside employment and activities.

2635.804 Outside earned income limitations applicable to certain
Presidential appointees and other noncareer employees.

2635.805 Service as an expert witness.

2635.806 Participation in professional associations. [Reserved]

2635.807 Teaching, speaking and writing.

2635.808 Fundraising activities.

2635.809 Just financial obligations.

Subpart I-Related Statutory Authorities

2635.901 General.

2635.902 Related statutes.

Authority: 5 U.S.C. 7351, 7353; 5 U.S.C. App. (Ethics in
Government Act of 1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989
Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR,
1990 Comp., p. 306.

Subpart A-General Provisions

2635.101

Basic obligation of public service.

(a) Public service is a public trust. Each employee has a
responsibility to the United States Government and its citizens
to place loyalty to the Constitution, laws and ethical principles
above private gain. To ensure that every citizen can have
complete confidence in the integrity of the Federal Government,
each employee shall respect and adhere to the principles of
ethical conduct set forth in this section, as well as the
implementing standards contained in this part and in supplemental
agency regulations.

(b) General principles. The following general principles apply to
every employee and may form the basis for the standards contained
in this part. Where a situation is not covered by the standards
set forth in this part, employees shall apply the principles set
forth in this section in determining whether their conduct is
proper.

(1) Public service is a public trust, requiring employees to
place loyalty to the Constitution, the laws and ethical
principles above private gain.

(2) Employees shall not hold financial interests that conflict
with the conscientious performance of duty.

(3) Employees shall not engage in financial transactions using
nonpublic Government information or allow the improper use of
such information to further any private interest.

(4) An employee shall not, except as permitted by subpart B of
this part, solicit or accept any gift or other item of monetary
value from any person or entity seeking official action from,
doing business with, or conducting activities regulated by the
employee's agency, or whose interests may be substantially
affected by the performance or nonperformance of the employee's
duties.

(5) Employees shall put forth honest effort in the performance of
their duties.

(6) Employees shall not knowingly make unauthorized commitments
or promises of any kind purporting to bind the Government.

(7) Employees shall not use public office for private gain.

(8) Employees shall act impartially and not give preferential
treatment to any private organization or individual.

(9) Employees shall protect and conserve Federal property and
shall not use it for other than authorized activities.

(10) Employees shall not engage in outside employment or
activities, including seeking or negotiating for employment, that
conflict with official Government duties and responsibilities.

(11) Employees shall disclose waste, fraud, abuse, and corruption
to appropriate authorities.

(12) Employees shall satisfy in good faith their obligations as
citizens, including all just financial obligations, especially
those-such as Federal, State, or local taxes-that are imposed by
law.

(13) Employees shall adhere to all laws and regulations that
provide equal opportunity for all Americans regardless of race,
color, religion, sex, national origin, age, or handicap.

(14) Employees shall endeavor to avoid any actions creating the
appearance that they are violating the law or the ethical
standards set forth in this part. Whether particular
circumstances create an appearance that the law or these
standards have been violated shall be determined from the
perspective of a reasonable person with knowledge of the relevant
facts.

(c) Related statutes. In addition to the standards of ethical
conduct set forth in this part, there are conflict of interest
statutes that prohibit certain conduct. Criminal conflict of
interest statutes of general applicability to all employees, 18
U.S.C. 201, 203, 205, 208, and 209, are summarized in the
appropriate subparts of this part and must be taken into
consideration in determining whether conduct is proper. Citations
to other generally applicable statutes relating to employee
conduct are set forth in subpart I and employees are further
cautioned that there may be additional statutory and regulatory
restrictions applicable to them generally or as employees of
their specific agencies. Because an employee is considered to be
on notice of the requirements of any statute, an employee should
not rely upon any description or synopsis of a statutory
restriction, but should refer to the statute itself and obtain
the advice of an agency ethics official as needed.

2635.102

Definitions.

The definitions listed below are used throughout this part.
Additional definitions appear in the subparts or sections of
subparts to which they apply. For purposes of this part:

(a) Agency means an executive agency as defined in 5 U.S.C. 105
and the Postal Service and the Postal Rate Commission. It does
not include the General Accounting Office or the Government of
the District of Columbia.

(b) Agency designee refers to any employee who, by agency
regulation, instruction, or other issuance, has been delegated
authority to make any determination, give any approval, or take
any other action required or permitted by this part with respect
to another employee. An agency may delegate these authorities to
any number of agency designees necessary to ensure that
determinations are made, approvals are given, and other actions
are taken in a timely and responsible manner. Any provision that
requires a determination, approval, or other action by the agency
designee shall, where the conduct in issue is that of the agency
head, be deemed to require that such determination, approval or
action be made or taken by the agency head in consultation with
the designated agency ethics official.

(c) Agency ethics official refers to the designated agency ethics
official or to the alternate designated agency ethics official,
referred to in 2638.202(b) of this chapter, and to any deputy
ethics official, described in 2638.204 of this chapter, who has
been delegated authority to assist in carrying out the
responsibilities of the designated agency ethics official.

(d) Agency programs or operations refers to any program or
function carried out or performed by an agency, whether pursuant
to statute, Executive order, or regulation.

(e) Corrective action includes any action necessary to remedy a
past violation or prevent a continuing violation of this part,
including but not limited to restitution, change of assignment,
disqualification, divestiture, termination of an activity,
waiver, the creation of a qualified diversified or blind trust,
or counseling.

(f) Designated agency ethics official refers to the official
designated under 2638.201 of this chapter.

(g) Disciplinary action includes those disciplinary actions
referred to in Office of Personnel Management regulations and
instructions implementing provisions of title 5 of the United
States Code or provided for in comparable provisions applicable
to employees not subject to title 5, including but not limited to
reprimand, suspension, demotion, and removal. In the case of a
military officer, comparable provisions may include those in the
Uniform Code of Military Justice.

(h) Employee means any officer or employee of an agency,
including
a special Government employee. It includes officers but not
enlisted members of the uniformed services. For purposes other
than subparts B and C of this part, it does not include the
President or Vice President. Status as an employee is unaffected
by pay or leave status or, in the case of a special Government
employee, by the fact that the individual does not perform
official duties on a given day.

(i) Head of an agency means, in the case of an agency headed by
more than one person, the chair or comparable member of such
agency.

(j) He, his, and him include she, hers and her.

(k) Person means an individual, corporation and subsidiaries it
controls, company, association, firm, partnership, society, joint
stock company, or any other organization or institution,
including any officer, employee, or agent of such person or
entity. For purposes of this part, a corporation will be deemed
to control a subsidiary if it owns 50 percent or more of the
subsidiary's voting securities. The term is all-inclusive and
applies to commercial ventures and nonprofit organizations as
well as to foreign, State, and local governments, including the
Government of the District of Columbia. It does not include any
agency or other entity of the Federal Government or any officer
or employee thereof when acting in his official capacity on
behalf of that agency or entity.

(l) Special Government employee means those executive branch
officers or employees specified in 18 U.S.C. 202(a). A special
Government employee is retained, designated, appointed, or
employed to perform temporary duties either on a full-time or
intermittent basis, with or without compensation, for a period
not to exceed 130 days during any consecutive 365-day period.

(m) Supplemental agency regulation means a regulation issued
pursuant to 2635.105.

2635.103

Applicability to members of the uniformed services.

The provisions of this part, except this section, are not
applicable to enlisted members of the uniformed services. Each
agency with jurisdiction over enlisted members of the uniformed
services shall issue regulations defining the ethical conduct
obligations of enlisted members under its jurisdiction. Those
regulations shall be consistent with Executive Order 12674, April
12, 1989, as modified, and may prescribe the full range of
statutory and regulatory sanctions, including those available
under the Uniform Code of Military Justice, for failure to comply
with such regulations.

2635.104

Applicability to employees on detail.

(a) Details to other agencies. Except as provided in paragraph
(d) of this section, an employee on detail, including a uniformed
officer on assignment, from his employing agency to another
agency for a period in excess of 30 calendar days shall be
subject to any supplemental agency regulations of the agency to
which he is detailed rather than to any supplemental agency
regulations of his employing agency.

(b) Details to the legislative or judicial branch. An employee on
detail, including a uniformed officer on assignment, from his
employing agency to the legislative or judicial branch for a
period in excess of 30 calendar days shall be subject to the
ethical standards of the branch or entity to which detailed. For
the duration of any such detail or assignment, the employee shall
not be subject to the provisions of this part, except this
section, or, except as provided in paragraph (d) of this section,
to any supplemental agency regulations of his employing agency,
but shall remain subject to the conflict of interest prohibitions
in title 18 of the United States Code.

(c) Details to non-Federal entities. Except to the extent
exempted in writing pursuant to this paragraph, an employee
detailed to a non-Federal entity remains subject to this part and
to any supplemental agency regulation of his employing agency.
When an employee is detailed pursuant to statutory authority to
an international organization or to a State or local government
for a period in excess of six months, the designated agency
ethics official may grant a written exemption from subpart B of
this part based on his determination that the entity has adopted
written ethical standards covering solicitation and acceptance of
gifts which will apply to the employee during the detail and
which will be appropriate given the purpose of the detail.

(d) Applicability of special agency statutes. Notwithstanding
paragraphs (a) and (b) of this section, an employee who is
subject to an agency statute which restricts his activities or
financial holdings specifically because of his status as an
employee of that agency shall continue to be subject to any
provisions in the supplemental agency regulations of his
employing agency that implement that statute.

2635.105

Supplemental agency regulations.

In addition to the regulations set forth in this part, an
employee shall comply with any supplemental agency regulations
issued by his employing agency under this section.

(a) An agency that wishes to supplement this part shall prepare
and submit to the Office of Government Ethics, for its
concurrence and joint issuance, any agency regulations that
supplement the regulations contained in this part. Supplemental
agency regulations which the agency determines are necessary and
appropriate, in view of its programs and operations, to fulfill
the purposes of this part shall be:

(1) In the form of a supplement to the regulations in this part;
and

(2) In addition to the substantive provisions of this part.

(b) After concurrence and co-signature by the Office of
Government Ethics, the agency shall submit its supplemental
agency regulations to the Federal Register for publication and
codification at the expense of the agency in title 5 of the Code
of Federal Regulations. Supplemental agency regulations issued
under this section are effective only after concurrence and
co-signature by the Office of Government Ethics and publication
in the Federal Register.

(c) This section applies to any supplemental agency regulations
or amendments thereof issued under this part. It does not apply
to:

(1) A handbook or other issuance intended merely as an
explanation of the standards contained in this part or in
supplemental agency regulations;

(2) An instruction or other issuance the purpose of which is to:

(i) Delegate to an agency designee authority to make any
determination, give any approval or take any other action
required or permitted by this part or by supplemental agency
regulations; or

(ii) Establish internal agency procedures for documenting or
processing any determination, approval or other action required
or permitted by this part or by supplemental agency regulations,
or for retaining any such documentation; or

(3) Regulations or instructions that an agency has authority,
independent of this part, to issue, such as regulations
implementing an agency's gift acceptance statute, protecting
categories of nonpublic information or establishing standards for
use of Government vehicles. Where the content of any such
regulations or instructions was included in the agency's
standards of conduct regulations issued pursuant to Executive
Order 11222 and the Office of Government Ethics concurs that they
need not be issued as part of an agency's supplemental agency
regulations, those regulations or instructions may be promulgated
separately from the agency's supplemental agency regulations.

2635.106

Disciplinary and corrective action.

(a) Except as provided in 2635.107, a violation of this part or
of supplemental agency regulations may be cause for appropriate
corrective or disciplinary action to be taken under applicable
Governmentwide regulations or agency procedures. Such action may
be in addition to any action or penalty prescribed by law.

(b) It is the responsibility of the employing agency to initiate
appropriate disciplinary or corrective action in individual
cases. However, corrective action may be ordered or disciplinary
action recommended by the Director of the Office of Government
Ethics under the procedures at part 2638 of this chapter.

(c) A violation of this part or of supplemental agency
regulations, as such, does not create any right or benefit,
substantive or procedural, enforceable at law by any person
against the United States, its agencies, its officers or
employees, or any other person. Thus, for example, an individual
who alleges that an employee has failed to adhere to laws and
regulations that provide equal opportunity regardless of race,
color, religion, sex, national origin, age, or handicap is
required to follow applicable statutory and regulatory
procedures, including those of the Equal Employment Opportunity
Commission.

2635.107

Ethics advice.

(a) As required by 2638.201 and 2638.202(b) of this chapter,
each agency has a designated agency ethics official who, on the
agency's behalf, is responsible for coordinating and managing the
agency's ethics program, as well as an alternate. The designated
agency ethics official has authority under 2638.204 of this
chapter to delegate certain responsibilities, including that of
providing ethics counseling regarding the application of this
part, to one or more deputy ethics officials.

(b) Employees who have questions about the application of this
part or any supplemental agency regulations to particular
situations should seek advice from an agency ethics official.
Disciplinary action for violating this part or any supplemental
agency regulations will not be taken against an employee who has
engaged in conduct in good faith reliance upon the advice of an
agency ethics official, provided that the employee, in seeking
such advice, has made full disclosure of all relevant
circumstances. Where the employee's conduct violates a criminal
statute, reliance on the advice of an agency ethics official
cannot ensure that the employee will not be prosecuted under that
statute. However, good faith reliance on the advice of an agency
ethics official is a
factor that may be taken into account by the Department of
Justice in the selection of cases for prosecution. Disclosures
made by an employee to an agency ethics official are not
protected by an attorney-client privilege. An agency ethics
official is required by 28 U.S.C. 535 to report any information
he receives relating to a violation of the criminal code, title
18 of the United States Code.

Subpart B-Gifts From Outside Sources

2635.201

Overview.

This subpart contains standards that prohibit an employee from
soliciting or accepting any gift from a prohibited source or
given because of the employee's official position unless the item
is excluded from the definition of a gift or falls within one of
the exceptions set forth in this subpart.

2635.202

General standards.

(a) General prohibitions. Except as provided in this subpart, an
employee shall not, directly or indirectly, solicit or accept a
gift:

(1) From a prohibited source; or

(2) Given because of the employee's official position.

(b) Relationship to illegal gratuities statute. Unless accepted
in violation of paragraph (c)(1) of this section, a gift accepted
under the standards set forth in this subpart shall not
constitute an illegal gratuity otherwise prohibited by 18 U.S.C.
201(c)(1)(B).

(c) Limitations on use of exceptions. Notwithstanding any
exception provided in this subpart, other than 2635.204(j), an
employee shall not:

(1) Accept a gift in return for being influenced in the
performance of an official act;

(2) Solicit or coerce the offering of a gift;

(3) Accept gifts from the same or different sources on a basis so
frequent that a reasonable person would be led to believe the
employee is using his public office for private gain;

Example 1: A purchasing agent for a Veterans Administration
hospital routinely deals with representatives of pharmaceutical
manufacturers who provide information about new company products.
Because of his crowded calendar, the purchasing agent has offered
to meet with manufacturer representatives during his lunch hours
Tuesdays through Thursdays and the representatives routinely
arrive at the employee's office bringing a sandwich and a soft
drink for the employee. Even though the market value of each of
the lunches is less than $6 and the aggregate value from any one
manufacturer does not exceed the $50 aggregate limitation in
2635.204(a) on de minimis gifts of $20 or less, the practice of
accepting even these modest gifts on a recurring basis is
improper.

(4) Accept a gift in violation of any statute. Relevant statutes
applicable to all employees include:

(i) 18 U.S.C. 201(b), which prohibits a public official from
seeking, accepting, or agreeing to receive or accept anything of
value in return for being influenced in the performance of an
official act or for being induced to take or omit to take any
action in violation of his official duty. As used in 18 U.S.C.
201(b), the term ``public official'' is broadly construed and
includes regular and special Government employees as well as all
other Government officials;

(ii) 18 U.S.C. 209, which prohibits an employee, other than a
special Government employee, from receiving any salary or any
contribution to or supplementation of salary from any source
other than the United States as compensation for services as a
Government employee. The statute contains several specific
exceptions to this general prohibition, including an exception
for contributions made from the treasury of a State, county, or
municipality; and

(iii) 41 U.S.C. 423(b)(2), which prohibits a procurement official
from seeking, accepting, or agreeing to receive any money,
gratuity, or other thing of value from any officer, employee,
representative, agent, or consultant of a competing contractor
during the conduct of a Federal agency procurement. Implementing
regulations, including exceptions to the gift prohibition, are
contained in the Federal Acquisition Regulation, 48 CFR 3.104;

(5) Accept vendor promotional training contrary to applicable
regulations, policies or guidance relating to the procurement of
supplies and services for the Government, except pursuant to
2635.204(l).

2635.203

Definitions.

For purposes of this subpart, the following definitions shall
apply:

(a) Agency has the meaning set forth in 2635.102(a). However,
for purposes of this subpart, an executive department, as defined
in 5 U.S.C. 101, may, by supplemental agency regulation,
designate as a separate agency any component of that department
which the department determines exercises distinct and separate
functions.

(b) Gift includes any gratuity, favor, discount, entertainment,
hospitality, loan, forbearance, or other item having monetary
value. It includes services as well as gifts of training,
transportation, local travel, lodgings and meals, whether
provided in-kind, by purchase of a ticket, payment in advance, or
reimbursement after the expense has been incurred. It does not
include:

(1) Modest items of food and refreshments, such as soft drinks,
coffee and donuts, offered other than as part of a meal;

(2) Greeting cards and items with little intrinsic value, such as
plaques, certificates, and trophies, which are intended solely
for presentation;

(3) Loans from banks and other financial institutions on terms
generally available to the public;

(4) Opportunities and benefits, including favorable rates and
commercial discounts, available to the public or to a class
consisting of all Government employees or all uniformed military
personnel, whether or not restricted on the basis of geographic
considerations;

(5) Rewards and prizes given to competitors in contests or
events, including random drawings, open to the public unless the
employee's entry into the contest or event is required as part of
his official duties;

(6) Pension and other benefits resulting from continued
participation in an employee welfare and benefits plan maintained
by a former employer;

(7) Anything which is paid for by the Government or secured by
the Government under Government contract;

Note: Some airlines encourage those purchasing tickets to join
programs that award free flights and other benefits to frequent
fliers. Any such benefit earned on the basis of
Government-financed travel belongs to the agency rather than to
the employee and may be accepted only insofar as provided under
41 CFR 301-1.6(b).

(8) Any gift accepted by the Government under specific statutory
authority, including:

(i) Travel, subsistence, and related expenses accepted by an
agency
under the authority of 31 U.S.C. 1353 in connection with an
employee's attendance at a meeting or similar function relating
to his official duties which takes place away from his duty
station. The agency's acceptance must be in accordance with the
implementing regulations at 41 CFR part 304-1; and

(ii) Other gifts provided in-kind which have been accepted by an
agency under its agency gift acceptance statute; or

(9) Anything for which market value is paid by the employee.

(c) Market value means the retail cost the employee would incur
to purchase the gift. An employee who cannot ascertain the market
value of a gift may estimate its market value by reference to the
retail cost of similar items of like quality. The market value of
a gift of a ticket entitling the holder to food, refreshments,
entertainment, or any other benefit shall be the face value of
the ticket.

Example 1: An employee who has been given an acrylic paperweight
embedded with the corporate logo of a prohibited source may
determine its market value based on her observation that a
comparable acrylic paperweight, not embedded with a logo,
generally sells for about $20.

Example 2: A prohibited source has offered an employee a ticket
to a charitable event consisting of a cocktail reception to be
followed by an evening of chamber music. Even though the food,
refreshments, and entertainment provided at the event may be
worth only $20, the market value of the ticket is its $250 face
value.

(d) Prohibited source means any person who:

(1) Is seeking official action by the employee's agency;

(2) Does business or seeks to do business with the employee's
agency;

(3) Conducts activities regulated by the employee's agency;

(4) Has interests that may be substantially affected by
performance or nonperformance of the employee's official duties;
or

(5) Is an organization a majority of whose members are described
in paragraphs (d) (1) through (4) of this section.

(e) A gift is solicited or accepted because of the employee's
official position if it is from a person other than an employee
and would not have been solicited, offered, or given had the
employee not held his position as a Federal employee.

Note: Gifts between employees are subject to the limitations set
forth in subpart C of this part.

Example 1: Where free season tickets are offered by an opera
guild to all members of the Cabinet, the gift is offered because
of their official positions.

(f) A gift which is solicited or accepted indirectly includes a
gift:

(1) Given with the employee's knowledge and acquiescence to his
parent, sibling, spouse, child, or dependent relative because of
that person's relationship to the employee, or

(2) Given to any other person, including any charitable
organization, on the basis of designation, recommendation, or
other specification by the employee, except as permitted for the
disposition of perishable items by 2635.205(a)(2) or for
payments made to charitable organizations in lieu of honoraria
under 2636.204 of this chapter.

Example 1: An employee who must decline a gift of a personal
computer pursuant to this subpart may not suggest that the gift
be given instead to one of five charitable organizations whose
names are provided by the employee.

(g) Vendor promotional training means training provided by any
person for the purpose of promoting its products or services. It
does not include training provided under a Government contract or
by a contractor to facilitate use of products or services it
furnishes under a Government contract.

2635.204

Exceptions.

The prohibitions set forth in 2635.202(a) do not apply to a gift
accepted under the circumstances described in paragraphs (a)
through (l) of this section and a gift accepted in accordance
with one of those paragraphs will not be deemed to violate the
principles set forth in 2635.101(b). Even though acceptance of a
gift may be permitted by one of the exceptions contained in
paragraphs (a) through (l) of this section, it is never
inappropriate and frequently prudent for an employee to decline a
gift offered by a prohibited source or because of his official
position.

(a) Gifts of $20 or less. An employee may accept unsolicited
gifts having an aggregate market value of $20 or less per
occasion, provided that the aggregate market value of individual
gifts received from any one person under the authority of this
paragraph shall not exceed $50 in a calendar year. This exception
does not apply to gifts of cash or of investment interests such
as stock,
bonds, or certificates of deposit. Where the market value of a
gift or the aggregate market value of gifts offered on any single
occasion exceeds $20, the employee may not pay the excess value
over $20 in order to accept that portion of the gift or those
gifts worth $20. Where the aggregate value of tangible items
offered on a single occasion exceeds $20, the employee may
decline any distinct and separate item in order to accept those
items aggregating $20 or less.

Example 1: An employee of the Securities and Exchange Commission
and his spouse have been invited by a representative of a
regulated entity to a Broadway play, tickets to which have a face
value of $30 each. The aggregate market value of the gifts
offered on this single occasion is $60, $40 more than the $20
amount that may be accepted for a single event or presentation.
The employee may not accept the gift of the evening of
entertainment. He and his spouse may attend the play only if he
pays the full $60 value of the two tickets.

Example 2: An employee of the Defense Mapping Agency has been
invited by an association of cartographers to speak about his
agency's role in the evolution of missile technology. At the
conclusion of his speech, the association presents the employee a
framed map with a market value of $18 and a book about the
history of cartography with a market value of $15. The employee
may accept the map or the book, but not both, since the aggregate
value of these two tangible items exceeds $20.

Example 3: On four occasions during the calendar year, an
employee of the Defense Logistics Agency was given gifts worth
$10 each by four employees of a corporation that is a DLA
contractor. For purposes of applying the yearly $50 limitation on
gifts of $20 or less from any one person, the four gifts must be
aggregated because a person is defined at 2635.102(k) to mean
not only the corporate entity, but its officers and employees as
well. However, for purposes of applying the $50 aggregate
limitation, the employee would not have to include the value of a
birthday present received from his cousin, who is employed by the
same corporation, if he can accept the birthday present under the
exception at 2635.204(b) for gifts based on a personal
relationship.

Example 4: Under the authority of 31 U.S.C. 1353 for agencies to
accept payments from non-Federal sources in connection with
attendance at certain meetings or similar functions, the
Environmental Protection Agency has accepted an association's
gift of travel expenses and conference fees for an employee of
its Office of Radiation Programs to attend an international
conference on ``The Chernobyl Experience.'' While at the
conference, the employee may accept a gift of $20 or less from
the association or from another person attending the conference
even though it was not approved in advance by the EPA. Although
31 U.S.C. 1353 is the only authority under which an agency may
accept gifts from certain
non-Federal sources in connection with its employees' attendance
at such functions, a gift of $20 or less accepted under
2635.204(a) is a gift to the employee rather than to his
employing agency.

Example 5: A Navy contracting officer is participating in a
procurement for environmental cleanup services at a Navy
installation that has recently been closed. She is presently
involved in negotiations with three competing contractors, one of
whom has offered her a fancy ballpoint pen embossed with its
corporate logo. Even though the pen has a market value of $18 and
could be accepted under the $20 de minimis exception at
2635.204(a), the contracting officer cannot accept the competing
contractor's gift. Under the procurement integrity provisions at
41 U.S.C. 423, she is a ``procurement official'' for that
contract and, except as specifically permitted by the regulations
implementing that statute, she is prohibited prior to award from
accepting a gift from a competing contractor for that contract.
The Federal Acquisition Regulation at 48 CFR 3.104 contains an
exception for gifts with a market value of $10 or less.

(b) Gifts based on a personal relationship. An employee may
accept a gift given under circumstances which make it clear that
the gift is motivated by a family relationship or personal
friendship rather than the position of the employee. Relevant
factors in making such a determination include the history of the
relationship and whether the family member or friend personally
pays for the gift.

Example 1: An employee of the Federal Deposit Insurance
Corporation has been dating a secretary employed by a member
bank. For Secretary's Week, the bank has given each secretary 2
tickets to an off-Broadway musical review and has urged each to
invite a family member or friend to share the evening of
entertainment. Under the circumstances, the FDIC employee may
accept his girlfriend's invitation to the theater. Even though
the tickets were initially purchased by the member bank, they
were given without reservation to the secretary to use as she
wished, and her invitation to the employee was motivated by their
personal friendship.

Example 2: Three partners in a law firm that handles corporate
mergers have invited an employee of the Federal Trade Commission
to join them in a golf tournament at a private club at the firm's
expense. The entry fee is $500 per foursome. The employee cannot
accept the gift of one-quarter of the entry fee even though he
and the three partners have developed an amicable relationship as
a result of the firm's dealings with the FTC. As evidenced in
part by the fact that the fees are to be paid by the firm, it is
not a personal friendship but a business relationship that is the
motivation behind the partners' gift.

(c) Discounts and similar benefits. In addition to those
opportunities and benefits excluded from the definition of a gift
by 2635.203(b)(4), an employee may accept:

(1) Reduced membership or other fees for participation in
organization activities offered to all Government employees or
all uniformed military personnel by professional organizations if
the only restrictions on membership relate to professional
qualifications; and

(2) Opportunities and benefits, including favorable rates and
commercial discounts not precluded by paragraph (c)(3) of this
section:

(i) Offered to members of a group or class in which membership is
unrelated to Government employment;

(ii) Offered to members of an organization, such as an employees'
association or agency credit union, in which membership is
related to Government employment if the same offer is broadly
available to large segments of the public through organizations
of similar size; or

(iii) Offered by a person who is not a prohibited source to any
group or class that is not defined in a manner that specifically
discriminates among Government employees on the basis of type of
official responsibility or on a basis that favors those of higher
rank or rate of pay; provided, however, that

(3) An employee may not accept for personal use any benefit to
which the Government is entitled as the result of an expenditure
of Government funds.

Example 1: An employee of the Consumer Product Safety Commission
may accept a discount of $50 on a microwave oven offered by the
manufacturer to all members of the CPSC employees' association.
Even though the CPSC is currently conducting studies on the
safety of microwave ovens, the $50 discount is a standard offer
that the manufacturer has made broadly available through a number
of similar organizations to large segments of the public.

Example 2: An Assistant Secretary may not accept a local country
club's offer of membership to all members of Department
Secretariats which includes a waiver of its $5,000 membership
initiation fee. Even though the country club is not a prohibited
source, the offer discriminates in favor of higher ranking
officials.

Example 3: The administrative officer for a district office of
the Immigration and Naturalization Service has signed an INS
order to purchase 50 boxes of photocopy paper from a supplier
whose literature advertises that it will give a free briefcase to
anyone who purchases 50 or more boxes. Because the paper was
purchased with INS funds, the administrative officer cannot keep
the briefcase which, if claimed and received, is Government
property.

(d) Awards and honorary degrees. (1) An employee may accept
gifts, other than cash or an investment interest, with an
aggregate market value of $200 or less if such gifts are a bona
fide award or incident to a bona fide award that is given for
meritorious public service or achievement by a person who does
not have interests that may be substantially affected by the
performance or nonperformance of the employee's official duties
or by an association or other organization the majority of whose
members do not have such interests. Gifts with an aggregate
market value in excess of $200 and awards of cash or investment
interests offered by such persons as awards or incidents of
awards that are given for these purposes may be accepted upon a
written determination by an agency ethics official that the award
is made as part of an established program of recognition:

(i) Under which awards have been made on a regular basis or which
is funded, wholly or in part, to ensure its continuation on a
regular basis; and

(ii) Under which selection of award recipients is made pursuant
to written standards.

(2) An employee may accept an honorary degree from an institution
of higher education as defined at 20 U.S.C. 1141(a) based on a
written determination by an agency ethics official that the
timing of the award of the degree would not cause a reasonable
person to question the employee's impartiality in a matter
affecting the institution.

(3) An employee who may accept an award or honorary degree
pursuant to paragraph (d)(1) or (2) of this section may also
accept meals and entertainment given to him and to members of his
family at the event at which the presentation takes place.

Example 1: Based on a determination by an agency ethics official
that the prize meets the criteria set forth in 2635.204(d)(1),
an employee of the National Institutes of Health may accept the
Nobel Prize for Medicine, including the cash award which
accompanies the prize, even though the prize was conferred on the
basis of laboratory work performed at NIH.

Example 2: Prestigious University wishes to give an honorary
degree to the Secretary of Labor. The Secretary may accept the
honorary degree only if an agency ethics official determines in
writing that the timing of the award of the degree would not
cause a reasonable person to question the Secretary's
impartiality in a matter affecting the university.

Example 3: An ambassador selected by a nonprofit organization as
recipient of its annual award for distinguished service in the
interest of world peace may, together with his wife, and
children, attend the awards ceremony dinner and accept a crystal
bowl worth
$200 presented during the ceremony. However, where the
organization has also offered airline tickets for the ambassador
and his family to travel to the city where the awards ceremony is
to be held, the aggregate value of the tickets and the crystal
bowl exceeds $200 and he may accept only upon a written
determination by the agency ethics official that the award is
made as part of an established program of recognition.

(e) Gifts based on outside business or employment relationships.
An employee may accept meals, lodgings, transportation and other
benefits:

(1) Resulting from the business or employment activities of an
employee's spouse when it is clear that such benefits have not
been offered or enhanced because of the employee's official
position;

Example 1: A Department of Agriculture employee whose husband is
a computer programmer employed by an Agriculture Department
contractor may attend the company's annual retreat for all of its
employees and their families held at a resort facility. However,
under 2635.502, the employee may be disqualified from performing
official duties affecting her husband's employer.

Example 2: Where the spouses of other clerical personnel have not
been invited, an employee of the Defense Contract Audit Agency
whose wife is a clerical worker at a defense contractor may not
attend the contractor's annual retreat in Hawaii for corporate
officers and members of the board of directors, even though his
wife received a special invitation for herself and her spouse.

(2) Resulting from his outside business or employment activities
when it is clear that such benefits have not been offered or
enhanced because of his official status; or

Example 1: The members of an Army Corps of Engineers
environmental advisory committee that meets 6 times per year are
special Government employees. A member who has a consulting
business may accept an invitation to a $50 dinner from her
corporate client, an Army construction contractor, unless, for
example, the invitation was extended in order to discuss the
activities of the committee.

(3) Customarily provided by a prospective employer in connection
with bona fide employment discussions. If the prospective
employer has interests that could be affected by performance or
nonperformance of the employee's duties, acceptance is permitted
only if the employee first has complied with the disqualification
requirements of subpart F of this part applicable when seeking
employment.

Example 1: An employee of the Federal Communications Commission
with responsibility for drafting regulations affecting all cable
television companies wishes to apply for a job opening with a
cable
television holding company. Once she has properly disqualified
herself from further work on the regulations as required by
subpart F of this part, she may enter into employment discussions
with the company and may accept the company's offer to pay for
her airfare, hotel and meals in connection with an interview
trip.

(4) For purposes of paragraphs (e)(1) through (3) of this
section, employment shall have the meaning set forth in
2635.603(a).

(f) Gifts from a political organization. An employee who is
exempt under 5 U.S.C. 7324(d) from the Hatch Act prohibitions
against active participation in political management or political
campaigns may accept meals, lodgings, transportation and other
benefits, including free attendance at events, when provided, in
connection with such active participation, by a political
organization described in 26 U.S.C. 527(e). Any other employee,
such as a security officer, whose official duties require him to
accompany an exempt employee to a political event may accept
meals, free attendance and entertainment provided at the event by
such a political organization.

Example 1: The Secretary of the Department of Health and Human
Services is exempt from the noted Hatch Act restrictions. He may
accept an airline ticket and hotel accommodations furnished by
the campaign committee of a candidate for the United States
Senate in order to give a speech in support of the candidate.

(g) Widely attended gatherings and other events-(1) Speaking and
similar engagements. When an employee is assigned to participate
as a speaker or panel participant or otherwise to present
information on behalf of the agency at a conference or other
event, his acceptance of an offer of free attendance at the event
on the day of his presentation is permissible when provided by
the sponsor of the event. The employee's participation in the
event on that day is viewed as a customary and necessary part of
his performance of the assignment and does not involve a gift to
him or to the agency.

(2) Widely attended gatherings. When there has been a
determination that his attendance is in the interest of the
agency because it will further agency programs or operations, an
employee may accept a sponsor's unsolicited gift of free
attendance at all or appropriate parts of a widely attended
gathering of mutual interest to a number of parties. A gathering
is widely attended if, for example, it is open to members from
throughout a given industry or profession or if those in
attendance represent a range of persons interested in a given
matter. For employees subject to a leave system, attendance at
the event shall be on the employee's own time or, if authorized
by the employee's agency, on excused absence pursuant to
applicable guidelines for granting such absence, or otherwise
without charge to the employee's leave account.

(3) Determination of agency interest. The determination of agency
interest required by paragraph (g)(2) of this section shall be
made orally or in writing by the agency designee.

(i) If the sponsor is a person who has interests that may be
substantially affected by the performance or nonperformance of an
employee's official duties or an association or organization the
majority of whose members have such interests, the employee's
participation may be determined to be in the interest of the
agency only where there is a written finding by the agency
designee that the agency's interest in the employee's
participation in the event outweighs concern that acceptance of
the gift of free attendance may or may appear to improperly
influence the employee in the performance of his official duties.
Relevant factors that should be considered by the agency designee
include the importance of the event to the agency, the nature and
sensitivity of any pending matter affecting the interests of the
sponsor of the event, the significance of the employee's role in
any such matter, the purpose of the event, the identity of other
expected participants and the monetary value of the gift of free
attendance.

(ii) A blanket determination of agency interest may be issued to
cover all or any category of invitees other than those as to whom
a finding is required by paragraph (g)(3)(i) of this section.
Where a finding under paragraph (g)(3)(i) of this section is
required, a written determination of agency interest, including
the necessary finding, may be issued to cover two or more
employees whose duties similarly affect the interests of the
sponsor or its members.

(4) Free attendance. For purposes of paragraphs (g) (1) and (2)
of this section, free attendance may include waiver of all or
part of a conference or other fee or the provision of food,
refreshments, entertainment, instruction and materials furnished
to all attendees as an integral part of the event. It does not
include travel expenses, lodgings, entertainment collateral to
the event, or meals taken other than in a group setting with all
other attendees.

Note: There are statutory authorities implemented other than by
part 2635 under which an agency or an employee may be able to
accept free attendance or other items not included in the
definition of free attendance, such as travel expenses.

(5) Cost provided by sponsor of event. The cost of the employee's
attendance will not be considered to be provided by the sponsor
where a person other than the sponsor designates the employee to
be invited and bears the cost of the employee's attendance
through a contribution or other payment intended to facilitate
that employee's attendance. Payment of dues or a similar
assessment to a sponsoring organization does not constitute a
payment intended to facilitate a particular employee's
attendance.

(6) Accompanying spouse. When others in attendance will generally
be accompanied by spouses, the agency designee may authorize an
employee to accept a sponsor's invitation to an accompanying
spouse to participate in all or a portion of the event at which
the employee's free attendance is permitted under paragraph
(g)(1) or (2) of this section. The authorization required by this
paragraph may be provided orally or in writing.

Example 1: An aerospace industry association that is a prohibited
source sponsors a seminar for which it charges a fee of $100. An
Air Force contractor pays $500 to the association so that the
association can extend free invitations to five Air Force
officials designated by the contractor. The Air Force officials
may not accept the gifts of free attendance. Because the
contractor specified the invitees and bore the cost of their
attendance, the gift of free attendance is considered to be
provided by the company and not by the sponsoring association.
Had the contractor paid $500 to the association in order that it
might invite any five Federal employees, an Air Force official to
whom the sponsoring association extended one of the five
invitations could attend if his participation were determined to
be in the interest of the agency.

Example 2: An employee of the Department of the Treasury
authorized to participate in a panel discussion of economic
issues as part of a one-day conference may accept the sponsor's
waiver of the conference fee. Under the separate authority of
2635.204(a), he may accept a token of appreciation for his
speech having a market value of $20 or less.

Example 3: An Assistant U.S. Attorney is invited to attend a
luncheon meeting of a local bar association to hear a
distinguished judge lecture on cross-examining expert witnesses.
Although members of the bar association are assessed a $15 fee
for the meeting, the Assistant U.S. Attorney may accept the bar
association's offer to attend for free, even without a
determination of agency interest. The gift can be accepted under
the $20 de minimis exception at 2635.204(a).

Example 4: An employee of the Department of the Interior
authorized to speak on the first day of a four-day conference on
endangered species may accept the sponsor's waiver of the
conference fee for the first day of the conference. If the
conference is widely attended, he may be authorized, based on a
determination that his attendance is in the agency's interest, to
accept the sponsor's offer to waive the attendance fee for the
remainder of the conference.

(h) Social invitations from persons other than prohibited
sources. An employee may accept food, refreshments and
entertainment, not including travel or lodgings, at a social
event attended by several persons where:

(1) The invitation is from a person who is not a prohibited
source; and

(2) No fee is charged to any person in attendance.

Example 1: Along with several other Government officials and a
number of individuals from the private sector, the Administrator
of the Environmental Protection Agency has been invited to the
premier showing of a new adventure movie about industrial
espionage. The producer is paying all costs of the showing. The
Administrator may accept the invitation since the producer is not
a prohibited source and no attendance fee is being charged to
anyone who has been invited.

Example 2: An employee of the White House Press Office has been
invited to a cocktail party given by a noted Washington hostess
who is not a prohibited source. The employee may attend even
though he has only recently been introduced to the hostess and
suspects that he may have been invited because of his official
position.

(i) Meals, refreshments and entertainment in foreign areas. An
employee assigned to duty in, or on official travel to, a foreign
area as defined in 41 CFR 301-7.3(c) may accept food,
refreshments or entertainment in the course of a breakfast,
luncheon, dinner or other meeting or event provided:

(1) The market value in the foreign area of the food,
refreshments or entertainment provided at the meeting or event,
as converted to U.S. dollars, does not exceed the per diem rate
for the foreign area specified in the U.S. Department of State's
Maximum Per Diem Allowances for Foreign Areas, Per Diem
Supplement Section 925 to the Standardized Regulations (GC,FA)
available from the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402;

(2) There is participation in the meeting or event by non-U.S.
citizens or by representatives of foreign governments or other
foreign entities;

(3) Attendance at the meeting or event is part of the employee's
official duties to obtain information, disseminate information,
promote the export of U.S. goods and services, represent the
United States or otherwise further programs or operations of the
agency or the U.S. mission in the foreign area; and

(4) The gift of meals, refreshments or entertainment is from a
person other than a foreign government as defined in 5 U.S.C.
7342(a)(2).

Example 1: A number of local businessmen in a developing country
are anxious for a U.S. company to locate a manufacturing facility
in their province. An official of the Overseas Private Investment
Corporation may accompany the visiting vice president of the U.S.
company to a dinner meeting hosted by the businessmen at a
province restaurant where the market value of the food and
refreshments does
not exceed the per diem rate for that country.

(j) Gifts to the President or Vice President. Because of
considerations relating to the conduct of their offices,
including those of protocol and etiquette, the President or the
Vice President may accept any gift on his own behalf or on behalf
of any family member, provided that such acceptance does not
violate 2635.202(c) (1) or (2), 18 U.S.C. 201(b) or 201(c)(3),
or the Constitution of the United States.

(k) Gifts authorized by supplemental agency regulation. An
employee may accept any gift the acceptance of which is
specifically authorized by a supplemental agency regulation.

(l) Gifts accepted under specific statutory authority. The
prohibitions on acceptance of gifts from outside sources
contained in this subpart do not apply to any item, receipt of
which is specifically authorized by statute. Gifts which may be
received by an employee under the authority of specific statutes
include, but are not limited to:

(1) Free attendance, course or meeting materials, transportation,
lodgings, food and refreshments or reimbursements therefor
incident to training or meetings when accepted by the employee
under the authority of 5 U.S.C. 4111 from an organization with
tax-exempt status under 26 U.S.C. 501(c)(3) or from a person to
whom the prohibitions in 18 U.S.C. 209 do not apply. The
employee's acceptance must be approved by the agency in
accordance with 410.701 through 410.706 of this title; or

Note: 26 U.S.C. 501(c)(3) is authority for tax-exempt treatment
of a limited class of nonprofit organizations, including those
organized and operated for charitable, religious or educational
purposes. Many nonprofit organizations are not exempt from
taxation under this section.

(2) Gifts from a foreign government or international or
multinational organization, or its representative, when accepted
by the employee under the authority of the Foreign Gifts and
Decorations Act, 5 U.S.C. 7342. As a condition of acceptance, an
employee must comply with requirements imposed by the agency's
regulations or procedures implementing that Act.

2635.205

Proper disposition of prohibited gifts.

(a) An employee who has received a gift that cannot be accepted
under this subpart shall, unless the gift is accepted by an
agency acting under specific statutory authority:

(1) Return any tangible item to the donor or pay the donor its
market value. An employee who cannot ascertain the actual market
value of an item may estimate its market value by reference to
the retail cost of similar items of like quality. See
2635.203(c).

Example 1: To avoid public embarrassment to the seminar sponsor,
an employee of the National Park Service did not decline a
barometer worth $200 given at the conclusion of his speech on
Federal lands policy. The employee must either return the
barometer or promptly reimburse the sponsor $200.

(2) When it is not practical to return a tangible item because it
is perishable, the item may, at the discretion of the employee's
supervisor or an agency ethics official, be given to an
appropriate charity, shared within the recipient's office, or
destroyed.

Example 1: With approval by the recipient's supervisor, a floral
arrangement sent by a disability claimant to a helpful employee
of the Social Security Administration may be placed in the
office's reception area.

(3) For any entertainment, favor, service, benefit or other
intangible, reimburse the donor the market value. Subsequent
reciprocation by the employee does not constitute reimbursement.

Example 1: A Department of Defense employee wishes to attend a
charitable event to which he has been offered a $300 ticket by a
prohibited source. Although his attendance is not in the interest
of the agency under 2635.204(g), he may attend if he reimburses
the donor the $300 face value of the ticket.

(4) Dispose of gifts from foreign governments or international
organizations in accordance with 41 CFR part 101-49, and dispose
of materials received in conjunction with official travel in
accordance with 41 CFR 101-25.103.

(b) An agency may authorize disposition or return of gifts at
Government expense. Employees may use penalty mail to forward
reimbursements required or permitted by this section.

(c) An employee who, on his own initiative, promptly complies
with the requirements of this section will not be deemed to have
improperly accepted an unsolicited gift. An employee who promptly
consults his agency ethics official to determine whether
acceptance of an unsolicited gift is proper and who, upon the
advice of the ethics official, returns the gift or otherwise
disposes of the gift in accordance with this section, will be
considered to have complied with the requirements of this section
on his own initiative.

Subpart C-Gifts Between Employees

2635.301

Overview.

This subpart contains standards that prohibit an employee from
giving, donating to, or soliciting contributions for, a gift to
an official superior and from accepting a gift from an employee
receiving less pay than himself, unless the item is excluded from
the definition of a gift or falls within one of the exceptions
set forth in this subpart.

2635.302

General standards.

(a) Gifts to superiors. Except as provided in this subpart, an
employee may not:

(1) Directly or indirectly, give a gift to or make a donation
toward a gift for an official superior; or

(2) Solicit a contribution from another employee for a gift to
either his own or the other employee's official superior.

(b) Gifts from employees receiving less pay. Except as provided
in this subpart, an employee may not, directly or indirectly,
accept a gift from an employee receiving less pay than himself
unless:

(1) The two employees are not in a subordinate-official superior
relationship; and

(2) There is a personal relationship between the two employees
that would justify the gift.

(c) Limitation on use of exceptions. Notwithstanding any
exception provided in this subpart, an official superior shall
not coerce the offering of a gift from a subordinate.

2635.303

Definitions.

For purposes of this subpart, the following definitions shall
apply:

(a) Gift has the meaning set forth in 2635.203(b). For purposes
of that definition an employee will be deemed to have paid market
value for any benefit received as a result of his participation
in any carpool or other such mutual arrangement involving another
employee or other employees if he bears his fair proportion of
the expense or effort involved.

(b) Indirectly, for purposes of 2635.302(b), has the meaning set
forth in 2635.203(f). For purposes of 2635.302(a), it includes
a
gift:

(1) Given with the employee's knowledge and acquiescence by his
parent, sibling, spouse, child, or dependent relative; or

(2) Given by a person other than the employee under circumstances
where the employee has promised or agreed to reimburse that
person or to give that person something of value in exchange for
giving the gift.

(d) Official superior means any other employee, other than the
President and the Vice President, including but not limited to an
immediate supervisor, whose official responsibilities include
directing or evaluating the performance of the employee's
official duties or those of any other official superior of the
employee. For purposes of this subpart, an employee is considered
to be the subordinate of any of his official superiors.

(e) Solicit means to request contributions by personal
communication or by general announcement.

(f) Voluntary contribution means a contribution given freely,
without pressure or coercion. A contribution is not voluntary
unless it is made in an amount determined by the contributing
employee, except that where an amount for a gift is included in
the cost for a luncheon, reception or similar event, an employee
who freely chooses to pay a proportionate share of the total cost
in order to attend will be deemed to have made a voluntary
contribution. Except in the case of contributions for a gift
included in the cost of a luncheon, reception or similar event, a
statement that an employee may choose to contribute less or not
at all shall accompany any recommendation of an amount to be
contributed for a gift to an official superior.

Example 1: A supervisory employee of the Agency for International
Development has just been reassigned from Washington, DC to
Kabul, Afghanistan. As a farewell party, 12 of her subordinates
have decided to take her out to lunch at the Khyber Repast. It is
understood that each will pay for his own meal and that the cost
of the supervisor's lunch will be divided equally among the
twelve. Even though the amount they will contribute is not
determined until the supervisor orders lunch, the contribution
made by those who choose to participate in the farewell lunch is
voluntary.

2635.304

Exceptions.

The prohibitions set forth in 2635.302(a) and (b) do not apply
to
a gift given or accepted under the circumstances described in
paragraph (a) or (b) of this section. A contribution or the
solicitation of a contribution that would otherwise violate the
prohibitions set forth in 2635.302(a) and (b) may only be made
in accordance with paragraph (c) of this section.

(a) General exceptions. On an occasional basis, including any
occasion on which gifts are traditionally given or exchanged, the
following may be given to an official superior or accepted from a
subordinate or other employee receiving less pay:

(1) Items, other than cash, with an aggregate market value of $10
or less per occasion;

(2) Items such as food and refreshments to be shared in the
office among several employees;

(3) Personal hospitality provided at a residence which is of a
type and value customarily provided by the employee to personal
friends;

(4) Items given in connection with the receipt of personal
hospitality if of a type and value customarily given on such
occasions; and

(5) Leave transferred under subpart I of part 630 of this title
to an employee who is not an immediate supervisor, unless
obtained in violation of 630.912 of this title.

Example 1: Upon returning to work following a vacation at the
beach, a claims examiner with the Department of Veterans Affairs
may give his supervisor, and his supervisor may accept, a bag of
saltwater taffy purchased on the boardwalk for $8.

Example 2: An employee of the Federal Deposit Insurance
Corporation whose bank examination responsibilities require
frequent travel may not bring her supervisor, and her supervisor
may not accept, souvenir coffee mugs from each of the cities she
visits in the course of performing her duties, even though each
of the mugs costs less than $5. Gifts given on this basis are not
occasional.

Example 3: The Secretary of Labor has invited the agency's
General Counsel to a dinner party at his home. The General
Counsel may bring a $15 bottle of wine to the dinner party and
the Secretary may accept this customary hostess gift from his
subordinate, even though its cost is in excess of $10.

Example 4: For Christmas, a secretary may give his supervisor,
and the supervisor may accept, a poinsettia plant purchased for
$10 or less. The secretary may also invite his supervisor to a
Christmas party in his home and the supervisor may attend.

(b) Special, infrequent occasions. A gift appropriate to the
occasion may be given to an official superior or accepted from a
subordinate or other employee receiving less pay:

(1) In recognition of infrequently occurring occasions of
personal significance such as marriage, illness, or the birth or
adoption of a child; or

(2) Upon occasions that terminate a subordinate-official superior
relationship, such as retirement, resignation, or transfer.

Example 1: The administrative assistant to the personnel director
of the Tennessee Valley Authority may send a $30 floral
arrangement to the personnel director who is in the hospital
recovering from surgery. The personnel director may accept the
gift.

Example 2: A chemist employed by the Food and Drug Administration
has been invited to the wedding of the lab director who is his
official superior. He may give the lab director and his bride,
and they may accept, a place setting in the couple's selected
china pattern purchased for $70.

Example 3: Upon the occasion of the supervisor's retirement from
Federal service, an employee of the Fish and Wildlife Service may
give her supervisor a book of wildlife photographs which she
purchased for $19. The retiring supervisor may accept the book.

(c) Voluntary contributions. An employee may solicit voluntary
contributions of nominal amounts from fellow employees for an
appropriate gift to an official superior and an employee may make
a voluntary contribution of a nominal amount to an appropriate
gift to an official superior:

(1) On a special, infrequent occasion as described in paragraph
(b) of this section; or

(2) On an occasional basis, for items such as food and
refreshments to be shared in the office among several employees.

An employee may accept such gifts to which a subordinate or other
employee receiving less pay than himself has contributed.

Example 1: To mark the occasion of his retirement, members of the
immediate staff of the Under Secretary of the Army would like to
give him a party and provide him with a gift certificate. They
may distribute an announcement of the party and include a nominal
amount for a retirement gift in the fee for the party.

Example 2: The General Counsel of the National Endowment for the
Arts may not collect contributions for a Christmas gift for the
Chairman. Christmas occurs annually and is not an occasion of
personal significance.

Example 3: Subordinates may not take up a collection for a gift
to an official superior on the occasion of the superior's
swearing in or promotion to a higher grade position within the
supervisory chain of that organization. These are not events that
mark the termination of the subordinate-official superior
relationship, nor are they events of personal significance within
the meaning of 2635.304(b). However, subordinates may take up a
collection and employees may contribute $3 each to buy
refreshments to be consumed by everyone in the immediate office
to mark either such occasion.

Example 4: Subordinates may each contribute a nominal amount to a
fund to give a gift to an official superior upon the occasion of
that superior's transfer or promotion to a position outside the
organization.

Example 5: An Assistant Secretary at the Department of the
Interior is getting married. His secretary has decided that a
microwave oven would be a nice gift from his staff and has
informed each of the Assistant Secretary's subordinates that they
should contribute $5 for the gift. Her method of collection is
improper. Although she may recommend a $5 contribution, the
recommendation must be coupled with a statement that the employee
whose contribution is solicited is free to contribute less or
nothing at all.

Subpart D-Conflicting Financial Interests

2635.401

Overview.

This subpart contains two provisions relating to financial
interests. One is a disqualification requirement and the other is
a prohibition on acquiring or continuing to hold specific
financial interests. An employee may acquire or hold any
financial interest not prohibited by 2635.403. Notwithstanding
that his acquisition or holding of a particular interest is
proper, an employee is prohibited in accordance with 2635.402 of
this subpart from participating in an official capacity in any
particular matter in which, to his knowledge, he or any person
whose interests are imputed to him has a financial interest, if
the particular matter will have a direct and predictable effect
on that interest.

2635.402

Disqualifying financial interests.

(a) Statutory prohibition. An employee is prohibited by criminal
statute, 18 U.S.C. 208(a), from participating personally and
substantially in an official capacity in any particular matter in
which, to his knowledge, he or any person whose interests are
imputed to him under this statute has a financial interest, if
the
particular matter will have a direct and predictable effect on
that interest.

Note: Standards applicable when seeking non-Federal employment
are contained in subpart F of this part and, if followed, will
ensure that an employee does not violate 18 U.S.C. 208(a) or this
section when he is negotiating for or has an arrangement
concerning future employment. In all other cases where the
employee's participation would violate 18 U.S.C. 208(a), an
employee shall disqualify himself from participation in the
matter in accordance with paragraph (c) of this section or obtain
a waiver, as described in paragraph (d) of this section.

(b) Definitions. For purposes of this section, the following
definitions shall apply:

(1) Direct and predictable effect. (i) A particular matter will
have a direct effect on a financial interest if there is a close
causal link between any decision or action to be taken in the
matter and any expected effect of the matter on the financial
interest. An effect may be direct even though it does not occur
immediately. A particular matter will not have a direct effect on
a financial interest, however, if the chain of causation is
attenuated or is contingent upon the occurrence of events that
are speculative or that are independent of, and unrelated to, the
matter. A particular matter that has an effect on a financial
interest only as a consequence of its effects on the general
economy does not have a direct effect within the meaning of this
subpart.

(ii) A particular matter will have a predictable effect if there
is a real, as opposed to a speculative possibility that the
matter will affect the financial interest. It is not necessary,
however, that the magnitude of the gain or loss be known, and the
dollar amount of the gain or loss is immaterial.

Note: If a particular matter involves a specific party or
parties, generally the matter will at most only have a direct and
predictable effect, for purposes of this subpart, on a financial
interest of the employee in or with a party, such as the
employee's interest by virtue of owning stock. There may,
however, be some situations in which, under the above standards,
a particular matter will have a direct and predictable effect on
an employee's financial interests in or with a nonparty. For
example, if a party is a corporation, a particular matter may
also have a direct and predictable effect on an employee's
financial interests through ownership of stock in an affiliate,
parent, or subsidiary of that party. Similarly, the disposition
of a protest against the award of a contract to a particular
company may also have a direct and predictable effect on an
employee's financial interest in another company listed as a
subcontractor in the proposal of one of the competing offerors.

Example 1: An employee of the National Library of Medicine at the
National Institutes of Health has just been asked to serve on the
technical evaluation panel to review proposals for a new library
computer search system. DEF Computer Corporation, a closely held
company in which he and his wife own a majority of the stock, has
submitted a proposal. Because award of the systems contract to
DEF or to any other offeror will have a direct and predictable
effect on both his and his wife's financial interests, the
employee cannot participate on the technical evaluation team
unless his disqualification has been waived.

Example 2: Upon assignment to the technical evaluation panel, the
employee in the preceding example finds that DEF Computer
Corporation has not submitted a proposal. Rather, LMN Corp., with
which DEF competes for private sector business, is one of the six
offerors. The employee is not disqualified from serving on the
technical evaluation panel. Any effect on the employee's
financial interests as a result of the agency's decision to award
or not award the systems contract to LMN would be at most
indirect and speculative.

(2) Imputed interests. For purposes of 18 U.S.C. 208(a) and this
subpart, the financial interests of the following persons will
serve to disqualify an employee to the same extent as if they
were the employee's own interests:

(i) The employee's spouse;

(ii) The employee's minor child;

(iii) The employee's general partner;

(iv) An organization or entity which the employee serves as
officer, director, trustee, general partner or employee; and

(v) A person with whom the employee is negotiating for or has an
arrangement concerning prospective employment. (Employees who are
seeking other employment should refer to and comply with the
standards in subpart F of this part).

Example 1: An employee of the Department of Education serves
without compensation on the board of directors of Kinder World,
Inc., a nonprofit corporation that engages in good works. Even
though her personal financial interests will not be affected, the
employee must disqualify herself from participating in the review
of a grant application submitted by Kinder World. Award or denial