Standards of Ethical Conduct for Employees of the Executive Branch; Amendments to the Seeking Other Employment Rules, 8008-8015 [2016-03214]

Agencies

• Office of Government Ethics

[Federal Register Volume 81, Number 31 (Wednesday, February 17, 2016)]
[Proposed Rules]
[Pages 8008-8015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03214]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 81, No. 31 / Wednesday, February 17, 2016 / 
Proposed Rules

[[Page 8008]]



OFFICE OF GOVERNMENT ETHICS

5 CFR Part 2635

RIN 3209-AA04


Standards of Ethical Conduct for Employees of the Executive 
Branch; Amendments to the Seeking Other Employment Rules

AGENCY: Office of Government Ethics (OGE).

ACTION: Proposed rule.

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SUMMARY: The Office of Government Ethics is amending the Standards of 
Ethical Conduct for Employees of the Executive Branch regarding seeking 
other employment, to conform with interpretive advice, update examples, 
improve clarity, and make technical corrections. In addition, the 
proposed amendments implement the statutory notification requirements 
that apply to individuals required to file public financial disclosure 
reports under section 101 of the Ethics in Government Act of 1978 when 
they negotiate for or have an agreement of future employment or 
compensation.

DATES: Written comments are invited and, in order to ensure 
consideration, must be received on or before April 18, 2016.

ADDRESSES: You may submit comments, in writing, to OGE on this proposed 
rule, identified by RIN 3209-AA04, by any of the following methods:
    Email: usoge@oge.gov. Include the reference ``Proposed Amendments 
to Subpart F'' in the subject line of the message.
    Fax: (202) 482-9237.
    Mail/Hand Delivery/Courier: Office of Government Ethics, Suite 500, 
1201 New York Avenue NW., Washington, DC 20005-3917, Attention: 
``Proposed Amendments to Subpart F.''
    Instructions: All submissions must include OGE's agency name and 
the Regulation Identifier Number (RIN), 3209-AA04, for this proposed 
rulemaking. All comments, including attachments and other supporting 
materials, will become part of the public record and subject to public 
disclosure. Comments may be posted on OGE's Web site, www.oge.gov. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments generally will not 
be edited to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Elaine Newton, Associate Counsel, or 
Rachel Dowell, Assistant Counsel, Office of Government Ethics, Suite 
500, 1201 New York Avenue NW., Washington, DC 20005-3917; Telephone: 
(202) 482-9300; TTY: (800) 877-8339; FAX: (202) 482-9237.

SUPPLEMENTARY INFORMATION: 

I. Background

    Executive Order 12674, which was issued on April 12, 1989, and 
later modified by Executive Order 12731 (Executive Order), sets forth 
basic obligations of public service and enumerates 14 principles of 
ethical conduct for Government officers and employees. The Executive 
Order also authorizes the Office of Government Ethics (OGE), in 
consultation with the Department of Justice (DOJ) and the Office of 
Personnel Management (OPM), to issue ``regulations that establish a 
single, comprehensive, and clear set of executive branch standards of 
conduct.'' On August 7, 1992, OGE published the Standards of Ethical 
Conduct for Employees of the Executive Branch, codified at 5 CFR part 
2635. See 57 FR 35005-35067, August 7, 1992, as amended.
    These uniform standards include a recusal requirement in subpart F 
that applies to employees seeking employment with persons whose 
financial interests would be directly and predictably affected by 
particular matters in which the employees participate personally and 
substantially. Subpart F combines the standards imposed by criminal 
statute with the standards imposed by the Executive order. In part, 
subpart F implements 18 U.S.C. 208(a), which requires an employee's 
recusal from participation in any particular matter that, to the 
employee's knowledge, will have a direct and predictable effect on the 
financial interests of a person with whom the employee is negotiating 
or has any arrangement concerning prospective employment. Beyond this 
statutory requirement, subpart F addresses issues of lack of 
impartiality that require recusal from any particular matter that 
affects the financial interests of a prospective employer, even where 
the employee's actions in seeking employment may fall short of 
negotiating for employment.
    Pursuant to section 402 of the Ethics in Government Act of 1978, 
the Director of OGE is responsible for periodically reviewing and 
updating the regulations as needed. Accordingly, OGE is proposing to 
amend subpart F by reorganizing and expounding upon certain existing 
subpart F provisions, as well as by adding certain new provisions and 
examples. In addition, the proposed amendments would implement new 
notification requirements under section 17 of the Stop Trading on 
Congressional Knowledge Act of 2012 (STOCK Act), Pub. L. 112-105, 126 
Stat. 303, 5 U.S.C. app. 101 note, which apply to employees who file 
public financial disclosure reports. In formulating this proposed rule, 
OGE has consulted with DOJ and OPM pursuant to section 201(a) of 
Executive Order 12674, as modified by Executive Order 12731, and the 
authorities contained in titles I and IV of the Ethics in Government 
Act of 1978. OGE has also solicited and considered the views of 
executive branch agency ethics officials.

II. Analysis of Proposed Amendments

    In addition to the specific changes discussed below, OGE is 
proposing a number of non-substantive changes. OGE proposes to renumber 
and reorganize the examples to follow the sequence of the regulations; 
revise examples for clarity; update legal citations; include references 
to section 17 of the STOCK Act and new Sec.  2635.607, where 
applicable; reword language paraphrasing 18 U.S.C. 208(a) to align the 
regulatory language with the statute; and modernize language by 
replacing the words ``he,'' ``shall,'' and ``disqualification.''

A. Section 2635.602--Applicability and Related Considerations

    OGE proposes to restructure the introductory paragraph for clarity. 
New subsection (a)(2) clarifies that, with the passage of the STOCK 
Act, a public filer who negotiates for or has an agreement of future 
employment or compensation must comply with the requirements in

[[Page 8009]]

new Sec.  2635.607. The proposed regulation also emphasizes that 
employees are strongly encouraged to consult with their ethics 
officials when they have questions about how subpart F may apply to 
them. OGE is proposing two new examples to illustrate these concepts.

B. Section 2635.603--Definitions

1. Definition of ``Employment''
    OGE proposes to add a new example to Sec.  2635.603(a) to clarify 
that certain volunteer activities are not considered ``employment'' 
under this subpart. In the preamble to the final rule, 57 FR 35006, 
Aug. 7, 1992, OGE discussed the types of volunteer services, such as 
washing dishes one night a week at a soup kitchen, that do not involve 
an employment or other specified relationship. Consistent with that 
discussion, a new example illustrates the types of informal, 
uncompensated, and non-fiduciary volunteer services that are not 
considered ``employment'' under this subpart.
2. Definition of ``Seeking Employment''
    OGE is amending the definition of ``seeking employment'' in several 
ways to provide additional clarity. To begin, OGE proposes to delete 
the exclusion at Sec.  2635.603(b)(1)(ii)(B) and incorporate this 
provision as a limitation to the recusal obligation in Sec.  2635.604. 
This makes no substantive change to the regulation. The only effect of 
the exclusion at Sec.  2635.603(b)(1)(ii)(B) was to limit an employee's 
recusal obligations. Accordingly, OGE believes that this provision is 
more appropriately included as a limitation to the recusal obligation 
in Sec.  2635.604. OGE also proposes to revise and move the two 
corresponding examples from Sec.  2635.603(b), Examples 4 and 5, to 
Sec.  2635.604(a) as Examples 3 and 4, to clarify the limitation to the 
recusal obligation under Sec.  2635.604.
    OGE is also adding new and revised examples to address 
informational discussions; highlight the distinction between seeking 
employment within the meaning of Sec.  2635.603(b)(1)(ii) or (iii) and 
negotiating for employment within the meaning of Sec.  
2635.603(b)(1)(i); address whether an employee is ``seeking 
employment'' when the employee uses a social networking or resume-
posting site; and provide practical guidance on rejecting employment 
inquiries from prospective employers.
    In regard to social media, which has not been explicitly addressed 
in subpart F, three new examples clarify that the rules in this subpart 
apply regardless of the method the employee uses when seeking 
employment. Specifically, these examples illustrate that the posting of 
a profile, resume, or other employment information that is not targeted 
to a specific person is not considered an unsolicited communication 
with an entity regarding possible employment. Rather, such a posting 
would be akin to posting a resume on a bulletin board. Likewise, the 
employee would not be seeking employment with a person if the employee 
received a notification or email from a person until the employee makes 
a response other than a rejection.
3. Definition of ``Prospective Employer''
    A new example in the proposed regulation illustrates that online 
resume distribution services are treated like employment search firms 
for purposes of determining when an employee has begun seeking 
employment.
4. Definition of ``Public Filer''
    Section 17 of the STOCK Act establishes new notification 
requirements for an individual required to file a financial disclosure 
report under section 101 of the Ethics in Government Act of 1978 (5 
U.S.C. app. 101). OGE proposes to include a definition of ``public 
filer'' describing the individuals who must submit such notification 
statements.

C. Section 2635.604--Recusal While Seeking Employment

    OGE proposes to revise Sec.  2635.604 for clarity and reorganize 
Sec.  2635.604(a) into two subsections. As discussed above, the 
proposed language includes a new Sec.  2635.604(a)(2) to replace an 
exclusion to the definition of ``seeking employment'' in Sec.  
2635.603(b)(1)(ii)(B). This is not a new exception; rather, it merely 
moves the exclusion found at Sec.  2635.603(b)(1)(ii)(B) to a more 
logical location in the subpart.
    OGE has added a new example to emphasize that the recusal 
obligation in Sec.  2635.604(a) is not limited to particular matters 
involving specific parties but is also applicable to particular matters 
of general applicability. In addition, OGE proposes to revise Sec.  
2635.604(b) to emphasize that employees are obligated to take whatever 
steps are necessary to ensure that they do not participate in 
particular matters from which they are recused. The proposed revision 
emphasizes that these steps can include written recusals, which 
employees may file with ethics officials.

D. Section 2635.605--Waiver or Authorization Permitting Participation 
While Seeking Employment

    OGE proposes to add a new requirement that any authorizations under 
Sec.  2635.605(b) must be in writing.

E. Proposed Sec.  2635.607--Notification Requirements for Public 
Financial Disclosure Filers Regarding Negotiations or Agreement of 
Future Employment or Compensation

    OGE proposes to add a new Sec.  2635.607 to implement section 17 of 
the STOCK Act. Section 17 of the STOCK Act requires a public filer who 
is negotiating for or has an agreement of future employment or 
compensation to file a statement notifying the agency ethics official 
of such negotiation or agreement within three business days after 
commencement of the negotiation or agreement. A public filer who files 
a notification statement regarding the negotiation or agreement also 
must file a notification regarding recusal whenever there is a conflict 
of interest or appearance of a conflict of interest with respect to the 
entity identified in the notification. In addition, this section 
affirms the recusal obligations addressed in the Standards of Ethical 
Conduct and, where applicable, 18 U.S.C. 208.
    OGE issued interpretive guidance for implementing section 17 of the 
STOCK Act on April 6, 2012, and April 25, 2013. See OGE, LA 12-01, 
available at https://www.oge.gov/OGE-Advisories/Legal-Advisories/LA-12-
01--Post-Employment-Negotiation-and-Recusal-Requirements-under-the-
STOCK-Act/, and OGE, LA 13-06, available at https://www.oge.gov/OGE-
Advisories/Legal-Advisories/LA-13-06--Notification-of-Negotiations-for-
Post-Government-Compensation-under-Section-17-of-the-STOCK-Act/. New 
Sec.  2635.607 is consistent with this guidance.
    Pursuant to OGE's authority under the Ethics in Government Act and 
Executive Order 12731, and consistent with OGE's interpretive guidance, 
OGE proposes to extend the notification requirement to negotiations for 
or agreements of future employment or compensation with all non-federal 
entities. The notification requirements under section 17 of the STOCK 
Act apply only to ``private'' entities. Because the potential for 
conflicts of interest is not limited to private entities, the proposed 
regulations cover all prospective non-federal employers. In addition, 
OGE proposes to include a provision allowing public filers to elect to 
file the notification statement, recusal statement, or both before 
negotiations

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have commenced and before an agreement of future employment or 
compensation is reached. Public filers who elect to file the 
notification statement, recusal statement, or both prior to the 
commencement of negotiations or an agreement are deemed to have met the 
statutory requirements because the statements will continue to be in a 
``filed'' status after the commencement of the negotiations. The 
statements must name the private entity or entities involved in the 
negotiations and an estimated date of the commencement of the 
negotiations or agreement. While not required, the option to file in 
advance enhances the access of public filers to advice from ethics 
officials.

III. Matters of Regulatory Procedure

Regulatory Flexibility Act

    As Director of the Office of Government Ethics, I certify under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) that this proposed rule 
would not have a significant economic impact on a substantial number of 
small entities because it primarily affects current Federal executive 
branch employees.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply 
because this regulation does not contain information collection 
requirements that require approval of the Office of Management and 
Budget.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
chapter 5, subchapter II), this proposed rule would not significantly 
or uniquely affect small governments and will not result in increased 
expenditures by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more (as adjusted for 
inflation) in any one year.

Executive Order 13563 and Executive Order 12866

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select the regulatory approaches that 
maximize net benefits (including economic, environmental, public health 
and safety effects, distributive impacts, and equity). Executive Order 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This rulemaking has been designated as a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly this proposed rule has been reviewed 
by the Office of Management and Budget.

Executive Order 12988

    As Director of the Office of Government Ethics, I have reviewed 
this proposed rule in light of section 3 of Executive Order 12988, 
Civil Justice Reform, and certify that it meets the applicable 
standards provided therein.

List of Subjects in 5 CFR Part 2635

    Conflict of interests, Executive Branch standards of ethical 
conduct, Government employees.

    Approved: February 11, 2016.
Walter M. Shaub, Jr.,
Director, Office of Government Ethics.
    Accordingly, for the reasons set forth in the preamble, the Office 
of Government Ethics proposes to amend 5 CFR part 2635, as set forth 
below:

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

0
1. The authority citation for part 2635 continues to read as follows:

    Authority: 5 U.S.C. 7301, 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.

0
2. Subpart F of part 2635 is revised to read as follows:
Subpart F--Seeking Other Employment
Sec.
2635.601 Overview.
2635.602 Applicability and related considerations.
2635.603 Definitions.
2635.604 Recusal while seeking employment.
2635.605 Waiver or authorization permitting participation while 
seeking employment.
2635.606 Recusal based on an arrangement concerning prospective 
employment or otherwise after negotiations.
2635.607 Notification requirements for public financial disclosure 
report filers regarding negotiations for or agreement of future 
employment or compensation.

Subpart F--Seeking Other Employment


Sec.  2635.601  Overview.

    This subpart contains a recusal requirement that applies to 
employees when seeking non-Federal employment with persons whose 
financial interests would be directly and predictably affected by 
particular matters in which the employees participate personally and 
substantially. Specifically, it addresses the requirement of 18 U.S.C. 
208(a) that an employee not participate in any particular matter that, 
to the employee's knowledge, will have a direct and predictable effect 
on the financial interests of a person ``with whom the employee is 
negotiating or has any arrangement concerning prospective employment.'' 
See Sec.  2635.402 and Sec.  2640.103 of this chapter. Beyond this 
statutory requirement, this subpart also addresses issues of lack of 
impartiality that require recusal from particular matters affecting the 
financial interests of a prospective employer when an employee's 
actions in seeking employment fall short of actual employment 
negotiations. In addition, this subpart contains the statutory 
notification requirements that apply to public filers when they 
negotiate for or have agreements of future employment or compensation. 
Specifically, it addresses the requirements of section 17 of the Stop 
Trading on Congressional Knowledge Act of 2012 (STOCK Act), Public Law 
112-105, 126 Stat. 303, 5 U.S.C. app. 101 note, that a public filer 
must submit a written statement identifying the entity involved in the 
negotiations or agreement within three business days after commencement 
of such negotiations or agreement and must submit a notification of 
recusal whenever there is a conflict of interest or an appearance of a 
conflict of interest.


Sec.  2635.602  Applicability and related considerations.

    (a) Applicability. (1) To ensure that an employee does not violate 
18 U.S.C. 208(a), section 17 of the STOCK Act, or the principles of 
ethical conduct contained in Sec.  2635.101(b), an employee who is 
seeking employment or who has an arrangement concerning prospective 
employment must comply with the applicable recusal requirements of 
Sec. Sec.  2635.604 and 2635.606 if particular matters in which the 
employee will be participating personally and substantially would, to 
the employee's knowledge, directly and predictably affect the financial 
interests of a prospective employer or of a person with whom the 
employee has an arrangement concerning prospective employment. 
Compliance with this subpart also will ensure that the employee does 
not violate subpart D or E of this part. In addition, a public filer 
who negotiates for or has an agreement of future employment or 
compensation must comply with the requirements of Sec.  2635.607.
    (2) An employee who is seeking employment with a person whose

[[Page 8011]]

financial interests are not, to the employee's knowledge, affected 
directly and predictably by particular matters in which the employee 
participates personally and substantially has no obligation to recuse 
under this subpart. In addition, nothing in this subpart requires an 
employee, other than a public filer, to notify anyone that the employee 
is seeking employment unless a notification is necessary to implement a 
recusal pursuant to Sec.  2635.604(b). A public filer who negotiates 
for or has an agreement of future employment or compensation must 
comply with the notification requirements in Sec.  2635.607. An 
employee may, however, be subject to other statutes that impose 
requirements on employment contacts or discussions, such as 41 U.S.C. 
2103, which is applicable to agency officials involved in certain 
procurement matters. Employees are encouraged to consult with their 
ethics officials if they have any questions about how this subpart may 
apply to them. Ethics officials are not obligated by this subpart to 
inform supervisors that employees are seeking employment.

    Example 1 to paragraph (a): Recently, an employee of the 
Department of Education who is not a public filer submitted her 
resume to the University of Delaware for a job opening that she 
heard about through a friend. The employee has begun seeking 
employment. However, because she is not participating in any 
particular matters affecting the University of Delaware, she is not 
required to notify anyone that she has begun seeking employment.
    Example 2 to paragraph (a): The employee in the preceding 
example has been approached about an employment opportunity at the 
University of Maryland. Because the University of Maryland has 
applied for grants on which she has been assigned to work in the 
past, she wants to make certain that she does not violate the ethics 
rules. The employee contacts her ethics official to discuss the 
matter. The employee informs the ethics official that she is not 
participating in any particular matters affecting the University of 
Maryland. As a result, the ethics official advises the employee that 
she will have no notification obligations under this subpart. 
However, the ethics official cautions the employee that, if the 
employee is assigned to participate in a particular matter affecting 
the University of Maryland while she is seeking employment with the 
university, she would normally need to notify her supervisor in 
order to avoid working on the grant.

    (b) Related restrictions.--(1) Outside employment while a Federal 
employee. An employee who is contemplating outside employment to be 
undertaken concurrently with the employee's Federal employment must 
abide by any limitations applicable to the employee's outside 
activities under subparts G and H of this part, including any 
requirements under supplemental agency regulations to obtain prior 
approval before engaging in outside employment or activities and any 
prohibitions under supplemental agency regulations related to outside 
employment or activities. The employee must also comply with any 
applicable recusal requirement of this subpart, as well as any 
applicable recusal requirements under subpart D or E of this part as a 
result of the employee's outside employment activities.
    (2) Post-employment restrictions. An employee who is contemplating 
employment to be undertaken following the termination of the employee's 
Federal employment should consult an agency ethics official to obtain 
advice regarding any post-employment restrictions that may be 
applicable. The regulation implementing the Governmentwide post-
employment statute, 18 U.S.C. 207, is contained in part 2641 of this 
chapter. Employees are cautioned that they may be subject to additional 
statutory prohibitions on post-employment acceptance of compensation 
from contractors, such as 41 U.S.C. 2104.
    (3) Interview trips and entertainment. Where a prospective employer 
who is a prohibited source as defined in Sec.  2635.203(d) offers to 
reimburse an employee's travel expenses, or provide other reasonable 
amenities incident to employment discussions, the employee may accept 
such amenities in accordance with Sec.  2635.204(e)(3). Where a 
prospective employer is a foreign government or international 
organization, the employee must also ensure that he or she is in 
compliance with the Foreign Gifts and Decorations Act.


Sec.  2635.603  Definitions.

    For purposes of this subpart:
    (a) Employment means any form of non-Federal employment or business 
relationship involving the provision of personal services by the 
employee, whether to be undertaken at the same time as or subsequent to 
Federal employment. It includes but is not limited to personal services 
as an officer, director, employee, agent, attorney, consultant, 
contractor, general partner, or trustee.

    Example 1 to paragraph (a): An employee of the Bureau of Indian 
Affairs who has announced her intention to retire is approached by 
tribal representatives concerning a possible consulting contract 
with the tribe. The contractual relationship the tribe wishes to 
negotiate is employment for purposes of this subpart.
    Example 2 to paragraph (a): An employee of the Department of 
Health and Human Services is invited to a meeting with officials of 
a nonprofit corporation to discuss the possibility of his serving as 
a member of the corporation's board of directors. Service, with or 
without compensation, as a member of the board of directors 
constitutes employment for purposes of this subpart.
    Example 3 to paragraph (a): An employee at the Department of 
Energy volunteers without compensation to serve dinners at a 
homeless shelter each month. The employee's uncompensated volunteer 
services in this case are not considered an employment or business 
relationship for purposes of this subpart.

    (b) An employee is seeking employment once the employee has begun 
seeking employment within the meaning of paragraph (b)(1) of this 
section and until the employee is no longer seeking employment within 
the meaning of paragraph (b)(2) of this section.
    (1) An employee has begun seeking employment if the employee has 
directly or indirectly:
    (i) Engaged in negotiations for employment with any person. For 
these purposes, as for 18 U.S.C. 208(a) and section 17 of the STOCK 
Act, the term negotiations means discussion or communication with 
another person, or such person's agent or intermediary, mutually 
conducted with a view toward reaching an agreement regarding possible 
employment with that person. The term is not limited to discussions of 
specific terms and conditions of employment in a specific position;
    (ii) Made an unsolicited communication to any person, or such 
person's agent or intermediary, regarding possible employment with that 
person. However, the employee has not begun seeking employment if that 
communication was for the sole purpose of requesting a job application; 
or
    (iii) Made a response, other than rejection, to an unsolicited 
communication from any person, or such person's agent or intermediary, 
regarding possible employment with that person.
    (2) An employee is no longer seeking employment when:
    (i) The employee or the prospective employer rejects the 
possibility of employment and all discussions of possible employment 
have terminated; or
    (ii) Two months have transpired after the employee's dispatch of an 
unsolicited resume or employment proposal, provided the employee has 
received no indication of interest in employment discussions from the 
prospective employer.
    (3) For purposes of this definition, a response that defers 
discussions until the foreseeable future does not

[[Page 8012]]

constitute rejection of an unsolicited employment overture, proposal, 
or resume nor rejection of a prospective employment possibility.

    Example 1 to paragraph (b): A paralegal at the Department of the 
Army is in his third year of law school. During a discussion with 
his neighbor, who is a partner in a large law firm in the community, 
the neighbor invited him to visit her law firm. The paralegal took 
her up on the offer and met with an associate at the firm. The 
associate shared with the paralegal her experiences looking for a 
legal position, discussed what she does in her position at the law 
firm, and explained why she chose her current law firm. There was no 
discussion of possible employment with the firm. The Army paralegal 
is not seeking employment at this time. The purpose of the visit was 
informational only.
    Example 2 to paragraph (b): An employee of the Defense Contract 
Audit Agency (DCAA) is auditing the overhead accounts of an Army 
contractor. While at the contractor's headquarters, the head of the 
contractor's accounting division tells the employee that his 
division is thinking about hiring another accountant and asks 
whether the employee might be interested in leaving DCAA. The DCAA 
employee asks what kind of work would be involved. The DCAA employee 
has begun seeking employment because he made a response other than a 
rejection to the communication regarding possible employment with 
the Army contractor, although he has not yet begun negotiating for 
employment.
    Example 3 to paragraph (b): The DCAA employee and the head of 
the contractor's accounting division in the previous example have a 
meeting to discuss the duties of the position that the accounting 
division would like to fill and the DCAA employee's qualifications 
for the position. They also discuss ways the DCAA employee could 
remedy one of the missing qualifications, and the employee indicates 
a willingness to obtain the proper qualifications. They do not 
discuss salary. The employee has engaged in negotiations regarding 
possible employment with the contractor.
    Example 4 to paragraph (b): An employee at the Department of 
Energy (DOE) lists his job duties and employment experience in a 
profile on an online, business-oriented social networking service. 
The employee's profile is not targeted at a specific person. The 
employee has not begun seeking employment because the posting of a 
profile or resume is not an unsolicited communication with any 
potential employer.
    Example 5 to paragraph (b): The DOE employee in the previous 
example was recently notified that a representative of a university 
has viewed his profile. The employee still has not begun seeking 
employment with the university. Subsequently, a representative of 
the university contacts the employee through the online forum to 
inquire whether the employee would be interested in working for the 
university, to which he makes a response other than rejection. At 
this point, the employee has begun seeking employment with the 
university until he rejects the possibility of employment and all 
discussions of possible employment have terminated.
    Example 6 to paragraph (b): The DOE employee in the previous two 
examples receives emails from various companies in response to his 
online profile. He does not respond. The employee has not begun 
seeking employment with the companies because he has not made a 
response.
    Example 7 to paragraph (b): An employee of the Centers for 
Medicare & Medicaid Services (CMS) is complimented on her work by an 
official of a State Health Department who asks her to call if she is 
ever interested in leaving Federal service. The employee explains to 
the State official that she is very happy with her job at CMS and is 
not interested in another job. She thanks him for his compliment 
regarding her work and adds that she'll remember his interest if she 
ever decides to leave the Government. The employee has rejected the 
unsolicited employment overture and has not begun seeking 
employment.
    Example 8 to paragraph (b): The employee in the preceding 
example responds by stating that she cannot discuss future 
employment while she is working on a project affecting the State's 
health care funding but would like to discuss employment with the 
State when the project is completed. Because the employee has merely 
deferred employment discussions until the foreseeable future, she 
has begun seeking employment with the State Health Department.
    Example 9 to paragraph (b): Three months prior to the end of the 
current administration, a political appointee at a large department 
receives a telephone call from the managing partner of an 
international law firm. The managing partner asks if the official 
would be interested in joining the law firm. The official says, ``I 
am not talking to anyone about employment until I leave the 
Government.'' The official has rejected the unsolicited employment 
overture and has not begun seeking employment.
    Example 10 to paragraph (b): A geologist employed by the U.S. 
Geological Survey sends her resume to an oil company. The geologist 
has begun seeking employment with that oil company and will be 
seeking employment for two months from the date the resume was 
mailed. However, if she withdraws her application or is notified 
within the two-month period that her resume has been rejected, she 
will no longer be seeking employment with the oil company as of the 
date she makes such withdrawal or receives such notification.

    (c) Prospective employer means any person with whom the employee is 
seeking employment. Where contacts that constitute seeking employment 
are made by or with an agent or other intermediary, the term 
prospective employer means:
    (1) A person who uses that agent or other intermediary for the 
purpose of seeking to establish an employment relationship with the 
employee if the agent identifies the prospective employer to the 
employee; and
    (2) A person contacted by the employee's agent or other 
intermediary for the purpose of seeking to establish an employment 
relationship if the agent identifies the prospective employer to the 
employee.

    Example 1 to paragraph (c): An employee of the Federal Aviation 
Administration (FAA) has retained an employment search firm to help 
her find another job. The search firm has just reported to the FAA 
employee that it has given her resume to and had promising 
discussions with two airport authorities, which the search firm 
identifies to the employee. Even though the employee has not 
personally had employment discussions with either airport authority, 
each airport authority is her prospective employer. She began 
seeking employment with each airport authority upon learning its 
identity and that it has been given her resume.
    Example 2 to paragraph (c): An employee pays for an online 
resume distribution service, which sends her resume to recruiters 
that specialize in her field. The online service has just notified 
her that they sent her resume to Software Company A and Software 
Company B. Even though the employee has not personally had 
employment discussions with either company, each software company is 
her prospective employer. She began seeking employment with each 
company upon learning from the online service that Software Company 
A and Software Company B had been given her resume by the 
intermediary.

    (d) Direct and predictable effect, particular matter, and personal 
and substantial have the respective meanings set forth in Sec.  
2635.402(b)(1), (3), and (4).
    (e) Public filer means a person required to file a public financial 
disclosure report as set forth in Sec.  2634.202 of this chapter.


Sec.  2635.604  Recusal while seeking employment.

    (a) Obligation to recuse. (1) Except as provided in paragraph 
(a)(2) or where the employee's participation has been authorized in 
accordance with Sec.  2635.605, the employee may not participate 
personally and substantially in a particular matter that, to the 
employee's knowledge, has a direct and predictable effect on the 
financial interests of a prospective employer with whom the employee is 
seeking employment within the meaning of Sec.  2635.603(b). Recusal is 
accomplished by not participating in the particular matter.
    (2) The employee may participate in a particular matter under 
paragraph (a)(1) of this section when:
    (i) The employee's only communication with the prospective employer 
in connection with the search for employment is the submission of an

[[Page 8013]]

unsolicited resume or other employment proposal;
    (ii) The prospective employer has not responded to the employee's 
unsolicited communication; and
    (iii) The matter is not a particular matter involving specific 
parties.

    Example 1 to paragraph (a): A scientist is employed by the 
National Science Foundation (NSF) as a special Government employee 
to serve on a panel that reviews grant applications to fund research 
relating to deterioration of the ozone layer. She is discussing 
possible employment with a university that received an NSF grant 
several years ago to study the effect of fluorocarbons but has no 
current grant applications pending before NSF. The employee is 
seeking employment, but she does not need to recuse because there is 
no particular matter that would have a direct and predictable effect 
on the financial interests of the prospective employer. Recusal 
would be required if the university submits a new application for 
the panel's review.
    Example 2 to paragraph (a): An employee of the Food and Drug 
Administration is developing a regulation on research criteria for 
approving prescription drugs. She begins discussing possible 
employment with a pharmaceutical company. The employee may not 
participate personally and substantially in the development of the 
regulation because she has begun employment discussions with the 
pharmaceutical company and the regulation is a particular matter of 
general applicability which would have a direct and predictable 
effect on the financial interests of the pharmaceutical company.
    Example 3 to paragraph (a): A special Government employee of the 
Federal Deposit Insurance Corporation (FDIC) is assigned to advise 
the FDIC on rules applicable to all member banks. She mails an 
unsolicited letter to a member bank offering her services as a 
contract consultant. Although the employee is seeking employment, 
the employee may participate in this particular matter of general 
applicability until she receives some response indicating an 
interest in discussing her employment proposal. A letter merely 
acknowledging receipt of the proposal is not an indication of 
interest in employment discussions.
    Example 4 to paragraph (a): An employee of the Occupational 
Safety and Health Administration is conducting an inspection of one 
of several textile companies to which he sent an unsolicited resume. 
The employee may not participate personally and substantially in the 
inspection because he is seeking employment and the inspection is a 
particular matter involving specific parties that will affect the 
textile company.

    (b) Notification. An employee who becomes aware of the need to 
recuse from participation in a particular matter to which the employee 
has been assigned must take whatever steps are necessary to ensure that 
the employee does not participate in the matter. Appropriate oral or 
written notification of the employee's recusal may be made to an agency 
ethics official, coworkers, or a supervisor to document and help 
effectuate the employee's recusal. Public filers must comply with 
additional notification requirements set forth in Sec.  2635.607.

    Example 1 to paragraph (b): An employee of the Department of 
Veterans Affairs (VA) is participating in the audit of a contract 
for laboratory support services. Before sending his resume to a lab 
which is a subcontractor under the VA contract, the employee should 
recuse from participation in the audit. Since he cannot withdraw 
from participation in the contract audit without the approval of his 
supervisor, he should notify his supervisor of his need to recuse 
for ethics reasons so that appropriate adjustments in his work 
assignments can be made.
    Example 2 to paragraph (b): An employee of the Food and Drug 
Administration (FDA) is contacted in writing by a pharmaceutical 
company concerning possible employment with the company. The 
employee is reviewing an application from a pharmaceutical company 
that is seeking FDA approval. Once the employee makes a response 
that is not a rejection to the company's communication concerning 
possible employment, the employee should recuse from further 
participation in the review of the application. Where he has 
authority to ask his colleague to assume his reviewing 
responsibilities, he may accomplish his recusal by transferring the 
work to the employee designated to cover for him. However, to ensure 
that his colleague and others with whom he had been working on the 
review do not seek his advice regarding the review of the 
application or otherwise involve him in the matter, it may be 
necessary for him to advise those individuals of his recusal.

    (c) Documentation. An employee, other than a public filer, need not 
file a written recusal statement unless the employee is required by 
part 2634 of this chapter to file written evidence of compliance with 
an ethics agreement with the Office of Government Ethics or a 
designated agency ethics official, or is specifically directed by an 
agency ethics official or the person responsible for the employee's 
assignment to file a written recusal statement. However, it is often 
prudent for an employee to create a record of his or her actions by 
providing written notice to an agency ethics official, a supervisor, or 
other appropriate official. Public filers must comply with the 
documentation requirements set forth in Sec.  2635.607.

    Example 1 to paragraph (c): The General Counsel of a regulatory 
agency will be engaging in discussions regarding possible employment 
as corporate counsel of a regulated entity. Matters directly 
affecting the financial interests of the regulated entity are 
pending within the Office of General Counsel, but the General 
Counsel will not be called upon to act in any such matter because 
signature authority for that particular class of matters has been 
delegated to an Assistant General Counsel. Because the General 
Counsel is responsible for assigning work within the Office of 
General Counsel, he can, in fact, accomplish his recusal by simply 
avoiding any involvement in matters affecting the regulated entity. 
However, because it is likely to be assumed by others that the 
General Counsel is involved in all matters within the cognizance of 
the Office of General Counsel, he would benefit from filing a 
written recusal statement with an agency ethics official or the 
Commissioners of the regulatory agency and providing his 
subordinates with written notification of his recusal. He may also 
be specifically directed by an agency ethics official or the 
Commissioners to file a written recusal statement. If the General 
Counsel is a public filer, he must comply with the documentation 
requirements set forth in Sec.  2635.607.

    (d) Agency determination of substantial conflict. Where the agency 
determines that the employee's action in seeking employment with a 
particular person will require the employee's recusal from matters so 
central or critical to the performance of the employee's official 
duties that the employee's ability to perform the duties of the 
employee's position would be materially impaired, the agency may allow 
the employee to take annual leave or leave without pay while seeking 
employment, or may take other appropriate action.


Sec.  2635.605  Waiver or authorization permitting participation while 
seeking employment.

    (a) Waiver. Where, as defined in Sec.  2635.603(b)(1)(i), an 
employee is engaged in employment negotiations for purposes of 18 
U.S.C. 208(a), the employee may not participate personally and 
substantially in a particular matter that, to the employee's knowledge, 
has a direct and predictable effect on the financial interests of a 
prospective employer. The employee may participate in such matters only 
where the employee has received a written waiver issued under the 
authority of 18 U.S.C. 208(b)(1) or (3). These waivers are described in 
Sec.  2635.402(d) and part 2640, subpart C of this chapter. For certain 
employees, a regulatory exemption under the authority of 18 U.S.C. 
208(b)(2) may also apply (see part 2640, subpart B of this chapter), 
including Sec.  2640.203(g) and (i).

    Example 1 to paragraph (a): An employee of the Department of 
Agriculture is negotiating for employment within the meaning of 18 
U.S.C. 208(a) and Sec.  2635.603(b)(1)(i) with an orange grower. In 
the absence of a written waiver issued under 18 U.S.C. 208(b)(1), 
she may not take official action on a complaint filed by a 
competitor alleging that the grower has shipped oranges in violation 
of applicable quotas.


[[Page 8014]]


    (b) Authorization by agency designee. Where an employee is seeking 
employment within the meaning of Sec.  2635.603(b)(1)(ii) or (iii) and 
is not negotiating for employment, a reasonable person would be likely 
to question the employee's impartiality if the employee were to 
participate personally and substantially in a particular matter that, 
to the employee's knowledge, has a direct and predictable effect on the 
financial interests of any such prospective employer. The employee may 
participate in such matters only where the agency designee has 
authorized in writing the employee's participation in accordance with 
the standards set forth in Sec.  2635.502(d).

    Example 1 to paragraph (b): Within the past month, an employee 
of the Department of Education mailed her resume to a university. 
She is thus seeking employment with the university within the 
meaning of Sec.  2635.603(b)(1)(ii). In the absence of specific 
authorization by the agency designee in accordance with Sec.  
2635.502(d), she may not participate in an assignment to review a 
grant application submitted by the university.


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

    (a) Employment or arrangement concerning employment. An employee 
may not participate personally and substantially in a particular matter 
that, to the employee's knowledge, has a direct and predictable effect 
on the financial interests of the person by whom he or she is employed 
or with whom he or she has an arrangement concerning future employment, 
unless authorized to participate in the matter by a written waiver 
issued under the authority of 18 U.S.C. 208(b)(1) or (3), or by a 
regulatory exemption under the authority of 18 U.S.C. 208(b)(2). These 
waivers and exemptions are described in Sec.  2635.402(d) and part 
2640, subparts B and C of this chapter.

    Example 1 to paragraph (a): A military officer has accepted a 
job with a defense contractor that will begin six months after his 
retirement from military service. During the period that he remains 
with the Government, the officer may not participate in the 
administration of a contract with that particular defense contractor 
unless he has received a written waiver under the authority of 18 
U.S.C. 208(b)(1).
    Example 2 to paragraph (a): An accountant has just been offered 
a job with the Office of the Comptroller of the Currency (OCC) which 
involves a two-year limited appointment. Her private employer, a 
large corporation, believes the job will enhance her skills and has 
agreed to give her a two-year unpaid leave of absence at the end of 
which she has agreed to return to work for the corporation. During 
the two-year period that she is to be an OCC employee, the 
accountant will have an arrangement concerning future employment 
with the corporation that will require her recusal from 
participation in any particular matter that, to her knowledge, will 
have a direct and predictable effect on the corporation's financial 
interests.

    (b) Offer rejected or not made. The agency designee for the purpose 
of Sec.  2635.502(c) may, in an appropriate case, determine that an 
employee not covered by the preceding paragraph who has sought but is 
no longer seeking employment nevertheless will be subject to a period 
of recusal upon the conclusion of employment negotiations. Any such 
determination will be based on a consideration of all the relevant 
factors, including those listed in Sec.  2635.502(d), and a 
determination that the concern that a reasonable person may question 
the integrity of the agency's decision-making process outweighs the 
Government's interest in the employee's participation in the particular 
matter.

    Example 1 to paragraph (b): An employee of the Securities and 
Exchange Commission was relieved of responsibility for an 
investigation of a broker-dealer while seeking employment with the 
law firm representing the broker-dealer in that matter. The firm did 
not offer her the partnership position she sought. Even though she 
is no longer seeking employment with the firm, she may continue to 
be recused from participating in the investigation based on a 
determination by the agency designee that the concern that a 
reasonable person might question whether, in view of the history of 
the employment negotiations, she could act impartially in the matter 
outweighs the Government's interest in her participation.


Sec.  2635.607  Notification requirements for public financial 
disclosure report filers regarding negotiations for or agreement of 
future employment or compensation.

    (a) Notification regarding negotiations for or agreement of future 
employment or compensation. A public filer who is negotiating for or 
has an agreement of future employment or compensation with a non-
Federal entity must file a statement notifying an agency ethics 
official of such negotiation or agreement within three business days 
after commencement of the negotiation or agreement. This notification 
statement must be in writing, must be signed by the public filer, and 
must include the name of the non-Federal entity involved in such 
negotiation or agreement and the date on which the negotiation or 
agreement commenced. When a public filer has previously complied with 
the notification requirement in this section regarding the commencement 
of negotiations, the filer need not file a separate notification 
statement when an agreement of future employment or compensation is 
reached with the previously identified non-Federal entity. There is 
also no requirement to file another notification when negotiations have 
been unsuccessful. However, employees may want to do so to facilitate 
the resumption of their duties.

    Example 1 to paragraph (a): An employee of the Merit Systems 
Protection Board who is a public filer was in private practice prior 
to his Government service. He receives a telephone call from a 
partner in a law firm who inquires as to whether he would be 
interested in returning to private practice. During this initial 
telephone call with the law firm partner, the employee indicates 
that he is interested in resuming private practice. They discuss 
generally the types of issues that would need to be agreed upon if 
the employee were to consider a possible offer to serve as ``of 
counsel'' with the firm, such as salary, benefits, and type of work 
the employee would perform. The employee has begun negotiating for 
future employment with the law firm. Within three business days 
after this initial telephone call, he must file written notification 
of the negotiations with his agency ethics official.
    Example 2 to paragraph (a): The employee in the previous example 
also negotiates a possible contract with a publisher to begin 
writing a textbook after he leaves Government service. Within three 
business days after commencing negotiations, the employee must file 
written notification with his agency ethics official documenting 
that he is engaged in negotiations for future compensation with the 
book publisher.

    (b) Notification of recusal. A public filer who files a 
notification statement pursuant to paragraph (a) of this section must 
file with an agency ethics official a notification of recusal whenever 
there is a conflict of interest or appearance of a conflict of interest 
with the non-Federal entity identified in the notification statement. 
The notification statement and the recusal statement may be contained 
in a single document or in separate documents.
    (c) Advance filing of notification and recusal statements. When a 
public filer is seeking employment within the meaning of Sec.  
2635.603(b)(1)(ii) or (iii) or is considering seeking employment, the 
public filer may elect to file the notification statement pursuant to 
paragraph (a) of this section before negotiations have commenced and 
before an agreement of future employment or compensation is reached. A 
public filer may also elect to file the recusal statement pursuant to 
paragraph (b) of this section before the public filer has a conflict of 
interest or appearance of a conflict of interest with the non-Federal 
entity identified in the notification statement. The public filer need 
not file the document again upon

[[Page 8015]]

commencing negotiations or reaching an agreement of future employment 
or compensation. The advance filing of any such document is not 
construed as a statement that negotiations have or have not commenced 
or that a conflict of interest does or does not exist. Although the 
Office of Government Ethics encourages advance filing when a public 
filer anticipates a realistic possibility of negotiations or an 
agreement, the failure to make an advance filing does not violate this 
subpart or the principles of ethical conduct contained in Sec.  
2635.101(b).

    Example 1 to paragraph (c): An employee of the Federal Labor 
Relations Authority who is a public filer began negotiating for 
future employment with a law firm. At the time he began negotiating 
for future employment with the law firm, he was not participating 
personally and substantially in a particular matter that, to his 
knowledge, had a direct and predictable effect on the financial 
interest of the law firm. Although the employee was not required to 
file a recusal statement because he did not have a conflict of 
interest or appearance of a conflict of interest with the law firm 
identified in the notification statement, the Office of Government 
Ethics encourages the employee to submit a notification of recusal 
at the same time that he files the notification statement regarding 
the negotiations for future employment in order to ensure that the 
requirement of paragraph (b) of this section is satisfied if a 
conflict of interest or an appearance of a conflict of interest 
later arises. The agency ethics official should counsel the employee 
on applicable requirements but is under no obligation to notify the 
employee's supervisor that the employee is negotiating for 
employment.
    Example 2 to paragraph (c): An employee of the General Services 
Administration is contacted by a prospective employer regarding 
scheduling an interview for the following week to begin discussing 
the possibility of future employment. The employee discusses the 
matter with the ethics official and chooses to file a notification 
and recusal statement prior to the interview. The notification and 
recusal statement contain the identity of the prospective employer 
and an estimated date of when the interview will occur. The employee 
has complied with the notification requirement of section 17 of the 
STOCK Act.

    (d) Agreement of future employment or compensation for the purposes 
of Sec.  2635.607 means any arrangement concerning employment that will 
commence after the termination of Government service. The term also 
means any arrangement to compensate in exchange for services that will 
commence after the termination of Government service. The term 
includes, among other things, an arrangement to compensate for 
teaching, speaking, or writing that will commence after the termination 
of Government service.

[FR Doc. 2016-03214 Filed 2-16-16; 8:45 am]
BILLING CODE 6345-03-P