action is brought may assess against the individual a civil penalty in any amount, not to exceed $1,000.

8724.703 Misuse of reports.

The Attorney General may bring a civil action against any person who obtains or uses a report filed under this part for any purpose prohibited by section 205(c)1) of the Act and § 734.603(e). The court in which the action is brought may assess against the person a penalty in any amount, not to exceed $5,000. This remedy shall be in addition to any other remedy available under statutory or common law.

Subpart H-Ethics Agreements

SOURCE: 50 FR 1204, Jan. 10, 1985, unless otherwise noted.

§ 734.801 Scope.

This subpart applies to ethics agreements made by reporting individuals (see 734.202) to resolve potential or actual conflicts of interest.

§ 734.802 Requirements.

(a) Ethics Agreement defined. Except as provided in subsection (c) of this section, the term "ethics agreement" shall for the purposes of this subpart include any undertaking to carry out one or more of the following actions:

(1) Recusal or disqualification from one or more particular matters or categories of official action;

(2) Divestiture of a financial interest or interests;

(3) Resignation from a non-federal business or other entity;

(4) Participation in one or more particular matters or categories of official action upon the issuance of an 18 U.S.C. 208(b)(1) waiver; or

(5) Establishment of a blind trust under this Act.

(b) Time limit. The ethics agreement shall specify that the individual must complete the action which he or she has undertaken within a period not to exceed 3 months from the date of the agreement, except in cases of unusual hardship as determined by the Office of Government Ethics.

(c) Exception. An ethics agreement shall not include an undertaking by a

reporting individual to carry out an action listed in subsection (a) of this section if the power to permit or deny the action by such individual has been granted by statute to an agency or official who has not approved the undertaking. See, for example, Department of Energy Organization Act, Pub. L. 95-91, Sections 602(a) and 606 (a) and (b).

Example 1. An official of the Boeing Company is nominated to a Department of Defense position requiring the advice and consent of the Senate. As a condition of assuming the position the individual has agreed to divest himself of his Boeing stock which he recently acquired while he was an officer with the company. However, a Securities and Exchange Commission law and regulation preclude officers of public corporations from deriving a profit from the sale of stock in the corporation in which they hold office within 6 months of acquiring the stock, and direct that any such profit must be returned to the issuing corporation or its stockholders. Since meeting the usual 3-month time limit specified in this subpart might entail losing any profit that might be realized on the sale of the stock, the Boeing official requests that such limit be extended beyond the end of the 6-month period imposed by the Commission to enable any profits from the transaction to inure to his benefit. Written approval would have to be obtained from the Office of Government Ethics to extend the customary 3-month period.

§ 734.803 Notification of ethics agree.

ments.

(a) Nominees to positions requiring the advice and consent of the Senate. (1) In the case of a nominee referred to in §734.201(c), the designated agency ethics official shall include with the report submitted to the Office of Government Ethics any ethics agreement which the nominee has made.

(2) A designated agency ethics official shall immediately notify the Office of Government Ethics of an ethics agreement of a nominee which is made or becomes known after the submission of the nominee's report to the Office of Government Ethics. This requirement includes an ethics agreement made by a nominee with the Senate confirmation committee. The nominee for his or her part shall immediately report to the designated

agency official an ethics agreement he or she has made with the committee.

(3) With regard to any ethics agreements made between the nominee and the Office of Government Ethics, the Office of Government Ethics shall immediately apprise the designated agency ethics official and the Senate confirmation committee.

(b) Incumbents of positions requiring the advice and consent of the Senate. In the case of a position requiring the incumbent's confirmation by the Senate, the designated agency ethics official shall immediately apprise the Office of Government Ethics of any ethics agreement which the incumbent has made.

(c) Designated agency ethics officials not covered by paragraph (a) or (b) and employees of the White House Office and other agencies referred to in § 734.602(c)(5). A designated agency ethics official not covered by paragraph (a) or (b) of this section and each employee of the White House Office, the Office of Vice President, or the Domestic Policy Staff and Office of Administration (agencies in the Executive Office of the President) who is referred to in § 734.602(c)(5) shall include with his or her initial report subImitted to the Office of Government Ethics any ethics agreement which such official or employee has undertaken and shall immediately apprise the Office of Government Ethics of any subsequent ethics agreement.

(d) Other reporting individuals. Other reporting individuals desiring to enter into ethics agreements may do so with the designated agency ethics official. Where an ethics agreement has been made with someone other than the designated agency ethics official, the officer or employee involved shall immediately apprise the designated agency ethics official of the agreement.

§ 734.804 Notification of compliance.

Requisite evidence of action taken. In the case of nominees to positions requiring the advice and consent of the Senate, evidence of the action taken by the nominee to carry out an ethics agreement shall be submitted to the Office of Government Ethics and the Senate confirmation committee by

the designated agency ethics official promptly upon receipt by the official of such evidence. In the case of incumbents of positions requiring the advice and consent of the Senate, evidence of action taken shall be submitted immediately by the designated agency ethics official to the Office of Government Ethics. Where a designated agency ethics official is neither a nominee nor an incumbent, such official must send evidence of his or her action to the Office of Government Ethics. In the case of other reporting individuals, evidence of action taken must be sent to the designated agency ethics official. The evidence of the action taken consists of any of the following:

(a) Recusal. A copy of the recusal agreement containing the specific matters to which the recusal shall apply, a statement of the process or method by which the recusal shall be enforced within the agency, and positions of those involved in its execution (i.e., the individual's immediate subordinates and supervisors).

Example (1): A member of the staff of the National Transportation Safety Board owns stock in UAL, Inc. (United Air Lines) and has agreed to recuse herself from participation in any investigations of accidents involving United Air Lines aircraft. A copy of this recusal would have to be given to her immediate subordinates and supervisors and to the designated agency ethics official. The staff member has also agreed to recuse herself from any particular matter (as defined in 18 U.S.C. 208) that might arise with respect to any of her present or future holdings. There would be no requirement to commit this type of general recusal to writing.

(b) Divestiture, resignation, and reassignment. Written notification that the divestiture, resignation, or reassignment has occurred.

(c) 18 U.S.C. 208(b)(1) waiver. A copy of the waiver, signed by the appropriate supervisory official.

(d) Blind trust. Information required by Subpart D of this part submitted to the Office of Government Ethics for its approval of the blind trust instrument. Should the trust not be approved, the designated agency ethics official and, as appropriate, the Senate

confirmation committee should be informed immediately.

§ 734.805 Retention.

Records of ethics agreements and actions described in this subpart shall be maintained with the individual's financial disclosure report at the agency and, where applicable, at the Office of Government Ethics.

APPENDIX A To Part 734—CERTIFICATE OF INDEPENDENCE

The Certificate of Independence required by § 734.406(a) shall be executed as follows: CERTIFICATE OF INDEPENDENCE With respect to the trust of (Settlor), which has been submitted to the Office of Government Ethics for certification pursuant to the Ethics in Government Act of 1978 (Pub. L. 95-521, as amended), the undersigned proposed Trustee of such trust, or person in addition to a party to the trust designated in the trust instrument as an investment adviser, is eligible to serve in such fiduciary capacity in accordance with section 202(f)(3)(A) of such Act:

FIRST: The undersigned is (check one)— a financial institution, which is a "bank" as defined in 15 U.S.C. 80b-2(a)(2); an attorney, who is admitted to practice before the highest court of

a certified public accountant;

a "broker", as defined in 15 U.S.C. 78c(a)(4);

an investment adviser, who is a person defined in 15 U.S.C. 806-2(a)(11) or who demonstrates to the satisfaction of the Director general involvement in his or her role as such an adviser in the management or control of trusts; or

a person in addition to a party to the trust designated in the trust instrument as an investment adviser.

SECOND: The undersigned (and any officer or employee of the undersigned, involved or to be involved in the management or control of the trust)

(A) Is independent of and unassociated with any interested party so that the undersigned (and any such officer and employee) cannot be controlled or influenced in the administration of the trust by any interested party;

(B) Is not or has not been an employee of an interested party, or any organization affiliated with any interested party and is not a partner of, or involved in any joint venture or other investment with, any interested party;

(C) Is not a relative of any interested party; and

(D) Does not share actively in a business enterprise or other undertaking with any interested party.

The undersigned certifies that the statements contained herein are true, complete and correct to the best of such undersigned's knowledge and belief.

Date (firm) By: (title) Approved by

Director, Office of Government Ethics

Date

APPENDIX B TO PART 734-CERTIFICATE OF COMPLIANCE

The Certificate of Compliance required by § 734.407(b) shall be executed as follows:

CERTIFICATE OF COMPLIANCE

With respect to the qualified blind trust [qualified diversified trust) of (Settlor), the undersigned, the approved Trustee of such trust or approved person in addition to a party to the trust designated in the trust instrument as an investment adviser pursuant to 5 CFR 734.406, has served in such fiduciary capacity during the calendar year (or for the period beginning and ending and is eligible to continue in such capacity by virtue of the following:

The undersigned (and any officer or employee involved in the management or control of the trust) has not knowingly or negligently, and will not

(A) disclose any information to an interested party with respect to such trust that may not be disclosed pursuant to 5 CFR 734.403(b)(5) (5 CFR 734.404(c)(5), in the case of a qualified diversified trust) or any other provision or requirement of Subpart D of 5 CFR Part 734,

(B) acquire any holding the ownership of which is prohibited by, or not in accordance with, 5 CFR 734.403(b)(2) (5 CFR 734.404(c)(2), in the case of a qualified diversified trust) or the terms of the trust instrument,

(C) solicit advice from any interested party with respect to such trust, which solicitation is prohibited by 5 CFR 734.403(b)(1) (5 CFR 734.404(c)(1), in the case of a qualified diversified trust) or any other provision or requirement of Subpart D of 5 CFR Part 734 or the trust instrument,