A Guide to Executive Branch Gift Rules for 2017

by Perkins Coie
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In this update, we summarize the current rules on providing gifts to federal executive branch officials and employees, including amendments to those rules effective January 1, 2017. The executive branch gift and travel rules are administered and interpreted by the Office of Government Ethics (OGE). Note that individual agencies frequently have their own gift regulations, which may well be stricter than OGE’s. Additionally, President Trump recently signed an executive order that extends the restrictions on gifts from registered lobbyists to new political appointees, which was originally put in place during the Obama administration. This memorandum describes the rules as amended and affected by the executive order.

The two sets of executive branch gift rules are described in detail below. The first applies broadly to gifts accepted by federal employees from prohibited sources and to gifts given because of an employee’s official position. The second applies more narrowly to gifts from registered lobbyists to political appointees. 

Both the existing executive branch ethics rules and the executive order prohibit executive branch employees from accepting certain gifts; neither imposes any liability on the person making the gift. However, it is never advisable to offer a gift to a public official that he/she could not lawfully receive. It is therefore important for interested parties to be aware of the applicable restrictions and to confirm the permissibility of any contemplated gift or invitation to an executive branch employee in advance.

Gifts from Prohibited Sources or Given Because of an Employee’s Official Position

Executive branch rules limit gifts solicited or accepted by federal employees from “prohibited sources” or those given “because of the employee’s official position.”

A gift is considered given “because of the employee’s official position” if it would not have been given had the federal employee not held the status, authority or duties associated with his or her federal position. 

An entity is considered a “prohibited source” with respect to a particular agency employee if it:

  • is seeking official action by the employee’s agency;
  • does business or seeks to do business with the employee’s agency;
  • conducts activities regulated by the employee’s agency;
  • has interests that may be substantially affected by performance or nonperformance of the employee’s official duties; or
  • is an organization a majority of whose members fall into any of the above categories.

Under these rules, unless the gift qualifies for an exception, an executive branch employee may not accept any gift worth more than $20 on any single occasion,[1] or a number of gifts totaling more than $50 over the course of a calendar year, from a prohibited source or if the gift is given because of the employee’s official position.[2] In addition, an executive branch employee may never accept a gift in return for being influenced in the performance of an official act, solicit or coerce the offering of a gift, or accept gifts from the same or different sources so frequently it suggests that the employee is using his public office for private gain. Similarly, an executive branch employee may not accept a gift in violation of another statute (such as a bribery law) or any executive order, or prohibited by a supplemental agency regulation. 

As of January 1, 2017, executive branch employees considering whether to accept or decline an otherwise permissible gift are encouraged to apply a new, “non-binding” standard. Under this standard, employees should consider whether acceptance of the gift would cause a reasonable person to question the employee’s integrity or impartiality. The rule advises employees to weigh specific factual circumstances that raise appearance concerns. Factors the employee should consider include whether:

  • the gift has a high market value;
  • the timing of the gift creates the appearance that the donor is seeking to influence an official action;
  • the gift was provided by a person who has interests that may be substantially affected by the performance or nonperformance of the employee’s official duties; and
  • acceptance of the gift would provide the donor with significantly disproportionate access.

“Gift” is broadly defined for purposes of this restriction, and it includes almost any item of monetary value unless an exception applies. The restrictions apply not only to a gift given to an executive branch employee, but also to gifts given to the employee’s family with the employee’s knowledge or acquiescence and gifts given to any other person, including a charity, on the basis of a recommendation by the employee (except for perishable items or payments in lieu of honoraria).[3]

Exceptions to the executive branch gift rules would permit employees to accept certain items of value under the following circumstances:

  • Gifts given based on a personal relationship (from family or friends). Relevant factors include the history of the relationship and whether the family member or friend personally pays for the gift. The recent amendments note that a social media relationship is not, in and of itself, indicative of a personal relationship.
  • An employee may accept modest items of food and refreshments, such as soft drinks, coffee and donuts, offered other than as part of a meal. The amendments clarify a “longstanding” OGE interpretation: “modest items of food and refreshments” do not include alcoholic refreshments.
  • An employee may accept “free attendance” furnished to all attendees by the sponsor of an event at which he or she is presenting information on behalf of any agency. 

Effective January 1, 2017, an employee assigned to present information on behalf of an agency may accept free attendance at an event (such as waiver of a conference fee) on any day when the employee is presenting, if the free attendance is provided by the sponsor of the event. Additionally, an employee whose presence on any day of an event is deemed to be essential by the agency to the presenting employee’s participation in the event may accept free attendance provided by the sponsor of the event, if the employee is accompanying the presenting employee. A spouse or one other guest of the presenting employee may also accept free attendance on any day when the employee is presenting, provided that others in attendance will generally be accompanied by a spouse or other guest, the spouse or guest’s free attendance is unsolicited, and the agency designee, orally or in writing, has authorized the presenting employee to accept the free attendance. 

  • An employee may accept “free attendance” furnished to all attendees by the sponsor of an event at which he or she is presenting information on behalf of any agency or at a widely attended gathering.

An employee seeking authorization to attend a widely attended gathering must obtain written authorization from the employing agency under the amendments effective January 1, 2017. In providing this written authorization, the employing agency must consider whether: (1) the event is a widely attended gathering; (2) the employee’s attendance at the event is in the agency’s interest because it will further agency programs or operations; (3) the agency’s interest in the employee’s attendance outweighs the concern that the employee may be, or may appear to be, improperly influenced in the performance of official duties; and (4) if a person other than the sponsor of the event invites or designates the employee as the recipient of the gift of free attendance and bears the cost of that gift, the event is expected to be attended by more than 100 persons and the value of the gift of free attendance does not exceed $375.

A gathering is “widely attended” if it is expected that a large number of persons will attend and that persons with a diversity of views or interests will be present (e.g., if it is open to members from an entire interested industry or if those in attendance represent a range of persons interested in a given matter). The definition of “widely attended gathering” has been amended to require that the event provide an “opportunity to exchange ideas and views among invited persons.”

The amendments effective January 1, 2017 also define “free attendance,” as used above and below, to mean the waiver of all or part of the fee for an event or the provision of food, refreshments, entertainment, instruction or materials furnished to all attendees as an integral part of an event. “Free attendance” does not include meals taken other than in a group setting with all other attendees, unless the employee is a presenter at the event and is invited to a separate meal for presenters hosted by the event sponsor; travel expenses; lodging; or entertainment collateral to an event. 

  • Greeting cards and items with little intrinsic value, such as plaques, certificates and trophies, which are intended primarily for presentation. The amendments clarify that if an item has “significant independent use” then an executive branch employee may not accept it under this exception.  
  • Gifts based on outside business or employment relationships, i.e., meals, lodging, transportation and other benefits, resulting from a spouse’s employment, the official’s outside business or employment, or bona fide employment discussions with a prospective employer. (Note that employment discussions may necessitate recusal from certain matters on the part of the government official.)
  • Attendance at a reception or similar event when the invitation and benefits are based on a former employment relationship, other former employees have been invited to attend, and it is clear that such benefits have not been offered or enhanced because of the employee’s current official position. This became effective January 1, 2017.
  • Opportunities and benefits including favorable rates and commercial discounts available to the public or to all government employees or all uniformed military personnel.
  • Rewards and prizes given to competitors in contests or events, including random drawings, that are open to the public.
  • Benefits offered to members of a group in which membership is unrelated to government employment.
  • Certain awards, and under the new amendments, items incident to the award, for meritorious public service (from persons or organizations who do not have interests that may be substantially affected by the performance of the employee’s official duties) and honorary degrees.
  • Gifts in connection with political activities permitted by the Hatch Act (as amended). Those who may take an active part in political campaigns may also accept meals, lodging, transportation and other benefits, including free attendance at events, in connection with such participation with a political organization.
  • Social invitations from persons other than prohibited sources where no fee is charged to any person in attendance. The invitee need not have a personal relationship with the host. The amendments effective January 1, 2017 require that if either the sponsor of the event or the person extending the invitation to the employee is not an individual, the employee must obtain a written determination from the agency designee that the employee’s attendance would not cause a reasonable person with knowledge of the relevant facts to question the employee’s integrity or impartiality. 
  • Unsolicited meals, refreshments and entertainment in foreign areas from private sources, where attendance will further programs or operations of the agency or the U.S. mission in the foreign area.
  • Most gifts to the president or vice president.
  • Gifts authorized by supplemental agency regulations or under specific statutory authority, such as the Foreign Gifts and Decorations Act.
  • An employee may accept gifts of informational materials, effective January 1, 2017, provided that the aggregate market value of all informational materials received from any one person does not exceed $100 in a calendar year. If the aggregate market value of all informational materials from the same person exceeds $100 in a calendar year, the employee must obtain a written determination from an agency designee finding that acceptance by the employee would not be inconsistent with the new non-binding standard described above. 

“Informational materials” include writings, recordings, documents, records or other items that: (1) are educational or instructive in nature; (2) are not primarily created for entertainment, display or decoration; and (3) contain information that relates in whole or in part to (i) the employee’s official duties or position, profession or field of study; (ii) a general subject matter area, industry or economic sector affected by or involved in the programs or operations of the agency; or (iii) another topic of interest to the agency or its mission. 

In general, and as amended by the amendments effective January 1, 2017, a gift’s value is based on its “market value,” which is defined as the cost that a member of the general public would reasonably expect to incur to purchase the gift. As clarified in the amendments, if “free attendance,” as defined above, has been extended to an accompanying spouse or other guest, the market value of the gift of free attendance includes the market value of the free attendance by both the employee and the spouse or other guest.

In determining the value of a skybox or private suite, OGE has advised, and the amendments explain, that the gift of attendance is determined by adding the market value of the most expensive publicly available ticket to the event to the market value of the food, parking and other tangible benefits provided in connection with the gift of attendance.

The new rules explain that the new voluntary standard for executive branch employees is not violated if an employee accepts a gift that qualifies for any exemption described above. 

Gifts from Registered Lobbyists

With few exceptions, President Trump’s executive order on ethics prohibits political appointees from accepting gifts from registered lobbyists and lobbying organizations. The prohibition applies even if the lobbyist does not have any contact or business with the appointee’s agency. Note that while the prohibition does extend to gifts from organizations that file their own registrations under the Lobbying Disclosure Act, the prohibition does not extend to gifts from organizations that retain outside lobbyists or lobbying firms but do not employ in-house lobbyists. 

For purposes of the executive order, “political appointees” are defined to include all full time, non-career presidential and vice-presidential appointees, non-career appointees in the senior executive service, and any appointee to a Schedule C or similar position, who were appointed on or after January 20, 2017. 

The term “gift” has the same definition as under the existing executive branch ethics rules, but it incorporates far fewer exceptions. For example, while political appointees may accept modest items of food and refreshments, items of little intrinsic value, gifts made under the personal relationship exception and certain other specified items, they may not take advantage of the general exception for gifts worth less than $20, nor may they accept free attendance at widely attended gatherings.

Finally, certain executive branch officials and employees must file annual public financial disclosure reports on which they disclose gifts they have received from private sources during the previous calendar year. Note that certain gifts must be disclosed even if they were permissible under the executive branch gift rules.

 

 

 

ENDNOTES

[1] The amendments clarify that when several individuals join together to give an executive branch employee a gift and contribute $20 or less each, it is impermissible for the executive branch employee to accept the gift because the gift is a single gift with a market value in excess of $20.

[2] This exception does not apply to gifts of cash. The recent amendments to the executive branch gift rules explain that it is permissible for an employee to accept a gift card worth less than $20 if the gift card is to a specific store, but an employee may not accept a gift card if the gift card is issued by a credit card company or other financial institution because such a card is equivalent to a gift of cash. 

[3] This rule does not prevent an employee from engaging in certain fundraising activity for a nonprofit organization on a limited basis. Because the rules governing charitable solicitations by executive branch employees are complex, we recommend seeking advice of counsel before inviting executive branch employees to participate in fundraising activity.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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