Final Exam Study Flashcards
1
Q
Criminal statute that covers the financial interest of the government official, his or her spouse and minor children
A
18 USC 208
2
Q
Does 208 cover the financial interest of the employee’s parents, grandparents, grown children, and extended family?
A
No
3
Q
what are the three ways to comply with 208?
A
- Recuse: don’t participate in the gov’t matter that affects the financial interest
- Eliminate: get rid of the financial interest (divest) or
- Waiver: get a waiver from the person who appointed you to the government pursuant to 208(b)
4
Q
Does 208 cover the financial interest of the government employee’s interest in any entity with which he is a director, employee, or trustee, and any entity with which he is negotiating for employment?
A
Yes
5
Q
if a government employee gets rid of a financial interest, what should he or she do?
A
- IT: make sure the sale of the asset doesn’t violate insider trading or other securities laws
- TAX: be prepared to deal with the tax consequences of the sale
- COD: get a certificate of divestiture from the OGE
6
Q
If the gov’t employee wants to get a certificate of divestiture, what does she have to do and what are the implications?
A
she would have to consult with OGE and the consequence is that it’s usually a politically unpopular opinion
7
Q
True or False: if an employee holds a small common stock under $15,000 and has a diversified mutual fund, there is no OGE conflict.
A
True. 18 USC 208 gives OGE authority to promulgate rules that make exceptions such as that. Those types of financial assets do not create conflicts for the purposes of the statute.
8
Q
Does 18 USC 208 apply to SGEs? (special government employee’s aka part-time employees?)
A
Yes
9
Q
What if an employee seeks a waiver but fails to disclose all of the material facts about the conflict?
A
It would violate the statute. 18 USC 208(b) requires full disclosure of all material facts of a potential conflict before waiver can be considered
10
Q
Give an example of a way in which rules can be worked around through compliance with the rule but not its intent
A
A government employee taking official action that will favor the financial interest of a parent or grandparent, from whom he will almost certainly inherit large amounts of money
11
Q
Amy was appointed to work for the Department of Energy. Her grandparents have stock in an oil company. Is there a conflict under 208?
A
No, not a conflict under 208 at least until one of the grandparents dies and leaves stock to Amy. Then Amy will need to inform the DOE ethics lawyers immediately so the potential conflict and risk of the 208 violation can be dealt with
12
Q
Amy is not working at the DOI as a lawyer. Do the ABA ethics rules apply to her?
A
No
13
Q
What is 18 USC 207
A
revolving door OUT. 18 USC 207 is a criminal statute that restricts former government employees from representing back to the gov
14
Q
What does 207 say about particular party matters?
A
for TWO YEARS, former government employee is restricted from representing back to the government in connection with a particular party matter in which the US is a party or has a direct and substantial interest which such person knows was actually pending under his official responsibility
15
Q
how long is the 207 ban for senior government officials?
A
one year
16
Q
how long is the 207 ban for very senior government officials?
A
two years
17
Q
who are considered “very senior” employees?
A
the VP, cabinet positions, heads of agencies
18
Q
What are the 207 restrictions on trade or treaty negotiations?
A
one-year restrictions; - Former employee of executive branch - who participated personally / substantially - in any ongoing trade or treaty negotiation - within one year before they left the government - and had access to information about the negotiation - that she couldn’t disclose - and she knew it was confidential - shall not represent, aid, or advise - any person concerning the trade or treaty negotiation - FOR ONE YEAR after employment with US terminates
19
Q
ABA MR 1.7
A
Conflict of interest rules; lawyer shall not represent a client if that representation involves a concurrent conflict of interest
20
Q
ABA MR 1.7 exceptions
A
- consent in writing
- lawyer feels they can competently and diligently represent each affected client
- the representation is not prohibited by 207 and 208
- the representation doesn’t involve the assertion of a claim by one client against another represented by the same lawyer in same litigation
21
Q
What can you do when a 1.7 conflict comes up?
A
- if both clients to you at the same time, you can choose to drop one of them
- if confidential information is received that violates your duty of those former/respective clients, you should drop all clients
22
Q
John, a presidentially appointed and Senate confirmed (PAS) official in the Department of Energy (DOI), has no oil company stock but his wife is a mid-level manager at an oil company. Can he participate in drafting a regulation on offshore drilling?
A
Probably not because the wife is likely getting some sort of profit sharing. We should look closely at her compensation package. Flat salary = ok, stock benefits = not OK. A bonus that turns on the profits of the company could be problematic.
23
Q
What are examples of particular party matters?
A
Grants
Investigations
Requests for rulings
Litigation
Contracts
or actions that involve deliberation, decision, or action affecting the legal rights of identified parties in a specific proceeding
24
Q
Cindy, another PAS official in the Department of Energy, was formerly a government affairs lawyer for BP until she joined DOE two months ago. She sold all of her BP stock upon coming to DOE. Can she participate in drafting the same regulation on offshore drilling?
A
It’s not a 208 problem because it involves a regulation, not a particular party matter. but confidentiality could be a problem under the ABA ethics rules.
25
Can Cindy participate in a DOE investigation of BP's conduct in connection with an oil spill that occurred when she was at BP?
No, unless she gets authorization. Even with a cooling off period, she cannot do this. Rule 1.11 would make it impermissible for a lawyer to go into the govt and represent the government in the same particular party matter she had worked on while in the private sector. If she had worked on anything regarding the oil spill while she was at BP, she isn't permitted from investigating under 1.11 without permission from the government. Under 1.9, a lawyer may never go adverse to a former client in the same particular party matter. She cannot go against BP without BP's permission.
26
are regulations a particular party matter under 207?
No
27
Does the ban on post-government representation of clients in ABA MR 1.11(a) apply to regulations?
No, lawyers routinely draft regulations in government agencies then go out into law firms and interpret and even try to change those regulations. It's not necessarily a good thing, but it is legal and common.
28
Under 207 what are the implications of a former very senior member of the executive or legislative branch working on a matter that was pending under his or her official responsibility as an officer, but they didnt work in it directly?
It would still be a violation under 207(d) The employee, as a very senior former employee, has a two-year restriction on representing back to any person in the agency or to certain high level employees EVEN IF that person didn't participate personally or substantially. if their subordinate did, that's enough
29
Under _____ a lawyer repping a company in one matter can't rep another company in the same or related matter in which company 1's interests are materially adverse to company 2's interests, unless company 1 gives informed, written consent
MR 1.9
30
Under _______ a lawyer who learned info from a potential client can't use that info in any way with respect to a former client. (except as rule 1.9 would permit - 1.9 says you need consent if you want to rep another company/client in the same matter)
MR 1.18 (b)
31
Under \_\_\_\_\_\_, a lawyer shall not represent a client with interests materially adverse to those of a prospective client in the same or substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided by (d). Disqualification of a lawyer imputes on his entire firm.
MR 1.18 (c)
32
Under MR 1.18(d) when is representation permissible if a lawyer has received disqualifying information?
if both the affected client and prospective client give informed consent
33
\_\_\_\_\_\_\_\_\_\_ makes it impermissible for a lawyer to go into the govt and represent the government in the same particular party matter she had worked on while in the private sector
**Rule 1.11** makes it impermissible for a lawyer to go into the govt and represent the government in the same particular party matter she had worked on while in the private sector
34
what is a prohibited source?
someone/something who is seeking an action by the official/agency, or who could be affected by the official action.
35
Pursuant to \_\_\_\_\_\_, current government employees may not represent anyone other than themselves on any matter before the executive branch or any court if the US is a party or has an interest
18 USC 205
36
Pursuant to \_\_\_\_\_\_\_\_\_, an executive branch employee may not receive any compensation from representing another person in a matter before the executive branch or the courts when the US is a party or has a direct and substantial interest. (This bar applies to representations while the person is an executive branch employee regardless of whether she receives the funds during or after government service)
18 USC 203
37
John was in public service and then became a partner at a lobbying firm. What must the firm do regarding John's salary to avoid an 18 USC 203 violation?
The firm must screen John off from any share of the firm's profits that came from representing others to the executive branch during the employee's period of public service. Or, they should just give him a flat salary until profits no longer include earnings from that period
**18 U.S.C. § 203** prohibits an executive branch employee from receiving any legal fees, partnership share, bonuses, or any other form of compensation derived from representational services of others in matters before the executive branch or the courts (when the United States is a party or has a direct and substantial interest). This bar applies to representations while the person is an executive branch employee, regardless of whether he or she receives the funds during or after Government service.
38
Who does a government employee have a "covered relationship" with?
a prospective or former employer that gives the employee an "extraordinary payment" over $10,000 after learning the employee will/has gone into government service
ALSO: household members, relatives with close personal relationships, organizations in which the employee is an active member, and maybe the spouse's employer
39
What must the government employee take caution about when it comes to covered relationships?
Pursuant to CFR 2635, The employee must NOT participate in matters that she knows are likely to have _a direct and predictable_ effect on the financial interest of that person with whom she has a covered relationship.
***EXCEPTION:*** if she tells the agency and receives authorization
40
Name some specific exemptions of 208 "revolving door in" prohibitions
1. Diversified mutual funds
2. Blind trust
3. De minimus exception for holdings in a stock under $15,000 and combinations of stocks in one industry under $50,000
41
Under 18 USC 207, what is there a LIFETIME ban on?
appearing in front of a court on behalf of someone in connection with a particular party matter in which the former government employee participated personally and substantially while he was a government employee
42
What if, as a lawyer, government or otherwise, you encounter fraud or criminal activities in an organization you represent?
You must report up pursuant to Rule 1.13 if you rep an organization and if its within the best interests of the organiztaion
43
44
A Government employee works for the Department of Agriculture. Because of this statute, she may not call the Internal Revenue Service on behalf of a neighbor (even if she will not be paid by the neighbor) to ask for reduction of a penalty assessed against him for late payment.
(Current government employees may not represent anyone other than themselves on any matter before the executive branch or any court if the US is a party or has an interest)
18 USC 205
45
Because of this statute, attorneys who join the executive branch from private firms may not keep a financial interest in a contingency fee case in which the United States is a party or has a substantial interest.
Government attorneys may need to ask their former law firms to maintain a bookkeeping arrangement that segregates funds received for representations before the Government from those in which they lawfully may share under a continuing compensation arrangement, such as deferred compensation or bonuses.
(prohibits an executive branch employee from receiving any legal fees, partnership share, bonuses, or any other form of compensation derived from representational services of others in matters before the executive branch or the courts (when the United States is a party or has a direct and substantial interest). This bar applies to representations while the person is an executive branch employee, regardless of whether he or she receives the funds during or after Government service.)
18 USC 203
46
Covered relationship rule? (Statute)
§2635.502-03
Where an employee knows that a particular matter involving specific parties is likely to have a **direct and predictable effect on the financial interest of a member of his household, or knows that a person with whom he has a covered relationship** is or represents a party to such matter, and where the employee determines that the circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality in the matter, the employee should not participate in the matter unless he has informed the agency designee of the appearance problem and received authorization from the agency designee in accordance with paragraph (d) of this section
47
Two types of 208 waivers
208(b)(1): A waiver issued by the employee's agency that covers certain financial interests that are **not so substantial as to affect the integrity of the employee's services.**
208(b)(3): A waiver for special government employees on Federal Advisory Committee Act committees when the **need for services outweighs the potential for conflicts.**
48
Under 18 USC 208, two of the restrictions may affect any former "employee," regardless of rank or position. The restrictions bar a former employee from representing another person or entity by making a communication to or appearance before a Federal department, agency, or court concerning the same "particular matter involving specific parties" (e.g., the same contract or grant) with which the former employee was involved while serving the Government. If the matter was pending under the employee's official responsibility during the employee's last year of Government service, the bar lasts for _____ years. If the employee participated in the matter "personally and substantially," the bar is \_\_\_\_\_\_\_\_\_\_.
Two of the restrictions may affect any former "employee," regardless of rank or position. The restrictions bar a former employee from representing another person or entity by making a communication to or appearance before a Federal department, agency, or court concerning the same "particular matter involving specific parties" (e.g., the same contract or grant) with which the former employee was involved while serving the Government. If the matter was pending under the employee's official responsibility during the employee's last year of Government service, the bar lasts for **two years**. If the employee participated in the matter "personally and substantially," the bar is **permanent.**
49
Under 18 USC 207, for a period of ________ after leaving a "senior" position, a former senior employee may not represent another person or entity by making a communication to or appearing before the former employee's former agency to seek official action on any matter. A former "very senior" employee is subject to a similar prohibition, except that the bar lasts for _______ and extends to contacts with specified high-level officials at any department or agency.
For a period of **one year** after leaving a "senior" position, a former senior employee may not represent another person or entity by making a communication to or appearing before the former employee's former agency to seek official action on any matter. A former "very senior" employee is subject to a similar prohibition, except that the bar lasts for **two years** and extends to contacts with specified high-level officials at any department or agency.
50
What is the purpose of 18 USC 207?
To prevent the appearance or involvement of unfair use of prior government employment.
51
Does 18 USC 207 apply to the President?
No.
52
A former employee of the Federal Bureau of Investigation makes a brief telephone call to a colleague in her former office concerning an ongoing investigation. Did she make an appearance under the meaning of 18 USC 207(d)?
Yes. She has made a communication. If she personally attends an informal meeting with agency personnel concerning the matter, she will have made an appearance.
53
A former employee of the National Endowment for the Humanities (NEH) accompanies other representatives of an NEH grantee to a meeting with the agency. Has she made an appearance under the 18 USC 207(d)?
Yes. Even if the former employee does not say anything at the meeting, he has made an appearance (although that appearance may or may not have been made with the intent to influence, depending on the circumstances).
54
A Government employee administered a particular contract for agricultural research with Q Company. Upon termination of her Government employment, she is hired by Q Company. She works on the matter covered by the contract, but has no direct contact with the Government. At the request of a company vice president, she prepares a paper describing the persons at her former agency who should be contacted and what should be said to them in an effort to increase the scope of funding of the contract and to resolve favorably a dispute over a contract clause. Can she do this under 18 USC 207(d), or is this an appearance?
Not an appearance. She may do so.
55
A former employee established a small government relations firm with a highly specialized practice in certain environmental compliance issues. She prepared a report for one of her clients, which she knew would be presented to her former agency by the client. The report is not signed by the former employee, but the document does bear the name of her firm. The former employee expects that it is commonly known throughout the industry and the agency that she is the author of the report. Is this a 207(d) violation?
Yes. If the report were submitted to the agency, the former employee would be making a communication and not merely confining herself to behind-the-scenes assistance, because the circumstances indicate that she intended the information to be attributed to herself.
56
A former employee of the Administration on Children and Families (ACF) signs a grant application and submits it to ACF on behalf of a nonprofit organization for which she now works. 207 violation?
Yes, 207(e)(1) violation. She has made a communication with the intent to influence an employee of the United States because her communication was made for the purpose of seeking a Government benefit.
57
A former Government employee calls an agency official to complain about the auditing methods being used by the agency in connection with an audit of a Government contractor for which the former employee serves as a consultant. 207 violation?
Yes, 207(e)(1) violation. The former employee has made a communication with the intent to influence because his call was made for the purpose of seeking government action in connection with an issue involving an appreciable element of dispute.
58
A former Government employee calls an agency to ask for the date of a scheduled public hearing on her client's license application. Is this a 207 violation?
No, this is a routine request not involving a potential controversy and is not made with the intent to influence. This is acceptable communication under 207(e)(2).
59
A former government employee represents a client on a license application. The agency's hearing calendar is quite full, as the agency has a significant backlog of license applications. The former employee calls a former colleague at the agency to ask if the hearing date for her client could be moved up on the schedule, so that her client can move forward with its business plans more quickly. Is this a 207 violation?
Yes, this is a 207(e) violation because the communication has been made with the intent to influence.
60
A former employee of the Department of Defense (DOD) now works for a firm that has a DOD contract to produce an operator's manual for a radar device used by DOD. In the course of developing a chapter about certain technical features of the device, the former employee asks a DOD official certain factual questions about the device and its properties. The discussion does not concern any matter that is known to involve a potential controversy between the agency and the contractor. Is this a 207 violation?
No. The former employee has not made a communication with the intent to influence.
61
A former Government employee now works for a management consulting firm, which has a Government contract to produce a study on the efficiency of certain agency operations. Among other things, the contract calls for the contractor to develop a range of alternative options for potential restructuring of certain internal Government procedures. The former employee would like to meet with agency representatives to present a tentative list of options developed by the contractor. Can she do this?
She may not. There is a potential for controversy between the Government and the contractor concerning the extent and adequacy of any options presented, and, moreover, the contractor may have its own interest in emphasizing certain options as opposed to others because some options may be more difficult and expensive for the contractor to develop fully than others. 207(e) problem.
62
An agency official visits the premises of a prospective contractor to evaluate the testing procedure being proposed by the contractor for a research contract on which it has bid. A former employee of the agency, now employed by the contractor, is the person most familiar with the technical aspects of the proposed testing procedure. The agency official asks the former employee about certain technical features of the equipment used in connection with the testing procedure. What should the former government employee do so as to comply to 207?
The former employee may provide factual information that is responsive to the questions posed by the agency official, as such information is requested by the Government under circumstances for its convenience in reviewing the bid. However, the former employee may not argue for the appropriateness of the proposed testing procedure or otherwise advocate any position on behalf of the contractor. 207(e)(1)
63
A former Government employee accompanies another employee of a contractor to a routine meeting with agency officials to deliver technical data called for under a Government contract. During the course of the meeting, an unexpected dispute arises concerning certain terms of the contract. Can the former employee provide her input?
No, this would be a 207(e)(3) violation. The former employee may not participate in any discussion of this issue. Moreover, if the circumstances clearly indicate that even her continued presence during this discussion would be an **appearance made with the intent to influence**, **she should excuse herself from the meeting.**
64
A former Regional Administrator of the Occupational Safety and Health Administration (OSHA) becomes a consultant for a company being investigated for possible enforcement action by the regional OSHA office. She is hired by the company to coordinate and guide its response to the OSHA investigation. She accompanies company officers to an informal meeting with OSHA, which is held for the purpose of airing the company's explanation of certain findings in an adverse inspection report. The former employee is introduced at the meeting as the company's compliance and governmental affairs adviser, but she does not make any statements during the meeting concerning the investigation. She is paid a fee for attending this meeting. 207 violation?
Yes, this would constitute a 207(e)(4) violation because her mere physical presence is considered an appearance with intent to influence.
65
A former employee of an agency now works for a manufacturer that seeks agency approval for a new product. The agency convenes a public advisory committee meeting for the purpose of receiving expert advice concerning the product. Representatives of the manufacturer will make an extended presentation of the data supporting the application for approval, and a special table has been reserved for them in the meeting room for this purpose. The former employee does not participate in the manufacturer's presentation to the advisory committee and does not even sit in the section designated for the manufacturer. Rather, he sits in the back of the room in a large area reserved for the public and the media. The manufacturer's speakers make no reference to the involvement or views of the former employee with respect to the matter.
Is this a 207(e)(4) appearance violation?
No. Even though the former employee may be recognized in the audience by certain agency employees, he has not made an appearance with intent to influence because his presence is relatively inconspicuous and there is little to identify him with the manufacturer or the advocacy of his representatives at the meeting
66
A Federal Trade Commission (FTC) employee participated in the FTC's decision to initiate an enforcement proceeding against a particular company. After terminating Government service, the former employee is hired by the company to lobby key Members of Congress concerning the necessity of the proceeding. Can he contact members of Congress without violating 18 USC 207?
Yes, he may contact members of Congress or their staff since a communication to or appearance before such persons is not made to or before an “employee of the United States” as that term is defined in 18 USC 207(f)(1).
(f) To or before an employee of the United States—(1) Employee of the United States. For purposes of this paragraph, an “employee of the United States” means the President, the Vice President, and any current Federal employee (including an individual appointed as an employee or detailed to the Federal Government under the Intergovernmental Personnel Act (5 U.S.C. 3371-3376)) who is detailed to or employed by any:
(i) Agency (including a Government corporation);
(ii) Independent agency in the executive, legislative, or judicial branch;
(iii) Federal court; or
(iv) Court-martial.
67
A Federal Communications Commission (FCC) employee participated in a proceeding to review the renewal of a license for a television station. After terminating Government service, he is hired by the company that holds the license. At a cocktail party, the former employee meets his former supervisor who is still employed by the FCC and begins to discuss the specifics of the license renewal case with him. Are there any 207 issues here?
Yes, this would be a violation of 18 USC 207(f). The former employee is directing his communication to an FCC employee in his capacity as an employee of the FCC. Moreover, as the conversation concerns the license renewal matter, it is not a purely social contact and satisfies the element of the intent to influence the Government within the meaning of paragraph (e) of this section.
68
A Federal Trade Commission economist participated in her agency's review of a proposed merger between two companies. After terminating Government service, she goes to work for a trade association that is interested in the proposed merger. She would like to speak about the proposed merger at a conference sponsored by the trade association. The conference is attended by 100 individuals, 50 of whom are employees of entities specified in paragraphs (f)(1)(i) through (f)(1)(iv) of 207 (agency employees, federal court employees, President, VP, etc).
Can the former employee speak at the conference without violating 207? Can She discuss the merits of the merger in response to a question posed by a DOJ employee?
Yes, this is acceptable under 18 USC 207(f)(3) because it is considered public commentary:
* Public commentary*.
(i) A former employee who addresses a public gathering or a conference, seminar, or similar forum as a speaker or panel participant will not be considered to be making a prohibited communication or appearance if the forum:
(A) Is not sponsored or co-sponsored by an entity specified in paragraphs (f)(1)(i) through (f)(1)(iv) of this section;
(B) Is attended by a large number of people; and
(C) A significant proportion of those attending are not employees of the United States.
(ii) In the circumstances described in paragraph (f)(3)(i) of this section, a former employee may engage in exchanges with any other speaker or with any member of the audience.
(iii) A former employee also may permit the broadcast or publication of a commentary provided that it is broadcast or appears in a newspaper, periodical, or similar widely available publication.
69
ABC Company has a contract with the Department of Energy which requires that contractor personnel work closely with agency employees in adjoining offices and work stations in the same building. After leaving the Department, a former employee goes to work for another corporation that has an interest in performing certain work related to the same contract, and he arranges a meeting with certain ABC employees at the building where he previously worked on the project. At the meeting, he asks the ABC employees to mention the interest of his new employer to the project supervisor, who is an agency employee. Moreover, he tells the ABC employees that they can say that he was the source of this information. The ABC employees in turn convey this information to the project supervisor. Has the former employee made a communication as defined in 18 USC 207?
Yes. The former employee has made a communication to an employee of the Department of Energy. His communication is directed to an agency employee because he intended that the information be conveyed to an agency employee with the intent that it be attributed to himself, and the circumstances indicate such a close working relationship between contractor personnel and agency employees that it was likely that the information conveyed to contractor personnel would be received by the agency.
70
An employee of the Bureau of Land Management (BLM) participated in the decision to grant a private company the right to explore for minerals on certain Federal lands. After retiring from Federal service to pursue her hobbies, the former employee becomes concerned that BLM is misinterpreting a particular provision of the lease. Can she contact a current BLM employee on her own behalf in order to argue that her interpretation is correct?
Yes, probably acceptable under 18 USC 207(g) because she is communicating on her own behalf without control or direction by another person.
71
A former Bureau of Land Management (BLM) employee leaves the government and joins an environmental organization as an uncompensated volunteer. The leadership of the organization authorizes the former employee to engage in any activity that she believes will advance the interests of the organization. She writes to BLM on the organization's letterhead in order to present an additional argument concerning the interpretation of the lease provision. Has she made a communication under 18 USC 207?
Yes, she made a communication. Although the organization did not direct her to send the specific communication to BLM, the circumstances establish that she made the communication with the consent of the organization and subject to a degree of control or direction by the organization. 18 USC 207(g)
72
An employee of the Administration for Children and Families wrote the statement of work for a cooperative agreement to be issued to study alternative workplace arrangements. After terminating Government service, the former employee joins a nonprofit group formed to promote family togetherness. He is asked by his former agency to attend a meeting in order to offer his recommendations concerning the ranking of the grant applications he had reviewed while still a Government employee. The management of the nonprofit group agrees to permit him to take leave to attend the meeting in order to present his personal views concerning the ranking of the applications. Is this a 207 violation?
No. Although the former employee is a salaried employee of the non-profit group and his recommendations may be consistent with the group's interests, the circumstances establish that he did not make the communication subject to the control of the group.
18 USC 207(g)(B)(ii) (ii) A former employee does *not* act on behalf of another merely because his communication or appearance is consistent with the interests of the other person, is in support of the other person, or may cause the other person to derive a benefit as a consequence of the former employee's activity.
73
An employee of the Department of Housing and Urban Development approved a specific city's application for Federal assistance for a renewal project. After leaving Government service, may she represent the city in relation to that application?
No, under 18 USC 207(h), the employee may not represent the city, especially if she participated personally and substantially in the application. Sounds like a particular party matter.
74
An attorney in the Department of Justice drafted provisions of a civil complaint that is filed in Federal court alleging violations of certain environmental laws by ABC Company. Can the attorney later represent ABC before the government in connection with this lawsuit?
No, violation of 18 USC 207(h) because it's a particular party matter.
75
True or false: Under 18 USC 207(h)(2), international trade agreements are always particular party matters
False. Treaties and trade agreements must be evaluated in light of all relevant circumstances to determine whether they should be considered particular party matters. Relevant considerations include factors like whether the agreement focuses on a *specific property or territory*, a specific claim, or whether it addresses a large number of diverse issues or economic interests.
76
A former employee of the Mine Safety and Health Administration (MSHA) participated personally and substantially in the development of a regulation establishing certain new occupational health and safety standards for mine workers. She later assisted MSHA in its defense of a lawsuit brought by a trade association challenging the same regulation. Can she now represent the trade association?
No. The lawsuit is a particular party matter.
77
An employee of the Food and Drug Administration (FDA) drafted a proposed rule requiring all manufacturers of a particular type of medical device to obtain pre-market approval for their products. It was known at the time that only three or four manufacturers currently were marketing or developing such products. However, there was nothing to preclude other manufacturers from entering the market in the future. Moreover, the regulation on its face was not limited in application to those companies already known to be involved with this type of product at the time of promulgation. Is this a particular party matter?
No. Because the proposed rule would apply to an open-ended class of manufacturers, not just specifically-identified companies, it would not be a particular matter involving specific parties. After leaving the government, the former FDA employee would not be prohibited from representing a manufacturer in connection with the final rule or application of the rule in any specific case.
78
An employee of the Department of Defense (DOD) performed certain feasibility studies and other basic conceptual work for a possible innovation to a missile system. At the time she was involved in the matter, DOD had not identified any prospective contractors who might perform the work on the project. After she left Government, DOD issued a request for proposals to construct the new system, and she now seeks to represent one of the bidders in connection with this procurement. Can she do this?
Yes. She may do so. Even though the procurement is a particular matter involving specific parties at the time of her proposed representation, no parties to the matter had been identified at the time she participated in the project as a Government employee.
18 USC 207(h)(3)
*Specific parties at all relevant times.* The particular matter must involve specific parties both at the time the individual participated as a Government employee and at the time the former employee makes the communication or appearance, although the parties need not be identical at both times.
79
A former employee in an agency inspector general's office conducted the first investigation of its kind concerning a particular fraudulent accounting practice by a grantee. This investigation resulted in a significant monetary recovery for the Government, as well as a settlement agreement in which the grantee agreed to use only certain specified accounting methods in the future. As a result of this case, the agency decided to issue a proposed rule expressly prohibiting the fraudulent accounting practice and requiring all grantees to use the same accounting methods that had been developed in connection with the settlement agreement. Can the employee represent a group of grantees submitting comments critical of the proposed regulation?
Yes. Although the proposed regulation in some respects evolved from the earlier fraud case, which did involve specific parties, the subsequent rulemaking proceeding does not involve specific parties.
18 USC 207(h)(3) *Specific parties at all relevant times.* The particular matter must involve specific parties both at the time the individual participated as a Government employee and at the time the former employee makes the communication or appearance, although the parties need not be identical at both times.
80
A Government employee participated in internal agency deliberations concerning the merits of taking enforcement action against a company for certain trade practices. He left the Government before any charges were filed against the company. Has he participated in a particular party matter under 18 USC 207?
Yes. He has participated in a particular party matter and may not represent another person in connection with the ensuing administrative or judicial proceedings against the company.
## Footnote
2635(h)(4) *Preliminary or informal stages in a matter. When a particular matter involving specific parties begins depends on the facts.* A particular matter may involve specific parties prior to any formal action or filings by the agency or other parties. Much of the work with respect to a particular matter is accomplished before the matter reaches its final stage, and preliminary or informal action is covered by the prohibition, provided that specific parties to the matter actually have been identified. With matters such as grants, contracts, and other agreements, ordinarily specific parties are first identified when initial proposals or indications of interest, such as responses to requests for proposals (RFP) or earlier expressions of interest, are received by the Government; in unusual circumstances, however, such as a sole source procurement or when there are sufficient indicia that the Government has explicitly identified a specific party in an otherwise ordinary prospective grant, contract, or agreement, specific parties may be identified even prior to the receipt of a proposal or expression of interest.
81
An Internal Revenue Service (IRS) attorney is neither in charge of nor does she have official responsibility for litigation involving a particular delinquent taxpayer. At the request of a co-worker who is assigned responsibility for the litigation, the lawyer provides advice concerning strategy during the discovery stage of the litigation. Did the IRS attorney participate personally in the litigation?
Yes.
82
The General Counsel of the Office of Government Ethics (OGE) contacts the OGE attorney who is assigned to evaluate all requests for “certificates of divestiture” to check on the status of the attorney's work with respect to all pending requests. The General Counsel makes no comment concerning the merits or relative importance of any particular request. Did the General Counsel participate personally and substantially?
No. The General Counsel did not participate substantially in any particular request when she checked on the status of all pending requests.
83
84
What is the basic prohibition if 18 USC 207(a)(2)?
**For two years after his Government service terminates, no former employee shall knowingly, with the intent to influence, make any communication to or appearance before an employee of the United States on behalf of any other person in connection with a particular matter involving a specific party or parties, in which the United States is a party or has a direct and substantial interest, and which such person knows or reasonably should know was actually pending under his official responsibility within the one-year period prior to the termination of his Government service.**
85
True or False: under 18 USC 207(a)(2) a communication or appearance by a former government employee is not prohibited unless the former employee had actual knowledge that the relevant matter was pending under his responsibility at the relevant time.
FALSE. So long as the employee "knows or *reasonably should know*" that the matter was pending under his official responsibility (within a one year period prior to his termination from government service), actual knowledge at the time of the involvement isn't necessary.
When facts suggest that a particular matter involving specific parties could have been actually pending under his official responsibility, a former employee _should seek information_ from an agency or ethics official _to clarify his role in the matter_ .
86
A budget officer at the National Oceanic and Atmospheric Administration (NOAA) is asked to review NOAA's budget to determine if there are funds still available for the purchase of a new hurricane tracking device. Is this considered an "official responsibility" for the purposes of 18 USC 207(a)(2)?
No.
The budget officer does not have official responsibility for the resulting contract even though she is responsible for all budget matters within the agency. The identification of funds for the contract is an ancillary aspect of the contract.
Authority to direct Government action concerning only ancillary or nonsubstantive aspects of a matter, such as budgeting, equal employment, scheduling, or format requirements does not, ordinarily, constitute official responsibility for the matter as a whole.
87
A regional employee of the Federal Emergency Management Agency requests guidance from the General Counsel concerning a contractual dispute with Baker Company. The General Counsel immediately assigns the matter to a staff attorney whose workload can accommodate the assignment, then retires from Government two days later. Is this under the General Counsel's official responsibility within the meaning of 207(a)(20?
Although the staff attorney did not retrieve the assignment from his in-box prior to the General Counsel's departure, the Baker matter was actually pending under the General Counsel's official responsibility from the time the General Counsel received the request for guidance.
*Basic prohibition of 18 U.S.C. 207(a)(2).* For two years after his Government service terminates, no former employee shall knowingly, with the intent to influence, make any communication to or appearance before an employee of the United States on behalf of any other person in connection with a particular matter involving a specific party or parties, in which the United States is a party or has a direct and substantial interest, and which such person knows or reasonably should know was **actually pending** under his official responsibility within the one-year period prior to the termination of his Government service.
88
What is the basic prohibition of 18 USC 207(b)?
*(a) Basic prohibition of 18 U.S.C. 207(b).* **For one year after his Government service terminates,** no former employee shall, on the basis of “covered information,” knowingly represent, aid, or advise any other person concerning an ongoing **trade or treaty negotiation** in which, during his last year of Government service, he participated personally and substantially as an employee. “Covered information” refers to agency records which were accessible to the employee which he knew or should have known were designated as exempt from disclosure under the Freedom of Information Act (5 U.S.C. 552).
89
What is the basic prohibition of 18 USC 207(c)?
**One-year restriction on any former senior employee's representations to former agency concerning _any matter, regardless of prior involvement_**
*Basic prohibition of 18 U.S.C. 207(c).* **For one year** after his service in a senior position terminates, no former senior employee may knowingly, with the intent to influence, make any communication to or appearance before an employee of an agency in which he served in any capacity within the one-year period prior to his termination from a senior position, if that communication or appearance is made on behalf of any other person in connection with any matter on which the former senior employee seeks official action by any employee of such agency. An individual who served in a “very senior employee” position is subject to the broader two-year restriction set forth in 18 U.S.C. 207(d) in lieu of that set forth in section 207(c). See §2641.205.
90
An employee of a private research institution serves on an advisory committee that convenes periodically to discuss United States policy on foreign arms sales. The expert is compensated at a daily rate which is the equivalent of 86.5 percent of the rate of basic pay for a full-time employee at level II of the Executive Schedule. The individual serves two hours per day for 65 days before resigning from the advisory committee nine months later. When she resigns, does the one-year prohibition under 18 USC 207(c) apply to her?
Yes. The individual becomes subject to 18 U.S.C. 207(c) when she resigns from the advisory committee since she served 60 or more days as a special Government employee during the one-year period before terminating service as a senior employee.
91
Two months after retiring from a senior employee position at the United States Department of Agriculture (USDA), the former senior employee is asked to represent a poultry producer in a compliance matter involving the producer's storage practices. Can he represent the poultry producer before the USDA?
No. The former senior employee may not represent the poultry producer before a USDA employee in connection with the compliance matter or any other matter in which official action is sought from the USDA. He has ten months remaining of the one-year bar which commenced upon his termination as a senior employee with the USDA.
18 USC 207(c) For one year after his service in a senior position terminates, no former senior employee may knowingly, with the intent to influence, make any communication to or appearance before an employee of an agency in which he served in any capacity within the one-year period prior to his termination from a senior position, if that communication or appearance is made on behalf of any other person in connection with any matter on which the former senior employee seeks official action by any employee of such agency. An individual who served in a “very senior employee” position is subject to the broader two-year restriction set forth in 18 U.S.C. 207(d) in lieu of that set forth in section 207(c).
92
An individual serves for several years at the Commodity Futures Trading Commission (CFTC) as a GS-15. With no break in service, she then accepts a senior employee position at the Export-Import Bank of the United States (Ex-Im Bank) where she remains for nine months until she leaves Government service in order to accept a position in the private sector. What are the 18 USC 207(c) implications?
She is barred by 18 USC 207(c) as to both agencies _for one year_ commencing from her termination from the senior employee position at the Ex-Im Bank because she served in both the CFTC and the Ex-Im Bank within her last year of senior service.
93
A former senior employee at the National Capital Planning Commission (NCPC) wishes to contact a friend who still works at the NCPC to solicit a donation for a local charitable organization. Can she do this?
Yes, she may do this since the circumstances establish that she would not be making the communication for the purpose of inducing the NCPC employee to make a decision in her official capacity about the donation.
94
A former senior employee at the Department of Defense wishes to contact the Secretary of Defense to ask him if he would be interested in attending a cocktail party. At the party, the former senior employee would introduce the Secretary to several of the former senior employee's current business clients who have sought the introduction. Is this a problem?
Yes, this is an 18 USC 207 problem. The former senior employee and the Secretary do not have a history of socializing outside the office, and the Secretary is in a position to affect the interests of the business clients. All the expenses associated with the party will e paid by the former senior employee's consulting firm. The circumstances suggest that the communication wouldn't be made for any purpose other than inducing the Secretary to make a decision in his official capacity about the invitation.
95
What is the basic prohibition if 18 USC 207(d)?
**Two-year restriction on any former very senior employee's representations to former agency or certain officials concerning any matter, regardless of prior involvement.**
96
True or False: The former Attorney General may not contact the Assistant Attorney General of the Antitrust Division on behalf of a professional sports league in support of a proposed exemption from certain laws, nor may he contact the Secretary of Labor. He may, however, speak directly to the President or Vice President concerning the issue.
True. That would be a 207(d) violation.
97
What is the basic prohibition of 18 USC 207(f)?
**One-year restriction on any former senior or very senior employee's representations on behalf of, or aid or advice to, a foreign entity.**
98
An employee of the Department of Transportation (DOT) transfers to become an employee of the Pension Benefit Guaranty Corporation (PBGC). The PBGC, a wholly owned Government corporation, is a corporation in which the United States has a proprietary interest. Can this former DOT employee press the PBGC's point of view in a meeting with DOT employees about an airline bankruptcy case in which he was personally and substantially involved while he was at the DOT?
Yes, he can do this because his communications to the DOT on behalf of the PBGC would be made on behalf of the United States. This is a 207
99
A Federal Transit Administration (FTA) employee recommended against the funding of a certain subway project. After terminating Government service, she is hired by a Congressman as a member of his staff to perform a variety of duties, including miscellaneous services for the Congressman's constituents. Can she contact the FTA on behalf of a constituent group as part of her official duties in order to argue for the reversal of the subway funding decision?
Yes, she may do this without risking violating 207 because her communications to the FTA are on behalf of the constituent group which would be on behalf of the United States.
100
A Postal Service attorney participated in discussions with the Office of Personnel Management (OPM) concerning a dispute over the mailing of health plan brochures. After terminating Government service, the attorney joins a law firm as a partner. He is assigned by the firm's managing partner to represent the Postal Service pursuant to a contract requiring the firm to provide certain legal services. Can the former senior employee represent the Postal Service in meetings with OPM concerning the dispute about the health plan brochures?
Yes, he may because his suggestions would be made on behalf of the United States (even though he is also acting on behalf of his law firm when he performs representational services for the United States). A communication to the Postal Service concerning a disagreement about the law firm's fee, however, would NOT be made on behalf of the United States.
101
A former senior employee of the Food and Drug Administration (FDA), now an employee of a drug company, is called by a Congressional committee to give unsworn testimony concerning the desirability of instituting cost controls in the pharmaceutical industry. Can she address the committee without violating 207?
Yes. The employee may address the committee even though her testimony will unavoidably be also directed to a current employee of the FDA who has also been asked to testify. This is a communication on behalf of the United States and shielded from 207.
102
A Marine Corps engineer participates personally and substantially in drafting the specifications for a new assault rifle. After terminating Government service, he accepts a job with the company that was awarded the contract to produce the rifle. Can he accompany the President of the company to a meeting with Marine Corps employees and report the results of a series of metallurgical tests?
Yes, provided he acts in accordance with agency procedures. He may not, however, present the company's argument that an advance payment is due the company under the terms of the contract since this would not be a "mere incidental reference or remark"
103
An employee was removed from service by his agency in connection with a series of incidents where the employee was absent without leave or was unable to perform his duties because he appeared to be intoxicated. The employee's supervisor, who had assisted the agency in handling the issues associated with the removal, subsequently left Government. In the ensuing case in Federal court between the employee who had been removed and his agency over whether he had been discriminated against because of his disabling alcoholism, his former supervisor was asked whether on certain occasions the employee had been intoxicated on the job and unable to perform his assigned duties. Can he answer without violating 18 USC 207?
Yes. The employee would not be providing expert testimony but opinions or inferences which are rationally based on his perception and helpful to a clear understanding of his testimony or the determination of fact in an issue. He can provide the testimony without violating 18 USC 207.
104
Is a former senior or very senior employee prohibited by 18 USC 207(c) or (d) from making a communication or appearance on behalf of a candidate in his capacity as a candidate?
No. Not prohibited by 18 USC 207
105
The former U.S. Attorney General is asked by a candidate running for Governor of Alabama to contact the Chairman of the Federal Trade Commission (a position listed in 5 U.S.C. 5314) to seek the dismissal of a pending enforcement action involving the candidate's family business. Can he do this?
No. The communication to the chairman would not be made on behalf of the candidate *in his capacity as a candidate* and thus, would be barred by 18 USC 207(d)
106
True or False: The President may grant a waiver of one or more of the restrictions in 18 U.S.C. 207 to eligible employees upon the determination and certification in writing that the waiver is in the public interest and the services of the individual are critically needed for the benefit of the Federal Government.
True.
107
108
The spouse of a high-level official of the Internal Revenue Service (IRS) requests a meeting on behalf of her client (a major U.S. corporation) with IRS officials to discuss a provision of IRS regulations governing depreciation of equipment. The spouse will be paid a fee by the corporation for arranging and attending the meeting. Is this a problem under 18 USC 208(b)
Yes this is an 18 USC 208 issue because the consideration of the spouse's request and the decision to hold the meeting are *particular matters* in which the spouse has a *financial interest.*
## Footnote
18 USC 208(a)
Except as permitted by subsection (b) hereof, whoever, being an officer or employee of the executive branch of the United States Government, or of any independent agency of the United States, a Federal Reserve bank director, officer, or employee, or an officer or employee of the District of Columbia, including a special Government employee, participates personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter in which, to his knowledge, he, **his spouse ...** has a financial interest
109
True or false: a regulation published by the Department of Agriculture applicable only to companies that operate meat packing plants is not a particular matter.
False. This is a particular matter
110
True or False: A change by the Department of Labor to health and safety regulations applicable to all employers in the United States is not a particular matter.
True. The change in the regulations is directed to the interest of a large and diverse group of persons. Not a particular matter.
111
An agency's Office of Enforcement is investigating the allegedly fraudulent marketing practices of a major corporation. One of the agency's personnel specialists is asked to provide information to the Office of Enforcement about the agency's personnel ceiling so that the Office can determine whether new employees can be hired to work on the investigation. The employee personnel specialist owns $20,000 worth of stock in the corporation that is the target of the investigation. Does she have a disqualifying financial interest in the matter?
No because her involvement is on a peripheral personnel issue and her participation cannot be defined as "substantial."
112
An attorney at the Department of Justice is working on a case in which several large companies are defendants. If the Department wins the case, the defendants may be required to reimburse the Federal Government for their failure to adequately perform work under several contracts with the Government. The attorney's spouse is a salaried employee of one of the companies, working in a division that has no involvement in any of the contracts. She does not participate in any bonus or benefit plans tied to the profitability of the company, nor does she own stock in the company. Does the attorney have a disqualifying financial interest in the matter?
No because there is no evidence that the case will have a direct and predictable effect on whether the spouse will retain her job or maintain the level of her salary, or whether the company will undergo any reorganization that would affect her interest. However, the attorney must consider, under the requirements of **2635.502** , whether his impartiality would be questioned if he continues to work on the case.
113
A special Government employee (SGE) whose principal employment is as a researcher at a major university is appointed to serve on an advisory committee that will evaluate the safety and effectiveness of a new medical device to regulate arrhythmic heartbeats. The device is being developed by Alpha Medical Inc., a company which also has contracted with the SGE's university to assist in developing another medical device related to kidney dialysis. Can the SGE participate in the committee's deliberations?
Yes, so long as there is no evidence that the advisory committee's determinations concerning the medical device under review will affect Alpha Medical's contract with the university to develop the kidney dialysis device. The SGE may participate in the committee's deliberations because those deliberations will not have a direct and predictable effect on the financial interests of the researcher or his employer.
114
An engineer at the Environmental Protection Agency (EPA) was formerly employed by Waste Management, Inc., a corporation subject to EPA's regulations concerning the disposal of hazardous waste materials. Waste Management is a large corporation, with less than 5% of its profits derived from handling hazardous waste materials. The engineer has a vested interest in a defined benefit pension plan sponsored by Waste Management which guarantees that he will receive payments of $500 per month beginning at age 62. As an employee of EPA, the engineer has been assigned to evaluate Waste Management's compliance with EPA hazardous waste regulations. Is there a 208 issue?
No because there isn't any evidence that the engineer's monitoring activities will affect Waste Management's ability or willingness to pay his pension benefits when he is entitled to receive them at age 62. Therefore, the EPA's monitoring activities will not have a direct and predictable effect on the employee's financial interest in his pension.
However, the engineer should consider whether, under the standards set forth in 5 CFR 2635.502, a reasonable person would question his impartiality if he acts in a matter in which Waste Management is a party.
115
An employee of the Department of the Interior owns transportation bonds issued by the State of Minnesota. The proceeds of the bonds will be used to fund improvements to certain State highways. In her official position, the employee is evaluating an application from Minnesota for a grant to support a State wildlife refuge. Does the ownership of the transportation bonds create a disqualifying financial interest?
No. The employee's ownership of the transportation bonds does not create a disqualifying financial interest in Minnesota's application for wildlife funds because approval or disapproval of the grant will not in any way affect the current value of the bonds or have a direct and predictable effect on the State's ability or willingness to honor its obligation to pay the bonds when they mature.
116
An employee of the Bureau of Land Management owns undeveloped land adjacent to Federal lands in New Mexico. A portion of the Federal land will be leased by the Bureau to a mining company for exploration and development, resulting in an increase in the value of the surrounding privately owned land, including that owned by the employee. Can the employee participate in Bureau matters involving the lease?
No, not unless he obtains an individual waiver pursuant to 18 USC 208(b)(1) because he has a financial interest in the lease of the federal land to the mining company.
117
A special Government employee serving on an advisory committee studying the safety and effectiveness of a new arthritis drug is a practicing physician with a specialty in treating arthritis. The drug being studied by the committee would be a low cost alternative to current treatments for arthritis. If the drug is ultimately approved, the physician will be able to prescribe the less expensive drug. The physician does not own stock in, or hold any position, or have any business relationship with the company developing the drug. Moreover, there is no indication that the availability of a less expensive treatment for arthritis will increase the volume and profitability of the doctor's private practice. Is there a disqualifying financial interest?
No. The physician does not own stock or hold any position, or have any business relationship with the company developing the drug. Moreover, there is no indication that the availability of a less expensive treatment for arthritis will increase the volume and profitability of the doctor's private practice. The physician has no disqualifying financial interest in the actions of the advisory committee.
118
An employee of the Consumer Product Safety Commission (CPSC) has two minor children who have inherited shares of stock from their grandparents in a company that manufactures small appliances. Can the employee participate in a CPSC proceeding to require the manufacturer to remove a defective appliance from the market?
No. Unless the employee obtains a waiver under 18 USC 208(b)(1), the employee is disqualified from participating in the matter.
119
A newly appointed employee of the Department of Housing and Urban Development (HUD) is a general partner with three former business associates in a partnership that owns a travel agency. The employee knows that his three general partners are also partners in another partnership that owns a HUD-subsidized housing project. Can the employee participate in particular matters involving the HUD-subsidized projects which his general partners own?
No, not unless he receives a waiver pursuant to 18 USC 208(b)(1)
120
he spouse of an employee of the Department of Health and Human Services (HHS) works for a consulting firm that provides support services to colleges and universities on research projects they are conducting under grants from HHS. The spouse is a salaried employee who has no direct ownership interest in the firm such as through stockholding, and the award of a grant to a particular university will have no direct and predictable effect on his continued employment or his salary. Can the employee participate in the award of a grant to a university to which the consulting firm will provide services?
Yes, this is not an 18 USC 208 violation because the grant will not affect the spouse's financial interest. However, the employee should consider whether her participation in the award of the grant would be barred under the impartiality provision in the Standards of Ethical Conduct for Employees of the Executive Branch at 5 CFR 2635.502
121
The supervisor of an employee of the Department of Education asks the employee to attend a meeting on his behalf on developing national standards for science education in secondary schools. When the employee arrives for the meeting, she realizes one of the participants is the president of Education Consulting Associates (ECA), a firm which has been awarded a contract to prepare a bulletin describing the Department's policies on science education standards. The employee's spouse has a subcontract with ECA to provide the graphics and charts that will be used in the bulletin. What should the employee do?
Because the employee realizes that the meeting will involve matters relating to the production of the bulletin, the employee must disqualify herself from participating in the discussions. After withdrawing from the meeting, the employee should notify her supervisor about the reason for her disqualification. She may elect to put her disqualification statement in writing, or to simply notify her supervisor orally. She may also elect to notify appropriate coworkers about her need to disqualify herself from this matter.
18 USC 208(b)(1)
122
An employee owns shares worth $100,000 in several mutual funds whose portfolios contain stock in a small computer company. Each mutual fund prospectus describes the fund as a “management company,” but does not characterize the fund as having a policy of concentrating its investments in any particular industry, business, single country (other than the U.S.) or bonds of a single State. Can the employee participate in agency matters affecting the computer company?
Yes, this is an exempted matter under 18 USC 208(b)(2)
123
A nonsupervisory employee of the Department of Energy owns shares valued at $75,000 in a mutual fund that expressly concentrates its holdings in the stock of utility companies. Can the employee rely on a 208(b) exemption to act in matters affecting a utility company whose stock is part of the mutual fund's portfolio?
No. The fund is not a diversified fund as defined in 2640.102(a). However, the employee may try to seek an individual waiver under 18 USC 208(b)(1) permitting him to act.
124
An employee of the Federal Reserve owns shares in the mutual fund described in the preceding example. In addition to holdings in utility companies, the mutual fund contains stock in certain regional banks and bank holding companies whose financial interests would be affected by an investigation in which the Federal Reserve employee would participate. Is the employee disqualified from participating in the investigation?
No. The employee is not disqualified from participating in the investigation because the banks that would be affected are not part of the sector in which the fund concentrates. Not a 208 problem
125
A health scientist administrator employed in the Public Health Service at the Department of Health and Human Services is assigned to serve on a Departmentwide task force that will recommend changes in how Medicare reimbursements will be made to health care providers. The employee owns $35,000 worth of shares in the XYZ Health Sciences Fund, a sector mutual fund invested primarily in health-related companies such as pharmaceuticals, developers of medical instruments and devices, managed care health organizations, and acute care hospitals.
Can the health scientist administrator participate in the recommendations?
Yes
18 USC 208(b)(2) An employee may participate in any particular matter affecting one or more holdings of a sector mutual fund or a sector unit investment trust where the affected holding is not invested in the sector in which the fund or trust concentrates, and where the disqualifying financial interest in the matter arises because of ownership of an interest in the fund or unit investment trust.
126
The spouse of a health scientist administrator employed in the Public Health Service at DHS owns $40,000 worth of shares in ABC Specialized Portfolios: Healthcare, a sector mutual fund that also concentrates its investments in health-related companies. The two funds focus on the same sector and both contain holdings that may be affected by the particular matter. Can the employee rely on a 208(b) exemption?
NO. Because the aggregated value of the two funds exceeds $50,000, the employee may not rely on the exemption.
127
An attorney terminates his position with a law firm to take a position with the Department of Justice. As a result of his employment with the firm, the employee has interests in a 401(k) plan, the assets of which are invested primarily in stocks chosen by an independent financial management firm. He also participates in a defined contribution pension plan maintained by the firm, the assets of which are stocks, bonds, and financial instruments. The plan is managed by an independent trustee. Assuming that the manager of the pension plan has a written policy of diversifying plan investments, can the employee participate in matters affecting the holdings of his 401(k) plan?
Yes, so long as the individual financial management firm that selects the plan's investments has a written policy of diversifying the plan's assets. Employee benefit plans that are tax deferred under 401(k) are not considered profit sharing or stock bonus plans for purposes of 208.
128
An employee owns 100 shares of publicly traded stock valued at $3,000 in XYZ Corporation. As part of his official duties, the employee is evaluating bids for performing computer maintenance services at his agency and discovers that XYZ Corporation is one of the companies that has submitted a bid. Does the employee have to recuse himself from continuing to evaluate the bids?
No, there is a de minimis exemption for matters that are publicly traded and not in excess of $15,000
129
The employee and his spouse each own $8,000 worth of stock in XYZ Corporation, resulting in ownership of $16,000 worth of stock by the employee and his spouse. Does the employee have to recuse himself from matters relating to XYZ corporation?
Yes, he must recuse. The employee does not get a de minimis exemption because the aggregate market value of the holdings exceeds $15,000. The employee could, however, seek an individual waiver under 18 USC 208(b)(1) in order to participate in the matter.
130
An employee is assigned to monitor XYZ Corporation's performance of a contract to provide computer maintenance services at the employee's agency. At the time the employee is first assigned these duties, he owns publicly traded stock in XYZ Corporation valued at less than $15,000. During the time the contract is being performed, however, the value of the employee's stock increases to $17,500. Does the employee have to do anything in order to avoid a 208 violation?
Yes. When the employee knows that the value of his stock exceeds $15,000, he must disqualify himself from any further participation in matters affecting XYZ Corporation or seek an individual waiver under 18 USC 208(b)(1). Alternatively, the employee may divest the portion of his XYZ stock that exceeds $15,000. This can be accomplished through a standing order with his broker to sell when the value of the stock exceeds $15,000.
131
A Food and Drug Administration advisory committee is asked to review a new drug application from Alpha Drug Co. for a new lung cancer drug. A member of the advisory committee owns $20,000 worth of stock in Mega Drug Co., which manufactures the only similar lung cancer drug on the market. If approved, the Alpha Drug Co.'s drug would directly compete with the drug sold by the Mega Drug Co., resulting in decreased sales of its lung cancer drug. Can the committee member participate in the review of this new drug without violating 208?
Yes.
## Footnote
18 USC 208(b) *De minimis exemption for matters affecting nonparties*. An employee may participate in any particular matter involving specific parties in which the disqualifying interest arises from the ownership by the employee, his spouse, or minor children of securities issued by one or more entities that are not parties to the matter but that are affected by the matter if
(1) The securities are publicly traded, or are long-term Fed Gov municipal securities; AND
(2) the aggregate market value of the holdings of the employee, his spouse, and minor children in the securities of all affected entities does not exceed $25,000.
132
An employee of the Federal Reserve is a director of the National Association to Save Trees (NAST), an environmental organization that is tax-exempt under section 501(c)(3) of the Internal Revenue Code. The employee knows that NAST has an endowment fund that is partially invested in the publicly traded stock of Computer Inc. The employee's position at the Federal Reserve involves the procurement of computer software, including software marketed by Computer Inc. Can the employee participate in the procurement of software from Computer, Inc.?
Yes, provided that he is not involved in selecting NAST's investments, and that NAST has no relationship to Computer Inc. other than as an investor in the company and routine purchaser of Computer Inc. software.
## Footnote
There is a 208 exemption for participation in 501(c)(3) or (4) matters and of which the employee is an unpaid officer, director, or trustee, and if (1) the matter affects only the organization's investments, not the organization directly, the employee isn't making investment decisions other than participating, and the organization's only relationship to the issuer is that of investor.
133
An employee of the Department of Transportation is a general partner in a partnership that owns commercial property. The employee knows that one of his partners owns stock in an aviation company valued at $100,000 because the stock has been pledged as collateral for the purchase of the commercial property by the partnership. Can the employee act in a matter affecting the aviation company?
No. In the absence of an individual waiver under 18 U.S.C. 208(b)(1), the employee may not act in a matter affecting the aviation company. Because the stock has been pledged as collateral, ownership of the securities is related to the partnership between the employee and his general partner.
134
An employee of the Pension Benefit Guaranty Corporation (PBGC) has a limited partnership interest in Ambank Partners, a large partnership with more than 500 limited partners. The partnership assets are invested in the securities of various financial institutions. Ambank's general partner is Capital Investment Services, an investment firm whose pension plan for its own employees is being examined by the PBGC for possible unfunded liabilities. Can the employee participate in the review of this matter?
Yes. Even though the employee's general partner (Capital Investment Services) has a financial interest in PBGC's review of the pension plan, the employee may participate in review because his relationship with his general partner is that of a limited partner in a partnership that has at least 100 limited partners.
§2640.202 *Exemptions for interests in securities.*
(f) Exemption for certain interests of general partners. An employee may participate in any particular matter in which the disqualifying financial interest arises from:
(1) The ownership of publicly traded securities, long-term Federal Government securities, or municipal securities by the employee's general partner, provided:
(i) Ownership of the securities is not related to the partnership between the employee and his general partner, and
(ii) The value of the securities does not exceed $200,000; or
(2) Any interest of the employee's general partner if the employee's relationship to the general partner is as a limited partner in a partnership that has at least 100 limited partners.
