**Version: February 21, 2008**

U.S. OFFICE OF GOVERNMENT ETHICS

GUIDE TO DRAFTING ETHICS

AGREEMENTS FOR PAS NOMINEES

**[NOTICE]{.underline}: This guide does not contain legal advice. It is
intended solely for educational purposes for ethics officials in the
Federal executive branch.**

**[INTRODUCTION]{.underline}**

In DAEOgram DO-01-013 (Mar. 28, 2001), OGE provided guidance to agency
reviewers who draft ethics agreements for nominees for positions
requiring Senate confirmation ("PAS

nominees"). A model ethics agreement that accompanied that issuance has
served as a valuable starting point for the ethics agreements of
countless PAS nominees. Over the years, OGE has had the benefit of
working closely with agency reviewers to refine the model ethics
agreement and to develop language addressing a variety of circumstances
that the model ethics agreement does not address. The result has been a
body of work that represents the joint product of OGE and the agencies
to which PAS nominees are appointed.

That body of work is reflected in this guide. It contains sample
language and commentary designed to enhance the quality of PAS nominee
ethics agreements. Our intention is to spread the benefit of individual
experiences with such agreements evenly throughout the Federal executive
branch. Use of the sample language in this guide is not mandatory, but
it will make the certification process more efficient for your PAS
nominees. These samples also will promote a degree of consistency among
the ethics agreements of different agencies.

This guide focuses primarily on sample language, but a number of
considerations are relevant to the process of drafting ethics agreements
for PAS nominees. The key consideration is that the agency and OGE both
have active roles in the process, and this shared responsibility
requires coordination at the earliest practicable stages. As you use
this guide, it also may help to keep in mind the following non-exclusive
list of some of the characteristics of an ideal ethics agreement:

> *1. The agreement is a joint product.*

The ethics agreement is a joint product of the agency, OGE and the
Office of the Counsel to the President, with input from the PAS nominee.
As a result, the process is collaborative.

> *2. The underlying conflicts analysis is comprehensive.*

Before drafting the ethics agreement, the reviewer completes a
comprehensive conflicts analysis. Under 18 U.S.C. § 208, for example,
the reviewer evaluates all "particular matters" that will have a direct
and predictable effect on the PAS nominee's financial interests. The
subset of "particular matters involving specific parties" often is the
easiest to identify, but the reviewer also considers the subset of
"particular matters of general applicability." [See]{.underline} OGE
DAEOgram DO-06-029 (Oct. 4, 2006). In appropriate cases, the reviewer
considers other applicable legal authorities, including the following:
18 U.S.C. §§ 203, 205, 209; 5 C.F.R. §§ 2635.502, 2635.503, 2635.807,
2636.305, 2636.306; and Executive Order 12674, § 102 (1989), as amended
by Executive Order 12731 (1990).

*3. The agreement is a statement of relevant commitments.*

The PAS nominee's ethics agreement is a statement of relevant
commitments. It describes a specific course of action that the PAS
nominee will undertake to achieve compliance with specific legal
authorities. It typically does not include generic statements regarding
compliance with a broad range of legal authorities. It also typically
does not explain the reasons for the PAS nominee's commitments, inasmuch
as the inclusion of explanations can create an incorrect impression that
these commitments are conditional. Except in very rare circumstances,
the only condition precedent in a PAS nominee's ethics agreement is
confirmation by the Senate.

*4. The agreement is factually accurate.*

Although this guide contains a number of samples, each PAS nominee's
circumstances are unique and the legal document addressing those
circumstances is unique. The sample language serves only as the starting
point for an individualized ethics agreement. Even before beginning to
draft the agreement, the reviewer works with the PAS nominee to develop
the details of the PAS nominee's ethics commitments. For example, the
reviewer inquires about the details of items such as the following: the
amount and timing of any payments; the existence of contingencies
affecting payments; the planned disposition of all equity interests in
an employer (e.g., a plan to accelerate the vesting of restricted stock,
a plan to forfeit unvested stock options, etc.); the terms of a deferred
compensation plan; the handling of accounts receivable; arrangements for
future employment; arrangements with publishers; etc. Also, when
analyzing a payment under 18 U.S.C. § 209, the reviewer acquires
sufficient information to consider the factors identified in OGE's
"Summary of the Restriction on Supplementation of Salary." DAEOgram
DO-02-016, DO-02-016A (Jul. 1, 2002).

*5. The agreement is complete.*

When reviewing the financial disclosure reports of PAS nominees, who are
the most senior leaders in the Federal executive branch, a reviewer does
not rely on the same "review assumptions" that sometimes apply to other
financial disclosure reports. A reviewer discusses the completeness of a
financial disclosure report with a PAS nominee who is confused about
disclosure requirements. Although the reviewer is not an investigator
and is not expected to uncover all undisclosed financial interests,
experience and judgment lead the reviewer to inquire about the existence
of certain likely interests. [See]{.underline} DAEOgram DO-08-002 (Jan.
25, 2008). For example, a reviewer might ask whether a PAS nominee holds
a position with a family limited partnership if the PAS nominee has not
disclosed any such position but has disclosed an equity interest in the
partnership. Similarly, a reviewer might ask whether a PAS nominee has
an equity interest in an employer if the PAS nominee has not disclosed
any such interests but has disclosed a position as a highly-paid
executive. The best time for such discussions is naturally before the
reviewer drafts the ethics agreement.

*6. The commitments are feasible.*

The ethics agreement communicates commitments, not mere aspirations. For
this reason, reviewers sometimes need assurances in advance that PAS
nominees will be able to honor stated commitments. For example, if a PAS
nominee expects to receive a nonstandard severance payment from an
employer before entering Federal service, the reviewer needs assurance
that the employer is capable of making the payment at the planned time.
This assurance is necessary because the applicability of either 5 C.F.R.
§ 2635.503 or 18 U.S.C. § 209 depends on whether the payment occurs
before or after the PAS nominee enters Federal service. Similarly, if a
PAS nominee agrees to divest a pooled investment fund within ninety days
of confirmation, the reviewer needs assurance that the PAS nominee is
not subject to a lock-in provision that prohibits divestiture for a
longer period of time.

7*. The agreement is concise.*

Ideally, the ethics agreement contains only a concise statement of
relevant commitments by the PAS nominee. Extraneous information may
distract from the statement of relevant commitments. At the same time,
being concise does not always mean keeping the agreement short. The
agreement should address every relevant commitment in sufficient detail
to be clear about the specific actions that the PAS nominee will
undertake.

> *8. The ethics agreement is not a comprehensive counseling document.*

Consistent with the admonition to be concise, most agencies do not
attempt to use the ethics agreement as the PAS nominee's all-purpose
introduction to ethics requirements in the Federal executive branch. The
ethics agreement could not cover every applicable ethics requirement
without sacrificing accuracy or obscuring relevant commitments. Any
attempt to discuss general ethics requirements extensively may create a
false impression that the agreement covers everything the PAS nominee
needs to know about ethics. For this reason, the agency may choose to
create a separate counseling document that introduces its PAS nominees
to issues they are likely to encounter at the agency.

*9. The language of the agreement is precise.*

As emphasized in DAEOgram DO-01-013 (Mar. 28, 2001), the ethics
agreement makes clear what measures a PAS nominee will undertake.
Reviewers strive to minimize the potential for inconsistent
interpretations because the agreement's audience eventually could
include the PAS nominee, the agency, the Inspector General, OGE, the
White House, the Senate, the House of Representatives, and members of
the general public. Ambiguity leaves a PAS nominee vulnerable if it
leads to differing interpretations of the stated commitments among the
members of this audience. The ethics agreement reduces ambiguity by
being specific about such matters as the following: the scope of any
recusal, both as to the types of matters from which the PAS nominee will
recuse and the duration of the recusal; the timing of any divestiture or
payment; the amount or estimated amount of any payment; arrangements for
separating from an employer; arrangements for dissolving a business; the
steps the PAS nominee will take to divest any privately held equity; any
intention to seek a waiver or authorization; and the details of any
other measure to resolve a conflict or the appearance of a conflict.

*10. The language of the agreement is consistent.*

The language of the agreement is consistent. Reviewers strive to
eliminate inadvertent variations of language because readers might
mistakenly attribute meaning to such variations. For example, omitting
the phrase "personally and substantially" from a recusal could cause
confusion when other recusals in the agreement contain this phrase.
Similar confusion with regard to a recusal can stem from omitting the
word "first" in the phrases "unless I first obtain a written waiver" and
"unless I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d)." Also, varying the name by which an ethics agreement
refers to an organization could cause confusion if another organization
has a similar name. While there often is only a small risk of confusion
as a result of such variations, it takes very little effort to eliminate
that risk altogether.

> *11. The PAS nominee signals a commitment to ethical leadership by
> signing the ethics agreement.*

Throughout the Federal executive branch, the traditional practice of
most agencies has been to prepare ethics agreements in the form of
letters from PAS nominees to Designated Agency Ethics Officials. By
signing such letters, the PAS nominees signal their commitment to
ethical leadership. Their signatures also offer assurances that the PAS
nominees are aware of the measures needed to achieve compliance with
applicable ethics requirements. While a few agencies have not instituted
the practice of collecting such signatures, there is a value to giving
PAS nominees responsibility for signing their ethics agreements.

*12. We welcome your feedback.*

The effort to refine the ethics agreements of PAS nominees is ongoing,
and we welcome your feedback. Please share with us your thoughts about
the sample language in this guide. Please also share with us any
additional samples that you develop. You can submit your comments to the
following e-mail address: <nominees@oge.gov>.

**[TABLE OF SAMPLES]{.underline}**

The following samples are organized by subject. Because OGE may update
this guide, OGE has employed a numbering system that permits the
insertion of new samples without renumbering the existing samples.

CHAPTER 1: SAMPLE ETHICS AGREEMENT

1.0.0 -- sample ethics agreement

1.1.0 -- introductory language

CHAPTER 2: RECUSALS PURSUANT TO 18 U.S.C. § 208

2.0.0 -- 208 recusals: general discussion

2.1.0 -- basic 208 recusal

2.1.1 -- basic 208 recusal including knowledge element

2.2.0 -- 208 recusal for specific stocks that pose only a remote risk of
a conflict

2.2.1 -- 208 recusal for specific stocks that pose a likely conflict

2.2.2 -- 208 recusal for specific bonds that pose only a remote risk of
a conflict

2.2.3 -- 208 recusal for specific bonds that pose a likely conflict

2.3.0 -- 208 recusal for a former employer when retaining employer stock

2.3.1 -- 208 recusal for a former employer when retaining employer stock
options

2.3.2 -- 208 recusal for a former employer when retaining a financial
interest tied to the employer's profits

2.3.3 -- 208 recusal for a former employer when retaining a passive
investment interest in a partnership

2.3.4 -- 208 recusal for a former employer when retaining a passive
membership in a limited liability corporation

2.4.0 -- limited 208 recusal related to contractual arrangements

2.4.1 -- limited 208 recusal related to defined benefit plans

2.4.2 -- limited 208 recusal related to state or local government
defined benefit plans

2.4.3 -- limited 208 recusal related to state or local government
defined contribution plans

2.4.4 -- limited 208 recusal related to other continuing employee
benefits

2.4.5 -- limited 208 recusal related to an arrangement with a publisher
regarding royalties

CHAPTER 3: DIVESTITURES

3.0.0 -- divestitures: general discussion

3.1.0 -- intention to seek a Certificate of Divestiture

3.2.0 -- interim 208 recusal pending divestiture of a single asset

3.2.1 -- interim 208 recusal pending divestiture of multiple assets

3.2.2 -- interim 208 recusal pending divestiture of a combination of
assets whose owners are: the PAS nominee individually, the spouse
individually, or the PAS nominee and the spouse jointly

3.2.3 -- interim 208 recusal for a former employer when divesting the
employer's stock

3.2.4 -- interim 208 recusal for a former employer when divesting the
employer's stock options

3.3.0 -- divestiture of a prohibited holding

3.4.0 -- divestiture due to inability to disclose assets of a
non-excepted investment fund

3.5.0 -- sale of privately-traded employer stock back to the employer

3.6.0 -- interim 208 recusal pending divestiture of a sector mutual fund
that does not qualify for the *de minimis* exemption at 5 C.F.R. §
2640.201(b)

CHAPTER 4: EXEMPTIONS, WAIVERS, AND AUTHORIZATIONS

4.0.0 -- exemptions, waivers, and authorizations: general discussion

4.1.0 -- reliance on *de minimis* exemptions

4.2.0 -- plan to request a waiver pursuant to 18 U.S.C. § 208(b)(1)

4.3.0 -- plan to request authorization pursuant to 5 C.F.R.
§ 2635.502(d)

4.3.1 -- plan to request authorization pursuant to 5 C.F.R.
§ 2635.502(d) subject to a limitation

CHAPTER 5: RECUSALS PURSUANT TO 5 C.F.R. § 2635.502

5.0.0 -- appearance recusals: general discussion

5.1.0 -- general 2635.502 recusal

5.2.0 -- one-year 2635.502 recusal for a former employer

5.2.1 -- one-year 2635.502 recusal for multiple former employers

5.2.2 -- one-year recusal for a former employer in which the PAS nominee
has a financial interest

5.2.3 -- one-year 2635.502 recusal for an organization with which the
PAS nominee has had an unpaid position when the PAS nominee is not
closely identified with the organization

5.3.0 -- one-year 2635.502 recusal for former clients

5.4.0 -- recusal from particular matters involving specific parties in
which the PAS nominee previously participated in connection with the PAS
nominee's prior non-Federal employment

5.4.1 -- recusal from certain particular matters in which the PAS
nominee previously participated in connection with the PAS nominee's
prior non-Federal employment

CHAPTER 6: SEVERANCE ARRANGEMENTS

6.0.0 -- severance arrangements: general discussion

6.1.0 -- sample of a complex executive severance and equity package

6.2.0 -- extraordinary payment recusal under 5 C.F.R. § 2635.503 that
addresses a severance payment

6.3.0 -- severance payment pursuant to a standard employer policy

6.4.0 -- outstanding bonus pursuant to a standard employer policy

6.4.1 -- outstanding bonus pursuant to a standard employer policy, when
the employer will prorate the bonus

6.5.0 -- extraordinary payment recusal under 5 C.F.R. § 2635.503 that
addresses an acceleration of compensation

CHAPTER 7: ATTORNEYS

7.0.0 -- attorneys: general discussion

7.1.0 -- resignation from a salaried position with a law firm in which
the PAS nominee does not have a financial interest

7.2.0 -- the refund of a capital account after resignation will occur
before the PAS nominee begins Federal service

7.2.1 -- the refund of a capital account after resignation may occur
after the PAS nominee begins Federal service

7.3.0 -- the PAS nominee is a sole practitioner who will place the law
practice in an inactive status

7.3.1 -- the PAS nominee is a sole practitioner who will place the law
practice in an inactive status and who may receive a referral fee from
another attorney

7.4.0 -- the PAS nominee will have outstanding accounts receivable after
appointment

7.4.1 -- a law firm will owe the PAS nominee an outstanding partnership
share after appointment

7.5.0 -- the PAS nominee's name appears in the name of the firm

7.6.0 -- the PAS nominee has an equity interest in a partnership created
by a law firm

CHAPTER 8: OUTSIDE POSITIONS

8.0.0 -- outside positions: general discussion

8.1.0 -- retention of a position as a board member of an organization

8.1.1 -- retention of a position as a board member of an organization
when the PAS nominee qualifies for the exemption at 5 C.F.R.
§ 2640.202(e)

8.1.2 -- retention of a position equivalent to a board member position
with a university when the PAS nominee qualifies for the exemption at 5
C.F.R. § 2640.202(e)

8.2.0 -- resignation from a position as a board member of an
organization

8.3.0 -- retention of a trustee position generally; retention of a
position as trustee of a trust for the benefit of members of the PAS
nominee's immediate family; retention of a position as trustee of a
trust for the benefit of members of the PAS nominee's extended family

8.3.1 -- retention of a position as trustee of a trust for the benefit
of members of both the PAS nominee's immediate family and the PAS
nominee's extended family

8.3.2 -- alternate: retention of a position as trustee of a trust for
the benefit of members of both the PAS nominee's immediate family and
the PAS nominee's extended family

8.4.0 -- retention of a position as an "active participant" in an
organization

8.4.1 -- resignation from a position as an "active participant" in an
organization

8.5.0 -- leave of absence from an institution of higher learning

8.5.1 -- leave of absence from an institution of higher learning that,
as a standard term of employment, allows the PAS nominee's child to
attend at a reduced tuition rate

8.6.0 -- changing the terms of a position: converting a paid outside
position to a non-paid outside position when a PAS nominee is appointed
to a full-time Federal position

8.6.1 -- changing the terms of a position: retention of a paid executor
position

CHAPTER 9: FAMILY FARMS AND FAMILY BUSINESSES

9.0.0 -- family farms and family businesses: general discussion

9.1.0 -- the PAS nominee is retaining a passive interest in a family
farm or family business

9.1.1 -- the PAS nominee is resigning from a position with a family farm
or family business but is retaining a passive financial interest

9.1.2-- the PAS nominee is resigning from a position with a family farm
or family business and is divesting a financial interest in the entity

9.2.0 -- entity formed to manage the assets of the PAS nominee's
immediate family and extended family

9.2.1 -- entity formed to manage the assets of the PAS nominee's
immediate family

CHAPTER 10: SPOUSES

10.0.0 -- spouses: general discussion

10.1.0 -- the employer of the PAS nominee's spouse pays the spouse a
fixed salary: 2635.502 recusal only

10.1.1 -- the employer of the PAS nominee's spouse pays the spouse a
fixed salary: 208 recusal and 2635.502 recusal

10.1.2 -- the employer of the PAS nominee's spouse pays the spouse a
fixed salary, but the ethics agreement addresses appearances regarding
the PAS nominee's impartiality: 208 recusal, 2635.502 recusal and
additional commitment regarding communications

10.2.0 -- the PAS nominee's spouse has an equity interest in the
employer or has a profit sharing arrangement with the employer: 208
recusal

10.3.0 -- the PAS nominee's spouse is an attorney whose compensation is
not based on the profitability of the spouse's law firm, and the spouse
does not have an equity interest in the law firm

10.3.1 -- the PAS nominee's spouse is an equity partner with a law firm

10.4.0 -- the PAS nominee's spouse is a salaried employee of an agency
contractor

CHAPTER 11: SPECIAL GOVERNMENT EMPLOYEES

11.0.0 -- special government employees: general discussion

11.1.0 -- a special government employee's outside employment

11.1.1 -- a special government employee will continue to practice as an
attorney

11.2.0 -- 18 U.S.C. § 203 and 18 U.S.C. § 205: seeking advice in the
event that a special government employee unexpectedly serves more than
60 days in a 365-day period

CHAPTER 12: MISCELLANEOUS PROVISIONS

12.0.0 -- miscellaneous provisions: general discussion

12.1.0 -- correcting a PAS nominee's submission to the Senate:
correction of the financial disclosure report and submission of a
supplemental ethics agreement

12.2.0 -- arrangement to write a book in the future

APPENDIX

A -- comparison between the 2001 model agreement and the 2008 sample
agreement

**CHAPTER 1: SAMPLE ETHICS AGREEMENT**

**1.0.0 -- sample ethics agreement**

[Comment]{.underline}:

The following sample ethics agreement incorporates several of the
individual sample paragraphs that appear in this guide. The purpose of
this sample ethics agreement is to demonstrate the structure of an
ethics agreement. For language addressing the specific circumstances of
a particular PAS nominee, please refer to the individual sample
paragraphs throughout this guide. The comments associated with those
individual sample paragraphs explain the purpose of the language that
they employ. An appendix at the end of this guide tracks some of the
significant changes between the previous 2001 model ethics agreement and
this current sample ethics agreement.

[Sample Language]{.underline}:

*\[date\]*

Dear *\[agency DAEO\]*:

The purpose of this letter is to describe the steps that I will take to
avoid any actual or apparent conflict of interest in the event that I am
confirmed for the position of Deputy Secretary of *\[agency\]*.

As required by 18 U.S.C. § 208(a), I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on my financial interests or those of any person whose interests
are imputed to me, unless I first obtain a written waiver, pursuant to
18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption, pursuant
to 18 U.S.C. § 208(b)(2). I understand that the interests of the
following persons are imputed to me: any spouse or minor child of mine;
any general partner of a partnership in which I am a limited or general
partner; any organization in which I serve as officer, director,
trustee, general partner or employee; and any person or organization
with which I am negotiating or have an arrangement concerning
prospective employment.

Within 90 days of my confirmation, I will divest my interests in the
following entities: Bortot Wilderness, Inc.; Molinaro Power Saws, LLC;
Bennett Worldwide Investigations, Co.; and Bitler Environmental
Consulting, LP. With regard to each of these entities, I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of the
entity until I have divested it, unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1), or qualify for a regulatory
exemption, pursuant to 18 U.S.C. § 208(b)(2).

Upon confirmation, I will resign from my position as Vice President of
Springfield Shipping, Inc. For one year after my resignation, I will not
participate personally and substantially in any particular matter
involving specific parties in which Springfield Shipping, Inc., is a
party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

Upon confirmation, I will resign from my position as President of Forest
Enterprises, Inc. Before I assume the duties of the position of Deputy
Secretary, I will receive a severance payment in the amount of \$250,000
from Forest Enterprises, Inc. For a period of two years after my receipt
of this payment, I will not participate personally and substantially in
any particular matter in which Forest Enterprises, Inc., is a party or
represents a party, unless I first receive a written waiver pursuant to
5 C.F.R. § 2635.503(c).

Upon confirmation, I will resign from my positions on the boards of
directors of the following entities: The Charity Foundation; Smith
Corp.; and QRS, Inc. For a period of one year after my resignation from
these positions, I will not participate personally and substantially in
any particular matter involving specific parties in which any of these
entities is a party or represents a party, unless I am first authorized
to participate, pursuant to 5 C.F.R. § 2635.502(d).

I will retain my unpaid position as a member of the board of directors
of Nonprofit, Inc. I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on the
financial interests of Nonprofit, Inc., unless I first obtain a written
waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a regulatory
exemption, pursuant to 18 U.S.C. § 208(b)(2).

My spouse is employed as an associate by the law firm of Collins &
Green, PC, from which he receives a fixed salary and an annual bonus. I
will not participate personally and substantially in any particular
matter that has a direct and predictable effect on my spouse's
compensation or employment with Collins & Green, PC, unless I first
obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1). I also will
not participate personally and substantially in any particular matter
involving specific parties in which the firm or any client of my spouse
is a party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d). In addition, for the
duration of my appointment to the position of Deputy Secretary, my
spouse has agreed not to communicate with the *\[agency\]* on behalf of
the firm or any client.

Sincerely,

*\[name of PAS nominee\]*

**1.1.0 -- introductory language of the sample ethics agreement**

[Comment]{.underline}:

In the sample above, a change from the prior model ethics agreement is
the statement that the PAS nominee "will" take certain actions. This
change is intended to reflect the PAS nominee's commitment to taking all
actions specified in the agreement. This change is consistent with OGE's
previous guidance on ethics agreements in DAEOgram DO-01-013 (Mar. 28,
2001): "\[T\]he model agreement does not use any language suggesting
that the PAS nominee's commitments might be aspirational, rather than
binding. Thus, for example, the various commitments do not use
expressions such as 'I will attempt,' 'I will try,' 'I will seek to
avoid,' etc., but rather state unequivocally, 'I will,' 'I will not,' or
'I agree to.' It is inconsistent with the very nature of an ethics
agreement to suggest that its terms are not binding."

[Sample Language]{.underline}:

The purpose of this letter is to describe the steps that I will take to
avoid any actual or apparent conflict of interest in the event that I am
confirmed for the position of Deputy Administrator of the U.S. Metric
Measurements Administration.

**CHAPTER 2: RECUSALS PURSUANT TO 18 U.S.C. § 208**

**2.0.0 -- 208 recusals: general discussion**

Throughout this guide, all sample recusals under 18 U.S.C. § 208 include
the following phrase: "any particular matter that has a direct and
predictable effect." Although the verb in this phrase is "has," agencies
may choose instead to write "will have" or "would have" for stylistic
reasons. The key is to be consistent in the use of "has," "will have" or
"would have" because variations in language may be construed to have
meaning. In contrast, the phrase "could have" would be an incorrect
substitution for the word "has." The scope of matters covered by the
phrase "could have" is broader than the prohibition established in 18
U.S.C. § 208, which does not extend to every particular matter that
"could have" a direct and predictable effect on a financial interest.

With regard to conflicts arising from a financial interest in an entity
(e.g., stock), another feature of these recusals is that they focus on
the "financial interests" of the entity. For example, one sample below
states that the PAS nominee will not participate in particular matters
that have "a direct and predictable effect on the financial interests of
Bortot Wilderness, Inc." It does not state that the recusal applies to
particular matters that have "a direct and predictable effect on Bortot
Wilderness, Inc.," or that have "a direct and predictable effect on my
interest in Bortot Wilderness, Inc."

Some of these samples include multiple recusals. Sometimes multiple
recusals are necessary because different recusal standards apply at
different times. For examples of the use of multiple recusals, see
2.3.2, 3.2.3, 5.2.2, 6.1.0, 7.2.1, and 7.4.1 below. Although multiple
recusals are necessary in some cases, they can be redundant in other
cases. For example, if a PAS nominee will continue to hold a former
employer's stock for the duration of the PAS nominee's appointment, the
PAS nominee's ethics agreement will need to include a full recusal under
18 U.S.C. § 208 for all particular matters directly and predictably
affecting the financial interests of the former employer. In that case,
there may be no need to include an additional "ability or willingness"
recusal for any payment the former employer owes the PAS nominee or an
additional one-year recusal under 5 C.F.R. § 2635.502.

Finally, note that a waiver under 18 U.S.C. § 208 may be inappropriate
in many circumstances in which a particular matter will directly and
predictably affect the "ability or willingness" of an entity to honor an
obligation to make a payment to a PAS nominee. Whenever samples in this
guide contain an "ability or willingness" recusal, the recusal contains
language regarding the potential availability of such a waiver. However,
agency ethics officials may want to counsel PAS nominees in advance that
requests for such waivers may be denied.

**2.1.0 -- basic 208 recusal**

[Comment]{.underline}:

Every ethics agreement has a basic criminal conflict of interest recusal
stating that the PAS nominee will not participate in any particular
matter that has a direct and predictable effect on the PAS nominee's
personal and imputed financial interests, absent a waiver or a
regulatory exemption. This sample language is flexible in that it
applies both to the PAS nominee's current financial interests and to
financial interests that the PAS nominee will acquire in the future.

Although the language of the sample below does not expressly refer to
the knowledge element of 18 U.S.C. § 208, OGE's longstanding
interpretation of this language is that lack of such a reference does
not eliminate the knowledge element. In fact, this sample language is
not intended to alter the scope of a PAS nominee's statutory obligation
in any way. To emphasize this point, some agencies have modified the
first sentence to include the phrase, "in violation of 18 U.S.C. § 208,"
as follows: "I will not participate personally and substantially, in
violation of 18 U.S.C. § 208, in any particular matter that has . . . ."
Other agencies have elected to use the language of 2.1.1 below, which
explicitly refers to the knowledge element.

[Sample Language]{.underline}:

As required by 18 U.S.C. § 208(a), I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on my financial interests or those of any person whose interests
are imputed to me, unless I first obtain a written waiver, pursuant to
18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption, pursuant
to 18 U.S.C. § 208(b)(2). I understand that the interests of the
following persons are imputed to me: any spouse or minor child of mine;
any general partner of a partnership in which I am a limited or general
partner; any organization in which I serve as officer, director,
trustee, general partner or employee; and any person or organization
with which I am negotiating or have an arrangement concerning
prospective employment.

**2.1.1 -- basic 208 recusal including knowledge element**

[Comment]{.underline}:

Some agencies prefer to refer explicitly to the knowledge element of
18 U.S.C. § 208. The key to including such a reference is to place it
correctly in the recusal language. Sometimes drafters mistakenly link
the knowledge element to the concept of a "direct and predictable
effect," as follows: "a particular matter that I know will have a direct
and predictable effect on my financial interests." However, the
knowledge element is properly linked to the concept of a "financial
interest" in a particular matter, as follows: "a particular matter in
which I know that I have a financial interest." This placement of the
reference to the knowledge element makes the recusal language
cumbersome, and agency ethics officials should make sure that it does
not confuse the PAS nominee. However, the advantage of this sample is
its similarity to the language of the applicable regulation, 5 C.F.R. §
2640.103(a).

[Sample Language]{.underline}:

As required by 18 U.S.C. § 208(a), I will not participate personally and
substantially in any particular matter in which I know that I have a
financial interest or in which I know that a person whose interests are
imputed to me has a financial interest, if the particular matter has a
direct and predictable effect on that interest, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2). I understand
that the interests of the following persons are imputed to me: any
spouse or minor child of mine; any general partner of a partnership in
which I am a limited or general partner; any organization in which I
serve as officer, director, trustee, general partner or employee; and
any person or organization with which I am negotiating or have an
arrangement concerning prospective employment.

**2.2.0 -- 208 recusal for specific stocks that pose only a remote risk
of a conflict**

[Comment]{.underline}:

OGE's earlier model ethics agreement supplied sample language for a
criminal conflict of interest recusal that identified specific entities
in which the PAS nominee has invested. DAEOgram DO-01-013 (Mar. 28,
2001). Sometimes such recusals are helpful because they draw attention
to assets that are more likely than other assets to present conflicts of
interests. However, a PAS nominee always must be vigilant for potential
conflicts with regard to *all* of the PAS nominee's assets. If certain
specific assets warrant greater attention than other assets, it may be
more prudent for the PAS nominee to divest those assets than for the PAS
nominee to recuse.

In some cases, recusals that focus on certain specific assets of PAS
nominees have caused confusion. In practice, the determination as to
which assets require specific recusals is highly subjective. Moreover,
all of a PAS nominee's assets are already covered by the general recusal
under 18 U.S.C. § 208 that appears at the beginning of the ethics
agreement, and any screening arrangement that the agency establishes
will necessarily cover all of the PAS nominee's assets. Drawing
attention to only certain assets could cause the PAS nominee to neglect
the obligation to recuse from particular matters directly and
predictably affecting other assets. In addition, listing all of a PAS
nominee's assets, or those that do not qualify for a *de minimis*
exemption, could create an incorrect impression that the PAS nominee
will have to recuse from so many matters that the PAS nominee will be
unable to perform the essential functions of the position. Such
comprehensive lists also have the disadvantage of establishing a recusal
that is based on the present value of the PAS nominee's current assets,
ignoring the fact that PAS nominee may buy or sell assets while in
Federal service and the fact that the value of assets will fluctuate.
For these reasons, ethics agreements usually do not contain recusals for
specific assets.

When an ethics agreement does contain a recusal that focuses on a
specific asset, there are specific reasons for drawing attention to that
asset and for allowing the PAS nominee to continue holding the asset.
For example, an agency may recently have concluded its handling of a
particular matter affecting a company in which the PAS nominee holds
stock. In this hypothetical situation, the following factors might weigh
in favor of allowing the PAS nominee to keep the stock: (1) the PAS
nominee would have difficulty divesting the stock because, for instance,
it is held in a trust for which the PAS nominee is not the trustee;
(2) the PAS nominee's recusal will not impede the work of the agency
because other officials at the PAS nominee's level will be able to
handle matters affecting the company; and (3) there is little likelihood
that another particular matter affecting the company will arise during
the PAS nominee's anticipated Federal service. In less compelling
circumstances, an agency might require the PAS nominee to divest the
stock, rather than including a specific recusal in the ethics agreement.

Please note that, in this sample and in 2.2.1, the language carefully
states the reason that the agency is allowing the PAS nominee to retain
potentially conflicting financial interests.

[Sample Language]{.underline}:

I have been advised that the duties of the position of Under Secretary
may involve particular matters affecting the financial interests of the
following entities: Bennett Financial, LLC; Bortot Wilderness, Inc.; and
Molinaro Power Saws, LLC. The agency has determined that it is not
necessary at this time for me to divest my interests in these entities
because the likelihood that my duties will involve any such matter is
remote. Accordingly, I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on the
financial interests of any of these entities, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**2.2.1 -- 208 recusal for specific stocks that pose a likely conflict**

[Comment]{.underline}:

See the comment to 2.2.0. As is the case in 2.2.0, the language of this
sample carefully states the reason that the agency is allowing the PAS
nominee to retain potentially conflicting financial interests.

[Sample Language]{.underline}:

I have been advised that the duties of the position of Under Secretary
may involve particular matters affecting the financial interests of the
following entities: Bortot Wilderness, Inc., and Molinaro Power Saws,
LLC. The agency has determined that it is not necessary at this time for
me to divest my interests in these entities because my recusal from
particular matters in which these interests pose a conflict of interest
will not substantially limit my ability to perform the essential duties
of the position of Under Secretary. Accordingly, I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of either of these
entities, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to 18
U.S.C. § 208(b)(2).

**2.2.2 -- 208 recusal for specific bonds that pose only a remote risk
of a conflict**

[Comment]{.underline}:

See the comment to 2.2.0 for a discussion of the reason that specific
208 recusals are disfavored except in limited circumstances. In those
limited circumstances in which a specific recusal for bonds is
appropriate, a significant feature of the following sample language for
bonds is the identification of the interest affected, as follows:
"direct and predictable effect on the market value of any of these bonds
or on the ability or willingness of the issuers to pay their debt
obligations to me."

[Sample Language]{.underline}:

I have been advised that the duties of the position of Under Secretary
may involve particular matters affecting the following bonds:
Bennettsville general obligation bond (6/30/09); Bitlerton water bond
(10/31/09); and Bitlerton general obligation bond (3/30/11). The agency
has determined that it is not necessary at this time for me to divest
these bonds because the likelihood that my duties will involve such a
matter is remote. Accordingly, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the market value of any of these bonds or on the ability or
willingness of the issuers to pay their debt obligations to me, unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**2.2.3 -- 208 recusal for specific bonds that pose a likely conflict**

[Comment]{.underline}:

See the comment to 2.2.2.

[Sample Language]{.underline}:

I have been advised that the duties of the position of Under Secretary
may involve particular matters affecting the following bonds:
Bennettsville general obligation bond (6/30/09); Bitlerton water bond
(10/31/09); and Bitlerton general obligation bond (3/30/11). The agency
has determined that it is not necessary at this time for me to divest
these bonds because my recusal from particular matters in which these
bonds pose a conflict of interest will not substantially limit my
ability to perform the essential duties of the position of Under
Secretary. Accordingly, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the market value of any of these bonds or on the ability or
willingness of the issuers to pay their debt obligations to me, unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**2.3.0** **-- 208 recusal for a former employer when retaining employer
stock**

[Comment]{.underline}:

The significant feature of this sample language is the inclusion of a
recusal under 18 U.S.C. § 208. As demonstrated in 5.2.0 below, an ethics
agreement normally contains a recusal under 5 C.F.R. § 2635.502 when a
PAS nominee will have no financial interest in an employer after
resignation. However, a recusal under 18 U.S.C. § 208 is necessary if
the PAS nominee will retain stock in the employer after resignation. As
demonstrated in 3.2.3 below, an ethics agreement should contain two
different recusals when a PAS nominee will divest the employer's stock
within a year of resignation.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Vice President of
Bortot Wilderness, Inc. Because I will continue to own stock in Bortot
Wilderness, Inc., I will not participate personally and substantially in
any particular matter that has a direct and predictable effect on the
financial interests of Bortot Wilderness, Inc., unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**2.3.1 -- 208 recusal for a former employer when retaining employer
stock options**

[Comment]{.underline}:

See the comment to 2.3.0. If the PAS nominee is divesting the stock
options, see 3.2.4 below.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Vice President of
Bortot Wilderness, Inc. Because I will continue to hold stock options in
Bortot Wilderness, Inc., I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of Bortot Wilderness, Inc., unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**2.3.2 -- 208 recusal for a former employer when retaining a financial
interest tied to the employer's profits**

[Comment]{.underline}:

One significant feature of this language is its specificity regarding
the details of the payment of a share of profits to the PAS nominee. In
this hypothetical situation, the agency was careful to collect these
details in order to analyze the appropriateness of this payment under
18 U.S.C. § 209. In connection with this analysis, the agency
specifically considered the factors described in OGE's "Summary of the
Restriction on Supplementation of Salary," DAEOgram DO-02-016,
DO-02-016A (Jul. 1, 2002).

Another significant feature of this language is the differing standards
for the PAS nominee's recusal at different times. The highest level of
recusal applies during the period in which the amount of the payment can
be affected by the employer's earnings. Another level of recusal applies
during the period after the amount of the payment has been fixed and
before the PAS nominee has received the final installment.

If the PAS nominee had resigned within the past year, the agreement
would have contained a third level of recusal. In that event, this
sample would have ended with the following sentence: "In addition, for a
period of one year after my resignation, I will not participate
personally and substantially in any particular matter involving specific
parties in which BMBB, Inc., is a party or represents a party, unless I
am first authorized to participate, pursuant to 5 C.F.R. § 2635.502(d)."

Note that the date of this agreement is August 1, 2007.

[Sample Language]{.underline}:

I resigned from my position as President of BMBB, Inc., in January 2004.
At the time of my resignation, I sold all of my stock in BMBB, Inc.,
back to the company, and I entered into a separation agreement that
provided for BMBB, Inc., to pay me a portion of its profits for four
years after my retirement. On April 1, 2005, I received 40 percent of
the calendar year 2004 profits; on April 1, 2006, I received 30 percent
of the calendar year 2005 profits; on April 1, 2007, I received 20
percent of the calendar year 2006 profits; on April 1, 2008, I will
receive 10 percent of the calendar year 2007 profits. Through
December 31, 2007, I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on the
financial interests of BMBB, Inc., unless I first obtain a written
waiver, pursuant to 18 U.S.C. § 208(b)(1). Thereafter, through April 1,
2008, I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
ability or willingness of BMBB, Inc., to honor its contractual
obligation, unless I first obtain a written waiver, pursuant to 18
U.S.C. § 208(b)(1).

**2.3.3 -- 208 recusal for a former employer when retaining a passive
investment interest in a partnership**

[Comment]{.underline}:

A significant feature of this sample is that it contains language
addressing the earned income ban in Executive Order 12674, § 102 (1989),
as amended by Executive Order 12731 (1990), which bars Senate-confirmed
Presidential appointees from earning any outside income.

In this hypothetical situation, the PAS nominee is resigning from a
position with a venture capital firm that holds 10 start-up companies.
Although the PAS nominee is resigning from this position, she will
continue to be an investor. This sample does not contain a separate
recusal under 5 C.F.R. § 2635.502 for clients because the partnership
does not represent clients. This sample does include a recusal under
18 U.S.C. § 208 because, as an investor, the PAS nominee will continue
to have a financial interest in the partnership.

The agency's ethics officials also will counsel this hypothetical PAS
nominee that 18 U.S.C. § 208 imputes to her the interests of the
partnership's general partner. In this case, the hypothetical PAS
nominee may qualify for the exemption at 5 C.F.R. § 2640.202(f) with
regard to the general partner.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as managing partner of
Bennett Venture Capital, LP, and I will become only a limited partner of
this entity. During my appointment, I will not manage this entity or
provide any other services to it. Instead, I will receive only passive
investment income from it. As Under Secretary, I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Bennett Venture
Capital, LP, unless I first obtain a written waiver, pursuant to
18 U.S.C. § 208(b)(1).

**2.3.4 -- 208 recusal for a former employer when retaining a passive
membership in a limited liability corporation**

[Comment]{.underline}:

See the comment to 2.3.3.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as managing member of
Bennett Venture Capital, LLC, and I will become a non-managing member of
this entity. During my appointment, I will not manage this entity or
provide any other services to it. Instead, I will receive only passive
investment income from it. As Under Secretary, I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Bennett Venture
Capital, LLC, unless I first obtain a written waiver, pursuant to 18
U.S.C. § 208(b)(1).

**2.4.0 -- limited 208 recusal related to contractual arrangements**

[Comment]{.underline}:

The key feature of this sample is its use of the "ability or
willingness" standard. In this hypothetical, the agency has confirmed
that the PAS nominee no longer holds any Bortot Wildnerness, Inc.,
stock. The agency also has confirmed that the PAS nominee does not
provide any services to Bortot Wildnerness, Inc. Note that the date of
this agreement is February 1, 2008.

[Sample Language]{.underline}:

I resigned from my former position as President of Bortot Wilderness,
Inc., in June 2001. At the time of my resignation, I entered into an
exit agreement with Bortot Wilderness, Inc., that allows me to continue
using office space and the services of a part-time assistant through
June 2011. I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
ability or willingness of Bortot Wilderness, Inc., to provide these
contractual benefits to me, unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1).

**2.4.1 -- limited 208 recusal related to defined benefit plans**

[Comment]{.underline}:

As with recusals addressing other contractual arrangements, the key
feature of this sample is that it limits the recusal requirement to
particular matters affecting the "ability or willingness" to honor
contractual obligations. Further guidance relevant to ethics agreements
addressing defined benefit pension plans is available in OGE Informal
Advisory Memorandum 99 x 6 (Apr. 14, 1999) ("OGE believes that, as a
practical matter, most governmental matters in which an employee would
participate are unlikely to have a direct and predictable effect on the
plan sponsor's ability or willingness to pay the employee's pension."),
also published as OGE DAEOgram DO-99-15 (Apr. 14, 1999). Based on the
guidance of that informal advisory memorandum, agencies often elect not
to address defined benefit pension plans in ethics agreements for PAS
nominees.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my positions as Vice President and
Board Member of Bortot Wilderness, Inc. Because I will continue to
participate in this entity's defined benefit pension plan, I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the ability or willingness of
Bortot Wilderness, Inc., to provide this contractual benefit, unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).
For a period of one year after my resignation, I also will not
participate personally and substantially in any particular matter
involving specific parties in which Bortot Wilderness, Inc., is a party
or represents a party, unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d).

**2.4.2 -- limited 208 recusal related to state or local government
defined benefit plans**

[Comment]{.underline}:

See the comment to 2.4.1 above and 5 C.F.R. § 2640.201(c)(2). For
reasons similar to the reasons discussed in 2.4.1 above, agencies
usually find it unnecessary to include recusals related to a state's
defined benefit pension plan.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Director of the
Department of Motor Vehicles for the State of Maryland. Following my
resignation, I will continue to participate in the State Employees
Retirement System of Maryland, a defined benefit pension plan. I will
not participate personally and substantially in any particular matter
that has a direct and predictable effect on the ability or willingness
of the State of Maryland to provide this contractual benefit to me,
unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to 18
U.S.C. § 208(b)(2), such as 5 C.F.R. § 2640.201(c)(2).

**2.4.3 -- limited 208 recusal related to state or local government
defined contribution plans**

[Comment]{.underline}:

This sample addresses the exemption at 5 C.F.R. § 2640.201(c)(1)(ii) for
any particular matter affecting "one or more holdings of an employee
benefit plan, where the disqualifying financial interest in the matter
arises from membership in . . . \[a\] pension plan established or
maintained by a State government or any political subdivision of a State
government for its employees." PAS nominees who are employees of state
governments and state universities sometimes rely on this exemption.
Because the exemption is very broad, however, agencies usually find it
unnecessary to include in the ethics agreement recusals related to any
defined contribution plan that qualifies for this exemption.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Director of the
Department of Motor Vehicles for the State of Maryland. Following my
resignation, I will continue to participate in the Maryland Supplemental
Employee Retirement System. You have advised me that this
defined contribution plan qualifies for the exemption at
5 C.F.R. § 2640.201(c)(1)(ii).

**2.4.4 -- limited 208 recusal related to other continuing employee
benefits**

[Comment]{.underline}:

The key feature to this sample is that it limits the recusal requirement
to particular matters affecting the "ability or willingness" of the
other party to the contract to honor the contractual arrangement.
Another feature is a reference to the fact that this hypothetical
contractual arrangement is "consistent with the corporation's practice
for departing executives," which is relevant to the agency's analysis
under 18 U.S.C. § 209. Also, the recusal under 18 U.S.C. § 208 does not
mention the availability of regulatory exemptions because there are no
applicable exemptions.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my positions as Vice President and
Board Member of Bortot Wilderness, Inc. As a retiring executive of
Bortot Wilderness, Inc., I am entitled to receive health coverage and
life insurance for both me and my spouse for the rest of our lives,
consistent with the corporation's practice for departing executives.
Therefore, I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
ability or willingness of Bortot Wilderness, Inc., to provide these
contractual benefits, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1). For a period of one year after my resignation,
I also will not participate personally and substantially in any
particular matter involving specific parties in which Bortot Wilderness,
Inc., is a party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**2.4.5 -- limited 208 recusal related to an arrangement with a
publisher regarding royalties**

[Comment]{.underline}:

The following sample applies the "ability or willingness" standard to a
publisher's payment of royalties under the terms of a publishing
contract with the PAS nominee.

[Sample Language]{.underline}:

I receive royalties from Molinaro Publishers, Inc., for sales of my
book, *Bortot's Field Guide to Wilderness Survival Techniques*. I will
not participate personally and substantially in any particular matter
that has a direct and predictable effect on the ability or willingness
of Molinaro Publishers, Inc., to honor its contractual obligations
regarding these royalties, unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1).

**CHAPTER 3: DIVESTITURES**

**3.0.0 -- divestitures: general discussion**

The deadline for divestiture can be stated in terms of days (e.g.,
"within 90 days of my confirmation"), or it can be tied to the
applicable regulation ("within the time limits established in 5 C.F.R. §
2634.802(b)"). The advantage of tying the deadline to the number of days
is that it provides clarity to the PAS nominee and interested parties.
The advantage of tying the deadline to the regulation is that, in
addition to establishing a deadline, it references the regulation that
establishes a procedure for requesting extensions. The samples in this
guide tie the deadline to the number of days, but either approach is
acceptable.

As noted above in the introduction to this guide, the agency's
determination regarding the assets to be divested should take into
consideration particular matters of general applicability, not merely
particular matters involving specific patters. [See]{.underline} OGE
DAEOgram, DO-06-029 (Oct. 4, 2006). Thus, for example, a conflicts
analysis that focuses only on agency contractors and grant applicants
may be insufficient.

Note that these samples employ the word "divest" rather than the word
"sell" because the PAS nominee must commit to the divestiture whether or
not a "sale" is possible. Although a sale may be the most common means
of divestiture, the PAS nominee will need to divest the conflicting
asset through one means or another.

**3.1.0 -- intention to seek a Certificate of Divestiture**

[Comment]{.underline}:

Discussion of Certificates of Divestiture is unnecessary in ethics
agreements. If an agency does elect to include such discussion in the
ethics agreement, the PAS nominee must commit unconditionally to divest
whether or not OGE ultimately issues a Certificate of Divestiture. As
OGE previously explained, an ethics agreement may not make "the
divestiture of prohibited or problematic holdings contingent upon
receiving a Certificate of Divestiture." DAEOgram DO-01-013 (Mar. 28,
2001), DAEOgram DO-98-013 (Apr. 8, 1998).

[Sample Language]{.underline}:

I understand that I may be eligible to request a Certificate of
Divestiture for these assets and that a Certificate of Divestiture is
effective only if obtained prior to divestiture. Regardless of whether I
receive a Certificate of Divestiture, I will divest these assets within
90 days of my confirmation and will invest the proceeds in
non-conflicting assets.

**3.2.0 -- interim 208 recusal pending divestiture of a single asset**

[Comment]{.underline}:

This language includes the PAS nominee's commitment to recuse from
conflicting matters pending divestiture.

[Sample Language]{.underline}:

I will divest my interests in Bortot Wilderness, Inc., within 90 days of
my confirmation. I will not participate personally and substantially in
any particular matter that has a direct and predictable effect on the
financial interests of this entity until I have divested it, unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**3.2.1 -- interim 208 recusal pending divestiture of multiple assets**

[Comment]{.underline}:

This language includes the PAS nominee's commitment to recuse from
conflicting matters pending divestiture. The recusal language has been
drafted carefully to require recusal from matters affecting only those
assets that the PAS nominee has not yet divested. One common drafting
error is to require recusal from matters affecting "these entities" or
"any of these entities" until the PAS nominee has completed *all* of the
divestitures (e.g., "Until I have completed *these* divestitures, I will
not participate personally and substantially in any particular matter
that has a direct and predictable effect on the financial interests of
*these entities*."). The following sample avoids this drafting error by
focusing on "each of these entities" that the PAS nominee has not yet
divested. By focusing on the interests of "each of these entities," the
language makes clear that the PAS nominee will recuse from a particular
matter even if it affects only one of the entities. By focusing on the
interest of only those entities that the PAS nominee has *not yet
divested*, the language makes clear that the PAS nominee will not need
to recuse from a particular matter affecting an entity after the PAS
nominee has divested the financial interest in that entity. This clarity
is useful because the PAS nominee may complete the various required
divestitures on different dates.

[Sample Language]{.underline}:

I will divest my interests in the following entities within 90 days of
my confirmation: Bortot Wilderness, Inc.; Molinaro Power Saws, LLC;
Bennett Worldwide Investigations Co.; and Bitler Environmental
Consulting, LP. With regard to each of these entities, I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of the
entity until I have divested it, unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1), or qualify for a regulatory
exemption, pursuant to 18 U.S.C. § 208(b)(2).

**3.2.2 -- interim 208 recusal pending divestiture of a combination of
assets whose owners are: the PAS nominee individually, the spouse
individually, or the PAS nominee and the spouse jointly**

[Comment]{.underline}:

This sample addresses assets owned by the PAS nominee and the PAS
nominee's spouse. However, it does not specify which assets are owned by
the PAS nominee and which assets are owned by the spouse. Instead, it
states only that the PAS nominee and the spouse will divest their
assets. This approach avoids a cumbersome formulation of divestiture
language that unnecessarily distinguishes between the PAS nominee's
assets, the spouse's assets, and joint assets. There is no need for such
a distinction, as long as the agreement indicates that both the PAS
nominee and the spouse have agreed to the divestiture.

An agency can use the language of this sample for assets owned by the
PAS nominee, for assets owned by the spouse, for assets owned jointly,
or for any combination of such assets. Similar language can address
combinations of assets that include assets owned by the PAS nominee's
minor children, as follows: "My spouse, my minor children and I will . .
. ."

[Sample Language]{.underline}:

My spouse and I will divest our interests in the following entities
within 90 days of my confirmation: Bortot Wilderness, Inc.; Molinaro
Power Saws, LLC; Bennett Worldwide Investigations Co.; and Bitler
Environmental Consulting, LP. With regard to each of these entities, I
will not participate personally and substantially in any particular
matter that has a direct and predictable effect on the financial
interests of the entity until we have divested it, unless I first obtain
a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**3.2.3 -- interim 208 recusal for a former employer when divesting the
employer's stock**

[Comment]{.underline}:

The significant feature of this sample is the inclusion of two recusals.
The subject of multiple recusals is discussed in 2.0.0 above. As
demonstrated in 2.3.0 above, an ethics agreement normally contains only
the 18 U.S.C. § 208 recusal when a PAS nominee retains a financial
interest in a former employer after resignation. As demonstrated in
5.2.0 below, an ethics agreement normally contains only a 5 C.F.R. §
2635.502 recusal for a former employer when a PAS nominee does not
retain such a financial interest. This sample, however, contains both
recusals because the 18 U.S.C. § 208 recusal will apply only until the
PAS nominee divests the employer's stock, while the 5 C.F.R. § 2635.502
recusal will apply for a full year after the PAS nominee's resignation.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position with Bortot
Wilderness, Inc. I will divest my stock in Bortot Wilderness, Inc.,
within 90 days of my confirmation. I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of this entity until I have divested
it, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to
18 U.S.C. § 208(b)(2). For a period of one year after my resignation, I
also will not participate personally and substantially in any particular
matter involving specific parties in which Bortot Wilderness, Inc., is a
party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**3.2.4 -- interim 208 recusal for a former employer when divesting the
employer's stock options**

[Comment]{.underline}:

See the comment to 3.2.3. This sample explicitly emphasizes that both
steps of the divestiture will occur before the applicable deadline. It
also states that divestiture will occur after the PAS nominee's
"appointment" because the PAS nominee will not be eligible for a
Certificate of Divestiture until the PAS nominee has been appointed. In
addition, the recusal language refers to both "stock options and stock,"
inasmuch as the PAS nominee will acquire stock by exercising the
options. Finally, this sample indicates what will happen to unvested
options.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position with Bortot
Wilderness, Inc. I will forfeit all Bortot Wilderness, Inc., stock
options that are unvested at the time of my resignation. Following my
appointment, I will divest my vested stock options and stock in Bortot
Wilderness, Inc., by exercising all such options and divesting all stock
within 90 days of my confirmation. I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of this entity until I have divested
it, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to 18
U.S.C. § 208(b)(2). For a period of one year after my resignation, I
also will not participate personally and substantially in any particular
matter involving specific parties in which Bortot Wilderness, Inc., is a
party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**3.3.0 -- divestiture of a prohibited holding**

[Comment]{.underline}:

This sample illustrates an approach to the divestiture of an asset that
is prohibited by a specific statutory or regulatory prohibition, as
opposed to a divestiture necessitated by 18 U.S.C. § 208.

Some statutory and regulatory provisions require divestiture of
prohibited holdings before the PAS nominee actually assumes the duties
of the position; other statutory and regulatory provisions require
divestiture within a specified time period. In any case, the ethics
agreement needs to be precise about the timing of divestitures of
prohibited holdings. In addition, the agency needs to coordinate with
OGE in advance to ensure that any request for a Certificate of
Divestiture is processed promptly after the PAS nominee is appointed and
before the PAS nominee becomes subject to the statutory prohibition. In
the example below, the PAS nominee will divest after appointment but
before commencing Federal service. However, the language of the
agreement should be tailored specifically to address the requirements of
any applicable legal authorities.

In some cases, compliance with statutory prohibitions also necessitates
coordination with the Office of the Counsel to the President regarding
the timing of an appointment, in order to ensure that the PAS nominee
has adequate time to effect necessary divestitures before a prohibition
becomes applicable to the PAS nominee. [See, e.g.]{.underline}, 12
U.S.C. §§ 242 ("Each member of the Board shall within fifteen days after
notice of appointment make and subscribe to the oath of office"), 244
("No member . . . shall . . . hold stock in any bank . . . and before
entering upon his duties as a member . . . he shall certify under oath
that he has complied with this requirement").

For purposes of this sample language, the date of "appointment" is the
date on which the President signs the PAS nominee's commission. This
date likely will be distinct from the date on which the PAS nominee
actually assumes the duties of the Federal position.

[Sample Language]{.underline}:

I understand that the Board's supplemental standards of conduct
regulations prohibit Board members from holding financial interests in
commercial providers of fissible material. 70 C.F.R. § 12901.101(a)(1).
I currently hold financial interests in the following prohibited
entities: Atomic Bortot, Inc., and Molinaro's Fissible Isotopes, LLC. I
will divest these assets after my appointment but before I assume the
duties of the position of Board member.

**3.4.0 -- divestiture due to inability to disclose assets of a
non-excepted investment fund**

[Comment]{.underline}:

A PAS nominee must disclose the underlying assets of an investment fund
that does not qualify as an excepted investment fund under 5 C.F.R. §
2634.310(c). However, managers of some private funds do not disclose
underlying assets to their investors. The inability to acquire such
information poses a potential obstacle for any PAS nominee who must
comply with the financial disclosure requirements of 5 U.S.C. app. IV, §
102.

In order to alleviate this potential obstacle, OGE may be willing to
certify the report of a PAS nominee who has agreed to divest such a
fund, provided that the PAS nominee has demonstrated an inability to
acquire required information about the fund's underlying assets. In
cases in which such an arrangement might be appropriate, the PAS nominee
will need to obtain a letter with the following characteristics: (1) the
letter, which will be addressed to the PAS nominee, will be from the
fund manager; (2) the letter will state that the fund does not disclose
information about its investments to its investors; and (3) the letter
will state that the fund will not make an exception for the PAS nominee.
Such a letter will demonstrate that a PAS nominee has made a good faith
effort to obtain all required information. Such a letter also will
demonstrate that the required information actually is unavailable to the
PAS nominee.

If a PAS nominee has made a good faith effort to obtain all required
information and has produced a copy of a letter with these
characteristics, OGE will consider certifying the PAS nominee's
financial disclosure report on the condition that the PAS nominee agrees
to divest the fund. The following sample illustrates a situation in
which a hypothetical PAS nominee has satisfied these conditions.

As a final word of caution, the measures described in this sample are
unnecessary in many cases. Before requiring a PAS nominee to obtain a
fund manager letter, the reviewer should consult with OGE and should
assist the PAS nominee in determining whether the fund qualifies as an
excepted investment fund.

[Sample Language]{.underline}:

I have disclosed in my financial disclosure report a financial interest
in the Bortot World Acquisitions Fund, LP. However, the fund's manager
declined to provide me with sufficient information to enable me to
disclose the fund's underlying assets in my financial disclosure report.
Therefore, I will divest my financial interest in the Bortot World
Acquisitions Fund, LP, within 90 days of my confirmation. Until I have
divested Bortot World Acquisitions Fund, LP, I will not participate
personally and substantially in any particular matter in which to my
knowledge I have a financial interest, if the particular matter has a
direct and predictable effect on the financial interests of Bortot World
Acquisitions Fund, LP, or its underlying assets, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**3.5.0 -- sale of privately-traded employer stock back to the
employer**

[Comment]{.underline}:

If a PAS nominee must divest the stock of an employer that is a private
corporation, the PAS nominee may have to sell the stock back to the
employer. If the sale will occur after the PAS nominee enters Federal
service, the agency will evaluate the terms of the sale under 18 U.S.C.
§ 209. The agency will consider the factors discussed in OGE's "Summary
of the Restriction on Supplementation of Salary" in connection with 18
U.S.C. § 209. DAEOgram DO-02-016 (July 1, 2002), DAEOgram DO-02-016A
(July 1, 2002).

This sample addresses a hypothetical situation in which the sale will
occur after the PAS nominee enters Federal service. In this context, the
agency's analysis under 18 U.S.C. § 209 noted the fact that the employer
has established a price for its stock that is applicable to all of its
employees.

If a PAS nominee will sell stock back to an employer before entering
Federal service, the sale may constitute an extraordinary payment,
depending partly on whether the employer has established a price that is
applicable to all employees. In that event, the ethics agreement may
need to include a recusal under 5 C.F.R. § 2635.503. Language for such a
recusal can be extrapolated from the sample at 6.2.0 below.

[Sample Language]{.underline}:

I will divest my shares of private stock in Bortot Wilderness, Inc.,
within 90 days of my confirmation. Consistent with the company's policy
for departing executives, Bortot Wilderness, Inc., will repurchase these
shares upon my resignation. Bortot Wilderness, Inc., values its private
stock quarterly, and the repurchase price will be based on the most
recent quarterly valuation at the time of my resignation. I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of Bortot
Wilderness, Inc., until I have divested it, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1).

**3.6.0 -- interim 208 recusal pending divestiture of a sector mutual
fund that does not qualify for the *de minimis* exemption at 5 C.F.R. §
2640.201(b)**

[Comment]{.underline}:

The PAS nominee in this sample will recuse from conflicting particular
matters until he has divested an interest in a sector mutual fund that
does not qualify for the *de minimis* exemption at 5 C.F.R. §
2640.201(b). The value of this hypothetical PAS nominee's interest in
the sector fund is greater than \$50,000.

When using this sample, agency ethics officials may need to caution the
PAS nominee that this sample does not address particular matters
affecting the fund itself as a legal entity. 5 C.F.R. § 2640.201(d)
establishes a limited exemption for "particular matters of general
applicability" affecting the fund as a legal entity. However, that
exemption does not extend to "particular matters involving specific
parties." Pending divestiture of the fund, the PAS nominee may not
participate in a particular matter involving specific parties that will
have a direct and predictable effect on the fund as a legal entity. This
sample does not address that issue because most PAS nominees are
unlikely to participate in such party matters. If the PAS nominee's
duties will include such party matters, as may be the case for certain
PAS nominees to the U.S. Internal Revenue Service or the U.S. Securities
and Exchange Commission for example, agency ethics officials may need to
incorporate a discussion of 5 C.F.R. § 2640.201(d) in the ethics
agreement.

[Sample Language]{.underline}:

I will divest my interests in the Bortot Healthcare Fund, within 90 days
of my confirmation. Until I have completed this divestiture, I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of any
holding of the Bortot Healthcare Fund that is invested in the healthcare
sector, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to
18 U.S.C. § 208(b)(2).

**CHAPTER 4: EXEMPTIONS, WAIVERS, AND AUTHORIZATIONS**

**4.0.0 -- exemptions, waivers, and authorizations: general discussion**

In certain circumstances, an ethics agreement may need to disclose a PAS
nominee's intention to rely on a waiver or an authorization. Some
agencies elect to include certain references to specific exemptions in
ethics agreements. The following samples provide language for these
purposes.

**4.1.0 -- reliance on *de minimis* exemptions**

[Comment]{.underline}:

This sample may be useful in an ethics agreement when a PAS nominee is
relying on *de minimis* exemptions for specific investments. However,
this sample should not be a substitute for individualized training and
counseling. Agencies should counsel PAS nominees thoroughly regarding
the requirements of *de minimis* exemptions. In particular, agencies
should ensure that PAS nominees understand that *de minimis* limits are
based on aggregate values, not on the values of individual assets.

Note that this sample does not include a recusal under 18 U.S.C. § 208.
This sample assumes that the ethics agreement also contains the standard
18 U.S.C. § 208 recusal in 2.1.0 or 2.1.1. This sample is intended only
to elaborate on the general references to the exemptions that are
contained in 2.1.0 and 2.1.1 (i.e., "unless I . . . qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2)"). This sample
language is not necessary in every case, but some agencies prefer to use
it when a PAS nominee is specifically relying on a *de minimis*
exemption for assets that otherwise would present likely conflicts of
interest.

[Sample Language]{.underline}:

If I rely on a *de minimis* exemption under 5 C.F.R. § 2640.202 with
regard to any of my financial interests, I will monitor the value of
those interests. If the aggregate value of interests affected by a
particular matter increases and exceeds the *de minimis* threshold, I
will not participate in the particular matter, unless I first obtain a
written waiver under 18 U.S.C. § 208(b)(1).

**4.2.0 -- plan to request a waiver pursuant to 18 U.S.C. § 208(b)(1)**

[Comment]{.underline}:

Executive Order 12674 requires agencies to consult with OGE when
practicable before issuing a waiver pursuant to 18 U.S.C. § 208. With
regard to PAS nominees, such consultation is practicable during the
review of the PAS nominee's financial disclosure report. Such
consultations often will be a necessary condition for OGE's
certification of the financial disclosure statement of a PAS nominee.
Therefore, the agency works with OGE during the certification process to
evaluate the appropriateness of issuing a waiver for the interests at
issue. As illustrated in the following sample, language in the ethics
agreement should place the Senate on notice that a PAS nominee intends
to resolve a conflict of interest by seeking a waiver. For additional
guidance on waivers, see OGE DAEOgram, DO-07-006 (Feb. 23, 2007).

[Sample Language]{.underline}:

I will request a written waiver under 18 U.S.C. § 208(b)(1) regarding my
financial interest in Bortot Wilderness, Inc. Until I have obtained such
a waiver, I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on
the financial interests of this entity.

**4.3.0 -- plan to request authorization pursuant to 5 C.F.R.
§ 2635.502(d)**

[Comment]{.underline}:

As illustrated in the following sample, language in the ethics agreement
should place the Senate on notice when a PAS nominee intends to resolve
an appearance issue by seeking an authorization pursuant to 5 C.F.R. §
2635.502(d). In any such case, the agency works with OGE during the
certification process to evaluate the appropriateness of issuing an
authorization pursuant to 5 C.F.R. § 2635.502(d). Such consultation
often will be a necessary condition for OGE's certification of the
financial disclosure statement of a PAS nominee.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Director of the
Wyoming State Police. For a period of one year after my resignation, I
will have a "covered relationship" under 5 C.F.R. § 2635.502 with the
Wyoming State Police. Pursuant to 5 C.F.R. § 2635.502(d), I will seek
written authorization to participate in particular matters involving
specific parties in which the Wyoming State Police is a party or
represents a party.

**4.3.1 -- plan to request authorization pursuant to 5 C.F.R.
§ 2635.502(d) subject to a limitation**

[Comment]{.underline}:

See the comment to 4.3.0. As a modification to 4.3.0, the following
sample provides a limitation on a PAS nominee's authorization to
participate in certain matters in which the PAS nominee previously
participated in another capacity outside the Federal Government.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Director of the
Wyoming State Police. For a period of one year after my resignation, I
will have a "covered relationship" under 5 C.F.R. § 2635.502 with the
Wyoming State Police. Pursuant to 5 C.F.R. § 2635.502(d), I will seek
written authorization to participate in particular matters involving
specific parties in which the Wyoming State Police is a party or
represents a party. However, during my appointment to the position of
Director of the Office of Emergency Coordination of State and Local Law
Enforcement, I will not participate personally and substantially in any
particular matter involving specific parties in which I previously
participated as Director of the Wyoming State Police.

**CHAPTER 5: RECUSALS PURSUANT TO 5 C.F.R. § 2635.502**

**5.0.0 -- 2635.502 recusals: general discussion**

Most of these samples do not incorporate the "reasonable person"
standard contained in 5 C.F.R. § 2635.502. That standard leaves an
employee free to determine on a case-by-case basis whether a "reasonable
person" with knowledge of the relevant facts would question the
employee's impartiality in certain matters. Under 5 C.F.R. §
2635.502(c)(1), the employee loses this discretion when the agency
determines that a "reasonable person" with knowledge of the relevant
facts would question the employee's impartiality. In the context of a
PAS nomination, an agency does not need to make a formal determination
that a "reasonable person" actually would question the PAS nominee's
impartiality. An ethics agreement may require recusal when there is any
concern about the potential for appearance issues to arise in connection
with the PAS nominee's participation in certain matters. Inasmuch as PAS
nominees are the most senior leaders in the Federal executive branch,
their ethics agreements often prospectively address the potential for
appearance issues. This approach protects a PAS nominee from the types
of questions that would arise if the PAS nominee were to self-regulate
on a case-by-case basis.

Most of these samples employ the phrase "pursuant to 5 C.F.R. §
2635.502(d)." The specific reference to 5 C.F.R. § 2635.502(d) is
consistent with the omission of any reference to the "reasonable person"
standard. It signifies that the PAS nominee will obtain prior written
authorization before participating in a covered matter and that the PAS
nominee will not rely on an informal determination under 5 C.F.R. §
2635.502(c)(2). Exceptions to this approach are contained in 5.1.0 and
5.2.3 because those samples address circumstances in which there is no
particular concern about the potential for appearance issues to arise in
connection with the PAS nominee's participation in certain matters.

Absent from these samples is generic language about the purpose of 5
C.F.R. § 2635.502 or about the significance of "covered relationships."
As suggested above, the agreement should be a concise statement of
relevant commitments. Extraneous information can create ambiguity.
Specifically with regard to a recusal under 5 C.F.R. § 2635.502,
extraneous information tends to create confusion as to whether the PAS
nominee is committing to recuse from certain matters or is committing
merely to consider recusal on a case-by-case basis under the "reasonable
person" standard. In order to eliminate the potential for such
confusion, these samples do not restate or explain the regulatory
prohibition.

Another notable feature of the recusals under 5 C.F.R. § 2635.502 in
this guide is that they include the phrase "personally and
substantially," which does not appear in the regulation. As with
recusals under 18 U.S.C. § 208, this language does not significantly
limit the PAS nominee's obligation to recuse. At the level of an
official whose position requires Senate confirmation, nearly any level
of participation would be deemed "personal and substantial" in light of
the effect that the official's participation would have on subordinates.
Therefore, the primary reason for including the phrase "personally and
substantially" in a recusal under 5 C.F.R. § 2635.502 is to avoid
creating the misperception that a recusal under 18 U.S.C. § 208 is
narrower than a recusal under 5 C.F.R. § 2635.502 with regard to the
level of participation it permits. In the past, differences of language
between recusals under 5 C.F.R. § 2635.502 that omitted the phrase
"personally and substantially" and recusals under 18 U.S.C. § 208 that
included this phrase have led to questions based on such an impression.

Finally, the following samples employ the phrase "unless I am first
authorized to participate," rather than the phrase "unless I am
authorized to participate." The inclusion of the word "first" ensures
consistency with the language of the sample recusals under 18 U.S.C. §
208 in this guide (i.e., "unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1)"). Omitting the word "first" may
create confusion as to whether the timing of an authorization under 5
C.F.R. § 2635.502(d) is different than the timing of a waiver under 18
U.S.C. § 208(b)(1).

**5.1.0 -- general 2635.502 recusal**

[Comment]{.underline}:

General recusals under 5 C.F.R. § 2635.502 are disfavored. A general
recusal under 5 C.F.R. § 2635.502 effectively means only that the PAS
nominee will recuse *if the PAS nominee decides to recuse*. Therefore,
it adds little value to an ethics agreement because it does not reflect
a specific commitment by the PAS nominee. However, if an agency does
elect to include a general recusal under 5 C.F.R. § 2635.502, the agency
should be careful to articulate the applicable legal standard correctly.
In the following sample, the language correctly articulates this legal
standard by requiring the PAS nominee to judge appearances from the
perspective of "a reasonable person with knowledge of the relevant
facts."

[Sample Language]{.underline}:

Finally, I will recuse myself from participation on a case-by-case basis
in any particular matter involving specific parties in which I determine
that a reasonable person with knowledge of the relevant facts would
question my impartiality in that matter, unless I am first authorized to
participate, pursuant to 5 C.F.R. part 2635, subpart E.

**5.2.0 -- one-year 2635.502 recusal for a former employer**

[Comment]{.underline}:

For party matters involving former employers, the ethics agreement does
not, in most cases, leave the question of recusal under 5 C.F.R. §
2635.502 to a PAS nominee's case-by-case determination. Instead, the
Government determines prospectively that any such party matter will
cause a reasonable person with knowledge of the relevant facts to
question the PAS nominee's participation in the matter. For this reason,
the following sample states that the PAS nominee will recuse unless the
PAS nominee first obtains authorization to participate, and it does not
include any reference to "a reasonable person with knowledge of the
relevant facts."

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position with Bortot
Wilderness, Inc. For a period of one year after my resignation, I will
not participate personally and substantially in any particular matter
involving specific parties in which Bortot Wilderness, Inc., is a party
or represents a party, unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d).

**5.2.1 -- one-year 2635.502 recusal for multiple former employers**

[Comment]{.underline}:

See the comment to 5.2.0.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my positions with the following
entities: Bortot Wilderness, Inc.; Molinaro Power Saws, LLC; Bennett
Worldwide Investigations Co.; and Bitler Environmental Consulting, LP.
For a period of one year after my resignation from each of these
entities, I will not participate personally and substantially in any
particular matter involving specific parties in which that entity is a
party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**5.2.2 -- one-year recusal for a former employer in which the PAS
nominee has a financial interest**

[Comment]{.underline}:

When a PAS nominee will retain a financial interest in a former
employer, the ethics agreement often includes language addressing only
the PAS nominee's obligation under 18 U.S.C. § 208. In most cases, there
is no need to include an additional recusal under 5 C.F.R. § 2635.502
because a recusal under 18 U.S.C. § 208 is broader as to the scope of
the matters covered than a recusal under 5 C.F.R. § 2635.502.
Specifically, a recusal under 18 U.S.C. § 208 covers all particular
matters, while a recusal under 5 C.F.R. § 2635.502 covers only a subset
of particular matters (i.e., particular matters involving specific
parties). Therefore, an agency often can use the language contained in
any of the following samples: 2.3.0, 2.3.1, 2.3.2, 2.3.3, or 2.3.4.

In some circumstances, however, an ethics agreement may need to include
both a recusal under 18 U.S.C. § 208 and a recusal under 5 C.F.R. §
2635.502. For example, the need for both recusals can arise if the
obligation to recuse under 18 U.S.C. § 208 will expire before the
obligation to recuse under 5 C.F.R. § 2635.502 will expire. Similarly,
the PAS nominee may have an obligation to recuse from certain party
matters involving former clients that is not addressed in the recusal
under 18 U.S.C. § 208. Therefore, an agency may need to use the language
contained in any of the following samples: 3.2.3, 3.2.4, 7.2.1, or 7.4.1

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Vice President of
Bortot Wilderness, Inc. Because I will continue to own stock in Bortot
Wilderness, Inc., I will not participate personally and substantially in
any particular matter that has a direct and predictable effect on the
financial interests of Bortot Wilderness, Inc., unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a
regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

\[or\]

Upon confirmation, I will resign from my position with Bortot
Wilderness, Inc. I will divest my stock in Bortot Wilderness, Inc.,
within 90 days of my confirmation. I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of this entity until I have divested
it, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to
18 U.S.C. § 208(b)(2). For a period of one year after my resignation, I
also will not participate personally and substantially in any particular
matter involving specific parties in which Bortot Wilderness, Inc., is a
party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**5.2.3 -- one-year 2635.502 recusal for an organization with which the
PAS nominee has had an unpaid position when the PAS nominee is not
closely identified with the organization**

[Comment]{.underline}:

In most cases, 5.2.0 is the preferred language for recusals under 5
C.F.R. § 2635.502. 5.2.0 omits the "reasonable" person standard because
the Government has determined prospectively that recusal is appropriate.
The following sample, 5.2.3, differs from 5.2.0 because it includes the
"reasonable person" standard. The language of 5.2.3 is not always
advisable because including the "reasonable person" standard leaves the
question of recusal to the PAS nominee's own case-by-case determination
about the appropriateness of participating in party matters involving an
entity with which the PAS nominee has a "covered relationship." In some
situations, this approach may leave the PAS nominee vulnerable to
questions that may arise if the PAS nominee self-authorizes his or her
own participation in such matters. Therefore, the language of this
sample, 5.2.3, is appropriate only when the totality of the
circumstances weighs in favor of permitting the PAS nominee to
self-authorize his or her own participation.

The following sample, 5.2.3, addresses a hypothetical situation in which
the following circumstances weigh in favor of permitting the
hypothetical PAS nominee to self-authorize her participation: (1) the
organization was not the PAS nominee's primary employer, (2) the PAS
nominee was not in a senior leadership position with the organization
and was not a spokesperson for the organization, (3) the PAS nominee is
not closely identified with the organization in the minds of members of
the public (e.g., as in the case of an organization's founder or a
person for whom the organization is named), and (4) the organization's
activities are not closely linked with particular matters involving
specific parties in which the PAS nominee is likely to be involved.
Based on all of these hypothetical circumstances, this sample, 5.2.3,
differs from 5.2.0 in that it leaves the question of recusal under 5
C.F.R. § 2635.502 to the PAS nominee's case-by-case determination under
the "reasonable person" standard.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Volunteer
Coordinator for the Bitler Foundation. For a period of one year after my
resignation, I will not participate personally and substantially in any
particular matter involving specific parties in which the Bitler
Foundation is a party or represents a party if I determine that a
reasonable person with knowledge of the relevant facts would question my
impartiality in that matter, unless I am first authorized to
participate, pursuant to 5 C.F.R. part 2635, subpart E.

**5.3.0 -- one-year 5 C.F.R. § 2635.502 recusal for former clients**

[Comment]{.underline}:

In the following sample, the PAS nominee will not retain a financial
interest in the entity from which the PAS nominee is resigning.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position with Bortot, Molinaro,
Bennett and Bitler, LP. For a period of one year after my resignation, I
will not participate personally and substantially in any particular
matter involving specific parties in which this firm is a party or
represents a party, unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d). In addition, I will not participate
personally and substantially in any particular matter involving specific
parties in which a former client of mine is a party or represents a
party, for a period of one year after I last provided service to that
client, unless I am first authorized to participate, pursuant to
5 C.F.R. § 2635.502(d).

**5.4.0 -- recusal from particular matters involving specific parties in
which the PAS nominee previously participated in connection with the PAS
nominee's prior non-Federal employment**

[Comment]{.underline}:

Sometimes PAS nominees are appointed to positions in which their
responsibilities are likely to include matters in which they previously
participated before entering Federal service. In such cases, the
Government may have concerns about the potential for an appearance that
the PAS nominee is "switching sides," especially if the PAS nominee is
an attorney, a lobbyist or an employee of an association. Although such
concerns do not arise frequently, they do arise from time to time. This
sample addresses a hypothetical situation in which such a concern has
arisen.

One feature of this sample is that it relies on the process described in
5 C.F.R. § 2635.502(d) for any authorization of participation. This
reliance on section 2635.502(d) is appropriate even though
section 2635.502 does not explicitly address the appearance of
"switching sides." The notice of proposed rulemaking for the Standards
of Ethical Conduct for Employees of the Executive Branch explained that
section 2635.502 is flexible: "Proposed § 2635.502 . . . provides that
an employee should use the process set forth in that section when
circumstances other than those specifically described raise questions
about his or her impartiality in the performance of official duties." 56
Fed. Reg. 33778, 33786 (1991). Similarly, the notice of final rulemaking
explained that section 2635.502(a)(2) is "intended to alert employees to
the fact that the covered relationships described in § 2635.502(b)(1)
are not the only relationships that can raise appearance issues and to
encourage employees to use the process set forth in § 2635.502 to
address any circumstances that would raise a question regarding their
impartiality." 57 Fed. Reg. 35006, 35026 (1992).

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as General Counsel of
the Consumer Defense Fund. For a period of one year after my
resignation, I will not participate personally and substantially in any
particular matter involving specific parties in which the Consumer
Defense Fund is a party or represents a party, unless I am first
authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). In
addition, for the duration of my appointment as General Counsel of the
Manufactured Products Administration, I will not participate personally
and substantially in any particular matter involving specific parties in
which I previously participated in my capacity as General Counsel of the
Consumer Defense Fund, unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d).

**5.4.1 -- recusal from certain particular matters in which the PAS
nominee previously participated in connection with the PAS nominee's
prior non-Federal employment**

[Comment]{.underline}:

The recusal in the previous sample, 5.4.0, required the PAS nominee to
recuse from "particular matters involving specific parties." The recusal
in this sample, 5.4.1, is broader than the recusal in the previous
sample, 5.4.0. The recusal in this sample, 5.4.1, requires the PAS
nominee to recuse from "particular matters," including both particular
matters involving specific parties and particular matters of general
applicability. The hypothetical agency officials in this sample elected
to require the broad "particular matter" recusal because the activities
of the PAS nominee's previous employer are closely related to the
mission of the agency.

As a practical matter, this "particular matter" recusal is limited to
particular matters in which the PAS nominee previously "appeared before"
or "directly communicated with" the agency. This limitation is intended
to define the covered particular matters with sufficient clarity to
enable agency staff to implement an effective screening arrangement.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Director of
Government Solutions with the Association of Metric Measurement Device
Manufacturers (AMMDM). For a period of one year after my resignation, I
will not participate personally and substantially in any particular
matter involving specific parties in which AMMDM is a party or
represents a party, unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d). In addition, for the duration of my
appointment as Deputy Administrator, I will not participate personally
and substantially in any particular matter in which I previously
appeared before, or directly communicated with, the U.S. Metric
Standards Administration on behalf of AMMDM, unless I am first
authorized to participate, pursuant to 5 C.F.R. § 2635.502(d).

**CHAPTER 6: SEVERANCE ARRANGEMENTS**

**6.0.0 -- severance arrangements: general discussion**

A reviewer necessarily works closely with a PAS nominee to develop a
full factual understanding of the terms of a severance arrangement. In
connection with such an arrangement, the PAS nominee's financial
disclosure report may need to disclose both a continuing arrangement
with an employer in Schedule C, Part II, and any related financial
interests in Schedule A. The ethics agreement carefully addresses the
resolution of all conflicts of interest stemming from the severance
package. In practice, the reviewer tailors the ethics agreement to the
specific facts of the PAS nominee's individual circumstances.

If any severance payment will occur after the PAS nominee begins Federal
service, the agency considers the factors discussed in OGE's "Summary of
the Restriction on Supplementation of Salary" in connection with 18
U.S.C. § 209. DAEOgram DO-02-016 (July 1, 2002), DAEOgram DO-02-016A
(July 1, 2002). If the payment will occur before the PAS nominee begins
Federal service, the agency considers the applicability of 5 C.F.R.
§ 2635.503.

When practicable, one way to provide specificity is to include in ethics
agreements the amounts of anticipated payments. However, it may be
impossible to provide a specific amount if the amount is variable. When
the amount of a payment is variable, one effective approach is to supply
a benchmark against which the agency will be able to evaluate the actual
payment in the future. For example, the following language establishes
such a benchmark: "I estimate that the value of the payment will be
approximately \$250,000." The words "estimate" and "approximately" are
sufficient to signal that the actual amount could be slightly larger or
smaller than this projected amount. However, if the actual payment is
significantly larger during the PAS nominee's appointment, the agency
will have to evaluate the payment under 18 U.S.C. § 209 before the PAS
nominee receives it.

Some of these samples include multiple recusals. They reflect the need
for agency ethics officials to define carefully the scope of matters in
which PAS nominees will participate after confirmation. Some financial
interests require full recusal under 18 U.S.C. § 208 from any particular
matter directly and predictably affecting the financial interests of
former employers. However, other financial interests require only
"ability or willingness" recusals under 18 U.S.C. § 208. In these
instances, payments or benefits are not directly tied to earnings or to
the value of stock (or other equity issuances). Instead, the commitment
is dependent only on the employers' continuing "ability or willingness"
to honor their commitments. In other cases, there may be no need for
recusals under 18 U.S.C. § 208, but there may be reasons for including
recusals under 5 C.F.R. § 2635.502 or 5 C.F.R. § 2635.503. For further
discussion regarding the use of multiple recusals, see the comment to
2.0.0 above.

**6.1.0 -- sample of a complex executive severance and equity package**

[Comment]{.underline}:

This sample is very fact-specific. Note that the date of this
hypothetical agreement is December 3, 2007. This sample is intended to
demonstrate the level of specificity with which ethics agreements
describe complex severance arrangements. However, the language of an
ethics agreement is tailored to the circumstances of an individual PAS
nominee. For additional discussion of the language of this sample
generally, see the comments to 6.0.0 above and 6.3.0 below. For a
discussion regarding the use of multiple recusals, see the comments to
2.0.0 and 6.0.0 above.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position with Borlinaro, Inc.
Following my resignation, I will receive from Borlinaro, Inc., a
severance payment in the amount of \$450,000. Borlinaro, Inc., will make
this payment to me before I assume the duties of the position of Under
Secretary. For a period of two years from the date of my resignation, I
will not participate personally and substantially in any particular
matter involving specific parties in which Borlinaro, Inc., is a party
or represents a party, unless I first receive a written waiver pursuant
to 5 C.F.R. § 2635.503(c).

Borlinaro, Inc., also will make a payment to me pursuant to a
non-compete agreement that I signed when I began working for Borlinaro,
Inc., in May 1990. The agreement provides that I will not work for a
competitor of Borlinaro, Inc., for one year after a voluntary
resignation from the company. Under the agreement, Borlinaro, Inc., has
the right to enforce this non-compete clause for a second year, provided
that it pays me an amount equivalent to an average of my annual base
salary during my final three years of employment. Borlinaro, Inc., has
advised me that it will exercise this right to enforce the non-compete
clause for a period of two years in exchange for the required payment. I
estimate that the amount of this payment will be approximately
\$475,000. Although the agreement provides for this payment to occur at
the end of the first year following my resignation, Borlinaro, Inc.,
will accelerate this payment and will pay it to me before I assume the
duties of the position of Under Secretary.

Consistent with the customary practice for departing executives of
Borlinaro, Inc., I also am entitled to receive an annual bonus for
fiscal year 2007 following my resignation. Borlinaro, Inc., will
calculate this bonus using an objective formula that is based solely on
the company's earnings for the period from October 1, 2006, through
September 30, 2007. If I begin my service as Under Secretary prior to
receiving this payment, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the ability or willingness of Borlinaro, Inc., to make this
payment, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1).

If I resign on or before March 30, 2008, I will not receive a bonus for
any portion of fiscal year 2008 that I work for Borlinaro, Inc.
Consistent with the customary practice for departing executives of
Borlinaro, Inc., if I resign after March 30, 2008, I will receive a *pro
rata* bonus for 2008. Borlinaro, Inc., will calculate this bonus using
an objective formula and will reduce the bonus proportionally to
compensate me only for the portion of 2008 during which I will have
worked for Borlinaro, Inc. If I begin my service as Under Secretary
prior to receiving this payment, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the ability or willingness of Borlinaro, Inc., to make this
payment, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1).

I own shares of Borlinaro, Inc., common stock. I also own vested
nonqualified employee stock options and both vested and unvested
incentive stock options for shares of Borlinaro, Inc., common stock. I
do not own any unvested nonqualified employee stock options for shares
of Borlinaro, Inc., common stock. Upon my resignation from Borlinaro,
Inc., I will forfeit all unvested incentive stock options for shares of
Borlinaro, Inc., common stock. Within 90 days of my confirmation, I will
divest all of my common stock, all of my vested nonqualified employee
stock options, and all of my vested incentive stock options in
Borlinaro, Inc. If I divest the stock options by exercising them, I will
divest the resulting stock within 90 days of my confirmation. Until I
have divested all of these financial interests, I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Borlinaro, Inc.,
unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1), or qualify for a regulatory exemption, pursuant to
18 U.S.C. § 208(b)(2).

Under the Borlinaro Executive Health Plan, my spouse and I will continue
to receive free health coverage, consistent with the corporation's
practice for departing executives. Borlinaro, Inc., will continue making
all payments to the health provider under this plan for as long as
either I or my spouse is living. I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the ability or willingness of Borlinaro, Inc., to make these
payments, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1).

**6.2.0 -- extraordinary payment recusal under 5 C.F.R. § 2635.503 that
addresses a severance payment**

[Comment]{.underline}:

This sample specifies that the employer will make a severance payment
before the PAS nominee begins Federal service. In this hypothetical
situation, the reviewer has already confirmed that the employer is
capable of making the payment before the PAS nominee's Federal service
begins. Given the timing of this payment, the reviewer has analyzed it
under 5 C.F.R. § 2635.503. If, instead, the employer were planning to
make the payment after the beginning of the PAS nominee's Federal
service, the reviewer would have analyzed the payment under 18 U.S.C. §
209. In that event, the reviewer would have considered the factors
identified in OGE's "Summary of the Restriction on Supplementation of
Salary." DAEOgram DO-02-016, DO-02-016A (Jul. 1, 2002).

[Sample Language]{.underline}:

Following my resignation, I will receive a severance payment in the
amount of \$75,000 from Molinaro Power, Inc., before I assume the duties
of the position of Under Secretary. For a period of two years from the
date of this payment, I will not participate personally and
substantially in any particular matter involving specific parties in
which Molinaro Power, Inc., is a party or represents a party, unless I
first receive a written waiver pursuant to 5 C.F.R. § 2635.503(c).

**6.3.0 -- severance payment pursuant to a standard employer policy**

[Comment]{.underline}:

This sample indicates that a particular payment is being made pursuant
to a preexisting agreement and an employer's standard policy. In this
hypothetical situation, the agency has confirmed that the partnership
makes such payments to all retiring partners. The consistency with which
the partnership makes such payments is relevant to the agency's analysis
under 18 U.S.C. § 209.

[Sample Language]{.underline}:

Upon confirmation, I will retire from my position as a partner with
Bennett Venture Capital, LP. Pursuant to the Bennett Venture Capital,
LP, 1998 Partnership Agreement for Participating Equity Partners, the
partnership will pay me a severance payment, in three equal
installments, totaling an amount equal to 75 percent of the average of
my partnership share for my final three years. Until I have received
these payments, I will not participate personally and substantially in
any particular matter that has a direct and predictable effect on the
ability or willingness of Bennett Venture Capital, LP, to make these
payments to me, unless I first obtain a written waiver, pursuant to 18
U.S.C. § 208(b)(1).

6.4.0 -- **outstanding bonus pursuant to a standard employer policy**

[Comment]{.underline}:

The date of this sample is January 15, 2008, and the sample addresses
the nominee's bonus for 2007. In connection with the agency's evaluation
of 18 U.S.C. § 209, the PAS nominee confirmed that the employer
routinely pays bonuses to executives after their resignations. The PAS
nominee also confirmed that the employer also uses an objective formula
to calculate such bonuses. (Specifically, the hypothetical nominee
explained to agency officials that the employer assigns differing
quantities of "points" to individual executives at the beginning of the
year and assigns a dollar-per-point value after calculating its profits
following the end of the year. In this hypothetical, the employer
eventually assigned a value of \$1,250 per point for calendar year 2007,
and the nominee's 200 points became worth \$250,000.)

If an employer does not use an objective formula, the agency will need
to inquire about how the employer determined the amount of the bonus.
The agency also will need to evaluate the payment under 18 U.S.C. § 209,
using the factors identified in OGE's "Summary of the Restriction on
Supplementation of Salary." DAEOgram DO-02-016, DO-02-016A (Jul. 1,
2002).

Finally, note that the recusal in this sample is not the full recusal
under 18 U.S.C. § 208. This sample employs the limited "ability or
willingness" recusal under 18 U.S.C. § 208 because the amount of the
bonus does not depend on the firm's future earnings. As noted above, the
date of this agreement is January 15, 2008. The bonus is based on the
application of an objective formula to the firm's past earnings during
the period between January 1, 2007, and December 31, 2007. In that
sense, the amount of the bonus is fixed, and the only variable is the
firm's continued ability or willingness to pay a fixed bonus.

[Sample Language]{.underline}:

Following my resignation, I will receive a bonus for 2007. Borlinaro,
Inc., will use an objective formula to calculate this bonus. Until I
have received this payment, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the ability or willingness of Borlinaro, Inc., to make these
payments to me, unless I first obtain a written waiver, pursuant to
18 U.S.C. § 208(b)(1).

**6.4.1 -- outstanding bonus pursuant to a standard employer policy,
when the employer will prorate the amount of the bonus**

[Comment]{.underline}:

The language of this sample is specific about the details of a bonus
payment from the PAS nominee's employer. For example, although the date
of this sample is hypothetically May 1, 2007, the sample addresses the
bonuses for both fiscal year 2007 and fiscal year 2008. It also explains
that the payment is consistent with the employer's standard practice, a
fact that was relevant to the hypothetical agency's analysis under 18
U.S.C. § 209. In connection with the agency's evaluation of 18 U.S.C. §
209, the agency confirmed that the amount of the payment will be
consistent with the amount paid to other executives, including
executives who have resigned. [See]{.underline} OGE's "Summary of the
Restriction on Supplementation of Salary," DAEOgram DO-02-016,
DO-02-016A (Jul. 1, 2002).

This sample includes a full recusal under 18 U.S.C. § 208 covering the
period of time in which the PAS nominee's bonus is dependent on the
company's profits. It includes an "ability or willingness" recusal
covering the period of time after which the amount of the PAS nominee's
bonus will be fixed and before the PAS nominee receives the bonus.
Finally, it includes a one-year recusal for certain party matters under
5 C.F.R. § 2635.502, which may overlap the period in which the other
recusals are applicable. When an agreement contains multiple recusals
that are applicable at different times in this manner, the reviewer
should explain them carefully to the PAS nominee. See the comments to
2.0.0 and 6.0.0 above for additional discussion about the use of
multiple recusals.

In this hypothetical situation, the employer generates its income by
selling power saws only to timber companies. Therefore, the employer's
profits are not based on representational activities that may trigger
concerns under 18 U.S.C. § 203 or the claims provision of 18 U.S.C.
§ 205. In some cases, the employer's earnings may trigger such concerns
in connection with the PAS nominee's outstanding bonus. When such
concerns arise, the agency will need to inquire about the method by
which the employer will prorate the bonus. Depending on the factual
circumstances, the PAS nominee may be unable to accept a prorated bonus
that is based on a percentage of the employer's total earnings for the
calendar or fiscal year. Such a bonus may be based partly on the
employer's earnings at a time when the PAS nominee is a Federal
employee. In cases in which there are issues under 18 U.S.C. § 203 or 18
U.S.C. § 205, the employer may need to limit the bonus to a share of
earnings during the specific period when the PAS nominee was not a
Federal employee. For a sample of language addressing such issues, see
7.4.1 below.

[Sample Language]{.underline}:

Following my resignation, I will receive a bonus for the work I
performed during fiscal year 2007, as is the corporation's practice for
departing executive members. Molinaro Power Saws, LLC, will use an
objective formula to calculate this bonus. If I am confirmed before the
end of the fiscal year on June 30, 2007, Molinaro Power Saws, LLC, will
pay me a *pro rata* share of my bonus that covers only the period of
fiscal year 2007 prior to my resignation. Through June 30, 2007, I will
not participate personally and substantially in any particular matter
that has a direct and predictable effect on the financial interests of
Molinaro Power Saws, LLC, unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1). After June 30, 2007, I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the ability or willingness of
Molinaro Power Saws, LLC, to make this payment to me, unless I first
obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1). In addition,
for a period of one year after my resignation, I will not participate
personally and substantially in any particular matter involving specific
parties in which Molinaro Power Saws, LLC, is a party or represents a
party, unless I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d). I will not receive a bonus for fiscal year 2008.

**6.5.0 -- extraordinary payment recusal under 5 C.F.R. § 2635.503 that
addresses an acceleration of compensation**

[Comment]{.underline}:

See the comment to 6.2.0, above. In addition, the PAS nominee in this
hypothetical situation has confirmed that the employer is able to make
the payment before the PAS nominee assumes the duties of the government
position. If the employer had been unable to offer this assurance, the
agency's ethics officials would have evaluated the payment under
18 U.S.C. § 209, in order to determine whether the PAS nominee could
accept the payment after beginning Federal service. In that event, the
reviewer would have considered the factors identified in OGE's "Summary
of the Restriction on Supplementation of Salary." DAEOgram DO-02-016,
DO-02-016A (Jul. 1, 2002). Because the payment in this case will occur
before the PAS nominee enters Federal service, however, the agency
evaluated the payment under 5 C.F.R. § 2635.503. (PAS nominees and
employers needing tax advice regarding accelerations of payments should
consult their own tax advisors for such advice. The U.S. Internal
Revenue Service has published regulations in connection with 26 U.S.C. §
409A regarding certain accelerations of payments under nonqualfied
deferred compensation plans that may be applicable to certain PAS
nominees who have entered into ethics agreements.)

Note that the date of this agreement is January 1, 2008.

[Sample Language]{.underline}:

Under the Molinaro Power Saws, LLC, Executive Deferred Compensation
Plan, I am entitled to receive a payment of \$250,000 in June 2012. Upon
my resignation, Molinaro Power Saws, LLC, will accelerate this payment.
As a result, Molinaro Power Saws, LLC will pay the full amount of
\$250,000 to me before I assume the duties of the position of Under
Secretary. For a period of two years from the date of this payment, I
will not participate personally and substantially in any particular
matter involving specific parties in which Molinaro Power Saws, LLC, is
a party or represents a party, unless I first receive a written waiver
pursuant to 5 C.F.R. § 2635.503(c).

**CHAPTER 7: ATTORNEYS**

**7.0.0 -- attorneys: general discussion**

Certain issues arise frequently in connection with the nominations of
attorneys who are in private practice. The samples in this section
address some of these issues, but they are not intended to be
comprehensive.

One key feature of these samples is that they include recusals from both
the law firm and from the PAS nominees' own clients. With regard to
clients, the recusals under 5 C.F.R. § 2635.502 normally focus on the
former clients of the PAS nominee, not the current or former clients of
the law firm.

Another feature is that the recusals under 5 C.F.R. § 2635.502 refer to
the former clients of PAS nominees only generally (e.g., "any particular
matter involving specific parties in which *a former client of mine* is
a party or represents a party"). They do not restate the list of clients
identified in Schedule D, Part II, of the PAS nominee's financial
disclosure report. The generic reference to any "former client" is
preferable because the clients identified in Schedule D, Part II, do not
include clients who paid \$5,000 or less. In addition, Schedule D, Part
II, may include clients whom the PAS nominee served more than one year
ago.

For similar reasons, the recusals for former clients refer generically
to a period of one year from the date on which the PAS nominee "last
provided service" to each former client. Consistent with the regulation,
the period of recusal is not measured from the date of confirmation or
the date of appointment (e.g., "for a period of one year from the date
of my confirmation"). Instead, these samples establish a rolling period
of recusal that is specific to each client: "I will not participate
personally and substantially in any particular matter involving specific
parties in which a former client of mine is a party or represents a
party *for a period of one year after I last provided service to that
client*."

When the PAS nominee will be a special government employee and will
continue to work as an equity partner in a law firm, the recusal under
18 U.S.C. § 208 must include all particular matters affecting the
financial interests of the law firm. The firm's financial interests
include the firm's financial interests in cases involving clients of the
firm who are not clients of the PAS nominee. Language addressing this
situation is provided in 11.1.1 below (e.g., "I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of the firm.").

**7.1.0 -- resignation from a salaried position with a law firm in which
the PAS nominee does not have a financial interest**

[Comment]{.underline}:

This sample does not contain a recusal under 18 U.S.C. § 208 because the
law firm's financial interests will no longer be imputed to the PAS
nominee after the PAS nominee's resignation.

Note that the language of this sample is not appropriate in certain
circumstances in which 18 U.S.C. § 208 will continue to impute the law
firm's financial interests to a PAS nominee following the PAS nominee's
resignation, as in 7.6.0 below. In 7.6.0 below, the hypothetical PAS
nominee will continue to have an investment in a separate investment
partnership in which the law firm is the general partner. Before using
the language of the following sample, a reviewer should confirm that the
PAS nominee has not invested in a separate partnership in which the law
firm is the general partner, which would necessitate the use of the
language in 7.6.0 below. The reviewer should also confirm that the PAS
nominee does not have a capital account with the firm, which would
necessitate the use of the language in 7.2.0 or 7.2.1 below.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as an attorney with
the law firm of Bortot, Molinaro, Bennett and Bitler, LP. For a period
of one year after my resignation, I will not participate personally and
substantially in any particular matter involving specific parties in
which this firm is a party or represents a party, unless I am first
authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). In
addition, I will not participate personally and substantially in any
particular matter involving specific parties in which a former client of
mine is a party or represents a party for a period of one year after I
last provided service to that client, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**7.2.0 -- the refund of a capital account after resignation will occur
before the PAS nominee begins Federal service**

[Comment]{.underline}:

This sample does not contain an "ability or willingness" recusal under
18 U.S.C. § 208, even though the law firm owes the PAS nominee an
outstanding payment. The reason that such a recusal is unnecessary is
that the payment will occur before the PAS nominee's Federal service
begins.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as a partner with the
law firm of Bortot, Molinaro, Bennett and Bitler, LP. I currently have a
capital account with the firm, and I will receive a refund of that
account before I assume the duties of the position of Under Secretary.
For a period of one year after my resignation, I will not participate
personally and substantially in any particular matter involving specific
parties in which this firm is a party or represents a party, unless I am
first authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). In
addition, I will not participate personally and substantially in any
particular matter involving specific parties in which a former client of
mine is a party or represents a party for a period of one year after I
last provided service to that client, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**7.2.1 -- the refund of a capital account after resignation may occur
after the PAS nominee begins Federal service**

[Comment]{.underline}:

This sample contains an "ability or willingness" recusal under 18 U.S.C.
§ 208 because the law firm will owe the PAS nominee an outstanding
payment after the PAS nominee's Federal service begins.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as a partner with the
law firm of Bortot, Molinaro, Bennett and Bitler, LP. I currently have a
capital account with the firm, and I will receive a refund of that
account after my resignation. Until I have received this refund, I will
not participate personally and substantially in any particular matter
that will have a direct and predictable effect on the ability or
willingness of the firm to pay this refund, unless I first obtain a
written waiver, pursuant to 18 U.S.C. 208(b)(1). For a period of one
year after my resignation, I also will not participate personally and
substantially in any particular matter involving specific parties in
which the firm is a party or represents a party, unless I am first
authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). In
addition, I will not participate personally and substantially in any
particular matter involving specific parties in which a former client of
mine is a party or represents a party for a period of one year after I
last provided service to that client, unless I am first authorized to
participate, pursuant to 5 C.F.R. §  2635.502(d).

**7.3.0 -- the PAS nominee is a sole practitioner who will place the law
practice in an inactive status**

[Comment]{.underline}:

In this sample, the PAS nominee is a sole practitioner who is agreeing
to place her practice in an inactive status. Agency ethics officials
should counsel a PAS nominee in such a circumstance about the strict
requirements of maintaining the practice in an inactive status. The PAS
nominee must understand that the PAS nominee's law practice may not
perform any business activities, including: taking on new clients,
generating income, advertising, engaging in correspondence, and making
telephone calls. The only permissible activities involve ministerial
duties that do not generate income and are necessary to maintain the
legal existence of the business while it is in an inactive status.

[Sample Language]{.underline}:

I am the sole proprietor of my law firm, which does business as The Law
Firm of Sandi L. Bennett. Upon confirmation, my law firm will cease
engaging in any business, including the representation of clients.
During my appointment to the position of Assistant Secretary, the law
firm will remain dormant and will not advertise. I will not perform any
services for the firm, except that I will comply with any requirements
involving legal filings, taxes and fees that are necessary to maintain
the law firm while it is in an inactive status. As Assistant Secretary,
I will not participate personally and substantially in any particular
matter that has a direct and predictable effect on the financial
interests of The Law Firm of Sandi L. Bennett. In addition, I will not
participate personally and substantially in any particular matter
involving specific parties in which a former client of mine is a party
or represents a party for a period of one year after I last provided
service to that client, unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d).

**7.3.1 -- the PAS nominee is a sole practitioner who will place the law
practice in an inactive status and who may receive a referral fee from
another attorney**

[Comment]{.underline}:

See the comment to 7.3.0 for a discussion of placing the law practice in
an inactive status. In this variation, the PAS nominee may receive
certain referral fees for transferring cases to other attorneys.

[Sample Language]{.underline}:

I am the sole proprietor of my law firm, which does business as The Law
Firm of Sandi L. Bennett. Upon confirmation, I will cease providing
services to my clients and I will refer them to other legal counsel for
any ongoing legal matters. I will complete all such referrals before I
assume the duties of the position of Assistant Secretary. If I agree to
accept any payment for referrals, I will consult your office regarding
the applicability of 18 U.S.C. § 209 before I receive any such payment.
Upon confirmation, my law firm will cease engaging in any business,
including the representation of clients. During my appointment to the
position of Assistant Secretary, the law firm will remain dormant and
will not advertise. I will not perform any services for the firm, except
that I will comply with any requirements involving legal filings, taxes
and fees that are necessary to maintain the law firm while it is in an
inactive status. As Assistant Secretary, I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of The Law Firm of
Sandi L. Bennett. In addition, I will not participate personally and
substantially in any particular matter involving specific parties in
which a former client of mine is a party or represents a party for a
period of one year after I last provided service to that client, unless
I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d).

**7.4.0 -- the PAS nominee will have outstanding accounts receivable
after appointment**

[Comment]{.underline}:

This sample contains an "ability or willingness" recusal under 18 U.S.C.
§ 208 because the hypothetical PAS nominee's clients will owe
outstanding payments after the PAS nominee's Federal service begins.
This sample includes language indicating that the PAS nominee and the
clients will "fix" any amounts owed before the PAS nominee begins
Federal service. The purpose of this language is to prevent a situation
in which the PAS nominee might have to negotiate during the PAS
nominee's Federal service with former clients over the amounts owed. By
resolving potential billing disputes in advance, the PAS nominee
eliminates any potential for appearing to misuse the Federal position
during subsequent negotiations with a former client.

See the comment to 7.3.0 for a discussion of sole practitioners
generally. In addition, see the comments to 2.0.0 and 6.0.0 above for a
discussion of the use of multiple recusals.

[Sample Language]{.underline}:

I am the sole proprietor of my law firm, which does business as The Law
Firm of Sandi L. Bennett. Upon confirmation, the law firm will cease
engaging in any business, including the representation of clients.
During my appointment to the position of Under Secretary, the law firm
will remain dormant and will not advertise. I will not perform any
services for the firm, except that I will comply with any requirements
involving legal filings, taxes and fees that are necessary to maintain
the law firm while it is in an inactive status. As Under Secretary, I
will not participate personally and substantially in any particular
matter that has a direct and predictable effect on the financial
interests of The Law Firm of Sandi L. Bennett. All amounts owed to me by
any of my clients will be fixed before I assume the duties of the
position of Under Secretary, and I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the ability or willingness of any of these clients to pay
these amounts. In addition, I will not participate personally and
substantially in any particular matter involving specific parties in
which a former client of mine is a party or represents a party, for a
period of one year after I last provided service to that client, unless
I am first authorized to participate, pursuant to 5 C.F.R. §
2635.502(d).

**7.4.1 -- a law firm will owe the PAS nominee an outstanding
partnership share after appointment**

[Comment]{.underline}:

This sample indicates that the PAS nominee will receive a partnership
share after withdrawing from a partnership. The language addressing
details of this payment is necessarily fact-specific. A reviewer must
tailor an agreement's language to the individual circumstances of a
particular PAS nominee. When drafting such individualized language, it
may be helpful to review 6.0.0 and 6.1.0 above.

Note that the hypothetical date of this agreement is February 1, 2008.
The language of this sample specifies that the PAS nominee's prorated
partnership share will be based only on the firm's earnings during the
period of 2008 prior to the PAS nominee's withdrawal. This sample
intentionally establishes that the partnership share will not be based
on a portion of the firm's total earnings for the entire year, which
could include a period of time when the PAS nominee was a Federal
employee.

In this hypothetical situation, the law firm's fiscal year ends on
September 30, 2008, but the PAS nominee is likely to be confirmed before
that date. (For purposes of this hypothetical situation, one can imagine
that the PAS nominee ultimately will be confirmed on June 30, 2008 and
will resign from the law firm that same day.) If the PAS nominee were
confirmed, for example, on June 30, 2008, the language of this sample
would not allow the law firm to prorate the PAS nominee's partnership
share by paying 75% of the partnership share that he would have earned
if he had resigned after September 30, 2008. Instead, the language of
this sample requires the law firm to calculate its actual earnings
through June 30, 2008, and to pay the PAS nominee a share of those
actual earnings.

If, instead, the ethics agreement allowed the law firm to base the PAS
nominee's prorated partnership share on the firm's total earnings for
the year, the agency would need to evaluate the payment carefully under
18 U.S.C. § 203 and 18 U.S.C. § 205. The agency might also need to
consider the emoluments clause of the United States Constitution. The
ethics agreement also would need to contain an appropriate recusal under
18 U.S.C. § 208, as in 6.4.1 above.

The language of this sample indicates that the payment of the
partnership share is being made pursuant to a preexisting agreement and
an employer's standard policy. It specifically cites the "Bortot,
Molinaro, Bennett and Bitler, LP, 1998 Partnership Agreement for
Participating Equity Partners." In this hypothetical situation, the
agency has confirmed that the firm makes this payment to all retiring
equity partners who have signed the 1998 agreement. The consistency with
which the firm makes this payment is relevant to the agency's analysis
under 18 U.S.C. § 209. [See]{.underline} DAEOgram DO-02-016, DO-02-016A
(Jul. 1, 2002) ("Summary of the Restriction on Supplementation of
Salary").

Note that this sample contains three different recusals. For a
discussion about the use of multiple recusals, see the comments to 2.0.0
and 6.0.0 above. In addition, note that this sample does not address the
refund of a capital account. For language addressing the refund of
capital accounts, see 7.2.0 and 7.2.1 above.

[Sample Language]{.underline}:

Upon confirmation, I will withdraw from the partnership of Bortot,
Molinaro, Bennett and Bitler, LP. Pursuant to the Bortot, Molinaro,
Bennett and Bitler, LP, 1998 Partnership Agreement for Participating
Equity Partners, I will receive a *pro rata* partnership share based on
the value of my partnership interests for services performed in 2008
through the date of my withdrawal. This payment will be based solely on
the firm's earnings through the date of my withdrawal from the
partnership. I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
ability or willingness of Bortot, Molinaro, Bennett and Bitler, LP, to
pay this *pro rata* partnership share to me, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1). For a period of one
year after my resignation, I also will not participate personally and
substantially in any particular matter involving specific parties in
which this firm is a party or represents a party, unless I am first
authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). In
addition, I will not participate personally and substantially in any
particular matter involving specific parties in which a former client of
mine is a party or represents a party for a period of one year after I
last provided service to that client, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**7.5.0 -- the PAS nominee's name appears in the name of the firm**

[Comment]{.underline}:

The language of this sample indicates that the PAS nominee has complied
with 5 C.F.R. § 2636.305 by having his law firm remove his name from the
name of the firm. Note that in this sample the hypothetical PAS nominee
is "Murray L. Bennett" and he is a named partner of the firm of "Bitler,
Bennett, Molinaro & Bortot, LLP."

[Sample Language]{.underline}:

I am a partner of the law firm of Bitler, Bennett, Molinaro & Bortot,
LLP. Upon confirmation, I will withdraw from the partnership, and the
firm will change its name to "Bitler, Molinaro & Bortot, LLP." I
currently have a capital account with the firm, and I will receive a
refund of that account before I assume the duties of the position of
Under Secretary. For a period of one year after my resignation, I will
not participate personally and substantially in any particular matter
involving specific parties in which this firm is a party or represents a
party, unless I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d). In addition, I will not participate personally and
substantially in any particular matter involving specific parties in
which a former client of mine is a party or represents a party for a
period of one year after I last provided service to that client, unless
I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d).

**7.6.0 -- the PAS nominee has an equity interest in a partnership
created by a law firm**

[Comment]{.underline}:

In this sample, the PAS nominee has disclosed in the financial
disclosure report a financial interest in an investment partnership
related to her law firm. The hypothetical investment partnership is
named "BMBB Equity Strategies, LP."

In the course of interviewing the PAS nominee about her financial
disclosure report, the reviewer uncovered the fact that the law firm is
the general partner of BMBB Equity Strategies, LP. Therefore, the law
firm's financial interests are imputed to the PAS nominee under 18
U.S.C. § 208, which imputes the interests of a "general partner" to a
Federal employee. Although the PAS nominee in this hypothetical
situation is resigning from her position as an associate attorney with
the law firm, she will retain her interest in BMBB Equity Strategies,
LP. Therefore, this sample contains a full recusal under 18 U.S.C. § 208
with regard to the law firm because the law firm's financial interests
will continue to be imputed to the PAS nominee following her
resignation. Note, however, that a PAS nominee may be able to rely on
the exemption for certain interests of general partners in 5 C.F.R. §
2640.202(f).

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as an attorney with
the law firm of Bortot, Molinaro, Bennett and Bitler, LP. I will retain
my investment in BMBB Equity Strategies, LP, a partnership for which the
law firm is the general partner. For as long as I retain my interest in
BMBB Equity Strategies, LP, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of either the law firm or BMBB Equity
Strategies, LP, unless I first obtain a written waiver, pursuant to
18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption, pursuant
to 18 U.S.C. § 208(b)(2). In addition, I will not participate personally
and substantially in any particular matter involving specific parties in
which a former client of mine is a party or represents a party, for a
period of one year after I last provided service to that client, unless
I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d).

**CHAPTER 8: OUTSIDE POSITIONS**

**8.0.0 -- outside positions: general discussion**

Ethics agreements typically address a PAS nominee's outside positions.
The reviewer should be mindful that a PAS nominee may hold outside
positions that the PAS nominee is not required to disclose in the
financial disclosure report.

Most of these samples do not identify positions as paid or unpaid. The
fact that a position is either paid or unpaid is not necessarily the
determining factor with regard to the type of recusal needed. For
full-time PAS positions, however, note that Executive Order 12674, § 102
(1989), as amended by Executive Order 12731 (1990), prohibits outside
earned income. PAS nominees for full-time positions must terminate any
paid outside positions upon confirmation. When drafting an ethics
agreement that addresses such a termination, there is no need to provide
an explanation that a PAS nominee is terminating a position in order to
comply with the earned income ban.

If a PAS nominee is retaining a position for which the PAS nominee is
presently receiving compensation, the PAS nominee will need to convert
the position to an unpaid position, as illustrated in 8.6.0 below.

**8.1.0 -- retention of a position as a board member of an
organization**

[Comment]{.underline}:

This sample includes a full recusal under 18 U.S.C. § 208 because the
PAS nominee is a "director." This full recusal is necessary whether or
not the PAS nominee receives compensation for this position.

Note that the agency has confirmed that this hypothetical PAS nominee is
not involved in matters related to the organization's investments. For
sample addressing the outside position of a PAS nominee who has been
involved in such matters, see 8.1.1 below.

[Sample Language]{.underline}:

I will retain my unpaid position as a member of the board of directors
of Sister Bitler's Home for the Homeless. I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Sister Bitler's
Home for the Homeless, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption,
pursuant to 18 U.S.C. § 208(b)(2).

**8.1.1 -- retention of a position as a board member of an organization
when the PAS nominee qualifies for the exemption at 5 C.F.R.
§ 2640.202(e)**

[Comment]{.underline}:

This sample specifically addresses the exemption at 5 C.F.R. §
2640.202(e). When incorporating language related to this exemption,
agency ethics officials should explain the meaning of the concept of
"categories" of investments carefully. A PAS nominee will cease to
qualify for the exemption if the PAS nominee plays a role in the
organization's investments that is more specific than identifying such
broad categories as "stocks" generally or "bonds" generally. The PAS
nominee may not select specific investments, such as specific stocks or
bonds.

In this hypothetical situation, the Office of the Counsel to the
President has approved this hypothetical PAS nominee's retention of an
outside position. However, the hypothetical PAS nominee has been
involved in deliberations related to the organization's investments.

A variation on this sample appears in 8.1.2 below.

[Sample Language]{.underline}:

I will retain my unpaid position as a member of the board of directors
of Sister Bitler's Home for the Homeless. I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Sister Bitler's
Home for the Homeless, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption,
pursuant to 18 U.S.C. § 208(b)(2). In order to qualify for the exemption
at 5 C.F.R. § 2640.202(e) during my government service, I will not play
any role in making investment decisions for Sister Bitler's Home for the
Homeless, except to the extent that I may participate personally and
substantially in decisions to invest in broad categories of investments
such as stocks, bonds, or mutual funds.

**8.1.2 -- retention of a position equivalent to a board member position
with a university when the PAS nominee qualifies for the exemption at 5
C.F.R. § 2640.202(e)**

[Comment]{.underline}:

This sample addresses the same situation addressed in 8.1.1 above. The
exemption at 5 C.F.R. § 2640.203(e) is sometimes used in connection with
positions PAS nominees hold with universities that are qualifying
tax-exempt organizations. In this sample, the hypothetical PAS nominee
is on several committees in connection with her outside position, but
only one of those committees, the Committee on Finance, is responsible
for the university's investments. The PAS nominee will resign from the
Committee on Finance and will limit her other board activities in order
to ensure that she continues to qualify for the exemption at 5 C.F.R.
§ 2640.202(e).

[Sample Language]{.underline}:

If confirmed, I will retain my position as a unpaid member of the Board
of Overseers of Borlinaro University. As part of my role as a member of
that board, I serve on the following committees: the Standing Committee
on Natural and Applied Sciences, the Visiting Committee on Athletics,
and the Committee on Finance. Before assuming the duties of the position
of Administrator, I will resign from my membership on the Committee on
Finance. As Administrator, I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of Borlinaro University, unless I
first obtain a written waiver, pursuant to section 208(b)(1), or qualify
for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2). In order
to qualify for the exemption at 5 C.F.R. § 2640.202(e) during my
government service, I will not play any role in making investment
decisions for Borlinaro University, except to the extent that I may
participate in decisions to invest in broad categories of investments
such as stocks, bonds, or mutual funds.

**8.2.0 -- resignation from a position as a board member of an
organization**

[Comment]{.underline}:

Unlike 8.1.0 and 8.1.1 above, this sample does not include a recusal
under 18 U.S.C. § 208 because the interests of the organization will not
be imputed to the PAS nominee, who is resigning from a board member
position. Instead, this sample contains a recusal under 5 C.F.R. §
2635.502. See 5.0.0 and 5.2.0 above for discussion of the language of
this type of recusal.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position on the board of
directors of Sister Bitler's Home for the Homeless. For a period of one
year after my resignation, I will not participate personally and
substantially in any particular matter involving specific parties in
which Sister Bitler's Home for the Homeless is a party or represents a
party, unless I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d).

**8.3.0 -- retention of a trustee position generally; retention of a
position as trustee of a trust for the benefit of members of the PAS
nominee's immediate family; retention of a position as trustee of a
trust for the benefit of members of the PAS nominee's extended family**

[Comment]{.underline}:

The following sample addresses certain situations in which a PAS nominee
is a trustee of a family trust. This language is appropriate if the
beneficiaries of the trust are solely members of the PAS nominee's
immediate family (i.e., the PAS nominee's spouse and the PAS nominee's
minor or dependent children). This language is also appropriate if the
beneficiaries of the trust are solely members of the PAS nominee's
extended family (e.g., the PAS nominee's brother, the PAS nominee's
niece, the PAS nominee's nephew, etc.).

This language is not appropriate if the beneficiaries of the trust
include both of the following: (1) members of the PAS nominee's
immediate family and (2) members of the PAS nominee's extended family.
If the beneficiaries include both immediate family members and extended
family members, the ethics agreement should use the language of 8.3.1 or
8.3.2 instead.

[Sample Language]{.underline}:

I will retain my position as a trustee of the Borlinaro Family Trust. I
will not receive any fees for the services that I provide as a trustee
during my appointment to the position of Under Secretary. I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of the
Borlinaro Family Trust, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption,
pursuant to 18 U.S.C. § 208(b)(2).

**8.3.1 -- retention of a position as trustee of a trust for the benefit
of members of both the PAS nominee's immediate family and the PAS
nominee's extended family**

[Comment]{.underline}:

The language of 8.3.0 above is sufficient when the beneficiaries include
only members of the PAS nominee's immediate family. The language of
8.3.0 above also is sufficient when the beneficiaries include only
members the PAS nominee's extended family. However, additional language
is needed if the trust's beneficiaries include members of both the
immediate family and the extended family.

When the beneficiaries include both immediate and extended family
members, the PAS nominee must agree not to make investment decisions for
the trust. The reason for this additional requirement stems from an
interpretation of the earned income ban in Executive Order 12674, § 102
(1989), as amended by Executive Order 12731 (1990), which bars PAS
nominees from earning any outside income after they have been appointed
to full-time Federal positions. As with the earned income limitation
applicable to certain other appointees, OGE interprets "earned income"
to include income from investment activities where the individual's
services are a material factor in the production of income.
[See]{.underline} 5 C.F.R. § 2636.303(b)(4). Decisions regarding a
trust's investments are a material factor in the production of income
for the trust. Therefore, trustee positions can give rise to questions
regarding the applicability of the earned income ban.

A PAS nominee may always manage the investments of a trust that benefits
solely the PAS nominee's immediate family because OGE has not extended
this definition of earned income to circumstances in which the PAS
nominee is managing only the money of the PAS nominee's own immediate
family. Similarly, a PAS nominee may manage the investments of a trust
that benefits solely members of the PAS nominee's extended family
because OGE has not extended this definition of earned income to
circumstances when income from investment activities will not inure to
the benefit of the PAS nominee's immediate family. However, this
definition of earned income arguably applies when a trust benefits both
the PAS nominee's immediate family and other individuals because the PAS
nominee is not managing solely the money of the PAS nominee's immediate
family. In that case, the PAS nominee's services would be material to
the production of income for both the PAS nominee's immediate family and
other individuals.

See 9.2.0 below for similar handling of other types of entities formed
to manage the investments of a PAS nominee's immediate and extended
family.

Note that the earned income ban under Executive Order 12674, § 102
(1989), as amended by Executive Order 12731 (1990), is applicable only
to full-time PAS positions. Therefore, this sample language is not for
PAS appointees who will be special government employees.

[Sample Language]{.underline}:

I will retain my position as a trustee of the Borlinaro Grandchildren's
Trust. I will not receive any fees for the services that I provide as a
trustee during my appointment to the position of Under Secretary. As one
of the trustees of this trust, I serve on both the investment committee
and the distribution committee of the trust. Upon confirmation, I will
resign from the investment committee of the trust, but I will continue
to serve on the distribution committee. I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of the Borlinaro
Grandchildren's Trust, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption,
pursuant to 18 U.S.C. § 208(b)(2).

**8.3.2 -- alternate: retention of a position as trustee of a trust for
the benefit of members of both the PAS nominee's immediate family and
the PAS nominee's extended family**

[Comment]{.underline}:

See the comment to 8.3.1 above. In addition, note that the ethics
agreement may not contain this language unless the PAS nominee is
willing to commit to taking no action regarding the trust's investments
for the duration of the PAS nominee's appointment. Such a commitment may
not be feasible if it is inconsistent with the PAS nominee's fiduciary
responsibilities to the trust. For example, the Bennett Stable
Investment Bond Fund may perform poorly during the PAS nominee's
appointment, and the PAS nominee may have a responsibility as trustee to
reinvest the trust's money. The language of this sample will prevent the
PAS nominee from carrying out that responsibility. Therefore, this
language usually is only useful if the PAS nominee is not the sole
trustee of the trust.

Note that the earned income ban under Executive Order 12674, § 102
(1989), as amended by Executive Order 12731 (1990), is applicable only
to full-time PAS positions. Therefore, this sample language is not for
PAS appointees who will be special government employees.

[Sample Language]{.underline}:

I will retain my position as a trustee of the Borlinaro Grandchildren's
Trust. I will not receive any fees for the services that I provide as a
trustee during my appointment to the position of Under Secretary. The
trust's only assets are shares of the Bitler Bank Money Market Fund and
the Bennett Stable Investment Bond Fund. For the duration of my
appointment to the position of Under Secretary, I will not make
investment decisions for the trust, although I may make distributions to
its beneficiaries. I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on the
financial interests of the Borlinaro Grandchildren's Trust, unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**8.4.0 -- retention of a position as an "active participant" in an
organization**

[Comment]{.underline}:

This sample contains a recusal under 5 C.F.R. § 2635.502(b)(1)(v)
because the PAS nominee in this hypothetical situation will continue to
serve in an unpaid capacity as an "active participant" in an
organization. As demonstrated in 8.4.1 below, this recusal would not be
necessary if the PAS nominee were terminating the role of "active
participant."

Note that an ethics agreement may contain the language of this sample
only when the PAS nominee does not have an imputed financial interest in
the organization under 18 U.S.C. § 208. If, for example, the PAS nominee
is a "director" or a "trustee," the ethics agreement will need to
contain the language of 8.1.0 above.

[Sample Language]{.underline}:

I will retain my unpaid position as Chair of the Admissions Committee of
the Bennettsville Bar Association. For as long as I retain this
position, I will not participate personally and substantially in any
particular matter involving specific parties in which the Bennettsville
Bar Association is a party or represents a party, unless I am first
authorized to participate, pursuant to 5 C.F.R. § 2635.502(d).

**8.4.1 -- resignation from a position as an "active participant" in an
organization**

[Comment]{.underline}:

As in 8.4.0 above, the PAS nominee is serving merely in an unpaid
capacity as an "active participant" in an outside organization. In this
variation of that hypothetical situation, the PAS nominee is terminating
that service. After terminating that service, the PAS nominee will have
no continuing recusal obligation. Unlike the recusal obligation under
5 C.F.R. § 2635.502(b)(1)(iv) related to former employers, the recusal
obligation under 5 C.F.R. § 2635.502(b)(1)(v) for organizations in which
an individual is an "active participant" does not continue for a period
of one year after termination. Therefore, the language of this sample
does not include a recusal.

As with 8.4.0, note that an ethics agreement may contain the language of
this sample only when the PAS nominee does not have an imputed financial
interest in the organization under 18 U.S.C. § 208. If, for example, the
PAS nominee is a "director" or a "trustee," the ethics agreement will
need to contain the language of 8.1.0 above.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as Chair of the
Admissions Committee of the Bennettsville Bar Association.

**8.5.0 -- leave of absence from an institution of higher learning**

[Comment]{.underline}:

This sample addresses the exemption related to leaves of absence at
5 C.F.R. § 2640.203(b). The reference to the specific exemption in this
sample serves the purpose of defining the limits on the PAS nominee's
participation in matters affecting the employing institution.

[Sample Language]{.underline}:

Upon confirmation, I will take an unpaid leave of absence from my
position as Associate Professor at Borlinaro University. I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of
Borlinaro University, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1), or qualify for either the exemption at 5
C.F.R. § 2640.203(b) or another regulatory exemption, pursuant to
18 U.S.C. § 208(b)(2).

**8.5.1 -- leave of absence from an institution of higher learning that,
as a standard term of employment, allows the PAS nominee's child to
attend at a reduced tuition rate**

[Comment]{.underline}:

In the hypothetical situation addressed in this sample, a PAS nominee
who will be on a leave of absence will continue to receive a specific
continuing benefit of employment from the PAS nominee's university. A
key factual circumstance in this hypothetical is that the university's
policy is to continue providing this benefit to all similarly situated
staff members during leaves of absence, whether or not those leaves of
absence are for the purpose of serving in Federal positions. In this
hypothetical situation, the university would continue to provide this
benefit even if the PAS nominee were taking the leave of absence to
accept a position in the private sector or to conduct independent
research.

[Sample Language]{.underline}:

Upon confirmation, I will take an unpaid leave of absence from my
position as Associate Professor from Borlinaro University. I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of
Borlinaro University, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1), or qualify for either the exemption at 5
C.F.R. § 2640.203(b) or another regulatory exemption, pursuant to
18 U.S.C. § 208(b)(2).

Under the university's Employee Tuition Assistance Plan, my child will
continue to attend the university at a reduced tuition rate. Therefore,
I also will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
ability or willingness of Borlinaro University to provide this employee
benefit to me, unless I first obtain a written waiver, pursuant to 18
U.S.C. § 208(b)(1).

**8.6.0 -- changing the terms of a position: converting a paid outside
position to a non-paid outside position when a PAS nominee is appointed
to a full-time Federal position**

[Comment]{.underline}:

This sample addresses the earned income ban under Executive Order 12674,
§ 102 (1989), as amended by Executive Order 12731 (1990), which is
applicable to full-time PAS positions. When a PAS nominee is allowed to
retain a paid position, the PAS nominee must arrange to convert the
position to an unpaid position upon confirmation. As this sample
demonstrates, the steps that a PAS nominee must take to achieve such a
conversion are fact-specific. A reviewer should ask the PAS nominee to
confirm in advance that the outside organization will take all steps
necessary to enable the PAS nominee to comply with the ethics agreement.
Note that this sample language is not for PAS appointees who will be
special government employees.

For PAS nominees who work for institutions of higher learning, such as
the hypothetical PAS nominee in this sample, the exemption at 5 C.F.R. §
2640.203(b) may apply. In that event, the agency can highlight the
availability of the exemption by referring to it in the language in the
18 U.S.C. § 208 recusal. Such language appears in the sample below. For
PAS nominees who work for other types of institutions, however, the
ethics agreement should omit the reference to 5 C.F.R. § 2640.203(b).

[Sample Language]{.underline}:

If confirmed, I will resign from my position as Adjunct Professor with
Borlinaro University on December 31, 2007. I am currently teaching one
course in the 2007 fall semester at Borlinaro University, and I will
continue teaching this course whether I am confirmed before or after the
end of the semester. Borlinaro University is currently scheduled to pay
me for teaching this course in two equal installments, in mid-October
and in mid-December. If I begin my government service prior to receiving
one or both of these payments, I will accept compensation only for
services rendered before I assume the duties of the position of
Assistant Secretary. If I begin my government service after having
received one or both of these payments, I will promptly repay any
portion that covers the period after I have assumed the duties of the
position of Assistant Secretary. Until I resign from my position as
Adjunct Professor, I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on the
financial interests of the Borlinaro University, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for either
the exemption at 5 C.F.R. § 2640.203(b) or another regulatory exemption,
pursuant to 18 U.S.C. § 208(b)(2). Following my resignation, I will not
participate personally and substantially in any particular matter
involving specific parties in which Borlinaro University is a party or
represents a party for a period of one year after my resignation, unless
I am first authorized to participate, pursuant to 5 C.F.R. §
2635.502(d).

**8.6.1 -- changing the terms of a position: retention of a paid
executor position**

[Comment]{.underline}:

See the comment to 8.6.0 above.

[Sample Language]{.underline}:

Following my confirmation, I will continue to serve as executor of the
estate of Jonathan Doe. I will not at any time receive compensation for
services that I perform during my government appointment. I am currently
owed executor fees of approximately \$15,000 for services that I have
provided to date, and this amount may increase prior to my confirmation.
I will accept payment of executor fees earned prior to my confirmation,
but the amount of any such fees will be fixed before I assume the duties
of the position of Assistant Secretary. Until I have received this
payment, I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
ability or willingness of the estate of Jonathan Doe to provide this
payment, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1).

**CHAPTER 9: FAMILY FARMS AND FAMILY BUSINESSES**

**9.0.0 -- family farms and family businesses: general discussion**

Among other issues, family farms and family businesses often implicate
the ban on outside earned income that is established in Executive Order
12674, § 102 (1989), as amended by Executive Order 12731 (1990). A PAS
nominee for a full-time Federal position will not be able to continue
receiving a salary from an outside entity. For the purposes of this ban,
however, earned income is not limited to salaries. A potential issue
involving earned income may arise when a PAS nominee provides services
that are a material factor in the production of income for a family farm
or family business. If the PAS nominee has a financial interest in the
family farm or family business, any services that generate income for
that entity arguably generate income for the PAS nominee. This
interpretation of "earned income" is reflected in OGE's regulations
addressing an analogous limitation on income. [See]{.underline} 5 C.F.R.
§ 2636.303(b)(4) (discussing services material to the production of
income).

Note that the earned income ban under Executive Order 12674, § 102
(1989), as amended by Executive Order 12731 (1990), is applicable only
to full-time PAS positions. Therefore, to the extent that the samples in
this section address the earned income ban, they are not intended for
PAS appointees who will be special government employees.

**9.1.0 -- the PAS nominee is retaining a passive ownership interest in
a family farm or family business**

[Comment]{.underline}:

See the comment to 9.0.0 above. This sample addresses the circumstances
of a hypothetical PAS nominee who does not hold a position in the family
farm or family business. For language addressing situations in which PAS
nominees hold positions in family farms or businesses, see 9.1.1 below.

[Sample Language]{.underline}:

My siblings and I own Bitler Farms, Inc., a closely-held corporation run
solely by my brother. I do not hold a position with this entity. I will
continue to have a financial interest in this entity, but I will not
manage it or provide any other services to it. Instead, I will receive
only passive investment income from it. I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Bitler Farms, Inc.,
unless I first obtain a written waiver pursuant to 18 U.S.C. §
208(b)(1).

**9.1.1-- the PAS nominee is resigning from a position with a family
farm or family business but is retaining a passive financial interest**

[Comment]{.underline}:

See the comment to 9.0.0 above.

[Sample Language]{.underline}:

My siblings and I own Bitler Farms, Inc. Upon confirmation, I will
resign from my position as Secretary of Bitler Farms, Inc. I will
continue to have a financial interest in this entity, but I will not
manage it or provide any other services to it. Instead, I will receive
only passive investment income from it. I will not participate
personally and substantially in any particular matter that has a direct
and predictable effect on the financial interests of Bitler Farms, Inc.,
unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1).

**9.1.2-- the PAS nominee is resigning from a position with a family
farm or family business and is divesting a financial interest in the
entity**

[Comment]{.underline}:

See the comment to 9.0.0 above. In this sample, the hypothetical PAS
nominee has a position with a private family business that has no assets
and no intrinsic value. Upon her resignation, the PAS nominee will
transfer at no cost her financial interest in the entity to her
siblings, who are the other owners.

If, instead, a PAS nominee will sell a financial interest to another
person, the ethics agreement should substitute the term "sell" for the
term "transfer." If the entity is not publicly traded, the reviewer may
need to evaluate the payment under 5 C.F.R. § 2635.503 or 18 U.S.C.
§ 209, depending on the terms of the sale. For a sample involving a
hypothetical large, privately traded corporation, see 3.5.0 above.

[Sample Language]{.underline}:

My siblings and I own Bitler Farms, Inc. Upon confirmation, I will
resign from my position as Secretary of Bitler Farms, Inc. Upon
resignation, I will transfer my financial interest in this entity to my
siblings. I will not participate personally and substantially in any
particular matter involving specific parties in which Bitler Farms,
Inc., is a party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**9.2.0 -- entity formed to manage the assets of members of the PAS
nominee's immediate and extended family**

[Comment]{.underline}:

As discussed in 9.0.0 above, issues may arise under the earned income
ban if a full-time PAS appointee provides services to an entity in which
the PAS nominee has a financial interest. [See]{.underline} Executive
Order 12674, § 102 (1989), as amended by Executive Order 12731 (1990).
The relevant inquiry often focuses on whether the PAS nominee's services
are material to the production of the entity's income. With regard to an
entity that is an investment vehicle, for example, investment decisions
are material to the production of the entity's income. For this reason,
an ethics agreement may need to provide that a PAS nominee will resign
from an outside position with such an entity.

9.2.1 below does not address the earned income ban -- and does not
require the PAS nominee to resign -- because, in that hypothetical
situation, only members of the PAS nominee's immediate family have
financial interests in the entity. OGE has not extended the definition
of "earned income" to circumstances in which the PAS nominee is managing
only the money of the PAS nominee's own immediate family. However,
additional language is needed if other individuals, such as members of
the PAS nominee's extended family or business associates, have financial
interests in an entity that manages the PAS nominee's investments. See
the comments to 8.3.1 and 8.3.2 above for similar handling of a trust
formed to manage the investments of a PAS nominee's immediate and
extended family.

Note that the earned income ban under Executive Order 12674, § 102
(1989), as amended by Executive Order 12731 (1990), is applicable only
to full-time PAS positions. Therefore, the following sample language is
not for PAS appointees who will be special government employees.

[Sample Language]{.underline}:

Upon confirmation, I will resign from my position as general partner of
The Molinaro Family Partnership, LP. I will retain my financial interest
in The Molinaro Family Partnership, LP, but I will not manage this
entity or provide any other services to it. Instead, I will receive only
passive investment income from it. I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of The Molinaro Family Partnership,
LP, unless I first obtain a written waiver, pursuant to 18 U.S.C.
§ 208(b)(1).

**9.2.1 -- entity formed to manage the assets of the PAS nominee's
immediate family**

[Comment]{.underline}:

The language of this sample is useful whenever the PAS nominee has a
position with an entity (e.g., S-corporation, limited liability
corporation, partnership, limited liability partnership, etc.) formed to
manage only the assets of the PAS nominee's *immediate* family.
Immediate family members include the PAS nominee, the PAS nominee's
spouse and the PAS nominee's minor or dependent children. If any other
individuals (e.g., the PAS nominee's siblings, nieces, nephews, parents,
business associates, etc.) have a financial interest in the entity, the
language of 9.2.0 should be used instead.

[Sample Language]{.underline}:

I will retain my position as general partner of The Molinaro Family
Partnership, LP. I will not participate personally and substantially in
any particular matter that has a direct and predictable effect on the
financial interests of The Molinaro Family Partnership, LP, unless I
first obtain a written waiver pursuant to 18 U.S.C. § 208(b)(1).

**CHAPTER 10: SPOUSES**

**10.0.0 -- spouse: general discussion**

Before drafting an ethics agreement, the reviewer ensures that the PAS
nominee's financial disclosure report fully discloses all reportable
income and assets of the PAS nominee's spouse. [See]{.underline}
DAEOgram DO-08-002 (Jan. 25, 2008). For example, the reviewer confirms
that the PAS nominee has disclosed all forms of equity interests that a
spouse may have in an employer (e.g., restricted stock, stock options,
pensions, profit-sharing plans, etc.).

**10.1.0 -- the employer of the PAS nominee's spouse pays the spouse a
fixed salary: 2635.502 recusal only**

[Comment]{.underline}:

In this sample, the hypothetical PAS nominee's spouse has neither an
equity interest in, nor a profit-sharing arrangement with, the spouse's
employer. Although the spouse receives an annual bonus, the bonus is
based on the spouse's performance and not directly on the employer's
profits. In this hypothetical situation, there is little likelihood that
the hypothetical PAS nominee will be involved in any particular matter
affecting the spouse's employer. In addition, there is little likelihood
that a particular matter would affect this hypothetical spouse's
compensation or employment because the spouse is a clerical employee of
a major corporation. Before using the language of this sample, reviewers
should also consider 10.1.1 and 10.1.2.

[Sample Language]{.underline}:

My spouse is an employee of International Hotel Chains, Inc. I will not
participate personally and substantially in any particular matter
involving specific parties in which International Hotel Chains, Inc., is
a party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d).

**10.1.1 -- the employer of the PAS nominee's spouse pays the spouse a
fixed salary: 208 recusal and 2635.502 recusal**

[Comment]{.underline}:

In this sample, agency officials might participate in particular matters
that will have a significant financial impact on the employer of the PAS
nominee's spouse. In this hypothetical situation, the U.S. Organ
Donation Standards Agency has authority to take regulatory action that
would restrict or terminate the import activities of Trans-Pacific Organ
Transplants, Inc., within the United States' borders. The restriction or
termination of these activities would have a direct and predictable
effect on the employment of the PAS nominee's spouse. Therefore, the
ethics agreement contains a recusal under 18 U.S.C. § 208.

The 18 U.S.C. § 208 recusal in this sample is narrower than the full
recusal under 18 U.S.C. § 208. Rather than focusing on the "financial
interests of Trans-Pacific Organ Transplants, Inc.," this language
focuses on the "spouse's compensation or employment." Although the PAS
nominee's agency, the U.S. Organ Donation Standards Agency, may be
involved in particular matters that will affect the financial interests
of the spouse's employer, the spouse has neither an equity interest in,
nor a profit-sharing arrangement with, the employer. In addition,
although this PAS nominee's spouse receives an annual bonus, the bonus
is based on the spouse's performance and not directly on the employer's
profits.

This sample includes both a recusal under 18 U.S.C. § 208 and a recusal
under 5 C.F.R. § 2635.502. The reason for including both recusals is
that the recusal under 18 U.S.C. § 208 in this sample is a *limited*
recusal. Rather than focusing on the financial interests of the spouse's
employer, it focuses only on the spouse's compensation and employment.
However, the spouse's compensation and employment might not be affected
by a particular matter involving specific parties in which the spouse's
employer is a party. As a result, the limited recusal under 18 U.S.C. §
208 would not prevent the PAS nominee from participating in such a party
matter. For this reason, the additional recusal under 5 C.F.R. §
2635.502 addresses the Government's concerns about the appearance of the
PAS nominee participating in such a party matter.

Although this sample refers to the potential for a waiver under 18
U.S.C. § 208(b)(1) or an authorization under 5 C.F.R. § 2635.502(d), the
agency may need to counsel the PAS nominees in advance that a waiver or
an authorization likely would be inappropriate in connection with a
particular matter that will affect a spouse's compensation or continued
employment. In such situations, ethics agreements sometimes omit the
language addressing waiver and authorization.

Before using the language of this sample, reviewers should also consider
10.1.0 and 10.1.2.

[Sample Language]{.underline}:

My spouse is employed as the Human Resources Director for Trans-Pacific
Organ Transplants, Inc., a position for which she receives a fixed
annual salary. I will not participate personally and substantially in
any particular matter that has a direct and predictable effect on my
spouse's compensation or employment with Trans-Pacific Organ
Transplants, Inc. I also will not participate personally and
substantially in any particular matters involving specific parties in
which Trans-Pacific Organ Transplants, Inc. is a party or represents a
party, unless I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d).

**10.1.2 -- the employer of the PAS nominee's spouse pays the spouse a
fixed salary, but the ethics agreement addresses appearances regarding
the PAS nominee's impartiality: 208 recusal, 2635.502 recusal and
additional commitment regarding communications**

[Comment]{.underline}:

In this sample, the hypothetical PAS nominee's spouse has neither an
equity interest in, nor a profit-sharing arrangement with, the employer.
The PAS nominee's spouse receives only a salary and a performance-based
bonus. Nevertheless, the agency is concerned about the appearance of the
PAS nominee's participation in certain matters that involve the PAS
nominee's spouse in a professional capacity. In this hypothetical
situation, the PAS nominee's agency occasionally receives communications
from the spouse's employer. For this reason, the ethics agreement has
additional language regarding communications between the PAS nominee's
agency and the PAS nominee's spouse. Before using the language of this
sample, reviewers should also consider 10.1.0 and 10.1.1.

[Sample Language]{.underline}:

My spouse is the President of the International Organ Donation
Association (IODA). I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on my
spouse's compensation or employment with IODA, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1). I also will not
participate personally and substantially in any particular matter
involving specific parties in which IODA is a party or represents a
party, unless I am first authorized to participate, pursuant to 5 C.F.R.
§ 2635.502(d). In addition, my spouse has agreed not to communicate with
the U.S. Organ Donation Standards Agency on behalf of IODA during my
appointment to the position of Deputy Director.

**10.2.0 -- the PAS nominee's spouse has an equity interest in the
employer or has a profit-sharing arrangement with the employer**

[Comment]{.underline}:

This sample contains a full recusal under 18 U.S.C. § 208 because the
PAS nominee has an imputed financial interest in the spouse's employer
as a result of the spouse's equity or profit-based financial interests
in the employer.

[Sample Language]{.underline}:

I will not participate personally and substantially in any particular
matter that has a direct and predictable effect on the financial
interests of Molinaro Power Saws, LLC, unless I first obtain a written
waiver, pursuant to 18 U.S.C. § 208(b)(1).

**10.3.0 -- the PAS nominee's spouse is an attorney whose compensation
is not based on the profitability of the spouse's law firm, and the
spouse does not have an equity interest in the law firm**

[Comment]{.underline}:

As with 10.1.2 above, the recusal in this sample focuses on the spouse's
"compensation or employment," as opposed to the financial interests of
the employer. In this hypothetical situation, the PAS nominee's spouse
is an attorney who has neither an equity interest in, nor a
profit-sharing arrangement with, the employing law firm. Although the
PAS nominee's spouse receives an annual bonus, the bonus is based on the
spouse's performance and not directly on the employer's profits. As in
the hypothetical situation addressed in 10.1.2, the agency is concerned
about the appearance of the PAS nominee's participation in certain
matters that involve the PAS nominee's spouse in a professional
capacity. Therefore, this sample includes additional language in which
the PAS nominee explains that the spouse has agreed not to communicate
with the agency on behalf of the firm or any client.

[Sample Language]{.underline}:

My spouse is employed as an associate by the law firm of Bortot,
Molinaro, Bennett and Bitler, LP, from which he receives a fixed salary
and an annual bonus. I will not participate personally and substantially
in any particular matter that has a direct and predictable effect on my
spouse's compensation or employment with the firm, unless I first obtain
a written waiver, pursuant to 18 U.S.C. § 208(b)(1). I also will not
participate personally and substantially in any particular matter
involving specific parties in which the firm or any client of my spouse
is a party or represents a party, unless I am first authorized to
participate, pursuant to 5 C.F.R. § 2635.502(d). In addition, for the
duration of my appointment to the position of Deputy Director, my spouse
has agreed not to communicate with the Interstate Waterways Adjudication
Agency on behalf of the firm or any client.

**10.3.1 -- the PAS nominee's spouse is an equity partner with a law
firm**

[Comment]{.underline}:

As a variation on 10.3.0 above, this sample addresses the circumstance
in which the spouse has a financial interest in the employer. In this
sample, the recusal under 18 U.S.C. § 208 is broader than the two
recusals related to the employer in 10.3.0 above.

[Sample Language]{.underline}:

My spouse is currently a partner with the law firm of Bortot, Molinaro,
Bennett and Bitler, LP. I will not participate personally and
substantially in any particular matter that has a direct and predictable
effect on the financial interests of the firm, unless I first obtain a
written waiver, pursuant to 18 U.S.C. § 208(b)(1). I also will not
participate personally and substantially in any particular matter
involving specific parties in which a client of my spouse is a party or
represents a party, unless I have been authorized pursuant to 5 C.F.R. §
2635.502(d). In addition, for the duration of my appointment to the
position of Deputy Director, my spouse has agreed not to communicate
with the Interstate Waterways Adjudication Agency on behalf of the firm
or any client.

**10.4.0 -- the PAS nominee's spouse is a salaried employee of a Federal
contractor**

[Comment]{.underline}:

In this sample, the PAS nominee's spouse has no financial interest in
the employer beyond a salary and a performance-based bonus.
Nevertheless, the agency is concerned about the appearance of the PAS
nominee's participation in certain matters that involve the PAS
nominee's spouse in a professional capacity.

[Sample Language]{.underline}:

My spouse is employed by Bennett & Bitler, LLC, from which she receives
a fixed salary and an annual bonus. I will not participate personally
and substantially in any particular matter that has a direct and
predictable effect on my spouse's compensation or employment with
Bennett & Bitler, LLC, unless I first obtain a written waiver, pursuant
to 18 U.S.C. § 208(b)(1). I also will not participate personally and
substantially in any particular matter involving specific parties in
which Bennett & Bitler, LLC, is a party or represents a party, unless I
am first authorized to participate, pursuant to 5 C.F.R. § 2635.502(d).
For the duration of my appointment as Assistant Administrator, my spouse
has agreed not to communicate with the U.S. Spatial Relationships
Research Administration on behalf of Bennett & Bitler, LLC.

**CHAPTER 11: SPECIAL GOVERNMENT EMPLOYEES**

**11.0.0 -- special government employees: general discussion**

Agencies should counsel special government employees thoroughly about
the requirements of applicable laws and regulations. These samples are
not intended to serve as a substitute for thorough counseling, but they
provide useful language for the ethics agreements of special government
employees. Note that the language of 11.1.1 regarding a special
government employee who is an attorney also may be useful for lobbyists
and consultants.

**11.1.0 -- a special government employee's outside employment**

[Comment]{.underline}:

A special government employee has an imputed financial interest in an
employer under 18 U.S.C. § 208. This language addresses the availability
of waivers only under 18 U.S.C. § 208(b)(1) because the hypothetical PAS
nominee will not be a member of a Federal Advisory Committee Act (FACA)
committee. (Note that a special government employee who is a FACA
committee member could also seek a waiver under 18 U.S.C. § 208(b)(3)).
In addition, this language addresses the availability of regulatory
exemptions under 18 U.S.C. § 208(b)(2). In appropriate circumstances,
special government employees who are employees of institutions of higher
learning may be able to rely on 5 C.F.R. § 2640.203(b).

[Sample Language]{.underline}:

I am an employee of Bitler-Bennett Overland Transport, Inc. I will not
participate personally and substantially in any particular matter that
has a direct and predictable effect on the financial interests of
Bitler-Bennett Overland Transport, Inc., unless I first obtain a written
waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a regulatory
exemption, pursuant to 18 U.S.C. § 208(b)(2).

**11.1.1 -- a special government employee will continue to practice as
an attorney**

[Comment]{.underline}:

A special government employee has an imputed financial interest in an
employer under 18 U.S.C. § 208. Therefore, this sample includes a full
recusal under 18 U.S.C. § 208 because the hypothetical PAS nominee will
retain his position with a law firm. This recusal extends to all
financial interests of the firm, including the firm's financial
interests in cases involving current clients of the firm who are not
clients of the PAS nominee. However, this sample also includes a recusal
under 5 C.F.R. § 2635.502 for *former* clients of the PAS nominee.

The language of this sample addresses the availability of waivers under
18 U.S.C. § 208(b)(1) because the hypothetical PAS nominee will not be a
member of a Federal Advisory Committee Act (FACA) committee. (Note that
a special government employee who is a FACA committee member could also
seek a waiver under 18 U.S.C. § 208(b)(3)). This language does not
address the availability of regulatory exemptions under 18 U.S.C. §
208(b)(2) because the hypothetical PAS nominee is not an employee of an
institution of higher learning and is not able to rely on 5 C.F.R.
§ 2640.203(b).

[Sample Language]{.underline}:

I am an attorney with the law firm of Bitler, Bennett, Molinaro &
Bortot, LLP. I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
financial interests of the firm, unless I first obtain a written waiver,
pursuant to 18 U.S.C. § 208(b)(1). In addition, I will not participate
personally and substantially in any particular matter involving specific
parties in which a former client of mine is a party or represents a
party, for a period of one year after I last provided service to that
client, unless I am first authorized to participate, pursuant to
5 C.F.R. § 2635.502(d).

**11.2.0 -- 18 U.S.C. § 203 and 18 U.S.C. § 205: seeking advice in the
event that a special government employee unexpectedly serves more than
60 days in a 365-day period**

[Comment]{.underline}:

Language in an ethics agreement addressing 18 U.S.C. § 203 and 18 U.S.C.
§ 205 is generally disfavored. Such language rarely contains a specific
commitment by the PAS nominee, and it may not capture all specific
requirements of the applicable statutory provisions.

If an agency elects to include language related to these statutory
provisions in an ethics agreement, the agency may use the language of
the following sample. This sample contains a specific commitment by a
hypothetical PAS nominee to keep track of her days of service and to
seek advice regarding the additional legal requirements that will apply
if her service exceeds 60 days in any period of 365 consecutive days.

[Sample Language]{.underline}:

I have been advised that I will likely serve on the board for no more
than 60 days in any period of 365 consecutive days. Accordingly, I
understand that I may not, under 18 U.S.C. §§ 203(c)(1), 205(c)(1),
provide any representational services or act as agent or attorney for
another in any particular matter involving specific parties in which I
have participated personally and substantially as a government official.
I also understand that I may not receive a share of any payment made for
such representational services performed by another. I understand that
additional requirements of 18 U.S.C. §§ 203(c)(1), 205(c)(1) will apply
to me if I serve for more than 60 days in any period of 365 consecutive
days. In that event, I will comply with all applicable requirements, and
I will consult your office if I have any questions about those
requirements.

**CHAPTER 12: MISCELLANEOUS PROVISIONS**

**12.0.0 -- miscellaneous provisions: general discussion**

This guide is not intended to provide an exhaustive list of provisions
for ethics agreements of PAS nominees. The samples in this miscellaneous
section are provided only as additional illustrations of useful
language.

**12.1.0 -- correcting a PAS nominee's submission to the Senate:
correction of the financial disclosure report and submission of a
supplemental ethics agreement**

[Comment]{.underline}:

A PAS nominee's financial disclosure report and ethics agreement should
be complete at the time the PAS nominee submits it to the Senate. In the
rare case in which a PAS nominee has omitted information inadvertently,
the agency needs to coordinate with OGE to supplement the original
submission. In addition, the agency's DAEO needs to submit a new opinion
letter certifying that there is no unresolved conflict of interest under
applicable laws and regulations.

[Sample Language]{.underline}:

I am writing to amend the financial disclosure report that I signed on
August 1, 2007, and to supplement the ethics agreement that I signed on
August 15, 2007.

Enclosed is a new page that I have identified as Page 23a. Please add
this page to my financial disclosure report after Page 23. This new page
discloses two financial interests that I inadvertently omitted from
Schedule A of my financial disclosure report.

If I am confirmed for the position of Under Secretary, I will divest my
interests in Bortot Wilderness, Inc., and Molinaro Power Saws, LLC,
within 90 days of my confirmation. With regard to each of these
entities, I will not participate personally and substantially in any
particular matter that has a direct and predictable effect on the
financial interests of the entity until I have divested it, unless I
first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or
qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2).

**12.2.0 -- arrangement to write a book in the future**

[Comment]{.underline}:

This sample provides language for a situation in which a PAS nominee has
an arrangement with a publisher.

[Sample Language]{.underline}:

Before learning of my consideration for a possible nomination to a
position at the U.S. Banking Administration, I received an advance from
Molinaro Publishers, Inc., for a textbook on economics that I have
agreed to write. I understand that I may not work on this textbook
during my appointment to the position of Deputy Administrator if the
Senate confirms my nomination.

**APPENDIX**

**A -- comparison between the 2001 model agreement and the 2008 sample
agreement**

Section 1.0.0 above contains the 2008 sample agreement. The 2008 sample
agreement is an updated version of the model ethics agreement that OGE
previously issued as an attachment to DAEOgram DO-01-013 (Mar. 28,
2001). This sample modifies that earlier model ethics agreement by
incorporating the guidance contained in this guide. The reasons for
these changes are addressed throughout this guide, and the following
discussion is provided solely for the convenience of readers who are
interested in tracking the major changes.

In the first sentence of the 2008 sample agreement, the phrase "will
take" replaces the phrase "intend to take" in the 2001 model ethics
agreement for the reason addressed in 1.1.0 above.

In the sentence that was the third sentence of the 2001 model agreement,
the phrase "any spouse or minor child of mine; any general partner of a
partnership in which I am a limited or general partner" replaces "my
spouse, minor children, or any general partner." This change emphasizes
that, absent an exemption such as 5 C.F.R. § 2640.202(f) ("Exemption for
certain interests of general partners"), the interests of a general
partner will be imputed to the PAS nominee, regardless of whether the
PAS nominee is a general partner or a limited partner. The new language
also addresses a concern about the previous language that was expressed
by a few PAS nominees who did not have spouses or minor children.

In the sentence that was the fourth sentence of the 2001 model
agreement, the phrase "In order to avoid potential conflicts of interest
under section 208" has been omitted to minimize the use of unnecessary
explanatory language.

After that fourth sentence, the following sentences have been omitted:
"Furthermore, I agree, as custodian for my minor children, that I will
divest their holdings in the same entities. My spouse also agrees to
divest her holdings in the same entities." Divestitures of the assets of
spouses and children are addressed in 3.2.2 above.

The fifth sentence now contains references to the applicable statutory
sections for the sake of clarity. The phrase "direct and predictable
effect on the financial interests of any of these entities" replaces the
phrase "direct and predictable effect on these entities" to be
consistent with 2.0.0 above. In addition, the phrase "has a direct and
predictable effect" in the fifth sentence replaces the phrase "would
have a direct and predictable effect" for the sake of consistency with
the second sentence. A discussion of the phrase "has a direct and
predictable effect" is provided in 2.0.0 above. Although both phrases
are equally acceptable, inconsistent use of language can lead to
confusion. In this case, the reader might mistakenly conclude that
"would have" and "has" are intended to communicate different legal
standards.

The paragraph that was the fourth paragraph in the 2001 model agreement
has been omitted. That paragraph, which addressed financial interests
that the PAS nominee will retain, has been omitted for the reasons
addressed in 2.2.0, 2.2.1, 2.2.2 and 2.2.3 above.

In the sentence that was the tenth sentence of the 2001 model agreement,
the name "Springfield Corporation" has been changed to "Springfield
Shipping, Inc." to highlight the importance of precision regarding an
entity's name.

In the sentence that was the eleventh sentence of the 2001 model
agreement, the phrase "unless I am first authorized to participate,
pursuant to 5 C.F.R. § 2635.502(d)" replaces the phrase "unless I am
authorized to participate" for the reasons addressed in 5.0.0.

In the sentence that was the twelfth sentence of the 2001 model
agreement, the "ability or willingness" recusal related to an employer's
defined benefit pension plan has been omitted. Such recusals are not
necessary in many cases for the reasons addressed in 2.4.1 above.

In the sentence that was the fourteenth sentence of the 2001 model
agreement, the phrase "Before I assume the duties of the position of
Under Secretary" replaces the phrase "prior to my appointment" to tie
the timing of the payment more closely to the applicability of 5 C.F.R.
§ 2635.503 and the inapplicability of 18 U.S.C. § 209. [See]{.underline}
OGE DAEOgram DO-02-014 (Jun. 3, 2002). Also, this sentence now omits the
language, "in consideration of my contributions as the founder of the
company." In light of the fact that the payment will occur before the
PAS nominee's Federal service commences, the reason for the payment does
not need to be addressed in the ethics agreement. Similarly, the phrase
"in consideration of my contributions as the founder of the company" has
been omitted because it is unnecessary explanatory information for a
payment that will occur before the PAS nominee's Federal service
commences.

In the sentence that was the fifteenth sentence of the 2001 model
agreement, the phrase "I understand that this constitutes an
'extraordinary payment' under 5 C.F.R. § 2635.503" has been omitted
because it is unnecessary. In this sentence, the phrase "unless I first
receive" replaces "unless I receive" for the sake of precision as to the
timing and for the sake of consistency with the language of other
recusals under 18 U.S.C. § 208 and 5 C.F.R. § 2635.502.

In the sentence that was the sixteenth sentence of the 2001 model
agreement, the phrase "following for-profit or non-profit organizations"
has been omitted because the status of the organizations as for-profit
or non-profit is unnecessary background information.

In the sentence addressing "Nonprofit, Inc.," the reference to the
regulatory exemptions in "section 208(b)(2)" has been expanded to
"18 U.S.C. § 208(b)(2)" for the sake of clarity. Note that, in this
hypothetical situation, the organization is a qualifying tax-exempt
organization and the PAS nominee might qualify for the exemption at
5 C.F.R. § 2640.202(e), as in 8.1.1 above.

The 2008 sample ethics agreement omits the paragraph addressing the
"Jones Family Farm, Inc.," that appeared in the 2001 model ethics
agreement. That paragraph is omitted because a PAS nominee's retention
of a position as the Secretary of such a corporation often will be
impermissible under the earned income ban that is established in
Executive Order 12674, § 102 (1989), as amended by Executive Order 12731
(1990). Discussions of the application of the earned income ban to such
situations appears in 9.0.0, 9.2.0 and 9.2.1 above.

The paragraph addressing Collins & Green, PC, has been modified to be
consistent with Chapter 10 of this guide. At the end of the agreement,
the last sentence continues to reflect a voluntary commitment by the
spouse of this hypothetical PAS nominee in order to resolve a potential
appearance issue. However, the language has been modified to clarify the
scope of the spouse's voluntary commitment.