This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

16985 

Vol. 72, No. 66 

Friday, April 6, 2007 

OFFICE OF GOVERNMENT ETHICS 

5 CFR Parts 2634, 2635, and 2636 

RINs 3209–AA00, 3209–AA04 and 3209– 

AA13 

Removal of Obsolete Regulations 

Concerning the Inoperative Provisions 

Regarding Charitable Payments In Lieu 

of Honoraria and Conforming 

Technical Amendments 

AGENCY: Office of Government Ethics 

(OGE). 

ACTION: Final rule; technical 

amendments and removals. 

SUMMARY: The Office of Government 

Ethics is removing obsolete regulatory 

provisions in its executive branch 

outside earned income restrictions and 

ethical conduct standards regulations 

that were designed to implement the 

statutory provision regarding charitable 

payments made in lieu of honoraria, 

which is no longer legally operative. In 

addition, OGE is removing a related 

provision in the branchwide financial 

disclosure regulation regarding 

supplemental confidential reporting for 

such payments. Finally, OGE is making 

a few technical conforming amendments 

to reflect these changes. 

DATES: These technical amendments 

and removals are effective May 7, 2007. 

ADDRESSES: Office of Government 

Ethics, Suite 500, 1201 New York 

Avenue, NW., Washington, DC 20005– 

3917, Attn.: Mr. Gressman. 

FOR FURTHER INFORMATION CONTACT: 

William E. Gressman, Senior Associate 

General Counsel, Office of Government 

Ethics, telephone: 202–482–9300; TDD: 

202–482–9293; Fax: 202–482–9237. 

SUPPLEMENTARY INFORMATION: The Ethics 

Reform Act of 1989 (Pub. L. 101–194) 

amended the Ethics in Government Act 

of 1978 (Ethics Act) to bar Government 

employees from accepting honoraria. 

See 5 U.S.C. app. 501(b). At the same 

time, the 1989 Act also contained an 

exception to this prohibition which 

permitted employees to direct payment 

to charitable organizations in lieu of 

accepting honoraria. See 5 U.S.C. app. 

501(c). However, in National Treasury 

Employees Union v. United States, 513 

U.S. 454 (1995) (the NTEU case), the 

U.S. Supreme Court overturned, as to 

most executive branch employees, the 

general honorarium prohibition in the 

Ethics Act, finding it to be 

unconstitutional. Subsequently, the 

Department of Justice determined that 

because of the scope of the Supreme 

Court decision, the statutory ban on 

receipt of honoraria was inoperative as 

to all Government employees. See the 

OGE Memorandum to Designated 

Agency Ethics Officials (DAEOs), 

General Counsels and Inspectors 

General of February 28, 1996 (# DO–96– 

012); a copy of that OGE memorandum, 

along with the memorandum of the 

Justice Department, is available in the 

‘‘DAEOgrams’’ section of the OGE Web 

site (http://www.usoge.gov). 

In the late 1990s, OGE removed the 

executive branch regulatory provisions 

concerning the overturned honoraria 

prohibition, along with cross-references 

thereto in various OGE regulations. See 

62 FR 48746–48748 (September 17, 

1997), 63 FR 43067–43069 (August 12, 

1998), and OGE’s Memorandum to 

DAEOs of August 13, 1998 (# DO–98– 

023); copies of which are available, 

respectively, in the Laws & Regulations 

and DAEOgrams sections of OGE’s Web 

site. 

Thereafter, OGE asked the Office of 

Legal Counsel (OLC) of the Justice 

Department whether section 501(c) of 

the Ethics Act remained in effect after 

the Supreme Court decision. OGE 

reasoned that because section 501(c) is 

basically an exception to the honoraria 

ban, the invalidation of section 501(b) 

should also nullify section 501(c). In an 

opinion issued March 1, 2001, OLC 

concluded that section 501(c) of the 

Ethics Act is no longer in effect given 

the NTEU case and the close connection 

between the old honorarium prohibition 

and the statutory exception for 

qualifying in lieu of honoraria charitable 

payments. See OGE’s Memorandum to 

DAEOs (# DO–01–011 of March 15, 

2001) announcing, in pertinent part, the 

OLC opinion and a planned OGE 

regulatory change as a result; both 

documents are available, respectively, 

in the ‘‘Laws & Regulations’’ and 

‘‘DAEOgrams’’ sections of OGE’s Web 

site (http://www.usoge.gov). 

In this rulemaking, OGE is removing 

from its executive branch regulations 

various provisions implementing the 

now-defunct exception in section 501(c) 

of the Ethics Act. First, in 5 CFR part 

2636, which addresses limitations on 

outside earned income, employment 

and affiliations for certain noncareer 

employees, OGE is removing current 

paragraph (b)(7) of § 2636.303. OGE is 

rescinding this paragraph, which cites 

sections 501(c) and 505 (defining certain 

terms) of the Ethics Act, because it 

excludes payments to charitable 

organizations in lieu of honoraria from 

the terms ‘‘outside earned income’’ and 

‘‘compensation’’ for purposes of part 

2636. (OGE is also redesignating current 

paragraph (b)(8) of § 2636.303 as new 

paragraph (b)(7).) Likewise, OGE is 

removing a related sentence in 

paragraph (c) of § 2636.303 that 

provides that such payments to 

charitable organizations are not received 

in violation of any of the limitations in 

subpart C of part 2636, since they are 

not outside earned income or 

compensation. In light of that change, 

OGE is making a conforming change to 

the wording of the following sentence of 

that paragraph. Moreover, OGE is 

removing current paragraph (a)(2)(i) of 

§ 2636.103, which provides that part 

2636 advisory opinions cannot be 

obtained regarding whether particular 

entities are qualified charitable 

organizations for purposes of the in lieu 

of honoraria payments regulatory 

provision that OGE is now removing 

from current paragraph (b)(7) of 

§ 2636.303. 

In addition, OGE is removing from 5 

CFR 2635.203(f)(2) of the executive 

branch standards of ethical conduct, 

which defines gifts that are solicited or 

accepted indirectly, an exception for 

payments to charities in lieu of 

honoraria (and which contains a citation 

to a provision previously removed from 

the part 2636 regulation). OGE is also 

updating a citation in 5 CFR 

2635.804(c)(1) to paragraph (b) of 

§ 2636.303 to reflect the above-noted 

revisions to that paragraph. 

Finally, OGE never activated for the 

executive branch the related provision 

of the Ethics Act on supplemental 

confidential reporting of information 

about payments to charitable 


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16986 Federal Register / Vol. 72, No. 66 / Friday, April 6, 2007 / Rules and Regulations 

organizations in lieu of honoraria, 5 

U.S.C. app., 102(a)(1)(A). In this 

rulemaking, OGE is removing the 

residual inactive confidential reporting 

provision currently found at paragraph 

(a)(2) of 5 CFR 2634.302 of its executive 

branch financial disclosure regulation 

(and is consequently redesignating the 

other parts of paragraph (a) of that 

section), since that regulatory provision 

is no longer needed in light of these 

developments. 

Matters of Regulatory Procedure 

Administrative Procedure Act 

Pursuant to 5 U.S.C. 553(b), as 

Director of the Office of Government 

Ethics, I find good cause exists for 

waiving the general notice of proposed 

rulemaking and opportunity for public 

comment as to these final rule revisions. 

The notice and comment are being 

waived because these technical 

amendments and removals of certain 

provisions in the OGE branchwide 

regulations being revised concern 

matters of agency organization, practice 

and procedure. Furthermore, it is in the 

public interest that the obsolete 

provisions be removed at this time. 

Regulatory Flexibility Act 

As Director of the Office of 

Government Ethics, I certify under the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) that this rulemaking will not 

have a significant economic impact on 

a substantial number of small entities 

because it primarily affects Federal 

executive branch agencies and their 

employees. 

Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. chapter 35) does not apply 

because this rulemaking, involving 

technical amendments and removals, 

just eliminates the last regulatory 

vestiges (still unactivated) of a structure 

(old OMB paperwork control #3209–

0004, now expired) which OGE had 

developed internally but never made 

effective in the executive branch, for 

supplemental confidential reporting of 

payments in lieu of honoraria to 

charitable organizations. The old 

inactive regulatory provisions being 

removed are no longer needed. 

Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (2 U.S.C. 

chapter 25, subchapter II), this rule will 

not significantly or uniquely affect small 

governments and will not result in 

increased expenditures by State, local, 

and tribal governments, or by the 

private sector, of $100 million or more 

(as adjusted for inflation) in any one 

year. 

Congressional Review Act 

The Office of Government Ethics has 

determined that this rulemaking is a 

nonmajor rule under the Congressional 

Review Act (5 U.S.C. chapter 8) and will 

submit a report thereon to the U.S. 

Senate, House of Representatives and 

Government Accountability Office in 

accordance with that law when the rule 

is transmitted to the Office of the 

Federal Register for publication. 

Executive Order 12866 

In promulgating these technical 

amendments to its regulations, OGE has 

adhered to the regulatory philosophy 

and the applicable principles of 

regulation set forth in section 1 of 

Executive Order 12866, Regulatory 

Planning and Review. These 

amendments have also been reviewed 

by the Office of Management and 

Budget under that Executive order. 

Moreover, in accordance with section 

6(a)(3)(B) of E.O. 12866, the preamble to 

these final rule revisions, which are 

being codified in revised 5 CFR parts 

2634, 2635 and 2636, notes the legal 

basis and benefits of, as well as the need 

for, the regulatory action. There should 

be no appreciable increase in costs to 

OGE or the executive branch of the 

Federal Government in administering 

these amended regulations, since the 

revisions only remove obsolete 

regulatory provisions concerning a 

provision of the Ethics Act on in lieu of 

honoraria payments that is no longer in 

effect, along with an inactive regulatory 

provision concerning a related 

confidential reporting section of the 

Ethics Act. Finally, this rulemaking is 

not economically significant under the 

Executive order and will not interfere 

with State, local or tribal governments. 

Executive Order 12988 

As Director of the Office of 

Government Ethics, I have reviewed this 

final rule in light of section 3 of 

Executive Order 12988, Civil Justice 

Reform, and certify that it meets the 

applicable standards provided therein. 

List of Subjects 

5 CFR Part 2634 

Certificates of divestiture, Conflict of 

interests, Financial disclosure, 

Government employees, Penalties, 

Privacy, Reporting and recordkeeping 

requirements, Trusts and trustees. 

5 CFR Part 2635 

Conflict of interests, Executive branch 

standards of ethical conduct, 

Government employees. 

5 CFR Part 2636 

Conflict of interests, Government 

employees, Penalties. 

Approved: March 26, 2007. 

Robert I. Cusick, 

Director, Office of Government Ethics. 

■ For the reasons set forth in the 

preamble, the Office of Government 

Ethics is amending parts 2634, 2635 and 

2636 of chapter XVI of 5 CFR as follows: 

TITLE 5—ADMINISTRATIVE 

PERSONNEL 

CHAPTER XVI—OFFICE OF GOVERNMENT 

ETHICS 

PART 2634—EXECUTIVE BRANCH 

FINANCIAL DISCLOSURE, QUALIFIED 

TRUSTS, AND CERTIFICATES OF 

DIVESTITURE 

■ 1. The authority citation for part 2634 

continues to read as follows: 

Authority: 5 U.S.C. App. (Ethics in 

Government Act of 1978); 26 U.S.C. 1043; 

Pub. L. 101–410, 104 Stat. 890, 28 U.S.C. 

2461 note (Federal Civil Penalties Inflation 

Adjustment Act of 1990), as amended by Sec. 

31001, Pub. L. 104–134, 110 Stat. 1321 (Debt 

Collection Improvement Act of 1996); E.O. 

12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 

215, as modified by E.O. 12731, 55 FR 42547, 

3 CFR, 1990 Comp., p. 306. 

Subpart C—Contents of Reports 

§ 2634.302 [Amended] 

■ 2. Section 2634.302 is amended by: 

■ A. Removing paragraph (a)(2); 

■ B. Redesignating paragraph (a)(1) as 

paragraph (a); and 

■ C. In redesignated paragraph (a), 

further designate paragraphs (i) through 

(iv) as paragraphs (a)(1) through (a)(4), 

respectively. 

PART 2635—STANDARDS OF 

ETHICAL CONDUCT FOR EMPLOYEES 

OF THE EXECUTIVE BRANCH 

■ 3. The authority citation for part 2635 

continues to read as follows: 

Authority: 5 U.S.C. 7301, 7351, 7353; 5 

U.S.C. App. (Ethics in Government Act of 

1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989 

Comp., p. 215, as modified by E.O. 12731, 55 

FR 42547, 3 CFR, 1990 Comp., p. 306. 

Subpart B—Gifts From Outside 

Sources 

§ 2635.203 [Amended] 

■ 4. Section 2635.203 is amended by 

removing the phrase ‘‘or for payments 

made to charitable organizations in lieu 

of honoraria under § 2636.204 of this 

chapter’’ before the period at the end of 

paragraph (f)(2). 


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Federal Register / Vol. 72, No. 66 / Friday, April 6, 2007 / Rules and Regulations 16987 

Subpart H—Outside Activities 

§ 2635.804 [Amended] 

■ 5. Section 2635.804 is amended by 

removing the citation ‘‘§ 2636.303(b)(8)’’

in paragraph (c)(1) and adding in its 

place the citation ‘‘§ 2636.303(b)(7)’’. 

PART 2636—LIMITATIONS ON 

OUTSIDE EARNED INCOME, 

EMPLOYMENT AND AFFILIATIONS 

FOR CERTAIN NONCAREER 

EMPLOYEES 

■ 6. The authority citation for part 2636 

continues to read as follows: 

Authority: 5 U.S.C. App. (Ethics in 

Government Act of 1978); Pub. L. 101–410, 

104 Stat. 890, 28 U.S.C. 2461 note (Federal 

Civil Penalties Inflation Adjustment Act of 

1990), as amended by Sec. 31001, Pub. L. 

104–134, 110 Stat. 1321 (Debt Collection 

Improvement Act of 1996); E.O. 12674, 54 FR 

15159, 3 CFR, 1989 Comp., p. 215, as 

modified by E.O. 12731, 55 FR 42547, 3 CFR, 

1990 Comp., p. 306. 

Subpart A—General Provisions 

■ 7. Section 2636.103 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 2636.103 Advisory opinions. 

(a) * * * 

(2) An advisory opinion may not be 

obtained for the purpose of establishing 

whether a noncareer employee who is 

subject to the restrictions in subpart C 

of this part may receive compensation 

for teaching. An advisory opinion 

issued under this section may not be 

substituted for the advance written 

approval required by § 2636.307 of this 

part. 

* * * * * 

Subpart C—Outside Earned Income 

Limitation and Employment and 

Affiliations Restrictions Applicable to 

Certain Noncareer Employees 

■ 8. Section 2636.303 is amended by: 

■ A. Adding the word ‘‘or’’ following 

the semicolon at the end of paragraph 

(b)(6); 

■ B. Removing paragraph (b)(7); 

■ C. Redesignating paragraph (b)(8) as 

new paragraph (b)(7); and 

■ D. Removing the second sentence of 

the undesignated text at the end of 

paragraph (c) and revising the last 

sentence thereof. 

The revision reads as follows: 

§ 2636.303 Definitions. 

* * * * * 

(c) * * * 

* * * * * 

* * * Also, compensation or outside 

earned income donated to a charitable 

organization is received by the 

employee. 

[FR Doc. E7–6228 Filed 4–5–07; 8:45 am] 

BILLING CODE 6345–02–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 204 

[Regulation D; Docket No. R–1262] 

Reserve Requirements of Depository 

Institutions 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board of Governors is 

revising its 1980 interpretation of 

Regulation D (Reserve Requirements of 

Depository Institutions) setting forth 

criteria for the ‘‘bankers’ bank’’

exemption from reserve requirements. 

The interpretation sets forth the 

standards that the Board uses in 

applying the statutory and regulatory 

requirements for the bankers’ banks 

exemption to specific institutions. The 

revised interpretation specifies that the 

Board may determine, on a case-by-case 

basis, whether certain entities not 

already expressly listed in the 

interpretation may become customers to 

a limited extent of bankers’ banks that 

remain exempt from reserve 

requirements. 

DATES: Effective Date: May 7, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Heatherun Allison, Senior Counsel, 

(202) 452–3565; or Kara Handzlik, 

Attorney, (202) 452–3852, Legal 

Division, Board of Governors of the 

Federal Reserve System, Washington, 

DC 20551. For users of 

Telecommunications Device for the Deaf 

(TDD) only, contact (202) 263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Statutory Background 

Section 19(b) of the Federal Reserve 

Act (Act) imposes reserve requirements 

on certain deposits and other liabilities 

of depository institutions for monetary 

policy purposes. 12 U.S.C. 461(b). The 

Board’s Regulation D, ‘‘Reserve 

Requirements of Depository 

Institutions’’ (12 CFR part 204), 

implements Section 19(b). Section 

19(b)(9) of the Act, commonly referred 

to as the ‘‘bankers’ bank exemption,’’

exempts from reserve requirements 

certain institutions that would 

otherwise be subject to them. 

Specifically, Section 19(b)(9) provides 

that reserve requirements ‘‘shall not 

apply with respect to any financial 

institution which—(A) is organized 

solely to do business with other 

financial institutions; (B) is owned 

primarily by the financial institutions 

with which it does business; and (C) 

does not do business with the general 

public.’’ 12 U.S.C. 461(b)(9). ‘‘Bankers’

banks’’ for purposes of Section 19(b)(9) 

of the Act and Regulation D include 

bankers’ banks for commercial banks 

and thrifts chartered under state or 

federal law authorities as well as 

corporate credit unions. 

II. Issuance of Original Interpretation 

In November 1980, the Board issued 

an interpretation of Regulation D 

specifying certain standards to be used 

in determining whether institutions 

qualify for the bankers’ bank exemption 

from reserve requirements. 12 CFR 

204.121 (Interpretation). Under the 

Interpretation, an institution may be 

regarded as ‘‘organized solely to do 

business with other depository 

institutions even if, as an incidental part 

to [sic] its activities, it does business to 

a limited extent with entities other than 

depository institutions.’’ Id. In addition, 

a depository institution will be regarded 

as ‘‘being owned primarily by the 

institutions with which it does 

business’’ if ‘‘75 per cent or more of its 

capital is owned by other depository 

institutions * * * regardless of the type 

of depository institution.’’ Id. 

Finally, the Interpretation states that a 

depository institution will be regarded 

as ‘‘not do[ing] business with the 

general public’’ if the depository 

institution has satisfied two 

requirements. First, the depository 

institution must limit the range of 

customers with which it does business 

to: depository institutions; subsidiaries 

or organizations owned by depository 

institutions; directors, officers or 

employees of the same or other 

depository institutions; individuals 

whose accounts are required at the 

request of the institution’s supervisory 

authority due to the actual or impending 

failure of another depository institution; 

share insurance funds; and depository 

institution trade associations. Second, 

the depository institution’s loans to or 

investment in that range of customers 

(other than depository institutions) 

cannot exceed 10 percent of total assets, 

and the extent to which it receives 

shares or deposits from or issues other 

liabilities to those same entities (other 

than depository institutions) cannot 

exceed 10 percent of total liabilities or 

net worth. Id. 

III. Proposed Revisions 

On August 14, 2006, the Board 

published for comment a proposal to 

revise the Interpretation to specify that 


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