This report examines the federal laws and regulations relevant to entering into federal government employment from the private sector, with respect particularly to the potential conflicts of interest that may arise because of the past employment, affiliations, or financial interests or involvements of a nominee or new officer or employee in the executive branch of government. The report is intended to provide those conducting congressional oversight with an outline of some of the issues, rules, regulations, and oversight tools that may be available regarding this subject. Concerns have been expressed about the impartiality, bias, or fairness of government regulators, administrators, and other executive branch decisionmakers who, shortly before entering government service, represented, owned, or were employed by the industries, firms, or other entities which they must now regulate and oversee, or about whom they now provide advice to the government. Several instances of alleged conflicts of interest, "appearances" of conflicts of interest or bias, or "cozy relationships" between the regulated entities and the government official who formerly worked for or represented that regulated entity, have been examined in the press over the last several years. Additionally, concerns have been raised with regard to large cash pay-outs or "rewards" to personnel of private entities who are about to enter government service. The allegations and concerns in such instances are that loyalty to private economic and business interests, rather than fealty to the general public interest, is being served by such officials in their actions. Individuals entering federal service will bring with them existing financial investments, ownerships, properties, and other economic arrangements typical of anyone similarly placed in American society. Those entering federal service immediately from private industry will also enter with certain former affiliations, employment, or other financial, economic, or business associations with particular private interests. Federal conflict of interest law and regulation focuses primarily on current economic and financial interests of a government official and those closely associated with the official. However, there are some limited conflict of interest regulations and ethics standards which look also to previous employment and past associations of those becoming federal officers and employees. The term "conflict of interest" may have a broad meaning in general usage. However, under federal law and regulation a "conflict of interest," for the most part, deals with a conflict between a federal employee's official, governmental duties and responsibilities on the one hand, and the personal, financial, or economic interests of the employee on the other. When the official duties of a government employee may impact upon the outside, private business or economic interests of that employee, or the economic interests of those closely associated with the employee, a conflict of interest situation presents itself. The overall scheme of the conflict of interest laws adopted by Congress generally embodies the principle "that a public servant owes undivided loyalty to the Government," and that advice and recommendations given to the government by its employees and officials be made in the public interest and not be tainted, even unintentionally, with influence from private or personal financial interests. The House Judiciary Committee, reporting out major conflict of interest revisions made to federal law in the 1960s, found, The proper operation of a democratic government requires that officials be independent and impartial; that Government decisions and policy be made in the proper channels of the governmental structure; ... and that the public have confidence in the integrity of its government. The attainment of one or more of these ends is impaired whenever there exists, or appears to exist an actual or potential conflict between the private interests of a Government employee and his duties as an official. The concern in such regulation "is not only the possibility or appearance of private gain from public office, but the risk that official decisions, whether consciously or otherwise, will be motivated by something other than the public's interest. The ultimate concern is bad government ... " The conflict of interest laws are thus directed not only at conduct which is improper, but rather are often preventative in nature, directed at situations which merely have the potential to tempt or subtly influence an official in the performance of official public duties. As explained by the Supreme Court with regard to a predecessor conflict of interest law requiring disqualification of officials from matters in which they have a personal financial interest: This broad proscription embodies a recognition of the fact that an impairment of impartial judgment can occur in even the most well-meaning men when their personal economic interests are affected by the business they transact on behalf of the Government. The application of federal conflict of interest laws and regulations, particularly the laws requiring an official's recusal or disqualification from certain matters, or regulations or procedures requiring the divestiture of certain assets, have traditionally been directed at current and existing financial interests and ties of that official, and those closely associated with the official. The regulatory scheme regarding financial interests encompasses what has colloquially been called the "three-D" method of conflict of interest regulation, that is: disclosure, disqualification, and divestiture. Upon entering the federal government, and then annually on May 15 thereafter, high-level government officials must file detailed, public financial disclosure statements. Public financial disclosures were first required by law with the passage of the Ethics in Government Act of 1978 ( P.L. 95-521 , as amended), and were intended to serve the purpose of identifying "potential conflicts of interest or situations that might present the appearance of a conflict of interest" for government officials in policymaking positions. In addition to the purpose of merely identifying potential conflicts, and then attempting to resolve such conflicts of interest, the committees considering the ethics legislation adopted in 1978 recognized the fact that there was potentially a "deterrent factor" in requiring public disclosure of a government official's personal and family financial information,—both in deterring the holding of certain assets (and thus deterring certain potential conflicts of interest), but also possibly in deterring the recruitment of certain persons into the government because of such persons' uneasiness with the required details of public financial disclosure. As noted by the Senate committee, however, this latter deterrent effect was not necessarily a negative consequence of required public disclosures, but could be a positive consideration in the enactment of the financial disclosure requirement: Public financial disclosure will deter some persons who should not be entering public service from doing so. Individuals whose personal finances would not bear up to public scrutiny ... will very likely be discouraged from entering public office altogether, knowing in advance that their sources of income and financial holdings will be available for public review. Whether an employee of the federal government is required to file public financial disclosure statements is determined, in the first instance, by the rate of compensation that the employee receives or will receive from the federal government, and then, secondly, by the number of days such an employee works for the federal government. Any officer or employee of the executive branch of government who "occupies a position classified above GS-15," or, if "not under the General Schedule," is in a position compensated at a "rate of basic pay ... equal to or greater than 120 percent of the minimum rate of basic pay payable for GS-15," is generally subject to the public disclosure provisions. Those employees compensated at the rate of pay described above will be required to file public disclosure statements if the individual works for the government for more than 60 days in the calendar year. This requirement for detailed, public financial disclosure under the Ethics in Government Act of 1978 applies to nearly 30,000 officials in the federal government. In addition to the statutory mandate for public disclosure based on salary level, all "Schedule C" employees, regardless of salary, must file public financial disclosures unless exempted from such disclosure by the Office of Government Ethics. Anyone entering the federal service who is covered by the public financial disclosure laws generally must, within 30 days of appointment, file an entry report. Thereafter, covered employees must file annual reports by May 15. All presidential nominees requiring Senate confirmation must file public disclosure statements regardless of salary (but uniformed and foreign service nominees file only if they meet the pay threshold), and such reports incur other specific procedural steps. Their disclosure statements are not only filed with and reviewed by their department or agency, but are also "transmitted" to the Office of Government Ethics for review, and are "foward[ed]" for review to the committee of the Senate with jurisdiction over the particular individual's nomination. Once the President has transmitted to the Senate the nomination of a person required to be confirmed by the Senate, the nominee must within five days of the President's transmittal (or any time after the public announcement of the nomination, but no later than five days after transmittal), file a financial disclosure statement. This financial disclosure statement is filed with the designated agency ethics officer of the agency in which the nominee will serve, and copies of the report are transmitted by the agency to the Director of the Office of Government Ethics (OGE). The Director of OGE then forwards a copy to the Senate committee which is considering the nomination of that individual. A presidential nominee must file an updated report to the committee reviewing his nomination at or before the commencement of hearings, updating the information through the period "not more than five days prior to the commencement of the hearing," concerning specifically information related to honoraria and outside earned income. For most incoming federal officials filing their entry report, as well as for current employees filing their annual financial disclosure statements by May 15 of each year, such reports are filed with the designated agency ethics officer (most commonly in the office of general counsel) in the agency in which the reporting officer or employee serves or is to serve. The President and the Vice President, however, file their reports with the Director of the Office of Government Ethics. All financial disclosure reports filed by federal officials are open generally for public inspection upon request made in writing, subject to rules on the impermissible commercial or political use of the information contained in the reports. The repository agencies are instructed to retain the reports as public records for six years.