(a) Scope. This subpart is intended to ensure that employees take appropriate steps to avoid an appearance of loss of impartiality in the performance of their official duties in circumstances other than those covered by the criminal conflict of interest statute, 18 U.S.C. 208(a).

(1) The provisions of § 2635.502 are designed to help employees identify and take appropriate steps regarding their participation in particular matters involving specific parties that may cause a reasonable person with knowledge of the relevant facts to question their impartiality. Employees and agencies should analyze such appearance issues, and employees may receive authorization to participate in such matters, using the procedures in this subpart.

(2) Under § 2635.503, an employee who has received a covered payment from a former employer is subject, in the absence of a waiver pursuant to § 2635.503(c), to a two-year period of recusal from participating in particular matters in which that former employer is or represents a party.

(3) An employee is prohibited by 18 U.S.C. 208(a) from participating personally and substantially in an official capacity in any particular matter in which, to the employee's knowledge, the employee has a personal or imputed financial interest, if the particular matter will have a direct and predictable effect on that interest. Section 208(a), its interpreting and implementing regulations under part 2640 of this chapter, and the regulations at subparts D and F of this part, apply when the particular matter would affect the financial interests of one of these persons.

(b) Distinction between authorizations under this subpart and waivers and exemptions under the criminal conflict of interest law. (1) When an employee's participation in a particular matter involving specific parties would raise a question in the mind of a reasonable person about the employee's impartiality, but would not violate 18 U.S.C. 208(a), the agency designee may make a determination, as explained in § 2635.502(d), and authorize the employee to participate in the matter.

(2) When the employee's participation in a particular matter would affect any one of the financial interests described in 18 U.S.C. 208(a), only a statutory waiver or exemption, as described in §§ 2635.402(d) and 2635.605(a), will enable the employee to participate in that matter. The specific requirements for regulatory exemptions and statutory waivers are contained in part 2640, subparts B and C, of this chapter.

(3) An applicable waiver or exemption under part 2640 of this chapter also authorizes an employee's participation in particular matters that would otherwise be restricted by § 2635.502. Specifically, if an employee meets all prerequisites for the application of one of the regulatory exemptions set forth in part 2640, subpart B, of this chapter, that constitutes a determination that the interest of the Government in the employee's participation in a particular matter outweighs the concern that a reasonable person may question the integrity of agency programs and operations. Similarly, if the employee complies with all terms of a statutory waiver granted pursuant to part 2640, subpart C, of this chapter, that also constitutes a determination that the interest of the Government in the employee's participation in a particular matter outweighs the concern that a reasonable person may question the integrity of agency programs and operations. In such cases, the employee is not required to recuse under § 2635.502(e) or request authorization to participate under § 2635.502(d).

(a) Consideration of appearances by the employee. In considering whether any of the following would cause a reasonable person to question their impartiality, employees may seek the assistance of their supervisor, an agency ethics official, or the agency designee.

(1) When an employee knows that a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interest of a member of the employee's household, and the employee determines that the circumstances would cause a reasonable person with knowledge of the relevant facts to question the employee's impartiality in the matter, the employee should not participate in the matter unless the employee has received a determination from the agency designee regarding the appearance problem in accordance with paragraph (c) of this section or received an authorization from the agency designee in accordance with paragraph (d) of this section.

(2) When an employee knows that a person with whom the employee has a covered relationship is or represents a party to a particular matter involving specific parties, and the employee determines that the circumstances would cause a reasonable person with knowledge of the relevant facts to question their impartiality in the matter, the employee should not participate in the matter unless the employee has received a determination from the agency designee regarding the appearance problem in accordance with paragraph (c) of this section or received an authorization from the agency designee in accordance with paragraph (d) of this section.

(3) Employees who are concerned that circumstances other than those specifically described in paragraphs (a)(1) and (2) of this section would raise a question regarding their impartiality should use the process described in this section to determine whether they should not participate in a particular matter.

(b) Definitions. For purposes of this section:

(1) An employee has a covered relationship with:

(i) A person, other than a prospective employer described in § 2635.603(c), with whom the employee has or seeks a business, contractual, or other financial relationship that involves other than a routine consumer transaction;

(ii) A person who is a member of the employee's household, or who is a relative with whom the employee has a close personal relationship;

(iii) A person for whom the employee's spouse, parent, or child is, to the employee's knowledge, serving or seeking to serve as an officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee;

(iv) Any person for whom the employee has, within the last year, served as officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee; or

(v) An organization, other than a political party described in 26 U.S.C. 527(e), in which the employee is an active participant. Participation is active if, for example, it involves service as an official of the organization or in a capacity similar to that of a committee or subcommittee chairperson or spokesperson, or participation in directing the activities of the organization. In other cases, significant time devoted to promoting specific programs of the organization, including coordination of fundraising efforts, is an indication of active participation. Payment of dues or the donation or solicitation of financial support does not, in itself, constitute active participation.

(2) Direct and predictable effect has the meaning set forth in § 2635.402(b)(1).

(3) Particular matter involving specific parties has the meaning set forth in § 2640.102(l) of this chapter.

Example 1 to paragraph (b): An employee of the General Services Administration (GSA) has made an offer to purchase a restaurant owned by a local developer. The developer has submitted an offer in response to a GSA solicitation for the lease of office space. Under the circumstances, the GSA employee would be correct in concluding that a reasonable person would be likely to question their impartiality if they were to participate in evaluating that developer's or its competitor's lease proposal.

Example 2 to paragraph (b): An employee of the Department of Labor is providing technical assistance in drafting occupational safety and health legislation that will affect all employers of five or more persons. The employee's spouse is employed as an administrative assistant by a large corporation that will incur additional costs if the proposed legislation is enacted. Because the legislation is not a particular matter involving specific parties, the employee may continue to work on the legislation and need not be concerned that the spouse's employment with an affected corporation would raise a question concerning the employee's impartiality.

Example 3 paragraph (b): An employee of the Bureau of Land Management (BLM) is studying environmental problems created by the use of hazardous substances on a particular section of public land. BLM has a contract with an environmental services company to produce a water quality study of the groundwater under this section of land along with a recommendation about how to remediate any problems that are found. The BLM employee will use the study to help determine the extent of the damage and to recommend a solution to any problems that are revealed. The employee's parent has accepted a job with this environmental services company and will be signing and submitting the report of the company's findings. Under these circumstances, the employee would be correct in concluding that a reasonable person would be likely to question their impartiality if they were to continue participating in the study related to this parcel of public land.

Example 4 to paragraph (b): An engineer has just resigned from a position as vice president of an electronics company in order to accept employment with the Federal Aviation Administration (FAA) in a position involving procurement responsibilities. Although the employee did not receive a covered payment in connection with the resignation and has severed all financial ties with the firm, under the circumstances the employee would be correct in concluding that this former service as an officer of the company would be likely to cause a reasonable person to question their impartiality if they were to participate in the administration of an FAA contract for which the firm is a first-tier subcontractor.

Example 5 to paragraph (b): An employee of the Internal Revenue Service (IRS) is a member of a private organization whose purpose is to restore a Victorian-era railroad station, and chairs its annual fundraising drive. Under the circumstances, the employee would be correct in concluding that this active membership in the organization would be likely to cause a reasonable person to question their impartiality if they were to participate in an IRS determination regarding the tax-exempt status of the organization.

Example 6 to paragraph (b): An employee of the Department of Defense (DoD) has responsibility for testing avionics produced by a large Air Force contractor. The employee just learned that their adult child accepted a staff position in the human resources division of that contractor. Although the DoD employee has a covered relationship with the contractor that employs their child, the employee could justifiably conclude that a reasonable person would not be likely to question their impartiality because the child's work is unrelated to the avionics contract.

Example 7 to paragraph (b): An employee of the Department of Defense (DoD) leads the office that is testing a new type of jet engine produced by a multinational conglomerate's aviation division. The employee's lifelong best friend is the head of the conglomerate's aviation division and is responsible for presenting and promoting the new jet engine. Although the DoD employee does not have a covered relationship under paragraph (b)(1) of this section, the employee is concerned that, under paragraph (a)(3) of this section, questions regarding their impartiality could be raised. Here, the employee could justifiably conclude that a reasonable person would be likely to question their impartiality if they were to continue performing duties related to this jet engine.

(c) Determination by agency designee. (1) When the agency designee has information concerning a potential appearance problem arising from either the financial interest of a member of the employee's household in a particular matter involving specific parties or a particular matter involving specific parties in which a person with whom the employee has a covered relationship is a party or represents a party, the agency designee may make an independent determination as to whether a reasonable person with knowledge of the relevant facts would be likely to question the employee's impartiality in the matter. Ordinarily, the agency designee's determination will be initiated by information provided by the employee pursuant to paragraph (a) of this section. However, at any time, including after an employee has recused from participating in a particular matter pursuant to paragraph (e) of this section, agency designees may make this determination on their own initiative or when requested by the employee's supervisor or any other person responsible for the employee's assignment.

(2) If the agency designee determines that the employee's impartiality is likely to be questioned, the agency designee must then determine, in accordance with paragraph (d) of this section, whether the employee should be authorized to participate in the matter. If the agency designee determines that the employee's participation should not be authorized, the employee must recuse from participating in the particular matter in accordance with paragraph (e) of this section.

(3) If the agency designee determines that the employee's impartiality is not likely to be questioned, the agency designee may advise the employee, including an employee who has reached a contrary conclusion under paragraph (a) of this section, that the employee's participation in the matter would be proper.

(d) Authorization by agency designee. When an employee's participation in a particular matter involving specific parties would not violate 18 U.S.C. 208(a), but would raise a question in the mind of a reasonable person about the employee's impartiality, the agency designee may authorize the employee to participate in the matter based on a determination, made in light of all relevant circumstances, that the interest of the Government in the employee's participation outweighs the concern that a reasonable person may question the integrity of the agency's programs and operations.

(1) Factors which may be taken into consideration include:

(i) The nature of the relationship involved;

(ii) The effect that resolution of the matter would have upon the financial interests of the person involved in the relationship;

(iii) The nature and importance of the employee's role in the matter, including the extent to which the employee is called upon to exercise discretion in the matter;

(iv) The sensitivity of the matter;

(v) The difficulty of reassigning the matter to another employee; and

(vi) Adjustments that may be made in the employee's duties that would reduce or eliminate the likelihood that a reasonable person would question the employee's impartiality.

(2) Authorization by the agency designee will be documented in writing at the agency designee's discretion or when requested by the employee. An employee who has been authorized to participate in a particular matter involving specific parties may not thereafter recuse from participating in the matter on the basis of an appearance problem involving the same circumstances that have been considered by the agency designee.

Example 1 to paragraph (d): The Deputy Director of Personnel for the Department of the Treasury and an attorney with the Department's Office of General Counsel are general partners in a real estate partnership. The Deputy Director advises their supervisor, the Director of Personnel, of the relationship upon being assigned to a selection panel for a position for which the partner has applied. If selected, the partner would receive a substantial increase in salary. The agency designee cannot authorize the Deputy Director to participate on the panel under the authority of this section because the Deputy Director is prohibited by criminal statute, 18 U.S.C. 208(a), from participating in a particular matter affecting the financial interest of a person who is their general partner. See § 2635.402.

Example 2 paragraph (d): A new employee of the Securities and Exchange Commission is assigned to an investigation of insider trading by the brokerage house where they have recently been employed. Because of the sensitivity of the investigation, the agency designee may be unable to conclude that the Government's interest in the employee's participation in the investigation outweighs the concern that a reasonable person may question the integrity of the investigation, even though the employee has severed all financial ties with the company. Based on consideration of all relevant circumstances, the agency designee might determine, however, that it is in the interest of the Government for the employee to participate in the review of a routine filing by the particular brokerage house.

Example 3 paragraph (d): An Internal Revenue Service employee involved in a long and complex tax audit learns that their child has just accepted an entry-level management position with a corporation whose taxes are the subject of the audit. Because the audit is essentially complete and because the employee is the only one with an intimate knowledge of the case, the agency designee might determine, after considering all relevant circumstances, that it is in the Government's interest for the employee to complete the audit, which is subject to additional levels of review.

(e) Recusal. Unless the employee is authorized to participate in the matter under paragraph (d) of this section, an employee may not participate in a particular matter involving specific parties when the employee or the agency designee has concluded, in accordance with paragraph (a) or (c) of this section, that the financial interest of a member of the employee's household, or the role of a person with whom the employee has a covered relationship, is likely to raise a question in the mind of a reasonable person about the employee's impartiality. Recusal is accomplished by not participating in the matter. When the covered relationship is with a former employer, this recusal requirement is for a period of one year after the date of the employee's resignation from the position with the former employer.

(1) Notification. Employees who become aware of the need to recuse from participating in a particular matter involving specific parties to which they have been assigned must take whatever steps are necessary to ensure that they do not participate in the matter. Appropriate oral or written notification of their recusal may be made to an agency ethics official, coworkers, or a supervisor to document and help effectuate the recusal.

(2) Documentation. Employees need not file written recusal statements unless they are required by part 2634 of this chapter to file written evidence of compliance with an ethics agreement with the Office of Government Ethics or a designated agency ethics official, or are specifically directed by an agency ethics official or the person responsible for their assignments to file written recusal statements. However, it is often prudent for employees to create a record of their actions by providing written notice to an agency ethics official, a supervisor, or other appropriate official.

(f) Irrelevant considerations. An employee's reputation for honesty and integrity is not a relevant consideration for purposes of any determination required by this section.

(a) Recusal requirement. Except as provided in paragraph (c) of this section, an employee must recuse for two years from participating in any particular matter involving specific parties in which the employee's former employer is a party or represents a party if the employee received a covered payment from that person. The two-year period of recusal begins to run on the date that the covered payment is received.

Example 1 to paragraph (a): Following confirmation hearings and one month before their scheduled swearing in, a nominee to the position of Assistant Secretary of a department received a covered payment from their employer. For one year and 11 months after their swearing in, the Assistant Secretary may not participate in any particular matter to which the former employer is a party.

Example 2 paragraph (a): An employee received a covered payment from their former employer, a coal mine operator, prior to entering on duty with the Department of the Interior. For two years thereafter, the employee may not participate in a determination regarding the former employer's obligation to reclaim a particular mining site, because the former employer is a party to the matter. However, the employee may help to draft reclamation legislation affecting all coal mining operations because this legislation does not involve any parties.

Example 3 to paragraph (a): An architect accepts a position with the Army Corps of Engineers and resigns from a private architecture partnership. One month after beginning this new position, the architect receives a covered payment from the partnership. The architect may not participate in any particular matter involving specific parties in which the former partnership is a party until two years after receipt of the covered payment, which will be 25 months after beginning service with the Corps. Because the payment was not received before the architect became an executive branch employee, agency ethics officials must also review the payment to determine whether it constituted a supplementation of salary under 18 U.S.C. 209.

(b) Definitions. For purposes of this section, the following definitions apply:

(1) Covered payment means any item, including cash or an investment interest, with a value in excess of $10,000, which is paid:

(i) On the basis of a determination made after it became known to the former employer that the individual was being considered for or had accepted a Government position; and

(ii) Other than pursuant to a qualifying program.

(2)(i) A qualifying program is:

(A) A compensation, partnership, or benefits program that is contained in bylaws, a contract, or other written form, and does not treat individuals entering Government service more favorably than other individuals; or

(B) A program that is not contained in written form, but is demonstrated by a history of similar payments made to others not entering Government service.

(ii) When a program is established in written form, any history of making similar payments to others not entering Government service that is contrary to an express provision of the written plan is not relevant to the evaluation of whether it is a qualifying program.

Example 1 to paragraph (b)(2): The vice president of a small corporation is nominated to be an ambassador. In recognition of service to the corporation, the board of directors votes to pay the departing vice president $50,000 upon confirmation in addition to the regular severance payment provided for by the corporate bylaws. The regular severance payment is not a covered payment because it was made pursuant to a qualifying program. The gratuitous payment of $50,000 is a covered payment, because the corporation had not made similar payments to other departing officers.

(3) Former employer includes any person which the employee served as an officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee. Payments from an officer, employee, or agent of a former employer will be considered to be payments from the former employer.

(c) Waiver of recusal. The recusal requirement of this section may be waived based on a finding that the amount of the payment was not so substantial as to cause a reasonable person to question the employee's ability to act impartially in a matter in which the former employer is or represents a party. The waiver must be in writing and may be given only by the head of the agency or, when the recipient of the payment is the head of the agency, by the President or the President's designee. Waiver authority may be delegated by the head of an agency to any person who has been delegated authority to issue individual waivers under 18 U.S.C. 208(b) for the employee who is the recipient of the covered payment.