Executive Branch Gift Rules and the New Executive Order

The following is an overview of federal executive branch gift rules and an analysis of new rules created by an executive order issued recently by President Barack Obama.

Gifts to executive branch employees are governed by federal law, regulations, and executive orders. All executive branch employees are subject to existing federal laws and regulations that regulate gifts. Upon taking office, President Obama issued an executive order that created new gift rules for political appointees in his administration. These rules prohibit political appointees from accepting certain gifts from lobbyists and lobbying organizations. This executive order applies in addition to existing federal laws and regulations.

Please note that the U.S. House of Representatives and the U.S. Senate – as well as some state and local governments – have their own gift and travel rules, which are not covered by this memo.

Due to the complexity of the executive branch gift rules, please consult with counsel, the Office of Government Ethics (OGE) and the designated agency ethics official (DAEO) in that executive agency before providing a gift to any executive branch employee.

Analysis

On January 21, 2009, President Obama issued Executive Order 13490, which created new restrictions on appointees he has appointed to the executive branch. EO 13490 applies to every full-time, non-career presidential or vice-presidential appointee, non-career Senior Executive Service (SES) appointee or Schedule C appointee in the executive branch. All other employees are only subject to existing executive branch gift rules.

Under EO 13490, the director of the OGE is required to adopt rules and procedures to carry out the executive order. OGE had not yet adopted such rules and procedures, however, on February 11, 2009, the director issued guidance on the implementation of the new gift rules. The Office of the White House Counsel is currently working with OGE to draft the rules and regulations required under the executive order.

What is considered a gift?

The executive branch gift rules define a gift as “any gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value.” This includes items such as travel, lodging, meals, certain food or drinks, awards, honorary degrees, or, in some cases, free admission to a conference. A gift includes anything given to the “parent, sibling, spouse, child, or dependent relative because of that person’s relationship to the employee, or ... any other person, including any charitable organization, on the basis of designation, recommendation, or other specification by the employee.”

The following are not considered a gift, regardless of the recipient or the source:

• modest items of food and refreshments, such as soft drinks, coffee and donuts, offered other than as part of a meal
• greeting cards and items with little intrinsic value, such as plaques, certificates, and trophies, which are intended solely for presentation
• loans from banks and other financial institutions on terms generally available to the public
• opportunities and benefits, including favorable rates and commercial discounts, available to the public or to a class consisting of all government employees or all uniformed military personnel, whether or not restricted on the basis of geographic considerations
• rewards and prizes given to competitors in contests or events, including random drawings, open to the public unless the employee’s entry into the contest or event is required as part of his official duties
• pension and other benefits resulting from continued participation in an employee welfare and benefits plan maintained by a former employer
• anything which is paid for by the government or secured by the government under government contract
• any gift accepted by the government under specific statutory authority
• anything for which market value is paid by the employee
• free attendance to an event on the day an employee is speaking or presenting information in an official capacity is not a gift, but rather is considered a customary and necessary part of the performance of his or her job

Who is considered the source of the gift?

Any gift from an employee is treated as a gift from the employee’s employer or organization unless the gift is given by the employee under an exception. This interpretation is relevant in determining whether the gift is from a prohibited source or whether the source has provided gift(s) in excess of applicable monetary thresholds described in the exceptions below.

When can the President accept a gift?

Gifts to the President or his family may be accepted based on protocol or etiquette required by the position, so long as it is not in return for the performance of an official act, it was not solicited or coerced, and it does not constitute a bribe. The President has wide discretion regarding whether or not to accept a gift as allowed under this provision.

When can an executive branch employee accept a gift?

The ability of an executive branch employee to accept a gift depends on two things: the recipient and the source. EO 13490 created a new obligation on all full-time, non-career appointees in the Obama administration. Other employees are only subject to existing executive branch gift rules.

New Gift Rules for Presidential Appointees

EO 13490 requires any full-time, non-career appointee appointed by President Obama to sign an ethics pledge. This pledge applies in addition to existing gift laws and regulations. Under the pledge, presidential appointees are generally prohibited from accepting any gift from lobbyists and lobbying organizations that are registered under the Lobbying Disclosure Act (LDA), subject to certain exceptions.

Exceptions from the pledge:

• gifts from an organization that is not registered under the LDA, even if it retains outside lobbyists
• gifts based on a personal relationship
• discounts and similar benefits given to all government employees or unrelated to the employee’s position
• gifts resulting from a spouse’s business or employment
• customary gifts/gratuities provided by a prospective employer
• gifts authorized by an OGE-approved agency supplemental regulation
• gifts accepted under specific statutory authority
• gifts from a 501(c)(3) non-profit that are not delivered by a lobbyist
• gifts from a media organization that are not delivered by a lobbyist

The director of the Office of Management and Budget (OMB) may grant a written exception for an appointee where that “the literal application of the restriction is inconsistent with the purposes of the restriction, or ... it is in the public interest to grant the waiver.” In all cases, a gift that qualifies for an exception from the presidential appointee pledge must still comply with existing executive branch gift laws and regulations.

Existing Gift Rules for All Executive Branch Employees

Under existing executive branch gift rules, an executive branch employee generally may not accept or solicit a gift that is provided based on his/her official position, or from any source who:

• is seeking official action from the individual’s employing entity
• is doing business with the individual’s employing entity
• is involved in activities regulated by the individual’s employing entity
• has interests that may be substantially affected by the performance or nonperformance of the individual’s official duties
• is an organization whose members are described above

There are several enumerated exceptions to the executive branch gift rule. These exceptions do not apply under certain circumstances where the gift is solicited for an improper purpose (i.e., bribery, graft, etc.). These exceptions include the following:

• a gift of $20 or less and no more than $50 from that source in one year
• gifts based on a personal relationship
• discounts and similar benefits given to all government employees or unrelated to the employee’s position
• awards and honorary degrees
• gifts resulting from a spouse’s business or employment
• gifts resulting from the employee’s own outside business or employment
• customary gifts/gratuities provided by a prospective employer
• gifts from political organizations in connection with political participation
• widely attended gatherings
• social invitations from non-prohibited sources
• food, refreshments and entertainment from persons other than a foreign government in a foreign area
• gifts authorized by an OGE-approved agency supplemental regulation
• gifts accepted under specific statutory authority

Conclusion

The federal executive branch gift laws, regulations and guidance are complex, and are subject to interpretation by the OGE and each DAEO. The OGE will typically provide general guidance, while the DAEO may provide an opinion about specific gifts. Keep in mind that the OGE has not yet issued final regulations implementing EO 13490 as required by the order. Again, please consult with counsel, the OGE and the appropriate DAEO before providing a gift to any executive branch employee.