E6-15129. Agency Information Collection Activities; Submission for OMB Review; Proposed Collection; Comment Request for Modified OGE Form 450 Executive Branch Confidential Financial Disclosure Report

AGENCY:

Office of Government Ethics (OGE).

ACTION:

Notice.

SUMMARY:

Once this notice is published in the Federal Register, the Office of Government Ethics will promptly submit to the Office of Management and Budget (OMB) a proposed modified version of the OGE Form 450 Executive Branch Confidential Financial Disclosure Report form (hereafter, OGE Form 450) for review and three-year extension of approval under the Paperwork Reduction Act (PRA). After that approval, the modified form would be used by covered departments and agency employees starting January 1, 2007.

In August of 2005, the Office of Government Ethics published a first round paperwork notice that it intended to modify the OGE Form 450 to improve its clarity and design and to change in part the information that it collects. Because OGE received so many helpful comments in response to that notice, it significantly redesigned the proposed new OGE Form 450 and published another first round paperwork notice on March 17, 2006, in order to provide a further comment period. OGE received a number of comments on the March 2006 notice and has made a few minor changes to the proposed modified form in response.

DATES:

Comments by the public and agencies on the proposal are again invited and should be received by October 13, 2006.

ADDRESSES:

Comments should be sent to Brenda Aguilar, the OMB Desk Officer for OGE, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503; Telephone: [phone]; fax: [phone].

FOR FURTHER INFORMATION CONTACT:

Paul D. Ledvina, Records Officer, Information Resources Management Division, Office of Government Ethics; telephone: [phone]; TDD: 202-482-9293; fax: [phone]; e-mail: [e-mail]. A copy of the proposed modified OGE Form 450 may be obtained, without charge, by contacting Mr. Ledvina.

SUPPLEMENTARY INFORMATION:

The OGE Form 450 (OMB control # 3209-0006) collects information from covered department and agency officials as required under OGE's executive branchwide regulatory provisions in subpart I of 5 CFR part 2634. The OGE Form 450 serves as the uniform report form for collection, on a confidential basis, of financial information required by the OGE regulation from certain new entrant and incumbent employees of the Federal Government executive branch departments and agencies. Agency ethics officials then use the completed OGE Form 450 reports to conduct conflict of interest reviews and to resolve any actual or potential conflicts found.

The basis for the OGE regulation and the report form is two-fold. First, section 201(d) of Executive Order 12674 of April 12, 1989 (as modified by Executive Order 12731 of October 17, 1990, 3 CFR, 1990 Comp., pp. 306-311, at p. 308), made OGE responsible for establishing a system of nonpublic (confidential) financial disclosure by executive branch employees to complement the system of public financial disclosure under the Ethics in Government Act of 1978 (the Ethics Act), as amended, 5 U.S.C. appendix. Second, section 107(a) of the Ethics Act, 5 U.S.C. app., sec. 107(a), further provided authority for OGE, as the supervising ethics office for the executive branch of the Federal Government, to require that appropriate executive agency employees file confidential financial disclosure reports, “in such form as the supervising ethics office may prescribe.” The OGE Form 450, and the underlying executive branchwide financial disclosure regulation (5 CFR part 2634), constitute the basic reporting system that OGE has prescribed for such confidential financial disclosure in the executive branch.

The Privacy Act Statement for the OGE Form 450 references the OGE/GOVT-2 executive branchwide Privacy Act system of records. The information about this system of records is located on the OGE Web site, http://www.usoge.gov. The Web site user should click on the “FOIA” heading on the left side of the home page. The user should then scroll to the bottom of the page. Under the heading “Links to Other Official Documents” the user will see links to the PDF, HTML and TXT formats of the most recent Privacy Act Records Systems.

OGE has promulgated a number of changes to the regulation on confidential financial disclosure, 5 CFR part 2634, subpart I. These amendments will become effective on January 1, 2007. See 71 FR 28229-28239 (May 16, 2006). The amendments change, in several ways, the body of information that filers are required to report on the OGE Form 450. For example, the new regulation eliminates the requirement to report several types of assets and liabilities, such as diversified mutual funds and mortgages on residential rental property.

In August 2005, OGE published a first round paperwork notice of a significant modification to the OGE Form 450. See 70 FR 47204-47206 (August 12, 2005). Because OGE received so many helpful comments in response to that notice, it significantly redesigned the proposed report form and published, in March 2006, another first round paperwork notice announcing that it intended to amend the OGE Form 450. See 71 FR 13848-13850 (March 17, 2006). This notice discusses only those comments received in response to the March 2006 paperwork notice.

Proposed Modifications to the Form

OGE's goal, in addition to reflecting the regulatory amendments to 5 CFR part 2634 that will become effective on January 1, 2007, is to make the OGE Form 450 easier to complete electronically. For example, because it is much easier to fill in a form electronically when it appears in a portrait orientation, we have proposed changing the form's orientation. Additionally, the ability to save an electronic copy of the completed report permits the filer to use it in subsequent filing cycles, without retyping information that has not changed. The proposed form provides enough space for filers to type at least two lines of data in each block and provides agencies with the option to accept digital signatures. Many agency ethics officials have told us that filers make errors on the current OGE Form 450 because they do not read the attached instructions. On the proposed OGE Form 450, the instructions are integrated within the respective response areas.

The proposed modifications to the OGE Form 450 reflect the changes in the confidential financial disclosure regulation. Generally, these changes to the information that will have to be reported on the OGE Form 450 include: Eliminating the reporting of diversified mutual funds, eliminating dates of honoraria, eliminating dates of agreements and arrangements (other than those for future employment), and eliminating the reporting of types of income that assets earned (i.e., dividends, capital gains, or interest), and revising reporting requirements relating to liabilities by eliminating the requirement to report student loans, mortgages on rental property, and credit card debt if the loans are granted on terms made available to the general public.

Also, OGE is proposing to incorporate in the modified OGE Form 450 the new aggregation threshold of more than $305 for the reporting of gifts and travel reimbursements received from one source during the year by regular employee annual filers, with an exception for any items valued at $122 or less that are not counted toward the overall threshold. These new thresholds are based on the General Services Administration's (GSA's) increase in “minimal value” under the Foreign Gifts and Decorations Act to $305 or less for 2005-2007, to which the thresholds are linked by the Ethics Act and OGE regulation. See GSA's redefinition at 70 FR 2317-2318 (pt. V) (January 12, 2005), section 102(a)(2)(A) and (B) of the Ethics Act, OGE's regulatory adjustment of the gifts/reimbursements thresholds for both public and confidential reports at 70 FR 12111-12112 (March 11, 2005), and OGE DAEOgram DO-05-007 of March 17, 2005, all available on OGE's Web site at http://www.usoge.gov.

Finally, OGE is proposing to update the OGE Form 450's Privacy Act Statement summary of the sixth listed routine use (see OGE's notice of revised Privacy Act records systems as published at 68 FR 3097-3109 (January 22, 2003) and routine use “f” at p. 3102 in particular).

Analysis of General Comments Received

OGE received comments on the proposed revised OGE Form 450 from fourteen executive branch agencies and one Federal Government employee association. Several of the agencies provided multiple comments. Based on these comments, a few minor modifications were made to the proposed report form.

Several of the comments that were received seem to concern the proposed report's application to various aspects of the regulation that will be superseded by the above-mentioned amendments on January 1, 2007. For example, some commenters noted that the revised form fails to ask for certain information such as the dates for agreements and arrangements. This is because the new regulation eliminates the requirement to report the specific date for agreements and arrangements on the confidential report form, except for future employment. Also received were a few comments that the form could not easily be completed electronically. This is because the version of the proposed modified form that was distributed to requesters during the paperwork notice process was not electronically fillable.

Many agencies have asked for a “smart form” rather than simply a form that can be filled out and saved electronically. A “smart form” allows the filer to answer a series of questions, after which a computer program enters the relevant data and generates the actual form. The expectation is that a “smart form” would eliminate many of the errors that filers often make when completing the form manually. We understand that such a form would be very useful. Unfortunately, as a small agency, OGE's budget constraints do not permit it to take on this larger project.

In the first round paperwork notice published on March 17, 2006, OGE indicated it intended to permit electronic filing of the new OGE Form 450. For this filing cycle, however, OGE has decided electronic filing using an Internet-based system will not be permitted. Further information about electronic filing will be forthcoming.

In response to the initial first round paperwork notice issued in August 2005, and at the autumn 2005 OGE conference, many commenters criticized the form's length. In response to these comments, the form's length has been significantly reduced. Although the proposed form contains seven pages, no agency will be required to retain the first page of the form (which contains the general instructions) or the last page of the form (which contains the examples), thus reducing the form to five pages. OGE noted, however, that in order to minimize the form's length certain concessions had to be made. For example, as one agency noted, it would be more effective to place the examples with the parts of the form that they illustrate, rather than on one page at the end of the form. But placing the examples on a separate page reduces the form's storage bulk by allowing agencies to separate and discard this page.

The proposed new OGE Form 450 also replaces the “none” boxes that appear in each part of the current OGE Form 450 with five “yes” or “no” boxes that all appear on the signature page. Like the “none” boxes, these “yes/no” boxes will indicate whether the filer has information to report in a particular part of the form. Although filers will still be required to check boxes to indicate whether they have information to report, these statements will be more visible to filers than the “none” boxes and will take up less space than in the previous proposal. Most significantly, placing all of the “yes/no” boxes on the signature page will allow agencies to retain only one page for each filer who checks the “no” box for all five parts, thereby vastly reducing the total number of pages that agencies will be required to store.

Analysis of Specific Comments

One agency commented that placing the signature lines on the form's first page may cause people to sign the form before they fill it out. We note, however, that the current version of the form also is organized in this manner. The filer provides his or her name, position, filing status, and grade, and then he or she signs the form. Parts I—V follow the signature. On the draft of the form that accompanied the first round paperwork notice published in August 2005, we placed all of the signatures at the end of the form. But many ethics officials expressed the concern that filers would forget to sign the form, or that the last page might become detached from the form and lost. As noted above, by putting the signature lines on the same page with the previously mentioned “yes/no” boxes, OGE was able to reduce the length of the proposed modified form in many cases to one page.

One agency requested that supervisors and intermediate reviewers not be required to fill in their e-mail addresses. Although OGE added a block for these individuals to provide their e-mail addresses, OGE is not requiring them to do so. We believe that providing a space on the form for supervisors to include contact information, if they choose to do so, will be helpful to most ethics offices.

One agency suggested that the penalty notice be placed adjacent to the filer's signature in the hope that employees will be more likely to notice it. Unfortunately, it will not fit there. As a compromise, the penalty notice has been moved to the center of page 1, its font size has been increased, it has been placed in bold print and a border is now surrounding it. These changes make it much more prominent than it was on prior versions of the form.

At the suggestion of two agencies, the “Date Received by Agency” box has been enlarged. At another agency's suggestion, the definition of special Government employee (SGE) has been moved so that it appears near the block requiring the filer to indicate his or her SGE status. A third agency recommended the elimination of the requirement that SGEs provide their home addresses, citing privacy concerns, and noting that it is not necessary to have an SGE's address now that the form asks for the filer's e-mail address. OGE agrees that it is not necessary for an SGE to provide a home address. However, OGE thinks it is useful to require an SGE to provide a mailing address at which the agency can contact him or her. Thus, “home address” has been changed to “mailing address” so that the SGE can decide which to provide.

As noted above, the first page of the proposed form includes five statements that take the place of the “none” boxes. One agency correctly noted that only annual filers must complete the gifts/travel reimbursements part of the form. Although in Part V of the form employees are instructed that only annual filers must complete this part of the form, it is agreed that this instruction also needs to be provided with these statements. Immediately above Statement V, the following language has been added: “Statement V is for annual filers only. It does not apply to new entrants and SGEs.”

Three agencies recommended the addition of an instruction that the underlying holdings of variable annuities and investment life insurance must be reported in Part I. Space constraints originally precluded doing this, but this additional instruction has now been included. Three agencies also noted that the definition of “diversified mutual fund” that appeared on the proposed form was incorrect. This editing error has been corrected. The definition now reads as follows: “A mutual fund that does not have a stated policy of concentrating its investments in one industry, business, or single country other than the United States, or bonds of a single State within the United States.”

One agency recommended that the addition of the following to the instructions proposed for Part I: “Designate entries for your dependent children with '(DC)' and '(J)' for joint holdings.” Because it was not the intention of OGE to signal any change in the use of these abbreviations, the instruction in Part I will now read: “You may distinguish any entry for a family member by preceding it with S for spouse, DC for dependent child, or J for jointly held.” In addition to changing the wording of this proposed instruction, it has been placed in the block labeled “Reportable Information” and removed from the instruction blocks for assets and income.

At the suggestion of one agency, line numbers have been added to the Part I continuation page. The suggestion of another agency that the “Bryggadune University” example that illustrates the receipt of earned income in Part I also be used as an example for Part III in order to help illustrate that any position with a former employer should also be listed in Part III has also been accepted.

One agency asked that the portions of the proposed modified form that filers have to complete be shaded, and instructions be provided to fill in the highlighted portions of the form. Although it was initially decided to accept this recommendation, when the highlighting suitable for viewing on a computer screen was made, the highlighting on the printed form was barely visible.

One agency requested that the ethics official, rather than the filer, be required to check the box for the filer's status because filers often mark the wrong box, and ethics officials must correct the error. It is understood that this error occurs, but OGE disagrees that the solution is to require the ethics official to complete this portion of the form. Requiring ethics officials to fill in this information on every form rather than correcting only those forms that have errors in this block would unnecessarily increase the administrative burden on ethics officials. Filers, not ethics officials, should be responsible for providing this information.

One agency asserted that two separate categories of instructions for assets and income are no longer needed because, under the current proposal, earned income, investment income, and assets would all be reported in Part I. OGE disagrees. The instructions for the reporting of assets and investment income are different from the instructions for reporting earned income. For example, a filer must report his or her assets, as well as the assets of the spouse and dependent children, but need not report the earned income of any dependent children. In addition, the reporting threshold for the earned income of the filer is different from the reporting threshold for the earned income of the filer's spouse. OGE believes that keeping the instructions in separate tables will help the filer notice these distinctions.

One agency recommended the addition of a column to Part I for the filer to list the type of asset or income (e.g., stock, bond, employer) which he or she reports. However, in response to comments received when ethics officials were surveyed in 2003, OGE intentionally eliminated the column that required filers to describe the type of income (dividends, rent, salary, capital gains) that they received from the assets listed in Part I. Just as it is unnecessary to require filers to report the type of investment income earned (e.g., “interest, dividends, capital gains”), it also is unnecessary to report the type of asset reported. OGE thinks that it is less time-consuming for the reviewer to contact the filer and ask about any particular entry that is not clearly identifiable on the form.

OGE also disagrees with one agency's suggestion that filers be required to provide the ticker symbols for their stocks and mutual funds. Although OGE recognizes that the inclusion of ticker symbols may be helpful to some reviewers, if the use of the ticker symbols were mandatory, ethics officials would then be required to obtain this information from filers who fail to provide it. OGE also has not accepted a similar recommendation that it allow filers to use the ticker symbol as an alternative to the full name of the reportable asset. Filers sometimes report the wrong ticker symbols and such mistakes make the conflict of interest analysis more difficult. OGE believes that it is best to continue to require that the filer report the full name of the company or fund, and make the use of ticker symbols optional.

On the proposed report that accompanied the first round paperwork notice published in August 2005, OGE had included a column for the filer to indicate whether a particular asset was worth over $15,000 or $50,000. Two agencies recommended that this column be reinstated. OGE had proposed this column so that filers could indicate which of their stocks and sector mutual funds are valued above these regulatory exemption amounts. On further reflection, however, OGE decided that the benefit of receiving this information would not justify the additional filing burden. The regulatory exemption amounts refer to the total value of the filer's financial interest in a particular matter, not just the value of a particular asset. In addition, security values fluctuate.

Two agencies asked that more blocks be added for the reporting of liabilities in Part II. OGE included only two lines in order to shorten the form. In addition, because the underlying confidential financial disclosure regulation amendments that will become effective on January 1, 2007 include a significant expansion of the exceptions for reporting liabilities, most filers will now have few, if any, liabilities to report.

One agency noted that the most common error that employees make in Part III on outside positions is to report, unnecessarily, their official duty activities. This agency recommended that OGE add official duty activities to the “Do Not Report” column in the instructions for Part III. The “Do Not Report” column in Part III already includes the instruction that a filer does not need to report “any position that you hold as part of your official duties.”

Another agency recommended that, in Part III, OGE change the proposed column heading “organization” because it does not adequately convey to filers that they must report their outside activities and employment. Because the heading “organization” is used on the current version of the form, and we have received no indication that it has caused confusion, OGE has not accepted this recommendation.

One agency recommended the removal of the instruction in Part V that filers need not report bequests and other forms of inheritance that they receive. This agency's concern is that including this instruction may lead filers to believe that they also are not required to report their inherited assets in Part I. OGE does not believe it is necessary to change this instruction as proposed.

Two agencies suggested that the proposed example illustrating the requirement that a filer report his or her spouse's earned income on Part I should include the employer's city and State. We have not accepted this recommendation because this information is not required by the regulation either in its current version or as amended effective January 1, 2007. Although the city and State of the spouse's employer appear in the example on the current version of the form, neither the regulation nor the instructions on that form require that this information be reported.

Availability and Timing

After it is finally updated and authorized for use next year, OGE will make the modified OGE Form 450 available to departments and agencies, and their reporting employees, through the Forms, Publications & Other Ethics Documents section of OGE's Web site (http://www.usoge.gov). We will maintain the current version of the form on the OGE Web site for the remainder of 2006.

As noted above, OGE does not intend that the modified OGE Form 450 (once finalized) be utilized until 2007. OGE received from OMB an extension of paperwork clearance for the current version of the report form to allow its continued use for the remainder of 2006. Thus, agencies should continue to have their new entrant confidential report filers, including special Government employees filing such reports upon their reappointment/redesignation or appointment anniversary dates, use the current version of the form throughout 2006. After the forthcoming final clearance of the new modified version of the OGE Form 450, agencies should require both new entrant and annual incumbent confidential report filers to use the new version of the form starting in 2007.

Because of the introduction of the new form, filers will not be required to file their annual incumbent reports by October 31, 2006. Instead, OGE will require annual confidential filers to file the new modified form with their agencies by the new filing deadline of February 15, 2007. This first new report will incorporate a 15-month reporting period (from October 2005 through December 2006) in order to avoid any gap in reporting due to the transition from a fiscal year to a calendar year basis for annual reporting. Thereafter, the new annual confidential reports due each February will just cover the prior calendar year.

The electronically fillable form will be provided in Adobe Acrobat PDF format. It is specially encoded to allow the filer to save the completed form on his or her computer just by using the free Adobe Acrobat Reader software, available from Adobe via a link from the OGE Web site.

Effect on Use of Alternative Reports and OGE Optional Form 450-A

Since 1992, various departments and agencies have developed, with OGE review/approval, alternative reporting formats such as certificates of no conflict for certain classes of employees. Other agencies provide for additional disclosures pursuant to independent organic statutes and in certain other circumstances when authorized by OGE. In 1997, OGE itself developed the OGE Optional Form 450-A (Confidential Certificate of No New Interests (Executive Branch)) for possible agency and employee use in certain years, if applicable. That optional form continues in use at various agencies. However, the OGE Form 450 remains the uniform executive branch report form for most of those executive branch employees required by their agencies to report confidentially on their financial interests. Agencies may allow annual filers who meet the requirements to file the OGE Form 450-A rather than the new OGE Form 450 for this 15-month filing cycle.

Reporting Individuals

The OGE Form 450 is to be filed by each reporting individual with the designated agency ethics official at the executive department or agency where he or she is or will be employed. Reporting individuals are regular employees whose positions have been designated by their agency under 5 CFR 2634.904 (both the current regulation as codified and the rule that will become effective in January 2007) as requiring confidential financial disclosure in order to help avoid conflicts with their assigned responsibilities. Under that section, all special Government employees are also generally required to file. Agencies may, if appropriate under the OGE regulation, exclude certain regular employees or SGEs as provided in 5 CFR 2634.905 (§ 2634.904(b) of the rule that will become effective in January 2007). Reports normally are required to be filed within 30 days of entering a covered position (or earlier if required by the agency concerned), and again annually if the employee serves for more than 60 days in the position.

Most of the persons who file this report are current executive branch Government employees at the time they complete their report. However, some filers are private citizens who are asked by their prospective agencies to file new entrant reports prior to entering Government service in order to permit advance identification of any potential conflicts of interest and resolution thereof by recusal, divestiture, waiver, etc.

Reporting Burden

In the two first round paperwork notices for the proposed modified form, the statistics OGE used to compute the reporting burden mistakenly included filers of the OGE Form 450-A and of alternative forms approved by OGE. Because the statistics should reflect the work involved in completing the OGE Form 450 and not any variations of the form, OGE is refining the statistics to reflect the reporting burden pertaining to the OGE Form 450 only. Additionally, the prior first round paperwork notices used statistics from calendar years 2002, 2003, and 2004. This paperwork notice uses the figures from calendar years 2003, 2004, and 2005.

Based on OGE's annual agency ethics program questionnaire responses for 2003 through 2005, OGE estimates that an average of approximately 246,131 OGE Form 450 reports will be filed each year for the next three years throughout the executive branch. This estimate is based on the number of OGE Form 450 reports filed branchwide for 2003 through 2005 (218,130 in 2003, 280,152 in 2004, and 240,111 in 2005) for a total of 738,393, with that number then divided by three and rounded, to give the projected annual average of 246,131 OGE Form 450 reports. Of these reports, OGE estimates that 7.65 percent, or some 18,829 per year, will be filed by private citizens with departments and agencies throughout the executive branch. Private citizen filers are those potential (incoming) regular employees whose positions are designated for confidential disclosure filing as well as potential special Government employees whose agencies require that they file their new entrant reports prior to assuming Government responsibilities. No termination reports are required for the OGE Form 450.

Because the amount of information that must be reported on the proposed modified form has been reduced, each filing is now estimated to take an average of one hour to complete. This yields an annual reporting burden of 18,829 hours.

Consideration of Comments

In this second round notice, public comment is again invited, this time on the proposed further modified OGE Form 450 summarized in this notice and available without charge from OGE upon request (see the FOR FURTHER INFORMATION CONTACT section above). In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), public comments are invited specifically on the need for and practical utility of this proposed modified collection of information, the accuracy of OGE's burden estimate, the enhancement of quality, utility and clarity of the information collected, and the minimization of burden (including the use of information technology).

The Office of Government Ethics, in consultation with OMB, will consider all comments received, which will become a matter of public record.

Approved: September 6, 2006.

Robert I. Cusick,

Director, Office of Government Ethics.