Background/Issues

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. 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. 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. Conflict of Interest Regulation

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. 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. Disqualification and Prohibited Conflicts of Interest

The principal statutory method of dealing with potential conflicts of interest of an executive branch officer or employee is to require the disqualification (or "recusal") of the officer or employee from participating in any official governmental matter in which that official—or those close enough to the official such that their financial interests may be "imputed" to the official—has any "financial interest." There is also a "regulatory" recusal requirement that may be broader in some aspects than the statutory restriction, and may apply to certain past affiliations and previous economic interests. Two-Year Regulatory Disqualification for Extraordinary Payments From Past Employers

In addition to the one-year recusal requirement for particular matters involving specific parties when a former client, employer, firm, or business is or represents a party in that matter (or two years by Executive Order if one is a presidential or vice presidential appointee in the Obama Administration), the regulations of the Office of Government Ethics also provide for a two-year recusal requirement which bars an official in the executive branch from participating in a particular matter in which a "former employer" is or represents a party when that former employer had made an "extraordinary payment" to the official prior to entering government. A further restriction on "lobbyists" serving in federal positions was announced by the Obama Administration in September of 2009, explaining the Administration's intention to prohibit federally registered lobbyists from serving on federal advisory boards and commissions used by federal executive agencies and officials. As noted earlier, the principal statutory method of conflict of interest avoidance, with respect to particular assets and holdings of a federal official, is to require the disqualification of that official from a governmental matter affecting those financial interests.
Ethics and conflict of interest concerns have been raised concerning the impartiality or bias of government regulators or administrators who, shortly before entering government service, represented, owned, were employed by, or were given large cash payments or "rewards" by private firms or other entities that such officials must now regulate and oversee. Federal conflict of interest law and regulation, for the most part, deal with the potential influence of existing financial assets, properties, and relationships of a federal official. There are, however, some limited conflict of interest regulations and standards which look also to previous employment and past associations of those entering federal service. Additionally, in 2009, by Executive Order, certain "appointees" of President Obama must, during the Obama Administration, file an "ethics pledge" agreeing to further limitations on participating in governmental matters affecting some former employers and/or clients. In 2010, the Administration's policy of not having registered lobbyists serve on advisory committees was formalized.
The regulatory scheme regarding financial interests and federal officials encompasses generally what has colloquially been called the "three-D" method of conflict of interest regulation, that is: disclosure, disqualification, and divestiture. Public financial disclosure is required of incoming federal officials who will be compensated above certain amounts, including those officials nominated by the President who must receive Senate confirmation. Disclosure information covers not only existing assets, property, debts, and income, but also pertains to certain information about past clients and employers, and positions held in organizations.
Disqualification or "recusal," the principal statutory method of dealing with potential conflicts of interest in the executive branch, prohibits a federal official from participating in any particular governmental matter in which that official, or those close to the official, has any financial interest. While the statutory disqualification provision is a criminal law covering only current financial interests of the official, there are also "regulatory" recusal requirements that may apply to certain past affiliations and previous economic interests. Such regulatory recusals are limited in time and generally apply to particular matters involving specific parties when entities or organizations previously affiliated with the federal official are now parties to or represent parties in those matters. There are also recusal requirements in regulations concerning such particular matters when a party (or one representing a party) had made an "extraordinary payment" to the official prior to the official's entry into government. Further limitations on participation in governmental matters have been imposed on certain presidential and vice presidential "appointees" in the Obama Administration who are required to take an "ethics pledge" concerning past clients and employers.
Other than certain specific and narrow divestiture requirements on particular regulatory officials that are generally part of the organic act establishing the regulatory entity, there are no overall, general divestiture requirements in federal law. Divestiture, however, may be an important device in conflict of interest avoidance, and can be required under regulatory authority by agency ethics officers to deal with potential conflicts of interest regarding ownership of particular private assets by those entering government service.