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Feds Could Accept Donations of up to $10K for Legal Funds Under First-Ever Ethics Rule - GovExec.com

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The government’s ethics watchdog has issued first-of-its-kind guidelines for federal employees who accept donations to pay for job-related legal fees, easing the restrictions on receiving gifts that the workers typically face. 

The Office of Government Ethics has never issued a rule on legal defense funds for executive branch workers, instead providing high-level input on a case-by-case basis along with broad advisories. The proposed rule followed high-profile Trump administration officials drawing scrutiny for their use of such funds. The ethics office said the rule, while expanding the universe of individuals from whom federal employees can accept gifts, would help avoid perceptions of civil servants using their public office for private gain. 

Federal workers typically face strict limitations on the types of gifts they can accept and who they can accept them from, but under the new rule would allow federal employees to sidestep many of those by setting up a legal defense fund. Individuals who do not have business before the employee’s agency could donate up to $10,000 per year to that person’s fund, so long as they are not a lobbyist, an agent of a foreign government or acting on someone else’s behalf. Individuals would not be eligible to donate if they were regulated by the beneficiary’s agency. Donors cannot send money anonymously under ethics office's proposal, and all donations—and disbursements—of more than $250 must be reported publicly on a quarterly basis. No organizations can make contributions and the funds can only be used for legal expenses. 

The funds, under the Office of Government Ethics’ rule, must be set up as a trust with a single beneficiary. The ethics office requested comments on that provision specifically, expressing concern that it would create too high of a barrier for feds who are not wealthy and well-connected. Employees would not have any direct control of their funds and the trustee could not be someone not in their immediate family. The fund would have to receive approval from an agency ethics official—with additional signoff from the Office of Government Ethics office required for top agency officials and White House staff—and they would not be able to start taking donations until that occurred. 

The proposed rule would apply to employees with legal fees related to matters involving their past or current official position, their prior position on a campaign or a prior position on a presidential transition team. The same rules would generally apply to federal workers accepting pro bono legal services. The ethics office clarified that established employee groups such as unions can provide free legal services. 

Former Environmental Protection Agency Administrator Scott Pruitt sparked controversy in 2018 for accepting donations to his legal fund from wealthy individuals without seeking advice from the agency’s ethics officials. President Trump also maintained a legal fund, though he repeatedly claimed that ethics laws do not apply to the president.

When closing out a legal defense fund, the ethics office proposed that trustees must donate all remaining money to charity within 90 days. 

The rule only applies to employees requiring legal services for matters related to their official duties. Employees with legal expenses related to personal matters are still subject to the gift restrictions that apply to all federal workers. Employees could only establish their funds in their personal capacities and would be subject to other existing ethics rules, such as not soliciting donations while on the clock or in their government facilities.  

The proposed rule has been two years in the making, as the ethics office launched the process after saying it had never approved or disapproved any specific legal expense fund. The agency will accept comments through June 21 before issuing a final rule. 

“There is currently no statutory or regulatory framework for establishing a legal expense fund in the executive branch, which has created concerns regarding the appearance of corruption in the creation and operation of legal expense funds for the benefit of executive branch employees,” OGE said. “The proposed regulation will more clearly spell out who is a prohibited donor, establish donation caps, and require transparency in the form of quarterly, publicly available reports.”

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