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3 2MB GENERAL EDUHEEL


SUBJECT: Review of Lease Agreement Under the Federal Ethics Regulations Regarding Gifts

Fnost: Kevin s. Minoli 1 
Desigttated Agency thics Df?ciai 
Principal Deputy General Counsel

TU: Matthew E. Leopold
General Counsel

 

As requested. the Ethics Df?ce reviewed the lease agreement entered into by E. Scott Pruitt
and 1 ttielti Hart under the federal ethics regulations regarding gifts.
The regulations issued by the Office of Ethics are clear that if a federal employee
pays market value for something. it is by de?nition net a gift under those regulations. 5 
1&3 5.2?3th1tt t?ttescluding from the de?nition of gift for which market value is paid
by the mployee?). Market value for rental apanments is commonly thought of in terms of rental
cost per month. Under the terms {If the lease. ifthe space was utilized far one Sill-day month. then
the rental cost would be 51500. which is a reasonable market value. The lease authorized use by
the Administrator and his immediate family. speci?cally including his spouse and children. and
consistent with that pmyision of the lease his immediate family did stay there when they were in
Washington. DC. The lease did not require payment when the prepeny was not utilized. Neither
of these two provisions render the rental cost under the lease as something other than mantel
ealtte. Therefore. entering into the lease was consistent with federal ethics regulations regarding
gills. and use of the property in accordance with the lease agreement did not ennstitute a gift as
defined in these regulations.