5 CFR 550.1504: Eligibility.

(a) An authorized agency official may, upon the request of a beneficiary, furnish one United States flag for an individual who—

(1) Was an employee of the agency at the time of death; and

(2) Died of injuries incurred in connection with such individual's employment with the Federal Government suffered as a result of—

(i) A criminal act;

(ii) An act of terrorism;

(iii) A natural disaster; or

(iv) Other circumstances, as determined by the President.

(b) An authorized agency official may not furnish a flag when the death is the result of—

(1) Unlawful or negligent action of the employee;

(2) Willful misconduct of the employee; or

(3) Activities unrelated to the employee's status as a Federal employee.

(c) The decision whether to furnish a flag to the beneficiary of an eligible employee is at the discretion of the agency. When an authorized agency official determines the agency will furnish a flag for a deceased eligible employee, the official must follow the order of precedence specified in § 550.1505.