Are Government Seals Copyrighted?

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I'm working on my logo, and for the sake of simplicity and local credibility, I want my logo to be based on the country seal. I'm not trying to pretend to be a government agency, but I want to make it clear that I am local and work exclusively in this county. 

I'll be making some changes to the seal, but I'm not sure exactly how the law applies, and I definitely don't want to step into any gray areas.

No gray areas here. Local governments have trademarks in their seals. If you use their seal in your logo, you won't be able to trademark it. And there's a high likelihood that you will confuse people into thinking you are a government agency, or affiliated with one. Maybe consider a key symbol from the seal (county bird, or color or something) and implement that instead.