[Federal Register Volume 87, Number 45 (Tuesday, March 8, 2022)]
[Proposed Rules]
[Pages 12888-12898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04452]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 45 / Tuesday, March 8, 2022 /
Proposed Rules
[[Page 12888]]
POSTAL SERVICE
5 CFR Part 7001
RIN 3209-AA51
Supplemental Standards of Ethical Conduct for Employees of the
United States Postal Service
AGENCY: Postal Service.
ACTION: Proposed rule.
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SUMMARY: The United States Postal Service (Postal Service), with the
concurrence of the United States Office of Government Ethics (OGE),
proposes to amend the Supplemental Standards of Ethical Conduct for
Employees of the United States Postal Service by updating and refining
outside employment and activity provisions (including prior approval
requirements and prohibitions), by adding new requirements applicable
to Postal Service Office of Inspector General (OIG) employees and
Postal Service Governors, and by making limited technical and
ministerial changes.
DATES: Submit comments on or before May 9, 2022.
ADDRESSES: Comments may be mailed or delivered to Jessica Brewster-
Johnson, Senior Ethics Counsel, United States Postal Service, 475
L'Enfant Plaza SW, Washington, DC 20260-1101; or submitted to
[email protected]. Faxed comments will not be accepted.
All written comments may be inspected and photocopied, by
appointment only, at Postal Service Headquarters Library, 475 L'Enfant
Plaza SW, 11th Floor North, Washington, DC. These records will be
available for review Monday through Friday, 9 a.m.-4 p.m., by calling
202-268-2906. All submitted comments and attachments are part of the
public record and subject to disclosure. Do not enclose any material in
your comments that you consider to be confidential or inappropriate for
public disclosure.
FOR FURTHER INFORMATION CONTACT: Jessica Brewster-Johnson, Senior
Ethics Counsel, United States Postal Service, 475 L'Enfant Plaza SW,
Washington, DC 20260-1101, 202-268-6936.
SUPPLEMENTARY INFORMATION:
I. Background
Pursuant to the Ethics in Government Act of 1978, as amended, and
other legal authority, OGE published new Standards of Ethical Conduct
for Employees of the Executive Branch (Standards) on August 7, 1992,
which were codified in 5 CFR part 2635. See 57 FR 35006-35067, as
corrected at 57 FR 48557 and 52583, with additional grace-period
extensions at 59 FR 4779-4780 and 60 FR 6390-6391. The Standards, which
became effective on February 3, 1993, set uniform ethical conduct
standards applicable to all executive branch personnel.
Under 5 CFR 2635.105, agencies may issue, with OGE's concurrence,
agency-specific regulations that supplement the Standards when the
agency determines that such supplemental regulations are necessary and
appropriate, in view of its programs and operations, to fulfill the
purposes of the Standards. Under 5 CFR 2635.802(a), agencies are
authorized to issue supplemental regulations prohibiting employees from
engaging in outside employment or other outside activities that
conflict with their official duties. Under 5 CFR 2635.803, agencies are
authorized to issue supplemental regulations requiring employees to
obtain prior approval before they engage in outside employment or other
outside activities.
On September 11, 1995, the Postal Service issued, with OGE's
concurrence, the Supplemental Standards of Ethical Conduct for
Employees of the United States Postal Service (Supplemental Standards),
which were codified in 5 CFR part 7001. See 60 FR 47240-47241. The
Supplemental Standards prohibit employees from engaging in certain
outside employment or business activities and require prior approval
for employees to engage in other outside employment or business
activities.
The Postal Service has now determined that amendment of the
Supplemental Standards is needed for the reasons explained below.
II. Explanation of Changes
A. Amendment of Sec. 7001.102(a)(1) To Modify the Restrictions on
Employees' Outside Employment or Business Activities With or for
Manufacturers of Uniforms or Other Postal-Required Products
Section 7001.102(a)(1)(i) of the Supplemental Standards currently
prohibits employees from engaging in outside employment or business
activities with or for persons, including the employees themselves,
engaged in the manufacture of any uniform, or other product required by
the Postal Service for use by its employees or customers (``other
postal-required products''). The Postal Service proposes to eliminate
this prohibition.
In connection with the issuance of the Supplemental Standards, the
Postal Service discussed the reason for the current prohibition in
Sec. 7001.102(a)(1)(i). See 60 FR 15700. The Postal Service explained
that the involvement of employees in the outside employment and
business activities covered by that provision could cause members of
the public to question the impartiality and objectivity with which
postal programs are administered because it could create the appearance
that the employees, or persons they represent or with whom they are
otherwise affiliated, are in a position to benefit from knowledge or
influence gained by the employees through their official positions.
The Postal Service has now concluded that the prohibition in Sec.
7001.102(a)(1)(i) is unduly restrictive. The Postal Service has
determined that the impartiality and objectivity concerns raised in
connection with the initial issuance of the Supplemental Standards may
adequately be addressed without outright prohibiting the sizeable
postal workforce (many of whom are part-time employees) from engaging
in the outside employment or business activities covered by Sec.
7001.102(a)(1)(i). In making this determination, the Postal Service has
considered that its experience since the initial issuance of the
Supplemental Standards has been that employees' outside employment or
business activities with or for manufacturers of uniforms or other
postal-required products would in many cases not cause members of the
public to question the impartiality and
[[Page 12889]]
objectivity with which postal programs are administered. This is
because uniform programs are administered by a discrete postal
headquarters organization and are not affected by employees outside
that organization, and other postal-required products are similarly
administered.
With the elimination of the prohibition in Sec. 7001.102(a)(1)(i),
employees will be required to obtain approval from the Postal Service's
Ethics Office prior to engaging in outside employment or business
activities with or for manufacturers of uniforms or other postal-
required products in situations covered by the existing prior-approval
process in Sec. 7001.102(b), as revised in these amendments of the
Supplemental Standards. Those situations include the following ones in
which impartiality and objectivity concerns are most likely to arise in
the Postal Service's experience:
(1) The employee has official dealings with the manufacturer on
behalf of the Postal Service (Sec. 7001.102(b)(1)(i)); or
(2) the manufacturer has interests that are substantially dependent
upon providing goods or services to, or for use in connection with, the
Postal Service (Sec. 7001.102(b)(1)(ii)(B)).
These situations requiring prior approval would encompass those
employees working in the discrete organizations responsible for uniform
programs and other postal-required products for whom impartiality and
objectivity concerns might be heightened. The review by the Postal
Service's Ethics Office under the prior-approval process can be
expected to identify and address those employment or business
relationships that would present ethical conduct concerns under 5 CFR
part 2635 because of the employee's official duties and the
manufacturer's interests.
However, regardless of the prior-approval process described above,
postal employees will continue to be prohibited from acting as agent,
with or without compensation, for any postal contractor for uniforms or
other postal-required products, or person offering to become such a
contractor. The criminal statute codified at 18 U.S.C. 440 makes it
unlawful for postal employees to act as agent, with or without
compensation, for any contractor or person offering to become a
contractor in any business before the Postal Service. This provision is
currently incorporated in Sec. 7001.103 of the Supplemental Standards.
Postal employees will also continue to be prohibited from engaging
in certain specified outside employment or business activities with
postal contractors for uniforms or other postal-required products. As
explained in further detail below, renumbered Sec. 7001.102(a)(1) of
the Supplemental Standards prohibits employees from engaging in outside
employment or business activities that involve providing consultation,
advice, or any subcontracting service, with respect to postal
operations, programs, or procedures, to any person who has a contract
with the Postal Service or who the employee has reason to believe will
compete for such a contract.
B. Amendment of Sec. 7001.102(a)(1) and (b)(1) To Modify the
Restrictions on Employees' Outside Employment or Business Activities
With or for HCR Contractors
The Postal Reorganization Act, as amended, codified at 39 U.S.C.
5005, authorizes the Postal Service to contract for the surface
transportation of mail. The Postal Service enters into Highway Contract
Route (HCR) contracts under that statute.
Section 7001.102(a)(1)(ii) of the Supplemental Standards currently
prohibits employees from engaging in outside employment or business
activities with or for persons, including the employees themselves,
engaged in the transportation of mail under Postal Service (HCR)
contract to or from the postal facility at which the employee works or
to or from a postal facility within the delivery area of a post office
in which the employee works (``transportation area criteria''). The
Postal Service proposes to eliminate this prohibition and replace it
with a provision requiring employees to obtain approval from the Postal
Service's Ethics Office prior to engaging in outside employment or
business activities with or for any HCR contractor, which will be
accomplished by amending Sec. 7001.102(b)(1).
In connection with the issuance of the Supplemental Standards, the
Postal Service discussed the reason for the current prohibition in
Sec. 7001.102(a)(1)(ii). See 60 FR 15700-15701. The Postal Service
explained that any outside employment involving the delivery of mail at
or near an employee's workplace, without regard to the nature of the
employee's duties, might lead reasonable persons to be concerned that
the employee's outside employer was receiving preferential treatment
from the Postal Service. Id. The Postal Service has now concluded that
the prohibition in Sec. 7001.102(a)(1)(ii) is both unduly restrictive
and too narrowly focused to address conflicts and impartiality concerns
adequately. Specifically, the Postal Service has determined that
preferential treatment concerns regarding employees engaging in outside
employment or business activities with or for persons engaged in the
transportation of mail under HCR contract could occur whether or not
such outside employment or business activities meet the transportation
area criteria described in the current Sec. 7001.102(a)(1)(ii). These
concerns, however, may be sufficiently addressed through a prior-
approval process without outright prohibiting the sizeable postal
workforce (many of whom are part-time employees) from engaging in such
outside employment or business activities.
Section 7001.102(b) of the Supplemental Standards currently governs
the requirements for employees to obtain prior approval to engage in
outside employment or business activities with or for certain
categories of persons. The Postal Service proposes to amend Sec.
7001.102(b)(1) to add a provision at Sec. 7001.102(b)(1)(iii)
requiring employees to obtain prior approval from the Postal Service's
Ethics Office to engage in outside employment or business activities
with or for any HCR contractor. This prior-approval requirement is not
limited to situations covered by the existing prior-approval process in
Sec. 7001.102(b), as revised in these amendments of the Supplemental
Standards, which is the case when employees wish to engage in outside
employment or business activities with or for manufacturers of uniforms
or other postal-required products as discussed above. Rather, this
prior approval requirement applies in any circumstance in which
employees desire to engage in outside employment or business activities
with or for any HCR contractor. This difference is due to the greater
impact on the Postal Service of its many HCR contracts nationwide as
compared to uniform programs or programs for other postal-required
products. The procedure for requesting, and the standard for granting,
approval to engage in outside employment or business activities with or
for an HCR contractor will be the same as that which exists for
requesting and granting approval for other types of outside employment
and business activities for which prior approval is required under
Sec. 7001.102(b). The review by the Postal Service's Ethics Office
under this prior-approval process can be expected to identify and
address those employment or business relationships that would present
ethical conduct concerns under 5 CFR part 2635 because of the
employee's official
[[Page 12890]]
duties and the HCR contractor's interests.
As discussed above in the context of outside employment and
business activities with or for certain manufacturers, other provisions
of the Supplemental Standards will continue to restrict certain
activities with respect to HCR contractors. Specifically, renumbered
Sec. 7001.102(a)(1) will continue to prohibit employee outside
activities that involve providing consultation, advice, or any
subcontracting service to a HCR contractor or person offering to become
such a contractor, and 18 U.S.C. 440, as incorporated in Sec. 7001.103
of the Supplemental Standards, continues to prohibit employees from
acting as agents for any HCR contractor, or person offering to become
such a contractor.
C. Amendments to Sec. 7001.102(a) Relating to Outside Employment or
Business Activities
The removal of current Sec. 7001.102(a)(1)(i) and (ii), described
above, will result in the renumbering of the restrictions found at
current Sec. 7001.102(a)(1)(iii) and (iv). To provide additional
clarity, the Postal Service proposes to revise the language of these
remaining restrictions. First, the Postal Service is modifying the
language of current Sec. 7001.102(a)(1)(iii), which prohibits
employees from ``engag[ing] in outside employment or business
activities with or for persons, including oneself, engaged in:
Providing consultation, advice, or any subcontracting service, with
respect to the operations, programs or procedures of the Postal
Service, to any person who has a contract with the Postal Service or
who the employee has reason to believe will compete for such a
contract.'' The Postal Service stated that its original intent with
this provision was to prohibit employees from providing ``consultation,
advice, or any subcontracting service,'' but also noted that ``an
employee would not be prohibited from consulting with a business that
happens to hold a Postal Service contract when the employee's
consulting work is not related to that contract and does not have any
other postal connection.'' 60 FR 15701. In other words, the prohibition
is focused on, and has been consistently applied by the Postal Service
to, the outside activity of the employee, not the activity of the
outside employer. As currently written, the Sec. 7001.102(a)(1)(iii)
prohibition could be read to cover both the employee and the outside
employer because of the introductory phrasing ``with or for a person,
including oneself.'' In order to more clearly state that the
prohibition is tied to the type of work the employee will do for an
outside employer or on their own, the Postal Service proposes to modify
this language in the restriction, found at renumbered Sec.
7001.102(a)(1), to state that an employee cannot engage in outside
employment or business activities ``that involve providing'' certain
consultation, advice, or subcontracting services.
Second, the Postal Service has revised current Sec.
7001.102(a)(1)(iv) by separating the two distinct prohibitions
contained therein: (1) The operation of a commercial mail receiving
agency and (2) the delivery outside the mails of any type of mailable
matter, except daily newspapers. These prohibitions, now at renumbered
Sec. 7001.102(a)(2), include revised language to more clearly state
that an employee is prohibited from engaging in outside employment or
business activities ``with, for, or as a person engaged in'' the
activity; for consistency, related language in the prior approval
section at Sec. 7001.102(b)(1)(ii) has similarly been updated. No
substantive change is intended.
D. Amendment of Sec. 7001.102 Relating to Outside Employment or
Business Activities With Certain Subsidiaries
As described above, current Sec. 7001.102(a)(1)(iv) (renumbered as
Sec. 7001.102(a)(2)) prohibits employees from engaging in outside
employment or business activities with, for, or as persons engaged in
certain categories of activities. The Supplemental Standards do not
currently include a definition of ``person.'' Therefore, the definition
of that term set forth in the Standards (5 CFR 2635.102(k)) applies to
the Supplemental Standards. That definition provides that a ``person''
includes, among others, a corporation and each subsidiary it controls
(``corporate subsidiary provision''). Consequently, when a corporation
is engaged in an activity covered by renumbered Sec. 7001.102(a)(2),
employees are not only currently prohibited from engaging in outside
employment or business activities with or for the corporation, but also
with or for a subsidiary, regardless of whether the subsidiary is also
engaged in a covered activity. For the reasons discussed below, the
Postal Service proposes to add a provision to Sec. 7001.102(b) that
would permit an employee to request approval to engage in outside
employment or business activities with certain subsidiaries of entities
engaged in activities covered by renumbered Sec. 7001.102(a)(2).
In connection with the initial issuance of the Supplemental
Standards, the Postal Service discussed the reasons for the outside
activity prohibitions in Sec. 7001.102(a). See 60 FR 15700-15702. The
Postal Service explained that reasons for the prohibitions included
that covered outside employment and business activities could lead
members of the public to be concerned that the employees were using
knowledge or influence gained through their official positions to
benefit their outside employers or business associates, or might lead
members of the public to question the employees' loyalty to the Postal
Service, thereby undermining public confidence in the integrity of
postal operations.
The Postal Service has now concluded that application of the
corporate subsidiary provision to the proposed amended Sec.
7001.102(a)(2) would be unduly restrictive in circumstances in which a
corporation is engaged in a covered activity, but a subsidiary with
which an employee desires to engage in employment or business
activities is not. The Postal Service has determined that the concerns
raised in connection with the initial issuance of the Supplemental
Standards are oftentimes not present when an employee would like to
engage in business activities with or for a company that is not engaged
in any of the activities outlined in Sec. 7001.102(a)(2), but happens
to be the subsidiary of a company engaged in such activities. In making
this determination, the Postal Service no longer considers there to be
a divided loyalty question with an employee who would like to work for
a subsidiary that is not engaged in the activities outlined in Sec.
7001.102(a)(2), even though the parent corporation is engaged in such
activities. This is because the focus of Sec. 7001.102(a)(2) is on the
business activities of the subsidiary itself. When a subsidiary engages
in a wholly separate line of trade than its parent corporation, the
Postal Service is not concerned with the subsidiary's line of trade if
that line of trade does not fall under the ambit of Sec.
7001.102(a)(2).
In order to mitigate the undue restrictiveness of renumbered Sec.
7001.102(a)(2), the Postal Service proposes to add a subsection, Sec.
7001.102(b)(2), that provides an exception for certain subsidiaries.
This provision provides that an employee who wishes to engage in
outside employment or activities with an entity that does not itself
engage in the activities outlined in Sec. 7001.102(a)(2), but is the
subsidiary of an entity that
[[Page 12891]]
engages in those activities, should follow the prior approval process
laid out in Sec. 7001.102(b)(3). Approval would allow the employee to
engage in outside employment or activity with a subsidiary that would
otherwise be restricted by renumbered Sec. 7001.102(a)(2) because of
the corporate subsidiary provision. For example, Employee A would like
to get a second job as a delivery driver for Amazon Logistics. Employee
B would like to earn money on the video streaming website Twitch. Both
Amazon Logistics and Twitch are subsidiaries of Amazon. Employee A is
prohibited from working for Amazon Logistics because that subsidiary
delivers mailable matter outside of the mail, and Sec. 7001.102(b)(2)
does not contemplate that approval can be granted for this type of
subsidiary employment. However, Employee B may request prior approval
to earn money on the website Twitch because that subsidiary is engaged
in creating digital media content, which is not prohibited under Sec.
7001.102(a)(2). An example has been added to this subsection
identifying a scenario in which an employee may request prior approval
for outside employment with a subsidiary.
E. Amendment of Sec. 7001.102(a)(2) To Modify the Activities in Which
Employees Are Prohibited From Engaging While on Duty, in Uniform, at
Any Postal Facility, or Using Postal Equipment
Section 7001.102(a)(2) of the Supplemental Standards currently
prohibits employees from engaging in any sales activity, including the
solicitation of business or the receipt of orders, for themselves or
any other persons while on duty or in uniform, or at any postal
facility. The Postal Service proposes to amend this provision, now at
renumbered Sec. 7001.102(a)(3), to add a prohibition on using postal
equipment to engage in such sales activity. The Postal Service
additionally proposes to amend this provision to also prohibit
employees from engaging in fundraising (as defined in the Standards) or
for-profit business activities for themselves or any other persons
while on duty, in uniform, at any postal facility, or using any postal
equipment (but not including fundraising at a postal facility as
permitted in connection with the Combined Federal Campaign (CFC) under
5 CFR part 950). The added reference to fundraising is intended to
highlight an existing restriction in the Standards (see 5 CFR
2635.808), and to improve clarity and reduce confusion for employees.
It is not intended to create a separate, new restriction. Examples have
been added to Sec. 7001.102(a)(3) demonstrating these prohibitions.
The Postal Service often encounters situations in which employees
who are involved in outside sales activities engage in those activities
while on duty, in uniform, on postal property, and/or using postal
equipment. The Postal Service has routinely found that by engaging in
those activities while on duty, in uniform, on postal property, and/or
using postal equipment, the employees violate the misuse of public
office for private gain, misuse of Government property, and/or misuse
of official time provisions of the Standards (5 CFR part 2635, subpart
G).
The Standards define ``fundraising'' to include, among other
things, the raising of funds for a nonprofit organization, other than a
political organization as defined in 26 U.S.C. 527(e), through the
solicitation of funds or sale of items. See 5 CFR 2635.808(a)(1)(i).
The Postal Service often encounters situations in which employees who
are involved in outside fundraising as defined in the Standards or for-
profit business activities engage in those activities while on duty, in
uniform, on postal property, and/or using postal equipment. The Postal
Service has routinely found that by engaging in those activities while
on duty, in uniform, on postal property, and/or using postal equipment,
the employees violate the misuse of public office for private gain,
misuse of Government property, and/or misuse of official time
provisions of the Standards (5 CFR part 2635, subpart G).
In addition, the Postal Service's Conduct on Postal Property (COPP)
regulations prohibit, with some exceptions, any person entering in or
on property under the charge and control of the Postal Service from
soliciting alms or contributions, or soliciting or vending for
commercial purposes. See 39 CFR 232.1(a), (h)(1). The Postal Service
has also routinely found that by engaging in outside sales activities,
outside fundraising as defined in the Standards, or for-profit business
activities on postal property, employees violate those COPP
regulations.
In consideration of all these factors, the Postal Service wishes to
explicitly incorporate in the Supplemental Standards a restriction on
engaging in these activities.
F. Amendment of Sec. 7001.102 To Provide for the Requirements for OIG
Employees To Report and/or Obtain Prior Approval To Engage in Outside
Employment or Business Activities
The Postal Service proposes to amend Sec. 7001.102 to add a
provision at Sec. 7001.102(c) providing for the requirements for when
OIG employees must report or obtain prior approval to engage in outside
employment or business activities. The amendment of Sec. 7001.102 will
result in the current definitions located at Sec. 7001.102(c) being
renumbered to Sec. 7001.102(d).
The proposed amendment requires all OIG employees to provide notice
to, and OIG Special Agents and Criminal Investigators to obtain
approval from, the OIG's Office of General Counsel before engaging in
compensated or uncompensated outside employment or business activities,
including:
(1) Any knowing sale or lease of real estate to the Postal Service
or to a Postal Service employee or contractor, regardless of the
frequency of such sales or leases or whether the sale or lease is at
fair market value;
(2) any ownership or control of a publicly-accessible online or
physical storefront; and
(3) volunteer activities, if they regularly exceed 20 hours per
week or when the employee holds an officer position in the
organization.
Employees' outside employment or business activities may not
interfere with their ability or availability to perform OIG duties. The
OIG's Office of General Counsel will analyze the reports of employees
engaged in outside employment or business activities to ensure that
they are warned of potential conflicts of interest or loss of
impartiality. Reporting these types of outside activities is necessary
for OIG employees (as opposed to regular Postal Service employees) due
to the nature of the OIG's work and the OIG's desire to avoid even the
appearance of impropriety. As an oversight entity, the OIG strives to
maintain an elevated standard of conduct that serves as an example to
its Postal Service colleagues. The OIG's reputation is of paramount
importance in its relationship with the Postal Service, Congress, and
other stakeholders. Accordingly, outside financial entanglements that
could impact the impartiality of OIG agents and auditors are of
particular concern, including the following:
1. Real Estate
Employees must report the knowing sale or lease of real estate to
the Postal Service or to a Postal Service employee
[[Page 12892]]
or contractor due to the high risk of a conflict of interest or loss of
impartiality inherent in such a large (in the case of a sale) or
ongoing (in the case of a lease) financial transaction. For example, an
audit manager who leases land to the entity he or she is auditing is
likely to have actual or apparent independence concerns that would
interfere with his or her duties.
2. Commercial Business
Because virtual businesses can be accessed at any time, including
during employees' official work hours, employees who have ownership or
control of publicly-accessible online storefronts will be advised that
they are prohibited from using Government resources, including
property, or time to conduct their outside businesses. The Postal
Service has no de minimis exception for using Government resources or
time to conduct outside employment or business activities. In the case
of ownership or control of physical storefronts, the same prohibition
on using Government resources or time applies.
3. Volunteer Activities
Limited volunteer activities seldom pose a significant risk of
violating 18 U.S.C. 208 or 5 CFR 2635.502. However, regular volunteer
work of more than 20 hours per week or holding an officer position
within an outside organization must be reported to ensure that
employees' close relationships to the outside entities would not cause
a reasonable person to question the employees' impartiality.
Accordingly, employees who engage in volunteer work may not use
Government resources or time, including--per Postal Service policy--
sick leave, to engage in their volunteer work and may not participate
personally and substantially in OIG particular matters that would
directly and predictably affect the organization with which they
volunteer. USPS OIG believes that an OIG employee's participation in
those matters would cause a reasonable person to question the OIG
employee's impartiality in the matter. See 5 CFR 2635.502. Two examples
have been provided in Sec. 7001.102(c)(1) regarding the reporting of
volunteer activities. Employees may submit questions about reporting of
volunteer activities to the OIG's Office of General Counsel.
4. Law Enforcement Officer Approval Requirement
Law Enforcement Officer involvement in outside employment or
business activities can pose additional challenges that must be
coordinated with OIG management and legal counsel to ensure that the
Law Enforcement Availability Pay (LEAP) requirements of 5 U.S.C. 5545a
and 5 CFR 550.181 through 550.186 can be balanced against the outside
activity. The Postal Service proposes to add new Sec. 7001.102(c)(2)
to require that such individuals in the OIG--Special Investigators and
Criminal Investigators--obtain prior approval for the outside
activities enumerated in Sec. 7001.102(c)(1). For these employees,
their outside employment and business activities often draw upon their
OIG law enforcement training and experience, requiring them to carry
firearms, which creates liability and safety concerns. In addition, the
OIG must ensure that Special Agents and Criminal Investigators are
available to carry out their law enforcement duties during exigent
circumstances. Special Agents receive LEAP and are required to be
available 50 hours per week. A conflict of interest review must be
conducted to ensure that Special Agents are aware of these potential
liability issues and duty requirements that are particular to their law
enforcement profession. Non-investigators do not have LEAP requirements
or potential firearm liability issues because they are not required to
carry firearms as part of their OIG duties. Accordingly, the proposed
amendment imposes the additional requirement that Special Agents and
Criminal Investigators request and obtain written approval prior to
engaging in outside employment or business activities which they are
required to report under the proposed amendment.
G. Amendment of Sec. 7001.102 To Revise and Add Definitions
Section 7001.102(c) of the Supplemental Standards, which will be
renumbered to Sec. 7001.102(d), currently provides definitions of
certain terms used in Sec. 7001.102. The Postal Service proposes to
amend this section as follows to include new definitions, which will
result in the renumbering of existing definitions in this section:
1. Commercial Mail Receiving Agency
Current Sec. 7001.102(a)(1), proposed to be renumbered to Sec.
7001.102(a)(2)(i), prohibits employees from engaging in outside
employment or business activities with or for persons engaged in the
operation of a commercial mail receiving agency registered with the
Postal Service. The Supplemental Standards do not currently include a
definition of a ``commercial mail receiving agency.'' The Postal
Service proposes to amend the definitions section of Sec. 7001.102 to
define a ``commercial mail receiving agency'' as a private business
that acts as the mail receiving agent for specific clients, and explain
that the business must be registered with the post office responsible
for delivery to the commercial mail receiving agency.
2. A Person Engaged in the Delivery Outside the Mails of Any Type of
Mailable Matter
Section 7001.102(a)(1), proposed to be renumbered to Sec.
7001.102(a)(2)(ii), currently prohibits employees from engaging in
outside employment or business activities with or for persons engaged
in the delivery outside the mails of any type of mailable matter,
except daily newspapers. The Supplemental Standards do not currently
include a definition of ``a person engaged in the delivery outside the
mails of mailable matter.'' The Postal Service has found that employees
are at times uncertain as to which of the different types of non-postal
delivery services current Sec. 7001.102(a)(1) applies.
The Postal Service proposes to amend the definitions section of
Sec. 7001.102 to define ``a person engaged in the delivery outside the
mails of any type of mailable matter'' as a person who is engaged in
the delivery outside the mails of any letter, card, flat, or parcel
eligible to be accepted for delivery by the Postal Service. An example
has been added to renumbered Sec. 7001.102(a)(2)(ii) identifying four
global companies that currently qualify as ``a person engaged in the
delivery outside the mails of any type of mailable matter, except daily
newspapers'' (i.e., United Parcel Service (UPS), Federal Express
(FedEx), Amazon, and DHL). Other businesses exist that qualify as such
a person, including but not limited to, regional companies that deliver
mailable matter that is not daily newspapers.
3. A Person Having Interests Substantially Dependent Upon, or
Potentially Affected to a Significant Degree by, Postal Rates, Fees, or
Classifications
Section 7001.102(b) currently requires employees to obtain prior
approval to engage in outside employment or business activities with or
for persons whose interests are substantially dependent upon, or
potentially affected to a significant degree by, postal rates, fees, or
classifications. The definitions section of Sec. 7001.102 currently
defines ``a person having interests substantially dependent upon, or
potentially affected to a significant degree by, postal rates, fees, or
classifications'' to include, among other persons, a person who is
[[Page 12893]]
engaged in a business that depends substantially upon the mails for the
solicitation or receipt of orders for, or the delivery of, goods or
services.
The Postal Service proposes to amend this definition to clarify the
employees who qualify in the current e-commerce environment as a person
engaged in a business that depends substantially upon the mails for the
delivery of goods or services (``a person engaged in a mail delivery-
dependent business''). Since the initial issuance of the Supplemental
Standards in 1995, the internet has come to provide a new avenue for
the sale of goods and services to the public, including by persons who
did not previously engage in sales activity, with many of those items
shipped to purchasers using the Postal Service. The Postal Service does
not intend that employees will qualify as a person engaged in a mail
delivery-dependent business unless they operate a commercial business
that utilizes the Postal Service as its primary shipper and can be
expected to earn gross revenue exceeding $10,000 from utilizing the
mails in its current fiscal year.
The Postal Service proposes to remove the reference in this
definition to ``a person who is engaged in a business that depends
substantially upon the mails for the solicitation or receipt of orders
for, or the delivery of, goods or services'' and replace it with
reference to a person who is engaged in a commercial business that:
(1) Primarily utilizes the mails for the solicitation or receipt of
orders for, or the delivery of, goods or services; and
(2) can be expected to earn gross revenue exceeding $10,000 from
utilizing the mails during the business's current fiscal year.
If it was reasonable to have expected that a business would not
exceed the $10,000 threshold during its fiscal year, a person will not
meet the proposed definition if the business in fact exceeds the
threshold at the end of the fiscal year. However, this fact must be
taken into account when determining whether the business can be
expected to exceed the threshold in its subsequent fiscal year.
In addition, examples have been added to this definition of persons
who are and are not engaged in a mail delivery-dependent business in
the e-commerce environment.
4. Second-Class Rates of Postage Reference and Postal Rate Commission
Reference
The Postal Service also proposes to amend the definition of ``a
person having interests substantially dependent upon, or potentially
affected to a significant degree by, postal rates, fees, or
classifications'' in Sec. 7001.102 to change the reference in that
provision from ``a publication mailed at second-class rates of
postage'' to ``a publication mailed at Periodicals rates of postage.''
As part of revisions to the Domestic Mail Classification Schedule (the
predecessor to the current Mail Classification Schedule), second-class
mail was renamed Periodicals. See 61 FR 10068, 10114, 10123-24. In
addition, the Postal Service proposes to amend the definition of ``a
person having interests substantially dependent upon, or potentially
affected to a significant degree by, postal rates, fees, or
classifications'' in Sec. 7001.102 to change the reference in that
provision from ``Postal Rate Commission'' to ``Postal Regulatory
Commission.'' The Postal Enhancement and Accountability Act
redesignated the Postal Rate Commission as the Postal Regulatory
Commission. See Public Law 109-435, Title VI, Sec. 604, 120 Stat.
3198, 3241-42 (2006).
5. A Person Having Interests Substantially Dependent Upon Providing
Goods or Services to, or for Use in Connection With, the Postal Service
Section 7001.102(b) currently requires employees to obtain prior
approval to engage in outside employment or business activities with or
for persons whose interests are substantially dependent upon providing
goods or services to, or for use in connection with, the Postal
Service. The definitions section of Sec. 7001.102 currently defines
``a person having interests substantially dependent upon providing
goods or services to, or for use in connection with, the Postal
Service'' to include, among other persons, a person who provides goods
or services under contract with the Postal Service that:
(1) Can be expected to provide revenue exceeding $100,000 over the
term of the contract; and
(2) provides 5% or more of the person's gross income for the
person's current fiscal year.
The Postal Service proposes to amend this definition to clarify
that a person who holds more than one contract with the Postal Service
to provide goods or services to, or for use in connection with, the
Postal Service meets the ``revenue exceeding $100,000'' criteria in
paragraph (1) above if the person's contracts in total can be expected
to provide revenue exceeding $100,000 over the terms of the contracts.
The Postal Service additionally proposes to amend this definition
to remove the ``5% of gross income'' criteria in paragraph (2) above.
The Postal Service's experience has been that in many cases it does not
have access to information that would indicate whether a contract to
provide goods or services to, or for use in connection with, the Postal
Service provides 5% or more of the contractor's gross income for the
contractor's current fiscal year.
Section 7001.102 also currently defines ``a person having interests
substantially dependent upon providing goods or services to, or for use
in connection with, the Postal Service'' to include a person
substantially engaged in the business of preparing items for others for
mailing through the Postal Service. An example has been added to
renumbered Sec. 7001.102(d)(5) of such a person.
H. Amendment of Part 7001 To Prohibit the Governors From Having or
Controlling Certain Financial Interests
The Postal Service's organizational structure includes nine
Governors, who are appointed by the President and confirmed by the
Senate. See 39 U.S.C. 202(a). The nine Governors, along with the
Postmaster General and Deputy Postmaster General, constitute the Board
of Governors. See 39 U.S.C. 202(a), (c), (d). The Board of Governors
directs the exercise of the powers of the Postal Service, directs and
controls postal expenditures, reviews postal practices and policies,
and performs other functions and duties as prescribed by the Postal
Reorganization Act, as amended, codified in 39 U.S.C. See 39 U.S.C.
202(a), 205(a). In addition, certain matters are reserved for decision
by the nine Governors. See 39 CFR 3.4.
On occasion, Postal Service Governors may be called upon to act
upon postal matters that would have a direct and predictable effect on
the financial interests of a postal competitor or postal lessor. In
those cases, such involvement would be prohibited by the criminal
conflict of laws (18 U.S.C. 208) to the extent that a Governor (or a
person or entity whose interests are imputed to the Governor) has a
financial interest in the postal competitor or postal lessor.
Recognizing that this is not the case for all postal matters, the
Postal Service proposes to amend Part 7001 to nevertheless prohibit
Governors, their spouses, and minor children from directly or
indirectly holding financial interests in postal competitors or
publicly-traded postal lessors, and Governors from actively controlling
the acquisition or holding of financial interests in postal competitors
or publicly-traded postal lessors on behalf
[[Page 12894]]
of any entity, because doing so would cause an appearance of a lack of
impartiality or objectivity with which postal programs are
administered.
The Postal Service proposes to amend Part 7001 of the Supplemental
Standards to include new Sec. 7001.104 regarding prohibited financial
interests of the Governors as follows:
1. Financial Interest in a Postal Competitor
The Postal Service proposes to add a provision at Sec.
7001.104(a)(1)(i) prohibiting Postal Service Governors, their spouses,
and minor children from directly or indirectly acquiring or holding any
financial interest in a person engaged in the delivery outside the
mails of any type of mailable matter, except daily newspapers (``postal
competitor''), with some exceptions. Pursuant to Sec. 7001.104(a)(2),
Postal Service Governors also would be prohibited from actively
controlling the acquisition of or the holding of any financial interest
in a postal competitor on behalf of an entity whose financial interests
are imputed to the Governor under 18 U.S.C. 208. A Governor actively
controls the acquisition or holding of financial interests on behalf of
an entity if he or she selects or dictates the entity's investments,
such as stocks, bonds, commodities, or funds. A Governor does not
actively control the acquisition or holding of financial interests on
behalf of an entity if he or she merely directs the investment strategy
of the entity, hires the entity's financial manager(s) who selects the
entity's investments, or designates another employee of the entity to
select the entity's investments. A Governor may have such investment
authority when serving as an officer, director, trustee, general
partner, or employee of an entity. Examples have been provided of when
a Governor does and does not actively control the acquisition or
holding of financial interests on behalf of an entity.
While the Postal Service is an independent establishment of the
executive branch of the Government of the United States, its mission
includes the provision to the public for a fee of services for which it
has private sector competitors, i.e., private businesses engaged in the
delivery outside the mails of mailable matter, including but not
limited to, United Parcel Service (UPS), Federal Express (FedEx),
Amazon, and DHL. This definition of ``a person engaged in the delivery
outside the mails of any type of mailable matter'' is the same
definition of that term that is included in the definitions section of
Sec. 7001.102 applicable to the prohibition on employees engaging in
outside employment or business activities with or for such persons.
The purpose of the proposed amendment is to avoid even the
appearance of impropriety that may be created by a Governor or his or
her spouse or minor child holding a financial interest in a postal
competitor, or a Governor actively controlling the acquisition or
holding of a financial interest in a postal competitor on behalf of an
entity whose financial interests are imputed to the Governor under the
criminal conflict of interest laws (18 U.S.C. 208). A Governor or his
or her spouse or minor child holding such a financial interest might
lead members of the public to question the Governor's loyalty to the
Postal Service, thereby undermining public confidence in the integrity
of postal operations. Likewise, members of the public might question
the Governor's loyalty to the Postal Service if an entity whose
financial interests are treated as his or her own, and for which the
Governor actively controls investment decisions, has a financial
interest in a postal competitor. These concerns are not presented by a
Governor or his or her spouse or minor child holding a financial
interest in a private business engaged in the delivery of daily
newspapers, or a Governor actively controlling a financial interest in
such a private business on behalf of an entity, which are not
prohibited.
2. Financial Interest in a Publicly-Traded Postal Lessor
The Postal Service proposes to add a provision at Sec.
7001.104(a)(1)(ii) prohibiting Postal Service Governors, their spouses,
and minor children from directly or indirectly acquiring or holding any
financial interest in a publicly-traded entity engaged primarily in the
business of leasing real property to the Postal Service (``postal
lessor''), with some exceptions. Pursuant to Sec. 7001.104(a)(2),
Postal Service Governors also would be prohibited from actively
controlling the acquisition of or the holding of any financial interest
in a postal lessor on behalf of an entity whose financial interests are
imputed to the Governor under 18 U.S.C. 208. A Governor actively
controls the acquisition or holding of financial interests on behalf of
an entity if he or she selects or dictates the entity's investments,
such as stocks, bonds, commodities, or funds. A Governor does not
actively control the acquisition or holding of financial interests on
behalf of an entity if he or she merely directs the investment strategy
of the entity, hires the entity's financial manager(s) who selects the
entity's investments, or designates another employee of the entity to
select the entity's investments. A Governor may have such investment
authority when serving as an officer, director, trustee, general
partner, or employee of an entity. Examples have been provided of when
a Governor does and does not actively control the acquisition or
holding of financial interests on behalf of an entity.
In order to accomplish its mission of providing adequate and
efficient postal services nationwide, the Postal Service maintains
retail (i.e., post offices) and other facilities across the country. In
most cases, the Postal Service leases, rather than owns, the real
property where its facilities are located.
The Postal Service's lease agreements are mainly with non-
governmental lessors, including, at present, one publicly-traded entity
engaged primarily in the business of leasing real property to the
Postal Service. While the interests of such an entity are at times
aligned with the Postal Service's interests, it also has interests that
do or may conflict with the Postal Service's interests, such as the
terms of the lease agreement and how those terms are implemented.
The purpose of the proposed amendment is to avoid even the
appearance of impropriety that may be created by a Governor or his or
her spouse or minor child holding a financial interest in a postal
lessor, or a Governor actively controlling the acquisition or holding
of a financial interest in a postal lessor on behalf of an entity whose
financial interests are imputed to the Governor under the criminal
conflict of interest laws (18 U.S.C. 208). A Governor or his or her
spouse or minor child having such a financial interest might lead
members of the public to question the Governor's loyalty to the Postal
Service, thereby undermining public confidence in the integrity of
postal operations, including the postal real estate leasing program.
Likewise, members of the public might question the Governor's loyalty
to the Postal Service if an entity whose financial interests are
treated as his or her own, and for which the Governor actively controls
investment decisions, has a financial interest in a postal lessor.
3. Exceptions, Time Limits, Disqualifications, and Waivers
Under an exception to the proposed prohibitions at Sec.
7001.104(b), Governors, their spouses, and minor children are not
prohibited from directly or indirectly acquiring or holding, and
Governors are not prohibited from actively controlling on behalf of any
entity, any financial interest in any publicly-traded or
[[Page 12895]]
publicly-available mutual fund (as defined in 5 CFR 2640.102(k)) or
other collective investment fund, including a widely-held pension or
other retirement fund, that includes any financial interest in a postal
competitor or postal lessor described in the proposed amendment, so
long as certain conditions are met.
The proposed amendment also provides in proposed Sec. 7001.104(c)
the time limit by which any financial interest in a postal competitor
or postal lessor prohibited by the proposed amendment generally must be
divested, as well as the time limits for reporting and divesting the
following:
(1) A financial interest directly or indirectly held by a Governor
or his or her spouse or minor child, or a financial interest actively
controlled by a Governor on behalf of any entity, that becomes
prohibited subsequent to the Governor's confirmation;
(2) a financial interest in a postal competitor or postal lessor
described in the proposed amendment that was acquired by the Governor
or his or her spouse or minor child without specific intent (such as
through marriage, inheritance, or gift) subsequent to the Governor's
confirmation; and
(3) a financial interest in a postal competitor or postal lessor
described in the proposed amendment that was acquired by an entity
whose financial interests are actively controlled by a Governor without
specific intent (such as through a gift) subsequent to the Governor's
confirmation.
The proposed amendment further provides that pending any required
divestiture of a prohibited financial interest provided for in the
proposed amendment, a Governor must disqualify himself or herself from
participating in particular matters involving or affecting the
prohibited financial interest, and that disqualification is
accomplished by not participating in the particular matter.
The proposed amendment at Sec. 7001.104(d) additionally authorizes
the Postal Service's DAEO, upon good cause shown by a Governor, to
grant a written waiver to the Governor of any prohibited financial
interest described in the proposed amendment, provided that the DAEO
finds that:
(1) The waiver is not inconsistent with 5 CFR part 2635 or
otherwise prohibited by law; and
(2) under the particular circumstances, application of the
prohibition is not necessary to avoid the appearance of the Governor's
misuse of position or loss of impartiality or otherwise to ensure
confidence in impartiality or objectivity with which postal programs
are administered.
The DAEO may impose appropriate conditions for granting of the
waiver, such as requiring the Governor to execute a written statement
of disqualification.
The waiver is intended, in appropriate cases, to lessen the burden
that the prohibitions on holding or controlling the relevant financial
interests may impose on, as applicable, the Governors, their spouses,
or minor children while ensuring that they do not hold or control
financial interests that may interfere with the objective and impartial
performance by the Governors of their official duties.
III. Matters of Regulatory Procedure
Although the Postal Service is exempted by 39 U.S.C. 410(a) from
the advance notice requirements of the Administrative Procedure Act
regarding rulemaking (5 U.S.C. 553(b), (c)), the Postal Service invites
comments on these proposed rules.
Lists of Subjects in 5 CFR Part 7001
Conflict of interests, Ethical standards, Executive branch
standards of conduct, Government employees.
For the reasons set forth in the preamble, the United States Postal
Service, with the concurrence of the United States Office of Government
Ethics, proposes to amend 5 CFR part 7001 as follows:
PART 7001--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE UNITED STATES POSTAL SERVICE
0
1. The authority citation for 5 CFR part 7001 continues to read as
follows:
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 39 U.S.C. 401; E.O. 12674, 54 FR 15159; 3 CFR, 1989
Comp., p. 215, as modified by E.O. 12731, 55 FR 42547; 3 CFR 1990
Comp., p. 306; 5 CFR 2635.105, 2635.802, and 2635.803.
0
2. Revise Sec. 7001.102 to read as follows:
Sec. 7001.102 Restrictions on outside employment and business
activities.
(a) Prohibited outside employment and business activities. No
Postal Service employee shall:
(1) Engage in outside employment or business activities that
involve providing consultation, advice, or any subcontracting service,
with respect to the operations, programs, or procedures of the Postal
Service, to any person who has a contract with the Postal Service or
who the employee has reason to believe will compete for such a
contract;
(2) Except as permitted by paragraph (b)(2) of this section, engage
in outside employment or business activities with, for, or as a person
engaged in:
(i) The operation of a commercial mail receiving agency registered
with the Postal Service; or
(ii) The delivery outside the mails of any type of mailable matter,
except daily newspapers.
Example to paragraph (a)(2)(ii): United Parcel Service (UPS),
Federal Express (FedEx), Amazon, or DHL offers a part-time job to a
postal employee. Because UPS, FedEx, Amazon and DHL are persons engaged
in the delivery outside the mails of mailable matter (as defined in
paragraph (c)(2) of this section) that is not daily newspapers, the
employee may not engage in employment with UPS, FedEx, Amazon, or DHL
in any location in any capacity while continuing employment with the
Postal Service in any location in any capacity. If the employee chooses
to work for UPS, FedEx, Amazon, or DHL, the employee must end his or
her postal employment before commencing work for that company.
(3) Engage in any fundraising (as defined in 5 CFR 2635.808(a)(1)),
for-profit business activity, or sales activity, including the
solicitation of business or the receipt of orders, for oneself or any
other person, while on duty or in uniform, at any postal facility, or
using any postal equipment. This paragraph does not prohibit an
employee from engaging in fundraising at a postal facility as permitted
in connection with the Combined Federal Campaign (CFC) under 5 CFR part
950.
Example 1 to paragraph (a)(3): An employee volunteers at a local
animal shelter (a non-profit organization) which is having its annual
fundraising drive. The employee may not solicit funds or sell items to
raise funds for the animal shelter while on duty, in uniform, at any
postal facility, or using any postal equipment.
Example 2 to paragraph (a)(3): Outside of his postal employment, an
employee operates a for-profit dog-walking business. The employee may
not engage in activities relating to the operation of his business
while on duty, in uniform, at any postal facility, or using any postal
equipment.
Example 3 to paragraph (a)(3): Outside of her postal employment, an
employee has a job as a sales associate for a cosmetics company. The
employee may not solicit sales or receive orders for the cosmetic
company from any person while on duty, in uniform, at any postal
facility, or using any postal equipment.
[[Page 12896]]
(b) Prior approval for outside employment and business activities.
(1) When prior approval required. A Postal Service employee shall
obtain approval from the Postal Service's Ethics Office in accordance
with paragraph (b)(3) of this section prior to:
(i) Engaging in outside employment or business activities with or
for any person with whom the employee has official dealings on behalf
of the Postal Service;
(ii) Engaging in outside employment or business activities with,
for, or as a person who has interests that are:
(A) Substantially dependent upon, or potentially affected to a
significant degree by, postal rates, fees, or classifications; or
(B) Substantially dependent upon providing goods or services to, or
for use in connection with, the Postal Service; or
(iii) Engaging in outside employment or business activities with or
for any Highway Contract Route (HCR) contractor.
(2) When prior approval may be requested for prohibited outside
employment and activities. If an entity with which an employee wishes
to engage in outside employment or business activities is a subsidiary
of an entity that is engaged in one the activities described in (a)(2)
of this section, but does not itself engage in any those activities,
the employee may request approval from the Postal Service's Ethics
Office to engage in such activity. The employee's request should follow
the procedures of (b)(3) of this section, and will be evaluated under
the standard set forth in (b)(4) of this section.
Example to paragraph (b)(2): A postal employee who wishes to engage
in outside employment with Whole Foods Market may submit a request to
engage in that activity to the Postal Service's Ethics Office. Although
Whole Foods Market is a subsidiary of Amazon, it is engaged in the
supermarket business, not in the delivery outside the mails of mailable
matter.
(3) Submission and contents of request for approval. An employee
who wishes to engage in outside employment or business activities for
which approval is required by paragraph (b)(1) of this section shall
submit a written request for approval to the Postal Service's Ethics
Office. The request shall be accompanied by a statement from the
employee's supervisor briefly summarizing the employee's duties and
stating any workplace concerns raised by the employee's request for
approval. The request for approval shall include:
(i) A brief description of the employee's official duties;
(ii) The name of the outside employer, or a statement that the
employee will be engaging in employment or business activities on his
or her own behalf;
(iii) The type of employment or business activities in which the
outside employer, if any, is engaged;
(iv) The type of services to be performed by the employee in
connection with the outside employment or business activities;
(v) A description of the employee's official dealings, if any, with
the outside employer on behalf of the Postal Service; and
(vi) Any additional information requested by the Postal Service's
Ethics Office that is needed to determine whether approval should be
granted.
(4) Standard for approval. The approval required by paragraph
(b)(1) of this section shall be granted only upon a determination that
the outside employment or business activities will not involve conduct
prohibited by statute or federal regulation, including 5 CFR part 2635,
which includes, among other provisions, the principle stated at 5 CFR
2635.101(b)(14) that employees shall endeavor to avoid any actions
creating the appearance that they are violating the law or the ethical
standards set forth in part 2635.
(c) Special rules for outside employment or business activities of
OIG employees.--(1) When reporting required. A Postal Service Office of
Inspector General (OIG) employee shall report compensated and
uncompensated outside employment or business activities to the OIG's
Office of General Counsel, including:
(i) Any knowing sale or lease of real estate to the Postal Service
or to a Postal Service employee or contractor, regardless of the
frequency of such sales or leases or whether the sale or lease is at
fair market value;
(ii) Any ownership or control of a publicly-accessible online or
physical storefront; and
(iii) Volunteer activities, if they regularly exceed 20 hours per
week or when the employee holds an officer position in the
organization.
Example 1 to paragraph (c)(1)(iii): An OIG employee occasionally
volunteers with a domestic violence non-profit. The employee's
volunteer duties are generally limited to 5 hours per week. The
employee is not an officer of the organization. One weekend the
employee helps to build a new home for a family, which takes a combined
22 hours. The employee is not required to report those volunteer
activities because the employee is not an officer and the employee's
volunteer activities do not regularly exceed 20 hours per week.
Example 2 to paragraph (c)(1)(iii): An OIG employee is a
Scoutmaster for his child's local scouting group. The children meet for
an hour each week and go on 4-hour hikes one weekend per month. Though
``Scoutmaster'' may involve leadership, it is not an officer position
within the non-profit entity and need not be reported.
(2) When prior approval required. A Special Agent or Criminal
Investigator shall also request and obtain written approval prior to
engaging in outside employment or business activities which he or she
is required to report under paragraph (c)(1) of this section. A request
for approval shall be submitted to the OIG's Office of General Counsel,
which will be reviewed under the same standard stated in paragraph
(b)(3) of this section.
(3) Implementation guidance. The OIG's Office of General Counsel
may issue internal instructions governing the submission of requests
for approval of outside employment, business activities, and volunteer
activities. The instructions may exempt categories of employment,
business activities, or volunteer activities from the reporting and
prior approval requirements of this section based on a determination
that those activities would generally be approved and are not likely to
involve conduct prohibited by statute or Federal regulation, including
5 CFR part 2635. The OIG's Office of General Counsel may include in
these instructions examples of outside activities that are permissible
or impermissible consistent with this part and 5 CFR part 2635.
(d) Definitions. For purposes of this section:
(1) Outside employment or business activity means any form of
employment or business, whether or not for compensation. It includes,
but is not limited to, the provision of personal services as officer,
employee, agent, attorney, consultant, contractor, trustee, teacher, or
speaker. It also includes, but is not limited to, engagement as
principal, proprietor, general partner, holder of a franchise,
operator, manager, or director. It does not include equitable ownership
through the holding of publicly-traded shares of a corporation.
(2) Commercial mail receiving agency means a private business that
acts as the mail receiving agent for specific clients. The business
must be registered with the post office responsible for delivery to the
commercial mail receiving agency.
(3) A person engaged in the delivery outside the mails of any type
of mailable matter means a person who is engaged
[[Page 12897]]
in the delivery outside the mails of any letter, card, flat, or parcel
eligible to be accepted for delivery by the Postal Service.
(4) A person having interests substantially dependent upon, or
potentially affected to a significant degree by, postal rates, fees, or
classifications includes a person:
(i) Primarily engaged in the business of publishing or distributing
a publication mailed at Periodicals rates of postage;
(ii) Primarily engaged in the business of sending advertising,
promotional, or other material on behalf of other persons through the
mails;
(iii) Engaged in a commercial business that:
(A) Primarily utilizes the mails for the solicitation or receipt of
orders for, or the delivery of, goods or services; and
(B) Can be expected to earn gross revenue exceeding $10,000 from
utilizing the mails during the business's current fiscal year; or
(iv) Who is, or within the past 4 years has been, a party to a
proceeding before the Postal Regulatory Commission.
Example 1 to paragraph (d)(4)(iii): An employee operates a business
which sells handmade wooden bowls on its website and other e-commerce
websites and uses the Postal Service as its primary shipper. The
employee's business can be expected to earn gross revenue of more than
$10,000 from utilizing the mails during the business's current fiscal
year. The employee's business is ``a person having interests
substantially dependent upon, or potentially affected to a significant
degree by, postal rates, fees, or classifications'' because it is a
commercial business that primarily utilizes the mails for the delivery
of its goods and the business can be expected to earn gross revenue
exceeding $10,000 from utilizing the mails during its current fiscal
year.
Example 2 to paragraph (d)(4)(iii): An employee knits scarves as a
hobby, most of which she gives to family and friends, but she
occasionally sells extra scarves on an e-commerce website and uses the
Postal Service as her primary shipper. The employee does not expect to
receive more than $10,000 from utilizing the mails during the current
calendar year in which she sells the scarves. The employee is not ``a
person having interests substantially dependent upon, or potentially
affected to a significant degree by, postal rates, fees, or
classifications'' because she is not engaged in a commercial business
that can be expected to earn gross revenue from utilizing the mails
exceeding $10,000 during its current fiscal year.
(5) A person having interests substantially dependent upon
providing goods or services to, or for use in connection with, the
Postal Service includes a person:
(i) Providing goods or services under contract(s) with the Postal
Service that in total can be expected to provide revenue exceeding
$100,000 over the term(s) of the contract(s); or
(ii) Substantially engaged in the business of preparing items for
others for mailing through the Postal Service.
Example to paragraph (d)(5)(ii): A mailing house that sorts and
otherwise prepares for its clients large volumes of advertising,
fundraising, or political mail for mailing to prospective customers,
donors, or voters through the Postal Service is ``a person having
interests substantially dependent upon providing goods or services to,
or for use in connection with, the Postal Service'' because it is
substantially engaged in the business of preparing items for others for
mailing through the Postal Service.
0
3. Add Sec. 7001.104 to read as follows:
Sec. 7001.104 Prohibited financial interests of the Governors of the
United States Postal Service.
(a) General prohibitions.--(1) No Governor of the United States
Postal Service or his or her spouse or minor child shall acquire or
hold, directly or indirectly:
(i) Any financial interest in a person engaged in the delivery
outside the mails of any type of mailable matter, except daily
newspapers; or
(ii) Any financial interest in a publicly-traded entity engaged
primarily in the business of leasing real property to the Postal
Service.
(2) No Governor shall actively control the acquisition of or the
holding of any financial interest described in paragraph (a)(1)(i) or
(ii) of this section on behalf of any entity whose financial interests
are imputed to the Governor under 18 U.S.C. 208. A Governor actively
controls the financial interests of an entity if he or she selects or
dictates the entity's investments, such as stocks, bonds, commodities,
or funds. A Governor does not actively control the financial interests
of an entity if he or she merely directs the investment strategy of the
entity, hires the entity's financial manager(s) who selects the
entity's investments, or designates another employee of the entity to
select the entity's investments. A Governor may have such investment
authority when serving as an officer, director, trustee, general
partner, or employee of an entity.
Example 1 to paragraph (a)(2): A Governor is also the chief
executive officer (CEO) of a life insurance company. The company's
policy is for: (1) The board of directors to determine the overall
investment strategy for the company's excess cash, (2) an internal team
to recommend to the CEO specific financial instruments in which to
invest the company's excess cash to implement the board's overall
investment strategy, and (3) the CEO to approve or disapprove of the
internal team's specific investment recommendations. The Governor
actively controls the financial interests of the life insurance company
in his position as CEO of the company.
Example 2 to paragraph (a)(2): A Governor is also on the board of
directors of an investment company. The company's policy is for: (1)
The board of directors to determine the overall investment strategy for
the company's excess cash, (2) the board of directors to choose an
external investment manager to select and manage day-to-day the
specific financial instruments in which the company's excess cash is
invested to implement the board's overall investment strategy, and (3)
the CEO and other company management official to oversee the investment
management process, including periodic review of the company's
investment portfolio. The Governor does not actively control the
financial interests of the investment company in her position on the
board of directors.
(b) Exception. Paragraph (a) of this section does not prohibit a
Governor or his or her spouse or minor child from directly or
indirectly acquiring or holding, or a Governor from actively
controlling on behalf of any entity, any financial interest in any
publicly-traded or publicly-available mutual fund (as defined in 5 CFR
2640.102(k)) or other collective investment fund, including a widely-
held pension or other retirement fund, that includes any financial
interest described in paragraph (a)(1)(i) or (ii) of this section,
provided that:
(1) Neither the Governor nor his or her spouse exercises active
control over the financial interests held by the fund; and
(2) The fund does not have a stated policy of concentrating its
investments in, as applicable, persons engaged in the delivery outside
the mails of mailable matter, except daily newspapers, or persons
engaged primarily in the business of leasing real property to the
Postal Service.
(c) Reporting of prohibited financial interest and divestiture.--
(1) General. Any financial interest prohibited by
[[Page 12898]]
paragraph (a) of this section shall be divested within 90 calendar days
of confirmation by the Senate of the Governor's nomination, or as soon
as possible thereafter if there are restrictions on divestiture.
(2) Newly-prohibited financial interests following confirmation. If
a financial interest directly or indirectly held by a Governor or his
or her spouse or minor child, or a financial interest actively
controlled by a Governor on behalf of any entity, becomes prohibited
subsequent to the Governor's confirmation:
(i) The Governor shall report the prohibited financial interest to
the Postal Service's Designated Agency Ethics Official (DAEO) within 30
calendar days of the DAEO informing the Governors that such financial
interests have become prohibited; and
(ii) The prohibited financial interest shall be divested within 90
calendar days of the DAEO informing the Governors that such financial
interests have become prohibited, or as soon as possible thereafter if
there are restrictions on divestiture.
(3) Prohibited financial interests acquired without specific intent
following confirmation.--(i) If a Governor or his or her spouse or
minor child acquires a financial interest prohibited by paragraph
(a)(1) of this section without specific intent to acquire it (such as
through marriage, inheritance, or gift) subsequent to the Governor's
confirmation:
(A) The Governor shall report the prohibited financial interest to
the Postal Service's DAEO within 30 calendar days of its acquisition;
and
(B) The prohibited financial interest shall be divested within 90
calendar days of its acquisition, or as soon as possible thereafter if
there are restrictions on divestiture.
(ii) If an entity whose financial interests are actively controlled
by a Governor acquires a financial interest described in paragraph
(a)(1)(i) or (ii) of this section without specific intent to acquire it
(such as through a gift) subsequent to the Governor's confirmation:
(A) The Governor shall report the prohibited financial interest to
the Postal Service's DAEO within 30 calendar days of its acquisition;
and
(B) The prohibited financial interest shall be divested within 90
calendar days of its acquisition, or as soon as possible thereafter if
there are restrictions on divestiture.
(4) Disqualification from participating in particular matters
pending divestiture. Pending any required divestiture of a prohibited
financial interest provided for in paragraph (c) of this section, a
Governor shall disqualify himself or herself from participating in
particular matters involving or affecting the prohibited financial
interest. Disqualification is accomplished by not participating in the
particular matter.
(d) Waiver of prohibited financial interests. For good cause shown
by a Governor, the Postal Service's DAEO may grant a written waiver to
the Governor of any prohibited financial interest described in
paragraph (a), (c)(2), or (c)(3) of this section; provided that the
DAEO finds that the waiver is not inconsistent with 5 CFR part 2635 or
otherwise prohibited by law, and that under the particular
circumstances, application of the prohibition is not necessary to avoid
the appearance of the Governor's misuse of position or loss of
impartiality or otherwise to ensure confidence in the impartiality or
objectivity with which the Postal Service's programs are administered.
The DAEO may impose appropriate conditions for granting of the waiver,
such as requiring the Governor to execute a written statement of
disqualification.
(e) Definition. For purposes of this section, a person engaged in
the delivery outside the mails of any type of mailable matter is as
defined in Sec. 7001.102(d)(3).
Ruth Stevenson,
Chief Counsel, Ethics and Legal Compliance, United States Postal
Service.
Emory Rounds,
Director, U.S. Office of Government Ethics.
[FR Doc. 2022-04452 Filed 3-7-22; 8:45 am]
BILLING CODE 7710-12-P