Supplemental Standards of Ethical Conduct, 23758-23765 [2017-10613]
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Proposed Rules
Federal Register
Vol. 82, No. 99
Wednesday, May 24, 2017
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.
POSTAL REGULATORY COMMISSION
5 CFR Part 5601
[Docket No. RM2017–4; Order No. 3906]
Supplemental Standards of Ethical
Conduct
Postal Regulatory Commission.
Proposed rulemaking.
AGENCY:
ACTION:
SUMMARY: The Commission proposes
rules that amend existing rules related
to supplemental standards of ethical
conduct for Postal Regulatory
Commission employees. The proposed
rules revise the existing rules in order
to better conform to our regulations and
accurately reflect the Commission’s
regulatory role under the Postal
Accountability and Enhancement Act.
The Commission invites public
comment on the proposed rules.
DATES: Comments are due: June 23,
2017.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
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I. Introduction
II. Background
III. Summary of Proposed Changes
IV. Section by Section Analysis of the
Proposed Changes to 5 CFR Part 5601
V. Administrative Actions
VI. Ordering Paragraphs
I. Introduction
The Postal Regulatory Commission
(Commission) establishes a rulemaking
docket to consider amending the
Commission’s supplemental standards
of ethical conduct, 5 CFR part 5601. The
supplemental standards of ethical
conduct apply to Commission
employees and concern prohibited
financial holdings, disqualification
when seeking non-federal employment,
and engaging in outside employment.
The Commission proposes to update the
existing supplemental standards to be
consistent with 5 CFR part 2635 and the
Commission’s current regulatory role
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under the Postal Accountability and
Enhancement Act (PAEA), Public Law
109–435, 120 Stat. 3198 (2006). This
rulemaking also proposes linguistic and
organizational revisions to clarify the
supplemental standards.
The Office of Government Ethics
(OGE) concurs with the Commission’s
proposed revisions to 5 CFR part 5601.
II. Background
In 1991, Executive Order 12674, as
amended by Executive Order 12731,
authorized OGE to establish a single,
comprehensive, and clear set of
executive branch standards of ethical
conduct.1 On August 7, 1992, OGE
published a final rule titled Standards of
Ethical Conduct for Employees of the
Executive Branch (OGE Standards).2
The OGE Standards, codified at 5 CFR
part 2635, became effective February 3,
1993, and established uniform standards
of ethical conduct applicable to all
executive branch personnel. In 1993, the
Postal Rate Commission collaborated
with OGE to draft supplemental
standards for inclusion in 5 CFR part
5601. The new 5 CFR part 5601 was
published as an interim rule. 58 FR
42839 (Aug. 12, 1993).
In 2006, PAEA changed the name of
the agency from the Postal Rate
Commission to the Postal Regulatory
Commission and made several changes
to the Commission’s regulatory role.
Specifically, PAEA eliminated the
former Postal Rate Commission’s
responsibility to adjudicate omnibus
rate cases each year, which set rates for
all United States Postal Service (Postal
Service) products.3 Instead, under
PAEA the Commission, among other
responsibilities, approves or denies
discrete Postal Service requests to
change rates of market-dominant
products or competitive products.4
1 See Executive Order No. 12674, 54 FR 15159
(Apr. 12, 1989) (requiring OGE to establish
executive-branch Standards of Ethical Conduct);
Executive Order No. 12731, 55 FR 42547 (Oct. 17,
1990) (providing for supplementary agency
regulations in 5 CFR to be promulgated jointly with
OGE for inclusion in 5 CFR).
2 See 57 FR 35006–35067, as corrected at 57 FR
48557 (Oct. 27, 1992), 57 FR 52583 (Nov. 4, 1992),
and 60 FR 66857–66858 (Dec. 27, 1995).
3 Public Law 109–435, 120 Stat. 3198 §§ 201–202
(2006) (amending 39 U.S.C. 3621–3622 (2005) and
repealing sections 3623–3624).
4 PAEA introduced the division of Postal Service
products into market-dominant products (products
delivered under the Postal Service monopoly) and
competitive products (all other products). 39 U.S.C.
3621–3622 and 39 CFR part 3010 (regulation of
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Proposed rate changes include requests
to change rates of general applicability,
e.g., retail rates available to the public,
and rates not of general applicability,
e.g., negotiated service agreements
(NSAs) with private parties. Post-PAEA,
the Commission also must make an
Annual Compliance Determination
report concerning whether the rates or
fees in effect for the year satisfied
statutory and regulatory requirements
and whether any service standards in
effect during the year were not met. 39
U.S.C. 3653(b). These enhanced
Commission responsibilities drive the
need to modernize the Commission’s
supplemental standards of ethical
conduct.
III. Summary of the Proposed
Regulatory Changes
The Commission identified a need to
revise the existing supplemental
standards for several reasons. The
supplemental standards of ethical
conduct, 5 CFR part 5601, have never
been amended or finalized since their
1993 adoption and remain attributed to
the Postal Rate Commission.
Therefore, the Commission proposes
amendments to accomplish the
following goals: (1) Reflect the
substantial changes to the Commission’s
regulatory role after the 2006 enactment
of PAEA; (2) update its rules to be
consistent with 5 CFR part 2635; (3)
reflect lessons learned through the
Commission’s experiences with the
existing ethics policies and practices; (4)
enhance the clarity of the ethical
guidance for its employees; (5) protect
the integrity of the Commission’s
programs and processes; (6) maintain
public confidence that Commission
employees are fulfilling their duties
impartially and objectively; (7) facilitate
a well-administered ethics counseling
program; and (8) finalize the interim
supplemental standards of conduct.
IV. Section by Section Analysis of the
Proposed Changes to 5 CFR Part 5601
The rules in 5 CFR part 5601 apply
only to Commission personnel.
A. Title 5 CFR Part 5601
The Commission proposes correcting
the title identified in 5 CFR part 5601
by replacing ‘‘Postal Rate Commission’’
rates for market-dominant products); 39 U.S.C.
3631–3634 and 39 CFR part 3015 (regulation of
rates for competitive products).
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with ‘‘Postal Regulatory Commission’’ to
reflect the agency’s post-PAEA name.
D. Section 5601.102
Financial Interests
B. Authority Identified in 5 CFR Part
5601
Section 2635.403(a) of title 5
authorizes agencies, by supplemental
regulation, to prohibit or restrict
acquiring or holding of a financial
interest or a class of financial interests
by agency employees based on a
determination that acquiring or holding
of such interests would cause
reasonable persons to question the
impartiality and objectivity with which
the agency programs are administered.
The Commission proposes revising the
supplemental regulations to maintain
the integrity of the Commission’s
programs and processes.
The deletion of the existing language
of § 5601.102. The existing § 5601.102
prohibits employees from direct or
indirect financial interest in ‘‘affected
persons’’ as defined by existing
§ 5601.101(b)’s non-exhaustive list of
categories of prohibited financial
interest. The Commission proposes
restructuring the scope of financial
prohibitions to be wholly contained
within proposed § 5601.102, providing
greater specificity as to the prohibited
categories and the meaning of direct
versus indirect holdings, and updating
the language to reflect that business
entities, rather than natural persons,
would most likely pose potential
conflicts of interest. The proposed
changes improve the regulation’s clarity
and precision.
Section 5601.102(a) General
prohibition. To ensure that employees
do not engage in (or appear to engage in)
actions that may interfere with the
objective and impartial execution of
their official duties, the Commission
proposes prohibiting employees, their
spouses, and dependent children from
acquiring or holding particular
categories of financial interests.
Section 5601.102(b) Prohibited
Securities List. The Commission
proposes to compile a Prohibited
Securities List (PSL) cataloguing the
financial interests that employees, their
spouses, and dependent children may
not own. The PSL is intended to serve
as a reference source to assist employees
in identifying prohibited interests,
particularly before purchasing
securities. The Commission shall update
and disseminate the PSL to Commission
employees at least once a year. The
proposed PSL will list entities drawn
from the six categories listed in
proposed § 5601.102(b)(1). A discussion
of those six categories follows.
The Commission proposes correcting
the authority identified in 5 CFR part
5601 by replacing ‘‘39 U.S.C. 3603’’
with ‘‘39 U.S.C. 503’’ to reflect the
renumbering of that provision by PAEA.
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C. Section 5601.101
General
Section 5601.101(a) Purpose. The
Commission proposes correcting
§ 5601.101(a) by replacing ‘‘Postal Rate
Commission’’ with ‘‘Postal Regulatory
Commission’’ to reflect the agency’s
post-PAEA name. The Commission also
proposes adding cross-references to the
executive branch financial disclosure
regulations in 5 CFR part 2634,
regulations on responsibilities and
conduct in 5 CFR part 735, and
Commission-specific provisions in 39
CFR part 3000.
Section 5601.101(b) Definitions. The
Commission proposes deleting the text
in existing § 5601.101(b), which defines
‘‘affected persons’’ as used in existing
§§ 5601.102 and 5601.104. The
Commission proposes retaining aspects
of the ‘‘affected persons’’ definition as
categories of prohibited sources
referenced in the proposed
§ 5601.102(b), subject to modifications
for clarity as well as updates to reflect
the Commission’s post-PAEA regulatory
role. The Commission’s proposal to
move the categories of prohibited
sources from § 5601.101 to § 5601.102 is
consistent with other federal regulators’
supplemental ethical standards.
The Commission proposes defining
eight terms in the revised § 5601.101(b)
as follows:
(1) ‘‘securities’’—based on a
commonly accepted definition.
(2) ‘‘parent’’—based on a commonly
accepted definition.
(3) ‘‘person’’—consistent with 5 CFR
2635.102(k).
(4) ‘‘entity’’—indicating its usage to be
equivalent to ‘‘person.’’
(5) Designated Agency Ethics Official
‘‘DAEO’’—consistent with § 2638.601 of
this title.
(6) ‘‘employment’’—moved from the
existing § 5601.104(c) and correcting
‘‘organizations’’ from plural to singular
form.
(7) ‘‘publicly held corporation’’—
consistent with a definition used by the
Internal Revenue Service. See 26 U.S.C.
162(m)(2).
(8) ‘‘dependent child’’—consistent
with § 2364.105(d) of this title.
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Prohibited
1. Proposed § 5601.102(b)(1)
Proposed § 5601.102(b)(1) will list the
six categories based on the
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Commission’s experience under PAEA
which may generally cause conflicts of
interest for all employees. The proposed
PSL will list entities from these six
categories. The proposed PSL lists
prohibited entities solely based on the
Commission’s authority to issue
supplemental standards. Depending on
the employee’s role within the
Commission, other restrictions on
employee’s financial holdings, such as
18 U.S.C. 208, 5 CFR part 2635, the
Ethics in Government Act, or the
Procurement Integrity Act may apply.
Employees should consult with the
DAEO to confirm that a particular
financial interest is not restricted based
on rules other than these supplemental
standards such as 18 U.S.C. 208, 5 CFR
part 2635, the Ethics in Government
Act, or the Procurement Integrity Act.
See 39 CFR 3000.10.
The Commission proposes to include
the following six categories of entities
on the PSL:
a. Entities That Participated in
Commission Proceedings in the Last 4
Years
Existing §§ 5601.101(b)(1)(i) and
5601.102 prohibit employees from
holding a financial interest in
companies or persons who have been a
party to a Commission proceeding in the
past 4 years. The Commission proposes
clarifying this prohibition to include
any entity participating in a proceeding
before the Commission in the last 4
years. This is because the Commission’s
rules allow entities that are not parties
to the proceedings to formally
participate in Commission proceedings
by expressing their views on the record
and seeking relief from the Commission.
See, e.g., 39 CFR 3001.20a. Based on the
Commission’s experiences in its
proceedings after the enactment of
PAEA, the Commission proposes that
the prohibition include complainants,
appellants, intervenors, and entities
filing comments on the record in
Commission proceedings. The
prohibition does not include persons
whose participation in Commission
proceedings is limited to: (1) Serving as
a witness; (2) serving as a Public
Representative; (3) identification,
through non-public materials provided
to the Commission by the Postal Service
according to 39 CFR part 3007, as a
mailer entering into a negotiated service
agreement (defined at § 3001.5(r) of title
39); or (4) persons merely submitting
off-the-record statements or letters to the
Commission’s Office of Public Affairs
and Government Relations. These four
proposed exclusions are consistent with
the current Commission ethics rules and
practices. The particular exclusion of
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persons submitting off-the-record
statements or letters is warranted
because the Commission’s rules of
practice clarify that such statements are
not made or considered as part of the
Commission’s formal record. See 39
CFR 3001.20b. It is also based on the
Commission’s experience that such offthe-record statements are typically
submitted by private citizens not
intending to formally participate in the
public proceeding, as opposed to
business entities that may pose a
financial conflict of interest for
Commission employees.
b. Parties to Proceedings to Which the
Commission Is Also a Party
The Commission proposes this
additional prohibition to encompass
entities seeking some form of relief from
or action by the Commission that are
involved in cases heard by a tribunal
other than the Commission, such as an
appeal of a final Commission order in
the courts. This prohibition is consistent
with the restrictions upon employees of
other federal regulators.
c. Competitors of the Postal Service
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Existing §§ 5601.101(b)(1)(v) and
5601.102 prohibit employees from
holding a financial interest in
companies or persons who are primarily
engaged in the business of delivering
merchandise or written
communications. The Commission
proposes clarifying the prohibition’s
language. The Commission does not
intend to modify the purpose of the
prohibition, which prohibits employees
from having a financial interest in
competitors of the Postal Service.
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d. Certain Postal Service Contractors
In conjunction with OGE in 1993, the
Commission adopted an interim
regulation prohibiting employees from
holding financial interests in certain
Postal Service contractors. This existing
prohibition applies to persons who
provide ‘‘services or products to the
Postal Service that can be expected to
produce income that exceeds $100,000
and equals or exceeds 5 percent of its
gross income for the current fiscal year.’’
5 CFR 5601.101(b)(1)(vi). The
Commission proposes moving the
existing prohibition to
§ 5601.102(b)(1)(iv) and clarifying its
terms. The Commission proposes to
change the term ‘‘gross income’’ to
‘‘gross revenue’’ for two reasons. First,
the proposed change reflects that the
majority of prohibited sources are
business entities rather than natural
persons and, as such, are more likely to
report either revenues alone or both
revenues and income. Second, because
companies report gross income as gross
revenues minus operating expenses,
gross revenue is the more appropriate
measure to analyze conflicts of interest.
The Commission also proposes that
different financial thresholds should
apply to publicly held corporations
versus other entities. This proposed
change is based on the Commission’s 23
years of experience with the existing
rule and aims to better reflect conflicts
of interest posed by modern securities
after enactment of PAEA. The
Commission proposes to retain the
dollar amount and percentage
thresholds adopted in 1993 for entities
other than publicly held corporations
that report their gross revenue publicly.
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Proposed § 5601.102(b)(1)(iv) will
prohibit employees from holding
interests in such entities with a Postal
Service contract producing annual gross
revenue that exceeds $100,000 and 5
percent of the entity’s annual gross
revenue.
However, recognizing based on
experience that most entities that are
not publicly held corporations do not
report gross income, the Commission
proposes to apply the percentage
threshold only if information regarding
the entity’s gross revenue is available
publicly. Therefore, the PSL shall
include an entity that provides services
or products to the Postal Service over
$100,000 if the entity is not a publicly
held corporation and does not report its
gross revenue publicly. An employee
with a financial interest in an entity
other than a publicly held corporation
that holds a Postal Service contract
producing annual gross revenue over
$100,000 may pose an actual or
apparent conflict of interest due to
multiple factors, including the limited
number of owners and a limited public
market for trading.
For these reasons, the Commission
proposes raising the dollar amount and
percentage thresholds adopted in 1993
applicable to publicly held corporations
to $1,000,000 and 10 percent of annual
gross revenue. An employee with a
financial interest in a publicly held
corporation that holds a Postal Service
contract producing annual gross
revenue over $1,000,000 and 10 percent
is likely to pose a risk of an actual or
apparent conflict of interest. The
following decision tree summarizes the
proposed § 5601.102(b)(1)(iv):
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e. Other Entities That May Pose an
Actual or Apparent Conflict of Interest
Under 5 CFR Part 2635
The existing definition of ‘‘affected
persons’’ in whom employees may not
hold a financial interest provides a nonexhaustive list of categories.
Recognizing that certain categories may
be imprecise, the Commission proposes
revisions to provide greater specificity
regarding prohibited interests.
Notwithstanding such revisions, the
Commission proposes memorializing
that the touchstone of all prohibitions
on financial holdings stems from the
requirements contained in 5 CFR part
2635, which require that employees
avoid holding financial interests that
may cause or appear to cause any
appearance of loss of impartiality in the
performance of their official duties. This
proposed change will promote
consistency between 5 CFR parts 5601
and 2635 and better safeguard the
integrity of the Commission’s programs
and operations. The proposed change
also reflects the Commission’s 23 years
of experience with the existing rule as
well as the Commission’s current
responsibilities under the PAEA.
To exemplify entities that may cause
an apparent or actual conflict of interest,
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the Commission references entities
primarily engaged in the business of
sending periodicals or standard mail,
which correspond respectively to the
aspects of the definition of ‘‘affected
persons’’ contained in existing
§§ 5601.101(b)(1)(ii) and (iv). Existing
§§ 5601.101(b)(1) (ii) and (iv) lack
objective criteria limiting the scope of
the prohibited interests. The existing
prohibitions burden employees and fail
to address actual or apparent conflict of
interests. Therefore, the Commission
proposes incorporating the provisions of
§§ 5601.101(b)(1)(ii) and (iv) as
examples of the proposed
§ 5601.102(b)(1)(v) to emphasize that
only those users of periodicals and
standard mail that pose an apparent or
actual conflict of interest should be
prohibited interests.
The Commission proposes deleting
existing § 5601.101(b)(1)(iii), which
defines a company or other person
‘‘[w]ho is in the business of selling
merchandise, and a substantial portion
of whose orders are solicited, received,
or delivered through the mails’’ as an
‘‘affected person.’’ Under the existing
§ 5601.102, employees are prohibited
from indirect or direct financial
interests in such persons.
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The Commission does not propose to
specifically incorporate the prohibition
of existing § 5601.101(b)(1)(iii) into the
revised supplemental regulations
because the prohibition is imprecise and
burdensome. Drafted before the advent
of e-commerce, the existing
§ 5601.101(b)(1)(iii) contains no
threshold or definition of which
merchandise sellers would be
considered to have a substantial portion
of their orders solicited, received, or
delivered through the mails. Given that
the majority of retailers solicit, receive,
or deliver merchandise through the
mails with the expansion of ecommerce, the existing
§ 5601.101(b)(1)(iii) provides minimal
guidance to employees and ethics
officials as to which companies or
persons may pose an apparent or actual
conflict of interest. Ultimately, the
Commission proposes deleting the
existing § 5601.101(b)(1)(iii) because
such financial holdings pose minimal
risk of an apparent or actual conflict of
interest.
Also, the enactment of PAEA has
transformed the Commission’s
regulatory role. In 1993, the primary
rationale given for adopting the existing
§ 5601.102 was to prevent
disqualification of too many
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Commission employees during omnibus
rate proceedings, which the
Commission no longer holds. Thus, the
Commission proposes to revise the
existing § 5601.102 to reflect the
Commission’s post-PAEA role. Further,
the proposed revised categories of
prohibited sources would likely
encompass any potential mail order
retailers that may exert (or appear to
exert) considerable influence upon the
mailing industry. For instance, such
retailers would likely have participated
in Commission proceedings in the last
4 years (as addressed by the proposed
§ 5601.102(b)(1)(i)).
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f. Parent Corporations to Any of the
Above Categories
The Commission proposes prohibiting
its employees from holding financial
interests in parent entities of any of the
above-listed categories of prohibited
holdings. This type of prohibition is
consistent with the restrictions on other
federal regulators’ employees.
2. Proposed 5 CFR 5601.102(b)(2)
To improve structural clarity and
consistency, the Commission proposes
moving the exclusion in the existing
§ 5601.101(b)(2) to the proposed
§ 5601.102(b)(2). Also, the Commission
proposes replacing ‘‘company or other
person’’ with ‘‘entity’’ and instead
referring to the PSL consistent with the
other proposed linguistic changes to 5
CFR part 5601.
Section 5601.102(c) Exception. The
Commission proposes adding
§ 5601.102(c) to clarify that proposed
§ 5601.102 does not prohibit employees
from holding diversified mutual funds
or sector mutual funds that do not
concentrate their investments in entities
identified in the proposed
§§ 5601.102(b)(1)(i)–(vi). This proposed
addition makes the Commission’s
proposed changes consistent with
§ 2640.201 of this title.
Section 5601.102(d) Newly prohibited
securities or new employees. The
Commission proposes adding
§ 5601.102(d) to provide guidance to
employees that discover they hold an
interest in an entity on the PSL, either
when the employee receives the
prohibited securities list for the first
time (e.g., employees receiving the first
publication of the PSL or new
employees) or receives an updated
version of the PSL adding entities. The
Commission proposes requiring such
employees to notify the DAEO in
writing of prohibited holdings within 30
days of dissemination of the PSL. The
Commission proposes requiring such
employees to divest the interest or
obtain a waiver under proposed
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§ 5601.102(g) within 90 days of
dissemination of the PSL.
Section 5601.102(e) Securities
acquired without specific intent. The
Commission proposes adding
§ 5601.102(e) to guide employees that
acquire an interest in a prohibited
security without specific intent (e.g.,
through marriage, inheritance, or gift).
The Commission proposes requiring
such employees to notify the DAEO in
writing within 30 days of the
acquisition. The Commission proposes
requiring such employees to divest the
interest or obtain a waiver within 90
days of acquisition.
Section 5601.102(f) Divestiture. 5 CFR
part 2635 and the ethics policies of the
Commission permit employees to divest
themselves of prohibited financial
interests under particular
circumstances. The Commission
proposes adding § 5601.102(f) to set
forth a uniform standard and guide for
employees regarding how to accomplish
divestiture, obtain extensions of time to
divest, and accomplish disqualification
pending divestiture.
(1) Procedure for accomplishing
divestiture. The Commission proposes
requiring employees to submit written
proof of divestiture to the DAEO. The
Commission proposes that the employee
shall continue to be recused until the
date of the DAEO’s written confirmation
that divestiture has been accomplished.
(2) Extension of period to divest.
Consistent with § 2635.403(d) of this
title, the proposed regulation provides
90 days for divestiture, with extension
available in cases of undue hardship.
(3) Disqualification pending
divestiture. The Commission proposes
requiring an employee to disqualify
himself or herself (or obtain a waiver
under proposed § 5601.102(g)) from
participation in any particular matters
that may pose a conflict of interest
before the employee receives written
confirmation of divestiture from the
DAEO.
This proposed procedure will help to
maintain public confidence and protect
the Commission’s integrity by ensuring
that employees are not working on
matters affecting their financial
interests.
Section 5601.102(g) Waivers. 5 CFR
part 2635 and the ethics policies of the
Commission permit employees to obtain
waivers of disqualification under
particular circumstances. The
Commission proposes adding
§ 5601.102(g) to provide greater
specificity regarding the requirements to
obtain a waiver and to acknowledge that
a waiver may be conditional. The
Commission proposes that the DAEO
shall have authority to grant a written
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waiver of the application of proposed
§ 5601.102(a) based on a determination
that the waiver is not prohibited by law
or inconsistent with § 2635.402(d) of
this title and that the particular
circumstances do not require that the
financial interest be prohibited or
divested to avoid an apparent conflict of
interest. An employee may be required
under the waiver to disqualify himself
or herself from a particular matter or
take other appropriate action.
The waiver provision is intended, in
appropriate cases, to ease the undue
burden that the prohibited financial
interests section may impose on
Commission employees, while ensuring
that employees do not engage in actions
that may interfere with the objective and
impartial execution of their official
duties or raise questions about possible
misuse of their official positions.
E. Section 5601.103 Notice of
Disqualification When Seeking
Employment
The existing § 5601.103 requires
employees to notify their supervisors of
the need to disqualify themselves from
proceedings when seeking employment.
The Commission proposes dividing
§ 5601.103 into sections (a) and (b).
Proposed § 5601.103(a) requires notice
of disqualification when seeking
employment to be made in writing and
directed to the DAEO within 3 business
days. The Commission also proposes
modifying § 5601.103(a) to reflect that
supervisors seeking employment must
notify the DAEO to ensure that the
supervisor is disqualified from working
on and supervising matters relating to
the supervisor’s prospective employer’s
financial interest. The Commission
proposes requiring the DAEO to inform
the employee’s supervisor of the
disqualification. This proposed
amended procedure does not replace
any notification requirements imposed
upon employees required to file public
financial disclosure reports (OGE form
278(e)) to comply with the Stop Trading
on Congressional Knowledge Act of
2012. See Public Law 112–105, 126 Stat.
291, 303–04, § 17 (2012). Public filers
must comply with additional
notification requirements set forth in
§ 2635.607 of this title. Proposed
§ 5601.103(b) addresses withdrawal of
notices of disqualification by
employees.
Notification of disqualification to the
DAEO facilitates the DAEO’s ability to
advise employees of potential ethical
concerns. Where disqualification is
necessary, the Commission proposes
requiring a written record to protect
both the disqualified employee and the
Commission. A written statement
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maintained by the DAEO avoids
possible questions about the scope and
terms of the disqualification and
ensures that the Commission will be
able to provide adequate staffing for the
affected matter. To encourage employee
candor concerning potential
disqualifications and maintain the
integrity of the Commission’s programs
and processes, the DAEO need not
inform the employee’s supervisor of the
reason for the employee’s
disqualification. The Commission’s
proposal merely amends the notification
procedure when disqualification is
otherwise appropriate. The
Commission’s proposal makes no
changes to the standard to determine
when disqualification is necessary.
mstockstill on DSK30JT082PROD with PROPOSALS
F. Section 5601.104 Prohibited
Outside Employment
Existing § 5601.104 is titled ‘‘Outside
employment’’ and includes discussion
of both prohibited outside employment
and outside employment that is
permitted, subject to prior approval. To
differentiate between these two
concepts, the Commission proposes to
divide the concepts into two separate
rules. Proposed § 5601.104 discusses
only prohibited outside employment,
which is currently discussed in existing
§ 5601.104(a). Newly created proposed
§ 5601.105 discusses prior approval for
outside employment, which is currently
discussed in existing § 5601.104(b). The
Commission proposes moving the
existing §§ 5601.104(c) to 5601.101(b)(6)
with the other defined terms of 5 CFR
part 5601. See supra part VI.C.
Accordingly, the Commission
proposes retitling § 5601.104 as
‘‘Prohibited outside employment.’’ Also,
the Commission proposes replacing the
phrase ‘‘a company or other person
whose interests are significantly affected
by rates of postage, fees for postal
services, the classification of mail or the
operations of the Postal Service’’ with
the phrase ‘‘an entity on the prohibited
securities list described in
§ 5601.102(b).’’ This proposed change
reflects the replacement of the
§ 5601.101(b) ‘‘affected persons’’
terminology with the ‘‘prohibited
securities list’’ terminology used in the
proposed § 5601.102(b).
G. Section 5601.105 Prior Approval for
Outside Employment
The Commission proposes to create
separate § 5601.105 to discuss prior
approval for outside employment and
subdivides the discussion into sections
(a) and (b) as follows.
Section 5601.105(a) Prior approval for
outside employment. The Commission
proposes amendments to make this
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subsection consistent with the existing
text of § 3000.20(b) of title 39 and to
enhance clarity. Currently, the DAEO
provides employees approved for
outside employment (and their
supervisor) with a written memorandum
counseling the employee regarding
potential ethical concerns. See 39 CFR
3000.10(a). Consistent with this current
practice, the Commission proposes
requiring the DAEO to provide the
written notice of approval to the
employee’s supervisor. The Commission
proposes this modification to ensure
that employees do not work on matters
that may pose an actual or apparent
conflict of interest and thereby maintain
the integrity of the Commission’s
programs and processes.
Section 5601.105(b) Scope of
approval. Also, the Commission
proposes addressing the scope of
approval for outside employment. The
Commission proposes requiring
employees to submit a new request for
approval upon a significant change in
the nature or scope of the outside
employment or a change in the
employee’s Commission position or
assigned responsibilities. This
requirement will enable the DAEO to
prevent actual or apparent conflicts of
interest that may develop based on
changes in circumstances after approval
for outside employment has been
granted.
V. Administrative Actions
The Commission establishes Docket
No. RM2017–4 for consideration of
matters raised by this Order. Additional
information concerning this rulemaking
may be accessed via the Commission’s
Web site at https://www.prc.gov.
Interested persons may submit
comments on this Order no later than 30
days after the date of publication of this
Order in the Federal Register. Pursuant
to 39 U.S.C. 505, Samuel M. Poole is
designated as an officer of the
Commission (Public Representative) to
represent the interests of the general
public in this proceeding.
VI. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
No. RM2017–4 for consideration of the
matters raised by this Order.
2. Interested persons may submit
comments no later than 30 days after the
date of publication of this Order in the
Federal Register.
3. Pursuant to 39 U.S.C. 505, the
Commission appoints Samuel M. Poole
to serve as an officer of the Commission
(Public Representative) to represent the
interests of the general public in this
proceeding.
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23763
4. The Secretary shall arrange for
publication of this Order in the Federal
Register.
By the Commission.
Stacy L. Ruble,
Secretary.
By the Office of Government Ethics.
Walter M. Shaub, Jr.,
Director, Office of Government Ethics.
List of Subjects in 5 CFR Part 5601
Conflicts of interests.
For the reasons discussed in the
preamble, the Commission proposes to
amend chapter XLVI of title 5 of the
Code of Federal Regulations as follows:
■ 1. Revise part 5601 to read as follows:
PART 5601—SUPPLEMENTAL
STANDARDS OF ETHICAL CONDUCT
FOR EMPLOYEES OF THE POSTAL
REGULATORY COMMISSION
Sec.
5601.101 General.
5601.102 Prohibited financial Interests.
5601.103 Notice of disqualification when
seeking employment.
5601.104 Prohibited outside employment.
5601.105 Prior approval for outside
employment.
Authority: 5 U.S.C. 7301; 5 U.S.C. App.
(Ethics in Government Act of 1978); 39
U.S.C. 503; 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, 2635.403(a),
2635.802(a), 2635.803.
Source: 58 FR 42840, Aug. 12, 1993, unless
otherwise noted.
§ 5601.101
General.
(a) Purpose. In accordance with
§ 2635.105 of this title, the regulations
in this part apply to employees,
including Commissioners, of the Postal
Regulatory Commission (Commission)
and supplement the Standards of
Ethical Conduct for Employees of the
Executive Branch contained in part
2635 of this title. In addition, the
executive branch financial disclosure
regulations contained in part 2634 of
this title, additional regulations on
responsibilities and conduct at part 735
of this title, and Commission-specific
provisions contained in 39 CFR part
3000 apply to Commission employees.
(b) Definitions. For the purposes of
this part:
(1) The term securities includes an
interest in debt or equity instruments.
The term includes, without limitation,
secured and unsecured bonds,
debentures, notes, securitized assets,
and commercial paper, as well as all
types of preferred and common stock.
The term encompasses both current and
contingent ownership interests,
including any beneficial or legal interest
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derived from a trust. It extends to any
right to acquire or dispose of any long
or short position in such securities and
includes, without limitation, interests
convertible into such securities, as well
as options, rights, warrants, puts, calls,
and straddles with respect thereto.
(2) The term parent means a company
that possesses, directly or indirectly, the
power to direct or cause the direction of
the management and policies of an
entity identified in §§ 5601.102 (b)(1)(i)–
(b)(1)(v).
(3) The term person means an
individual, corporation and subsidiaries
it controls, company, association, firm,
partnership, society, joint stock
company, or any other organization or
institution, including any officer,
employee, or agent of such person or
entity. For purposes of this part, a
corporation will be deemed to control a
subsidiary if it owns 50 percent or more
of the subsidiary’s voting securities. The
term is all-inclusive and applies to
commercial ventures and nonprofit
organizations as well as to foreign, State,
and local governments, including the
Government of the District of Columbia.
It does not include any agency or other
entity of the Federal Government or any
officer or employee thereof when acting
in his official capacity on behalf of that
agency or entity.
(4) The term entity means person.
(5) The term DAEO means the
Designated Agency Ethics Official, or
his delegate under § 2638.601 of this
title.
(6) The term employment means any
form of non-Federal employment or
business relationship involving the
provision of personal services by the
employee. It includes but is not limited
to personal services as an officer,
director, employee, agent, attorney,
consultant, contractor, general partner
or trustee. Employment does not
include participation in the activities of
a nonprofit charitable, religious,
professional, social, fraternal,
educational, recreational, public service
or civic organization unless such
activities involve the practice of a
profession within the meaning of
§ 2636.305(b)(1) of this title, including
the giving of professional advice, or are
for compensation, other than
reimbursement of expenses.
(7) The term publicly held corporation
means any corporation issuing any class
of common equity securities required to
be registered under section 12 of the
Securities Exchange Act of 1934.
(8) The term dependent child means
when used with respect to any reporting
individual, any individual who is a son,
daughter, stepson, or stepdaughter and
who:
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17:40 May 23, 2017
Jkt 241001
(i) Is unmarried, under age 21, and
living in the household of the reporting
individual; or
(ii) Is a dependent of the reporting
individual within the meaning of
section 152 of the Internal Revenue
Code of 1986, 26 U.S.C. 152.
§ 5601.102
Prohibited financial interests.
(a) General prohibition. No employee,
and no spouse or dependent child of an
employee, shall acquire or hold any
securities issued by an entity on the
prohibited securities list described in
paragraph (b) of this section.
(b) Prohibited securities list. At least
once a year, the Commission will
publish and distribute to employees a
list of entities whose securities an
employee or the spouse or dependent
child of an employee may not own.
(1) The list shall include:
(i) An entity participating in a
proceeding before the Commission in
the last 4 years, e.g., complainants,
appellants, intervenors, and entities
filing comments on the record in
Commission proceedings;
(ii) A party to a proceeding to which
the Commission is a party, e.g.,
appellate proceedings, administrative
proceedings, or civil actions;
(iii) An entity primarily engaged in
the business of delivering packages,
merchandise, or written
communications, i.e., an entity whose
primary business competes with the
Postal Service;
(iv) An entity providing services or
products to the Postal Service that can
be expected to produce annual revenue:
(A) To a publicly held corporation
exceeding $1,000,000, and if the entity
reports its gross revenue publicly,
exceeding 10 percent of its annual gross
revenue; or
(B) to any other entity exceeding
$100,000, and if the entity reports its
gross revenue publicly, exceeding 5
percent of the entity’s annual gross
revenue;
(v) Any other entities not listed above
for which a Commission employee
holding a security may raise an actual
or apparent loss of impartiality affecting
the integrity of the Commission’s
programs and operations, e.g., entities
primarily engaged in the business of
publishing or distributing publications
such as periodicals or sending
advertising, promotional, or other
material on behalf of itself or another
entity through the mails; and
(vi) The parent corporation of any
subsidiary described in paragraphs
(b)(1)(i)–(b)(1)(v) of this section.
(2) The list shall not include an entity
whose use of the mail is merely an
incidental or minor factor in the general
conduct of its business.
PO 00000
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Fmt 4702
Sfmt 4702
(c) Exception. Nothing in this section
prohibits an employee, or the spouse or
dependent child of an employee, from
acquiring or holding an interest in a
publicly traded or publicly available
mutual fund or other collective
investment fund, or in a widely held
pension or mutual fund, provided that
the fund’s prospectus or practice does
not indicate the stated objective of
concentrating its investments in entities
identified in paragraphs (b)(1)(i)–
(b)(1)(vi) of this section.
(d) Newly prohibited securities or new
employees. Within 30 days after the
Commission disseminates the
prohibited securities list to an
employee, an employee who owns, or
whose spouse or dependent child owns,
prohibited securities shall report that
ownership to the DAEO. The
employee’s report must be in writing
and include the name of the prohibited
security and the date of acquisition.
Except as provided in paragraph (g) of
this section, the employee, or the spouse
or dependent child of the employee,
shall divest prohibited securities within
90 days after dissemination of the
prohibited securities list.
(e) Securities acquired without
specific intent. Within 30 days after an
employee, or the spouse or dependent
child of an employee, acquires
securities of an entity on the prohibited
securities list as a result of marriage,
inheritance, gift or otherwise without
specific intent to acquire the securities,
the employee shall report the
acquisition to the DAEO. The
employee’s report must be in writing
and include the name of the prohibited
security, the date of acquisition, and the
method of acquisition. Except as
provided in paragraph (g) of this
section, an employee, or the spouse or
dependent child of an employee, shall
divest prohibited securities within 90
days after the date of acquisition.
(f) Divestiture.
(1) Procedure for accomplishing
divestiture. To alleviate an actual or
apparent conflict of interest, an
employee divesting prohibited
securities shall obtain written
confirmation from the DAEO that
divesture has been accomplished. A
request for such confirmation shall be
submitted in writing with sufficient
proof to enable the DAEO to confirm
that the employee has divested the
prohibited security. The employee shall
continue to be recused until the date of
the DAEO’s written confirmation that
divestiture has been accomplished.
(2) Extension of period to divest.
Upon a showing of undue hardship, the
DAEO may extend the 90 day period for
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divestiture specified in paragraphs (e)
through (f) of this section.
(3) Disqualification pending
divestiture. Pending divestiture of
prohibited securities, an employee must
disqualify himself or herself, in
accordance with § 2635.402 of this title,
from participation in particular matters
which, as a result of continued
ownership of the prohibited securities,
would affect the financial interests of
the employee, or those of the spouse or
dependent child of the employee.
(g) Waivers. The DAEO may grant a
written waiver from this section based
on a determination that the waiver is
not inconsistent with 5 CFR part 2635
of this title or otherwise prohibited by
law and that, under the particular
circumstances, application of the
prohibition is not necessary to avoid the
appearance of an employee’s misuse of
position or loss of impartiality, or to
otherwise ensure confidence in the
impartiality and objectivity with which
the Commission’s programs are
administered, or in the case of a special
Government employee, divestiture
would result in substantial financial
hardship. A waiver under this
paragraph must be in writing and may
impose conditions, such as requiring
execution of a written disqualification.
mstockstill on DSK30JT082PROD with PROPOSALS
§ 5601.103 Notice of disqualification when
seeking employment.
(a) An employee who has been
assigned to or is supervising work on a
particular matter that affects the
financial interests of a prospective
employer and who is required, in
accordance with § 2635.604(a) of this
title, to disqualify himself or herself
from participation in that matter shall
provide written notice of
disqualification to the DAEO within 3
business days. The DAEO shall inform
the employee’s supervisor that the
employee is disqualified from the
matter. Public filers must comply with
the notification requirements set forth in
§ 2635.607 of this title even when not
required to disqualify from participation
in a particular matter. Employees who
file a notification statement in
compliance with § 2635.607 of this title
are not required to file a separate notice
under this section.
(b) An employee may withdraw
written notice under paragraph (a) of
this section upon determining that
disqualification from participation in
the matter is no longer required. A
withdrawal of disqualification shall be
in writing and shall be provided to the
DAEO. The DAEO shall inform the
employee’s supervisor that the
employee is no longer disqualified from
the matter.
VerDate Sep<11>2014
17:40 May 23, 2017
Jkt 241001
§ 5601.104 Prohibited outside
employment.
An employee shall not engage in
outside employment, either on a paid or
unpaid basis, with or for an entity on
the prohibited securities list described
in § 5601.102(b)(1)(i)–(b)(1)(vi).
§ 5601.105 Prior approval for outside
employment.
(a) Prior approval for outside
employment. An employee who wishes
to engage in outside employment, either
on a paid or unpaid basis, shall obtain
the prior written approval of the DAEO.
A request for such approval shall be
submitted in writing with sufficient
description of the employment to enable
the DAEO to give approval based on an
informed determination that the outside
employment is not expected to involve
conduct prohibited by statute or Federal
regulation, including paragraph (a) of
this section and part 2635 of this title.
The DAEO shall provide a copy of any
written approvals for outside
employment to the employee’s
supervisor.
(b) Scope of approval. An employee
must submit a new request for approval
upon either a significant change in the
nature or scope of the outside
employment or a change in the
employee’s Commission position or
assigned responsibilities.
[FR Doc. 2017–10613 Filed 5–23–17; 8:45 am]
BILLING CODE 7710–FW–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Chapter I
RIN 3038–AE55
Project KISS
Commodity Futures Trading
Commission.
ACTION: Request for Information;
Correction.
AGENCY:
SUMMARY: This is a correction to a
Request for Information published by
the Commodity Futures Trading
Commission (‘‘Commission’’ or
‘‘CFTC’’) in the Federal Register of May
9, 2017 regarding the submission by the
public of suggestions about how the
Commission’s existing rules,
regulations, or practices could be
applied in a simpler, less burdensome,
and less costly manner. This correction
changes the web address to which
suggestions may be submitted. The
incorrect web address appeared in two
places in the original document. To
avoid any confusion and to ensure the
public has all necessary information in
PO 00000
Frm 00008
Fmt 4702
Sfmt 4702
23765
one place, the Request for Information is
being republished in full with the
corrected web address.
DATES: Suggestions must be received on
or before September 30, 2017.
ADDRESSES: You may submit
suggestions, identified by RIN number
3038–AE55, by any of the following
methods:
• The agency’s Web site, at
www.cftc.gov/projectkiss. Follow the
instructions for submitting a Project
KISS suggestion through the Public
Comment Form.
• Mail: Christopher Kirkpatrick,
Secretary of the Commission,
Commodity Futures Trading
Commission, Three Lafayette Centre,
1155 21st Street, NW., Washington, DC
20581.
• Hand Delivery/Courier: Same as
Mail, above.
Please submit your suggestions using
only one method.
FOR FURTHER INFORMATION CONTACT:
Michael Gill, Regulatory Reform Officer,
(202) 418–5713, mgill@cftc.gov,
Commodity Futures Trading
Commission, Three Lafayette Centre,
1151 21st Street NW., Washington, DC
20581; or KISS@cftc.gov.
SUPPLEMENTARY INFORMATION: On
February 24, 2017, President Donald J.
Trump issued Executive Order 13777:
Enforcing the Regulatory Reform
Agenda (‘‘EO 13777’’). EO 13777 directs
federal agencies, among other things, to
designate a Regulatory Reform Officer
and establish a Regulatory Reform Task
Force. Although the CFTC, as an
independent federal agency,1 is not
bound by EO 13777, the Commission is
nevertheless commencing an agencywide review of its rules, regulations,
and practices to make them simpler, less
burdensome, and less costly. This
initiative is called Project KISS, which
stands for ‘‘Keep It Simple Stupid.’’ 2 In
support of these efforts, the Commission
has approved the solicitation of
suggestions from the public regarding
how the Commission’s existing rules,
regulations, or practices could be
applied in a simpler, less burdensome,
and less costly manner. The public may
submit Project KISS suggestions through
the Public Comment Form on the
1 Independent federal agencies exist outside of
the federal executive departments headed by a
Cabinet secretary and the Executive Office of the
President. See Humphrey’s Executor v. United
States, 295 U.S. 602 (1935); 5 U.S.C. 104.
2 See Remarks of Acting Chairman J. Christopher
Giancarlo before the 42nd Annual International
Futures Industry Conference in Boca Raton, FL,
Mar. 15, 2017, available at https://www.cftc.gov/
PressRoom/SpeechesTestimony/opagiancarlo-20.
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Agencies
[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)]
[Proposed Rules]
[Pages 23758-23765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10613]
========================================================================
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.
========================================================================
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 /
Proposed Rules
[[Page 23758]]
POSTAL REGULATORY COMMISSION
5 CFR Part 5601
[Docket No. RM2017-4; Order No. 3906]
Supplemental Standards of Ethical Conduct
AGENCY: Postal Regulatory Commission.
ACTION: Proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Commission proposes rules that amend existing rules
related to supplemental standards of ethical conduct for Postal
Regulatory Commission employees. The proposed rules revise the existing
rules in order to better conform to our regulations and accurately
reflect the Commission's regulatory role under the Postal
Accountability and Enhancement Act. The Commission invites public
comment on the proposed rules.
DATES: Comments are due: June 23, 2017.
FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at
202-789-6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Background
III. Summary of Proposed Changes
IV. Section by Section Analysis of the Proposed Changes to 5 CFR
Part 5601
V. Administrative Actions
VI. Ordering Paragraphs
I. Introduction
The Postal Regulatory Commission (Commission) establishes a
rulemaking docket to consider amending the Commission's supplemental
standards of ethical conduct, 5 CFR part 5601. The supplemental
standards of ethical conduct apply to Commission employees and concern
prohibited financial holdings, disqualification when seeking non-
federal employment, and engaging in outside employment. The Commission
proposes to update the existing supplemental standards to be consistent
with 5 CFR part 2635 and the Commission's current regulatory role under
the Postal Accountability and Enhancement Act (PAEA), Public Law 109-
435, 120 Stat. 3198 (2006). This rulemaking also proposes linguistic
and organizational revisions to clarify the supplemental standards.
The Office of Government Ethics (OGE) concurs with the Commission's
proposed revisions to 5 CFR part 5601.
II. Background
In 1991, Executive Order 12674, as amended by Executive Order
12731, authorized OGE to establish a single, comprehensive, and clear
set of executive branch standards of ethical conduct.\1\ On August 7,
1992, OGE published a final rule titled Standards of Ethical Conduct
for Employees of the Executive Branch (OGE Standards).\2\ The OGE
Standards, codified at 5 CFR part 2635, became effective February 3,
1993, and established uniform standards of ethical conduct applicable
to all executive branch personnel. In 1993, the Postal Rate Commission
collaborated with OGE to draft supplemental standards for inclusion in
5 CFR part 5601. The new 5 CFR part 5601 was published as an interim
rule. 58 FR 42839 (Aug. 12, 1993).
---------------------------------------------------------------------------
\1\ See Executive Order No. 12674, 54 FR 15159 (Apr. 12, 1989)
(requiring OGE to establish executive-branch Standards of Ethical
Conduct); Executive Order No. 12731, 55 FR 42547 (Oct. 17, 1990)
(providing for supplementary agency regulations in 5 CFR to be
promulgated jointly with OGE for inclusion in 5 CFR).
\2\ See 57 FR 35006-35067, as corrected at 57 FR 48557 (Oct. 27,
1992), 57 FR 52583 (Nov. 4, 1992), and 60 FR 66857-66858 (Dec. 27,
1995).
---------------------------------------------------------------------------
In 2006, PAEA changed the name of the agency from the Postal Rate
Commission to the Postal Regulatory Commission and made several changes
to the Commission's regulatory role. Specifically, PAEA eliminated the
former Postal Rate Commission's responsibility to adjudicate omnibus
rate cases each year, which set rates for all United States Postal
Service (Postal Service) products.\3\ Instead, under PAEA the
Commission, among other responsibilities, approves or denies discrete
Postal Service requests to change rates of market-dominant products or
competitive products.\4\ Proposed rate changes include requests to
change rates of general applicability, e.g., retail rates available to
the public, and rates not of general applicability, e.g., negotiated
service agreements (NSAs) with private parties. Post-PAEA, the
Commission also must make an Annual Compliance Determination report
concerning whether the rates or fees in effect for the year satisfied
statutory and regulatory requirements and whether any service standards
in effect during the year were not met. 39 U.S.C. 3653(b). These
enhanced Commission responsibilities drive the need to modernize the
Commission's supplemental standards of ethical conduct.
---------------------------------------------------------------------------
\3\ Public Law 109-435, 120 Stat. 3198 Sec. Sec. 201-202 (2006)
(amending 39 U.S.C. 3621-3622 (2005) and repealing sections 3623-
3624).
\4\ PAEA introduced the division of Postal Service products into
market-dominant products (products delivered under the Postal
Service monopoly) and competitive products (all other products). 39
U.S.C. 3621-3622 and 39 CFR part 3010 (regulation of rates for
market-dominant products); 39 U.S.C. 3631-3634 and 39 CFR part 3015
(regulation of rates for competitive products).
---------------------------------------------------------------------------
III. Summary of the Proposed Regulatory Changes
The Commission identified a need to revise the existing
supplemental standards for several reasons. The supplemental standards
of ethical conduct, 5 CFR part 5601, have never been amended or
finalized since their 1993 adoption and remain attributed to the Postal
Rate Commission.
Therefore, the Commission proposes amendments to accomplish the
following goals: (1) Reflect the substantial changes to the
Commission's regulatory role after the 2006 enactment of PAEA; (2)
update its rules to be consistent with 5 CFR part 2635; (3) reflect
lessons learned through the Commission's experiences with the existing
ethics policies and practices; (4) enhance the clarity of the ethical
guidance for its employees; (5) protect the integrity of the
Commission's programs and processes; (6) maintain public confidence
that Commission employees are fulfilling their duties impartially and
objectively; (7) facilitate a well-administered ethics counseling
program; and (8) finalize the interim supplemental standards of
conduct.
IV. Section by Section Analysis of the Proposed Changes to 5 CFR Part
5601
The rules in 5 CFR part 5601 apply only to Commission personnel.
A. Title 5 CFR Part 5601
The Commission proposes correcting the title identified in 5 CFR
part 5601 by replacing ``Postal Rate Commission''
[[Page 23759]]
with ``Postal Regulatory Commission'' to reflect the agency's post-PAEA
name.
B. Authority Identified in 5 CFR Part 5601
The Commission proposes correcting the authority identified in 5
CFR part 5601 by replacing ``39 U.S.C. 3603'' with ``39 U.S.C. 503'' to
reflect the renumbering of that provision by PAEA.
C. Section 5601.101 General
Section 5601.101(a) Purpose. The Commission proposes correcting
Sec. 5601.101(a) by replacing ``Postal Rate Commission'' with ``Postal
Regulatory Commission'' to reflect the agency's post-PAEA name. The
Commission also proposes adding cross-references to the executive
branch financial disclosure regulations in 5 CFR part 2634, regulations
on responsibilities and conduct in 5 CFR part 735, and Commission-
specific provisions in 39 CFR part 3000.
Section 5601.101(b) Definitions. The Commission proposes deleting
the text in existing Sec. 5601.101(b), which defines ``affected
persons'' as used in existing Sec. Sec. 5601.102 and 5601.104. The
Commission proposes retaining aspects of the ``affected persons''
definition as categories of prohibited sources referenced in the
proposed Sec. 5601.102(b), subject to modifications for clarity as
well as updates to reflect the Commission's post-PAEA regulatory role.
The Commission's proposal to move the categories of prohibited sources
from Sec. 5601.101 to Sec. 5601.102 is consistent with other federal
regulators' supplemental ethical standards.
The Commission proposes defining eight terms in the revised Sec.
5601.101(b) as follows:
(1) ``securities''--based on a commonly accepted definition.
(2) ``parent''--based on a commonly accepted definition.
(3) ``person''--consistent with 5 CFR 2635.102(k).
(4) ``entity''--indicating its usage to be equivalent to
``person.''
(5) Designated Agency Ethics Official ``DAEO''--consistent with
Sec. 2638.601 of this title.
(6) ``employment''--moved from the existing Sec. 5601.104(c) and
correcting ``organizations'' from plural to singular form.
(7) ``publicly held corporation''--consistent with a definition
used by the Internal Revenue Service. See 26 U.S.C. 162(m)(2).
(8) ``dependent child''--consistent with Sec. 2364.105(d) of this
title.
D. Section 5601.102 Prohibited Financial Interests
Section 2635.403(a) of title 5 authorizes agencies, by supplemental
regulation, to prohibit or restrict acquiring or holding of a financial
interest or a class of financial interests by agency employees based on
a determination that acquiring or holding of such interests would cause
reasonable persons to question the impartiality and objectivity with
which the agency programs are administered. The Commission proposes
revising the supplemental regulations to maintain the integrity of the
Commission's programs and processes.
The deletion of the existing language of Sec. 5601.102. The
existing Sec. 5601.102 prohibits employees from direct or indirect
financial interest in ``affected persons'' as defined by existing Sec.
5601.101(b)'s non-exhaustive list of categories of prohibited financial
interest. The Commission proposes restructuring the scope of financial
prohibitions to be wholly contained within proposed Sec. 5601.102,
providing greater specificity as to the prohibited categories and the
meaning of direct versus indirect holdings, and updating the language
to reflect that business entities, rather than natural persons, would
most likely pose potential conflicts of interest. The proposed changes
improve the regulation's clarity and precision.
Section 5601.102(a) General prohibition. To ensure that employees
do not engage in (or appear to engage in) actions that may interfere
with the objective and impartial execution of their official duties,
the Commission proposes prohibiting employees, their spouses, and
dependent children from acquiring or holding particular categories of
financial interests.
Section 5601.102(b) Prohibited Securities List. The Commission
proposes to compile a Prohibited Securities List (PSL) cataloguing the
financial interests that employees, their spouses, and dependent
children may not own. The PSL is intended to serve as a reference
source to assist employees in identifying prohibited interests,
particularly before purchasing securities. The Commission shall update
and disseminate the PSL to Commission employees at least once a year.
The proposed PSL will list entities drawn from the six categories
listed in proposed Sec. 5601.102(b)(1). A discussion of those six
categories follows.
1. Proposed Sec. 5601.102(b)(1)
Proposed Sec. 5601.102(b)(1) will list the six categories based on
the Commission's experience under PAEA which may generally cause
conflicts of interest for all employees. The proposed PSL will list
entities from these six categories. The proposed PSL lists prohibited
entities solely based on the Commission's authority to issue
supplemental standards. Depending on the employee's role within the
Commission, other restrictions on employee's financial holdings, such
as 18 U.S.C. 208, 5 CFR part 2635, the Ethics in Government Act, or the
Procurement Integrity Act may apply. Employees should consult with the
DAEO to confirm that a particular financial interest is not restricted
based on rules other than these supplemental standards such as 18
U.S.C. 208, 5 CFR part 2635, the Ethics in Government Act, or the
Procurement Integrity Act. See 39 CFR 3000.10.
The Commission proposes to include the following six categories of
entities on the PSL:
a. Entities That Participated in Commission Proceedings in the Last 4
Years
Existing Sec. Sec. 5601.101(b)(1)(i) and 5601.102 prohibit
employees from holding a financial interest in companies or persons who
have been a party to a Commission proceeding in the past 4 years. The
Commission proposes clarifying this prohibition to include any entity
participating in a proceeding before the Commission in the last 4
years. This is because the Commission's rules allow entities that are
not parties to the proceedings to formally participate in Commission
proceedings by expressing their views on the record and seeking relief
from the Commission. See, e.g., 39 CFR 3001.20a. Based on the
Commission's experiences in its proceedings after the enactment of
PAEA, the Commission proposes that the prohibition include
complainants, appellants, intervenors, and entities filing comments on
the record in Commission proceedings. The prohibition does not include
persons whose participation in Commission proceedings is limited to:
(1) Serving as a witness; (2) serving as a Public Representative; (3)
identification, through non-public materials provided to the Commission
by the Postal Service according to 39 CFR part 3007, as a mailer
entering into a negotiated service agreement (defined at Sec.
3001.5(r) of title 39); or (4) persons merely submitting off-the-record
statements or letters to the Commission's Office of Public Affairs and
Government Relations. These four proposed exclusions are consistent
with the current Commission ethics rules and practices. The particular
exclusion of
[[Page 23760]]
persons submitting off-the-record statements or letters is warranted
because the Commission's rules of practice clarify that such statements
are not made or considered as part of the Commission's formal record.
See 39 CFR 3001.20b. It is also based on the Commission's experience
that such off-the-record statements are typically submitted by private
citizens not intending to formally participate in the public
proceeding, as opposed to business entities that may pose a financial
conflict of interest for Commission employees.
b. Parties to Proceedings to Which the Commission Is Also a Party
The Commission proposes this additional prohibition to encompass
entities seeking some form of relief from or action by the Commission
that are involved in cases heard by a tribunal other than the
Commission, such as an appeal of a final Commission order in the
courts. This prohibition is consistent with the restrictions upon
employees of other federal regulators.
c. Competitors of the Postal Service
Existing Sec. Sec. 5601.101(b)(1)(v) and 5601.102 prohibit
employees from holding a financial interest in companies or persons who
are primarily engaged in the business of delivering merchandise or
written communications. The Commission proposes clarifying the
prohibition's language. The Commission does not intend to modify the
purpose of the prohibition, which prohibits employees from having a
financial interest in competitors of the Postal Service.
d. Certain Postal Service Contractors
In conjunction with OGE in 1993, the Commission adopted an interim
regulation prohibiting employees from holding financial interests in
certain Postal Service contractors. This existing prohibition applies
to persons who provide ``services or products to the Postal Service
that can be expected to produce income that exceeds $100,000 and equals
or exceeds 5 percent of its gross income for the current fiscal year.''
5 CFR 5601.101(b)(1)(vi). The Commission proposes moving the existing
prohibition to Sec. 5601.102(b)(1)(iv) and clarifying its terms. The
Commission proposes to change the term ``gross income'' to ``gross
revenue'' for two reasons. First, the proposed change reflects that the
majority of prohibited sources are business entities rather than
natural persons and, as such, are more likely to report either revenues
alone or both revenues and income. Second, because companies report
gross income as gross revenues minus operating expenses, gross revenue
is the more appropriate measure to analyze conflicts of interest.
The Commission also proposes that different financial thresholds
should apply to publicly held corporations versus other entities. This
proposed change is based on the Commission's 23 years of experience
with the existing rule and aims to better reflect conflicts of interest
posed by modern securities after enactment of PAEA. The Commission
proposes to retain the dollar amount and percentage thresholds adopted
in 1993 for entities other than publicly held corporations that report
their gross revenue publicly. Proposed Sec. 5601.102(b)(1)(iv) will
prohibit employees from holding interests in such entities with a
Postal Service contract producing annual gross revenue that exceeds
$100,000 and 5 percent of the entity's annual gross revenue.
However, recognizing based on experience that most entities that
are not publicly held corporations do not report gross income, the
Commission proposes to apply the percentage threshold only if
information regarding the entity's gross revenue is available publicly.
Therefore, the PSL shall include an entity that provides services or
products to the Postal Service over $100,000 if the entity is not a
publicly held corporation and does not report its gross revenue
publicly. An employee with a financial interest in an entity other than
a publicly held corporation that holds a Postal Service contract
producing annual gross revenue over $100,000 may pose an actual or
apparent conflict of interest due to multiple factors, including the
limited number of owners and a limited public market for trading.
For these reasons, the Commission proposes raising the dollar
amount and percentage thresholds adopted in 1993 applicable to publicly
held corporations to $1,000,000 and 10 percent of annual gross revenue.
An employee with a financial interest in a publicly held corporation
that holds a Postal Service contract producing annual gross revenue
over $1,000,000 and 10 percent is likely to pose a risk of an actual or
apparent conflict of interest. The following decision tree summarizes
the proposed Sec. 5601.102(b)(1)(iv):
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[GRAPHIC] [TIFF OMITTED] TP24MY17.027
e. Other Entities That May Pose an Actual or Apparent Conflict of
Interest Under 5 CFR Part 2635
The existing definition of ``affected persons'' in whom employees
may not hold a financial interest provides a non-exhaustive list of
categories. Recognizing that certain categories may be imprecise, the
Commission proposes revisions to provide greater specificity regarding
prohibited interests. Notwithstanding such revisions, the Commission
proposes memorializing that the touchstone of all prohibitions on
financial holdings stems from the requirements contained in 5 CFR part
2635, which require that employees avoid holding financial interests
that may cause or appear to cause any appearance of loss of
impartiality in the performance of their official duties. This proposed
change will promote consistency between 5 CFR parts 5601 and 2635 and
better safeguard the integrity of the Commission's programs and
operations. The proposed change also reflects the Commission's 23 years
of experience with the existing rule as well as the Commission's
current responsibilities under the PAEA.
To exemplify entities that may cause an apparent or actual conflict
of interest, the Commission references entities primarily engaged in
the business of sending periodicals or standard mail, which correspond
respectively to the aspects of the definition of ``affected persons''
contained in existing Sec. Sec. 5601.101(b)(1)(ii) and (iv). Existing
Sec. Sec. 5601.101(b)(1) (ii) and (iv) lack objective criteria
limiting the scope of the prohibited interests. The existing
prohibitions burden employees and fail to address actual or apparent
conflict of interests. Therefore, the Commission proposes incorporating
the provisions of Sec. Sec. 5601.101(b)(1)(ii) and (iv) as examples of
the proposed Sec. 5601.102(b)(1)(v) to emphasize that only those users
of periodicals and standard mail that pose an apparent or actual
conflict of interest should be prohibited interests.
The Commission proposes deleting existing Sec.
5601.101(b)(1)(iii), which defines a company or other person ``[w]ho is
in the business of selling merchandise, and a substantial portion of
whose orders are solicited, received, or delivered through the mails''
as an ``affected person.'' Under the existing Sec. 5601.102, employees
are prohibited from indirect or direct financial interests in such
persons.
The Commission does not propose to specifically incorporate the
prohibition of existing Sec. 5601.101(b)(1)(iii) into the revised
supplemental regulations because the prohibition is imprecise and
burdensome. Drafted before the advent of e-commerce, the existing Sec.
5601.101(b)(1)(iii) contains no threshold or definition of which
merchandise sellers would be considered to have a substantial portion
of their orders solicited, received, or delivered through the mails.
Given that the majority of retailers solicit, receive, or deliver
merchandise through the mails with the expansion of e-commerce, the
existing Sec. 5601.101(b)(1)(iii) provides minimal guidance to
employees and ethics officials as to which companies or persons may
pose an apparent or actual conflict of interest. Ultimately, the
Commission proposes deleting the existing Sec. 5601.101(b)(1)(iii)
because such financial holdings pose minimal risk of an apparent or
actual conflict of interest.
Also, the enactment of PAEA has transformed the Commission's
regulatory role. In 1993, the primary rationale given for adopting the
existing Sec. 5601.102 was to prevent disqualification of too many
[[Page 23762]]
Commission employees during omnibus rate proceedings, which the
Commission no longer holds. Thus, the Commission proposes to revise the
existing Sec. 5601.102 to reflect the Commission's post-PAEA role.
Further, the proposed revised categories of prohibited sources would
likely encompass any potential mail order retailers that may exert (or
appear to exert) considerable influence upon the mailing industry. For
instance, such retailers would likely have participated in Commission
proceedings in the last 4 years (as addressed by the proposed Sec.
5601.102(b)(1)(i)).
f. Parent Corporations to Any of the Above Categories
The Commission proposes prohibiting its employees from holding
financial interests in parent entities of any of the above-listed
categories of prohibited holdings. This type of prohibition is
consistent with the restrictions on other federal regulators'
employees.
2. Proposed 5 CFR 5601.102(b)(2)
To improve structural clarity and consistency, the Commission
proposes moving the exclusion in the existing Sec. 5601.101(b)(2) to
the proposed Sec. 5601.102(b)(2). Also, the Commission proposes
replacing ``company or other person'' with ``entity'' and instead
referring to the PSL consistent with the other proposed linguistic
changes to 5 CFR part 5601.
Section 5601.102(c) Exception. The Commission proposes adding Sec.
5601.102(c) to clarify that proposed Sec. 5601.102 does not prohibit
employees from holding diversified mutual funds or sector mutual funds
that do not concentrate their investments in entities identified in the
proposed Sec. Sec. 5601.102(b)(1)(i)-(vi). This proposed addition
makes the Commission's proposed changes consistent with Sec. 2640.201
of this title.
Section 5601.102(d) Newly prohibited securities or new employees.
The Commission proposes adding Sec. 5601.102(d) to provide guidance to
employees that discover they hold an interest in an entity on the PSL,
either when the employee receives the prohibited securities list for
the first time (e.g., employees receiving the first publication of the
PSL or new employees) or receives an updated version of the PSL adding
entities. The Commission proposes requiring such employees to notify
the DAEO in writing of prohibited holdings within 30 days of
dissemination of the PSL. The Commission proposes requiring such
employees to divest the interest or obtain a waiver under proposed
Sec. 5601.102(g) within 90 days of dissemination of the PSL.
Section 5601.102(e) Securities acquired without specific intent.
The Commission proposes adding Sec. 5601.102(e) to guide employees
that acquire an interest in a prohibited security without specific
intent (e.g., through marriage, inheritance, or gift). The Commission
proposes requiring such employees to notify the DAEO in writing within
30 days of the acquisition. The Commission proposes requiring such
employees to divest the interest or obtain a waiver within 90 days of
acquisition.
Section 5601.102(f) Divestiture. 5 CFR part 2635 and the ethics
policies of the Commission permit employees to divest themselves of
prohibited financial interests under particular circumstances. The
Commission proposes adding Sec. 5601.102(f) to set forth a uniform
standard and guide for employees regarding how to accomplish
divestiture, obtain extensions of time to divest, and accomplish
disqualification pending divestiture.
(1) Procedure for accomplishing divestiture. The Commission
proposes requiring employees to submit written proof of divestiture to
the DAEO. The Commission proposes that the employee shall continue to
be recused until the date of the DAEO's written confirmation that
divestiture has been accomplished.
(2) Extension of period to divest. Consistent with Sec.
2635.403(d) of this title, the proposed regulation provides 90 days for
divestiture, with extension available in cases of undue hardship.
(3) Disqualification pending divestiture. The Commission proposes
requiring an employee to disqualify himself or herself (or obtain a
waiver under proposed Sec. 5601.102(g)) from participation in any
particular matters that may pose a conflict of interest before the
employee receives written confirmation of divestiture from the DAEO.
This proposed procedure will help to maintain public confidence and
protect the Commission's integrity by ensuring that employees are not
working on matters affecting their financial interests.
Section 5601.102(g) Waivers. 5 CFR part 2635 and the ethics
policies of the Commission permit employees to obtain waivers of
disqualification under particular circumstances. The Commission
proposes adding Sec. 5601.102(g) to provide greater specificity
regarding the requirements to obtain a waiver and to acknowledge that a
waiver may be conditional. The Commission proposes that the DAEO shall
have authority to grant a written waiver of the application of proposed
Sec. 5601.102(a) based on a determination that the waiver is not
prohibited by law or inconsistent with Sec. 2635.402(d) of this title
and that the particular circumstances do not require that the financial
interest be prohibited or divested to avoid an apparent conflict of
interest. An employee may be required under the waiver to disqualify
himself or herself from a particular matter or take other appropriate
action.
The waiver provision is intended, in appropriate cases, to ease the
undue burden that the prohibited financial interests section may impose
on Commission employees, while ensuring that employees do not engage in
actions that may interfere with the objective and impartial execution
of their official duties or raise questions about possible misuse of
their official positions.
E. Section 5601.103 Notice of Disqualification When Seeking Employment
The existing Sec. 5601.103 requires employees to notify their
supervisors of the need to disqualify themselves from proceedings when
seeking employment. The Commission proposes dividing Sec. 5601.103
into sections (a) and (b). Proposed Sec. 5601.103(a) requires notice
of disqualification when seeking employment to be made in writing and
directed to the DAEO within 3 business days. The Commission also
proposes modifying Sec. 5601.103(a) to reflect that supervisors
seeking employment must notify the DAEO to ensure that the supervisor
is disqualified from working on and supervising matters relating to the
supervisor's prospective employer's financial interest. The Commission
proposes requiring the DAEO to inform the employee's supervisor of the
disqualification. This proposed amended procedure does not replace any
notification requirements imposed upon employees required to file
public financial disclosure reports (OGE form 278(e)) to comply with
the Stop Trading on Congressional Knowledge Act of 2012. See Public Law
112-105, 126 Stat. 291, 303-04, Sec. 17 (2012). Public filers must
comply with additional notification requirements set forth in Sec.
2635.607 of this title. Proposed Sec. 5601.103(b) addresses withdrawal
of notices of disqualification by employees.
Notification of disqualification to the DAEO facilitates the DAEO's
ability to advise employees of potential ethical concerns. Where
disqualification is necessary, the Commission proposes requiring a
written record to protect both the disqualified employee and the
Commission. A written statement
[[Page 23763]]
maintained by the DAEO avoids possible questions about the scope and
terms of the disqualification and ensures that the Commission will be
able to provide adequate staffing for the affected matter. To encourage
employee candor concerning potential disqualifications and maintain the
integrity of the Commission's programs and processes, the DAEO need not
inform the employee's supervisor of the reason for the employee's
disqualification. The Commission's proposal merely amends the
notification procedure when disqualification is otherwise appropriate.
The Commission's proposal makes no changes to the standard to determine
when disqualification is necessary.
F. Section 5601.104 Prohibited Outside Employment
Existing Sec. 5601.104 is titled ``Outside employment'' and
includes discussion of both prohibited outside employment and outside
employment that is permitted, subject to prior approval. To
differentiate between these two concepts, the Commission proposes to
divide the concepts into two separate rules. Proposed Sec. 5601.104
discusses only prohibited outside employment, which is currently
discussed in existing Sec. 5601.104(a). Newly created proposed Sec.
5601.105 discusses prior approval for outside employment, which is
currently discussed in existing Sec. 5601.104(b). The Commission
proposes moving the existing Sec. Sec. 5601.104(c) to 5601.101(b)(6)
with the other defined terms of 5 CFR part 5601. See supra part VI.C.
Accordingly, the Commission proposes retitling Sec. 5601.104 as
``Prohibited outside employment.'' Also, the Commission proposes
replacing the phrase ``a company or other person whose interests are
significantly affected by rates of postage, fees for postal services,
the classification of mail or the operations of the Postal Service''
with the phrase ``an entity on the prohibited securities list described
in Sec. 5601.102(b).'' This proposed change reflects the replacement
of the Sec. 5601.101(b) ``affected persons'' terminology with the
``prohibited securities list'' terminology used in the proposed Sec.
5601.102(b).
G. Section 5601.105 Prior Approval for Outside Employment
The Commission proposes to create separate Sec. 5601.105 to
discuss prior approval for outside employment and subdivides the
discussion into sections (a) and (b) as follows.
Section 5601.105(a) Prior approval for outside employment. The
Commission proposes amendments to make this subsection consistent with
the existing text of Sec. 3000.20(b) of title 39 and to enhance
clarity. Currently, the DAEO provides employees approved for outside
employment (and their supervisor) with a written memorandum counseling
the employee regarding potential ethical concerns. See 39 CFR
3000.10(a). Consistent with this current practice, the Commission
proposes requiring the DAEO to provide the written notice of approval
to the employee's supervisor. The Commission proposes this modification
to ensure that employees do not work on matters that may pose an actual
or apparent conflict of interest and thereby maintain the integrity of
the Commission's programs and processes.
Section 5601.105(b) Scope of approval. Also, the Commission
proposes addressing the scope of approval for outside employment. The
Commission proposes requiring employees to submit a new request for
approval upon a significant change in the nature or scope of the
outside employment or a change in the employee's Commission position or
assigned responsibilities. This requirement will enable the DAEO to
prevent actual or apparent conflicts of interest that may develop based
on changes in circumstances after approval for outside employment has
been granted.
V. Administrative Actions
The Commission establishes Docket No. RM2017-4 for consideration of
matters raised by this Order. Additional information concerning this
rulemaking may be accessed via the Commission's Web site at https://www.prc.gov. Interested persons may submit comments on this Order no
later than 30 days after the date of publication of this Order in the
Federal Register. Pursuant to 39 U.S.C. 505, Samuel M. Poole is
designated as an officer of the Commission (Public Representative) to
represent the interests of the general public in this proceeding.
VI. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. RM2017-4 for consideration
of the matters raised by this Order.
2. Interested persons may submit comments no later than 30 days
after the date of publication of this Order in the Federal Register.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Samuel M.
Poole to serve as an officer of the Commission (Public Representative)
to represent the interests of the general public in this proceeding.
4. The Secretary shall arrange for publication of this Order in the
Federal Register.
By the Commission.
Stacy L. Ruble,
Secretary.
By the Office of Government Ethics.
Walter M. Shaub, Jr.,
Director, Office of Government Ethics.
List of Subjects in 5 CFR Part 5601
Conflicts of interests.
For the reasons discussed in the preamble, the Commission proposes
to amend chapter XLVI of title 5 of the Code of Federal Regulations as
follows:
0
1. Revise part 5601 to read as follows:
PART 5601--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE POSTAL REGULATORY COMMISSION
Sec.
5601.101 General.
5601.102 Prohibited financial Interests.
5601.103 Notice of disqualification when seeking employment.
5601.104 Prohibited outside employment.
5601.105 Prior approval for outside employment.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 39 U.S.C. 503; 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, 2635.403(a), 2635.802(a), 2635.803.
Source: 58 FR 42840, Aug. 12, 1993, unless otherwise noted.
Sec. 5601.101 General.
(a) Purpose. In accordance with Sec. 2635.105 of this title, the
regulations in this part apply to employees, including Commissioners,
of the Postal Regulatory Commission (Commission) and supplement the
Standards of Ethical Conduct for Employees of the Executive Branch
contained in part 2635 of this title. In addition, the executive branch
financial disclosure regulations contained in part 2634 of this title,
additional regulations on responsibilities and conduct at part 735 of
this title, and Commission-specific provisions contained in 39 CFR part
3000 apply to Commission employees.
(b) Definitions. For the purposes of this part:
(1) The term securities includes an interest in debt or equity
instruments. The term includes, without limitation, secured and
unsecured bonds, debentures, notes, securitized assets, and commercial
paper, as well as all types of preferred and common stock. The term
encompasses both current and contingent ownership interests, including
any beneficial or legal interest
[[Page 23764]]
derived from a trust. It extends to any right to acquire or dispose of
any long or short position in such securities and includes, without
limitation, interests convertible into such securities, as well as
options, rights, warrants, puts, calls, and straddles with respect
thereto.
(2) The term parent means a company that possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of an entity identified in Sec. Sec. 5601.102
(b)(1)(i)-(b)(1)(v).
(3) The term person means an individual, corporation and
subsidiaries it controls, company, association, firm, partnership,
society, joint stock company, or any other organization or institution,
including any officer, employee, or agent of such person or entity. For
purposes of this part, a corporation will be deemed to control a
subsidiary if it owns 50 percent or more of the subsidiary's voting
securities. The term is all-inclusive and applies to commercial
ventures and nonprofit organizations as well as to foreign, State, and
local governments, including the Government of the District of
Columbia. It does not include any agency or other entity of the Federal
Government or any officer or employee thereof when acting in his
official capacity on behalf of that agency or entity.
(4) The term entity means person.
(5) The term DAEO means the Designated Agency Ethics Official, or
his delegate under Sec. 2638.601 of this title.
(6) The term employment means any form of non-Federal employment or
business relationship involving the provision of personal services by
the employee. It includes but is not limited to personal services as an
officer, director, employee, agent, attorney, consultant, contractor,
general partner or trustee. Employment does not include participation
in the activities of a nonprofit charitable, religious, professional,
social, fraternal, educational, recreational, public service or civic
organization unless such activities involve the practice of a
profession within the meaning of Sec. 2636.305(b)(1) of this title,
including the giving of professional advice, or are for compensation,
other than reimbursement of expenses.
(7) The term publicly held corporation means any corporation
issuing any class of common equity securities required to be registered
under section 12 of the Securities Exchange Act of 1934.
(8) The term dependent child means when used with respect to any
reporting individual, any individual who is a son, daughter, stepson,
or stepdaughter and who:
(i) Is unmarried, under age 21, and living in the household of the
reporting individual; or
(ii) Is a dependent of the reporting individual within the meaning
of section 152 of the Internal Revenue Code of 1986, 26 U.S.C. 152.
Sec. 5601.102 Prohibited financial interests.
(a) General prohibition. No employee, and no spouse or dependent
child of an employee, shall acquire or hold any securities issued by an
entity on the prohibited securities list described in paragraph (b) of
this section.
(b) Prohibited securities list. At least once a year, the
Commission will publish and distribute to employees a list of entities
whose securities an employee or the spouse or dependent child of an
employee may not own.
(1) The list shall include:
(i) An entity participating in a proceeding before the Commission
in the last 4 years, e.g., complainants, appellants, intervenors, and
entities filing comments on the record in Commission proceedings;
(ii) A party to a proceeding to which the Commission is a party,
e.g., appellate proceedings, administrative proceedings, or civil
actions;
(iii) An entity primarily engaged in the business of delivering
packages, merchandise, or written communications, i.e., an entity whose
primary business competes with the Postal Service;
(iv) An entity providing services or products to the Postal Service
that can be expected to produce annual revenue:
(A) To a publicly held corporation exceeding $1,000,000, and if the
entity reports its gross revenue publicly, exceeding 10 percent of its
annual gross revenue; or
(B) to any other entity exceeding $100,000, and if the entity
reports its gross revenue publicly, exceeding 5 percent of the entity's
annual gross revenue;
(v) Any other entities not listed above for which a Commission
employee holding a security may raise an actual or apparent loss of
impartiality affecting the integrity of the Commission's programs and
operations, e.g., entities primarily engaged in the business of
publishing or distributing publications such as periodicals or sending
advertising, promotional, or other material on behalf of itself or
another entity through the mails; and
(vi) The parent corporation of any subsidiary described in
paragraphs (b)(1)(i)-(b)(1)(v) of this section.
(2) The list shall not include an entity whose use of the mail is
merely an incidental or minor factor in the general conduct of its
business.
(c) Exception. Nothing in this section prohibits an employee, or
the spouse or dependent child of an employee, from acquiring or holding
an interest in a publicly traded or publicly available mutual fund or
other collective investment fund, or in a widely held pension or mutual
fund, provided that the fund's prospectus or practice does not indicate
the stated objective of concentrating its investments in entities
identified in paragraphs (b)(1)(i)-(b)(1)(vi) of this section.
(d) Newly prohibited securities or new employees. Within 30 days
after the Commission disseminates the prohibited securities list to an
employee, an employee who owns, or whose spouse or dependent child
owns, prohibited securities shall report that ownership to the DAEO.
The employee's report must be in writing and include the name of the
prohibited security and the date of acquisition. Except as provided in
paragraph (g) of this section, the employee, or the spouse or dependent
child of the employee, shall divest prohibited securities within 90
days after dissemination of the prohibited securities list.
(e) Securities acquired without specific intent. Within 30 days
after an employee, or the spouse or dependent child of an employee,
acquires securities of an entity on the prohibited securities list as a
result of marriage, inheritance, gift or otherwise without specific
intent to acquire the securities, the employee shall report the
acquisition to the DAEO. The employee's report must be in writing and
include the name of the prohibited security, the date of acquisition,
and the method of acquisition. Except as provided in paragraph (g) of
this section, an employee, or the spouse or dependent child of an
employee, shall divest prohibited securities within 90 days after the
date of acquisition.
(f) Divestiture.
(1) Procedure for accomplishing divestiture. To alleviate an actual
or apparent conflict of interest, an employee divesting prohibited
securities shall obtain written confirmation from the DAEO that
divesture has been accomplished. A request for such confirmation shall
be submitted in writing with sufficient proof to enable the DAEO to
confirm that the employee has divested the prohibited security. The
employee shall continue to be recused until the date of the DAEO's
written confirmation that divestiture has been accomplished.
(2) Extension of period to divest. Upon a showing of undue
hardship, the DAEO may extend the 90 day period for
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divestiture specified in paragraphs (e) through (f) of this section.
(3) Disqualification pending divestiture. Pending divestiture of
prohibited securities, an employee must disqualify himself or herself,
in accordance with Sec. 2635.402 of this title, from participation in
particular matters which, as a result of continued ownership of the
prohibited securities, would affect the financial interests of the
employee, or those of the spouse or dependent child of the employee.
(g) Waivers. The DAEO may grant a written waiver from this section
based on a determination that the waiver is not inconsistent with 5 CFR
part 2635 of this title or otherwise prohibited by law and that, under
the particular circumstances, application of the prohibition is not
necessary to avoid the appearance of an employee's misuse of position
or loss of impartiality, or to otherwise ensure confidence in the
impartiality and objectivity with which the Commission's programs are
administered, or in the case of a special Government employee,
divestiture would result in substantial financial hardship. A waiver
under this paragraph must be in writing and may impose conditions, such
as requiring execution of a written disqualification.
Sec. 5601.103 Notice of disqualification when seeking employment.
(a) An employee who has been assigned to or is supervising work on
a particular matter that affects the financial interests of a
prospective employer and who is required, in accordance with Sec.
2635.604(a) of this title, to disqualify himself or herself from
participation in that matter shall provide written notice of
disqualification to the DAEO within 3 business days. The DAEO shall
inform the employee's supervisor that the employee is disqualified from
the matter. Public filers must comply with the notification
requirements set forth in Sec. 2635.607 of this title even when not
required to disqualify from participation in a particular matter.
Employees who file a notification statement in compliance with Sec.
2635.607 of this title are not required to file a separate notice under
this section.
(b) An employee may withdraw written notice under paragraph (a) of
this section upon determining that disqualification from participation
in the matter is no longer required. A withdrawal of disqualification
shall be in writing and shall be provided to the DAEO. The DAEO shall
inform the employee's supervisor that the employee is no longer
disqualified from the matter.
Sec. 5601.104 Prohibited outside employment.
An employee shall not engage in outside employment, either on a
paid or unpaid basis, with or for an entity on the prohibited
securities list described in Sec. 5601.102(b)(1)(i)-(b)(1)(vi).
Sec. 5601.105 Prior approval for outside employment.
(a) Prior approval for outside employment. An employee who wishes
to engage in outside employment, either on a paid or unpaid basis,
shall obtain the prior written approval of the DAEO. A request for such
approval shall be submitted in writing with sufficient description of
the employment to enable the DAEO to give approval based on an informed
determination that the outside employment is not expected to involve
conduct prohibited by statute or Federal regulation, including
paragraph (a) of this section and part 2635 of this title. The DAEO
shall provide a copy of any written approvals for outside employment to
the employee's supervisor.
(b) Scope of approval. An employee must submit a new request for
approval upon either a significant change in the nature or scope of the
outside employment or a change in the employee's Commission position or
assigned responsibilities.
[FR Doc. 2017-10613 Filed 5-23-17; 8:45 am]
BILLING CODE 7710-FW-P