Supplemental Standards of Ethical Conduct for Employees of the United States Postal Service, 12888-12898 [2022-04452]

Agencies

• Postal Service

[Federal Register Volume 87, Number 45 (Tuesday, March 8, 2022)]
[Proposed Rules]
[Pages 12888-12898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04452]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 87, No. 45 / Tuesday, March 8, 2022 / 
Proposed Rules

[[Page 12888]]



POSTAL SERVICE

5 CFR Part 7001

RIN 3209-AA51


Supplemental Standards of Ethical Conduct for Employees of the 
United States Postal Service

AGENCY: Postal Service.

ACTION: Proposed rule.

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SUMMARY: The United States Postal Service (Postal Service), with the 
concurrence of the United States Office of Government Ethics (OGE), 
proposes to amend the Supplemental Standards of Ethical Conduct for 
Employees of the United States Postal Service by updating and refining 
outside employment and activity provisions (including prior approval 
requirements and prohibitions), by adding new requirements applicable 
to Postal Service Office of Inspector General (OIG) employees and 
Postal Service Governors, and by making limited technical and 
ministerial changes.

DATES: Submit comments on or before May 9, 2022.

ADDRESSES: Comments may be mailed or delivered to Jessica Brewster-
Johnson, Senior Ethics Counsel, United States Postal Service, 475 
L'Enfant Plaza SW, Washington, DC 20260-1101; or submitted to 
[email protected]. Faxed comments will not be accepted.
    All written comments may be inspected and photocopied, by 
appointment only, at Postal Service Headquarters Library, 475 L'Enfant 
Plaza SW, 11th Floor North, Washington, DC. These records will be 
available for review Monday through Friday, 9 a.m.-4 p.m., by calling 
202-268-2906. All submitted comments and attachments are part of the 
public record and subject to disclosure. Do not enclose any material in 
your comments that you consider to be confidential or inappropriate for 
public disclosure.

FOR FURTHER INFORMATION CONTACT: Jessica Brewster-Johnson, Senior 
Ethics Counsel, United States Postal Service, 475 L'Enfant Plaza SW, 
Washington, DC 20260-1101, 202-268-6936.

SUPPLEMENTARY INFORMATION:

I. Background

    Pursuant to the Ethics in Government Act of 1978, as amended, and 
other legal authority, OGE published new Standards of Ethical Conduct 
for Employees of the Executive Branch (Standards) on August 7, 1992, 
which were codified in 5 CFR part 2635. See 57 FR 35006-35067, as 
corrected at 57 FR 48557 and 52583, with additional grace-period 
extensions at 59 FR 4779-4780 and 60 FR 6390-6391. The Standards, which 
became effective on February 3, 1993, set uniform ethical conduct 
standards applicable to all executive branch personnel.
    Under 5 CFR 2635.105, agencies may issue, with OGE's concurrence, 
agency-specific regulations that supplement the Standards when the 
agency determines that such supplemental regulations are necessary and 
appropriate, in view of its programs and operations, to fulfill the 
purposes of the Standards. Under 5 CFR 2635.802(a), agencies are 
authorized to issue supplemental regulations prohibiting employees from 
engaging in outside employment or other outside activities that 
conflict with their official duties. Under 5 CFR 2635.803, agencies are 
authorized to issue supplemental regulations requiring employees to 
obtain prior approval before they engage in outside employment or other 
outside activities.
    On September 11, 1995, the Postal Service issued, with OGE's 
concurrence, the Supplemental Standards of Ethical Conduct for 
Employees of the United States Postal Service (Supplemental Standards), 
which were codified in 5 CFR part 7001. See 60 FR 47240-47241. The 
Supplemental Standards prohibit employees from engaging in certain 
outside employment or business activities and require prior approval 
for employees to engage in other outside employment or business 
activities.
    The Postal Service has now determined that amendment of the 
Supplemental Standards is needed for the reasons explained below.

II. Explanation of Changes

A. Amendment of Sec.  7001.102(a)(1) To Modify the Restrictions on 
Employees' Outside Employment or Business Activities With or for 
Manufacturers of Uniforms or Other Postal-Required Products

    Section 7001.102(a)(1)(i) of the Supplemental Standards currently 
prohibits employees from engaging in outside employment or business 
activities with or for persons, including the employees themselves, 
engaged in the manufacture of any uniform, or other product required by 
the Postal Service for use by its employees or customers (``other 
postal-required products''). The Postal Service proposes to eliminate 
this prohibition.
    In connection with the issuance of the Supplemental Standards, the 
Postal Service discussed the reason for the current prohibition in 
Sec.  7001.102(a)(1)(i). See 60 FR 15700. The Postal Service explained 
that the involvement of employees in the outside employment and 
business activities covered by that provision could cause members of 
the public to question the impartiality and objectivity with which 
postal programs are administered because it could create the appearance 
that the employees, or persons they represent or with whom they are 
otherwise affiliated, are in a position to benefit from knowledge or 
influence gained by the employees through their official positions.
    The Postal Service has now concluded that the prohibition in Sec.  
7001.102(a)(1)(i) is unduly restrictive. The Postal Service has 
determined that the impartiality and objectivity concerns raised in 
connection with the initial issuance of the Supplemental Standards may 
adequately be addressed without outright prohibiting the sizeable 
postal workforce (many of whom are part-time employees) from engaging 
in the outside employment or business activities covered by Sec.  
7001.102(a)(1)(i). In making this determination, the Postal Service has 
considered that its experience since the initial issuance of the 
Supplemental Standards has been that employees' outside employment or 
business activities with or for manufacturers of uniforms or other 
postal-required products would in many cases not cause members of the 
public to question the impartiality and

[[Page 12889]]

objectivity with which postal programs are administered. This is 
because uniform programs are administered by a discrete postal 
headquarters organization and are not affected by employees outside 
that organization, and other postal-required products are similarly 
administered.
    With the elimination of the prohibition in Sec.  7001.102(a)(1)(i), 
employees will be required to obtain approval from the Postal Service's 
Ethics Office prior to engaging in outside employment or business 
activities with or for manufacturers of uniforms or other postal-
required products in situations covered by the existing prior-approval 
process in Sec.  7001.102(b), as revised in these amendments of the 
Supplemental Standards. Those situations include the following ones in 
which impartiality and objectivity concerns are most likely to arise in 
the Postal Service's experience:
    (1) The employee has official dealings with the manufacturer on 
behalf of the Postal Service (Sec.  7001.102(b)(1)(i)); or
    (2) the manufacturer has interests that are substantially dependent 
upon providing goods or services to, or for use in connection with, the 
Postal Service (Sec.  7001.102(b)(1)(ii)(B)).
    These situations requiring prior approval would encompass those 
employees working in the discrete organizations responsible for uniform 
programs and other postal-required products for whom impartiality and 
objectivity concerns might be heightened. The review by the Postal 
Service's Ethics Office under the prior-approval process can be 
expected to identify and address those employment or business 
relationships that would present ethical conduct concerns under 5 CFR 
part 2635 because of the employee's official duties and the 
manufacturer's interests.
    However, regardless of the prior-approval process described above, 
postal employees will continue to be prohibited from acting as agent, 
with or without compensation, for any postal contractor for uniforms or 
other postal-required products, or person offering to become such a 
contractor. The criminal statute codified at 18 U.S.C. 440 makes it 
unlawful for postal employees to act as agent, with or without 
compensation, for any contractor or person offering to become a 
contractor in any business before the Postal Service. This provision is 
currently incorporated in Sec.  7001.103 of the Supplemental Standards.
    Postal employees will also continue to be prohibited from engaging 
in certain specified outside employment or business activities with 
postal contractors for uniforms or other postal-required products. As 
explained in further detail below, renumbered Sec.  7001.102(a)(1) of 
the Supplemental Standards prohibits employees from engaging in outside 
employment or business activities that involve providing consultation, 
advice, or any subcontracting service, with respect to postal 
operations, programs, or procedures, to any person who has a contract 
with the Postal Service or who the employee has reason to believe will 
compete for such a contract.

B. Amendment of Sec.  7001.102(a)(1) and (b)(1) To Modify the 
Restrictions on Employees' Outside Employment or Business Activities 
With or for HCR Contractors

    The Postal Reorganization Act, as amended, codified at 39 U.S.C. 
5005, authorizes the Postal Service to contract for the surface 
transportation of mail. The Postal Service enters into Highway Contract 
Route (HCR) contracts under that statute.
    Section 7001.102(a)(1)(ii) of the Supplemental Standards currently 
prohibits employees from engaging in outside employment or business 
activities with or for persons, including the employees themselves, 
engaged in the transportation of mail under Postal Service (HCR) 
contract to or from the postal facility at which the employee works or 
to or from a postal facility within the delivery area of a post office 
in which the employee works (``transportation area criteria''). The 
Postal Service proposes to eliminate this prohibition and replace it 
with a provision requiring employees to obtain approval from the Postal 
Service's Ethics Office prior to engaging in outside employment or 
business activities with or for any HCR contractor, which will be 
accomplished by amending Sec.  7001.102(b)(1).
    In connection with the issuance of the Supplemental Standards, the 
Postal Service discussed the reason for the current prohibition in 
Sec.  7001.102(a)(1)(ii). See 60 FR 15700-15701. The Postal Service 
explained that any outside employment involving the delivery of mail at 
or near an employee's workplace, without regard to the nature of the 
employee's duties, might lead reasonable persons to be concerned that 
the employee's outside employer was receiving preferential treatment 
from the Postal Service. Id. The Postal Service has now concluded that 
the prohibition in Sec.  7001.102(a)(1)(ii) is both unduly restrictive 
and too narrowly focused to address conflicts and impartiality concerns 
adequately. Specifically, the Postal Service has determined that 
preferential treatment concerns regarding employees engaging in outside 
employment or business activities with or for persons engaged in the 
transportation of mail under HCR contract could occur whether or not 
such outside employment or business activities meet the transportation 
area criteria described in the current Sec.  7001.102(a)(1)(ii). These 
concerns, however, may be sufficiently addressed through a prior-
approval process without outright prohibiting the sizeable postal 
workforce (many of whom are part-time employees) from engaging in such 
outside employment or business activities.
    Section 7001.102(b) of the Supplemental Standards currently governs 
the requirements for employees to obtain prior approval to engage in 
outside employment or business activities with or for certain 
categories of persons. The Postal Service proposes to amend Sec.  
7001.102(b)(1) to add a provision at Sec.  7001.102(b)(1)(iii) 
requiring employees to obtain prior approval from the Postal Service's 
Ethics Office to engage in outside employment or business activities 
with or for any HCR contractor. This prior-approval requirement is not 
limited to situations covered by the existing prior-approval process in 
Sec.  7001.102(b), as revised in these amendments of the Supplemental 
Standards, which is the case when employees wish to engage in outside 
employment or business activities with or for manufacturers of uniforms 
or other postal-required products as discussed above. Rather, this 
prior approval requirement applies in any circumstance in which 
employees desire to engage in outside employment or business activities 
with or for any HCR contractor. This difference is due to the greater 
impact on the Postal Service of its many HCR contracts nationwide as 
compared to uniform programs or programs for other postal-required 
products. The procedure for requesting, and the standard for granting, 
approval to engage in outside employment or business activities with or 
for an HCR contractor will be the same as that which exists for 
requesting and granting approval for other types of outside employment 
and business activities for which prior approval is required under 
Sec.  7001.102(b). The review by the Postal Service's Ethics Office 
under this prior-approval process can be expected to identify and 
address those employment or business relationships that would present 
ethical conduct concerns under 5 CFR part 2635 because of the 
employee's official

[[Page 12890]]

duties and the HCR contractor's interests.
    As discussed above in the context of outside employment and 
business activities with or for certain manufacturers, other provisions 
of the Supplemental Standards will continue to restrict certain 
activities with respect to HCR contractors. Specifically, renumbered 
Sec.  7001.102(a)(1) will continue to prohibit employee outside 
activities that involve providing consultation, advice, or any 
subcontracting service to a HCR contractor or person offering to become 
such a contractor, and 18 U.S.C. 440, as incorporated in Sec.  7001.103 
of the Supplemental Standards, continues to prohibit employees from 
acting as agents for any HCR contractor, or person offering to become 
such a contractor.

C. Amendments to Sec.  7001.102(a) Relating to Outside Employment or 
Business Activities

    The removal of current Sec.  7001.102(a)(1)(i) and (ii), described 
above, will result in the renumbering of the restrictions found at 
current Sec.  7001.102(a)(1)(iii) and (iv). To provide additional 
clarity, the Postal Service proposes to revise the language of these 
remaining restrictions. First, the Postal Service is modifying the 
language of current Sec.  7001.102(a)(1)(iii), which prohibits 
employees from ``engag[ing] in outside employment or business 
activities with or for persons, including oneself, engaged in: 
Providing consultation, advice, or any subcontracting service, with 
respect to the operations, programs or procedures of the Postal 
Service, to any person who has a contract with the Postal Service or 
who the employee has reason to believe will compete for such a 
contract.'' The Postal Service stated that its original intent with 
this provision was to prohibit employees from providing ``consultation, 
advice, or any subcontracting service,'' but also noted that ``an 
employee would not be prohibited from consulting with a business that 
happens to hold a Postal Service contract when the employee's 
consulting work is not related to that contract and does not have any 
other postal connection.'' 60 FR 15701. In other words, the prohibition 
is focused on, and has been consistently applied by the Postal Service 
to, the outside activity of the employee, not the activity of the 
outside employer. As currently written, the Sec.  7001.102(a)(1)(iii) 
prohibition could be read to cover both the employee and the outside 
employer because of the introductory phrasing ``with or for a person, 
including oneself.'' In order to more clearly state that the 
prohibition is tied to the type of work the employee will do for an 
outside employer or on their own, the Postal Service proposes to modify 
this language in the restriction, found at renumbered Sec.  
7001.102(a)(1), to state that an employee cannot engage in outside 
employment or business activities ``that involve providing'' certain 
consultation, advice, or subcontracting services.
    Second, the Postal Service has revised current Sec.  
7001.102(a)(1)(iv) by separating the two distinct prohibitions 
contained therein: (1) The operation of a commercial mail receiving 
agency and (2) the delivery outside the mails of any type of mailable 
matter, except daily newspapers. These prohibitions, now at renumbered 
Sec.  7001.102(a)(2), include revised language to more clearly state 
that an employee is prohibited from engaging in outside employment or 
business activities ``with, for, or as a person engaged in'' the 
activity; for consistency, related language in the prior approval 
section at Sec.  7001.102(b)(1)(ii) has similarly been updated. No 
substantive change is intended.

D. Amendment of Sec.  7001.102 Relating to Outside Employment or 
Business Activities With Certain Subsidiaries

    As described above, current Sec.  7001.102(a)(1)(iv) (renumbered as 
Sec.  7001.102(a)(2)) prohibits employees from engaging in outside 
employment or business activities with, for, or as persons engaged in 
certain categories of activities. The Supplemental Standards do not 
currently include a definition of ``person.'' Therefore, the definition 
of that term set forth in the Standards (5 CFR 2635.102(k)) applies to 
the Supplemental Standards. That definition provides that a ``person'' 
includes, among others, a corporation and each subsidiary it controls 
(``corporate subsidiary provision''). Consequently, when a corporation 
is engaged in an activity covered by renumbered Sec.  7001.102(a)(2), 
employees are not only currently prohibited from engaging in outside 
employment or business activities with or for the corporation, but also 
with or for a subsidiary, regardless of whether the subsidiary is also 
engaged in a covered activity. For the reasons discussed below, the 
Postal Service proposes to add a provision to Sec.  7001.102(b) that 
would permit an employee to request approval to engage in outside 
employment or business activities with certain subsidiaries of entities 
engaged in activities covered by renumbered Sec.  7001.102(a)(2).
    In connection with the initial issuance of the Supplemental 
Standards, the Postal Service discussed the reasons for the outside 
activity prohibitions in Sec.  7001.102(a). See 60 FR 15700-15702. The 
Postal Service explained that reasons for the prohibitions included 
that covered outside employment and business activities could lead 
members of the public to be concerned that the employees were using 
knowledge or influence gained through their official positions to 
benefit their outside employers or business associates, or might lead 
members of the public to question the employees' loyalty to the Postal 
Service, thereby undermining public confidence in the integrity of 
postal operations.
    The Postal Service has now concluded that application of the 
corporate subsidiary provision to the proposed amended Sec.  
7001.102(a)(2) would be unduly restrictive in circumstances in which a 
corporation is engaged in a covered activity, but a subsidiary with 
which an employee desires to engage in employment or business 
activities is not. The Postal Service has determined that the concerns 
raised in connection with the initial issuance of the Supplemental 
Standards are oftentimes not present when an employee would like to 
engage in business activities with or for a company that is not engaged 
in any of the activities outlined in Sec.  7001.102(a)(2), but happens 
to be the subsidiary of a company engaged in such activities. In making 
this determination, the Postal Service no longer considers there to be 
a divided loyalty question with an employee who would like to work for 
a subsidiary that is not engaged in the activities outlined in Sec.  
7001.102(a)(2), even though the parent corporation is engaged in such 
activities. This is because the focus of Sec.  7001.102(a)(2) is on the 
business activities of the subsidiary itself. When a subsidiary engages 
in a wholly separate line of trade than its parent corporation, the 
Postal Service is not concerned with the subsidiary's line of trade if 
that line of trade does not fall under the ambit of Sec.  
7001.102(a)(2).
    In order to mitigate the undue restrictiveness of renumbered Sec.  
7001.102(a)(2), the Postal Service proposes to add a subsection, Sec.  
7001.102(b)(2), that provides an exception for certain subsidiaries. 
This provision provides that an employee who wishes to engage in 
outside employment or activities with an entity that does not itself 
engage in the activities outlined in Sec.  7001.102(a)(2), but is the 
subsidiary of an entity that

[[Page 12891]]

engages in those activities, should follow the prior approval process 
laid out in Sec.  7001.102(b)(3). Approval would allow the employee to 
engage in outside employment or activity with a subsidiary that would 
otherwise be restricted by renumbered Sec.  7001.102(a)(2) because of 
the corporate subsidiary provision. For example, Employee A would like 
to get a second job as a delivery driver for Amazon Logistics. Employee 
B would like to earn money on the video streaming website Twitch. Both 
Amazon Logistics and Twitch are subsidiaries of Amazon. Employee A is 
prohibited from working for Amazon Logistics because that subsidiary 
delivers mailable matter outside of the mail, and Sec.  7001.102(b)(2) 
does not contemplate that approval can be granted for this type of 
subsidiary employment. However, Employee B may request prior approval 
to earn money on the website Twitch because that subsidiary is engaged 
in creating digital media content, which is not prohibited under Sec.  
7001.102(a)(2). An example has been added to this subsection 
identifying a scenario in which an employee may request prior approval 
for outside employment with a subsidiary.

E. Amendment of Sec.  7001.102(a)(2) To Modify the Activities in Which 
Employees Are Prohibited From Engaging While on Duty, in Uniform, at 
Any Postal Facility, or Using Postal Equipment

    Section 7001.102(a)(2) of the Supplemental Standards currently 
prohibits employees from engaging in any sales activity, including the 
solicitation of business or the receipt of orders, for themselves or 
any other persons while on duty or in uniform, or at any postal 
facility. The Postal Service proposes to amend this provision, now at 
renumbered Sec.  7001.102(a)(3), to add a prohibition on using postal 
equipment to engage in such sales activity. The Postal Service 
additionally proposes to amend this provision to also prohibit 
employees from engaging in fundraising (as defined in the Standards) or 
for-profit business activities for themselves or any other persons 
while on duty, in uniform, at any postal facility, or using any postal 
equipment (but not including fundraising at a postal facility as 
permitted in connection with the Combined Federal Campaign (CFC) under 
5 CFR part 950). The added reference to fundraising is intended to 
highlight an existing restriction in the Standards (see 5 CFR 
2635.808), and to improve clarity and reduce confusion for employees. 
It is not intended to create a separate, new restriction. Examples have 
been added to Sec.  7001.102(a)(3) demonstrating these prohibitions.
    The Postal Service often encounters situations in which employees 
who are involved in outside sales activities engage in those activities 
while on duty, in uniform, on postal property, and/or using postal 
equipment. The Postal Service has routinely found that by engaging in 
those activities while on duty, in uniform, on postal property, and/or 
using postal equipment, the employees violate the misuse of public 
office for private gain, misuse of Government property, and/or misuse 
of official time provisions of the Standards (5 CFR part 2635, subpart 
G).
    The Standards define ``fundraising'' to include, among other 
things, the raising of funds for a nonprofit organization, other than a 
political organization as defined in 26 U.S.C. 527(e), through the 
solicitation of funds or sale of items. See 5 CFR 2635.808(a)(1)(i). 
The Postal Service often encounters situations in which employees who 
are involved in outside fundraising as defined in the Standards or for-
profit business activities engage in those activities while on duty, in 
uniform, on postal property, and/or using postal equipment. The Postal 
Service has routinely found that by engaging in those activities while 
on duty, in uniform, on postal property, and/or using postal equipment, 
the employees violate the misuse of public office for private gain, 
misuse of Government property, and/or misuse of official time 
provisions of the Standards (5 CFR part 2635, subpart G).
    In addition, the Postal Service's Conduct on Postal Property (COPP) 
regulations prohibit, with some exceptions, any person entering in or 
on property under the charge and control of the Postal Service from 
soliciting alms or contributions, or soliciting or vending for 
commercial purposes. See 39 CFR 232.1(a), (h)(1). The Postal Service 
has also routinely found that by engaging in outside sales activities, 
outside fundraising as defined in the Standards, or for-profit business 
activities on postal property, employees violate those COPP 
regulations.
    In consideration of all these factors, the Postal Service wishes to 
explicitly incorporate in the Supplemental Standards a restriction on 
engaging in these activities.

F. Amendment of Sec.  7001.102 To Provide for the Requirements for OIG 
Employees To Report and/or Obtain Prior Approval To Engage in Outside 
Employment or Business Activities

    The Postal Service proposes to amend Sec.  7001.102 to add a 
provision at Sec.  7001.102(c) providing for the requirements for when 
OIG employees must report or obtain prior approval to engage in outside 
employment or business activities. The amendment of Sec.  7001.102 will 
result in the current definitions located at Sec.  7001.102(c) being 
renumbered to Sec.  7001.102(d).
    The proposed amendment requires all OIG employees to provide notice 
to, and OIG Special Agents and Criminal Investigators to obtain 
approval from, the OIG's Office of General Counsel before engaging in 
compensated or uncompensated outside employment or business activities, 
including:
    (1) Any knowing sale or lease of real estate to the Postal Service 
or to a Postal Service employee or contractor, regardless of the 
frequency of such sales or leases or whether the sale or lease is at 
fair market value;
    (2) any ownership or control of a publicly-accessible online or 
physical storefront; and
    (3) volunteer activities, if they regularly exceed 20 hours per 
week or when the employee holds an officer position in the 
organization.
    Employees' outside employment or business activities may not 
interfere with their ability or availability to perform OIG duties. The 
OIG's Office of General Counsel will analyze the reports of employees 
engaged in outside employment or business activities to ensure that 
they are warned of potential conflicts of interest or loss of 
impartiality. Reporting these types of outside activities is necessary 
for OIG employees (as opposed to regular Postal Service employees) due 
to the nature of the OIG's work and the OIG's desire to avoid even the 
appearance of impropriety. As an oversight entity, the OIG strives to 
maintain an elevated standard of conduct that serves as an example to 
its Postal Service colleagues. The OIG's reputation is of paramount 
importance in its relationship with the Postal Service, Congress, and 
other stakeholders. Accordingly, outside financial entanglements that 
could impact the impartiality of OIG agents and auditors are of 
particular concern, including the following:
1. Real Estate
    Employees must report the knowing sale or lease of real estate to 
the Postal Service or to a Postal Service employee

[[Page 12892]]

or contractor due to the high risk of a conflict of interest or loss of 
impartiality inherent in such a large (in the case of a sale) or 
ongoing (in the case of a lease) financial transaction. For example, an 
audit manager who leases land to the entity he or she is auditing is 
likely to have actual or apparent independence concerns that would 
interfere with his or her duties.
2. Commercial Business
    Because virtual businesses can be accessed at any time, including 
during employees' official work hours, employees who have ownership or 
control of publicly-accessible online storefronts will be advised that 
they are prohibited from using Government resources, including 
property, or time to conduct their outside businesses. The Postal 
Service has no de minimis exception for using Government resources or 
time to conduct outside employment or business activities. In the case 
of ownership or control of physical storefronts, the same prohibition 
on using Government resources or time applies.
3. Volunteer Activities
    Limited volunteer activities seldom pose a significant risk of 
violating 18 U.S.C. 208 or 5 CFR 2635.502. However, regular volunteer 
work of more than 20 hours per week or holding an officer position 
within an outside organization must be reported to ensure that 
employees' close relationships to the outside entities would not cause 
a reasonable person to question the employees' impartiality. 
Accordingly, employees who engage in volunteer work may not use 
Government resources or time, including--per Postal Service policy--
sick leave, to engage in their volunteer work and may not participate 
personally and substantially in OIG particular matters that would 
directly and predictably affect the organization with which they 
volunteer. USPS OIG believes that an OIG employee's participation in 
those matters would cause a reasonable person to question the OIG 
employee's impartiality in the matter. See 5 CFR 2635.502. Two examples 
have been provided in Sec.  7001.102(c)(1) regarding the reporting of 
volunteer activities. Employees may submit questions about reporting of 
volunteer activities to the OIG's Office of General Counsel.
4. Law Enforcement Officer Approval Requirement
    Law Enforcement Officer involvement in outside employment or 
business activities can pose additional challenges that must be 
coordinated with OIG management and legal counsel to ensure that the 
Law Enforcement Availability Pay (LEAP) requirements of 5 U.S.C. 5545a 
and 5 CFR 550.181 through 550.186 can be balanced against the outside 
activity. The Postal Service proposes to add new Sec.  7001.102(c)(2) 
to require that such individuals in the OIG--Special Investigators and 
Criminal Investigators--obtain prior approval for the outside 
activities enumerated in Sec.  7001.102(c)(1). For these employees, 
their outside employment and business activities often draw upon their 
OIG law enforcement training and experience, requiring them to carry 
firearms, which creates liability and safety concerns. In addition, the 
OIG must ensure that Special Agents and Criminal Investigators are 
available to carry out their law enforcement duties during exigent 
circumstances. Special Agents receive LEAP and are required to be 
available 50 hours per week. A conflict of interest review must be 
conducted to ensure that Special Agents are aware of these potential 
liability issues and duty requirements that are particular to their law 
enforcement profession. Non-investigators do not have LEAP requirements 
or potential firearm liability issues because they are not required to 
carry firearms as part of their OIG duties. Accordingly, the proposed 
amendment imposes the additional requirement that Special Agents and 
Criminal Investigators request and obtain written approval prior to 
engaging in outside employment or business activities which they are 
required to report under the proposed amendment.

G. Amendment of Sec.  7001.102 To Revise and Add Definitions

    Section 7001.102(c) of the Supplemental Standards, which will be 
renumbered to Sec.  7001.102(d), currently provides definitions of 
certain terms used in Sec.  7001.102. The Postal Service proposes to 
amend this section as follows to include new definitions, which will 
result in the renumbering of existing definitions in this section:
1. Commercial Mail Receiving Agency
    Current Sec.  7001.102(a)(1), proposed to be renumbered to Sec.  
7001.102(a)(2)(i), prohibits employees from engaging in outside 
employment or business activities with or for persons engaged in the 
operation of a commercial mail receiving agency registered with the 
Postal Service. The Supplemental Standards do not currently include a 
definition of a ``commercial mail receiving agency.'' The Postal 
Service proposes to amend the definitions section of Sec.  7001.102 to 
define a ``commercial mail receiving agency'' as a private business 
that acts as the mail receiving agent for specific clients, and explain 
that the business must be registered with the post office responsible 
for delivery to the commercial mail receiving agency.
2. A Person Engaged in the Delivery Outside the Mails of Any Type of 
Mailable Matter
    Section 7001.102(a)(1), proposed to be renumbered to Sec.  
7001.102(a)(2)(ii), currently prohibits employees from engaging in 
outside employment or business activities with or for persons engaged 
in the delivery outside the mails of any type of mailable matter, 
except daily newspapers. The Supplemental Standards do not currently 
include a definition of ``a person engaged in the delivery outside the 
mails of mailable matter.'' The Postal Service has found that employees 
are at times uncertain as to which of the different types of non-postal 
delivery services current Sec.  7001.102(a)(1) applies.
    The Postal Service proposes to amend the definitions section of 
Sec.  7001.102 to define ``a person engaged in the delivery outside the 
mails of any type of mailable matter'' as a person who is engaged in 
the delivery outside the mails of any letter, card, flat, or parcel 
eligible to be accepted for delivery by the Postal Service. An example 
has been added to renumbered Sec.  7001.102(a)(2)(ii) identifying four 
global companies that currently qualify as ``a person engaged in the 
delivery outside the mails of any type of mailable matter, except daily 
newspapers'' (i.e., United Parcel Service (UPS), Federal Express 
(FedEx), Amazon, and DHL). Other businesses exist that qualify as such 
a person, including but not limited to, regional companies that deliver 
mailable matter that is not daily newspapers.
3. A Person Having Interests Substantially Dependent Upon, or 
Potentially Affected to a Significant Degree by, Postal Rates, Fees, or 
Classifications
    Section 7001.102(b) currently requires employees to obtain prior 
approval to engage in outside employment or business activities with or 
for persons whose interests are substantially dependent upon, or 
potentially affected to a significant degree by, postal rates, fees, or 
classifications. The definitions section of Sec.  7001.102 currently 
defines ``a person having interests substantially dependent upon, or 
potentially affected to a significant degree by, postal rates, fees, or 
classifications'' to include, among other persons, a person who is

[[Page 12893]]

engaged in a business that depends substantially upon the mails for the 
solicitation or receipt of orders for, or the delivery of, goods or 
services.
    The Postal Service proposes to amend this definition to clarify the 
employees who qualify in the current e-commerce environment as a person 
engaged in a business that depends substantially upon the mails for the 
delivery of goods or services (``a person engaged in a mail delivery-
dependent business''). Since the initial issuance of the Supplemental 
Standards in 1995, the internet has come to provide a new avenue for 
the sale of goods and services to the public, including by persons who 
did not previously engage in sales activity, with many of those items 
shipped to purchasers using the Postal Service. The Postal Service does 
not intend that employees will qualify as a person engaged in a mail 
delivery-dependent business unless they operate a commercial business 
that utilizes the Postal Service as its primary shipper and can be 
expected to earn gross revenue exceeding $10,000 from utilizing the 
mails in its current fiscal year.
    The Postal Service proposes to remove the reference in this 
definition to ``a person who is engaged in a business that depends 
substantially upon the mails for the solicitation or receipt of orders 
for, or the delivery of, goods or services'' and replace it with 
reference to a person who is engaged in a commercial business that:
    (1) Primarily utilizes the mails for the solicitation or receipt of 
orders for, or the delivery of, goods or services; and
    (2) can be expected to earn gross revenue exceeding $10,000 from 
utilizing the mails during the business's current fiscal year.
    If it was reasonable to have expected that a business would not 
exceed the $10,000 threshold during its fiscal year, a person will not 
meet the proposed definition if the business in fact exceeds the 
threshold at the end of the fiscal year. However, this fact must be 
taken into account when determining whether the business can be 
expected to exceed the threshold in its subsequent fiscal year.
    In addition, examples have been added to this definition of persons 
who are and are not engaged in a mail delivery-dependent business in 
the e-commerce environment.
4. Second-Class Rates of Postage Reference and Postal Rate Commission 
Reference
    The Postal Service also proposes to amend the definition of ``a 
person having interests substantially dependent upon, or potentially 
affected to a significant degree by, postal rates, fees, or 
classifications'' in Sec.  7001.102 to change the reference in that 
provision from ``a publication mailed at second-class rates of 
postage'' to ``a publication mailed at Periodicals rates of postage.'' 
As part of revisions to the Domestic Mail Classification Schedule (the 
predecessor to the current Mail Classification Schedule), second-class 
mail was renamed Periodicals. See 61 FR 10068, 10114, 10123-24. In 
addition, the Postal Service proposes to amend the definition of ``a 
person having interests substantially dependent upon, or potentially 
affected to a significant degree by, postal rates, fees, or 
classifications'' in Sec.  7001.102 to change the reference in that 
provision from ``Postal Rate Commission'' to ``Postal Regulatory 
Commission.'' The Postal Enhancement and Accountability Act 
redesignated the Postal Rate Commission as the Postal Regulatory 
Commission. See Public Law 109-435, Title VI, Sec.  604, 120 Stat. 
3198, 3241-42 (2006).
5. A Person Having Interests Substantially Dependent Upon Providing 
Goods or Services to, or for Use in Connection With, the Postal Service
    Section 7001.102(b) currently requires employees to obtain prior 
approval to engage in outside employment or business activities with or 
for persons whose interests are substantially dependent upon providing 
goods or services to, or for use in connection with, the Postal 
Service. The definitions section of Sec.  7001.102 currently defines 
``a person having interests substantially dependent upon providing 
goods or services to, or for use in connection with, the Postal 
Service'' to include, among other persons, a person who provides goods 
or services under contract with the Postal Service that:
    (1) Can be expected to provide revenue exceeding $100,000 over the 
term of the contract; and
    (2) provides 5% or more of the person's gross income for the 
person's current fiscal year.
    The Postal Service proposes to amend this definition to clarify 
that a person who holds more than one contract with the Postal Service 
to provide goods or services to, or for use in connection with, the 
Postal Service meets the ``revenue exceeding $100,000'' criteria in 
paragraph (1) above if the person's contracts in total can be expected 
to provide revenue exceeding $100,000 over the terms of the contracts.
    The Postal Service additionally proposes to amend this definition 
to remove the ``5% of gross income'' criteria in paragraph (2) above. 
The Postal Service's experience has been that in many cases it does not 
have access to information that would indicate whether a contract to 
provide goods or services to, or for use in connection with, the Postal 
Service provides 5% or more of the contractor's gross income for the 
contractor's current fiscal year.
    Section 7001.102 also currently defines ``a person having interests 
substantially dependent upon providing goods or services to, or for use 
in connection with, the Postal Service'' to include a person 
substantially engaged in the business of preparing items for others for 
mailing through the Postal Service. An example has been added to 
renumbered Sec.  7001.102(d)(5) of such a person.

H. Amendment of Part 7001 To Prohibit the Governors From Having or 
Controlling Certain Financial Interests

    The Postal Service's organizational structure includes nine 
Governors, who are appointed by the President and confirmed by the 
Senate. See 39 U.S.C. 202(a). The nine Governors, along with the 
Postmaster General and Deputy Postmaster General, constitute the Board 
of Governors. See 39 U.S.C. 202(a), (c), (d). The Board of Governors 
directs the exercise of the powers of the Postal Service, directs and 
controls postal expenditures, reviews postal practices and policies, 
and performs other functions and duties as prescribed by the Postal 
Reorganization Act, as amended, codified in 39 U.S.C. See 39 U.S.C. 
202(a), 205(a). In addition, certain matters are reserved for decision 
by the nine Governors. See 39 CFR 3.4.
    On occasion, Postal Service Governors may be called upon to act 
upon postal matters that would have a direct and predictable effect on 
the financial interests of a postal competitor or postal lessor. In 
those cases, such involvement would be prohibited by the criminal 
conflict of laws (18 U.S.C. 208) to the extent that a Governor (or a 
person or entity whose interests are imputed to the Governor) has a 
financial interest in the postal competitor or postal lessor. 
Recognizing that this is not the case for all postal matters, the 
Postal Service proposes to amend Part 7001 to nevertheless prohibit 
Governors, their spouses, and minor children from directly or 
indirectly holding financial interests in postal competitors or 
publicly-traded postal lessors, and Governors from actively controlling 
the acquisition or holding of financial interests in postal competitors 
or publicly-traded postal lessors on behalf

[[Page 12894]]

of any entity, because doing so would cause an appearance of a lack of 
impartiality or objectivity with which postal programs are 
administered.
    The Postal Service proposes to amend Part 7001 of the Supplemental 
Standards to include new Sec.  7001.104 regarding prohibited financial 
interests of the Governors as follows:
1. Financial Interest in a Postal Competitor
    The Postal Service proposes to add a provision at Sec.  
7001.104(a)(1)(i) prohibiting Postal Service Governors, their spouses, 
and minor children from directly or indirectly acquiring or holding any 
financial interest in a person engaged in the delivery outside the 
mails of any type of mailable matter, except daily newspapers (``postal 
competitor''), with some exceptions. Pursuant to Sec.  7001.104(a)(2), 
Postal Service Governors also would be prohibited from actively 
controlling the acquisition of or the holding of any financial interest 
in a postal competitor on behalf of an entity whose financial interests 
are imputed to the Governor under 18 U.S.C. 208. A Governor actively 
controls the acquisition or holding of financial interests on behalf of 
an entity if he or she selects or dictates the entity's investments, 
such as stocks, bonds, commodities, or funds. A Governor does not 
actively control the acquisition or holding of financial interests on 
behalf of an entity if he or she merely directs the investment strategy 
of the entity, hires the entity's financial manager(s) who selects the 
entity's investments, or designates another employee of the entity to 
select the entity's investments. A Governor may have such investment 
authority when serving as an officer, director, trustee, general 
partner, or employee of an entity. Examples have been provided of when 
a Governor does and does not actively control the acquisition or 
holding of financial interests on behalf of an entity.
    While the Postal Service is an independent establishment of the 
executive branch of the Government of the United States, its mission 
includes the provision to the public for a fee of services for which it 
has private sector competitors, i.e., private businesses engaged in the 
delivery outside the mails of mailable matter, including but not 
limited to, United Parcel Service (UPS), Federal Express (FedEx), 
Amazon, and DHL. This definition of ``a person engaged in the delivery 
outside the mails of any type of mailable matter'' is the same 
definition of that term that is included in the definitions section of 
Sec.  7001.102 applicable to the prohibition on employees engaging in 
outside employment or business activities with or for such persons.
    The purpose of the proposed amendment is to avoid even the 
appearance of impropriety that may be created by a Governor or his or 
her spouse or minor child holding a financial interest in a postal 
competitor, or a Governor actively controlling the acquisition or 
holding of a financial interest in a postal competitor on behalf of an 
entity whose financial interests are imputed to the Governor under the 
criminal conflict of interest laws (18 U.S.C. 208). A Governor or his 
or her spouse or minor child holding such a financial interest might 
lead members of the public to question the Governor's loyalty to the 
Postal Service, thereby undermining public confidence in the integrity 
of postal operations. Likewise, members of the public might question 
the Governor's loyalty to the Postal Service if an entity whose 
financial interests are treated as his or her own, and for which the 
Governor actively controls investment decisions, has a financial 
interest in a postal competitor. These concerns are not presented by a 
Governor or his or her spouse or minor child holding a financial 
interest in a private business engaged in the delivery of daily 
newspapers, or a Governor actively controlling a financial interest in 
such a private business on behalf of an entity, which are not 
prohibited.
2. Financial Interest in a Publicly-Traded Postal Lessor
    The Postal Service proposes to add a provision at Sec.  
7001.104(a)(1)(ii) prohibiting Postal Service Governors, their spouses, 
and minor children from directly or indirectly acquiring or holding any 
financial interest in a publicly-traded entity engaged primarily in the 
business of leasing real property to the Postal Service (``postal 
lessor''), with some exceptions. Pursuant to Sec.  7001.104(a)(2), 
Postal Service Governors also would be prohibited from actively 
controlling the acquisition of or the holding of any financial interest 
in a postal lessor on behalf of an entity whose financial interests are 
imputed to the Governor under 18 U.S.C. 208. A Governor actively 
controls the acquisition or holding of financial interests on behalf of 
an entity if he or she selects or dictates the entity's investments, 
such as stocks, bonds, commodities, or funds. A Governor does not 
actively control the acquisition or holding of financial interests on 
behalf of an entity if he or she merely directs the investment strategy 
of the entity, hires the entity's financial manager(s) who selects the 
entity's investments, or designates another employee of the entity to 
select the entity's investments. A Governor may have such investment 
authority when serving as an officer, director, trustee, general 
partner, or employee of an entity. Examples have been provided of when 
a Governor does and does not actively control the acquisition or 
holding of financial interests on behalf of an entity.
    In order to accomplish its mission of providing adequate and 
efficient postal services nationwide, the Postal Service maintains 
retail (i.e., post offices) and other facilities across the country. In 
most cases, the Postal Service leases, rather than owns, the real 
property where its facilities are located.
    The Postal Service's lease agreements are mainly with non-
governmental lessors, including, at present, one publicly-traded entity 
engaged primarily in the business of leasing real property to the 
Postal Service. While the interests of such an entity are at times 
aligned with the Postal Service's interests, it also has interests that 
do or may conflict with the Postal Service's interests, such as the 
terms of the lease agreement and how those terms are implemented.
    The purpose of the proposed amendment is to avoid even the 
appearance of impropriety that may be created by a Governor or his or 
her spouse or minor child holding a financial interest in a postal 
lessor, or a Governor actively controlling the acquisition or holding 
of a financial interest in a postal lessor on behalf of an entity whose 
financial interests are imputed to the Governor under the criminal 
conflict of interest laws (18 U.S.C. 208). A Governor or his or her 
spouse or minor child having such a financial interest might lead 
members of the public to question the Governor's loyalty to the Postal 
Service, thereby undermining public confidence in the integrity of 
postal operations, including the postal real estate leasing program. 
Likewise, members of the public might question the Governor's loyalty 
to the Postal Service if an entity whose financial interests are 
treated as his or her own, and for which the Governor actively controls 
investment decisions, has a financial interest in a postal lessor.
3. Exceptions, Time Limits, Disqualifications, and Waivers
    Under an exception to the proposed prohibitions at Sec.  
7001.104(b), Governors, their spouses, and minor children are not 
prohibited from directly or indirectly acquiring or holding, and 
Governors are not prohibited from actively controlling on behalf of any 
entity, any financial interest in any publicly-traded or

[[Page 12895]]

publicly-available mutual fund (as defined in 5 CFR 2640.102(k)) or 
other collective investment fund, including a widely-held pension or 
other retirement fund, that includes any financial interest in a postal 
competitor or postal lessor described in the proposed amendment, so 
long as certain conditions are met.
    The proposed amendment also provides in proposed Sec.  7001.104(c) 
the time limit by which any financial interest in a postal competitor 
or postal lessor prohibited by the proposed amendment generally must be 
divested, as well as the time limits for reporting and divesting the 
following:
    (1) A financial interest directly or indirectly held by a Governor 
or his or her spouse or minor child, or a financial interest actively 
controlled by a Governor on behalf of any entity, that becomes 
prohibited subsequent to the Governor's confirmation;
    (2) a financial interest in a postal competitor or postal lessor 
described in the proposed amendment that was acquired by the Governor 
or his or her spouse or minor child without specific intent (such as 
through marriage, inheritance, or gift) subsequent to the Governor's 
confirmation; and
    (3) a financial interest in a postal competitor or postal lessor 
described in the proposed amendment that was acquired by an entity 
whose financial interests are actively controlled by a Governor without 
specific intent (such as through a gift) subsequent to the Governor's 
confirmation.
    The proposed amendment further provides that pending any required 
divestiture of a prohibited financial interest provided for in the 
proposed amendment, a Governor must disqualify himself or herself from 
participating in particular matters involving or affecting the 
prohibited financial interest, and that disqualification is 
accomplished by not participating in the particular matter.
    The proposed amendment at Sec.  7001.104(d) additionally authorizes 
the Postal Service's DAEO, upon good cause shown by a Governor, to 
grant a written waiver to the Governor of any prohibited financial 
interest described in the proposed amendment, provided that the DAEO 
finds that:
    (1) The waiver is not inconsistent with 5 CFR part 2635 or 
otherwise prohibited by law; and
    (2) under the particular circumstances, application of the 
prohibition is not necessary to avoid the appearance of the Governor's 
misuse of position or loss of impartiality or otherwise to ensure 
confidence in impartiality or objectivity with which postal programs 
are administered.
    The DAEO may impose appropriate conditions for granting of the 
waiver, such as requiring the Governor to execute a written statement 
of disqualification.
    The waiver is intended, in appropriate cases, to lessen the burden 
that the prohibitions on holding or controlling the relevant financial 
interests may impose on, as applicable, the Governors, their spouses, 
or minor children while ensuring that they do not hold or control 
financial interests that may interfere with the objective and impartial 
performance by the Governors of their official duties.

III. Matters of Regulatory Procedure

    Although the Postal Service is exempted by 39 U.S.C. 410(a) from 
the advance notice requirements of the Administrative Procedure Act 
regarding rulemaking (5 U.S.C. 553(b), (c)), the Postal Service invites 
comments on these proposed rules.

Lists of Subjects in 5 CFR Part 7001

    Conflict of interests, Ethical standards, Executive branch 
standards of conduct, Government employees.

    For the reasons set forth in the preamble, the United States Postal 
Service, with the concurrence of the United States Office of Government 
Ethics, proposes to amend 5 CFR part 7001 as follows:

PART 7001--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE UNITED STATES POSTAL SERVICE

0
1. The authority citation for 5 CFR part 7001 continues to read as 
follows:

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government 
Act of 1978); 39 U.S.C. 401; E.O. 12674, 54 FR 15159; 3 CFR, 1989 
Comp., p. 215, as modified by E.O. 12731, 55 FR 42547; 3 CFR 1990 
Comp., p. 306; 5 CFR 2635.105, 2635.802, and 2635.803.

0
2. Revise Sec.  7001.102 to read as follows:


Sec.  7001.102  Restrictions on outside employment and business 
activities.

    (a) Prohibited outside employment and business activities. No 
Postal Service employee shall:
    (1) Engage in outside employment or business activities that 
involve providing consultation, advice, or any subcontracting service, 
with respect to the operations, programs, or procedures of the Postal 
Service, to any person who has a contract with the Postal Service or 
who the employee has reason to believe will compete for such a 
contract;
    (2) Except as permitted by paragraph (b)(2) of this section, engage 
in outside employment or business activities with, for, or as a person 
engaged in:
    (i) The operation of a commercial mail receiving agency registered 
with the Postal Service; or
    (ii) The delivery outside the mails of any type of mailable matter, 
except daily newspapers.
    Example to paragraph (a)(2)(ii): United Parcel Service (UPS), 
Federal Express (FedEx), Amazon, or DHL offers a part-time job to a 
postal employee. Because UPS, FedEx, Amazon and DHL are persons engaged 
in the delivery outside the mails of mailable matter (as defined in 
paragraph (c)(2) of this section) that is not daily newspapers, the 
employee may not engage in employment with UPS, FedEx, Amazon, or DHL 
in any location in any capacity while continuing employment with the 
Postal Service in any location in any capacity. If the employee chooses 
to work for UPS, FedEx, Amazon, or DHL, the employee must end his or 
her postal employment before commencing work for that company.
    (3) Engage in any fundraising (as defined in 5 CFR 2635.808(a)(1)), 
for-profit business activity, or sales activity, including the 
solicitation of business or the receipt of orders, for oneself or any 
other person, while on duty or in uniform, at any postal facility, or 
using any postal equipment. This paragraph does not prohibit an 
employee from engaging in fundraising at a postal facility as permitted 
in connection with the Combined Federal Campaign (CFC) under 5 CFR part 
950.
    Example 1 to paragraph (a)(3): An employee volunteers at a local 
animal shelter (a non-profit organization) which is having its annual 
fundraising drive. The employee may not solicit funds or sell items to 
raise funds for the animal shelter while on duty, in uniform, at any 
postal facility, or using any postal equipment.
    Example 2 to paragraph (a)(3): Outside of his postal employment, an 
employee operates a for-profit dog-walking business. The employee may 
not engage in activities relating to the operation of his business 
while on duty, in uniform, at any postal facility, or using any postal 
equipment.
    Example 3 to paragraph (a)(3): Outside of her postal employment, an 
employee has a job as a sales associate for a cosmetics company. The 
employee may not solicit sales or receive orders for the cosmetic 
company from any person while on duty, in uniform, at any postal 
facility, or using any postal equipment.

[[Page 12896]]

    (b) Prior approval for outside employment and business activities.
    (1) When prior approval required. A Postal Service employee shall 
obtain approval from the Postal Service's Ethics Office in accordance 
with paragraph (b)(3) of this section prior to:
    (i) Engaging in outside employment or business activities with or 
for any person with whom the employee has official dealings on behalf 
of the Postal Service;
    (ii) Engaging in outside employment or business activities with, 
for, or as a person who has interests that are:
    (A) Substantially dependent upon, or potentially affected to a 
significant degree by, postal rates, fees, or classifications; or
    (B) Substantially dependent upon providing goods or services to, or 
for use in connection with, the Postal Service; or
    (iii) Engaging in outside employment or business activities with or 
for any Highway Contract Route (HCR) contractor.
    (2) When prior approval may be requested for prohibited outside 
employment and activities. If an entity with which an employee wishes 
to engage in outside employment or business activities is a subsidiary 
of an entity that is engaged in one the activities described in (a)(2) 
of this section, but does not itself engage in any those activities, 
the employee may request approval from the Postal Service's Ethics 
Office to engage in such activity. The employee's request should follow 
the procedures of (b)(3) of this section, and will be evaluated under 
the standard set forth in (b)(4) of this section.
    Example to paragraph (b)(2): A postal employee who wishes to engage 
in outside employment with Whole Foods Market may submit a request to 
engage in that activity to the Postal Service's Ethics Office. Although 
Whole Foods Market is a subsidiary of Amazon, it is engaged in the 
supermarket business, not in the delivery outside the mails of mailable 
matter.
    (3) Submission and contents of request for approval. An employee 
who wishes to engage in outside employment or business activities for 
which approval is required by paragraph (b)(1) of this section shall 
submit a written request for approval to the Postal Service's Ethics 
Office. The request shall be accompanied by a statement from the 
employee's supervisor briefly summarizing the employee's duties and 
stating any workplace concerns raised by the employee's request for 
approval. The request for approval shall include:
    (i) A brief description of the employee's official duties;
    (ii) The name of the outside employer, or a statement that the 
employee will be engaging in employment or business activities on his 
or her own behalf;
    (iii) The type of employment or business activities in which the 
outside employer, if any, is engaged;
    (iv) The type of services to be performed by the employee in 
connection with the outside employment or business activities;
    (v) A description of the employee's official dealings, if any, with 
the outside employer on behalf of the Postal Service; and
    (vi) Any additional information requested by the Postal Service's 
Ethics Office that is needed to determine whether approval should be 
granted.
    (4) Standard for approval. The approval required by paragraph 
(b)(1) of this section shall be granted only upon a determination that 
the outside employment or business activities will not involve conduct 
prohibited by statute or federal regulation, including 5 CFR part 2635, 
which includes, among other provisions, the principle stated at 5 CFR 
2635.101(b)(14) that employees shall endeavor to avoid any actions 
creating the appearance that they are violating the law or the ethical 
standards set forth in part 2635.
    (c) Special rules for outside employment or business activities of 
OIG employees.--(1) When reporting required. A Postal Service Office of 
Inspector General (OIG) employee shall report compensated and 
uncompensated outside employment or business activities to the OIG's 
Office of General Counsel, including:
    (i) Any knowing sale or lease of real estate to the Postal Service 
or to a Postal Service employee or contractor, regardless of the 
frequency of such sales or leases or whether the sale or lease is at 
fair market value;
    (ii) Any ownership or control of a publicly-accessible online or 
physical storefront; and
    (iii) Volunteer activities, if they regularly exceed 20 hours per 
week or when the employee holds an officer position in the 
organization.
    Example 1 to paragraph (c)(1)(iii): An OIG employee occasionally 
volunteers with a domestic violence non-profit. The employee's 
volunteer duties are generally limited to 5 hours per week. The 
employee is not an officer of the organization. One weekend the 
employee helps to build a new home for a family, which takes a combined 
22 hours. The employee is not required to report those volunteer 
activities because the employee is not an officer and the employee's 
volunteer activities do not regularly exceed 20 hours per week.
    Example 2 to paragraph (c)(1)(iii): An OIG employee is a 
Scoutmaster for his child's local scouting group. The children meet for 
an hour each week and go on 4-hour hikes one weekend per month. Though 
``Scoutmaster'' may involve leadership, it is not an officer position 
within the non-profit entity and need not be reported.
    (2) When prior approval required. A Special Agent or Criminal 
Investigator shall also request and obtain written approval prior to 
engaging in outside employment or business activities which he or she 
is required to report under paragraph (c)(1) of this section. A request 
for approval shall be submitted to the OIG's Office of General Counsel, 
which will be reviewed under the same standard stated in paragraph 
(b)(3) of this section.
    (3) Implementation guidance. The OIG's Office of General Counsel 
may issue internal instructions governing the submission of requests 
for approval of outside employment, business activities, and volunteer 
activities. The instructions may exempt categories of employment, 
business activities, or volunteer activities from the reporting and 
prior approval requirements of this section based on a determination 
that those activities would generally be approved and are not likely to 
involve conduct prohibited by statute or Federal regulation, including 
5 CFR part 2635. The OIG's Office of General Counsel may include in 
these instructions examples of outside activities that are permissible 
or impermissible consistent with this part and 5 CFR part 2635.
    (d) Definitions. For purposes of this section:
    (1) Outside employment or business activity means any form of 
employment or business, whether or not for compensation. It includes, 
but is not limited to, the provision of personal services as officer, 
employee, agent, attorney, consultant, contractor, trustee, teacher, or 
speaker. It also includes, but is not limited to, engagement as 
principal, proprietor, general partner, holder of a franchise, 
operator, manager, or director. It does not include equitable ownership 
through the holding of publicly-traded shares of a corporation.
    (2) Commercial mail receiving agency means a private business that 
acts as the mail receiving agent for specific clients. The business 
must be registered with the post office responsible for delivery to the 
commercial mail receiving agency.
    (3) A person engaged in the delivery outside the mails of any type 
of mailable matter means a person who is engaged

[[Page 12897]]

in the delivery outside the mails of any letter, card, flat, or parcel 
eligible to be accepted for delivery by the Postal Service.
    (4) A person having interests substantially dependent upon, or 
potentially affected to a significant degree by, postal rates, fees, or 
classifications includes a person:
    (i) Primarily engaged in the business of publishing or distributing 
a publication mailed at Periodicals rates of postage;
    (ii) Primarily engaged in the business of sending advertising, 
promotional, or other material on behalf of other persons through the 
mails;
    (iii) Engaged in a commercial business that:
    (A) Primarily utilizes the mails for the solicitation or receipt of 
orders for, or the delivery of, goods or services; and
    (B) Can be expected to earn gross revenue exceeding $10,000 from 
utilizing the mails during the business's current fiscal year; or
    (iv) Who is, or within the past 4 years has been, a party to a 
proceeding before the Postal Regulatory Commission.
    Example 1 to paragraph (d)(4)(iii): An employee operates a business 
which sells handmade wooden bowls on its website and other e-commerce 
websites and uses the Postal Service as its primary shipper. The 
employee's business can be expected to earn gross revenue of more than 
$10,000 from utilizing the mails during the business's current fiscal 
year. The employee's business is ``a person having interests 
substantially dependent upon, or potentially affected to a significant 
degree by, postal rates, fees, or classifications'' because it is a 
commercial business that primarily utilizes the mails for the delivery 
of its goods and the business can be expected to earn gross revenue 
exceeding $10,000 from utilizing the mails during its current fiscal 
year.
    Example 2 to paragraph (d)(4)(iii): An employee knits scarves as a 
hobby, most of which she gives to family and friends, but she 
occasionally sells extra scarves on an e-commerce website and uses the 
Postal Service as her primary shipper. The employee does not expect to 
receive more than $10,000 from utilizing the mails during the current 
calendar year in which she sells the scarves. The employee is not ``a 
person having interests substantially dependent upon, or potentially 
affected to a significant degree by, postal rates, fees, or 
classifications'' because she is not engaged in a commercial business 
that can be expected to earn gross revenue from utilizing the mails 
exceeding $10,000 during its current fiscal year.
    (5) A person having interests substantially dependent upon 
providing goods or services to, or for use in connection with, the 
Postal Service includes a person:
    (i) Providing goods or services under contract(s) with the Postal 
Service that in total can be expected to provide revenue exceeding 
$100,000 over the term(s) of the contract(s); or
    (ii) Substantially engaged in the business of preparing items for 
others for mailing through the Postal Service.
    Example to paragraph (d)(5)(ii): A mailing house that sorts and 
otherwise prepares for its clients large volumes of advertising, 
fundraising, or political mail for mailing to prospective customers, 
donors, or voters through the Postal Service is ``a person having 
interests substantially dependent upon providing goods or services to, 
or for use in connection with, the Postal Service'' because it is 
substantially engaged in the business of preparing items for others for 
mailing through the Postal Service.
0
3. Add Sec.  7001.104 to read as follows:


Sec.  7001.104  Prohibited financial interests of the Governors of the 
United States Postal Service.

    (a) General prohibitions.--(1) No Governor of the United States 
Postal Service or his or her spouse or minor child shall acquire or 
hold, directly or indirectly:
    (i) Any financial interest in a person engaged in the delivery 
outside the mails of any type of mailable matter, except daily 
newspapers; or
    (ii) Any financial interest in a publicly-traded entity engaged 
primarily in the business of leasing real property to the Postal 
Service.
    (2) No Governor shall actively control the acquisition of or the 
holding of any financial interest described in paragraph (a)(1)(i) or 
(ii) of this section on behalf of any entity whose financial interests 
are imputed to the Governor under 18 U.S.C. 208. A Governor actively 
controls the financial interests of an entity if he or she selects or 
dictates the entity's investments, such as stocks, bonds, commodities, 
or funds. A Governor does not actively control the financial interests 
of an entity if he or she merely directs the investment strategy of the 
entity, hires the entity's financial manager(s) who selects the 
entity's investments, or designates another employee of the entity to 
select the entity's investments. A Governor may have such investment 
authority when serving as an officer, director, trustee, general 
partner, or employee of an entity.
    Example 1 to paragraph (a)(2): A Governor is also the chief 
executive officer (CEO) of a life insurance company. The company's 
policy is for: (1) The board of directors to determine the overall 
investment strategy for the company's excess cash, (2) an internal team 
to recommend to the CEO specific financial instruments in which to 
invest the company's excess cash to implement the board's overall 
investment strategy, and (3) the CEO to approve or disapprove of the 
internal team's specific investment recommendations. The Governor 
actively controls the financial interests of the life insurance company 
in his position as CEO of the company.
    Example 2 to paragraph (a)(2): A Governor is also on the board of 
directors of an investment company. The company's policy is for: (1) 
The board of directors to determine the overall investment strategy for 
the company's excess cash, (2) the board of directors to choose an 
external investment manager to select and manage day-to-day the 
specific financial instruments in which the company's excess cash is 
invested to implement the board's overall investment strategy, and (3) 
the CEO and other company management official to oversee the investment 
management process, including periodic review of the company's 
investment portfolio. The Governor does not actively control the 
financial interests of the investment company in her position on the 
board of directors.
    (b) Exception. Paragraph (a) of this section does not prohibit a 
Governor or his or her spouse or minor child from directly or 
indirectly acquiring or holding, or a Governor from actively 
controlling on behalf of any entity, any financial interest in any 
publicly-traded or publicly-available mutual fund (as defined in 5 CFR 
2640.102(k)) or other collective investment fund, including a widely-
held pension or other retirement fund, that includes any financial 
interest described in paragraph (a)(1)(i) or (ii) of this section, 
provided that:
    (1) Neither the Governor nor his or her spouse exercises active 
control over the financial interests held by the fund; and
    (2) The fund does not have a stated policy of concentrating its 
investments in, as applicable, persons engaged in the delivery outside 
the mails of mailable matter, except daily newspapers, or persons 
engaged primarily in the business of leasing real property to the 
Postal Service.
    (c) Reporting of prohibited financial interest and divestiture.--
(1) General. Any financial interest prohibited by

[[Page 12898]]

paragraph (a) of this section shall be divested within 90 calendar days 
of confirmation by the Senate of the Governor's nomination, or as soon 
as possible thereafter if there are restrictions on divestiture.
    (2) Newly-prohibited financial interests following confirmation. If 
a financial interest directly or indirectly held by a Governor or his 
or her spouse or minor child, or a financial interest actively 
controlled by a Governor on behalf of any entity, becomes prohibited 
subsequent to the Governor's confirmation:
    (i) The Governor shall report the prohibited financial interest to 
the Postal Service's Designated Agency Ethics Official (DAEO) within 30 
calendar days of the DAEO informing the Governors that such financial 
interests have become prohibited; and
    (ii) The prohibited financial interest shall be divested within 90 
calendar days of the DAEO informing the Governors that such financial 
interests have become prohibited, or as soon as possible thereafter if 
there are restrictions on divestiture.
    (3) Prohibited financial interests acquired without specific intent 
following confirmation.--(i) If a Governor or his or her spouse or 
minor child acquires a financial interest prohibited by paragraph 
(a)(1) of this section without specific intent to acquire it (such as 
through marriage, inheritance, or gift) subsequent to the Governor's 
confirmation:
    (A) The Governor shall report the prohibited financial interest to 
the Postal Service's DAEO within 30 calendar days of its acquisition; 
and
    (B) The prohibited financial interest shall be divested within 90 
calendar days of its acquisition, or as soon as possible thereafter if 
there are restrictions on divestiture.
    (ii) If an entity whose financial interests are actively controlled 
by a Governor acquires a financial interest described in paragraph 
(a)(1)(i) or (ii) of this section without specific intent to acquire it 
(such as through a gift) subsequent to the Governor's confirmation:
    (A) The Governor shall report the prohibited financial interest to 
the Postal Service's DAEO within 30 calendar days of its acquisition; 
and
    (B) The prohibited financial interest shall be divested within 90 
calendar days of its acquisition, or as soon as possible thereafter if 
there are restrictions on divestiture.
    (4) Disqualification from participating in particular matters 
pending divestiture. Pending any required divestiture of a prohibited 
financial interest provided for in paragraph (c) of this section, a 
Governor shall disqualify himself or herself from participating in 
particular matters involving or affecting the prohibited financial 
interest. Disqualification is accomplished by not participating in the 
particular matter.
    (d) Waiver of prohibited financial interests. For good cause shown 
by a Governor, the Postal Service's DAEO may grant a written waiver to 
the Governor of any prohibited financial interest described in 
paragraph (a), (c)(2), or (c)(3) of this section; provided that the 
DAEO finds that the waiver is not inconsistent with 5 CFR part 2635 or 
otherwise prohibited by law, and that under the particular 
circumstances, application of the prohibition is not necessary to avoid 
the appearance of the Governor's misuse of position or loss of 
impartiality or otherwise to ensure confidence in the impartiality or 
objectivity with which the Postal Service's programs are administered. 
The DAEO may impose appropriate conditions for granting of the waiver, 
such as requiring the Governor to execute a written statement of 
disqualification.
    (e) Definition. For purposes of this section, a person engaged in 
the delivery outside the mails of any type of mailable matter is as 
defined in Sec.  7001.102(d)(3).

Ruth Stevenson,
Chief Counsel, Ethics and Legal Compliance, United States Postal 
Service.
Emory Rounds,
Director, U.S. Office of Government Ethics.
[FR Doc. 2022-04452 Filed 3-7-22; 8:45 am]
BILLING CODE 7710-12-P