Supplemental Standards of Ethical Conduct for Employees of the United States Postal Service, 53351-53357 [2023-16811]
Download as PDF
53351
Rules and Regulations
Federal Register
Vol. 88, No. 151
Tuesday, August 8, 2023
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
POSTAL SERVICE
5 CFR Part 7001
Supplemental Standards of Ethical
Conduct for Employees of the United
States Postal Service
Postal ServiceTM.
Final rule.
AGENCY:
ACTION:
The United States Postal
Service (Postal Service), with the
concurrence of the United States Office
of Government Ethics (OGE), amends
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, Postal Service
Governors, the Postmaster General, and
the Deputy Postmaster General, and by
making limited technical and
ministerial changes. In response to the
proposed rule, the Postal Service
received two sets of comments, which it
addresses here.
DATES: This rule is effective as of
September 7, 2023.
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:
ddrumheller on DSK120RN23PROD with RULES1
SUMMARY:
Background
In March 2022, the Postal Service
proposed to amend the Supplemental
Standards of Ethical Conduct for
Employees of the United States Postal
Service (Supplemental Standards),
which are codified in 5 CFR part 7001.
87 FR 12888 (March 8, 2022). The
proposed rule provided a 60 day
comment period, which ended on May
9, 2022. The Postal Service received two
timely and responsive comments in
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
reply, which were submitted by one
trade association and one private
organization. The Postal Service now
responds.
Summary of Commenter A’s Comments
and Postal Service Responses
Commenter A, a private organization,
contributed seven (7) suggested changes
to the proposed rule. The Postal Service
reviews and responds to each
responsive comment in turn.
I. Expansion of § 7001.104—
Competitors and Publicly-Traded
Lessors
Commenter A ‘‘strongly supports the
Postal Service’s efforts to establish firm
prohibitions that bar the Board of
Governors, their spouses, and their
minor children from directly or
indirectly acquiring or holding financial
interests in postal competitors . . . [or]
investments in publicly-traded
companies that lease real estate to the
Postal Service.’’ However, Commenter A
recommended that the Postal Service
broaden the prohibitions proposed at 5
CFR 7001.104(a)(1)(i) and (ii) (on
acquiring or holding, directly or
indirectly, ‘‘any financial interest in a
person engaged in the delivery outside
the mails of any type of mailable matter,
except daily newspapers’’ or ‘‘any
financial interest in a publicly-traded
entity engaged primarily in the business
of leasing real property to the Postal
Service’’) to apply also to the Postmaster
General and the Deputy Postmaster
General.
The Postal Service notes that the
holdings of the Postmaster General and
Deputy Postmaster General are carefully
vetted, with recusals in place when
necessary, for the purpose of ensuring
that neither individual participates in
any particular matter in a manner that
violates any ethics statute or regulation
or even in a manner that raises the mere
appearance of a violation of these
statutes and regulations. Nevertheless,
for the reasons stated below, the Postal
Service has determined that it is
appropriate to extend the prohibitions
proposed at 5 CFR 7001.104 to the
Postmaster General and the Deputy
Postmaster General, in addition to the
Governors. Accordingly, the Postal
Service has updated the language of
§ 7001.104 to require that the Postmaster
General and the Deputy Postmaster
General, in addition to the Governors,
abstain from holding financial interests
PO 00000
Frm 00001
Fmt 4700
Sfmt 4700
in Postal Service competitors or
publicly-traded companies that lease
real estate to the Postal Service.
The nine Governors, the Postmaster
General, and the Deputy Postmaster
General—who together constitute a
complete Board of Governors—should
all be subject to the same restrictions on
holdings of postal competitors and
publicly-traded lessors because they
together constitute the highest echelons
of the Postal Service. See 39 U.S.C.
202(a), (c), (d). Prohibiting all members
of the Board from holding these assets
will assuage any appearance concerns
that any member of the Board has any
divided loyalties when engaged in
Board activities. The Governors alone
vote on pricing decisions, which was
why they alone were included in the
proposed rule. The comments are well
taken, however, that the Postmaster
General and Deputy Postmaster General,
with the Governors, constitute a full
Board and that, therefore, if any Board
member, regardless of their involvement
with pricing decisions, were to hold
stock in competitors or publicly-traded
lessors, this still may lead to the
appearance that a Board member has
divided loyalties when he or she makes
broadly applicable decisions with wideranging consequences, including
consequences that may affect
competitors or publicly-traded entities
who purchase postal real estate and sell
it back to the Postal Service at a profit.
This expansion to include the
Postmaster General and Deputy
Postmaster General will support the
public’s ability to trust that the full
Board will continue to make choices
that are for the sole benefit of the Postal
Service and that those decisions are
made without even the appearance of
divided loyalties. Therefore, the full
Board—the Governors, Postmaster
General, and Deputy Postmaster
General—will henceforth be subject to
the holding prohibitions of § 7001.104.
II. Expansion of § 7001.104—
Contractors and Subcontractors
Commenter A recommends that the
Postal Service broaden the proposed
restrictions of 5 CFR 7001.104 to
‘‘prohibit the Postmaster General, the
Deputy Postmaster General and the . . .
Governors from holding any financial
interest, directly or indirectly, in a
Postal Service contractor or
subcontractor.’’ The Postal Service has
E:\FR\FM\08AUR1.SGM
08AUR1
ddrumheller on DSK120RN23PROD with RULES1
53352
Federal Register / Vol. 88, No. 151 / Tuesday, August 8, 2023 / Rules and Regulations
considered this suggestion but
concluded that such a restriction is both
overly broad and unnecessary to address
actual conflicts of interest or any
significant appearance concerns.
First, all Postal Service employees—
including the Postmaster General and
the Deputy Postmaster General—must
recuse themselves from ‘‘participating
personally and substantially in an
official capacity in any particular matter
in which, to [their] knowledge, [they] or
any person whose interests are imputed
to [them] . . . has a financial interest, if
the particular matter will have a direct
and predictable effect on that interest.’’
18 U.S.C. 208(a)(‘‘section 208’’). In other
words, no Postal Service employee—
including those in leadership—may
work personally and substantially on
any particular matter that could have a
direct and predictable effect on his or
her financial interests (or the financial
interests of those whose interests are
imputed to him or her—i.e., the
employee’s spouse, minor child, and
others as defined by the statute). All
Postal Service employees must continue
to comply with this criminal statute
prohibiting conflicts of interest and with
the impartiality and misuse provisions
of the Standards of Ethics Conduct for
Employees of the Executive Branch,
when considering what actions they
may take at work for the Postal Service.
It is not necessary to prohibit financial
interests in Postal Service contractors or
subcontractors beyond those entities
with whom the employee will actually
work in his or her postal capacity. To
do so would be overly broad and would
not serve to prevent actual conflicts of
interest.
Financial interests in postal
contractors and subcontractors also do
not raise appearance concerns in the
same way as financial interests in
competitors and publicly traded lessors,
which are covered by § 7001.104. While
there are only a handful of postal
competitors and only one publicly
traded lessor to the Postal Service, there
are thousands of postal contractors and
subcontractors. Therefore, the primary
concern addressed by proposed
§ 7001.104—that there is an appearance
concern for the Governors, the
Postmaster General or the Deputy
Postmaster General to hold a financial
interest in one of a handful of Postal
Service competitors or in the one
publicly traded lessor of the Postal
Service, because of the highly visible
nature of these entities—is not present
with regard to the over 11,000
contractors and the multitude of
subcontractors, many of whom are not
publicly traded entities, or with regard
to those entities with whom the Postal
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
Service enters into local buy contracts.
For example, if a Governor were to hold
a financial interest in a small private
company that has one contract with the
Postal Service, so long as that Governor
does not work on postal matters
affecting that company, there is no
conflicts concern and the level of
appearance concerns is greatly reduced
as compared to if that Governor owned
a financial holding in one of the Postal
Service’s competitors or the sole
publicly-traded lessor, whose visibility
is pronounced. In other words, holding
a financial interest in one of thousands
of postal contractors or subcontractor
presents negligible, if any, appearance
issues.
The Governors, Postmaster General,
and Deputy Postmaster General already
must track, for conflicts of interest
purposes, whether they hold financial
interests in any entity that they may
affect as part of their postal duties, and
it would be overly burdensome,
impractical, and unnecessary for them
to have to track the entire universe of
postal contractors and subcontractors
for the purposes of avoiding minimal
appearance concerns. For these reasons,
the Postal Service declines to broaden 5
CFR 7001.104(a)(1) to include a broad
blanket prohibition on holding financial
interests in any of the wide universe of
contractors and subcontractors.
III. Expansion of § 7001.104(a)(1)(ii) to
Privately Held Lessors
Third, Commenter A recommends
that 5 CFR 7001.104(a)(1)(ii) ‘‘should
not only prohibit holdings in publiclytraded entities engaged primarily in the
business of leasing real property to the
Postal Service, but also prohibit
holdings in privately-held entities
engaged primarily in the business of
leasing real property to the Postal
Service.’’ The Postal Service declines
this expansion of the entities covered by
§ 7001.104(a)(1)(ii), as such a
prohibition is not necessary to prevent
either an actual or apparent conflict of
interest.
The Postal Service contracts with
numerous privately-owned lessors
(including many sole proprietors).
These private lessors change frequently,
are often relatively small, and are too
numerous for covered individuals to
effectively track (though of course the
individuals must continue to track those
outside entities who could be
financially impacted as they perform
their postal duties for conflicts
analyses). This is in contrast to publiclytraded lessors, of which there is only
one. Commenter A’s suggestion is
overbroad because it would require
covered individuals to abstain from
PO 00000
Frm 00002
Fmt 4700
Sfmt 4700
holding a financial interest in a private
entity even if there is no overlap with
the financial interests of that entity and
his or her official postal duties. If a
covered employee holds a financial
interest in a private entity, he or she
would already be prohibited from
working on a matter affecting that entity
under applicable conflicts rules. That
will continue to be the case—though the
Postal Service notes that an actual
conflict is unlikely because the Board of
Governors rarely would be called to
address leasing matters.
What the Postal Service intends to
address with 5 CFR 7001.104(a)(1)(ii),
by prohibiting the covered individuals
from holding a financial interest in the
Postal Service’s sole publicly traded
lessor, is even the appearance of a
conflict. The appearance of holding a
financial interest in that sole, massive
lessor is far greater than the potential
appearance of a conflict when holding
a financial interest in an entity that few
know exists, such as for example a
small, private, lessor that may
potentially be a sole proprietorship, or
have operations in just one small town.
By contrast, the public lessor’s sole
business is to buy postal properties and
sell those properties back to the Postal
Service at a profit. If a covered
individual were to hold a financial
interest in that publicly traded lessor,
there could be the appearance that the
covered individual has divided
loyalties—in other words, there could
be the appearance of a conflict, even if
there was not an actual conflict because
the conflicts rule served its purpose to
prevent one. The appearance of a
conflict is what § 7001.104(a)(1)(ii) is
designed to prevent. Holding a financial
interest in a private lessor simply does
not raise the same level of appearance
concerns or questions regarding divided
loyalties, and thus the Postal Service
declines to include such lessors in the
coverage of § 7001.104.
IV. Waivers
Fourth, Commenter A is concerned
that the Designated Agency Ethics
Official (DAEO) will not be required to
consult with the Office of Government
Ethics (OGE) before issuing waivers of
prohibited financial interests pursuant
to § 7001.104(d), which provides that
the Postal Service’s DAEO may, for good
cause shown, grant a waiver ‘‘of any
prohibited financial interest described
in paragraph (a) or (c)(2) or (3) of this
section.’’
Although the Postal Service is
required to—and does—consult with
OGE when practicable prior to issuing
waivers under section 208 (under 5 CFR
2640.303), the Postal Service need not
E:\FR\FM\08AUR1.SGM
08AUR1
Federal Register / Vol. 88, No. 151 / Tuesday, August 8, 2023 / Rules and Regulations
ddrumheller on DSK120RN23PROD with RULES1
consult externally with OGE when it
grants a waiver pursuant to its own
Supplemental Standards, which are
agency-specific rules that go above and
beyond those rules already required by
OGE. The Postal Service is best
positioned to determine whether a
waiver under its own Supplemental
Standards is appropriate (unlike with
section 208 waivers, for which OGE is
the subject matter expert). That the
Postal Service is empowered to approve
waivers under its own Supplemental
Standards is consistent with others
agencies’ abilities to make similar
decisions under their own supplemental
ethics regulations.
V. Section 7001.104(a)(2) Scope
Fifth, Commenter A makes
recommendations regarding how the
Postal Service should apply certain of
the prohibited holding provisions in
§ 7001.104(a). As discussed above,
§ 7001.104(a)(1) sets forth the financial
interests that are restricted for the
Governors (and, as expanded in this
final rule, to the Postmaster General and
Deputy Postmaster General);
§ 7001.104(a)(2) builds upon that
restriction by noting that such
individuals similarly should not
‘‘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
. . . under 18 U.S.C. 208.’’ The
provision goes on to explain that the
Postal Service does not deem an
individual to ‘‘actively control’’ the
financial interests of an entity for
purposes of this provision if he or she
merely directs the investment strategy,
hires the entity’s financial manager who
selects the investments, or designates
another employee to select the
investments. Commenter A seems to
suggest that the Postmaster General and
Deputy Postmaster General—to whom
the final rule applies restrictions of
§ 7001.104(a)(1), as suggested by
Commenter A—should have a different
standard than the Governors for
evaluating when they ‘‘do[ ] not actively
control the financial interests of an
entity’’ relating to the § 7001.104(a)(2)
restriction. Specifically, Commenter A
suggests that the standards for
determining whether the Postmaster
General and Deputy Postmaster General
‘‘actively control’’ the financial interests
of an entity ‘‘should be consistent with
5 CFR 2640.202(e).’’
The Postal Service disagrees that the
concept of ‘‘active[ ] control’’ in this
restriction should be different for the
Postmaster General and Deputy
Postmaster General than for the
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
Governors. As updated consistent with
the discussions in this preamble,
§ 7001.104(a) will place requirements on
Governors, the Postmaster General, and
the Deputy Postmaster General to
address appearance concerns. These
requirements are above and beyond—
and in addition to—the requirements
that all Federal employees are subject
to, under section 208 and the Standards
of Ethical Conduct for Employees of the
Executive Branch. Section 208 will
continue to control when any real
conflicts of interest are present.
Therefore, the restrictions, which mirror
the exemption to section 208 found in
5 CFR 2640.202(e), will apply to the
Postmaster General and Deputy
Postmaster General should an actual
conflict arise.
Conversely, § 7001.104(a) is meant to
address appearance concerns, as stated
above. A reasonable person with the
knowledge that a Governor, the
Postmaster General or the Deputy
Postmaster General actively controls the
holdings of entity would have reason to
question the loyalty of that individual
when the entity invests in a competitor
or the publicly held lessor. The same
cannot be said when the entity invests
in a competitor or the publicly held
lessor, but the Governor, Postmaster
General or Deputy Postmaster General
does not actively control the acquisition
of or holding of those financial interests,
as described in § 7001.014(a)(2). As
such, the standard that Commenter A
suggests should be applied to PG and
DPG is simply not necessary because we
do not believe that there are any
appearance concerns if the Postmaster
General or the Deputy Postmaster is
merely directing the investment strategy
of the entity and hiring the entity’s
financial manager, who in turn selects
the entity’s investment, or designating
another employee of the entity to select
the entity’s investments. Because the
Postal Service is focused on the
appearance of a conflict as opposed to
an actual conflict, the Postal Service
will apply § 7001.104(a)(2) in the same
manner to the Postmaster General and
the Deputy Postmaster General as it
does to the Governors.
VI. Postmaster General Vetting Process
Sixth, Commenter A asks that the
ethics review process for the position of
Postmaster General be ‘‘strengthened
and enhanced’’—specifically through an
accelerated process similar to that used
for Presidential appointees subject to
Senate confirmation (‘‘PAS’’ nominees),
which would require a new Postmaster
General to enter into a written ethics
agreement with the DAEO within 30
PO 00000
Frm 00003
Fmt 4700
Sfmt 4700
53353
days of taking office and adhere to a 90day time limit for divestiture.
The Postal Service notes that the
vetting process for potential future
Postmasters General is outside of the
scope of this rulemaking. Regarding the
substance of the commenter’s
suggestion, the Postal Service has every
confidence in its current protocols for
reviewing the financial interests of
incoming Postmasters General, but does
note that it is currently considering an
enhanced framework under which
prospective Postmasters General would
be reviewed.
VII. Office of Government Ethics
Website
Last, Commenter A asks that the
Postmaster General’s ethics agreements,
and any amendments thereto, be subject
to review and approval by the Director
of OGE and made publicly available on
OGE’s website, along with the
Postmaster General’s public financial
disclosure reports and any waivers
issued pursuant to 18 U.S.C. 208(b)(1) or
by supplemental regulation.
First, with regard generally to what
materials are publicly available on
OGE’s website, the Postal Service notes
that it is not empowered to make that
determination. OGE solely determines
what materials it includes or excludes
on its own website, pursuant to
applicable law.
Second, as to the Postmaster General’s
public financial disclosure reports, they
are already publicly available on OGE’s
website. While PAS officials’ ethics
agreements are available on OGE’s
website, the Postmaster General is not a
PAS government official. As such, the
Postal Service is not required to have
OGE involved in developing an ethics
agreement for the Postmaster General, as
OGE is involved for PAS officials.
Moreover, even if the Postmaster
General were a PAS official, the Postal
Service is not in the position to choose
or determine what is posted on OGE’s
website and the question of whether the
Postmaster General should be a PAS
official, with all the requirements those
positions entail, is far afield and outside
of the scope of the Postal Service’s
authority and this rulemaking. Finally,
no other PAS government official’s
waivers issued pursuant to 18 U.S.C.
208(b)(1) are published on OGE website
and the Postal Service declines to treat
the Postmaster General differently by
requesting that his or her waivers be
posted to OGE website or, in the case of
waivers issued pursuant to
Supplemental Standards, posted on the
Postal Service’s website.
Notwithstanding the foregoing, the
Postal Service notes that any waiver
E:\FR\FM\08AUR1.SGM
08AUR1
53354
Federal Register / Vol. 88, No. 151 / Tuesday, August 8, 2023 / Rules and Regulations
ddrumheller on DSK120RN23PROD with RULES1
issued pursuant to section 208 to the
Postmaster General is available upon
request to the public under that statute
and 5 CFR 2640.304(a).
Summary of Commenter B’s Comments
and Postal Service Responses
Commenter B is a trade association.
Commenter B’s correspondence overall
expressed optimism. In particular,
Commenter B articulated the hope that
the Postal Service’s proposed changes to
5 CFR 7001.102 would positively affect
the labor shortage currently faced by
highway contract route (‘‘HCR’’)
suppliers. Commenter B described the
HCR driver shortage as part of a larger
problem faced by the greater surface
transportation industry that uniquely
challenges HCR suppliers. Commenter B
identified multiple factors causing the
available labor pool to shrink, including
matters both outside of the scope of this
rulemaking and factors within the scope
of this rulemaking, addressed here.
As stated above, Commenter B
broadly supported the proposed change
to 5 CFR 7001.102, which would permit
a Postal Service employee to seek
concurrent supplemental employment
with HCR contractors if the employee
obtained permission from the Ethics
Office. Commenter B acknowledged that
removing the outright prohibition on
concurrent employment with the Postal
Service and HCR suppliers and
instituting a ‘‘case-by-case’’ analysis
would permit HCR suppliers to hire
some Postal Service employees—those
whom the Ethics Office clears for parttime positions—as opposed to the prior
situation, in which HCR suppliers were
prohibited outright from hiring Postal
Service employees. Commenter B hopes
that this change would result in a larger
pool of applicants for open HCR driver
positions. If finalized, this Commenter
opined, ‘‘the proposed rule would create
a more flexible, dynamic workforce
benefitting the transportation of mail
throughout the nation.’’
Nevertheless, Commenter B was
apprehensive about whether the
proposed approval process would result
in delays. Specifically, it expressed
concerns about potential delays caused
by (1) the requirement that a Postal
Service employee obtain a statement
from the employee’s supervisor for the
Ethics Office to consider and (2) the
requirement that the Ethics Office
review the Postal Service employee’s
request and his or her manager’s
statement. Essentially, Commenter B
opined that these two requirements
would cause undue delay between
when the employee decides to apply for
an open supplier position and when he
or she is able to obtain clearance from
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
the Ethics Office to apply. Commenter B
is concerned that these requirements,
which would take time, could
jeopardize the Postal Service employee’s
opportunity for employment with an
HCR contractor because the HCR
application process moves swiftly.
The Postal Service respectfully
disagrees with Commenter B’s
characterization of the review
requirements as delays, which connotes
that the time taken to review is
unnecessary. Rather, the Postal Service
posits that the time needed to complete
these requirements will be relatively
short and that the perceived negatives of
the approval process are outweighed by
its benefits. Specifically, both
requirements are essential for the Ethics
Office to determine whether a Postal
Service employee would run afoul of
the criminal conflict of interest statute
or other Federal ethics rules if he or she
were hired by an HCR supplier. As to a
timeframe for review, the Ethics Office
will endeavor to review these requests
within its already established practice of
reviewing all ethics advice matters as
quickly as possible and in a timely
manner.
The Postal Service is cognizant of,
and wishes to be attentive to, the needs
of the supplier community and the timesensitive nature of the application
process, and understands that the
requirement to obtain a statement from
the employee’s manager and approval
from the Ethics Office will lengthen the
time that it takes an employee to apply
for a position with a supplier. However,
the Ethics Office requires the
information contained in the statement
from the employee’s manager, and time
to review that information, in order to
make a determination about whether the
employee’s application would be
consistent with the ethics rules and
statutes. And, as stated above, the Ethics
Office will continue to respond as
quickly as possible to all requests for
review under this new provision.
In changing the rule from an outright
prohibition on supplemental
employment with an HCR to a case-bycase analysis via an approval process,
the Postal Service will permit some
Postal Service employees, as
appropriate, to apply for concurrent
employment with HCR suppliers—thus
helping to alleviate the HCR driver
shortage—while assisting Postal Service
employees with remaining in
compliance with the ethics rules and
regulations.
As a final point, Commenter B raised
a question regarding 5 CFR 7001.102,
about which the Postal Service would
like to offer clarification. Commenter B
expressed concern that an employee
PO 00000
Frm 00004
Fmt 4700
Sfmt 4700
who is a prospective applicant with an
HCR may have to submit unnecessarily
duplicative applications to the Ethics
Office if he or she wished to work for
more than one HCR supplier. In other
words, it appears that Commenter B saw
the proposed rule as requiring a Postal
Service employee to submit one request
per supplier. However, this is not the
intention of the proposed rule. Postal
Service employees seeking clearance to
work for more than one HCR supplier
may submit a single request to the
Ethics Office and may obtain a single
statement from their managers in
support of that request.
Conclusion
The Postal Service did not receive any
other comments other than those
discussed above. For the reasons
detailed in the preamble of the
previously-issued Notice of Proposed
Rulemaking, the Postal Service is, with
the concurrence of the Office of
Government Ethics, issuing the rule in
final with only one change, to expand
the coverage of 5 CFR 7001.104(a) to
apply to the Postmaster General and the
Deputy Postmaster General.
List 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, amends 5 CFR part 7001 as
follows:
PART 7001—SUPPLEMENTAL
STANDARDS OF ETHICAL CONDUCT
FOR EMPLOYEES OF THE UNITED
STATES POSTAL SERVICE
1. The authority citation for part 7001
continues to read as follows:
■
Authority: 5 U.S.C. 7301; 5 U.S.C. Chapter
131; 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.
2. Revise § 7001.102 to read as
follows:
■
§ 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
E:\FR\FM\08AUR1.SGM
08AUR1
ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 151 / Tuesday, August 8, 2023 / Rules and Regulations
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 1 to paragraph (a)(2)(ii):
United Parcel Service (UPS), Federal
Express (FedEx), Amazon, or DHL offers
a part-time job to a Postal Service
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)), forprofit 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 2 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 3 to paragraph (a)(3):
Outside of his postal employment, an
employee operates a for-profit dogwalking 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 4 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
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
person while on duty, in uniform, at any
postal facility, or using any postal
equipment.
(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 paragraph (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 paragraph
(b)(3) of this section, and will be
evaluated under the standard set forth
in paragraph (b)(4) of this section.
Example 5 to paragraph (b)(2): A
Postal Service 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
PO 00000
Frm 00005
Fmt 4700
Sfmt 4700
53355
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 6 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
E:\FR\FM\08AUR1.SGM
08AUR1
ddrumheller on DSK120RN23PROD with RULES1
53356
Federal Register / Vol. 88, No. 151 / Tuesday, August 8, 2023 / Rules and Regulations
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 7 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.
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
(3) A person engaged in the delivery
outside the mails of any type of mailable
matter means 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.
(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 8 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 9 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
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
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 10 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.
■ 3. Add § 7001.104 to read as follows:
§ 7001.104 Prohibited financial interests of
the members of the Board of Governors
(a) General prohibitions. (1) No
member of the Board of Governors,
which includes the Postmaster General,
the Deputy Postmaster General, and the
nine appointed Governors of the United
States Postal Service, or any spouse or
minor child of any member of the Board
of Governors, 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 member of the Board of
Governors 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 them under 18 U.S.C.
208. A member of the Board of
Governors 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 member of the Board of
Governors 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
E:\FR\FM\08AUR1.SGM
08AUR1
ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 151 / Tuesday, August 8, 2023 / Rules and Regulations
entity’s investments, or designates
another employee of the entity to select
the entity’s investments. A member of
the Board of Governors 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:
the board of directors to determine the
overall investment strategy for the
company’s excess cash, 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 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 her position as CEO of the company.
Example 2 to paragraph (a)(2): A
Deputy Postmaster General is also on
the board of directors of an investment
company. The company’s policy is for:
the board of directors to determine the
overall investment strategy for the
company’s excess cash, 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
the CEO and other company
management official to oversee the
investment management process,
including periodic review of the
company’s investment portfolio. This
Deputy Postmaster General does not
actively control the financial interests of
the investment company in his position
on the board of directors.
(b) Exception. Paragraph (a) of this
section does not prohibit any member of
the Board of Governors or spouse or
minor child of any member of the Board
of Governors from directly or indirectly
acquiring or holding, or a member of the
Board of Governors 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 member of the Board
of Governors 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
VerDate Sep<11>2014
17:06 Aug 07, 2023
Jkt 259001
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
paragraph (a) of this section shall be
divested, in the case of a Governor,
within 90 calendar days of confirmation
by the Senate of the Governor’s
nomination, and, in the case of a
Postmaster General or Deputy
Postmaster General, within 90 calendar
days of his or her appointment, or as
soon as possible thereafter if there are
restrictions on divestiture.
(2) Newly-prohibited financial
interests following confirmation or
appointment. If a financial interest
described in paragraph (a) of this
section becomes prohibited subsequent
to the Governor’s confirmation or a
Postmaster General or Deputy
Postmaster General’s appointment:
(i) The member of the Board of
Governors 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 member of the
Board of 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
member of the Board of 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 or appointment.
(i) If a member of the Board of
Governors, or spouse or minor child of
any member of the Board of Governors
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 or the appointment of a
Postmaster General or Deputy
Postmaster General:
(A) The member of the Board of
Governors 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
member of the Board of Governors
PO 00000
Frm 00007
Fmt 4700
Sfmt 9990
53357
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 a
Governor’s confirmation or the
appointment of a Postmaster General or
Deputy Postmaster General:
(A) The member of the Board of
Governors 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 this paragraph
(c), a member of the Board of Governors
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
member of the Board of Governors, the
Postal Service’s DAEO may grant a
written waiver to the member of the
Board of Governors of any prohibited
financial interest described in paragraph
(a) or (c)(2) or (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 member of the Board
of Governors’ 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 member of the
Board of Governors 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 § 7001.102(d)(3).
Ruth Stevenson,
Chief Counsel, Ethics and Legal Compliance,
United States Postal Service.
Shelley K. Finlayson,
Acting Director, U.S. Office of Government
Ethics.
[FR Doc. 2023–16811 Filed 8–7–23; 8:45 am]
BILLING CODE 7710–12–P
E:\FR\FM\08AUR1.SGM
08AUR1
Agencies
[Federal Register Volume 88, Number 151 (Tuesday, August 8, 2023)]
[Rules and Regulations]
[Pages 53351-53357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16811]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 88 , No. 151 / Tuesday, August 8, 2023 /
Rules and Regulations
[[Page 53351]]
POSTAL SERVICE
5 CFR Part 7001
Supplemental Standards of Ethical Conduct for Employees of the
United States Postal Service
AGENCY: Postal ServiceTM.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The United States Postal Service (Postal Service), with the
concurrence of the United States Office of Government Ethics (OGE),
amends 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, Postal
Service Governors, the Postmaster General, and the Deputy Postmaster
General, and by making limited technical and ministerial changes. In
response to the proposed rule, the Postal Service received two sets of
comments, which it addresses here.
DATES: This rule is effective as of September 7, 2023.
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:
Background
In March 2022, the Postal Service proposed to amend the
Supplemental Standards of Ethical Conduct for Employees of the United
States Postal Service (Supplemental Standards), which are codified in 5
CFR part 7001. 87 FR 12888 (March 8, 2022). The proposed rule provided
a 60 day comment period, which ended on May 9, 2022. The Postal Service
received two timely and responsive comments in reply, which were
submitted by one trade association and one private organization. The
Postal Service now responds.
Summary of Commenter A's Comments and Postal Service Responses
Commenter A, a private organization, contributed seven (7)
suggested changes to the proposed rule. The Postal Service reviews and
responds to each responsive comment in turn.
I. Expansion of Sec. 7001.104--Competitors and Publicly-Traded Lessors
Commenter A ``strongly supports the Postal Service's efforts to
establish firm prohibitions that bar the Board of Governors, their
spouses, and their minor children from directly or indirectly acquiring
or holding financial interests in postal competitors . . . [or]
investments in publicly-traded companies that lease real estate to the
Postal Service.'' However, Commenter A recommended that the Postal
Service broaden the prohibitions proposed at 5 CFR 7001.104(a)(1)(i)
and (ii) (on acquiring or holding, directly or indirectly, ``any
financial interest in a person engaged in the delivery outside the
mails of any type of mailable matter, except daily newspapers'' or
``any financial interest in a publicly-traded entity engaged primarily
in the business of leasing real property to the Postal Service'') to
apply also to the Postmaster General and the Deputy Postmaster General.
The Postal Service notes that the holdings of the Postmaster
General and Deputy Postmaster General are carefully vetted, with
recusals in place when necessary, for the purpose of ensuring that
neither individual participates in any particular matter in a manner
that violates any ethics statute or regulation or even in a manner that
raises the mere appearance of a violation of these statutes and
regulations. Nevertheless, for the reasons stated below, the Postal
Service has determined that it is appropriate to extend the
prohibitions proposed at 5 CFR 7001.104 to the Postmaster General and
the Deputy Postmaster General, in addition to the Governors.
Accordingly, the Postal Service has updated the language of Sec.
7001.104 to require that the Postmaster General and the Deputy
Postmaster General, in addition to the Governors, abstain from holding
financial interests in Postal Service competitors or publicly-traded
companies that lease real estate to the Postal Service.
The nine Governors, the Postmaster General, and the Deputy
Postmaster General--who together constitute a complete Board of
Governors--should all be subject to the same restrictions on holdings
of postal competitors and publicly-traded lessors because they together
constitute the highest echelons of the Postal Service. See 39 U.S.C.
202(a), (c), (d). Prohibiting all members of the Board from holding
these assets will assuage any appearance concerns that any member of
the Board has any divided loyalties when engaged in Board activities.
The Governors alone vote on pricing decisions, which was why they alone
were included in the proposed rule. The comments are well taken,
however, that the Postmaster General and Deputy Postmaster General,
with the Governors, constitute a full Board and that, therefore, if any
Board member, regardless of their involvement with pricing decisions,
were to hold stock in competitors or publicly-traded lessors, this
still may lead to the appearance that a Board member has divided
loyalties when he or she makes broadly applicable decisions with wide-
ranging consequences, including consequences that may affect
competitors or publicly-traded entities who purchase postal real estate
and sell it back to the Postal Service at a profit. This expansion to
include the Postmaster General and Deputy Postmaster General will
support the public's ability to trust that the full Board will continue
to make choices that are for the sole benefit of the Postal Service and
that those decisions are made without even the appearance of divided
loyalties. Therefore, the full Board--the Governors, Postmaster
General, and Deputy Postmaster General--will henceforth be subject to
the holding prohibitions of Sec. 7001.104.
II. Expansion of Sec. 7001.104--Contractors and Subcontractors
Commenter A recommends that the Postal Service broaden the proposed
restrictions of 5 CFR 7001.104 to ``prohibit the Postmaster General,
the Deputy Postmaster General and the . . . Governors from holding any
financial interest, directly or indirectly, in a Postal Service
contractor or subcontractor.'' The Postal Service has
[[Page 53352]]
considered this suggestion but concluded that such a restriction is
both overly broad and unnecessary to address actual conflicts of
interest or any significant appearance concerns.
First, all Postal Service employees--including the Postmaster
General and the Deputy Postmaster General--must recuse themselves from
``participating personally and substantially in an official capacity in
any particular matter in which, to [their] knowledge, [they] or any
person whose interests are imputed to [them] . . . has a financial
interest, if the particular matter will have a direct and predictable
effect on that interest.'' 18 U.S.C. 208(a)(``section 208''). In other
words, no Postal Service employee--including those in leadership--may
work personally and substantially on any particular matter that could
have a direct and predictable effect on his or her financial interests
(or the financial interests of those whose interests are imputed to him
or her--i.e., the employee's spouse, minor child, and others as defined
by the statute). All Postal Service employees must continue to comply
with this criminal statute prohibiting conflicts of interest and with
the impartiality and misuse provisions of the Standards of Ethics
Conduct for Employees of the Executive Branch, when considering what
actions they may take at work for the Postal Service. It is not
necessary to prohibit financial interests in Postal Service contractors
or subcontractors beyond those entities with whom the employee will
actually work in his or her postal capacity. To do so would be overly
broad and would not serve to prevent actual conflicts of interest.
Financial interests in postal contractors and subcontractors also
do not raise appearance concerns in the same way as financial interests
in competitors and publicly traded lessors, which are covered by Sec.
7001.104. While there are only a handful of postal competitors and only
one publicly traded lessor to the Postal Service, there are thousands
of postal contractors and subcontractors. Therefore, the primary
concern addressed by proposed Sec. 7001.104--that there is an
appearance concern for the Governors, the Postmaster General or the
Deputy Postmaster General to hold a financial interest in one of a
handful of Postal Service competitors or in the one publicly traded
lessor of the Postal Service, because of the highly visible nature of
these entities--is not present with regard to the over 11,000
contractors and the multitude of subcontractors, many of whom are not
publicly traded entities, or with regard to those entities with whom
the Postal Service enters into local buy contracts. For example, if a
Governor were to hold a financial interest in a small private company
that has one contract with the Postal Service, so long as that Governor
does not work on postal matters affecting that company, there is no
conflicts concern and the level of appearance concerns is greatly
reduced as compared to if that Governor owned a financial holding in
one of the Postal Service's competitors or the sole publicly-traded
lessor, whose visibility is pronounced. In other words, holding a
financial interest in one of thousands of postal contractors or
subcontractor presents negligible, if any, appearance issues.
The Governors, Postmaster General, and Deputy Postmaster General
already must track, for conflicts of interest purposes, whether they
hold financial interests in any entity that they may affect as part of
their postal duties, and it would be overly burdensome, impractical,
and unnecessary for them to have to track the entire universe of postal
contractors and subcontractors for the purposes of avoiding minimal
appearance concerns. For these reasons, the Postal Service declines to
broaden 5 CFR 7001.104(a)(1) to include a broad blanket prohibition on
holding financial interests in any of the wide universe of contractors
and subcontractors.
III. Expansion of Sec. 7001.104(a)(1)(ii) to Privately Held Lessors
Third, Commenter A recommends that 5 CFR 7001.104(a)(1)(ii)
``should not only prohibit holdings in publicly-traded entities engaged
primarily in the business of leasing real property to the Postal
Service, but also prohibit holdings in privately-held entities engaged
primarily in the business of leasing real property to the Postal
Service.'' The Postal Service declines this expansion of the entities
covered by Sec. 7001.104(a)(1)(ii), as such a prohibition is not
necessary to prevent either an actual or apparent conflict of interest.
The Postal Service contracts with numerous privately-owned lessors
(including many sole proprietors). These private lessors change
frequently, are often relatively small, and are too numerous for
covered individuals to effectively track (though of course the
individuals must continue to track those outside entities who could be
financially impacted as they perform their postal duties for conflicts
analyses). This is in contrast to publicly-traded lessors, of which
there is only one. Commenter A's suggestion is overbroad because it
would require covered individuals to abstain from holding a financial
interest in a private entity even if there is no overlap with the
financial interests of that entity and his or her official postal
duties. If a covered employee holds a financial interest in a private
entity, he or she would already be prohibited from working on a matter
affecting that entity under applicable conflicts rules. That will
continue to be the case--though the Postal Service notes that an actual
conflict is unlikely because the Board of Governors rarely would be
called to address leasing matters.
What the Postal Service intends to address with 5 CFR
7001.104(a)(1)(ii), by prohibiting the covered individuals from holding
a financial interest in the Postal Service's sole publicly traded
lessor, is even the appearance of a conflict. The appearance of holding
a financial interest in that sole, massive lessor is far greater than
the potential appearance of a conflict when holding a financial
interest in an entity that few know exists, such as for example a
small, private, lessor that may potentially be a sole proprietorship,
or have operations in just one small town. By contrast, the public
lessor's sole business is to buy postal properties and sell those
properties back to the Postal Service at a profit. If a covered
individual were to hold a financial interest in that publicly traded
lessor, there could be the appearance that the covered individual has
divided loyalties--in other words, there could be the appearance of a
conflict, even if there was not an actual conflict because the
conflicts rule served its purpose to prevent one. The appearance of a
conflict is what Sec. 7001.104(a)(1)(ii) is designed to prevent.
Holding a financial interest in a private lessor simply does not raise
the same level of appearance concerns or questions regarding divided
loyalties, and thus the Postal Service declines to include such lessors
in the coverage of Sec. 7001.104.
IV. Waivers
Fourth, Commenter A is concerned that the Designated Agency Ethics
Official (DAEO) will not be required to consult with the Office of
Government Ethics (OGE) before issuing waivers of prohibited financial
interests pursuant to Sec. 7001.104(d), which provides that the Postal
Service's DAEO may, for good cause shown, grant a waiver ``of any
prohibited financial interest described in paragraph (a) or (c)(2) or
(3) of this section.''
Although the Postal Service is required to--and does--consult with
OGE when practicable prior to issuing waivers under section 208 (under
5 CFR 2640.303), the Postal Service need not
[[Page 53353]]
consult externally with OGE when it grants a waiver pursuant to its own
Supplemental Standards, which are agency-specific rules that go above
and beyond those rules already required by OGE. The Postal Service is
best positioned to determine whether a waiver under its own
Supplemental Standards is appropriate (unlike with section 208 waivers,
for which OGE is the subject matter expert). That the Postal Service is
empowered to approve waivers under its own Supplemental Standards is
consistent with others agencies' abilities to make similar decisions
under their own supplemental ethics regulations.
V. Section 7001.104(a)(2) Scope
Fifth, Commenter A makes recommendations regarding how the Postal
Service should apply certain of the prohibited holding provisions in
Sec. 7001.104(a). As discussed above, Sec. 7001.104(a)(1) sets forth
the financial interests that are restricted for the Governors (and, as
expanded in this final rule, to the Postmaster General and Deputy
Postmaster General); Sec. 7001.104(a)(2) builds upon that restriction
by noting that such individuals similarly should not ``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 . . . under 18 U.S.C. 208.'' The
provision goes on to explain that the Postal Service does not deem an
individual to ``actively control'' the financial interests of an entity
for purposes of this provision if he or she merely directs the
investment strategy, hires the entity's financial manager who selects
the investments, or designates another employee to select the
investments. Commenter A seems to suggest that the Postmaster General
and Deputy Postmaster General--to whom the final rule applies
restrictions of Sec. 7001.104(a)(1), as suggested by Commenter A--
should have a different standard than the Governors for evaluating when
they ``do[ ] not actively control the financial interests of an
entity'' relating to the Sec. 7001.104(a)(2) restriction.
Specifically, Commenter A suggests that the standards for determining
whether the Postmaster General and Deputy Postmaster General ``actively
control'' the financial interests of an entity ``should be consistent
with 5 CFR 2640.202(e).''
The Postal Service disagrees that the concept of ``active[ ]
control'' in this restriction should be different for the Postmaster
General and Deputy Postmaster General than for the Governors. As
updated consistent with the discussions in this preamble, Sec.
7001.104(a) will place requirements on Governors, the Postmaster
General, and the Deputy Postmaster General to address appearance
concerns. These requirements are above and beyond--and in addition to--
the requirements that all Federal employees are subject to, under
section 208 and the Standards of Ethical Conduct for Employees of the
Executive Branch. Section 208 will continue to control when any real
conflicts of interest are present. Therefore, the restrictions, which
mirror the exemption to section 208 found in 5 CFR 2640.202(e), will
apply to the Postmaster General and Deputy Postmaster General should an
actual conflict arise.
Conversely, Sec. 7001.104(a) is meant to address appearance
concerns, as stated above. A reasonable person with the knowledge that
a Governor, the Postmaster General or the Deputy Postmaster General
actively controls the holdings of entity would have reason to question
the loyalty of that individual when the entity invests in a competitor
or the publicly held lessor. The same cannot be said when the entity
invests in a competitor or the publicly held lessor, but the Governor,
Postmaster General or Deputy Postmaster General does not actively
control the acquisition of or holding of those financial interests, as
described in Sec. 7001.014(a)(2). As such, the standard that Commenter
A suggests should be applied to PG and DPG is simply not necessary
because we do not believe that there are any appearance concerns if the
Postmaster General or the Deputy Postmaster is merely directing the
investment strategy of the entity and hiring the entity's financial
manager, who in turn selects the entity's investment, or designating
another employee of the entity to select the entity's investments.
Because the Postal Service is focused on the appearance of a conflict
as opposed to an actual conflict, the Postal Service will apply Sec.
7001.104(a)(2) in the same manner to the Postmaster General and the
Deputy Postmaster General as it does to the Governors.
VI. Postmaster General Vetting Process
Sixth, Commenter A asks that the ethics review process for the
position of Postmaster General be ``strengthened and enhanced''--
specifically through an accelerated process similar to that used for
Presidential appointees subject to Senate confirmation (``PAS''
nominees), which would require a new Postmaster General to enter into a
written ethics agreement with the DAEO within 30 days of taking office
and adhere to a 90-day time limit for divestiture.
The Postal Service notes that the vetting process for potential
future Postmasters General is outside of the scope of this rulemaking.
Regarding the substance of the commenter's suggestion, the Postal
Service has every confidence in its current protocols for reviewing the
financial interests of incoming Postmasters General, but does note that
it is currently considering an enhanced framework under which
prospective Postmasters General would be reviewed.
VII. Office of Government Ethics Website
Last, Commenter A asks that the Postmaster General's ethics
agreements, and any amendments thereto, be subject to review and
approval by the Director of OGE and made publicly available on OGE's
website, along with the Postmaster General's public financial
disclosure reports and any waivers issued pursuant to 18 U.S.C.
208(b)(1) or by supplemental regulation.
First, with regard generally to what materials are publicly
available on OGE's website, the Postal Service notes that it is not
empowered to make that determination. OGE solely determines what
materials it includes or excludes on its own website, pursuant to
applicable law.
Second, as to the Postmaster General's public financial disclosure
reports, they are already publicly available on OGE's website. While
PAS officials' ethics agreements are available on OGE's website, the
Postmaster General is not a PAS government official. As such, the
Postal Service is not required to have OGE involved in developing an
ethics agreement for the Postmaster General, as OGE is involved for PAS
officials. Moreover, even if the Postmaster General were a PAS
official, the Postal Service is not in the position to choose or
determine what is posted on OGE's website and the question of whether
the Postmaster General should be a PAS official, with all the
requirements those positions entail, is far afield and outside of the
scope of the Postal Service's authority and this rulemaking. Finally,
no other PAS government official's waivers issued pursuant to 18 U.S.C.
208(b)(1) are published on OGE website and the Postal Service declines
to treat the Postmaster General differently by requesting that his or
her waivers be posted to OGE website or, in the case of waivers issued
pursuant to Supplemental Standards, posted on the Postal Service's
website. Notwithstanding the foregoing, the Postal Service notes that
any waiver
[[Page 53354]]
issued pursuant to section 208 to the Postmaster General is available
upon request to the public under that statute and 5 CFR 2640.304(a).
Summary of Commenter B's Comments and Postal Service Responses
Commenter B is a trade association. Commenter B's correspondence
overall expressed optimism. In particular, Commenter B articulated the
hope that the Postal Service's proposed changes to 5 CFR 7001.102 would
positively affect the labor shortage currently faced by highway
contract route (``HCR'') suppliers. Commenter B described the HCR
driver shortage as part of a larger problem faced by the greater
surface transportation industry that uniquely challenges HCR suppliers.
Commenter B identified multiple factors causing the available labor
pool to shrink, including matters both outside of the scope of this
rulemaking and factors within the scope of this rulemaking, addressed
here.
As stated above, Commenter B broadly supported the proposed change
to 5 CFR 7001.102, which would permit a Postal Service employee to seek
concurrent supplemental employment with HCR contractors if the employee
obtained permission from the Ethics Office. Commenter B acknowledged
that removing the outright prohibition on concurrent employment with
the Postal Service and HCR suppliers and instituting a ``case-by-case''
analysis would permit HCR suppliers to hire some Postal Service
employees--those whom the Ethics Office clears for part-time
positions--as opposed to the prior situation, in which HCR suppliers
were prohibited outright from hiring Postal Service employees.
Commenter B hopes that this change would result in a larger pool of
applicants for open HCR driver positions. If finalized, this Commenter
opined, ``the proposed rule would create a more flexible, dynamic
workforce benefitting the transportation of mail throughout the
nation.''
Nevertheless, Commenter B was apprehensive about whether the
proposed approval process would result in delays. Specifically, it
expressed concerns about potential delays caused by (1) the requirement
that a Postal Service employee obtain a statement from the employee's
supervisor for the Ethics Office to consider and (2) the requirement
that the Ethics Office review the Postal Service employee's request and
his or her manager's statement. Essentially, Commenter B opined that
these two requirements would cause undue delay between when the
employee decides to apply for an open supplier position and when he or
she is able to obtain clearance from the Ethics Office to apply.
Commenter B is concerned that these requirements, which would take
time, could jeopardize the Postal Service employee's opportunity for
employment with an HCR contractor because the HCR application process
moves swiftly.
The Postal Service respectfully disagrees with Commenter B's
characterization of the review requirements as delays, which connotes
that the time taken to review is unnecessary. Rather, the Postal
Service posits that the time needed to complete these requirements will
be relatively short and that the perceived negatives of the approval
process are outweighed by its benefits. Specifically, both requirements
are essential for the Ethics Office to determine whether a Postal
Service employee would run afoul of the criminal conflict of interest
statute or other Federal ethics rules if he or she were hired by an HCR
supplier. As to a timeframe for review, the Ethics Office will endeavor
to review these requests within its already established practice of
reviewing all ethics advice matters as quickly as possible and in a
timely manner.
The Postal Service is cognizant of, and wishes to be attentive to,
the needs of the supplier community and the time-sensitive nature of
the application process, and understands that the requirement to obtain
a statement from the employee's manager and approval from the Ethics
Office will lengthen the time that it takes an employee to apply for a
position with a supplier. However, the Ethics Office requires the
information contained in the statement from the employee's manager, and
time to review that information, in order to make a determination about
whether the employee's application would be consistent with the ethics
rules and statutes. And, as stated above, the Ethics Office will
continue to respond as quickly as possible to all requests for review
under this new provision.
In changing the rule from an outright prohibition on supplemental
employment with an HCR to a case-by-case analysis via an approval
process, the Postal Service will permit some Postal Service employees,
as appropriate, to apply for concurrent employment with HCR suppliers--
thus helping to alleviate the HCR driver shortage--while assisting
Postal Service employees with remaining in compliance with the ethics
rules and regulations.
As a final point, Commenter B raised a question regarding 5 CFR
7001.102, about which the Postal Service would like to offer
clarification. Commenter B expressed concern that an employee who is a
prospective applicant with an HCR may have to submit unnecessarily
duplicative applications to the Ethics Office if he or she wished to
work for more than one HCR supplier. In other words, it appears that
Commenter B saw the proposed rule as requiring a Postal Service
employee to submit one request per supplier. However, this is not the
intention of the proposed rule. Postal Service employees seeking
clearance to work for more than one HCR supplier may submit a single
request to the Ethics Office and may obtain a single statement from
their managers in support of that request.
Conclusion
The Postal Service did not receive any other comments other than
those discussed above. For the reasons detailed in the preamble of the
previously-issued Notice of Proposed Rulemaking, the Postal Service is,
with the concurrence of the Office of Government Ethics, issuing the
rule in final with only one change, to expand the coverage of 5 CFR
7001.104(a) to apply to the Postmaster General and the Deputy
Postmaster General.
List 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, amends 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 part 7001 continues to read as follows:
Authority: 5 U.S.C. 7301; 5 U.S.C. Chapter 131; 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
[[Page 53355]]
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 1 to paragraph (a)(2)(ii): United Parcel Service (UPS),
Federal Express (FedEx), Amazon, or DHL offers a part-time job to a
Postal Service 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 2 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 3 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 4 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.
(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
paragraph (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 paragraph (b)(3) of this
section, and will be evaluated under the standard set forth in
paragraph (b)(4) of this section.
Example 5 to paragraph (b)(2): A Postal Service 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 6 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
[[Page 53356]]
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 7 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 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 8 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 9 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 10 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 members of the
Board of Governors
(a) General prohibitions. (1) No member of the Board of Governors,
which includes the Postmaster General, the Deputy Postmaster General,
and the nine appointed Governors of the United States Postal Service,
or any spouse or minor child of any member of the Board of Governors,
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 member of the Board of Governors 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 them under 18 U.S.C. 208. A
member of the Board of Governors 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 member of
the Board of Governors 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
[[Page 53357]]
entity's investments, or designates another employee of the entity to
select the entity's investments. A member of the Board of Governors 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: the board of directors to determine the overall
investment strategy for the company's excess cash, 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 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 her position as
CEO of the company.
Example 2 to paragraph (a)(2): A Deputy Postmaster General is also
on the board of directors of an investment company. The company's
policy is for: the board of directors to determine the overall
investment strategy for the company's excess cash, 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 the CEO and other company management official to oversee
the investment management process, including periodic review of the
company's investment portfolio. This Deputy Postmaster General does not
actively control the financial interests of the investment company in
his position on the board of directors.
(b) Exception. Paragraph (a) of this section does not prohibit any
member of the Board of Governors or spouse or minor child of any member
of the Board of Governors from directly or indirectly acquiring or
holding, or a member of the Board of Governors 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 member of the Board of Governors 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 paragraph (a) of this
section shall be divested, in the case of a Governor, within 90
calendar days of confirmation by the Senate of the Governor's
nomination, and, in the case of a Postmaster General or Deputy
Postmaster General, within 90 calendar days of his or her appointment,
or as soon as possible thereafter if there are restrictions on
divestiture.
(2) Newly-prohibited financial interests following confirmation or
appointment. If a financial interest described in paragraph (a) of this
section becomes prohibited subsequent to the Governor's confirmation or
a Postmaster General or Deputy Postmaster General's appointment:
(i) The member of the Board of Governors 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 member of the Board of 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 member of the Board of
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 or appointment. (i) If a member of the Board of
Governors, or spouse or minor child of any member of the Board of
Governors 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 or the appointment of a Postmaster General or Deputy
Postmaster General:
(A) The member of the Board of Governors 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 member of the Board of Governors 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 a
Governor's confirmation or the appointment of a Postmaster General or
Deputy Postmaster General:
(A) The member of the Board of Governors 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 this paragraph (c), a member of the
Board of Governors 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 member of the Board of Governors, the Postal Service's DAEO may
grant a written waiver to the member of the Board of Governors of any
prohibited financial interest described in paragraph (a) or (c)(2) or
(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 member of
the Board of Governors' 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 member of the Board of Governors 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.
Shelley K. Finlayson,
Acting Director, U.S. Office of Government Ethics.
[FR Doc. 2023-16811 Filed 8-7-23; 8:45 am]
BILLING CODE 7710-12-P