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[Federal Register Volume 60, Number 58 (Monday, March 27, 1995)]
[Proposed Rules]
[Pages 15700-15703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7469]

     
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Proposed Rules
                                                Federal Register
________________________________________________________________________

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

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Federal Register / Vol. 60, No. 58 / Monday, March 27, 1995 / 
Proposed Rules

[[Page 15700]]

POSTAL SERVICE

5 CFR Chapter LX

RIN 3209-AA04

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

AGENCY: Postal Service.

ACTION: Proposed rule.

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SUMMARY: The United States Postal Service, with the concurrence of the 
Office of Government Ethics (OGE), proposes to issue regulations 
applicable to employees of the Postal Service to supplement the 
Standards of Ethical Conduct for Employees of the Executive Branch 
issued by OGE. The proposed rule, which addresses ethical issues unique 
to the Postal Service, would prohibit certain outside activities and 
would require prior approval for employees to engage in other specified 
outside employment or activities.

DATES: Comments must be received on or before May 26, 1995.

ADDRESSES: Send comments to Chief Counsel, Ethics and Information Law, 
United States Postal Service, 475 L'Enfant Plaza, SW, Washington, DC 
20260-1110. Copies of all written comments will be available for 
inspection and photocopying between 9 a.m. and 4 p.m., Monday through 
Friday, in Room 6427, at the above address.

FOR FURTHER INFORMATION CONTACT: Mitchell J. Benowitz, Ethics and 
Information Law, Postal Service, (202) 268-2967.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 7, 1992, the Office of Government Ethics published new 
Standards of Ethical Conduct for Employees of the Executive Branch 
(Standards), now codified at 5 CFR part 2635. See 57 FR 35006-35067, as 
corrected at 57 FR 48557 and 52583, with additional grace-period 
extensions at 59 FR 4779-4780 and 60 FR 6390-6391. The Standards, which 
became effective on February 3, 1993, set uniform ethical conduct 
standards applicable to all executive branch personnel.
    Under 5 CFR 2635.105, agencies may issue, with the concurrence of 
OGE, agency-specific regulations supplementing 5 CFR part 2635 as 
necessary to fulfill the purposes of that part in light of the agency's 
particular programs and operations. The Postal Service, with OGE's 
concurrence, has determined that the following proposed supplemental 
regulations, to appear in new 5 CFR chapter LX, consisting of part 
7001, are necessary to the successful implementation of its ethics 
program.
    The OGE regulations in 5 CFR part 2635 superseded many provisions 
of the Code of Ethical Conduct for Postal Employees (Code), 39 CFR part 
447, including many of its restrictions on outside employment at 39 CFR 
447.23 that do not involve compensated outside employment 
relationships. Certain other provisions of the Code that prohibited the 
holding of specified financial interests, 39 CFR 447.22(b)(1)-(7), and 
those provisions of 39 CFR 447.23 that involve compensated outside 
employment relationships, remained temporarily in effect pursuant to 
the note following 5 CFR 2635.403(a), as extended at 59 FR 4779-4780 
and 60 FR 6390-6391.
    The supplemental regulations will include restrictions on outside 
employment similar to many of those that were or continue to be in 
effect under 39 CFR 447.23. Upon further consideration of the 
prohibited financial interest provisions of 39 CFR 447.22(b)(1)-(7) in 
light of the uniform regulations concerning conflicting interests 
codified in 5 CFR 2635.401-2635.403, and other provisions of part 2635, 
the Postal Service has concluded that these financial interest 
prohibitions should not be retained. These provisions will be repealed 
in a separate document amending 39 CFR part 447 to remove outdated 
provisions, which will be published concurrently with the final rule 
adopting supplemental regulations.
II. Analysis of the Regulations

Section 7001.101  General

    Section 7001.101 explains that the regulations contained in the 
proposed rule apply to all employees of the Postal Service and are 
supplemental to the uniform executive branch standards. Postal Service 
employees also are subject to the Standards at 5 CFR part 2635, the 
executive branch financial disclosure regulations at 5 CFR part 2634, 
and additional rules of conduct published in Postal Service regulations 
and manuals.

Section 7001.102  Restrictions on Outside Employment and Business 
Activities

    Under 5 CFR 2635.802(a), agencies are authorized to issue 
supplemental regulations prohibiting employees from engaging in outside 
employment or activities that conflict with their official duties. 
Under 5 CFR 2635.803, agencies are authorized to issue supplemental 
regulations requiring employees to obtain prior approval before they 
engage in outside employment or other outside activities.
    (a) Prohibited outside employment and business activities.
    Under 39 CFR 447.23(a)(1), the Postal Service previously has 
prohibited its employees from manufacturing or representing a 
manufacturer of any product produced for exclusive use by the Postal 
Service or required for use by its customers. Proposed 
Sec. 7001.102(a)(1)(i) would refine and continue this prohibition, 
adding an express reference to working for manufacturers of postal 
employee uniforms. The involvement of Postal Service employees in such 
activities could cause members of the public to question the 
impartiality and objectivity with which Postal Service programs are 
administered, because it could create the appearance that the 
employees, or the persons they represent or with whom they otherwise 
are affiliated, are in a position to benefit from knowledge or 
influence gained by the employees through their official positions.
    Under 39 CFR 447.23(a)(3), the Postal Service previously has 
prohibited employees from engaging in employment that involves the 
delivery of mail to the postal facility in which the employee works, or 
to a facility within the delivery area of the post office in which the 
employee works, if such employment required the employee to conduct 
business with other employees performing the same type of duties. In 
proposed Sec. 7001.102(a)(1)(ii), the rule would be revised to prohibit 
any employment [[Page 15701]] involving the delivery of mail for a 
postal contractor to the specified facilities, without regard to the 
nature of the employee's duties. The revision is intended to simplify 
the rule. Although the revision would create a somewhat broader 
prohibition, the Postal Service has concluded that the involvement of 
employees in the delivery of mail at or near their official workplace 
might lead reasonable persons to be concerned that the employees' 
outside employers are receiving preferential treatment from the Postal 
Service.
    Under 39 CFR 447.23(a)(4), the Postal Service previously has 
prohibited employees from acting as ``consultants'' for current or 
potential Postal Service contractors. Such activity could lead members 
of the public to be concerned that the employees are using knowledge or 
influence gained through their official positions to benefit their 
outside employers. Proposed Sec. 7001.102(a)(1)(iii) would provide a 
similar prohibition, but because the term ``consultants'' did not 
clearly define the activity subject to the prohibition, the new section 
would apply to ``consultation, advice, or any subcontracting service.'' 
In addition, proposed Sec. 7001.102(a)(1)(iii) would apply to such 
services only when rendered ``with respect to the operations, programs, 
or procedures of the Postal Service.'' This limitation has been 
included to make clear that an employee would not be prohibited from 
consulting with a business that happens to hold a Postal Service 
contract when the employee's consulting work is not related to that 
contract and does not have any other postal connection. Under such 
circumstances the employee would not be expected to gain any personal 
benefit, or to provide any benefit for the outside business, from 
knowledge or influence arising from his or her official position. As 
explained below, another proposed provision, Sec. 7001.102(b)(1), may 
require the employee to obtain prior approval before engaging in any 
employment, including consulting work, with a business that depends 
heavily on postal contracts.
    Under 39 CFR 447.23(g), the Postal Service previously has 
prohibited employees from engaging in employment with a private 
business that delivers mailable matter. Proposed 
Sec. 7001.102(a)(1)(iv) would continue the prohibition, and also would 
specify that working for a commercial mail receiving agency--an agency 
registered under Domestic Mail Manual D042.2.5 to receive mail from the 
Postal Service for delivery to others--would be included in this 
prohibition. Unlike most Federal agencies, the Postal Service must 
compete with certain private businesses. The new section would prohibit 
employees from working for such businesses because the outside 
employment might lead members of the public to question the employees' 
loyalty to the Postal Service, thereby undermining public confidence in 
the integrity of postal operations. This type of concern is not 
presented by postal employees having outside employment delivering 
daily newspapers, which is not prohibited.
    Under 39 CFR 447.23(a)(5), the Postal Service previously has 
prohibited employees from engaging in any sales activity while on duty, 
in uniform, or in the office where the employee is stationed. Proposed 
Sec. 7001.102(a)(2) would continue this prohibition, but would extend 
it to cover sales activities at any postal facility. The prohibition is 
intended to prevent employees from using influence derived from their 
official positions as an aid to sales activities, and experience has 
shown that employees may exert such influence at postal facilities 
other than their own. Under 5 CFR 2635.702, employees must not use 
public office for their own private gain or for the benefit of others 
such as any business with which they are affiliated. The Postal Service 
considers that a more explicit, supplemental rule is needed to deal 
with sales activities in the workplace or in uniform, whether or not 
the employee who would engage in the sales activity is on duty.
    (b) Prior approval for outside employment and business activities. 
Under 39 CFR 447.23(a)(2), the Postal Service previously has prohibited 
employees from engaging in employment with persons with whom they have 
dealings in their official capacities. Proposed Sec. 7001.102(b)(1)(i) 
would instead require employees to obtain approval before engaging in 
such employment or business activities. Although there are situations 
in which outside activities involving such persons would raise issues 
under 5 CFR part 2635, the duties of many Postal Service employees, 
such as clerks and letter carriers, might bring them into limited 
contact with a variety of outside businesses, including large, 
diversified corporations. Prohibiting such employees from being 
employed in any phase of a business, merely because the business's mail 
touches their hands, would be unduly restrictive. Therefore, the Postal 
Service considers a prior approval requirement more appropriate than a 
prohibition for this type of outside employment and, under 5 CFR 
2635.803, has proposed the prior approval requirement at 
Sec. 7001.102(b)(1)(i). The review required by the approval process can 
be expected to identify those employment relationships that would 
present ethical conduct concerns under 5 CFR part 2635.
    Under 39 CFR 447.23(a)(6), the Postal Service previously has 
prohibited employees from engaging in outside employment with (1) 
persons whose business interests are substantially dependent upon, or 
may be significantly affected by, postal rates, fees, or 
classifications; and (2) persons whose interests are substantially 
dependent on providing goods or services to, or for use in connection 
with, the Postal Service. Proposed Sec. 7001.102(b)(1)(ii) would 
require employees to obtain prior approval before engaging in such 
employment or business activities. Definitions of the outside 
businesses to which the prior approval requirement would apply are 
provided in Sec. 7001.102(c)(2) and (c)(3). Whether such outside 
employment or business activities should be approved will usually 
depend upon the relationship between the particular postal employee's 
official duties and the operations or interests of the outside 
business. Therefore, the Postal Service considers that a prior approval 
requirement is the appropriate mechanism to bring to light and address 
outside relationships that are likely to raise ethical conduct issues 
under 5 CFR part 2635.
    Proposed Sec. 7001.102(b)(2) would set forth the procedure by which 
employees may request approval to engage in outside employment or 
business activities for which prior approval is required. The standard 
for approval would be set forth in proposed Sec. 7001.102(b)(3). Under 
this standard, approval could be granted only when it is determined 
that the outside employment or business activity will not involve 
conduct prohibited by law or Federal regulation. Because requests for 
prior approval might involve situations where the employee's conduct 
could violate the principle that employees shall endeavor to avoid any 
actions creating the appearance that they are violating the law or the 
standards set forth in 5 CFR part 2635, the approval standard includes 
a specific reference to 5 CFR 2635.101(b)(14).
    Proposed Sec. 7001.102(c)(1) would provide a definition of 
``outside employment or business activity.'' The definition would 
clarify that the regulations cover those who would engage in business 
as a principal--as proprietor, general partner, director, or holder of 
a franchise--as well as to [[Page 15702]] those who would serve a 
business as employee, contractor, or the like. Under the proposed 
definition, an employee would not, simply by holding shares in a 
publicly held corporation, be engaged in employment or business 
activity with or on behalf of that corporation.

Section 7001.103  Statutory Prohibition Against Interests in Contracts 
To Carry Mail and Acting as Agent for Contractors

    Proposed Sec. 7001.103 would provide notice to Postal Service 
employees that certain interests in, and conduct in connection with, 
mail transportation contracts are prohibited by a criminal statute, 18 
U.S.C. 440. The section is for purposes of notification only. Neither 
the Postal Service nor OGE has issued regulations interpreting this 
statutory prohibition.

III. Matters of Regulatory Procedure

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

List of Subjects in 5 CFR Part 7001

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

    Dated: March 8, 1995.
Mary S. Elcano,
General Counsel and Vice President, United States Postal Service.

    Approved: March 15, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.

    For the reasons set forth in the preamble, the United States Postal 
Service, with the concurrence of the Office of Government Ethics, is 
proposing to amend title 5 of the Code of Federal Regulations by adding 
a new chapter LX, consisting of part 7001, as follows:

Chapter LX--United States Postal Service

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

Sec.
7001.101  General.
7001.102  Restrictions on outside employment and business 
activities.
7001.103  Statutory prohibition against interests in contracts to 
carry mail and acting as agent for contractors.

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

Sec. 7001.101  General.

    In accordance with 5 CFR 2635.105, the regulations in this part 
supplement the Standards of Ethical Conduct for Employees of the 
Executive Branch contained in 5 CFR part 2635, as applied to employees 
of the United States Postal Service (Postal Service). Postal Service 
employees are subject, in addition to the standards in 5 CFR part 2635 
and this part, to the executive branch financial disclosure regulations 
contained in 5 CFR part 2634, and to any rules of conduct issued 
separately by the Postal Service, including but not limited to, 
regulations contained in 39 CFR part 447, the Postal Service Employee 
and Labor Relations Manual, and the Postal Service Procurement Manual.

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 with or for 
a person, including oneself, engaged in:
    (i) The manufacture of any uniform or other product required by the 
Postal Service for use by its employees or customers;
    (ii) The transportation of mail under Postal Service contract to or 
from the postal facility at which the employee works, or to or from a 
postal facility within the delivery area of a post office in which the 
employee works;
    (iii) Providing consultation, advice, or any subcontracting 
service, with respect to the operations, programs, or procedures of the 
Postal Service, to any person who has a contract with the Postal 
Service or who the employee has reason to believe will compete for such 
a contract; or
    (iv) The operation of a commercial mail receiving agency registered 
with the Postal Service, or the delivery outside the mails of any type 
of mailable matter, except daily newspapers; or
    (2) Engage in any sales activity, including the solicitation of 
business or the receipt of orders, for oneself or any other person, 
while on duty or in uniform, or at any postal facility.
    (b) Prior approval for outside employment and business activities--
(1) Requirement for approval. A Postal Service employee shall obtain 
approval, in accordance with paragraph (b)(2) 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; or
    (ii) Engaging in outside employment or business activities, with or 
for a person, including oneself, whose interests 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.
    (2) Submission and contents of request for approval. An employee 
who wishes to engage in outside employment or business activities for 
which prior approval is required by paragraph (b)(1) of this section 
shall submit a written request for approval to the Postal Service 
Ethical Conduct Officer or appropriate delegate. 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 Ethical Conduct 
Officer or delegate that is needed to determine whether approval should 
be granted.
    (3) 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 activity 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) Definitions. For purposes of this section: [[Page 15703]] 
    (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) 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 second-class 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 business that depends substantially upon the 
mails for the solicitation or receipt of orders for, or the delivery 
of, goods or services; or
    (iv) Who is, or within the past 4 years has been, a party to a 
proceeding before the Postal Rate Commission.
    (3) 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 with the Postal 
Service that can be expected to provide revenue exceeding $100,000 over 
the term of the contract and that provides five percent or more of the 
person's gross income for the person's current fiscal year; or
    (ii) Substantially engaged in the business of preparing items for 
others for mailing through the Postal Service.

Sec. 7001.103  Statutory prohibition against interests in contracts to 
carry mail and acting as agent for contractors.

    Section 440 of title 18, United States Code, makes it unlawful for 
any Postal Service employee to become interested in any contract for 
carrying the mail, or to act as agent, with or without compensation, 
for any contractor or person offering to become a contractor in any 
business before the Postal Service.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 95-7469 Filed 3-24-95; 8:45 am]
BILLING CODE 7710-12-P
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