[Federal Register Volume 82, Number 210 (Wednesday, November 1, 2017)]
[Rules and Regulations]
[Pages 50493-50496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23764]


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POSTAL REGULATORY COMMISSION

5 CFR Part 5601

[Docket No. RM2017-4; Order No. 4177]


Supplemental Standards of Ethical Conduct

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is issuing a set of rules that amend existing 
rules related to supplemental standards of ethical conduct for Postal 
Regulatory Commission employees. The rules revise the existing rules in 
order to better conform to Office of Government Ethics standards and 
accurately reflect the Commission's regulatory role under the Postal 
Accountability and Enhancement Act.

DATES: Effective December 1, 2017.

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Background
III. Comments
IV. Commission Analysis
V. Ordering Paragraphs

I. Introduction

    On May 24, 2017, the Postal Regulatory Commission (Commission) 
issued a notice of proposed rulemaking to revise its supplemental 
standards of ethical conduct, 5 CFR part 5601.\1\ On the same day, the 
Commission also issued a notice of proposed rulemaking to revise the 
ethics rules applicable to Commission employees, 39 CFR subpart A of 
part 3000.\2\
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    \1\ 82 FR 23758 (May 24, 2017). The Commission posted this 
document on its Web site on May 19, 2017. Notice of Proposed 
Rulemaking on Amendments to Supplemental Standards of Ethical 
Conduct for Employees of the Postal Regulatory Commission, May 19, 
2017 (Order No. 3906).
    \2\ 82 FR 23766 (May 24, 2017). The Commission posted this 
document on its Web site on May 19, 2017. Order No. 3907, Notice of 
Proposed Rulemaking on Amendments to Ethics Rules, May 19, 2017.
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    Executive branch employees are subject to multiple federal ethics 
laws, regulations issued by the Office of Government Ethics (OGE), and 
executive orders. The supplemental standards of ethical conduct at 
issue in this Order are additional restrictions applicable only to 
Commission employees. These supplemental standards of ethical conduct 
concern prohibited financial interests, prohibited outside employment, 
disqualification when seeking non-federal employment, and prior 
approval to engage in outside employment. For the reasons discussed 
below, the Commission adopts the proposed rules without alteration. OGE 
concurs with the Commission's proposed revisions to 5 CFR part 5601.

II. Background

    In 1991, Executive Order 12674, as amended by Executive Order 
12731, authorized OGE to establish a single, comprehensive, and clear 
set of executive branch standards of ethical conduct.\3\ On August 7, 
1992, OGE published a final rule titled Standards of Ethical Conduct 
for Employees of the Executive Branch (OGE Standards).\4\ The OGE 
Standards, codified at 5 CFR part 2635, became effective February 3, 
1993, and established uniform standards of ethical conduct applicable 
to all executive branch personnel. On August 12, 1993, the Postal Rate 
Commission collaborated with OGE to publish existing 5 CFR part 5601 as 
an interim rule. 58 FR 42839 (Aug. 12, 1993).
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    \3\ See Executive Order No. 12674, 54 FR 15159 (Apr. 12, 1989); 
Executive Order No. 12731, 55 FR 42547 (Oct. 17, 1990).
    \4\ See 57 FR 35006-35067, as corrected at 57 FR 48557 (Oct. 27, 
1992), 57 FR 52583 (Nov. 4, 1992), and 60 FR 66857-66858 (Dec. 27, 
1995).
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    In 2006, the Postal Accountability and Enhancement Act (PAEA), 
Public Law 109-435, 120 Stat. 3198 (2006) changed the agency's name 
from the Postal Rate Commission to the Postal Regulatory Commission and 
made several changes to the Commission's regulatory role. Order No. 
3906 at 2-3. The supplemental standards of ethical conduct, existing 5 
CFR part 5601, have never been amended or finalized since their 1993 
adoption and remain attributed to the Postal Rate Commission. The 
PAEA's changes to the Commission's responsibilities drive the need to 
modernize the Commission's supplemental standards of ethical conduct. 
Moreover, experience has informed the Commission's view regarding 
linguistic and organizational revisions to clarify the supplemental 
standards of ethical conduct.

III. Comments

    The Commission received two sets of comments pertaining to the 
proposed revisions to the supplemental standards of ethical conduct and 
the Commission's ethics rules.
    Sum Comments. The Commission received the following comment through 
the www.federalregister.gov Web site: ``Any deletion of ethical conduct 
would not be in the best interest of the American people due to 
transparency.'' \5\
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    \5\ Comment Received from Beth Sum, June 19, 2017 (Sum 
Comments). For transparency, this comment was posted to the 
Commission's Web site and associated with this docket.
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    PR Comments. The Public Representative supports the proposed 
revisions.\6\ He deems it ``critical that the

[[Page 50494]]

Commission's ethics rules accurately reflect its role as a regulator 
and are reflective of the agency's procedures.'' PR Comments at 2. He 
concludes that the proposed revisions serve the public interest, 
reinforce public perception of the Commission's integrity, and increase 
accessibility and transparency. Id. He states that the proposed 
revisions ``ensure that financial holdings and outside employment do 
not result in the appearance of or in actual conflicts of interest.'' 
Id. at 3. He observes that the proposed deletions are primarily 
editorial revisions made to delete duplicative and outdated sections. 
Id. He notes that the proposed deletions will not limit the ethical 
obligations of Commission employees. Id.
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    \6\ Public Representative Comments on Notices of Proposed 
Rulemaking on Amendments to Ethics Rules and Amendments to 
Supplemental Standards of Ethical Conduct for Employees of the 
Postal Regulatory Commission, June 26, 2017 (PR Comments). The 
Public Representative also filed a motion for late acceptance of his 
comments. Motion of Public Representative for Late Acceptance of 
Comments, June 26, 2017 (Motion). The Motion is granted.
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IV. Commission Analysis

    Neither commenter suggested changes to the proposed rules. The 
Public Representative supports the proposed rules. Id. at 2-3. In 
response to the concern expressed in the Sum Comments, the Commission 
reiterates its commitment to upholding the highest ethical standards. 
As executive branch employees, Commission employees remain subject to 
several statutes governing conflicts of interests (see, e.g., 18 U.S.C. 
201-219); the standards of ethical conduct appearing in Executive Order 
12674, as amended by Executive Order 12731; and regulations promulgated 
by OGE relating to several issues including financial disclosure, the 
standards of ethical conduct, and post-employment conflicts of interest 
(see, e.g., 5 CFR parts 2634, 2635, and 2641). Commission employees are 
also subject to the Commission's ethics rules, 39 CFR subpart A of part 
3000, which are also being revised to reflect the Commission's modern 
regulatory role under the PAEA and to remove duplicative and outdated 
provisions.\7\ The regulations at issue in this Order, the supplemental 
standards of ethical conduct applicable to Commission employees only, 
concern restrictions imposed upon Commission employees in addition to 
these laws and standards. The proposed revisions remain consistent with 
these laws and do not abrogate their application in any way. 
Streamlining the Commission's supplemental standards of ethical conduct 
supports OGE's mission to establish a single, comprehensive, and clear 
set of executive branch standards of ethical conduct in accordance with 
Executive Order 12731. The proposed revisions will not lead to any 
reduction in the ethical obligations of Commission employees. 
Ultimately, the proposed revisions will enhance the Commission's 
adherence to ethical conduct by more accurately reflecting the 
Commission's modern regulatory role under the PAEA.
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    \7\ Order No. 4178, Order Amending Ethics Rules, October 25, 
2017.
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    The proposed rules clarify the bounds of ethical conduct in several 
ways, including linguistic and organizational revisions to delete 
duplicative and outdated language as well as to improve the specificity 
of the provisions. For instance, the definition of ``affected persons'' 
used in existing Sec.  5601.101(b) is being incorporated into proposed 
Sec.  5601.102. Existing Sec.  5601.101(b)'s non-exhaustive list of 
categories of prohibited financial interest are being restructured to 
form specific categories upon which the Commission will develop a 
prohibited securities list (PSL) applicable to Commission staff (and 
their spouses and dependent children). Based on years of experience 
with the existing rules, the Commission believes that developing the 
PSL will assist employees to identify financial holdings that may pose 
(or appear to pose) a financial conflict of interest. Having the PSL 
available to employees as a reference before purchasing securities will 
improve transparency and adherence to ethical standards. The six 
categories underlying the PSL properly reflect the Commission's modern 
regulatory role under the PAEA and are consistent with the laws 
prohibiting actual or apparent financial conflicts of interests. See 
Order No. 3906 at 7-12.
    The proposed revisions also improve the procedures related to the 
supplemental standards of ethical conduct. Proposed Sec. Sec.  5601.101 
and 5601.102 define additional terms and provide specific procedures 
related to exceptions, newly prohibited securities, new employees, 
acquisition of prohibited securities without specific intent, 
divestiture, and waiver. Proposed Sec. Sec.  5601.103 and 5601.104 
improve the procedures concerning employees that are seeking employment 
or prior approval for outside employment to better ensure any 
disqualification is prompt and appropriate. Therefore, the proposed 
revisions improve transparency and the ability of Commission employees 
to adhere to the highest ethical standards.
    For these reasons and those reasons detailed in Order No. 3906, the 
Commission adopts the proposed rules without changes.

V. Ordering Paragraphs

    It is ordered:
    1. Part 5601 of title 5, Code of Federal Regulations, is amended as 
set forth below the signatures of this Order effective 30 days after 
the date of publication of this Order in the Federal Register.
    2. The Secretary shall arrange for publication of this Order in the 
Federal Register.

List of Subjects in 5 CFR Part 5601

    Conflicts of interests.

    By the Commission.
Stacy L. Ruble,
Secretary.
    By the Office of Government Ethics.
David J. Apol,
Acting Director and General Counsel, Office of Government Ethics.


0
For the reasons discussed in the preamble, the Commission amends 
chapter XLVI of title 5 of the Code of Federal Regulations by revising 
part 5601 to read as follows:

PART 5601--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES 
OF THE POSTAL REGULATORY COMMISSION

Sec.
5601.101 General.
5601.102 Prohibited financial interests.
5601.103 Notice of disqualification when seeking employment.
5601.104 Prohibited outside employment.
5601.105 Prior approval for outside employment.

    Authority:  5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government 
Act of 1978); 39 U.S.C. 503; E.O. 12674, 54 FR 15159, 3 CFR, 1989 
Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 
Comp., p. 306; 5 CFR 2635.105, 2635.403(a), 2635.802(a), 2635.803.


Sec.  5601.101  General.

    (a) Purpose. In accordance with Sec.  2635.105 of this title, the 
regulations in this part apply to employees, including Commissioners, 
of the Postal Regulatory Commission (Commission) and supplement the 
Standards of Ethical Conduct for Employees of the Executive Branch 
contained in part 2635 of this title. In addition, the executive branch 
financial disclosure regulations contained in part 2634 of this title, 
additional regulations on responsibilities and conduct at part 735 of 
this title, and Commission-specific provisions contained in 39 CFR part 
3000 apply to Commission employees.
    (b) Definitions. For the purposes of this part:
    (1) The term securities includes an interest in debt or equity 
instruments.

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The term includes, without limitation, secured and unsecured bonds, 
debentures, notes, securitized assets, and commercial paper, as well as 
all types of preferred and common stock. The term encompasses both 
current and contingent ownership interests, including any beneficial or 
legal interest derived from a trust. It extends to any right to acquire 
or dispose of any long or short position in such securities and 
includes, without limitation, interests convertible into such 
securities, as well as options, rights, warrants, puts, calls, and 
straddles with respect thereto.
    (2) The term parent means a company that possesses, directly or 
indirectly, the power to direct or cause the direction of the 
management and policies of an entity identified in Sec.  5601.102 
(b)(1)(i) through (v).
    (3) The term person means an individual, corporation and 
subsidiaries it controls, company, association, firm, partnership, 
society, joint stock company, or any other organization or institution, 
including any officer, employee, or agent of such person or entity. For 
purposes of this part, a corporation will be deemed to control a 
subsidiary if it owns 50 percent or more of the subsidiary's voting 
securities. The term is all-inclusive and applies to commercial 
ventures and nonprofit organizations as well as to foreign, State, and 
local governments, including the Government of the District of 
Columbia. It does not include any agency or other entity of the Federal 
Government or any officer or employee thereof when acting in his 
official capacity on behalf of that agency or entity.
    (4) The term entity means person.
    (5) The term DAEO means the Designated Agency Ethics Official, or 
his delegate under Sec.  2638.601 of this title.
    (6) The term employment means any form of non-Federal employment or 
business relationship involving the provision of personal services by 
the employee. It includes but is not limited to personal services as an 
officer, director, employee, agent, attorney, consultant, contractor, 
general partner or trustee. Employment does not include participation 
in the activities of a nonprofit charitable, religious, professional, 
social, fraternal, educational, recreational, public service or civic 
organization unless such activities involve the practice of a 
profession within the meaning of Sec.  2636.305(b)(1) of this title, 
including the giving of professional advice, or are for compensation, 
other than reimbursement of expenses.
    (7) The term publicly held corporation means any corporation 
issuing any class of common equity securities required to be registered 
under section 12 of the Securities Exchange Act of 1934.
    (8) The term dependent child means when used with respect to any 
reporting individual, any individual who is a son, daughter, stepson, 
or stepdaughter and who:
    (i) Is unmarried, under age 21, and living in the household of the 
reporting individual; or
    (ii) Is a dependent of the reporting individual within the meaning 
of section 152 of the Internal Revenue Code of 1986, 26 U.S.C. 152.


Sec.  5601.102  Prohibited financial interests.

    (a) General prohibition. No employee, and no spouse or dependent 
child of an employee, shall acquire or hold any securities issued by an 
entity on the prohibited securities list described in paragraph (b) of 
this section.
    (b) Prohibited securities list. At least once a year, the 
Commission will publish and distribute to employees a list of entities 
whose securities an employee or the spouse or dependent child of an 
employee may not own.
    (1) The list shall include:
    (i) An entity participating in a proceeding before the Commission 
in the last 4 years, e.g., complainants, appellants, intervenors, and 
entities filing comments on the record in Commission proceedings;
    (ii) A party to a proceeding to which the Commission is a party, 
e.g., appellate proceedings, administrative proceedings, or civil 
actions;
    (iii) An entity primarily engaged in the business of delivering 
packages, merchandise, or written communications, i.e., an entity whose 
primary business competes with the Postal Service;
    (iv) An entity providing services or products to the Postal Service 
that can be expected to produce annual revenue:
    (A) to a publicly held corporation exceeding $1,000,000, and if the 
entity reports its gross revenue publicly, exceeding 10 percent of its 
annual gross revenue; or
    (B) to any other entity exceeding $100,000, and if the entity 
reports its gross revenue publicly, exceeding 5 percent of the entity's 
annual gross revenue;
    (v) Any other entities not listed above for which a Commission 
employee holding a security may raise an actual or apparent loss of 
impartiality affecting the integrity of the Commission's programs and 
operations, e.g., entities primarily engaged in the business of 
publishing or distributing publications such as periodicals or sending 
advertising, promotional, or other material on behalf of itself or 
another entity through the mails; and
    (vi) The parent corporation of any subsidiary described in 
paragraphs (b)(1)(i) through (v) of this section.
    (2) The list shall not include an entity whose use of the mail is 
merely an incidental or minor factor in the general conduct of its 
business.
    (c) Exception. Nothing in this section prohibits an employee, or 
the spouse or dependent child of an employee, from acquiring or holding 
an interest in a publicly traded or publicly available mutual fund or 
other collective investment fund, or in a widely held pension or mutual 
fund, provided that the fund's prospectus or practice does not indicate 
the stated objective of concentrating its investments in entities 
identified in paragraphs (b)(1)(i) through (vi) of this section.
    (d) Newly prohibited securities or new employees. Within 30 days 
after the Commission disseminates the prohibited securities list to an 
employee, an employee who owns, or whose spouse or dependent child 
owns, prohibited securities shall report that ownership to the DAEO. 
The employee's report must be in writing and include the name of the 
prohibited security and the date of acquisition. Except as provided in 
paragraph (g) of this section, the employee, or the spouse or dependent 
child of the employee, shall divest prohibited securities within 90 
days after dissemination of the prohibited securities list.
    (e) Securities acquired without specific intent. Within 30 days 
after an employee, or the spouse or dependent child of an employee, 
acquires securities of an entity on the prohibited securities list as a 
result of marriage, inheritance, gift or otherwise without specific 
intent to acquire the securities, the employee shall report the 
acquisition to the DAEO. The employee's report must be in writing and 
include the name of the prohibited security, the date of acquisition, 
and the method of acquisition. Except as provided in paragraph (g) of 
this section, an employee, or the spouse or dependent child of an 
employee, shall divest prohibited securities within 90 days after the 
date of acquisition.
    (f) Divestiture--(1) Procedure for accomplishing divestiture. To 
alleviate an actual or apparent conflict of interest, an employee 
divesting prohibited securities shall obtain written confirmation from 
the DAEO that divesture has been accomplished. A request for such 
confirmation shall be submitted in writing with sufficient proof to 
enable the DAEO to confirm that the employee has divested the

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prohibited security. The employee shall continue to be recused until 
the date of the DAEO's written confirmation that divesture has been 
accomplished.
    (2) Extension of period to divest. Upon a showing of undue 
hardship, the DAEO may extend the 90 day period for divestiture 
specified in paragraphs (e) through (f) of this section.
    (3) Disqualification pending divestiture. Pending divestiture of 
prohibited securities, an employee must disqualify himself or herself, 
in accordance with Sec.  2635.402 of this title, from participation in 
particular matters which, as a result of continued ownership of the 
prohibited securities, would affect the financial interests of the 
employee, or those of the spouse or dependent child of the employee.
    (g) Waivers. The DAEO may grant a written waiver from this section 
based on a determination that the waiver is not inconsistent with part 
2635 of this title or otherwise prohibited by law and that, under the 
particular circumstances, application of the prohibition is not 
necessary to avoid the appearance of an employee's misuse of position 
or loss of impartiality, or to otherwise ensure confidence in the 
impartiality and objectivity with which the Commission's programs are 
administered, or in the case of a special Government employee, 
divestiture would result in substantial financial hardship. A waiver 
under this paragraph must be in writing and may impose conditions, such 
as requiring execution of a written disqualification.


Sec.  5601.103  Notice of disqualification when seeking employment.

    (a) An employee who has been assigned to or is supervising work on 
a particular matter that affects the financial interests of a 
prospective employer and who is required, in accordance with Sec.  
2635.604(a) of this title, to disqualify himself or herself from 
participation in that matter shall provide written notice of 
disqualification to the DAEO within 3 business days. The DAEO shall 
inform the employee's supervisor that the employee is disqualified from 
the matter. Public filers must comply with the notification requirement 
set forth in Sec.  2635.607 of this title even when not required to 
disqualify from participation in a particular matter. Employees who 
file a notification statement in compliance with Sec.  2635.607 of this 
title are not required to file a separate notice under this section.
    (b) An employee may withdraw written notice under paragraph (a) of 
this section upon determining that disqualification from participation 
in the matter is no longer required. A withdrawal of disqualification 
shall be in writing and shall be provided to the DAEO. The DAEO shall 
inform the employee's supervisor that the employee is no longer 
disqualified from the matter.


Sec.  5601.104  Prohibited outside employment.

    An employee shall not engage in outside employment, either on a 
paid or unpaid basis, with or for an entity on the prohibited 
securities list described in Sec.  5601.102(b)(1)(i) through (vi).


Sec.  5601.105  Prior approval for outside employment.

    (a) Prior approval for outside employment. An employee who wishes 
to engage in outside employment, either on a paid or unpaid basis, 
shall obtain the prior written approval of the DAEO. A request for such 
approval shall be submitted in writing with sufficient description of 
the employment to enable the DAEO to give approval based on an informed 
determination that the outside employment is not expected to involve 
conduct prohibited by statute or Federal regulation, including 
paragraph (a) of this section and part 2635 of this title. The DAEO 
shall provide a copy of any written approvals for outside employment to 
the employee's supervisor.
    (b) Scope of approval. An employee must submit a new request for 
approval upon either a significant change in the nature or scope of the 
outside employment or a change in the employee's Commission position or 
assigned responsibilities.

[FR Doc. 2017-23764 Filed 10-31-17; 8:45 am]
 BILLING CODE 7710-FW-P