[Federal Register Volume 66, Number 37 (Friday, February 23, 2001)]
[Proposed Rules]
[Pages 11242-11243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-4432]


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POSTAL RATE COMMISSION

39 CFR Part 3000

[Docket No. RM2001-1; Order No. 1303]


Proposed Revision to Standards of Conduct

AGENCY: Postal Rate Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission proposes eliminating an ethics provision on 
procedures for reviewing employees' security holdings for conflicts of 
interest. These procedures have been overtaken by government-wide 
ethical standards and new screening procedures. Eliminating this 
provision will prevent confusion in the administration of the 
Commission's ethics program.

DATES: Submit comments on or before March 26, 2001.

ADDRESSES: Send comments to Margaret P. Crenshaw, Secretary, Postal 
Rate Commission, 1333 H Street NW., Suite 300, Washington, DC 20268-
0001.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, 202-789-6820.

SUPPLEMENTARY INFORMATION: Currently, the Commission's standards of 
conduct [39 CFR part 3000] contain a de minimis rule. The de minimis 
rule provides that security interests held by a Commission employee 
that are valued below a certain amount will receive a different level 
of scrutiny for conflicts of interest than security interests valued 
above the specified amount. The Commission invites the public to 
comment on its proposal to delete its de minimis rule.

Rationale for the Proposed Change

    Currently, rule 103(b) of the Commission's standards of conduct [39 
CFR 3000.735-103(b)] requires the chairman of the Commission to 
determine an appropriate maximum limit on the value of an interest that 
a Commission employee may have in stocks, bonds, or other form of 
securities in any one entity. It authorizes the chairman to 
specifically approve maintaining a security interest above the maximum 
limit, if he determines that the interest is not so substantial as to 
be likely to affect the integrity of the service that the employee 
provides to the Commission.
    The Commission finds that this procedure for screening security 
holdings for potential conflicts of interest has become redundant under 
the Commission's current screening procedures. Furthermore, 5 CFR part 
2640 contains de minimis exemptions from the conflict of interest rules 
that are intended to govern federal agencies generally. This regulation 
was promulgated by the Office of Government Ethics (OGE) subsequent to 
the Commission's adoption of rule 103(b). The OGE has advised the 
Commission that its generally applicable de minimis exemptions 
supercede rule 103(b).

Original Purpose of the De Minimis Rule

    The Commission's standards of conduct prohibit its employees from 
having a financial interest in companies ``whose interests may be 
significantly affected by rates of postage, fees for postal services, 
the classification of mail, or the operation of the Postal Service.'' 
Conversely, they allow Commission employees to have a financial 
interest in companies ``whose use of the mail is merely an incidental 
or minor factor in the general conduct of its business.'' See 39 CFR 
3000.735-103(a).
    More than 25 years ago, the Commission's general counsel set up 
internal guidelines for applying rule 103 that used a three-part test 
to analyze financial conflicts of interest. Some interests were 
categorized as conflicts per se, others were categorized as non-
conflicts per se, and those that remained required specific approval by 
the chairman. See memo of general counsel Crutchfield to the Commission 
staff dated December 26, 1973.
    The rigorous financial reporting required by the OGE since 1989, as 
a practical matter, supercedes this three-part test involving per se 
categories. The OGE's rules now require that every agency individually 
analyze every asset held by a policy-making employee that is worth over 
$1,000 for potential conflicts with that employee's official duties. 
For that reason, grouping assets into those that are regarded as 
conflicts per se, those that are regarded as non-conflicts per se, and 
those that require individual analysis, no longer simplifies the 
evaluation of financial conflicts that the Commission must perform.
    In ethics practice, assuming that financial interests do not 
present a potentially significant conflict if they are below a certain 
market value is known as a de minimis rule. Under current rule 103(b), 
the chairman must select the market value of financial interests that 
are to be considered de minimis for purposes of conflicts analysis.
    The original rationale for the de minimis rule was that most 
companies are affected to some degree by postal services. Therefore, 
even where the Commission had already determined that postal activity 
is a minor part of a particular company's business, the Commission 
feared that a conflict could arise if an employee were to concentrate 
investments in a few such companies. See memo to the Commission from 
David Ruderman, dated July 13, 1993, at 3. Because the Commission now 
screens all investments worth more than $1,000 for per se conflicts, it 
has routinely approved the holding of security interests that are above 
the de minimis amount. Accordingly, the screening procedure required by 
rule 103(b) has become redundant.
    Because the conflicts analysis that current rule 103(b) requires 
has become redundant, and because it has been superceded by the de 
minimis rules of

[[Page 11243]]

5 CFR part 2640 that apply to federal agencies generally, the 
Commission proposes that current rule 103(b) be deleted.

Public Comment

    Any public comment directed toward this proposal should be 
submitted within 30 days of the publication of this notice in the 
Federal Register.

Ordering Paragraphs

    1. Public comment on the Commission's proposal to delete paragraph 
(b) from current rule 103 of its standards of conduct should be 
submitted within 30 days of the publication of this notice in the 
Federal Register.
    2. The Secretary is directed to cause this notice of proposed 
rulemaking to appear in the Federal Register.

    Dated: February 16, 2001.
Margaret P. Crenshaw,
Secretary.

List of Subjects in 39 CFR Part 3000

    Administrative practice and procedure, Postal Service.

    For the reasons stated in the preamble, the Postal Rate Commission 
proposes to amend 39 CFR part 3000 as follows:

PART 3000--STANDARDS OF CONDUCT

    1. The authority citation for part 3000 continues to read as 
follows:

    Authority: 39 U.S.C. 3603; E.O. 12674, 54 FR 15159, 3 CFR, 1989 
Comp., p. 215, as modified by E.O. 12731, 56 FR 42547, 3 CFR, 1990 
Comp., p. 306; 5 CFR parts 2634 and 2636.

    2. Revise Sec. 3000.735-103 to read as follows:


Sec. 3000.735-103  Financial interests.

    An employee shall not, either directly or indirectly, have any 
financial interest (whether by ownership of any stock, bond, security, 
or otherwise) in any entity or person whose interests may be 
significantly affected by rates of postage, fees for postal services, 
the classification of mail, or the operation of the Postal Service. 
This paragraph does not proscribe interests in an entity or person 
whose use of the mail is merely an incidental or a minor factor in the 
general conduct of its business.

[FR Doc. 01-4432 Filed 2-22-01; 8:45 am]
BILLING CODE 7710-FW-P