Advisory Opinion NO 2012-06

QUESTION PRESENTED

Summary of Request From: J. Randolph Evans and Benjamin J. Vinson of McKenna Long & Aldridge, LLP

1) Given the nature of the regulatory framework set forth by the Act, Commission Rule 189-3-.06 and Commission Advisory Opinion 2007-07 with regard to the purchase of non-commercial air transportation services, what guidelines (if any) exist for a state campaign committee seeking to utilize its contribution funds to pay the costs associated with private air travel when such services are purchased in accordance with the terms of a fair-market, commercially-reasonable transaction? In other words, due to the fact that the Commission’s regulatory structure appears to address the payment of non-commercial air transportation service costs only in settings involving either an in-kind contribution of such services or the reimbursement of a party who provides such services free of charge, what guidelines (if any) exist for a state campaign committee seeking to purchase such services on the open market in accordance with the terms of a commercially-reasonable contract, lease, or other similar agreement? Also, in light of the current regulatory framework for the purchase of noncommercial air transportation services, does the provided analysis at all change if the private air travel is being purchased from an entity for which the candidate, candidate’s spouse, or candidate’s relative has an ownership interest (fractional or otherwise)? In such an ownership interest scenario, please assume that the state campaign committee is paying the entity at issue fair market rates for the non-commercial air transportation services provided.

2) When a state campaign committee utilizes its campaign funds to pay the costs associated with non-commercial air transportation services that are purchased in accordance with the terms of a fair-market, commercially-reasonable transaction rather than in settings involving either an in-kind contribution of such services or the reimbursement of a party who provides such services free of charge, what is the appropriate disclosure methodology for such expenditures on the committee’s periodic CCDRs filed with the Commission? In other words, given that the Act, Commission Rule 189-3-.06 and Commission Advisory Opinion 2007-07 only appear to provide a standard means of valuation and disclosure for noncommercial air transportation service expenditures made in situations where no actual market transaction took place and no true market value was set, how should a campaign committee that purchases such services on the open market through a commercially-reasonable contract, lease or other similar agreement report its private aircraft expenditures for the purposes of its CCDRs filed with the Commission?

Posted: June 18, 2012

ADVISORY OPINION

GEORGIA GOVERNMENT TRANSPARENCY AND CAMPAIGN FINANCE COMMISSION

ADVISORY OPINION
C.F.C. 2012-04 AND C.F.C. 2012-06

The Georgia Government Transparency and Campaign Finance Commission (the “Commission”) has received the following requests for advisory opinion from the Commission staff (Request No. C.F.C. 2012-04) and McKenna Long & Aldridge (Request No. C.F.C. 2012-06). Because these requests cover the same issues, the Commission has combined them into one advisory opinion.

QUESTIONS PRESENTED – C.F.C. 2012-04

1. Whether the Georgia Government Transparency and Campaign Finance Act (the “Act”) allows campaign expenditures for use of aircraft for campaign purposes under circumstances where the candidate or the candidate’s spouse owns an interest in an airplane or when the candidate has entered into an aircraft sharing arrangement where all owners pay a fixed monthly fee to use the aircraft.

2. If the above expenditure is permissible under the Act, what is the proper manner in which to report the expenditure on a Campaign Contribution Disclosure Report?

3. Would a candidate be required to report the expense pursuant to Commission Rules 189-3.06(2), 189-3.06(4), and 189-3.06(5)?

QUESTIONS PRESENTED – C.F.C. 2012-06

1. What guidelines (if any) exist for a state campaign committee seeking to utilize its contribution funds to pay the costs associated with private air travel when such services are purchased in accordance with the terms of a fair-market, commercially-reasonable transaction? In other words, what guidelines (if any) exist for a state campaign committee seeking to purchase such services on the open market in accordance with the terms of a commercially-reasonable contract, lease, or other similar agreement? In light of the current regulatory framework for the purchase of non-commercial air transportation services, does the above analysis at all change if the private air travel is being purchased from an entity for which the candidate, candidate’s spouse, or candidate’s relative has an ownership interest (fractional or otherwise)? In such an ownership scenario, please assume that the state campaign committee is paying the entity at issue fair market rates for the non-commercial air transportation services provided.

2. When a state campaign committee utilizes its campaign funds to pay the costs associated with non-commercial air transportation services that are purchased in accordance with the terms of a fair-market, commercially-reasonable transaction rather than in settings involving either an in-kind contribution of such services or the reimbursement of a party who provides such services free of charge, what is the appropriate disclosure methodology for such expenditures on the committee’s periodic CCDRs filed with the Commission? In other words, how should a campaign committee that purchases such services on the open market through a commercially-reasonable contract, lease, or other similar agreement report its private aircraft expenditures for the purposes of its CCDRs filed with the Commission?

ADVISORY OPINION

The Georgia Government Transparency and Campaign Finance Act (the “Act”) provides that

Contributions to a candidate…shall be utilized only to defray ordinary and necessary expenses…incurred in connection with such candidate’s campaign for elective office….

See O.C.G.A. § 21-5-33(a). The Act defines “ordinary and necessary expenses” as including, but not limited to “Expenditures made during the reporting period for … travel….” See O.C.G.A. § 21-5-3(18).

Per its explicit language, the Act allows campaign expenditures for travel so long as it is incurred in connection with such candidate’s campaign for elective office. The Commission has recognized that a candidate or public officer may expend campaign funds for flights on noncommercial aircraft if the flight is an ordinary and necessary expense incurred in connection with a campaign for elective office. See Comm’n Rule 189-3-.06; Advisory Opinion 2007-07. Taking into account the provisions cited above and Advisory Opinion 2007-07, the Commission finds that a candidate is allowed to use campaign funds for expenditures for use of aircraft for campaign purposes under circumstances where the candidate or the candidate’s spouse owns an interest in an airplane or when the candidate has entered into an aircraft sharing arrangement where all owners pay a fixed monthly fee to use the aircraft.

In light of the Commission’s finding that such expenditures are generally allowed, the next question presented is the allowable scope and proper treatment of such expenditures. The Commission finds that the current rules do not adequately address these types of expenditures, so the Commission looks to federal law for guidance and adopts the following guidelines for reporting and disclosure of such expenditures:

For non-commercial travel by a candidate on an aircraft owned or leased by that candidate or an immediate family member of that candidate that is conducted in connection with such candidate’s campaign for elective office:

(1) In the case of travel on an aircraft that is owned or leased under a shared-ownership or other time-share arrangement, where the travel does not exceed the candidate’s or immediate family member’s proportional share of the ownership interest in the aircraft, the candidate must pay and report the hourly, mileage, or other applicable rate charged the candidate or immediate family member for the costs of the travel; or

(2) In the case of travel on an aircraft that is owned or leased under a shared-ownership or other time-share arrangement, where the travel exceeds the candidate’s or immediate family member’s proportional share of the ownership interest in the aircraft, the candidate must pay and report the normal and usual charter fare or rental charge for travel on a comparable aircraft of comparable size.

A candidate, or an immediate family member of the candidate, will be considered to own or lease an aircraft if the candidate or the immediate family member of the candidate has an ownership interest in an entity that owns the aircraft, provided that the entity is not a corporation with publicly traded shares.
A proportional share of the ownership interest in an aircraft means the amount of use to which the candidate or immediate family member is entitled under an ownership or lease agreement.
The candidate must maintain documentation of the ownership or lease agreement specifying the amount of use of the aircraft corresponding to the candidate’s or an immediate family member’s ownership interest in the aircraft required by this opinion.

For the purposes of this opinion, an “immediate family member” of a candidate is the father, mother, son, daughter, brother, sister, husband, wife, father-in-law, or mother-in-law of the candidate.

If a candidate, campaign, or other person/entity has a question concerning aircraft activity, as it relates to the Act, then an Advisory Opinion on that question shall be immediately requested. During the period before such Advisory Opinion is adopted, guidance shall be sought in 1) the Act and 2) 11 C.F.R. § 100.93. While § 100.93 is uniquely tailored to federal conduct, the Commission expects a common sense application of § 100.93 to the set of circumstances necessitating clarification for correct behavior.

Prepared by Jonathan Hawkins
November 1, 2012

ADOPTED AT NOVEMBER 16, 2012 COMMISSION MEETING


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