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New Rules for Flying Federal Candidates
In this election year, some Part 91 operators may be asked to fly federal, state and local office seekers who are managing busy schedules. If you are asked, make sure you know the rules before scheduling a flight: Operators need a working knowledge of the myriad travel policies imposed on candidates and their staffs by everyone from the Federal Aviation Administration (FAA ) to the Federal Election Commission (FEC) to the Internal Revenue Service (IRS) to state election authorities.
More Complexity Can Mean More Mistakes
In the past, the rules for federal candidates were pretty simple. For destinations with commercial service, operators charged federal candidates the cost of a first-class airline ticket to the destination for each person traveling for campaign purposes; if the destination only offered coach service, then the coach rate was charged. For destinations without commercial service, the full charter rate applied.
Today, the rules are more stringent and different for House, Senate, presidential and vice presidential candidates, as well as those traveling on behalf of political parties and federal political action committees. Operators risk fines and penalties if some forms of compensation are viewed as campaign contributions.
What explains the myriad changes in recent years? Some policymakers wanted tougher federal campaign rules. When the Jack Abramoff scandal erupted in 2006, an outcry for strict federal campaign and disclosure laws ensued, prompting Congress to pass the Honest Leadership and Open Government Act (HLOGA ). That law and the FEC's implementing regulations, which regulate noncommercial campaign air travel on behalf of federal candidates and officeholders, went into effect in January 2010.
The rules are more stringent and different for House, Senate, presidential and vice presidential candidates.
"Even though the rules are written for candidates, it would be wise for operators and aircraft owners to understand them because if there's a violation, the Federal Election Commission will weigh all the evidence and rule accordingly," said Mary Brandenberger, FEC public affairs specialist.
Know What the Rules Say
HLOGA governs noncommercial aircraft, not commercial carriers operating under Parts 135 and 121. Typically, these are aircraft owned by a company or a private owner flying under Part 91.
Under HLOGA , presidential and senatorial candidates pay the full charter rate, regardless of whether or not the destination has commercial service. However, candidates traveling on behalf of someone else, such as a senator traveling on business for a national or state political party, still pay the first-class rate if first-class service exists for the destinations traveled. Otherwise, they also pay the full charter rate, explained former FEC chairman Michael Toner.
HLOGA bans House campaigners from all noncommercial air travel, with one exception: House candidates who own an aircraft or travel on behalf of an entity other than their campaign committee. One illustration is a House candidate traveling to a fundraising event for a national party committee, with the party committee paying for the flight.
For candidate-owned aircraft, fuel, crew and a share of the maintenance cost is the minimal charge, according to Joanne M. Barbera, an attorney at the Overland Park, KS law firm of Barbera & Watkins and past chairwoman of the NBAA Tax Committee, "otherwise any costs not reimbursed could be considered an in-kind campaign contribution," such as catering or landing fees.
Penalties for in-kind contributions can range from at least $7,500 to the cost of the trip, even if the violation is unintentional. "You might be carrying a friend of the CEO at no charge, who happens to be a candidate," she said. "Know who's on board."
Operators must also collect a 7.5 percent excise tax, which is calculated on the total cost of the transportation, along with a segment fee of $3.70 per passenger (the segment fee changes annually). However, aircraft with maximum certified takeoff weights of less than 6,000 pounds can be exempt from collecting and remitting these excise taxes, said Barbera.
Except for allowing operators to get paid when flying under Part 91, which is provided under FAR 91.321, the FAA 's role in candidate flying is minimal. Whether some of the payment ever becomes an in-kind contribution isn't a concern, said FAA public affairs specialist Laura Brown. "The FAA looks toward the FEC and state agencies" to enforce those discrepancies.
Even though the rules are written for candidates, it would be wise for operators and aircraft
owners to understand them. Mary Brandenberger, Public Affairs Specialist, FEC
Good record keeping will help operators steer clear of problems. Accurate manifests and knowing who's on board, and for what purpose, is vital. For instance, you could have passengers representing different candidates or political action committees. Candidates must report who provided the service, the size, model, make and tail number of the aircraft.
Operators should know that HLOGA could even apply to lawmakers not campaigning. Anyone in Congress who has raised more than $5,000 for his or her next campaign – even if it's six years away – is a federal candidate. Under that definition, "it's very rare when someone isn't a candidate," said former FEC chairman Toner.
Not All States Are Equal
Regulations for flying state and local candidates differ in each jurisdiction, and operators should check with their state election agency.
For instance, Indiana limits corporate contributions to $5,000 for statewide candidates and $2,000 for local and state representative candidates. Unreimbursed air travel beyond these limits is prohibited. Michigan, on the other hand, limits individual contributions to $3,400. Virginia doesn't restrict contributions, but requires candidates to pay fair market value for any service, including air travel, or else an in-kind contribution results. "We require full disclosure and accurate reporting," explained Chris Piper, Virginia's manager of election services.
Frank Kimmel, president of the Aviation Insurance Association, warns that insurance should be everyone's concern, particularly when flying a high-profile passenger. Kimmel urges both operators and candidates to review whether there's enough liability coverage to handle any loss.
"The election season presents opportunities for candidates to utilize business aviation as a productivity and efficiency tool, yet the operator and the campaign need to ask questions, share information and maintain clear records to ensure they are in compliance with the rules involved," said Mike Nichols, NBAA's vice president of operations, education & economics.