December 2007

Use of Private Aircraft by Members of Congress and Federal Candidates Under New Ethics Reforms

Holland & Knight Newsletter
Jonathan M. Epstein

The rules regarding carriage of members of Congress and their staff on private and charter aircraft changed this September with the enactment of the Honest Leadership and Open Government Act (the Act). The old price of a “first-class ticket rule” for travel on private aircraft is out, and significant additional restrictions are now in place. Further, by the end of the year, the Federal Election Commission (FEC) is expected to approve new rules to clarify how the Act affects federal candidates and the Senate Ethics Committee is developing similar guidance for current members and employees of the Senate. With an election year close on the horizon, companies owning business aircraft should be aware of these changes, and public companies in particular should update their corporate aircraft usage policies before the requests come in.

What Are the Current Rules for Federal Candidates and Members of Congress?

The current rules for federal candidates and members of Congress are summarized here:

  • members of the U.S. Senate must reimburse the pro-rata share of the fair market value of the normal and usual charter fare or rental charge for a comparable aircraft of comparable size, as determined by dividing such costs by the number of members, officers or employees of Congress on the flight
  • members of the U.S. House of Representatives may not use personal funds, official funds or campaign funds to pay for a flight on a private aircraft
  • candidates for U.S. Senate or president must reimburse the pro-rata share of the fair market value of the flight (as determined by dividing the fair market value of the normal and usual charter fare or rental charge for a comparable aircraft of comparable size by the number of candidates on the flight) within a commercially reasonable time
  • candidates for the U.S. House of Representatives may not use campaign or leadership political action committee (PAC) funds to pay for a flight on a private aircraft
  • aircraft owned by candidates or their immediate family members are generally exempt from prohibitions and rate restrictions subject to certain requirements 

When Can a Private Aircraft Owner Accept Compensation?

In general, an owner of an aircraft operated as a private aircraft under Federal Aviation Regulations (FAR) Part 91 cannot accept reimbursement for provision of air travel, except under limited circumstances. And while the FAA does not restrict carriage of guests at no charge, political candidates or officials are often required to make payment or are otherwise limited in accepting in-kind contributions. Basically, under FAR Part 91 reimbursements, an owner can generally accept reimbursement from the following:

  • federal and state candidates for elected office and their staff, when such reimbursement is required by FEC or state law under FAR § 91.321 (note that under the Act, a Senator’s non-election campaign flight would require the Senator to reimburse a private owner, but the FAA regulations would not allow such reimbursement, as FAR 91.321 only applies to a candidate in a federal election)
  • other persons or entities under a time-sharing, interchange or other arrangement specified and limited in FAR 91.501, including corporate reimbursement between parent/subsidiary/sister companies within an intra-corporate family (since the new rules essentially require “arms-length” charter rates, however, the provisions of 91.501 – to the extent they cap payments – may be of limited use in carrying members of Congress and their staff) 

In addition, use of a corporate aircraft for carrying members of Congress, political candidates, or their staff may only qualify as “good” business use in particular circumstances, and may implicate: 

  • the deductibility of the direct and indirect operating costs of such travel for federal and state income tax purposes
  • regulatory reporting requirements for companies under state and federal laws (e.g., lobbying and election laws)
  • corporate governance restrictions on use of corporate assets 

What About Charter Flights?

In general, a private owner whose aircraft is operated by a certificated charter operator could consent to allow a member of Congress or other person subject to House or Senate Rules or FEC regulations to charter the aircraft from the operator. However, that person will likely be required to pay the commercial charter rate without a discount.

What to Do While the Dust Settles

The recent legislation substantially changes the way private aircraft can be used by members of Congress and federal candidates. Since the rules are somewhat more complex than the summary above, and FEC rules are currently being revised, such flights on private aircraft may have FAA and tax implications and should only be undertaken after consultation with your counsel. 

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