Cheap flights offered in 2010 to two political candidates through Alaska money manager and anti-Pebble mine activist Bob Gillam violated state election law, the state Supreme Court ruled Wednesday in upholding a fine against Gillam's RBG Bush Planes.
The decision by three justices keeps intact the $25,500 fine and resolves a lengthy court battle involving the role of Bush Planes, a holding company for private planes owned by a Gillam trust, in the fall 2010 Lake and Peninsula Borough election. At issue was whether the company made illegal corporate contributions to candidates by only charging gas money for the flights and whether the $25,500 fine was excessive. The company also contended that the Alaska Public Offices Commission was out to get it.
Gillam, a multimillionaire opponent of the proposed Pebble mine, had hired former state Sen. George Jacko to be his "eyes and ears in Bristol Bay," a characterization that justices noted. The proposed massive gold and copper mine straddles the headwaters of salmon-producing streams that feed into Bristol Bay, home to the world's biggest runs of sockeye salmon.
Jacko was traveling throughout the borough for Gillam on his planes. McKinley Capital Management, Gillam's money management firm, paid the pilots' salaries, and Gillam, a pilot, owned the Anchorage hangar where the aircraft were stored, according to testimony at earlier APOC hearing before an administrative law judge.
Jacko asked whether two Lake and Peninsula borough candidates, Nana Kalmakoff and Michelle Ravenmoon, could fly with him for their campaigns. Gillam checked with a lawyer and said they could, but fuel costs would have to be recorded, the order said.
After two multi-day trips in September 2010, in which the candidates traveled overlapping but not identical itineraries, Ravenmoon paid $351.55 for fuel and Kalmakoff paid $1,184.60.
APOC, Superior Court Judge Catherine Easter and now the Supreme Court all found that was too little. They also concluded that Gillam's Bush Planes officials should have known better. Gillam himself was the subject of an earlier APOC complaint as part of a group secretly funneling money into a clean water ballot measure. They paid a $100,000 fine. Bush Planes embroiled "two unsophisticated candidates in its wrongdoing," APOC found.
Gillam's company argued that billing the candidates for pro-rated fuel was appropriate because it's not a charter service and couldn't charge market rates under federal aviation law. Federal aviation law generally bans private pilots using personal aircraft from charging passengers anything other than a pro-rated share of costs, unlike charters and commercial airlines.
"But Bush Planes' basic premise — that there is tension between state and federal law — is incorrect," the new order says. The justices said that their reading of federal law for general aviation uncovered an exception: A private aircraft operator carrying candidates can receive a payment for services if one is required under local, state or federal election law.
Estimates of the actual value of the flights varied, but ultimately APOC settled on a low-end, per-seat figure and determined that Ravenmoon was undercharged by $788 and Kalmakoff by $500.
That amounts to an illegal contribution of $1,288, but even at that, a fine of $25,500 is justified, the Supreme Court found.
The state prohibition on corporate contributions was part of a 1996 campaign finance reform bill designed to prevent special interests from gaining undue influence on elected officials, the justices noted. A bar on corporate contributions and an increase in penalties were intended to help restore public trust. A candidate trying to travel a vast Bush district gets an unfair advantage with cheap flights.
"Moreover, the fine both punishes Bush Planes and serves as a deterrent to other corporations that might consider flouting the prohibition on direct contribution," the order said.
The U.S. Supreme Court, in its 2010 Citizens United decision, allowed campaign contributions from businesses, but only if paid to independent political committees. The contributions by Gillam's company, directly to candidates, remains illegal.
As to whether APOC director Paul Dauphinais, then-deputy Jerry Anderson and then-commission chairwoman Elizabeth Hickerson were biased, as Bush Planes contended, those arguments came too late and were without substance, the Supreme Court said.
Even if the company had been allowed to present its case of bias in an earlier court proceeding, the main issue was still "the proper determination of 'commercially reasonable rate' " for aircraft services, the order said.
Both Kalmakoff and Ravenmoon paid the difference to Bush Planes and underwent APOC training on campaign disclosures. They also were re-elected to the borough assembly and still serve.
The total amount levied against Gillam's Bush Planes was $55,268, counting investigative costs and attorney fees.
Justices Craig Stowers wrote the ruling, with Daniel Winfree and Joel Bolger consenting. Chief Justice Dana Fabe and Justice Peter Maassen didn't participate. Justices typically do not specify why they step aside, or recuse themselves.