RBG Bush Planes, LLC v. Alaska Public Offices Commission, 111313 AKAPO, 3AN-11-13052CI

Docket Nº:3AN-11-13052CI
Opinion Judge:Catherine M. Easter, Superior Court Judge
Case Date:November 13, 2013
Court:Superior Court of Alaska




No. 3AN-11-13052CI

Superior Court of Alaska, Third Judicial District, Anchorage

November 13, 2013


Catherine M. Easter, Superior Court Judge

I. Introduction

RBG Bush Planes, LLC ("Bush Planes") appeals the decision by Alaska Public Offices Commission ("APOC") that Bush Planes made illegal campaign contributions, in the form of airplane transportation, to two Lake & Peninsula Borough ("Borough") Assembly candidates in 2010.1 Bush Planes believes the decision is erroneous, that APOC abused its discretion, and that the civil penalty assessed is excessive. In addition, Bush Planes contends that it was denied due process in the proceedings before the APOC. As explained in more detail below, all aspects of APOC's Revised Decision and Order are AFFIRMED.

II. Factual and Procedural Background

The prohibited campaign contributions alleged in this case are services in the form of air transportation by Bush Planes to Borough Assembly candidates Nana Kalmakoff ("Kalmakoff") and Michelle Ravenmoon ("Ravenmoon").2

The flights at issue in this case arise from two separate travel itineraries in September 2010. Excerpt of Record ("Exc.") 37-43. Robert B. Gillam ("Gillam") retains an independent consultant, George Jacko ("Jacko"), to keep in touch with Borough residents and officials regarding the Pebble Mine Project.3 Exc. 151. In September 2010, Jacko invited Kalmakoff and Ravenmoon to use seats available on Bush Planes on pre-planned trips to various Borough communities. Exc. 152. Prior to extending the invitations, Bush Planes made efforts to ensure that it would be permissible to do so, and determined that it only needed to charge the candidate passengers Bush Planes' actual costs, which, in its view, was the cost of fuel expended. Transcript of Proceedings ("Tr.") 130-132.

Kalmakoff and Ravenmoon were both first-time candidates for Borough Assembly in contested races against incumbent candidates. Exc. 673-676. Kalmakoff and Ravenmoon were told in advance that they would be charged for a proportion of the fuel costs incurred. Exc. 152. Both candidates accepted, and travel on Bush Planes with one or both candidates took place on September 3-6, 2010, and on September 17-18, 2010. Exc. 670. Both candidates won their respective races in the Borough election held October 5, 2010. Appellant Brief, Exhibit A, page 3. Bush Planes sent final invoices to the candidates for reimbursement on October 25, 2010. Exc. 41-43.

First APOC Complaint

On October 28 and 29, 2010, before Kalmakoff and Ravenmoon were seated on the Assembly, the Borough filed two APOC complaints, against Jacko and Gillam, respectively, requesting an investigation into alleged campaigning and failure to file required reports. Appellant Brief, Exhibits A, B. APOC rejected the complaints, the Borough appealed, a hearing was held, and APOC affirmed its earlier rejection. Appellant Brief, Exhibits C, D, E. This is not the APOC decision being appealed in this case.

Second APOC Complaint

On or around January 1, 2011, APOC Staff initiated its own inquiry into the September 2010 trips on Bush Planes' aircraft by Kalmakoff and Ravenmoon. Exc. 33; 39. As a result of its inquiry, APOC Staff filed a Complaint against MCM, Bush Planes, Gillam, Kalmakoff, and Ravenmoon on July 7, 2011. Exc. 32-34. Pre-hearing proceedings ensued, leading to, among other things, the submission of the pre-hearing Staff Report on August 5, 2011, and dismissal of MCM and Gillam from the proceedings. Exc. 154-204. The Staff Report concluded that Bush Planes had violated AS 15.13.074(f) by providing the use of a plane to candidates for public office at less than a commercially reasonable rate. Exc. 155; 159. Kalmakoff and Ravenmoon were accused of violating AS 15.13.114(a) by failing to pay the equivalent value of the commercially reasonable air travel back to Bush Planes. Id.

APOC Hearing on the Complaint Against Bush Planes and Candidates

A hearing on the APOC complaint against Bush Planes, Kalmakoff, and Ravenmoon was heard by an ALJ on December 1, 2011. Tr. 92-513. Because the determination of whether the flights were campaign contributions and, if so, the amount that may have been either donated or received, turned on the issue of "commercially reasonable" rate, the central focus at the hearing was valuing the travel services provided to the candidates. Exc. 222; Tr. 103. Three theories were advanced: cost to charter an airplane (Staff position pre-hearing); actual cost (Bush Plane/candidates' position); and, cost for a seat on a similar flight (i.e., seat value) (Staff position at hearing). Exc. 217-245; Tr. 470-473. With regard to its actual costs to fly the candidates, Bush Planes maintains that it only incurred fuel costs. Exc. 237, Appellant Brief 3-6.

The related issue of allocation of value was also addressed. APOC Staff advanced the positions that there should be no allocation of value between campaign and non-campaign purposes, and that no allocation of value could be made between candidates. Exc. 159; 229. In other words, both candidates should each pay the entire cost for all of the travel. On the other hand, Bush Planes and the candidates argued that value of the air travel should be allocated based on purpose and between candidates. Exc. 233-241. For example, if the travel was 50% for Jacko's community outreach, and 50% for the candidates' campaigning, then Bush Planes should only be found to have made a campaign contribution for 50% of the total value, and the candidates should only be asked to reimburse the campaign contribution. And if, of the 50% allocated to campaign purposes, Kalmakoff campaigned 25% and Ravenmoon campaigned 75%, then they would be found to have accepted unreported campaign contributions in those respective amounts.

APOC Decisions and Orders

The evidentiary record was closed December 7, 2011, and on December 16, 2011, the Administrative Law Judge ("ALJ") issued a Decision and Order with the following rulings: (1) proper valuation of the services provided by Bush Planes is based on seat value; (2) allocation of value based on both purpose and candidates' proportion of use is appropriate; (3) Ravenmoon should have paid Bush Planes $1, 140, and Kalmakoff should have paid Bush Planes...

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