Navigating the Oregon Government Ethics Commission’s Gift Rules

Government Ethics Alert
Navigating the Oregon Government Ethics Commission’s Gift Rules

New ethics laws became operative on January 1, 2008, so all public officials in Oregon
(whether elected, employed or volunteer) should be familiar with these requirements that
affect their activities as public officials. Whether they are public officials or not, other
individuals should also be aware of the new laws because their interactions with public
officials may be affected.

One of the major changes in the law is that public officials may not during a calendar year
accept any gift or gifts from a single source with an aggregate value in excess of $50.
(Previously, the limit on gifts to public officials was $100 in a calendar year.) The
definition of what constitutes a “gift” has also changed, and items like meals, beverages
and other expenditures on behalf of a public official may count against the annual limit.

On March 7, 2008, the Oregon Government Ethics Commission (OGEC) promulgated
new rules to implement the new government ethics requirements of Senate Bill 10 (2007)
and House Bill 2595 (2007). The rules went into effect immediately. The OGEC also
promulgated temporary rules related to filing of Statements of Economic Interest. The
rules are available at //www.oregon.gov/OGEC/admin_rulemaking.shtml. This alert
focuses on the permanent rules adopted by the OGEC.

The permanent rules seek to clarify some of the terms and requirements of the new ethics
laws. The rules deal with 1) the value of items or services received by public officials; 2)
resale value of unsolicited tokens or awards; 3) attendance at receptions, meals or
meetings under the gift exceptions; 4) gift exceptions related to travel; 5) gift exceptions
related to receptions and entertainment; 6) the source of gifts; and 7) definitions of
various statutory terms. This alert provides a brief overview of the permanent rules but
should not be considered an exhaustive commentary on both the rules and the statutory
requirements.

Value of Items and Services Received by Public Officials
OAR 199-005-0005

This rule is intended to guide public officials in determining the value of items or services
they receive in order to comply with reporting requirements and gifts and honoraria limits.

Generally, the value of merchandise, goods or services is the fair market value of those
items or services. Any portion of the value of merchandise, goods or services that a
public official transfers to a 501(c) tax exempt organization will not be counted in the
value of an item or service received by the public official. The per person cost at a
reception, meal or meeting includes all costs (food, beverage, facility rental, service, etc.)
other than any amount donated to certain non-profit organizations.

Example: A source with a legislative or administrative interest
in a public official invites the public official to a $100 per plate
dinner to benefit a charitable organization. The cost of the
meal is $30, the donation to the charitable organization is $70,
and the reportable benefit to the public official is $30.

NOTE: Any amount over $50 would be in violation of law unless the expenditure meets a
specific exemption in the law from the definition of “gift.”

When there is no price established to attend a reception, meal or meeting, reasonable
methods of calculating the per person value of the event include:

1. Divide the total amount spent on food, beverages and other costs, excluding
contributions to certain non-profit organizations, by the number of persons
reasonably expected to attend the event.

2. Divide the total amount spent on food, beverages and other costs, excluding
contributions to certain non-profit organizations, by the number of persons who
actually attend the event.

3. Calculate the actual amount spent on the public official.

NOTE: The rule refers at various times to “charities” and “501(c) tax exempt
organizations.” 501(c) tax exempt organizations need not be charitable in nature, so it is
unclear whether the rules intend to limit pass-through of benefits by public officials only to
charitable organizations. However, because of the specific reference to “501(c) tax
exempt organizations,” in contrast with the more general reference to charitable
organizations, it is likely that the rules apply to 501(c) tax-exempt organizations, whether
they are “charitable” or not. The “other costs” referred to in the rules may include such
expenses as incidental entertainment or facility rental.

Resale Value of Unsolicited Tokens or Awards
OAR 199-005-0010

Engraved or personalized items that include a public official’s name are presumed to
have a resale value of less than $25 unless the item is made from some valuable material
that would be worth more than $25 in its raw form.

NOTE: This exception to the gift definition applies to tokens or awards of appreciation,
and the underlying rationale is that putting most public officials’ name on a plaque
devalues it.

Attendance at Receptions, Meals or Meetings
OAR 199-005-0015

The rules explain criteria for determining whether expenditures for receptions, meals or
meetings under ORS 244.020(5)(b)(E) are exempt from the $50 per year gift limits. (This
exception applies to “admission or the cost of food or beverage consumed by the public
official” when the public official appears to speak or answer questions as part of a
regularly scheduled program). The rules specify that the expenditure is exempt if all of
the following factors are satisfied, although it may still qualify if not every factor is met.

1. A large number of persons or groups are invited to the event.

2. The invitations or programs for the event are sent out in advance.

3. The event is publicized.

4. The reception, meal or meeting is open to the public.

5. Written materials such as a printed program are available.

6. The public official delivers a planned speech or remarks to the entire audience.

7. The public official participates in a formal question and answer session before the
entire audience.

NOTE: This exception is unusually subjective. For example, what constitutes a “large
number” of invitees is not specified, nor does the rule make clear what “open to the
public” or the “entire audience” means. In addition, while the presence of all of the factors
makes the expenditure a non-gift, the presence of only one factor probably does not, and
the rule doesn’t explain where the line should be drawn between these two extremes.

Gift Exceptions Related to Travel OAR 199-005-0020

This rule addresses issues related to the gift exceptions in ORS 244.020(5)(b)(F) and (H),
that allow public officials to accept gifts of payment for travel and reasonable expenses
over and above the $50 per year gift limit when they are representing a governmental
entity.

The rule provides that a public official “represents” a unit of government when the public
official makes an authorized appearance in an official capacity on behalf of the unit of
government. The public official’s supervisor may authorize the public official’s
appearance, and individual statewide or local elected officials may authorize their own
appearances.

The rule also defines the terms “fact-finding mission,” “trade promotion” and “economic
development activities.”

NOTE: ORS 244.020(5)(b)(H) requires that in order to fall within the gift exceptions a
trade promotion or fact-finding mission must be officially sanctioned, and expenses
related to economic development activities must be approved in advance. The rule
allows individual local and statewide elected officials to authorize their own travel, but only
allows statewide elected officials to approve their own expenses in advance.

Gift Exceptions Related to Receptions and Entertainment
OAR 199-005-0025
The government ethics statutes generally prohibit public officials from accepting gifts of
entertainment (with two exceptions discussed below). The rules define “entertainment”
generally as amusement or diversion. Examples of entertainment “. . . include, but are
not limited to concerts, plays, movies, operas, sporting events, participating in sports
(golf, skiing, hunting or fishing, etc.), comedy shows, and similar events.”
One exception allows public officials to appear at an entertainment event for a ceremonial
purpose. Examples of appearing for a ceremonial purpose include throwing the first pitch
at a baseball game, appearing in a parade and ribbon cutting ceremonies. Staff of the
public official may also attend the entertainment event if they are performing official
duties.

The second exception allows public officials to benefit from paid entertainment if the
entertainment “is incidental to another event.” The rules provide a dictionary definition of
“incidental” and suggest that a singer or band at an awards dinner is allowable, while
personal participation in the entertainment (such as a golf tournament) is not.

Source of Gifts
OAR 199-005-0030

The source of any gift is the individual or entity that ultimately pays the bill. The $50 gift
limit under ORS 244.025 applies separately to each public official and to his or her
spouse, relatives and members of household. Each of these individuals may accept gifts
with an aggregate value of $50 from a single source with a legislative or administrative
interest in a calendar year.

NOTE: It is important to remember that the gift limits only apply to public officials who
receive gifts from persons with a “legislative or administrative interest” in the
governmental entity which the individual serves. The term “legislative or administrative
interest” has been defined in Oregon law for a number of years, and it requires an
“economic interest, distinct from that of the general public” in official action “subject to the
action or vote of a person acting in the capacity of a public official.” The rules do not
provide guidance about how to put this standard into practice. However, if a “source” has
no legislative or administrative interest in the public official’s actions, the public official
may accept gifts from that source without limit.

Various Definitions
OAR 199-005-0035
This rule includes definitions for “official capacity,” “official compensation package,”
“reimbursement of expenses,” “confidential information,” “authorized by” (for the purposes
of the new contracts provisions) and “agent or otherwise” (for purposes of the government
ethics laws, a public official is a person serving the state or a political subdivision,
including as an “agent or otherwise”).

CONCLUSION
Oregon’s new government ethics laws set a number of new standards for public officials
and those with whom they interact in conducting official business. Neither the ethics
statutes nor the rules promulgated by the OGEC provide comprehensive guidance to help
Oregonians understand what conduct is allowable and what conduct is prohibited.
If you have questions about the applicability of the ethics laws and regulations, you may
request formal guidance from the OGEC, based on either actual or hypothetical
circumstances. OGEC staff will also provide informal advice about such matters, but
compliance with staff opinions may not protect persons from complaints that they have
violated the law.

The revised ethics statutes can be accessed at //www.leg.state.or.us/bills_laws/
either in bill form (see Senate Bill 10 and House Bill 2595) or as codified in ORS Chapter
244.

If you have further questions or we can be of assistance, please feel free to contact us.
HARRANG LONG GARY RUDNICK P.C.

Lauren Sommers
(541) 485-0220
[email protected]

Bruce Bishop
(503) 371-3330
[email protected]

Jerry Lidz
(541) 485-0220
[email protected]

Jim Mountain
(503) 242-0000
[email protected]
* * *

Our firm’s Government Ethics Alerts are intended to provide general information regarding
recent changes and developments in the government ethics area. These publications do
not constitute legal advice, and the reader should consult legal counsel to determine how
this information may apply to any specific situation.
HARRANG LONG GARY RUDNICK P.C.
www.harrang.com

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