The Federal Election Commission (FEC) is fining the National Air Transportation Association more than $90,000 and a former employee more than $50,000 for violating federal campaign finance laws by using the salaries of 20 employees to help fund the association’s Political Action Campaign (PAC).

Both NATA and Eric Byer, the association's former vice president of government and regulatory affairs, last month signed conciliation agreements accepting the fines and admitting to their roles in the activities.

The FEC began its investigation after NATA president Tom Hendricks uncovered the PAC funding system, put a stop to it and reported it to the agency. NATA has since made numerous changes and implemented a number of controls to ensure that the association remains in full compliance with FEC rules and election laws. “It’s been a long process,” Henricks told AIN and praised the FEC for working with the association and recognizing its efforts to correct its practices.

“NATA thanks the FEC for its assistance and guidance through a very difficult period,” Hendricks said in a statement. “The commission confirmed the results of our own internal investigation that concluded federal campaign finance violations occurred within the organization prior to its present leadership….With the help of the commission, NATA’s new leadership is moving forward with a political activities regime that is fully compliant with all federal election regulations.”

According to an FEC First General Counsel’s Report that was dated July 14 but just released today, NATA helped fund its PAC through salary increases of 20 employees. The funding mechanism was presented and signed off by the board in 2001 and continued through 2012.

According to FEC documents, Byer, who was then a government affairs specialist for the association and later became vice president of government and industry affairs, had discussed the funding mechanism with then NATA CFO Alan Darrow to help build up the PAC, which they feared was “non-existent in the political process” during a time when Congress was debating FAA reauthorization legislation.

The idea was presented to the board. Byer was not at the board meeting, but both then-president Jim Coyne and Darrow were believed present.  According to the FEC documents, the former treasurer was not properly certifying PAC disclosure reports.

After investigating, the FEC was unable to determine the extent of Darrow’s involvement or evidence of Coyne’s direct involvement and decided to take no action against either (although Darrow received a letter of caution). The FEC found that Byer violated federal campaign finance laws, but agreed that the violations were neither "knowingly" nor "willfully" conducted. Byer, however, was fined more than $53,000. 

“I really wish the leadership of NATA had gotten legal advice back in 2001 when this practice was being considered,” Byer said in a statement. “I believed all along it was permissible because it was voluntary and NATA employees were properly reporting all the funds as income. In hindsight, I’m sorry I didn’t press for independent legal review, and I encourage all PAC administrators to get proper legal advice. I myself have undertaken to get proper legal training on the relevant rules and will make sure such mistakes do not occur on my watch.”

More than $214,000 was funneled to the PAC from December 2001 to August 2012 through employee salaries. This violates laws that "no person shall make a [PAC] contribution in the name of another person," the FEC said, “That prohibition extends to knowingly permitting one's name to be used to effect the making of a contribution in the name of another.”

The FEC praised NATA for voluntarily reporting the issue and bringing “substantial information to the attention of the commission.” As a result, the commission said it was not concluding that NATA or its PAC “knowingly and willfully” violated the law.

Hendricks said he first became aware of the funding system before he took the role as president and immediately took actions when he came on board. He also noted he worked closely with the board on the initiatives.  These included a number of personnel changes, from regulatory and government affairs to a new treasurer. The initiatives also included establishing a new set of articles of organization for the PAC, instituting training for employees and board members and undergoing biannual audits. Hendricks noted that in addition to working with the board, the association also endeavored to protect the employees who were involved but unaware that the funding system was illegal.

The FEC issued letters of caution to those employees. According to the FEC, NATA has been “a party in an ongoing arbitration proceeding against both Coyne and Darrow."