Ethics: Advisory Opinion No. 2002-2

Advisory Opinion No. 2002-2
Advisory Opinion No. 2002-2

Application Of The Codes’ Gift Limits To Items Of Substantial Cost
But Insignificant Value

The State Ethics Commission has been asked how to value an item for purposes of the Codes’ gift provisions under the following circumstances. A client lobbyist corporation has produced a commemorative publication recounting the company’s history to mark its one hundredth anniversary. The production cost of the book is sixty dollars per copy. While no copies of the book will be available for sale to the general public, the company would like to distribute free copies to various state officials. The company wishes to know whether this is permissible under the Codes’ gift restrictions; and if so, how to value the publication.

As a preliminary matter, depending on the intended usage and content of the publication it may be a permissible benefit under either of two gift exceptions. Specifically, if given to a state office and maintained on state property the publication could qualify as a gift to the State (i.e., "goods…provided to the state…for use on state property"). Conn. Gen. Stat. 1-79(e)(5) and 1-91(g)(5). Alternatively, if relevant to the agency’s or official’s work the publication could qualify as "printed…informational material germane to state action or functions." Conn. Gen. Stat. 1-79(e)(8) and 1-91(g)(8).

Remaining to be determined, however, is whether a public official may personally accept such a publication absent the above referenced state purposes. The answer to this question turns on the issue of the appropriate valuation of the publication for purposes of the Codes’ gift limitations.

Pursuant to the Commission’s gift valuation regulations, "the value of the benefit equals the cost to the donor or payor if the benefit was obtained by the donor or payor in a marketplace transaction." Regulations of Conn. State Agencies 1-81-20(d)(1). This valuation rule assumes, however, that the benefit is also capable of resale in a marketplace transaction; e.g., a restaurant meal of ticket to a sports event. Here, although the item cost sixty dollars in a marketplace transaction, the publication has essentially no resale value on the open market.

Under such circumstances, the regulation’s alternative valuation rules allow acceptance of the item if its value is essentially "indeterminable" but is "clearly insignificant" in fair market terms. 1-81-20(d)(4). In applying this regulation, the Commission will hold that an item is "insignificant" if its market value is less than ten dollars (the threshold for the Codes’ gift bans).

In making its determination as to whether a specific item is insignificant in value, and hence permissible, the Commission will, of necessity, rule on a case by case basis utilizing a fact based analysis. In the case at hand, the publication, although costing sixty dollars a copy to produce, has essentially no market or resale value; and, therefore, falls below the ten dollar "insignificant" threshold. Consequently, the client lobbyist company may distribute copies of the publication to various state officials without risk of violation of the Codes’ gift limits.

By order of the Commission,

Rosemary Giuliano

Content Last Modified on 9/7/2005 8:04:20 AM