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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1774 Introduced in Senate (IS)]

104th CONGRESS
  2d Session
                                S. 1774

 To enhance the enforceability of airport revenue diversion provisions 
   under chapter 471 of title 49, United States Code, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 17, 1996

  Mr. McCain introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL

 
 To enhance the enforceability of airport revenue diversion provisions 
   under chapter 471 of title 49, United States Code, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Airport Revenue Protection Act of 
1996''.

SEC. 2. FINDINGS; PURPOSE.

    (a) In General.--The Congress finds that--
            (1) section 47107 of title 49, United States Code, 
        prohibits the diversion of certain revenue generated by a 
        public airport as a condition of receiving a project grant;
            (2) a grant recipient that uses airport revenue for 
        purposes that are not airport related in a manner inconsistent 
        with chapter 471 of title 49, United States Code, illegally 
        diverts airport revenues;
            (3) any diversion of airport revenues in violation of the 
        condition referred to in paragraph (1) undermines the interest 
        of the United States in promoting a strong national air 
        transportation system that is responsive to the needs of 
        airport users;
            (4) the Secretary and the Administrator have not enforced 
        airport revenue diversion rules adequately;
            (5) despite attempts by the Congress to halt the illegal 
        diversion of revenues referred to in paragraph (1), including 
        the enactment of laws to strengthen the enforcement authority 
        of the Department of Transportation (including the Federal 
        Aviation Administration), such illegal airport revenue 
        diversion continues to occur;
            (6) sponsors who have been found to have illegally diverted 
        airport revenues have not reimbursed airports in a timely 
        manner;
            (7) sponsors are openly and publicly seeking ways to divert 
        additional airport revenues; and
            (8) to the detriment of the United States Treasury, the 
        Secretary and the Administrator have failed to seek adequately 
        the return of illegally diverted airport revenues referred to 
        in paragraph (1).
    (b) Purpose.--The purpose of this Act is to ensure that airport 
users are not burdened with hidden taxation for unrelated municipal 
services and activities by--
            (1) eliminating the ability of any State or political 
        subdivision thereof that is a recipient of a project grant to 
        divert airport revenues for purposes that are not related to an 
        airport, in violation of section 47107 of title 49, United 
        States Code;
            (2) imposing financial reporting requirements that are 
        designed to identify instances of illegal diversions referred 
        to in paragraph (1);
            (3) establishing a statute of limitations for airport 
        revenue diversion actions;
            (4) clarifying limitations on revenue diversion that is 
        permitted under chapter 471 of title 49, United States Code; 
        and
            (5) establishing clear penalties and enforcement mechanisms 
        for identifying and prosecuting airport revenue diversion.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Federal Aviation Administration.
            (2) Airport.--The term ``airport'' has the meaning provided 
        that term in section 47102(2) of title 49, United States Code.
            (3) Project grant.--The term ``project grant'' has the 
        meaning provided that term in section 47102(14) of title 49, 
        United States Code.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Transportation.
            (5) Sponsor.--The term ``sponsor'' has the meaning provided 
        that term in section 47102(19) of title 49, United States Code.

SEC. 4. RESTRICTION ON USE OF AIRPORT REVENUES.

    (a) In General.--Chapter 471 of title 49, United States Code, is 
amended by adding at the end of subchapter I the following new section:
``Sec. 47132. Restriction on use of revenues
    ``(a) Prohibition.--Local taxes on aviation fuel (except taxes in 
effect on December 30, 1987) or the revenues generated by an airport 
that is the subject of Federal assistance or that operates pursuant to 
an airport operating certificate issued under section 44706 may not be 
expended for any purpose other than the capital or operating costs of--
            ``(1) the airport;
            ``(2) the local airport system; or
            ``(3) any other local facility that is owned or operated by 
        the person or entity that owns or operates the airport that is 
        directly and substantially related to the air transportation of 
        passengers or property.
    ``(b) Exceptions.--
            ``(1) In general.--Subsection (a) shall not apply with 
        respect to any provision of law enacted before September 3, 
        1982, that--
                    ``(A) controls financing by the owner or operator, 
                or a covenant or assurance in a debt obligation issued 
                not later than September 2, 1982, by the owner or 
                operator; and
                    ``(B) provides that the revenues, including local 
                taxes on aviation fuel at public airports, from any of 
                the facilities of the owner or operator involved 
                (including the airport of the owner or operator) be 
                used to support both the airport and general debt 
                obligations of other facilities of the owner or 
                operator.
            ``(2) Sunset.--This subsection shall have no force and 
        effect beginning on the earlier of--
                    ``(A) the date on which all debt obligations 
                covered under this subsection are either retired or 
                refinanced; or
                    ``(B) the date that is 10 years after the date of 
                enactment of the Airport Revenue Protection Act of 
                1996.
    ``(c) Rule of Construction.--Nothing in this section may be 
construed to prevent the use of a State tax on aviation fuel to support 
a State aviation program or the use of airport revenue on or off the 
airport for a noise mitigation purpose.''.
    (b) Conforming Amendment.--The chapter analysis for subchapter I of 
chapter 471 of title 49, United States Code, is amended by adding at 
the end the following new item:

``47132. Restriction on use of revenues.''.

SEC. 5. REGULATIONS; AUDITS AND ACCOUNTABILITY.

    (a) In General.--Section 47107 of title 49, United States Code, is 
amended by adding at the end the following new subsections:
    ``(m) Audit Certification.--
            ``(1) In general.--The Secretary of Transportation 
        (hereafter in this section referred to as the `Secretary'), 
        acting through the Administrator of the Federal Aviation 
Administration (hereafter in this section referred to as the 
`Administrator'), shall promulgate regulations that require a recipient 
of a project grant (or any other recipient of Federal financial 
assistance that is provided for an airport) to include as part of an 
annual audit conducted under sections 7501 through 7505 of title 31, a 
review and opinion of the review concerning the funding activities with 
respect to an airport that is the subject of the project grant (or 
other Federal financial assistance) and the sponsors (or other 
recipients) involved.
            ``(2) Content of review.--A review conducted under 
        paragraph (1) shall provide reasonable assurances that funds 
        paid or transferred to sponsors are paid or transferred in a 
        manner consistent with the applicable requirements of this 
        chapter and any other applicable provision of law (including 
        regulations promulgated by the Secretary or the Administrator).
            ``(3) Requirements for audit report.--The report submitted 
        to the Secretary under this subsection shall include a specific 
        determination and opinion regarding the appropriateness of the 
        disposition of airport funds paid or transferred to a sponsor.
            ``(4) Certification by inspector general.--Upon completion 
        of each audit and review conducted under this subsection, the 
        Inspector General of the Department of Transportation shall, 
        upon making a determination that the audit and review meet the 
        requirements of this section, certify that the audit and review 
        meet those requirements.
    ``(n) Recovery of Illegally Diverted Funds.--
            ``(1) In general.--Not later than 180 days after the 
        issuance of an audit or any other report that identifies an 
        illegal diversion of airport revenues (as determined under 
        subsections (b) and (l) and section 47132), the Secretary, 
        acting through the Administrator, shall--
                    ``(A) review the audit or report;
                    ``(B) perform appropriate factfinding; and
                    ``(C) render a final determination concerning 
                whether the illegal diversion of airport revenues 
                asserted in the audit or report occurred.
            ``(2) Notification.--Upon making such a finding, the 
        Secretary, acting through the Administrator, shall provide 
        written notification to the sponsor and the airport of--
                    ``(A) the finding; and
                    ``(B) the obligations of the sponsor to reimburse 
                the airport involved under this paragraph.
            ``(3) Administrative action.--If a sponsor receives 
        notification that the sponsor is required to reimburse an 
        airport, the Secretary, acting through the Administrator, 
        shall--
                    ``(A) assess an administrative penalty against the 
                sponsor in an amount equal to--
                            ``(i) the amount of the illegal diversion 
                        in question;
                            ``(ii) interest (as determined under 
                        subsection (o)); and
                            ``(iii) at the discretion of the Secretary, 
                        acting through the Administrator, in accordance 
                        with procedures established under subsection 
                        (q), an amount to make a payment to a 
                        petitioner under subsection (q)(4); or
                    ``(B) notwithstanding any other provision of law, 
                withhold an amount calculated in the same manner as 
                provided under subparagraph (A) from funds that would 
                otherwise be made available to the sponsor as part of 
                an apportionment under sections 47114 or a grant made 
                from amounts apportioned under section 47114 pursuant 
                to section 47117.
        Any withholding made under subparagraph (B) shall not be 
        subject to section 47106(d) or 47111(d), or the hearing 
        requirement under section 47111(e).
            ``(4) Civil action.--
                    ``(A) In general.--If a sponsor fails to pay the 
                amount specified in paragraph (3) during the 180-day 
                period beginning on the date of notification and the 
                Secretary or the Administrator is unable to withhold a 
                sufficient amount under paragraph (3)(B), the 
                Secretary, acting through the Administrator, shall 
                initiate a civil action under which the sponsor shall 
                be liable for civil penalty in an amount equal to the 
                illegal diversion in question plus interest (as 
                determined under subsection (o)).
                    ``(B) Additional amount.--In addition to the amount 
                determined under subparagraph (A), if applicable, the 
                civil penalty may include an amount that the court 
                shall cause to be transferred to a petitioner under 
                subsection (q)(4).
            ``(5) Disposition of penalties.--
                    ``(A) Administrative penalties.--The Secretary or 
                the Administrator shall transfer any amounts collected 
                as an administrative penalty under paragraph (3)(A) to 
                the Airport and Airway Trust Fund established under 
                section 9502(d) of the Internal Revenue Code of 1986.
                    ``(B) Amounts withheld.--The Secretary or the 
                Administrator shall transfer any amounts withheld under 
                paragraph (3)(B) to the Airport and Airway Trust Fund.
                    ``(C) Civil penalties.--With respect to any amount 
                collected by a court in a civil action under paragraph 
                (4), the court shall cause to be transferred to the 
                Airport and Airway Trust Fund any amount collected as a 
                civil penalty under paragraph (4).
            ``(6) Reimbursement.--The Secretary, acting through the 
        Administrator, shall, as soon as practicable after any amount 
        is collected from a sponsor under paragraph (3) or (4), cause 
        to be transferred from the Airport and Airway Trust Fund to an 
        airport affected by a diversion that is the subject of an 
        administrative action under paragraph (3) or a civil action 
        under paragraph (4), reimbursement in an amount equal to the 
        amount that has been collected from the sponsor under paragraph 
        (3) or (4) (including any amount of interest calculated under 
        subsection (o)), other than any amount that has been collected 
        under paragraph (3) or (4) for a payment to a petitioner under 
        subsection (q)(4).
            ``(7) Statute of limitations.--No person may bring an 
        action for the recovery of funds illegally diverted in 
        violation of this section (as determined under subsections (b) 
        and (l)) or section 47132 after the date that is 6 years after 
        the date on which the diversion occurred.
    ``(o) Interest.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary, acting through the Administrator, shall charge a 
        minimum annual rate of interest on the amount of any illegal 
        diversion of revenues referred to in subsection (n) in an 
        amount equal to the average investment interest rate for tax 
        and loan accounts of the Department of the Treasury (as 
        determined by the Secretary of the Treasury) for the applicable 
        calendar year, rounded to the nearest whole percentage point.
            ``(2) Adjustment of interest rates.--If, with respect to a 
        calendar quarter, the average investment interest rate for tax 
        and loan accounts of the Department of the Treasury exceeds the 
        average investment interest rate for the immediately preceding 
        calendar quarter, rounded to the nearest whole percentage 
        point, the Secretary of the Treasury may adjust the interest 
        rate charged under this subsection in a manner that reflects 
        that change.
            ``(3) Accrual.--Interest assessed under subsection (n) 
        shall accrue from the date of the actual illegal diversion of 
        revenues referred to in subsection (n).
            ``(4) Determination of applicable rate.--The applicable 
        rate of interest charged under paragraph (1) shall--
                    ``(A) be the rate in effect on the date on which 
                interest begins to accrue under paragraph (3); and
                    ``(B) remain at a rate fixed under subparagraph (A) 
                during the duration of the indebtedness.
    ``(p) Payment by Airport to Sponsor.--If, in the course of an audit 
or other review conducted under this section, the Secretary determines 
that an airport owes a sponsor funds as a result of activities 
conducted by the sponsor or expenditures by the sponsor for the benefit 
of the airport, interest on that amount shall be determined in the same 
manner as provided in paragraphs (1) through (4) of subsection (o), 
except that the amount of any interest assessed under this subsection 
shall be determined from the date on which the Secretary or the 
Administrator makes that determination.''.
    (b) Revision of Policies and Procedures; Deadlines.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary, acting through the 
        Administrator, shall revise the policies and procedures 
        established under section 47107 (l) of title 49, United States 
        Code, to take into account the amendments made to that section 
        by this Act.
            (2) Deadlines.--Section 47107(l) of title 49, United States 
        Code, is amended by adding at the end the following new 
        paragraph:
            ``(5) Deadlines.--In addition to the statute of limitations 
        specified in subsection (n)(7), the following statutes of 
        limitations and deadlines shall apply with respect to project 
        grants made under this chapter:
                    ``(A) Any request to any airport for additional 
                payments for services conducted off of the airport 
shall be filed not later than 6 years after the date on which the 
expense is incurred.
                    ``(B) Any amount of airport funds that are used to 
                make a payment as described in subparagraph (A) after 
                the date specified in that subparagraph shall be 
                considered to be an illegal diversion of airport 
                revenues that is subject to subsection (n).''.

SEC. 6. ELIMINATION OF CERTAIN EXCEPTIONS.

    (a) In General.--Section 47107(b)(2) of title 49, United States 
Code, is amended--
            (1) by inserting ``(A)'' before ``Notwithstanding 
        subsection (b)(1)''; and
            (2) by adding at the end the following new subparagraph:
    ``(B) This paragraph shall have no force and effect beginning on 
the earlier of--
            ``(i) the date on which all debt obligations covered under 
        this paragraph on the day before the date of enactment of the 
        Airport Revenue Protection Act of 1996 are either retired or 
        refinanced; or
            ``(ii) the date that is 10 years after the date of 
        enactment of the Airport Revenue Protection Act of 1996.''.
    (b) Hawaii.--Section 47107(j) of title 49, United States Code, is 
amended by adding at the end the following new paragraph:
    ``(8) This subsection shall have no force and effect beginning on 
the earlier of--
            ``(A) the date on which all debt obligations referred to in 
        paragraph (2) that are covered under this subsection are either 
        retired or refinanced; or
            ``(B) the date that is 10 years after the date of enactment 
        of the Airport Revenue Protection Act of 1996.''.

SEC. 7. WHISTLEBLOWER PROTECTION AND PAYMENTS.

    Section 47107 of title 49, United States Code, as amended by 
section 5 of this Act, is further amended by adding at the end the 
following new subsection:
    ``(q) Whistleblower Protection and Payments.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of the Airport Revenue Protection Act of 1996, the 
        Secretary, acting through the Administrator, shall establish a 
        process under which a private citizen or other party (other 
        than an employee of the Department of Transportation and the 
        organization or entity that conducts an audit under subsection 
        (m)) may petition the Secretary or the Administrator for review 
        of an allegation of illegal diversion of airport revenues.
            ``(2) Evaluation.--Not later than 30 days after the date on 
        which a petition is made under paragraph (1), the Secretary, 
        acting through the Administrator--
                    ``(A) shall evaluate the petition if it asserts 
                that an illegal diversion of airport revenues (as 
                determined under subsections (b) and (l) and section 
                47132) has occurred in an amount greater than or equal 
                to $10,000 for a calendar year period; and
                    ``(B) may evaluate the petition if it asserts an 
                illegal diversion of airport revenues in an amount less 
                than the amount specified in subparagraph (A).
            ``(3) Action by the secretary of transportation.--If the 
        Secretary, acting through the Administrator, reviews a petition 
        described under paragraph (1) and determines that an illegal 
        diversion of revenues (as determined under subsections (b) and 
        (l) and section 47132) has occurred, the Secretary, acting 
        through the Administrator, shall take such action, in 
        accordance with this section, as is necessary to--
                    ``(A) recover the illegally diverted revenues; and
                    ``(B) provide for reimbursement to the airport of 
                the amount illegally diverted.
            ``(4) Payment to petitioner.--Notwithstanding any other 
        provision of law, in any case in which the Secretary or the 
        Administrator recovers funds under paragraph (3), the Secretary 
        or the Administrator shall take such action as may be necessary 
        (including requiring the sponsor to make a payment for the 
        petitioner and transferring funds from the Airport and Airway 
        Trust Fund established under section 9502(d) of the Internal 
        Revenue Code of 1986), to make a payment to the petitioner, in 
        accordance with procedures that the Secretary, acting through 
        the Administrator, shall establish by regulation (after 
        providing opportunity for notice and public comment).
            ``(5) Prohibition on disclosure.--Neither the Secretary nor 
        the Administrator may disclose to an airport, a sponsor, or the 
        general public the identity of a petitioner under this 
        subsection without the consent of the petitioner.''.

SEC. 8. QUI TAM ACTIONS.

    Section 47107 of title 49, United States Code, as amended by 
section 6 of this Act, is further amended by adding at the end the 
following new subsection:
    ``(r) Qui Tam Actions.--Notwithstanding any other provision of law, 
a private citizen may bring a civil action for a violation of this 
section in the same manner as is provided for a civil action for a 
violation of section 3729 of title 31 under section 3730 of that 
title.''.

SEC. 9. CONFORMING AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

    Section 9502(d) of the Internal Revenue Code of 1986 is amended--
            (1) in subsection (b)--
                    (A) by striking ``and'' at the end of paragraph 
                (3);
                    (B) by striking the period at the end of paragraph 
                (4) and inserting ``, and''; and
                    (C) by adding at the end the following:
            ``(5) amounts determined by the Secretary of the Treasury 
        to be equivalent to the amounts of administrative and civil 
        penalties collected under section 47107(n) of title 49, United 
        States Code.''; and
            (2) in subsection (d), by adding at the end the following 
        new paragraph:
            ``(4) Transfers from the airport and airway trust fund on 
        account of certain airports.--The Secretary of the Treasury may 
        transfer from the Airport and Airway Trust Fund to the 
        Secretary of Transportation or the Administrator of the Federal 
        Aviation Administration an amount to make a payment--
                    ``(A) to an airport affected by a diversion that is 
                the subject of an administrative action under paragraph 
                (3) or a civil action under paragraph (4) of section 
                47107(n) of title 49, United States Code; or
                    ``(B) pursuant to section 47107(q)(4) of title 49, 
                United States Code.''.
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