H. R. 1000—36
SEC. 210. REGIONAL JET SERVICE FOR SMALL COMMUNITIES.
(a) IN GENERAL.—Chapter 417 is amended by adding at the
end the following:
‘‘SUBCHAPTER III—REGIONAL AIR SERVICE INCENTIVE
PROGRAM
‘‘§ 41761. Purpose
‘‘The purpose of this subchapter is to improve service by jet
aircraft to underserved markets by providing assistance, in the
form of Federal credit instruments, to commuter air carriers that
purchase regional jet aircraft for use in serving those markets.
‘‘§ 41762. Definitions
‘‘In this subchapter, the following definitions apply:
‘‘(1) AIR CARRIER.—The term ‘air carrier’ means any air
carrier holding a certificate of public convenience and necessity
issued by the Secretary of Transportation under section 41102.
‘‘(2) AIRCRAFT
PURCHASE.—The term ‘aircraft purchase’
means the purchase of commercial transport aircraft, including
spare parts normally associated with the aircraft.
‘‘(3) CAPITAL RESERVE SUBSIDY AMOUNT.—The term ‘capital
reserve subsidy amount’ means the amount of budget authority
sufficient to cover estimated long-term cost to the United States
Government of a Federal credit instrument, calculated on a
net present value basis, excluding administrative costs and
any incidental effects on Government receipts or outlays in
accordance with provisions of the Federal Credit Reform Act
of 1990 (2 U.S.C. 661 et seq.).
‘‘(4) COMMUTER AIR CARRIER.—The term ‘commuter air car-
rier’ means an air carrier that primarily operates aircraft
designed to have a maximum passenger seating capacity of
75 or less in accordance with published flight schedules.
‘‘(5) FEDERAL
CREDIT
INSTRUMENT.—The term ‘Federal
credit instrument’ means a secured loan, loan guarantee, or
line of credit authorized to be made under this subchapter.
‘‘(6) FINANCIAL OBLIGATION.—The term ‘financial obligation’
means any note, bond, debenture, or other debt obligation
issued by an obligor in connection with the financing of an
aircraft purchase, other than a Federal credit instrument.
‘‘(7) LENDER.—The term ‘lender’ means any non-Federal
qualified institutional buyer (as defined by section 230.144A(a)
of title 17, Code of Federal Regulations (or any successor regula-
tion) known as Rule 144A(a) of the Security and Exchange
Commission and issued under the Security Act of 1933 (15
U.S.C. 77a et seq.)), including—
‘‘(A) a qualified retirement plan (as defined in section
4974(c) of the Internal Revenue Code of 1986) that is
a qualified institutional buyer; and
‘‘(B) a governmental plan (as defined in section 414(d)
of the Internal Revenue Code of 1986) that is a qualified
institutional buyer.
‘‘(8) LINE OF CREDIT.—The term ‘line of credit’ means an
agreement entered into by the Secretary with an obligor under
section 41763(d) to provide a direct loan at a future date upon
the occurrence of certain events.
H. R. 1000—37
‘‘(9) LOAN GUARANTEE.—The term ‘loan guarantee’ means
any guarantee or other pledge by the Secretary under section
41763(c) to pay all or part of any of the principal of and
interest on a loan or other debt obligation issued by an obligor
and funded by a lender.
‘‘(10) NEW ENTRANT AIR CARRIER.—The term ‘new entrant
air carrier’ means an air carrier that has been providing air
transportation according to a published schedule for less than
5 years, including any person that has received authority from
the Secretary to provide air transportation but is not providing
air transportation.
‘‘(11) NONHUB AIRPORT.—The term ‘nonhub airport’ means
an airport that each year has less than .05 percent of the
total annual boardings in the United States.
‘‘(12) OBLIGOR.—The term ‘obligor’ means a party primarily
liable for payment of the principal of or interest on a Federal
credit instrument, which party may be a corporation, partner-
ship, joint venture, trust, or governmental entity, agency, or
instrumentality.
‘‘(13) REGIONAL JET AIRCRAFT.—The term ‘regional jet air-
craft’ means a civil aircraft—
‘‘(A) powered by jet propulsion; and
‘‘(B) designed to have a maximum passenger seating
capacity of not less than 30 nor more than 75.
‘‘(14) SECURED LOAN.—The term ‘secured loan’ means a
direct loan funded by the Secretary in connection with the
financing of an aircraft purchase under section 41763(b).
‘‘(15) SMALL HUB AIRPORT.—The term ‘small hub airport’
means an airport that each year has at least .05 percent,
but less than .25 percent, of the total annual boardings in
the United States.
‘‘(16) UNDERSERVED
MARKET.—The term ‘underserved
market’ means a passenger air transportation market (as
defined by the Secretary) that—
‘‘(A) is served (as determined by the Secretary) by
a nonhub airport or a small hub airport;
‘‘(B) is not within a 40-mile radius of an airport that
each year has at least .25 percent of the total annual
boardings in the United States; and
‘‘(C) the Secretary determines does not have sufficient
air service.
‘‘§ 41763. Federal credit instruments
‘‘(a) IN GENERAL.—Subject to this section and section 41766,
the Secretary of Transportation may enter into agreements with
one or more obligors to make available Federal credit instruments,
the proceeds of which shall be used to finance aircraft purchases.
‘‘(b) SECURED LOANS.—
‘‘(1) TERMS AND LIMITATIONS.—
‘‘(A) IN GENERAL.—A secured loan under this section
with respect to an aircraft purchase shall be on such terms
and conditions and contain such covenants, representatives,
warranties, and requirements (including requirements for
audits) as the Secretary determines appropriate.
‘‘(B) MAXIMUM AMOUNT.—No secured loan may be made
under this section—
H. R. 1000—38
‘‘(i) that extends to more than 50 percent of the
purchase price (including the value of any manufac-
turer credits, post-purchase options, or other discounts)
of the aircraft, including spare parts, to be purchased;
or
‘‘(ii) that, when added to the remaining balance
on any other Federal credit instruments made under
this subchapter, provides more than $100,000,000 of
outstanding credit to any single obligor.
‘‘(C) FINAL PAYMENT DATE.—The final payment on the
secured loan shall not be due later than 18 years after
the date of execution of the loan agreement.
‘‘(D) SUBORDINATION.—The secured loan may be
subordinate to claims of other holders of obligations in
the event of bankruptcy, insolvency, or liquidation of the
obligor as determined appropriate by the Secretary.
‘‘(E) FEES.—The Secretary, subject to appropriations,
may establish fees at a level sufficient to cover all or
a portion of the administrative costs to the United States
Government of making a secured loan under this section.
The proceeds of such fees shall be deposited in an account
to be used by the Secretary for the purpose of administering
the program established under this subchapter and shall
be available upon deposit until expended.
‘‘(2) REPAYMENT.—
‘‘(A) SCHEDULE.—The Secretary shall establish a repay-
ment schedule for each secured loan under this section
based on the projected cash flow from aircraft revenues
and other repayment sources.
‘‘(B) COMMENCEMENT.—Scheduled loan repayments of
principal and interest on a secured loan under this section
shall commence no later than 3 years after the date of
execution of the loan agreement.
‘‘(3) PREPAYMENT.—
‘‘(A) USE OF EXCESS REVENUE.—After satisfying sched-
uled debt service requirements on all financial obligations
and secured loans and all deposit requirements under the
terms of any trust agreement, bond resolution, or similar
agreement securing financial obligations, the secured loan
may be prepaid at anytime without penalty.
‘‘(B) USE OF PROCEEDS OF REFINANCING.—The secured
loan may be prepaid at any time without penalty from
proceeds of refinancing from non-Federal funding sources.
‘‘(c) LOAN GUARANTEES.—
‘‘(1) IN
GENERAL.—A loan guarantee under this section
with respect to a loan made for an aircraft purchase shall
be made in such form and on such terms and conditions and
contain such covenants, representatives, warranties, and
requirements (including requirements for audits) as the Sec-
retary determines appropriate.
‘‘(2) MAXIMUM AMOUNT.—No loan guarantee shall be made
under this section—
‘‘(A) that extends to more than the unpaid interest
and 50 percent of the unpaid principal on any loan;
‘‘(B) that, for any loan or combination of loans, extends
to more than 50 percent of the purchase price (including
the value of any manufacturer credits, post-purchase
H. R. 1000—39
options, or other discounts) of the aircraft, including spare
parts, to be purchased with the loan or loan combination;
‘‘(C) on any loan with respect to which terms permit
repayment more than 15 years after the date of execution
of the loan; or
‘‘(D) that, when added to the remaining balance on
any other Federal credit instruments made under this sub-
chapter, provides more than $100,000,000 of outstanding
credit to any single obligor.
‘‘(3) FEES.—The Secretary, subject to appropriations, may
establish fees at a level sufficient to cover all or a portion
of the administrative costs to the United States Government
of making a loan guarantee under this section. The proceeds
of such fees shall be deposited in an account to be used by
the Secretary for the purpose of administering the program
established under this subchapter and shall be available upon
deposit until expended.
‘‘(d) LINES OF CREDIT.—
‘‘(1) IN GENERAL.—Subject to the requirements of this sub-
section, the Secretary may enter into agreements to make avail-
able lines of credit to one or more obligors in the form of
direct loans to be made by the Secretary at future dates on
the occurrence of certain events for any aircraft purchase
selected under this section.
‘‘(2) TERMS AND LIMITATIONS.—
‘‘(A) IN GENERAL.—A line of credit under this subsection
with respect to an aircraft purchase shall be on such terms
and conditions and contain such covenants, representatives,
warranties, and requirements (including requirements for
audits) as the Secretary determines appropriate.
‘‘(B) MAXIMUM AMOUNT.—
‘‘(i) TOTAL AMOUNT.—The amount of any line of
credit shall not exceed 50 percent of the purchase
price (including the value of any manufacturer credits,
post-purchase options, or other discounts) of the air-
craft, including spare parts.
‘‘(ii) 1–YEAR DRAWS.—The amount drawn in any
year shall not exceed 20 percent of the total amount
of the line of credit.
‘‘(C) DRAWS.—Any draw on the line of credit shall
represent a direct loan.
‘‘(D) PERIOD OF AVAILABILITY.—The line of credit shall
be available not more than 5 years after the aircraft pur-
chase date.
‘‘(E) RIGHTS OF THIRD-PARTY CREDITORS.—
‘‘(i) AGAINST
UNITED
STATES
GOVERNMENT.—A
third-party creditor of the obligor shall not have any
right against the United States Government with
respect to any draw on the line of credit.
‘‘(ii) ASSIGNMENT.—An obligor may assign the line
of credit to one or more lenders or to a trustee on
the lender’s behalf.
‘‘(F) SUBORDINATION.—A direct loan under this sub-
section may be subordinate to claims of other holders of
obligations in the event of bankruptcy, insolvency, or liq-
uidation of the obligor as determined appropriate by the
Secretary.