New House COVID Bill Changes Airline Aid Conditions, Bails Out Aviation Trust Fund

New House COVID Bill Changes Airline Aid Conditions, Bails Out Aviation Trust Fund

May 15, 2020  | Jeff Davis

The new coronavirus relief bill (H.R. 6800) being considered by the House of Representatives this week does not include additional funding grants for airports, nor does it include any more funding for payroll sustainment grants to air carriers. It does, however, change some of the conditions attached to those earlier air carrier grants and loans provided by the CARES Act, and also contains a provision ensuring that the Airport and Airway Trust Fund will not run out of money in spite of the CARES Act’s suspension of the taxes that support the Trust Fund.

Sec. 10901 automatically transfers such sums as necessary from the general fund of the Treasury to the Airport and Airway Trust Fund to fulfill subsection (c) of 26 U.S.C. §9502. This is a bit of a circular reference – §9502(c) just says “There are hereby authorized to be appropriated to the Airport and Airway Trust Fund such additional sums as may be required to make the expenditures referred to in subsection (d)” and §9502(d) just says Amounts in the Airport and Airway Trust Fund, as provided by appropriation acts, for making expenditures before October 1, 2023 to meet those obligations of the United States” pursuant to a long list of every aviation authorization law since 1970 up through the 2018 FAA reauthorization, which expires in September 2023.

It is uncertain whether or not section 10901 will expire at the end of FY 2020 or if it will be permanent. (There is a savings clause in sec. 11003 making most other appropriations of budget authority in Division A limited to FY 2020, but since this is an intragovernmental transfer, and not budget authority, it might not be subject to that savings clause). But it was always going to be next to impossible for the Trust Fund to run out of cash during FY 2020 – the fund started the year with an $18.6 billion cash balance, collected taxes as normal for the first half of the fiscal year, had collected over $9 billion in the first half of the year before the CARES Act’s tax holiday took effect, and was only project to spend around $18 billion this year.

Even if this provision does remain in effect into FY 2021, if the payroll tax holiday in section 4007 of the CARES Act is allowed to expire on schedule on January 1, 2021, the transfer from the general fund should not be needed. But if the payroll tax holiday is extended, and the transfer provision in the House bill is enacted and remains in effect, then the general fund will automatically bail out the Trust Fund as necessary to ensure that obligations made by law as provided in the annual appropriations acts will be fulfilled.

Sec. 190501(a) amends sec. 4114 of the CARES Act to extend the restriction that any air carrier or contractor receiving aviation worker support grants under CARES must not lay off or furlough employees until after September 30, 2020. The bill extends that from 9/30/2020 to “the date on which such financial assistance is fully exhausted by the air carrier or contractor,” and the self-executed amendment to H.R. 6800 adds clarifies that the restriction expires on 9/30/2020 or the date the financial assistance runs out, “whichever date occurs later.”

Sec. 190501(b) amends sec. 4115 of the CARES Act to strike subsection 4115(b). Subsection (b) allows the federal government to condition aviation worker assistance grants issued after September 30, 2020 on the air carrier or contractor renegotiating labor agreements.

Sec. 190502 requires the Treasury Department to make public on its website plain-language summaries and totals of all the aviation worker support grants provided by the CARES Act, along with copies of all contracts and other documents (after redaction to protect any trade secrets).

Sec. 19503 prevents any air carrier which has received a CARES Act loan or loan guarantee (these being distinct from the worker support grants) from using the proceeds of that loan or loan guarantee “toward a contract for heavy maintenance work at a facility located outside of the United States if such contract would increase the ratio of maintenance work performed outside of the United States to all maintenance work performed by or on behalf of such air carrier at all locations.”

Sec. 190504 requires DOT, HHS, DHS and other agencies to develop a national aviation preparedness plan for communicable disease outbreaks.

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