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[[Page 229]]

         AIR TRANSPORTATION SAFETY AND SYSTEM STABILIZATION ACT

[[Page 115 STAT. 230]]

Public Law 107-42
107th Congress

                                 An Act


 
      To preserve the continued viability of the United States air 
     transportation system. <<NOTE: Sept. 22, 2001 -  [H.R. 2926]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Air 
Transportation Safety and System Stabilization Act. 49 USC 40101 
note.>> 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Air Transportation Safety and System 
Stabilization Act''.

                     TITLE I--AIRLINE STABILIZATION

SEC. 101. AVIATION DISASTER RELIEF. <<NOTE: 49 USC 40101 note.>> 

    (a) <<NOTE: President. Terrorism.>>  In General.--Notwithstanding 
any other provision of law, the President shall take the following 
actions to compensate air carriers for losses incurred by the air 
carriers as a result of the terrorist attacks on the United States that 
occurred on September 11, 2001:
            (1) Subject to such terms and conditions as the President 
        deems necessary, issue Federal credit instruments to air 
        carriers that do not, in the aggregate, exceed $10,000,000,000 
        and provide the subsidy amounts necessary for such instruments 
        in accordance with the provisions of the Federal Credit Reform 
        Act of 1990 (2 U.S.C. 661 et seq.).
            (2) Compensate air carriers in an aggregate amount equal to 
        $5,000,000,000 for--
                    (A) direct losses incurred beginning on September 
                11, 2001, by air carriers as a result of any Federal 
                ground stop order issued by the Secretary of 
                Transportation or any subsequent order which continues 
                or renews such a stoppage; and
                    (B) the incremental losses incurred beginning 
                September 11, 2001, and ending December 31, 2001, by air 
                carriers as a direct result of such attacks.

    (b) Emergency Designation.--Congress designates the amount of new 
budget authority and outlays in all fiscal years resulting from this 
title as an emergency requirement pursuant to section 252(e) of the 
Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 
901(e)). Such amount shall be available only to the extent that a 
request, that includes designation of such amount as an emergency 
requirement as defined in such Act, is transmitted by the President to 
Congress.

[[Page 115 STAT. 231]]

SEC. 102. AIR TRANSPORTATION STABILIZATION BOARD. <<NOTE: 49 USC 40101 
            note.>> 

    (a) Definitions.--In this section, the following definitions apply:
            (1) Board.--The term ``Board'' means the Air Transportation 
        Stabilization Board established under subsection (b).
            (2) Financial obligation.--The term ``financial obligation'' 
        means any note, bond, debenture, or other debt obligation issued 
        by an obligor in connection with financing under this section 
        and section 101(a)(1).
            (3) 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 
        regulation) known as Rule 144A(a) of the Securities and Exchange 
        Commission and issued under the Security Act of 1933, 
        including--
                    (A) a qualified retirement plan (as defined in 
                section 4974(c) of the Internal Revenue Code of 1986 (26 
                U.S.C. 4974(c)) that is a qualified institutional buyer; 
                and
                    (B) a governmental plan (as defined in section 
                414(d) of the Internal Revenue Code of 1986 (26 U.S.C. 
                414(d)) that is a qualified institutional buyer.
            (4) 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, 
        partnership, joint venture, trust, or governmental entity, 
        agency, or instrumentality.

    (b) Air Transportation Stabilization Board.--
            (1) Establishment.--There is established a board (to be 
        known as the ``Air Transportation Stabilization Board'') to 
        review and decide on applications for Federal credit instruments 
        under section 101(a)(1).
            (2) Composition.--The Board shall consist of--
                    (A) the Secretary of Transportation or the designee 
                of the Secretary;
                    (B) the Chairman of the Board of Governors of the 
                Federal Reserve System, or the designee of the Chairman, 
                who shall be the Chair of the Board;
                    (C) the Secretary of the Treasury or the designee of 
                the Secretary; and
                    (D) the Comptroller General of the United States, or 
                the designee of the Comptroller General, as a nonvoting 
                member of the Board.

    (c) Federal Credit Instruments.--
            (1) In general.--The Board may enter into agreements with 1 
        or more obligors to issue Federal credit instruments under 
        section 101(a)(1) if the Board determines, in its discretion, 
        that--
                    (A) the obligor is an air carrier for which credit 
                is not reasonably available at the time of the 
                transaction;
                    (B) the intended obligation by the obligor is 
                prudently incurred; and
                    (C) such agreement is a necessary part of 
                maintaining a safe, efficient, and viable commercial 
                aviation system in the United States.
            (2) Terms and limitations.--
                    (A) Forms; terms and conditions.--A Federal credit 
                instrument shall be issued under section 101(a)(1) in 
                such

[[Page 115 STAT. 232]]

                form and on such terms and conditions and contain such 
                covenants, representatives, warranties, and requirements 
                (including requirements for audits) as the Board 
                determines appropriate.
                    (B) <<NOTE: Deadline. Regulations.>>  Procedures.--
                Not later than 14 days after the date of enactment of 
                this Act, the Director of the Office of Management and 
                Budget shall issue regulations setting forth procedures 
                for application and minimum requirements, which may be 
                supplemented by the Board in its discretion, for the 
                issuance of Federal credit instruments under section 
                101(a)(1).

    (d) Financial Protection of Government.--
            (1) In general.--To the extent feasible and practicable, the 
        Board shall ensure that the Government is compensated for the 
        risk assumed in making guarantees under this title.
            (2) Government participation in gains.--To the extent to 
        which any participating corporation accepts financial 
        assistance, in the form of accepting the proceeds of any loans 
        guaranteed by the Government under this title, the Board is 
        authorized to enter into contracts under which the Government, 
        contingent on the financial success of the participating 
        corporation, would participate in the gains of the participating 
        corporation or its security holders through the use of such 
        instruments as warrants, stock options, common or preferred 
        stock, or other appropriate equity instruments.
            (3) Deposit in treasury.--All amounts collected by the 
        Secretary of the Treasury under this subsection shall be 
        deposited in the Treasury as miscellaneous receipts.

SEC. 103. SPECIAL RULES FOR COMPENSATION. <<NOTE: 49 USC 40101 note.>> 

    (a) Documentation.--Subject to subsection (b), the amount of 
compensation payable to an air carrier under section 101(a)(2) may not 
exceed the amount of losses described in section 101(a)(2) that the air 
carrier demonstrates to the satisfaction of the President, using sworn 
financial statements or other appropriate data, that the air carrier 
incurred. The Secretary of Transportation and the Comptroller General of 
the United States may audit such statements and may request any 
information that the Secretary and the Comptroller General deems 
necessary to conduct such audit.
    (b) Maximum Amount of Compensation Payable Per Air Carrier.--The 
maximum total amount of compensation payable to an air carrier under 
section 101(a)(2) may not exceed the lesser of--
            (1) the amount of such air carrier's direct and incremental 
        losses described in section 101(a)(2); or
            (2) in the case of--
                    (A) flights involving passenger-only or combined 
                passenger and cargo transportation, the product of--
                          (i) $4,500,000,000; and
                          (ii) the ratio of--
                                    (I) the available seat miles of the 
                                air carrier for the month of August 2001 
                                as reported to the Secretary; to
                                    (II) the total available seat miles 
                                of all such air carriers for such month 
                                as reported to the Secretary; and

[[Page 115 STAT. 233]]

                    (B) flights involving cargo-only transportation, the 
                product of--
                          (i) $500,000,000; and
                          (ii) the ratio of--
                                    (I) the revenue ton miles or other 
                                auditable measure of the air carrier for 
                                cargo for the latest quarter for which 
                                data is available as reported to the 
                                Secretary; to
                                    (II) the total revenue ton miles or 
                                other auditable measure of all such air 
                                carriers for cargo for such quarter as 
                                reported to the Secretary.

    (c) Payments.--The President may provide compensation to air 
carriers under section 101(a)(2) in 1 or more payments up to the amount 
authorized by this title.

SEC. 104. LIMITATION ON CERTAIN EMPLOYEE COMPENSATION. <<NOTE: 49 USC 
            40101 note.>> 

    (a) In General.--The President may only issue a Federal credit 
instrument under section 101(a)(1) to an air carrier after the air 
carrier enters into a legally binding agreement with the President that, 
during the 2-year period beginning September 11, 2001, and ending 
September 11, 2003, no officer or employee of the air carrier whose 
total compensation exceeded $300,000 in calendar year 2000 (other than 
an employee whose compensation is determined through an existing 
collective bargaining agreement entered into prior to September 11, 
2001)--
            (1) will receive from the air carrier total compensation 
        which exceeds, during any 12 consecutive months of such 2-year 
        period, the total compensation received by the officer or 
        employee from the air carrier in calendar year 2000; and
            (2) will receive from the air carrier severance pay or other 
        benefits upon termination of employment with the air carrier 
        which exceeds twice the maximum total compensation received by 
        the officer or employee from the air carrier in calendar year 
        2000.

    (b) Total Compensation Defined.--In this section, the term ``total 
compensation'' includes salary, bonuses, awards of stock, and other 
financial benefits provided by an air carrier to an officer or employee 
of the air carrier.

SEC. 105. CONTINUATION OF CERTAIN AIR SERVICE. <<NOTE: 49 USC 40101 
            note.>> 

    (a) Action of Secretary.--The Secretary of Transportation should 
take appropriate action to ensure that all communities that had 
scheduled air service before September 11, 2001, continue to receive 
adequate air transportation service and that essential air service to 
small communities continues without interruption.
    (b) <<NOTE: Appropriation authorization.>>  Essential Air Service.--
There is authorized to be appropriated to the Secretary to carry out the 
essential air service program under subchapter II of chapter 417 of 
title 49, United States Code, $120,000,000 for fiscal year 2002.

    (c) Secretarial Oversight.--
            (1) In general.--Notwithstanding any other provision of law, 
        the Secretary is authorized to require an air carrier receiving 
        direct financial assistance under this Act to maintain scheduled 
        air service to any point served by that carrier before September 
        11, 2001.
            (2) Agreements.--In applying paragraph (1), the Secretary 
        may require air carriers receiving direct financial assistance 
        under this Act to enter into agreements which will ensure,

[[Page 115 STAT. 234]]

        to the maximum extent practicable, that all communities that had 
        scheduled air service before September 11, 2001, continue to 
        receive adequate air transportation service.

SEC. 106. REPORTS. <<NOTE: Deadlines. President. 49 USC 40101 note.>> 

    (a) Report.--Not later than February 1, 2001, the President shall 
transmit to the Committee on Transportation and Infrastructure, the 
Committee on Appropriations, and the Committee on the Budget of the 
House of Representatives and the Committee on Commerce, Science, and 
Transportation, the Committee on Appropriations, and the Committee on 
the Budget of the Senate a report on the financial status of the air 
carrier industry and the amounts of assistance provided under this title 
to each air carrier.
    (b) Update.--Not later than the last day of the 7-month period 
following the date of enactment of this Act, the President shall update 
and transmit the report to the Committees.

SEC. 107. DEFINITIONS.

    In this title, the following definitions apply:
            (1) Air carrier.--The term ``air carrier'' has the meaning 
        such term has under section 40102 of title 49, United States 
        Code.
            (2) Federal credit instrument.--The term ``Federal credit 
        instrument'' means any guarantee or other pledge by the Board 
        issued under section 101(a)(1) to pledge the full faith and 
        credit of the United States 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.
            (3) Incremental loss.--The term ``incremental loss'' does 
        not include any loss that the President determines would have 
        been incurred if the terrorist attacks on the United States that 
        occurred on September 11, 2001, had not occurred.

                      TITLE II--AVIATION INSURANCE

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