To reauthorize the essential air service program under chapter 471 of title 49, United States Code, and for other purposes.

April 30, 2003

Mr. LOTT (for himself and Mr. ROCKEFELLER) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation

To reauthorize the essential air service program 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 `Small Community and Rural Air Service Revitalization Act of 2003'.

SEC. 2. REAUTHORIZATION OF ESSENTIAL AIR SERVICE PROGRAM.

Section 41742(a) of title 49, United States Code, is amended to read as follows:

`(a) IN GENERAL- There are authorized to be appropriated to the Secretary of Transportation to carry out the essential air service under this subchapter, $113,000,000 for each of fiscal years 2004 through 2007, $50,000,000 of which for each such year shall be derived from amounts received by the Federal Aviation Administration credited to the account established under section 45303 of this title or otherwise provided to the Administration.'.

SEC. 3. INCENTIVE PROGRAM.

(a) IN GENERAL- Chapter 417 of title 49, United States Code, is amended by adding at the end the following:

`SUBCHAPTER IV--MARKETING INCENTIVE PROGRAM

` 41781. Purposes

`The purposes of this subchapter are--

`(1) to enable essential air service communities to increase boardings and the level of passenger usage of airport facilities at an eligible place by providing technical, financial, and other marketing assistance to such communities and to States;

`(2) to reduce subsidy costs under subchapter II of this chapter as a consequence of such increased usage; and

`(3) to provide such communities with opportunities to obtain, retain, and improve transportation services.

` 41782. Marketing program

`(a) IN GENERAL- The Secretary of Transportation shall establish a marketing incentive program for eligible essential air service communities receiving assistance under subchapter II under which the airport sponsor in such a community may receive a grant of not more than $50,000 to develop and implement a marketing plan to increase passenger boardings and the level of passenger usage of its airport facilities.

`(b) MATCHING REQUIREMENT; SUCCESS BONUSES--

`(1) IN GENERAL- Except as provided in paragraphs (2) and (3), not less than 25 percent of the publicly financed costs associated with the marketing plan shall come from non-Federal sources. For purposes of this paragraph--

`(A) the non-Federal portion of the publicly financed costs may be derived from contributions in kind; and

`(B) State or local matching contributions may not be derived, directly or indirectly, from Federal funds, but the use by a state or local government of proceeds from the sale of bonds to provide the matching contribution is not considered to be a contribution derived directly or indirectly from Federal funds, without regard to the Federal income tax treatment of interest paid on those bonds or the Federal income tax treatment of those bonds.

`(2) Bonus for 25-percent increase in usage- Except as provided in paragraph (3), if, after any 12-month period during which a marketing plan has been in effect, the Secretary determines that the marketing plan has increased average monthly boardings, or the level of passenger usage, at the airport facilities at the eligible place, by 25 percent or more, then only 10 percent of the publicly financed costs associated with the marketing plan shall be required to come from non-Federal sources for the following 12-month period.

`(3) Bonus for 50-percent increase in usage- If, after any 12-month period during which a marketing plan has been in effect, the Secretary determines that the marketing plan has increased

average monthly boardings, or the level of passenger usage, at the airport facilities at the eligible place, by 50 percent or more, then no portion of the publicly financed costs associated with the marketing plan shall be required to come from non-Federal sources for the following 12-month period.

` 41783. State marketing assistance

The Secretary of Transportation may provide up to $50,000 in technical assistance to any State within which an eligible essential air service community is located for the purpose of assisting the State and such communities to develop methods to increase boardings in such communities. At least 10 percent of the costs of the activity with which the assistance is associated shall come from non-Federal sources, including contributions in kind.

` 41784. Definitions

`In this subchapter:

`(1) ELIGIBLE PLACE- The term `eligible place' has the meaning given that term in section 41731(a)(1).

`(2) ELIGIBLE ESSENTIAL AIR SERVICE COMMUNITY- The term `eligible essential air service community' means an eligible place that--

`(A) submits an application to the Secretary in such form, at such time, and containing such information as the Secretary may require, including a detailed marketing plan, or specifications for the development of such a plan, to increase average boardings, or the level of passenger usage, at its airport facilities; and

`(B) provides assurances, satisfactory to the Secretary, that it is able to meet the non-Federal funding requirements of section 41782(b)(1).

`(3) PASSENGER BOARDINGS- The term `passenger boardings' has the meaning given that term by section 47102(10).

`(4) SPONSOR- The term `sponsor' has the meaning given that term in section 47102(19).

` 41785. Authorization of appropriations

`There are authorized to be appropriated to the Secretary of Transportation $12,000,000 for each of fiscal years 2004 through 2007, not more than $200,000 per year of which may be used for administrative costs.'.

(b) CONFORMING AMENDMENT- The chapter analysis for chapter 417 of such title is amended by inserting after the item relating to section 41767 the following:

`SUBCHAPTER IV--MARKETING INCENTIVE PROGRAM

SEC. 4. PILOT PROGRAMS.

(a) IN GENERAL- Subchapter II of chapter 417 of title 49, United States Code, is amended by adding at the end the following:

`41745. Other pilot programs

`(a) IN GENERAL- If the entire amount authorized to be appropriated to the Secretary of Transportation by section 41785 is appropriated for fiscal years 2004 through 2007, the Secretary of Transportation shall establish pilot programs that meet the requirements of this section for improving service to communities receiving essential air service assistance under this subchapter or consortia of such communities.

`(b) Programs Authorized-

`(1) COMMUNITY FLEXIBILITY- The Secretary shall establish a pilot program for not more than 10 communities or consortia of communities under which the airport sponsor of an airport serving the community or consortium may elect to forego any essential air service assistance under preceding sections of this subchapter for a 10-year period in exchange for a grant from the Secretary equal in value to twice the annual essential air service assistance received for the most recently ended calendar year. Under the program, and notwithstanding any provision of law to the contrary, the Secretary shall make a grant to each participating sponsor for use by the recipient for any project that--

`(A) is eligible for assistance under chapter 471;

`(B) is located on the airport property; or

`(C) will improve airport facilities in a way that would make such facilities more usable for general aviation.

`(2) Equipment changes-

`(A) IN GENERAL- The Secretary shall establish a pilot program for not more than 10 communities or consortia of communities under which, upon receiving a petition from the sponsor of the airport serving the community or consortium, the Secretary shall authorize and request the essential air service provider for that community or consortium to use smaller equipment to provide the service and to consider increasing the frequency of service using such smaller equipment. Before granting any such petition, the Secretary shall determine that passenger safety would not be compromised by the use of such smaller equipment.

`(B) ALTERNATIVE SERVICES- For any 3 aiport sponsors participating in the program established under subparagraph (A), the Secretary may establish a pilot program under which--

`(i) the Secretary provides 100 percent Federal funding for reasonable levels of alternative transportation services from the eligible place to the nearest hub airport or small hub airport;

`(ii) the Secretary will authorize the sponsor to use its essential air service subsidy funds provided under preceding sections of this subchapter for any airport-related project that would improve airport facilities; and

`(iii) the sponsor may make an irrevocable election to terminate its participation in the pilot program established under this paragraph after 1 year.

`(3) COST-SHARING- The Secretary shall establish a pilot program under which the sponsors of airports serving a community or consortium of communities share the cost of providing air transportation service greater than the basic essential air service provided under this subchapter.

`(4) EAS local participation program-

`(A) IN GENERAL- The Secretary of Transportation shall establish a pilot program under which designated essential air service communities located in proximity to hub airports are required to assume 10 percent of their essential air service subsidy costs for a 3-year period.

`(B) Designation of communities-

`(i) IN GENERAL- The Secretary may not designate any community under this paragraph unless it is located within 100 miles by road of a hub airport and is not located in a noncontiguous State. In making the designation, the Secretary may take into consideration the total traveltime between a community and the nearest hub airport, taking into account terrain, traffic, weather, road conditions, and other relevant factors.

`(ii) ONE COMMUNITY PER STATE- The Secretary may not designate--

`(I) more than 1 community per State under this paragraph; or

`(II) a community in a State in which another community that is eligible to participate in the essential air service program has elected not to participate in the essential air service program.

`(C) APPEAL OF DESIGNATION- A community may appeal its designation under this section. The Secretary may withdraw the designation of a community under this paragraph based on--

`(i) the airport sponsor's ability to pay; or

`(ii) the relative lack of financial resources in a community, based on a comparison of the median income of the community with other communities in the State.

`(D) NON-FEDERAL SHARE-

`(i) NON-FEDERAL AMOUNTS- For purposes of this section, the non-Federal portion of the essential air service subsidy may be derived from contributions in kind, or through reduction in the amount of the essential air service subsidy through reduction of air carrier costs, increased ridership, pre-purchase of tickets, or other means. The Secretary shall provide assistance to designated communities in identifying potential means of reducing the amount of the subsidy without adversely affecting air transportation service to the community.

`(ii) APPLICATION WITH OTHER MATCHING REQUIREMENTS- This section shall apply to the Federal share of essential air service provided this subchapter, after the application of any other non-Federal share matching requirements imposed by law.

`(E) ELIGIBILITY FOR OTHER PROGRAMS NOT AFFECTED- Nothing in this paragraph affects the eligibility of a community or consortium of communities, an airport sponsor, or any other person to participate in any program authorized by this subchapter. A community designated under this paragraph may participate in any program (including pilot programs) authorized by this subchapter for which it is otherwise eligible--

`(i) without regard to any limitation on the number of communities that may participate in that program; and

`(ii) without reducing the number of other communities that may participate in that program.

`(F) SECRETARY TO REPORT TO CONGRESS ON IMPACT- The Secretary shall transmit a report to the Senate Committee on Commerce, Science, and Transportation and the House of Representatives Committee on Transportation and Infrastructure on--

`(i) the economic condition of communities designated under this paragraph before their designation;

`(ii) the impact of designation under this paragraph on such communities at the end of each of the 3 years following their designation; and

`(iii) the impact of designation on air traffic patterns affecting air transportation to and from communities designated under this paragraph.

`(c) CODE-SHARING- Under the pilot program established under subsection (a), the Secretary is authorized to require air carriers providing service to participating communities and major air carriers (as defined in section 41716(a)(2)) serving large hub airports (as defined in section 41731(a)(3)) to participate in multiple code-share arrangements consistent with normal industry practice whenever and wherever the Secretary determines that such multiple code-sharing arrangements would improve air transportation services. The Secretary may not require air carriers to participate in such arrangements under this subsection for more than 10 such communities.

`(d) TRACK SERVICE- The Secretary shall require essential air service providers to track changes in service, including on-time arrivals and departures.

`(e) ADMINISTRATIVE PROVISIONS- In order to participate in a pilot program established under this section, the airport sponsor for a community or consortium of communities shall submit an application to the Secretary in such form, at such time, and containing such information as the Secretary may require.'.

(b) CONFORMING AMENDMENT- The chapter analysis for chapter 417 of such title is amended by inserting after the item relating to section 41744 the following:

SEC. 5. EAS PROGRAM AUTHORITY CHANGES.

(a) RATE RENEGOTIATION- If the Secretary of Transportation determines that essential air service providers are experiencing significantly increased costs of providing service under subchapter II of chapter 417 of title 49, United States Code, the Secretary of Transportation may increase the rates of compensation payable under that subchapter within 30 days after the date of enactment of this Act without regard to any agreements or requirements relating to the renegotiation of contracts. For purposes of this subsection, the term `significantly increased costs' means an average monthly cost increase of 10 percent or more.

(b) RETURNED FUNDS- Notwithstanding any provision of law to the contrary, any funds made available under subchapter II of chapter 417 of title 49, United States Code, that are returned to the Secretary by an airport sponsor because of decreased subsidy needs for essential air service under that subchapter shall remain available to the Secretary and may be used by the Secretary under that subchapter to increase the frequency of flights at that airport.

(c) SMALL COMMUNITY AIR SERVICE DEVELOPMENT PILOT PROGRAM- Section 41743(h) of such title is amended by striking `an airport' and inserting `each airport'.

END