49 U.S.C. § 41763 — Federal credit instruments

(a) In General. Following the rules in this section and section 41766, the Secretary of Transportation can sign agreements with one or more obligors to offer federal credit instruments. That money must be used to help pay for buying aircraft. (b) Secured Loans. (1) Terms and limitations. (A) In general -- a secured loan's terms, conditions, promises, and requirements (including audits) are whatever the Secretary decides fit. (B) Maximum amount -- a secured loan cannot cover more than 50% of the aircraft's purchase price (counting any manufacturer credits, post-purchase options, or discounts), including spare parts. Also, adding this loan to the remaining balance on any other federal credit instruments already given to the same obligor under this subchapter can't add up to more than $100,000,000. (C) Final payment date -- the loan must be fully paid off no later than 18 years after it was signed. (D) Subordination -- if the obligor goes bankrupt, becomes insolvent, or is liquidated, the Secretary can decide the secured loan gets paid after other debts. (E) Fees -- subject to Congress appropriating money, the Secretary can charge fees to cover some or all of the government's administrative costs for making the loan. Fee money goes into an account used to run this program and stays available until spent. (2) Repayment. (A) Schedule -- the Secretary sets a repayment schedule for each loan, based on the aircraft's expected income and other repayment sources. (B) Commencement -- scheduled payments of principal and interest must start no later than 3 years after the loan agreement is signed. (3) Prepayment. (A) Use of excess revenue -- after covering scheduled debt payments on all loans and financial obligations, and meeting any trust or bond agreement's deposit rules, the loan can be paid off early without penalty. (B) Use of proceeds of refinancing -- the loan can also be paid off early, without penalty, using money from refinancing through non-federal sources. (c) Loan Guarantees. (1) In general -- a loan guarantee's form, terms, conditions, and requirements (including audits) are whatever the Secretary decides fit. (2) Maximum amount -- a loan guarantee cannot cover more than the unpaid interest plus 50% of the unpaid principal on any loan; cannot cover more than 50% of the aircraft's purchase price for any loan or combination of loans; cannot apply to a loan that allows repayment more than 15 years after signing; and, combined with the obligor's other federal credit instruments under this subchapter, cannot exceed $100,000,000. (3) Fees -- same rule as for secured loans: subject to appropriations, the Secretary can charge fees to cover administrative costs, deposited into the program's account and available until spent. (d) Lines of Credit. (1) In general -- subject to this subsection, the Secretary can agree to offer lines of credit to obligors -- meaning direct loans the Secretary will make later, if certain events happen, for an aircraft purchase chosen under this section. (2) Terms and limitations. (A) In general -- same flexible standard: whatever terms, conditions, and requirements the Secretary thinks fit. (B) Maximum amount -- the total line of credit can't exceed 50% of the aircraft's purchase price (with the same credits and discounts counted); and in any single year, the amount drawn can't exceed 20% of the total line. (C) Draws -- every draw on the line counts as a direct loan. (D) Period of availability -- the line of credit can't be used more than 5 years after the aircraft purchase date. (E) Rights of third-party creditors -- a third-party creditor of the obligor has no claim against the federal government based on any draw on the line; but the obligor can assign the line of credit to one or more lenders or a trustee for them. (F) Subordination -- same as with secured loans: the Secretary can decide the direct loan gets paid after other debts if the obligor goes bankrupt, insolvent, or is liquidated. (G) Fees -- same rule again: fees for administrative costs, subject to appropriations, deposited in the program account, available until spent. (3) Repayment. (A) Schedule -- the Secretary sets a repayment schedule for each direct loan made this way. (B) Commencement -- payments of principal or interest must start no later than 3 years after the first draw, and the loan must be fully repaid, with interest, within 18 years of that first draw. (e) Risk Assessment. Before agreeing to offer any federal credit instrument, the Secretary -- working with the Director of the Office of Management and Budget -- must figure out the right "capital reserve subsidy amount," based on whatever credit checks the Secretary thinks are needed. (f) Conditions. Except as subsection (h) allows, the Secretary can only offer a federal credit instrument if the Secretary finds: (1) the aircraft being bought is a regional jet needed to improve service and efficiency for a commuter or new entrant air carrier; (2) that airline signs a binding agreement to use the aircraft to serve underserved markets; and (3) the airline's expected earnings, plus the value of whatever security is pledged (including the aircraft itself and any other assets), give (A) reasonable assurance the airline can and will repay the loan on time, keep operating as an airline, and -- where the Secretary thinks it's needed -- keep flying the same route or routes it was flying when it got the credit instrument; and (B) reasonable protection for the United States. (g) Limitation on Combined Amount of Federal Credit Instruments. The Secretary can't let the total federal credit instruments for any one aircraft purchase exceed 50% of the purchase cost, or let any single obligor receive more than $100,000,000 total. (h) Requirement. Except as subsection (i) allows, no federal credit instrument can help buy a regional jet that doesn't meet the "Stage 3" noise limits under 14 CFR Part 36, as those rules stood on January 1, 1999. (i) Other Limitations. No federal credit instrument can help buy a regional jet unless the airline signs a binding agreement to fly scheduled passenger service to the underserved market that justified the purchase, for at least 36 straight months after the aircraft enters service.