[Congressional Record Volume 149, Number 63 (Wednesday, April 30, 2003)]
[Senate]
[Pages S5609-S5612]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LOTT (for himself and Mr. Rockefeller):
  S. 964. A bill to reauthorize the essential air service program under 
chapter 471 of title 49, United States Code, and for other purposes; to 
the Committee on Commerce, Science, and Transportation.
  Mr. LOTT. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 964

       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

[[Page S5610]]

     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

``Sec. 41781. Purpose.
``Sec. 41782. Marketing program.
``Sec. 41783. State marketing assistance.
``Sec. 41784. Definitions.
``Sec. 41785. Authorization of appropriations.

     ``Sec.  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.

     ``Sec.  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.

     ``Sec.  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.

     ``Sec.  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).

     ``Sec.  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

``41781. Purpose.
``41782. Marketing program.
``41783. State marketing assistance.
``41784. Definitions.
``41785. Authorization of appropriations.''.

     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:

     ``Sec.  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

[[Page S5611]]

       ``(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:

``41745. Other pilot programs''.

     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''.
                                  ____

  Mr. ROCKEFELLER. Mr. President, the continuing economic crisis facing 
the U.S. airline industry also imperils the future of hundreds of small 
and rural communities across our country as air carriers drastically 
reduce service to small and rural communities. While small and rural 
communities have long had to cope with limited and unreliable service, 
these problems have been exacerbated by the weakened financial 
condition of most major U.S. airlines.
  Faced with declining revenues brought on by the Nation's economic 
downturn, the events of September 11, 2001 and the war in Iraq most 
carriers have substantially reduced or eliminated service to many 
communities. In the last month, United Air Lines, US Airways and 
Continental Airlines announced significant service cuts to West 
Virginia.
  Last month, this Congress provided $3.5 billion in direct and 
indirect benefits to the Nation's airlines. I strongly supported this 
package because our economy requires a strong and vibrant airline 
industry. In my own aviation relief package, I had provided resources 
to the airlines to continue to provide air service to small and rural 
communities. Even in the best of times, these communities face a 
difficult time maintaining and developing new air service options. 
Today, their challenge is preventing the complete loss of air service. 
In these difficult economic and uncertain times, I strongly believe 
that the Federal Government must continue to assist our most vulnerable 
communities stay connected to the Nation's aviation network--a network 
paid for by all Americans.
  The reduction or elimination of air service had a devastating effect 
on the economy of a community. Having adequate air service is not just 
a matter of convenience, but a matter of economic survival. Without 
access to reliable air service, no business is willing to locate their 
operations in these areas of the country no matter how attractive the 
quality of life. Airports are economic engines that attract critical 
new development opportunities and jobs.
  West Virginia has been able to attract firms from around the world 
because corporate executives know they can visit their operations with 
ease. Rural and small town America must continue to be adequately 
linked to the Nation's air transportation network if its people and 
businesses are to compete economically with larger urban areas in this 
country and around the world.
  In the Aviation Investment and Reform Act for the 21st Century, we 
began to address the need to improve air service in small and rural 
communities. I, along with many of my colleagues, supported the 
creation of the Small Community Air Service Development Pilot Program, 
a competitive grant program to provide communities with the resources 
they needed to attract new air service to their communities. The 
program is an enormous success. Over 180 communities applied for 40 
grants in the first year funds were available. The Department of 
Transportation has announced the next round of funding.

  In West Virginia, Charleston received money under the program and has 
used it to successfully attract a new service connection to Houston, an 
important gateway to the markets of Latin America. This program gave 
local communities the ability and flexibility to meet local air 
transportation needs.
  The Aviation Investment and Revitalization Vision Act, cosponsored by 
myself and Senator Lott, reauthorizes the expands the successful Small 
Community Air Service Development Program. The bill authorizes the 
participation of 120 communities over 3 years.
  Many of our most isolated and vulnerable communities whose only 
service is through the Essential Air Service Program have indicated 
that they would like to develop innovative and flexible programs that 
communities who received Small Community Air Service Development grants 
to improve the quality of their air service.
  It is for this reason that I, along with Senator Lott, have 
introduced the Small Community and Rural Air Service Revitalization Act 
of 2003. The legislation reauthorizes the Department of 
Transportation's Essential Air Service, EAS, program and creates a 
series of pilot programs for EAS communities to participate to 
stimulate passenger demand for air service in their communities.
  Under the bill, communities are given the option on continuing their 
EAS as is or they may apply to participate in new incentive programs to 
help them develop new and innovative solutions to increasing local 
demand for air

[[Page S5612]]

service. The EAS Marketing and Community Flexibility Programs would 
provide communities new resources and tools to implement locally 
developed plans to improve their air service. By providing communities 
the ability to design their own air service proposals, a community has 
the ability to develop a plan that meets it locally determined needs, 
improves air service choices, and gives the community a greater stake 
in the EAS program.
  Specifically, these new EAS pilot programs include authorization for 
the use of smaller planes to decrease cost or increase frequency, 
communities to cost-share for service above base EAS subsidy level, 
alternative service at up to 3 EAS points if a community applies, an 
opt out of the EAS program with a one-time infusion of funding to 
assist in transition out of the program, and DOT to mandate multiple 
code-sharing arrangements for EAS providers.
  A pilot program added at the request of Senator Lott would allow DOT 
to require a cost-share for up to 10 communities within 100 miles of a 
hub. I have significant reservations about forcing communities to pay 
for a service the Federal Government promised them.
  In addition, the communities that participate in EAS are small and 
isolated and have lower than average per captia incomes than urban or 
suburban communities. Cash-strapped communities will have to provide 
anywhere between $50,000 and $120,000 in local funds to continue their 
EAS service. I worked with Senator Lott to make sure DOT considers a 
variety of relevant factors when selecting communities, to provide 
communities appeal rights, and to make sure they have access to all 
other pro-active pilot programs. I will monitor DOT's implementation of 
this pilot program closely.
  Small and rural communities are the first to bear the brunt of bad 
economic times and the last to see the benefits of good times. The 
general economic downturn and the dire straits of the aviation industry 
have placed exceptional burdens on air service to our most isolated 
communities. The Federal Government must provide additional resources 
and tools for small communities to help themselves attract adequate air 
service. The Federal Government must make sure that our most vulnerable 
towns and cities are linked to the rest of the Nation. My legislation 
builds on existing programs and strengthens them. If these bills are 
enacted, our constituents will have the tools and resources necessary 
to attract air service, related economic development, and most 
importantly expand their connections to the national and global 
economy.

                          ____________________