Issue Brief: GA Small Business Relief Legislation

On Capitol Hill

Issue Brief

GA Small Business Relief Legislation

April 2002

Summary of Legislation Affecting General Aviation Small Businesses

General aviation small businesses are experiencing tremendous economic losses as a direct result of unprecedented actions taken by the Federal Aviation Administration in response to the terrorist acts of September 11, 2001. This small business sector faces dire consequences including the layoff of thousands of workers.

The losses incurred by general aviation small businesses do not appear to qualify under any established federal disaster relief law or program. In testimony before the House aviation subcommittee on September 25, 2001, AOPA President Phil Boyer gave a proposal for a general aviation federal aid recovery plan.

That proposal was incorporated in the General Aviation Small Business Relief Act (H.R. 3007), introduced on October 3, 2001 in the House of Representatives by Bill Shuster (R-Pa.). The legislation would amend Section 7(b) of the Small Business Act (15 U.S.C. 636 [b]) to require the Small Business Administration to provide grants and loans to small GA businesses that qualify and would defer repayment of loans and interest rates for one year.

AOPA also worked with Senators Tom Harkin (D-Iowa) and Jim Inhofe (R-Okla.) who introduced the General Aviation Small Business Assistance Act (S. 1552) on October 16, 2001. This bill complements the American Small Business Emergency Relief and Recovery Act of 2001 (S. 1499) introduced by Senators John Kerry (D-Mass.) and Christopher "Kit" Bond (R-Mo.) on October 2, 2001, and its companion bill in the House (H.R. 3230), introduced by Representative Donald Manzullo (R-Ill.) on November 6, 2001.

The Harkin-Inhofe bill would provide for direct grants to GA small businesses affected by the shutdown of airspace, whereas the Kerry-Bond bill would provide disaster loans to GA small businesses similarly affected. Terms include deferred payments and forgiven interest on these loans for two years.

One GA Relief bill that will now head to the full House of Representatives for a vote is H.R. 3347, the General Aviation Industry Reparations Act of 2001. On November 27, House Aviation Subcommittee Chairman John Mica (R-Fla.) introduced H.R. 3347, which will provide, if enacted as it was amended by the full committee, $3 billion in loan guarantees (which will be authorized from the unused portion of the $10 billion in loan guarantees provided through last September's airline bailout bill) and $2.5 billion in grants to general aviation businesses. The newly formed Air Transportation Stabilization Board would administer funding, and the President would have the power to give priority for compensation to a GA entity based on the length of time that entity has been unable to operate. AOPA Legislative Affairs worked closely with Chairman Mica's staff to finalize the bill. H.R. 3347 was reported out of the House Transportation and Infrastructure Committee on February 27 and must now be approved by the full House of Representatives. Meanwhile in the Senate, Jim Inhofe of Oklahoma introduced companion legislation to Rep. Mica's bill, S. 2007, on March 12. Sen. Inhofe's bill has been referred to the Senate Banking, Housing, and Urban Affairs Committee.

And S. 1499, a bill introduced by Small Business Committee Chairman John Kerry (D-Mass.) passed the Senate by voice vote on March 22. Sen. Kerry negotiated with the White House and Republican Christopher Bond (Mo.), ranking member of the Small Business Committee, to clear the way for the President's signature on the AOPA-backed bill. The original version of the bill, which provided $800 million in aid over five years, was considered too costly by the Administration. The compromise legislation would provide $300 million over five years.

Please look below for recent congressional action on these bills and individual bill summaries.

Background on the Individual Bills

H.R. 3347, General Aviation Industry Reparations Act of 2002

  • On April 15, in an important statement of support, the House Transportation and Infrastructure Committee endorsed AOPA's petition to the FAA for a rule requiring pilots to carry valid photo identification. The recommendation for prompt action was included in the official Committee Report (Rept. 107-406) that accompanies the General Aviation Reparations Act of 2002 (H.R. 3347).

    In its report, the committee said, "While the reported bill focuses on compensation for general aviation entities and their employees, the Committee is also concerned about general aviation security. One of the best ways to address general aviation security is to systematically and immediately identify and characterize general aviation pilots. This issue has been the subject of security discussions within the general aviation community.

    "The Aircraft Owners and Pilots Association have (sic) petitioned the Federal Aviation Administration (FAA) for a rule requiring pilots to carry valid photo identification. This can be implemented quickly and would result in pilots having a picture identification (most likely a valid state issued driver's license, government ID card, passport, or other form of identification that is acceptable to the FAA for security purposes), in addition to their pilot and medical certificates on their person when flying. The Committee recommends prompt action by the FAA on this petition for rulemaking."
  • On February 27, the House Transportation and Infrastructure Committee approved H.R. 3347. At the markup hearing for this legislation, the bill's author, House Aviation Subcommittee Chairman John Mica of Florida, asked for the committee's support, saying general aviation businesses were "the forgotten victims of the tragedies of Sept. 11." Ranking Minority Member Jim Oberstar of Minnesota called general aviation the "entrepreneurial lifeblood of aviation" and noted that "general aviation is still hostage to the national security agencies who continue to limit the use of the nation's airspace."
  • On December 13, the House aviation subcommittee unanimously approved H.R. 3347. At the markup hearing for this legislation, Chairman Mica of Florida called general aviation "the forgotten victim of the tragedies of September 11," and added that he hopes the bill will "repair some of the damage done to the general aviation industry as a direct result of federal action." Congressman Robin Hayes of North Carolina praised AOPA for the "work it has done to inform the Congress and the public of the vital role that general aviation plays" in the national economy.

Bill status and sponsorship

Includes the following:

  • Directs the President to take the following action to compensate general aviation entities (this includes FBOs, GA product manufacturers, flight schools, and persons engaged in nonscheduled commercial aviation enterprises) for losses incurred as a result of the terrorist attacks on 9/11/01:
    • Provide $3 billion in federal loan guarantees, which would be authorized from the unused portion of the $10 billion in loan guarantees provided through last September's $15 billion airline bailout law (PL 107-42).
    • Provide $2.5 billion in grants to GA entities suffering direct losses and incremental losses as a direct result of the terrorist attacks.
    • Priority for compensation shall be given based on the length of time that the entity has been unable to operate as a result of the terrorist attacks and whether the entity is a small business concern.
  • Allows the Air Transportation Stabilization Board, in consultation with the Small Business Administration, to enter into agreements with one or more GA entities if credit for these entities is not reasonably available at the time of transaction.
  • Permits the Secretary of Transportation to provide insurance and reinsurance to general aviation aircraft if the President determines that it is necessary to carry out the foreign policy of the United States.
  • Requires the President to only issue loans to GA entities that agree to provide payment of health insurance coverage for current and former employees who lost coverage due to a job loss after Sept. 11.

S. 2007, General Aviation Industry Reparations Act of 2002

  • In his bill introduction statement on the Senate floor on March 12, Sen. Inhofe said, "General aviation, a very important segment of the aviation industry, has yet to be made whole for actions taken by the federal government following the terrorist attacks of September 11th." He further stated that "working closely with general aviation groups such as the Aircraft Owners and Pilots Association, AOPA, which has worked hard to explain the scope of general aviation to members of Congress and how critical it is to the nation, I think we have a very balanced package."

Bill status and sponsorship

Includes the same language as H.R. 3347 (outlined above)

H.R. 3007, General Aviation Small Business Relief Act of 2001

  • Representative Shuster attempted to add H.R. 3007 as an amendment to the House Republican version of the Aviation Security Act (H.R. 3150), but was unsuccessful.

Bill status and sponsorship

Includes the following:

  • Immediate grants consisting of expense reimbursement payments to all qualified general aviation flight schools grounded by FAA orders that were issued on or after September 11, 2001.
    • Each grant should at least equal all business revenue losses directly due to flight restrictions imposed September 11, 2001 less any directly related "business interruption" insurance payment made to the recipient.
  • One-year period of "no-interest" loans.
  • Long-term "low-interest" loans.
  • One-year deferment from payments on any SBA loan programs.
  • Extension of due date from any federal excise tax or other federal fees incurred in the course of conducting aviation business activities.

The Federal Emergency Management Agency (FEMA) should be used to administer grants provided by relief legislation. FEMA would also provide assistance in obtaining loans through various SBA loan programs in the event that grant monies are not sufficient. Though FEMA's responsibilities have traditionally been to assist communities, individuals and businesses with grants and loans in times of natural disaster, FEMA is best suited to administer this General Aviation Small Business Relief Act.

H.R. 3230, American Small Business Emergency Relief and Recovery Act of 2001

  • On November 14, the House Small Business Committee approved H.R. 3230 and reported it out of committee. AOPA was particularly interested in an amendment from Representative Nydia Velazquez (D-N.Y.) that would give the SBA administrator the discretion to give grants to small businesses hurt by the September 11th attacks. It would also give the administrator the discretion to forgive disaster loans and to establish a variable interest rate on disaster loans. While this provision is not GA-specific, it would allow the GA small businesses hurt by the September 11th attacks to get grants and loans. Rep. Velazquez's amendment passed the committee.

Bill status and sponsorship

Includes the following:

  • Grants the Small Business Administration the authority to make two categories of loans either directly or in cooperation with bands or other lending institutions to a small business concern that has been directly affected and suffered, or that is likely to suffer, substantial economic injury as a direct result of the terrorist attacks of 9/11/01, including due to the closure or suspension of its business for national security purposes at the mandate of the federal government.
  • Under the first category of loans - disaster loans - up to $6 million in loan guarantees would be available to individual businesses in Virginia, New York, or contiguous areas designated by the President as a disaster area. Up to $5 million in loan guarantees to business located elsewhere. GA businesses are in this category.
  • Under the second category of loans - emergency loans - up to $1 million in loan guarantees, and up to $2 million in loan guarantees to businesses in high-cost areas, for small businesses that were not directly affected but suffered collateral damage.
  • Deferment of loan payments: Payments of principal and interest on these loans shall be deferred, and no interest shall accrue during the two-year period following the date of issuance of such loan.
  • Refinancing of loans: Any outstanding SBA loan held by a small business eligible for an additional loan under this section may be refinanced to be part of the new loan.
  • An amendment offered by Nydia Velàzquez (D- N.Y.) and accepted by the Small Business Committee would give the SBA administrator the discretion to give grants to small businesses hurt by the Sept. 11 attacks.

S. 1552, General Aviation Small Business Assistance Act

Bill status and sponsorship

Includes the following:

  • $400 million authorized to appropriators to carry out this act.
  • Immediate grants to GA small businesses for direct and incremental losses incurred by such small businesses as a result of the FAA ground-stop orders issued on or after September 11, 2001.
    • Each grant should be equal to the amount of direct and incremental losses incurred by a GA small business between September 11 and December 31, 2001, less any directly related insurance payment made to the recipient.
  • The grant cannot exceed $6 million.
  • Applications for assistance will be accepted until September 10, 2002.

S. 1499, American Small Business Emergency Relief and Recovery Act of 2001

  • On March 22, 2002, Senators Kerry and Bond amended their legislation after their negotiations with the White House. The amended version then passed the Senate by a voice vote. The original version of the bill, which provided $800 million in aid over five years, was considered too costly by the Administration. The compromise legislation would provide $300 million over five years.
  • On November 9, Senators Kerry and Bond's bill (S. 1499) bypassed the Senate Small Business Committee and was placed on the Senate calendar.
  • On November 1, Senator John Kerry (D-Mass.), chairman of the Senate Small Business Committee and member of the Commerce Committee, sent a letter to the President urging him "to make a portion of the $40 billion provided to the Office of the President available to small businesses affected by the closure of Class B airspace throughout the United States."

Bill status and sponsorship

Includes the following:

  • Grants the Small Business Administration the authority to make two categories of loans either directly or in cooperation with banks or other lending institutions to a small business concern that has been directly affected and suffered, or that is likely to suffer, substantial economic injury as a direct result of the terrorist attacks of 9/11/01, including due to the closure or suspension of its business for national security purposes at the mandate of the gederal government.
  • Under the first category of loans - disaster loans - up to $10 million in loan guarantees would be available to individual businesses in Virginia, New York, or contiguous areas designated by the President as disaster areas. Up to $5 million in loan guarantees to businesses located elsewhere. GA businesses are in this category.
  • Under the second category of loans - emergency loans - up to $1 million in loan guarantees, and up to $2 million in loan guarantees to businesses in high-cost areas, for small businesses that were not directly affected but suffered collateral damage.
  • Deferment of loan payments: Payments of principal and interest on these loans shall be deferred, and no interest shall accrue during the two-year period following the date of issuance of such loan.
  • Refinancing of loans: Any outstanding SBA loan held by a small business eligible for an additional loan under this section may be refinanced to be part of the new loan.