U.S. Treasury, Guidelines and Application Procedures for Payroll Support to Air Carriers and Contractors (Mar. 30, 2020)

Summary

Guidelines and Application Procedures for Payroll Support to Air Carriers and Contractors issued by the U.S. Department of the Treasury on March 30, 2020 under Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and Economic Security Act. They state aggregate amounts of $25 billion for passenger air carriers, $4 billion for cargo air carriers and $3 billion for contractors. The document defines terms, lists required assurances including no involuntary layoffs or furloughs until September 30, 2020, and describes how the Awardable Amount is determined for the period from April 1, 2019 through September 30, 2019. It states that applicants should submit application materials not later than 5:00 p.m. EDT on April 3, 2020, and that applications received after 11:59 p.m. EDT on April 27, 2020, may not be considered.

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  Guidelines and Application Procedures for Payroll Support to Air Carriers and
Contractors under Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and
                              Economic Security Act

                                      March 30, 2020

INTRODUCTION

These application procedures for payroll support to air carriers and contractors are issued
pursuant to the Coronavirus Aid, Relief, and Economic Security Act (Act). These procedures
may be updated, revised, or modified at any time, and the requirements contained herein may be
waived by the Secretary of the Treasury in his sole discretion to the extent permitted by law.

General Authority. Section 4112(a) of the Act authorizes the Department of the Treasury
(Treasury Department) to provide payments to passenger air carriers, cargo air carriers, and
certain contractors that must be exclusively used for the continuation of payment of employee
wages, salaries, and benefits. Section 4113(b)(1)(A) of the Act authorizes the Treasury
Department to provide such payroll support in such form, and on such terms and conditions, as
he determines appropriate.

These application procedures are issued pursuant to Section 4113(b)(1) of the Act and apply only
to payroll support under Division A, Title IV, Subtitle B, of the Act.

Aggregate Amounts. Section 4112(a) of the Act authorizes the Treasury Department to provide
payments to passenger air carriers, cargo air carriers, and certain contractors up to the following
aggregate amounts:
    Passenger air carriers: $25 billion.
    Cargo air carriers: $4 billion.
    Contractors: $3 billion.

DEFINITIONS

Following are definitions that the Treasury Department will apply for purposes of these
procedures. These definitions supplement and interpret certain terms in the Act.

“Act” means the Coronavirus Aid, Relief, and Economic Security Act (S. 3548, 116th
Cong.).

“Air carrier” has the meaning given to such term under 49 U.S.C. § 40102.

“Cargo air carrier” means an air carrier that, during the time period from April 1, 2019 to
September 30, 2019, derived more than 50% of its air transportation revenue from the
transportation of property or mail, or both.




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“Contractor” means:
   1) a person that performs, under contract with a passenger air carrier conducting operations
       under part 121 of title 14, Code of Federal Regulations:
       a) catering functions, or
       b) functions on the property of an airport that are directly related to the air transportation
          of persons, property, or mail, including but not limited to the loading and unloading
          of property on aircraft; assistance to passengers under 14 C.F.R. part 382; security;
          airport ticketing and check-in functions; ground-handling of aircraft; or aircraft
          cleaning and sanitization functions and waste removal; or
   2) a subcontractor that performs the above functions.

“Catering functions” means the preparation, assembly, or both, of food, beverage, provisions and
related supplies for delivery, and the delivery of such items, directly to aircraft or to a location on
or near airport property for subsequent delivery to aircraft.

“Employee” means an individual, other than a corporate officer, who is employed by an air
carrier or a contractor in the United States (including its territories and possessions).

“Passenger air carrier” means an air carrier that, during the period from April 1, 2019, to
September 30, 2019, derived more than 50% of its air transportation revenue from the
transportation of passengers.

“Wages, salaries, benefits, and other compensation,” for purposes of Section 4113(a)(2) and (3)
of the Act, means remuneration paid by the applicant to its employees for personal services and
includes salaries, wages, overtime pay, cost-of-living differentials, and other similar
compensation, as distinguished from per diem allowances or reimbursement for expenses
incurred by personnel for the benefit of the applicant.

ELIGIBILITY

Payments may only be provided to applicants that are air carriers or contractors.

REQUIRED ASSURANCES AND OTHER CONDITIONS

Pursuant to Sections 4113(b)(1)(A) and 4114 of the Act, to be eligible to receive payments, an
applicant must agree to:

      use such payments exclusively for the continuation of employee wages, salaries, and
       benefits;
      refrain from conducting involuntary layoffs or furloughs, or reducing pay rates and
       benefits, of employees of the applicant and its subsidiaries (or, in the discretion of the
       Secretary of the Treasury, any affiliated entity) until September 30, 2020;
      through September 30, 2021, ensure that neither the applicant nor any subsidiary or
       affiliate thereof purchases, in any transaction, an equity security of the applicant or the
       direct or indirect parent company of the applicant that is listed on a national securities
       exchange; and

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      through September 30, 2021, ensure that the applicant shall not pay dividends, or make
       other capital distributions, with respect to the common stock (or equivalent interest) of
       the applicant or any subsidiary thereof.

Collective Bargaining Agreements. Under Section 4115 of the Act, through September 30, 2020,
neither the Treasury Department nor any other actor, department, or agency of the Federal
Government may condition the provision of payroll support payments on the applicant’s
implementation of measures to enter into negotiations with the certified bargaining
representative of a craft or class of employees of the applicant under the Railway Labor Act (45
U.S.C. § 151 et seq.) or the National Labor Relations Act (29 U.S.C. § 151 et seq.), regarding
pay or other terms of employment.

Limitation on Certain Employee Compensation. The Treasury Department may only provide
payroll support payments to an applicant after the applicant enters into an agreement with the
Treasury Department limiting, during the two-year period beginning March 24, 2020 and ending
March 24, 2022, the total compensation (including salary, bonus, awards of stock, and other
financial benefits) of certain employees of the applicant, as set forth in Section 4116 of the Act.

Taxpayer Protection. Under Section 4117 of the Act, the Treasury Department is authorized to
receive warrants, options, preferred stock, debt securities, notes, or other financial instruments
issued by recipients of payroll support which, in the sole determination of the Treasury
Department, provide appropriate compensation to the Federal Government for the provision of
the payroll support.

Audits and Reports. Under Section 4113(d) of the Act, the Inspector General of the Treasury
Department will audit certifications regarding an applicant’s awardable amount. Under Section
4118 of the Act, the Treasury Department will report to Congress on the payroll support
provided.

Suspension or Debarment. The Treasury Department may refuse to provide payroll support
payments to applicants that have been debarred, suspended, deemed ineligible, or voluntarily
excluded from participation.

Insolvency. The Treasury Department may refuse to provide payroll support payments to
applicants that have taken, or are currently evaluating, any action to commence a bankruptcy or
insolvency filing in any applicable jurisdiction.

Consultation with Transportation. Under Section 4119 of the Act, the Treasury Department may
disclose to the Department of Transportation any information submitted as part of an application
for payroll support, and may consult with the Department of Transportation on any aspect of
application screening or evaluation.

Continuation of Certain Air Service. Under Section 4114(b) of the Act, an air carrier applicant
provided payroll support may be required, to the extent reasonable and practicable, by the
Secretary of Transportation to maintain scheduled air transportation service, as the Secretary of



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Transportation deems necessary to ensure services to any point served by that carrier before
March 1, 2020.

AWARDABLE AMOUNTS

Under Section 4113(a) of the Act, payroll support will be awardable to an approved applicant in
an amount equal to the compensation paid by the applicant to its employees, as determined by
the Secretary of the Treasury in his sole discretion, for the period from April 1, 2019 through
September 30, 2019 (Awardable Amount).

The Awardable Amount is determined in one of three ways:

      For an air carrier that reports salaries and benefits to the Department of Transportation
       pursuant to 14 C.F.R. part 241, the Awardable Amount is an amount equal to the salaries
       and benefits reported by such air carrier on such reports pertaining to the time period.
      For an air carrier that does not transmit reports under 14 C.F.R. part 241, the Awardable
       Amount is an amount that such carrier certifies, using sworn financial statements or other
       appropriate data, as the amount of wages, salaries, benefits, and other compensation paid
       by such carrier during the time period.
      For a contractor, the Awardable Amount is an amount that such contractor certifies, using
       sworn financial statements or other appropriate data, as the amount of wages, salaries,
       benefits, and other compensation that such contractor paid its employees during the time
       period.

Pro Rata Authority. In the event that Awardable Amounts payable to approved applicants in any
category (passenger air carriers, cargo air carriers, or contractors) exceed the aggregate amount
authorized to be provided to such category, the Treasury Department may reduce, on a pro rata
basis, the amounts payable to approved applicants in such category in order to address such
shortfall.

APPLICATION FORM AND DEADLINES

To be eligible for payroll support, an applicant must complete the Payroll Support Application
Form, including a proposal identifying a financial instrument (or instruments) and proposed
terms for such instruments that would provide appropriate compensation to the Federal
Government in exchange for payroll support. If the applicant is not an air carrier that reports
salaries and benefits to the U.S. Department of Transportation under 14 C.F.R. part 241, the
applicant must also include a sworn financial statement certifying the amount of compensation
paid to its employees during the period from April 1, 2019, through September 30, 2019. The
Treasury Department may request appropriate documentation in support of the sworn financial
statement at a later time.

An applicant must also complete a Payroll Support Agreement, which will be provided by the
Treasury Department after an application is received. The Payroll Support Agreement will
include terms containing:


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       the assurances described above;
       the compensation limitations in Section 4116 of the Act;
       certain other conditions and covenants; and
       provisions for the clawback of payments upon the applicant’s failure to satisfy its
        assurances, conditions, or agreements.

To receive approval of their applications as soon as possible, applicants should submit their
completed application materials not later than 5:00 p.m. EDT on April 3, 2020. Applicants
may submit their application materials to PayrollSupportApplications@treasury.gov. In the
coming days, the Treasury Department will provide a web-based form for application
submissions.

Applications received after 5:00 p.m. EDT on April 3 will be considered, but may not receive
approval as quickly. Applications received after 11:59 p.m. EDT on April 27, 2020, may not
be considered, but the Secretary of the Treasury may, in his discretion and subject to the
availability of funds, consider such applications for approval.

OMB Approved No. 1505-0263, Expiration Date: 09/30/2020

APPLICATION EVALUATION

Applications determined to be complete will be reviewed and evaluated by the Treasury
Department. The Treasury Department will consider the eligibility of the applicant, the
adequacy of the proposed financial instruments for providing compensation to the Federal
Government, the availability of funds, the applicant’s willingness to be bound by the Payroll
Support Agreement, and the purposes of the Act in determining whether to approve an
application.

PAYROLL SUPPORT PAYMENTS

Approved applicants may receive payroll support in multiple payments, and the amounts and
timing of such payments will be determined by the Secretary of the Treasury in his discretion.

To the extent an approved applicant’s initial payment or payments are less than the applicant’s
Awardable Amount, the Treasury Department will make additional payments to the applicant
up to its Awardable Amount from any funds remaining available. If there is any shortfall in
available funds, the Treasury Department may reduce the Awardable Amounts to be received
by approved applicants, as described under “Pro Rata Authority” above.


PAPERWORK REDUCTION ACT NOTICE
The information collected will be used for the U.S. Government to process requests for support. The estimated
burden associated with this collection of information is two hours per response. Comments concerning the accuracy
of this burden estimate and suggestions for reducing this burden should be directed to the Office of Privacy,
Transparency and Records, Department of the Treasury, 1500 Pennsylvania Ave., N.W., Washington, D.C. 20220.
DO NOT send the form to this address. An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid control number assigned by OMB.


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