The primary beneficiaries under the CAA include airlines, public transit agencies and transportation service providers.

On December 21, 2020, Congress passed the Consolidated Appropriations Act of 2021 (CAA), signed by President Trump on December 27, 2020, which provides more than $45 billion in critical financial assistance to the transportation industry, one of the industries most distressed by the COVID-19 pandemic. Similar to the CARES Act, the stimulus bill passed earlier in 2020, financial assistance in the CAA comes in the form of grants that are available until expended, with varying stipulations and assurances from the federal government attached. The primary beneficiaries under the CAA include airlines, public transit agencies and transportation service providers.

Aviation–Airlines

The federal government extended the Payroll Support Program from the CARES Act, appropriating funds for commercial carriers and cargo airlines in the form of grants. Specifically, the CAA provides $15 billion in the aggregate for passenger airlines wages and payroll support to aid air carriers in restoring the jobs of furloughed workers, and an additional $1 billion in aid for their contractors.

The financial assistance is subject to assurances similar to those of the CARES Act:

• Restrictions on buying back stock shares until March 31, 2022, for passenger airlines and contractors;
• Prohibitions on passenger airlines and contractors’ employee furloughs or pay reductions until March 31, 2022;
• No increase in compensation or severance pay for executives or employees making more than $425,000 until October 1, 2022; and
• Minimum services guarantees of air carriers who receive assistance for U.S. locations serviced before March 1, 2020.

Additionally, this act requires grant recipients to recall involuntarily furloughed employees, compensate those employees for lost pay and benefits, and restore rights and protections for returning employees who were not involuntarily furloughed.

Airports

Congress provided grants-in-aid of $2 billion to the Federal Aviation Administration (FAA) in support of airports and concessionaires, payable to sponsors[1], provided they retain 90 percent of those employed as of March 27, 2020, until February 15, 2021. As under the CARES Act, the 90 percent rule is not applicable to nonhub/nonprimary airports and the Secretary of Transportation can waive the 90 percent rule with a proper determination.

The $2 billion is appropriated as follows, with a federal cost share of 100 percent, which will allow critical safety and capacity projects to continue as planned regardless of airport sponsors’ current financial circumstances: 

• $1.75 billion to primary airports and certain cargo airports for costs related to operations, personnel, cleaning, sanitization and janitorial services to combat the spread of COVID-19 at airports and debt service payments;
• $45 million for nonprimary airports for costs related to operations, personnel, cleaning, sanitization and janitorial services to combat the spread of COVID-19 at airports and debt service payments; and
• $200 million for primary airport sponsors to provide rent relief and minimum annual guarantees to airport car rentals, on-airport parking and interterminal concessions.

Rail

An allocation of $1 billion is provided to Amtrak to prevent, prepare for and respond to the pandemic, consisting of $655 million in grants for the Northeast Corridor and $345 million for Amtrak’s national network.

Public Transit

Under the CAA, $14 billion in grants are allocated to state and local transit agencies to prevent, prepare for and respond to COVID-19. These funds are to be used for payroll and operations, including payroll and expenses of private providers of public transportation, to the greatest extent possible.

• $13.27 billion is designated for urbanized area formula funds;
• $50 million is provided for enhanced mobility for seniors and people with disabilities formula funds; and
• $678.65 million is designated for rural area formula funds.

Transportation Service Providers

Unlike the CARES Act, the CAA provides $2 billion in grant funding to transportation service providers for fiscal year 2021, such as private bus and motorcoach companies. Eligible providers are owners and operators of passenger vessels in the United States who provide transportation services using (1) a bus with an elevated passenger deck over a baggage department, (2) a school bus or (3) passenger services subject to the Department of Transportation regulations.

In order to receive this grant funding, providers must make the following assurances:

• As a priority, at least 60 percent of funds must be used for payroll costs of employees from December 28, 2020, to March 31, 2021, or the date on which all funds are expended (the latter date prevails);
• No involuntary furloughs or reduction in pay or benefits for nonexecutive employees from December 28, 2020, to March 31, 2021;
• Recall or rehire any employees laid off, furloughed or terminated after March 27, 2020, to the extent required by service levels; and
• Return any unused funds after one year of receipt to the Department of Transportation.

Please note that this is a summary of the Consolidated Appropriations Act of 2021 and not intended to be comprehensive.

About Duane Morris

Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.

For More Information

If you have any questions about this Alert, please contact Sharon L. Caffrey, Alyson Walker Lotman, any of the attorneys in our Transportation, Automotive and Logistics Industry Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are in regular contact.

Notes

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.