§2373. Program benefits

(a) Types of adjustment assistance

Adjustment assistance under this part consists of-

(1) all forms of assistance, other than loan guarantees, which are provided to a redevelopment area under the Public Works and Economic Development Act of 1965 [42 U.S.C. 3121 et seq.], and

(2) the loan guarantee program described in subsection (d) of this section.

(b) Approval of adjustment assistance plan

No adjustment assistance may be extended to any community or person in a trade impacted area under this part unless the Secretary approves the adjustment assistance plan submitted to him under section 2372(d) of this title.

(c) Public Works and Economic Development Act of 1965

For purposes of the Public Works and Economic Development Act of 1965 [42 U.S.C. 3121 et seq.]

(1) a trade impacted area for which an adjustment assistance plan has been approved under section 2372(d) of this title shall be treated as a redevelopment area, except that-

(A) no loan guarantees may be made to any person under such Act; and

(B) no loan or grant may be made to any recipient in such an area after September 30, 1980, and

(2) approval of an adjustment assistance plan submitted under section 2372(d) of this title shall be treated as approval of an overall economic development program under section 202(b)(10) of such Act [42 U.S.C. 3142(b)(10)].

(d) Loan guarantees

The Secretary is authorized to guarantee loans for-

(1) the acquisition, construction, installation, modernization, development, conversion, or expansion of land, plant, buildings, equipment, facilities, or machinery, and

(2) working capital,

made to private borrowers by private lending institutions in connection with projects in trade impacted areas subject to the same terms and conditions to which loan guarantees are subject under section 202 of the Public Works and Economic Development Act of 1965 [42 U.S.C. 3142], including record and audit requirements and penalties, except that-

(1) no new loan guarantee may be made under this subsection after September 30, 1982,

(2) a loan guarantee may be made for the entire amount of the outstanding unpaid balance of such loan, and

(3) no more than 20 percent of the amount of loan guarantees made under this subsection by the United States may be made in one State.

(e) Agreement of State or community to pay a portion of liability arising on loan guarantees

The Governor of the State, the authorized representative of the community, or the Governor of the State and the authorized representative of the community, in which an applicant for a loan guarantee under subsection (b) of this section is located may enter into an agreement with the Secretary which provides that such State or such community, or that such State and such community, will pay not to exceed one-half of the amount of any liability which arises on a loan guarantee made under subsection (d) of this section if the State in which the applicant for such guarantee is located has established by law a program approved by the Secretary for the purposes of this section.

(f) Preference to corporations with employee stock ownership plan; requisite features of plan

(1) When considering whether to guarantee a loan to a corporation which is otherwise qualified for the purposes of subsection (d) of this section, the Secretary shall give preference to a corporation which agrees with respect to such loan to fulfill the following requirements-

(A) 25 percent of the principal amount of the loan is paid by the lender to a qualified trust established under an employee stock ownership plan established and maintained by the recipient corporation, by a parent or subsidiary of such corporation, or by several corporations including the recipient corporation.

(B) the employee stock ownership plan meets the requirements of this subsection, and

(C) the agreement among the recipient corporation, the lender, and the qualified trust relating to the loan meets the requirements of this section.

(2) An employee stock ownership plan does not meet the requirements of this subsection unless the governing instrument of the plan provides that-

(A) the amount of the loan paid under paragraph (1)(A) to the qualified trust will be used to purchase qualified employer securities,

(B) the qualified trust will repay to the lender the amount of such loan, together with the interest thereon, out of amounts contributed to the trust by the recipient corporation, and

(C) from time to time, as the qualified trust repays such amount, the trust will allocate qualified employer securities among the individual accounts of participants and their beneficiaries in accordance with the provisions of paragraph (4).

(3) The agreement among the recipient corporation, the lender, and the qualified trust does not meet the requirements of this subsection unless-

(A) it is unconditionally enforceable by any party against the others, jointly and severally,

(B) it provides that the liability of the qualified trust to repay loan amounts paid to the qualified trust may not, at any time, exceed an amount equal to the amount of contributions required under paragraph (2)(B) which are actually received by such trust,

(C) it provides that amounts received by the recipient corporation from the qualified trust for qualified employer securities purchased for the purpose of this subsection will be used exclusively by the recipient corporation for those purposes for which it may use that portion of the loan paid directly to it by the lender,

(D) it provides that the recipient corporation may not reduce the amount of its equity capital during the one year period beginning on the date on which the qualified trust purchases qualified employer securities for purposes of this subsection, and

(E) it provides that the recipient corporation will make contributions to the qualified trust of not less than such amounts as are necessary for such trust to meet its obligation to make repayments of principal and interest on the amount of the loan received by the trust without regard to whether such contributions are deductible by the corporation under section 404 of title 26 and with out regard to any other amounts the recipient corporation is obligated under law to contribute to or under the employee stock ownership plan.

(4) At the close of each plan year, an employee stock ownership plan shall allocate to the accounts of participating employees that portion of the qualified employer securities the cost of which bears substantially the same ratio to the cost of all the qualified employer securities purchased under paragraph (2)(A) of this subsection as the amount of the loan principal and interest repaid by the qualified trust during that year bears to the total amount of the loan principal and interest payable by such trust during the term of such loan. Qualified employer securities allocated to the individual account of a participant during one plan year must bear substantially the same proportion to the amount of all such securities allocated to all participants in the plan as the amount of compensation paid to such participant bears to the total amount of compensation paid to all such participants during that year.

(5) For purposes of this subsection, the term-

(A) "employee stock ownership plan" means a plan described in section 407(d)(6) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1107(d)(6)], section 4975(e)(7) of title 26, and in section 702(5) ¹ of title 45 which meets the requirements of title I of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1001 et seq.] and of part I of subchapter D of chapter 1 of title 26,

(B) "qualified trust" means a trust established under an employee stock ownership plan and meeting the requirements of title I of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1001 et seq.] and of part I of subchapter D of chapter 1 of title 26,

(C) "qualified employer securities" means common stock issued by the recipient corporation or by a parent or subsidiary of such corporation with voting power and dividend rights no less favorable than the voting power and dividend rights on other common stock issued by the issuing corporation and with voting power being exercised by the participants in the employee stock ownership plan after it is allocated to their plan accounts, and

(D) "equity capital" means, with respect to the recipient corporation, the sum of its money and other property (in an amount equal to the adjusted basis of such property but disregarding adjustments made on account of depreciation or amortization made during the period described in paragraph (3)(D)), less the amount of its indebtedness.

(g) Maximum United States share of loan guarantees

The United States share of loan guarantees made under subsection (d) of this section on loans which are outstanding at any time may not exceed $500,000,000.

( Pub. L. 93–618, title II, §273, Jan. 3, 1975, 88 Stat. 2037 ; Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095 .)

Termination of Section

For termination of section by section 285 of Pub. L. 93–618, see Termination Date note set out preceding section 2271 of this title.

References in Text

The Public Works and Economic Development Act of 1965, referred to in subsecs. (a) and (c), is Pub. L. 89–136, Aug. 26, 1965, 79 Stat. 552 , as amended, which is classified generally to chapter 38 (§3121 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 3121 of Title 42 and Tables.

The Employee Retirement Income Security Act of 1974, referred to in subsec. (f)(5)(A), (B), is Pub. L. 93–406, Sept. 2, 1974, 88 Stat. 829 , as amended. Title I of the Employee Retirement Income Security Act of 1974 is classified generally to subchapter 1 (§1001 et seq.) of chapter 18 of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables.

Section 702(5) of title 45, referred to in subsec. (f)(5)(A), was redesignated section 702(7) of title 45 by Pub. L. 97–35, title XI, §1135(b), Aug. 13, 1981, 95 Stat. 646 .

Amendments

1986-Subsec. (f)(3)(E), (5)(A). Pub. L. 99–514 substituted "Internal Revenue Code of 1986" for "Internal Revenue Code of 1954", which for purposes of codification was translated as "title 26" thus requiring no change in text.

Section Referred to in Other Sections

This section is referred to in section 2374 of this title.

¹ See References in Text note below.