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[[Stamp]] AIR TRANSPORT ASSOCIATION OF AMERICA
1000 CONNECTICUT AVENUE, N.W. WASHINGTON, D.C. 20036 Telephone 296-5900
Office of the        March 11,1968
General Counsel

Memorandum

To: Airline Attorneys (Copies to Airline Finance & Accounting Conference 
Representatives and Washington Representatives.) 

From: Joseph F. Healy, Jr.
Assistant General Counsel

Subject: Proposed Regulations Relating to Industrial Revenue bonds

The Securities and Exchange Commission and the Treasury Department, 
in separate but possible related actions, have announced that they have 
under consideration proposed regulations dealing with industrial revenue bonds. The 
SEC has already published its proposed rules for public comment, while the 
Treasury, through the device of an IRS Technical Information Release, has 
stated that a proposed regulation the the subject will be issued on or about 
March 15, 1968. Copies of both documents are attached.

Airline interest in this matter relates to the possible adverse effect of 
such regulations on the issuance and sale of airport revenue bonds. 

The SEC proposal provides that any part of an obligation evidenced by a 
bond, note, debenture, or other evidence of indebtedness issued by a state or 
its political subdivisions, or an agency or instrumentality thereof, which is 
payable from payments to be made for property or money used under a lease, 
sale or loan arrangement with industrial or commercial enterprises shall be 
deemed to be a separate "security" issued by the private lessee or obligor. 
Thus, the registration and other disclosure requirements of the Securities 
Act of 1933 and the Securities Exchange Act of 1934 would have to be met, 
when otherwise applicable, by the private company involved. The underlying 
theory of the SEC is that since industrial revenue bonds are not backed by the 
taxing power and general credit of the governmental instrumentality issuing 
them, the prospective investor would in reality be purchasing in interest in 
the lease or other obligation of the private company and thus should be furnished 
sufficient information about the obligation of the private lessee and about 
its business to enable the investor to make and informed investment judgment.

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