UNITED STATES DEPARTMENT OF TRANSPORTATION, ET AL., PETITIONERS V. PARALYZED VETERANS OF AMERICA, ET AL. No. 85-289 In the Supreme Court of the United States October Term 1985 On Writ Of Certiorari To The United States Court Of Appeals For The District Of Columbia Circuit Brief For The Petitioners PARTIES TO THE PROCEEDING In addition to the United States Department of Transportation, the respondents in the court of appeals included the Civil Aeronautics Board, the Federal Aviation Administration, and the Regional Airline Association. The CAB ceased operations on December 31, 1984, pursuant to the Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92 Stat. 1705 et seq., and the Civil Aeronautics Board Sunset Act of 1984, Pub. L. No. 98-443, 98 Stat. 1703 et seq. See note l, infra. The Department of Transportation assumed the CAB'S functions under the Rehabilitation Act of 1973, and it is the petitioner in this Court, along with its constituent agency, the Federal Aviation Administration. Pursuant to Rule 19.6 of the Rules of this Court, the Regional Airline Association is a respondent in this Court. In addition to Paralyzed Veterans of America, the petitioners in the court of appeals included the Americal Coalition of Citizens with Disabilities, Inc., and the American Council of the Blind. All three organizations are respondents in this Court. TABLE OF CONTENTS Questions Presented Parties to the Proceedings Opinions below Jurisdiction Statute and regulations involved Statement A. The history of the CAB'S regulations B. The court of appeals' decision Summary of argument Argument I. Federal financial assistance to airport operators does not render the on-board activities of subsidized airlines subject to Section 504 A. Nonsubsidized airlines are not recipients of federal assistance for the conduct of in-flight activities B. The court of appeals' decision in this case is inconsistent with the "program specificity" requirement established in Gove City College v. Bell C. Legislative reports expressing general concern for the transportation problems of the disabled are no substitute for the statute actually enacted by Congress II. The federal air traffic control system does not constitute federal financial assistance to airlines Conclusion The opinion of the court of appeals (Pet. App. 1a-76a) is reported at 752 F.2d 694. The opinion dissenting from the denial of rehearing en banc (Pet. App. 80a-83a) is not reported. JURISDICTION The judgment of the court of appeals was entered on January 18, 1985. A petition for rehearing was denied on April 26, 1985 (Pet. App. 77a). On July 13, 1985, Justice White extended the time for filing a petition for a writ of certiorari to and including August 26, 1985. The petition was filed on August 20, 1985, and granted on October 21, 1985. The jurisdiction of this Court rests on 28 U.S.C. 1254(1). STATUTE AND REGULATIONS INVOLVED 1. Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, provides in pertinent parts as follows: No otherwise qualified handicapped individual in the United States, as defined in section 706(7) of this title shall, solely be reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service. 2. Regulations promulgated by the Civil Aeronautics Board to implement Section 504 of the Rehabilitation Act of 1973 were published at 47 Fed. Reg. 25936 et seq. (1982), as amended by 47 Fed. Reg. 51857 et seq. (1982), and codified at 14 C.F.R. Pt. 382. Because the issues in this case are limited to the question of the proper jurisdictional reach of the regulations and do not involve the details of the regulations themselves, only the preamble to the regulations (47 Fed. Reg. 25936-25939 (1982)), setting forth the Board's legal rationale for the scope of the regulations, is reproduced in the appendix to the petition (Pet. App. 84a-95a). QUESTIONS PRESENTED 1. Whether federal financial assistance to airport operators renders Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, applicable to the on-board activities of airlines using federally-assisted airports. 2. Whether the federally-operated air traffic control system constitutes a form of federal financial assistance to airlines. STATEMENT Respondents, the Paralyzed Veterans of America and two other organizations representing disabled individuals brought this action under Section 1006 of the Federal Aviation Act, 49 U.S.C. (1976 ed.) 1486, seeking review of regulations issued by the Civil Aeronautics Board to implement Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794. Section 504 prohibits discrimination on the basis of handicap in "any program or activity receiving Federal financial assistance." In its final rulemaking, the Board determined, with the approval of the Department of Justice, that only those airlines receiving a subsidy from the Board under Section 406(b) or Section 419(a)(4) and (b)(5) of the Federal Aviation Act, 49 U.S.C. (1976 ed. Supp. V.) 1376(b) and 1389(a)(4) and (b)(5) were federally assisted within the meaning of Section 504. The court of appeals disagreed, holding that the commerical aviation activities of all certificated airlines constitute federally assisted programs or activities because the airlines have the use of federally assisted airports. In addition, the court of appeals was of the view that the federally operated air traffic control system constitutes federal financial assistance to the commerical aviation activities of all airlines. Accordingly, the court vacated the Board's regulations insofar as they were limited in their application to carriers receiving subsidies under Sections 406 or 419 of the Federal Aviation Act and instructed the CABS' successor agency, the Department of Transportation, to promulgate new regulations applicable to all commerical airlines. /1/ A. The History Of The CAB'S Regulations 1. Prior to the "sunset" of the CAB, federal regulation of aviation was divided between the CAB and the Federal Aviation Administration. /2/ The FAA was and is responsible for operating the air traffic control system and ensuring the safety of airline operations. See Air Line Pilots Ass'n v. CAB, 667 F.2d 181 (D.C. Cir. 1981). In addition, the FAA has, since 1946, granted federal financial assistance to airport operators (typically, municipalities or other units of local government) for the construction and improvement of terminals, runways, and airport safety equipment. /3/ The CAB, on the other hand, was responsible for the economic regulation of the airline industry. In that capacity, the Board regulated airline routes, fares, and service under the authority of the Federal Aviation Act of 1958, 49 U.S.C. (1976 ed. & Supp. V) 1301 et seq. Of particular relevance to this case was the Board's administration of subsidies to a few airlines pursuant to Sections 406(b) and 419(a)(4) and (b)(5) of the Federal Aviation Act, 49 U.S.C. (1976 ed. Supp. V) 1376 (b) and 1389(a)(4) abd (b)(5). Until 1978, Section 406 was the Board's only subsidy program. Designed to guarantee air service necessary to transport the mail to small communities, the original statutory scheme provided that the Postmaster General was to pay the airlines for the basic cost of transporting mail, while the Board was to pay the airlines additional amounts as subsidies if necessary to ensure the carriage of mail. See Section 406(b) and (c), 49 U.S.C. (1976 ed. Supp. V) 1376 (b and (c). The Section 406 program was sharply curtailed in 1978, and it was terminated entirely at the end of fiscal year 1982. See Airline Deregulation Act of 1978, Pub, L. No. 95-504, Sections 24, 92, Stat. 1725; Act of Oct. 2, 1982, Pub. L. No. 97-276, Sections 130, 96 Stat. 1196-1197; Dep't of Transportation and Related Agencies Appropriations Act, 1983, Pub. L. No. 97-369, Tit. II, 96 Stat. 1778-1779. Also in 1978, the CAB began operating the "Section 419 program," in order to subsidize "small community" and other essential air service that would not otherwise be provided. See Airline Deregulation Act of 1978, Pub. L. No. 95-504, Sections 33, 92 Stat. 1732. This program, which is to operate through 1988, is unrelated to the provisions of mail service under Section 406. 2. In 1964, Congress passed Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq., prohibiting discrimination on the basis of race, color, or national origin in federally assisted programs or activities. /4/ Both aviation agencies, the CAB and FAA, published regulations implementing Title VI on December 31, 1964. The only federally assisted grant program administered by the Board at that time was the Section 406 mail subsidy program, and the Board's initial Title VI regulations, while leaving open the possibility of Title VI coverage for unspecified, future programs, expressly applied only to the activities of airlines receiving payments under the Section 406 program (14 C.F.R. 379.2 (1965), 29 Fed. Reg. 19287 (1964)): This part applies to any program for which Federal financial assistance is authorized under a law administered by the Board, including the payment of compensation by the Board under section 406 of the Federal Aviation Act of 1958 (49 U.S.C. 1376). /5/ After 1978, the Board modified its Title VI regulations to include its only other subsidy program, the newly-enacted Section 419 program. 14 C.F.R. 379.2, 379.3, 379.4, and 379.12, 44 Fed. Reg. 42175-42176 (1979). Meanwhile, the FAA, based on its administration of grants to airport operators, proscribed discriminatory treatment by airport operators and by lessees of airport operators who furnished services at the airport; the illustrative examples given in the FAA'S Title VI regulations make it clear that its regulatory authority extended to the threshold of the planes but no farther. /6/ When the FAA became a part of the Department of Transportation (see note 2, supra), its Title VI regulations were subsumed within DOT'S own Title VI regulations (35 Fed. Reg. 10080 et seq. (1970)). DOT'S regulations contained equivalent illustrative examples that, if anything, made it even clearer that the regulatory jurisdiction conferred by virtue fo federal financial assistance to airport operators extended to services provided at the airport, but not to the interior of aircraft. /7/ Indeed, DOT'S regulations prohibited airport administrators from discriminating against aircraft operators because of the race of the pilot (49 C.F.R. Pt. 21, App. C(a)(1)(iii),(iv) and (v) (1971), set forth at note 7, supra). Significantly, however, the lengthy list of examples made no mention of passengers in airplanes; the only provisions for passengers related to the use of facilities at the airport and the use of ground transportation to leave the airport (49 C.F.R. Pt. 21, App. C(a)(1)(vi) and (vii) (1971), set forth at note 7, supra). In sum, the regulatory agencies recognized from the very outset that Title VI did not reach the onboard activities of commerical airlines, except for those few airlines that received subsidies from the CAB. /8/ 3. Using their Title VI regulations as a model, DOT and the Board divided regulatory jurisdiction under Section 504 in the same fashion, with DOT taking responsibility for regulations covering activities at airports and the Board assuming responsibility only for the on-board activities of the airlines. Initially, however, both agencies expected the CAB to be able to promulgate regulations governing the on-board activities of all certified airlines, using authority derived from the Federal Aviation Act to supplement its more limited authority under Section 504. Thus, on June 6, 1979, the CAB published a Notice of Proposed Rulemaking in which it announced its intention to promulgate regulations "to prohibit unlawful discrimination against disabled travelers and to implement section 504 of the Rehabilitation Act of 1973." 44 Fed. Reg. 32401 (emphasis added). The Board's notice made clear its position that its jurisdiction under Section 504 was limited to those few carriers to which the Board extended federal subsidies. 44 Fed. Reg. 32402 (1979). /9/ For that reason, the Board proposed to prohibit all carriers from discriminating against handicapped air travellers not in reliance on Section 504, but instead based on its authority under Section 404 of the Federal Aviation Act, 49 U.S.C. (1976 ed. & Supp. V) 1374. As the Board explained (44 Fed. Reg. 32401-32402 (1979) (emphasis added)): (The proposed rules) would implement section 504 * * *, which prohibits discrimination against the handicapped in any program or activity receiving Federal financial assistance. In addition, the proposed rules would emphasize that the handicapped are protected by the adequacy of service and antidiscrimination provisions of section 404 of the Federal Aviation Act * * *, which are applicable to all air carriers, whether or not receiving Federal financial assistance. Section 404 of the Federal Aviation Act, 49 U.S.C. (1976 ed. & Supp. V) 1374, as it existed at the time of the Board's Notice of Proposed Rulemaking, contained two provisions relevant to this case. Section 404(a)(1), 49 U.S.C. (1976 ed. Supp. V) 1374(a)(1), contained a "safe and adequate service" requirement, obligating all air carriers to "provide safe and adequate service, equipment, and facilities in connection with (interstate and overseas air) transportation." Section 404(b), 49 U.S.C. (1976 ed.) 1374(b), contained a general "antidiscrimination" clause, prohibiting any carrier from "subjecting any particular person, port, locality, or description of traffic in air transportation to any unjust discrimination or any undue or unreasonable prejudice or disadvantage in any respect whatsoever." As set forth above, the Board was of the view that the "safe and adequate service" and "antidiscrimination" provisions of Section 404, taken together, gave the Board sufficient authority to require all carriers to comply with regulations prohibiting discrimination against handicapped air travellers, whether or not a particular carrier was receiving federal financial assistance. Pursuant to the Airline Deregulation Act of 1978, Pub. L. No. 95-504, Sections 40(a) 92 Stat. 1744 (codified at 49 U.S.C. 1551(a), (2)(B)), however, the "antidiscrimination" clause of Section 404(b) lapsed as of January 1, 1983; only the "safe and adequate service" requirement of Section 404(a), 49 U.S.C. (1976 ed. & Supp. V) 1374(a), remains in effect. This contraction of the Board's statutory authority required it to reevaluate its jurisdiction to impose the proposed regulations on all carriers. After studying the numerous comments received and consulting with the Department of Justice, /10/ the Board concluded that the "safe and adequate service" clause of Section 404(a) might support a general prohibition against discrimination on the basis of handicap applicable to all carriers, but that it was too slender a reed to justify the imposition of more specific regulations applicable to the on-board activities of nonsubsidized carriers. 47 Fed. Reg. 25937-25938 (1982) (Pet. App. 85a-91a). /11/ In reaching this conclusion, the Board carefully considered, but ultimately rejected, the contention that all certified carriers receive federal financial assistance within the meaning of Section 504 by virtue of their use of the federally operated air traffic control system and federally assisted airports. 47 Fed. Reg. 25937 (1982) (Pet. App. 88a). Accordingly, the Board concluded that the on-board activities of only those airlines receiving subsidies from the Board could be regulated under Section 504. 47 Fed. Reg. 25937-25938 (1982) (Pet. App. 85a-91a). The final regulations promulgated by the Board (14 C.F.R. Pt. 382, 47 Fed. Reg. 25948 et seq. (1982)) contain three subparts. Subparts A is a general prohibition against discrimination in air transportation against qualified handicapped persons. Subpart B of the Board's final rules set forth specific requirements to be followed by each regulated carrier in providing air transport service to the handicapped. /12/ Subpart C establishes compliance and enforcement mechanisms. By virtue of the "safe and adequate service" provision of Section 404(a) of the Federal Aviation Act, the Subpart A regulations apply to all certified carriers, whether they receive federal financial assistance or not. In recognition of the limited jurisdictional reach of Section 504, however, Subparts B and C of the final regulations apply only to those carriers receiving federal subsidies under Sections 406 or 419 of the Federal Aviation Act. /13/ The Attorney General approved the CAB'S final regulations (see note 10, supra). B. The Court Of Appeals' Decision. After setting forth the history of the rulemaking, the court of appeals turned to respondents' contention that all commerical airlines are subject to Section 504. The court first rejected respondents' arguments that operating certificates and preferential tax treatment for airlines constitute "Federal financial assistance" to airlines within the meaning of Section 504. /14/ The court next considered respondents' contention that the federally operated air traffic control system constitutes federal financial assistance to airlines and concluded that it does (Pet. App. 39a-40a, 43a (footnotes omitted)): It cannot be seriously disputed that the safe and efficient operation of commerical air transportation depends in great measure (if not, as (respondents) assert, "entirely") upon "the proper functioning of the national air traffic control system." * * * Moreover, this crucial assistance may reasonably be considered "financial. "* * * Consequently, (respondents) argument that the federal air traffic control system is an "arrangement" that "provides or otherwise makes available assistance in the form of . . . services of Federal personnel" leads reasonably to the conclusion that the system does indeed constitute federal financial assistance to all commerical air carriers. It follows, therefore, that any and all carriers making use of the federal air traffic control system should be subject to any regulations promulgated under section 504. * * * * * The fact is that the air traffic control system is indispensable to the very existence of modern commerical aviation, and that if it were not provided by the federal program now in place, it would have to be provided, and paid for, by the airlines themselves. Despite the court's conclusion that the air traffic control system constitutes federal financial assistance to all commerical airlines, the court declined to invalidate the Board's rules on that basis, apparently because it found itself unable to define the "program or activity" that is federally assisted by the air traffic control system. Taking note of this Court's decision in Grove City College v. Bell, 465 U.S. 555 (1984), the court observed that if the assisted "program or activity" were deemed to be the federal air traffic control system, then "only that particular system its personnel practices and physical facilities, for example could be regulated under section 504" (Pet. App. 45a). On the other hand, the court reasoned that, if the assisted "program or activity" were deemed to be that of "commerical air transportation as engaged in by the air carriers," then Grove City's program-specific mandate would not be violated by applying Section 504 to the on-board activities of all commerical airlines (Pet. App. 45a). The court then concluded that it need not resolve the "Program or activity" question in the context of the air traffic control system. Instead, the court reasoned that the CAB "erred as a matter of law in failing to apply its section 504 regulations to all commerical air carriers" because of the federal government's funding of airports and airways used by those carriers. Pet. App. 45a. The court stated (id. at 50a-51a (footnotes omitted)): Airports and airlines are inextricably interwined. The indissoluble nexus between them is the provision of commerical air transportation. Although airports may lease space to gift shops and airlines may publish in-flight magazines or own a chain of resort hotels, when it comes to the "program or activity" of providing air transportation to the traveling public, the two entities are so functionally integrated that they become one. While it may be the case * * * that the airline as a corporate entity does not become a federally-assisted "program" by virtue of its use of federally-assisted airports, its "program or activity" of providing commerical air transportation certainly does. Accordingly, the court vacated the CAB'S regulations insofar as they failed to apply to all commerical airlines and remanded the regulations to the Department of Transportation (the CAB'S successor) for repromulgation in accordance with its opinion. /15/ The government's petition for rehearing and suggestion that rehearing be en banc were denied. Judges Bork, Scalia, and Starr dissented from the denial of rehearing en banc. In an opinion written by Judge Bork, the dissenters expressed the view that the panel's decision could not be squared with this Court's decisions in Grove City and North Haven Bd. of Educ. v. Bell, 456 U.S. 512 (1982) (Pet. App. 82a-83a (footnote omitted)): Under Grove City, the airlines here are clearly not "recipients" of federal funds. The airports are, and the ground activities of the airlines integral to the operation of the airport may be, subject to section 504. However, the non-airport activities of the airlines, such as in-flight procedures, are outside the scope of that section. The panel's attempts to distinguish this case from Grove City are wholly unpersuasive. * * * The Supreme Court has been over this ground, and we ought to accept, rather than evade, its conclusion. SUMMARY OF ARGUMENT I.A. The court of appeals' decision that the onboard activities of all commerical airlines, by virtue of the airlines' use of federally assisted airports, are subject to regulation under Section 504 completely ignores the distinction between a "recipient" operating a federally assisted "program or activity" and an entity that "participates in," or receives the benefits of, a federally assisted program. The two are not the same. Section 504 prohibits those who receive federal financial assistance -- i.e., recipients from discriminating in the conduct of assisted programs against, inter alia, the intended beneficiaries of that assistance. Importantly, however, Congress never intended to regulate beneficiaries who do not themseleves, either directly or indirectly, receive federal funding. Maintenance of the distinction between a "recipient" operating a federally asssisted "program or acitivity" and a "beneficiary" of that assistance is essential if Congress's expressed intent to impose some limits on the reach of the statute is to be respected. In the context of this case, only airport operators are "recipients" of federal funds extended under the Airport and Airway Improvement Act of 1982, 49 U.S.C. App. 2201 et seq. Those who are airports -- the airlines, businesses requiring air travel and members of the travelling public -- are merely the beneficiaries of federal grants to airport operators. These beneficiaries are not subject to regulation under Section 504. The contrary conclusion of the court of appeals leads to absurd results and, as recognized by the dissenting opinion below (Pet. App. 80a-81a), admits of no limiting principle. The "indissoluble nexus" between airports and airlines created by the court of appeals (Pet. App. 50a) would apply with equal force to all those who rely on air travel in the conduct of their business or for personal convenience. Clearly, Congress did not intend to transform all such entities or persons into "recipients" of federal financial assistance. It is therefore of no consequence that the airlines arguably benefit more directly from the use of federally assisted airports than other users. The error of the court of appeals is also apparent in its failure to note the element of choice inherent in Section 504 and the statutes on which it is modeled. Had it so desired; Congress could have made it unlawful for all businesses engaged in interstate commerce to discriminate against the handicapped, whether or not those businesses received federal funding. Instead, however, Congress made regulations under Section 504 a matter of choice, by tying regulatory coverage to the voluntary receipt of federal funding. Instead, however, Congress made regulation under Section 504 a matter of choice, by tying regulatory coverage to the voluntary receipt of federal financial assistance. See e.g., Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 633 n.13 (1984). As a practical matter, however, the "indissoluble nexus" (Pet. App. 50a) that the court of appeals used to bind airports and airlines makes it impossible for the airlines to "opt out" of the federally assisted program into which the court has thrust them. The airlines, of course, have no control over an airport operator's decision to accept or reject federal financial assistance. Although the airlines could, in theory, choose to go out of business, it is inconceivable that Congress meant to put them to the choice of involuntary acceptacnce of federal aid or termination of commerical aviation throughout the nation. Section 504 should not be interpreted to produce such an anomalous result. B. The court of appeals' disregard of the "program specificity" limitation inherent in Section 504 cannot be squared with this Court's decisions in Grove City College v. Bell, 465 U.S. 555 (1984); Consolidated Rail Corp. v. Darrone, 465 U.S. 624 (1984); and North Haven Bd. of Educ. v. Bell, 456 U.S. 512 (1982). In this case, the court of appeals effectively invented its own "program or activity" of "providing commerical air transportation" (Pet. App. 50a) and then held that all of the constituent parts of that financial "program or activity" are covered by Section 504. The problem with the court of appeals' approach is that there is no federally assisted program or activity" of "providing commerical air transportation," any more than there is a federally assisted "program or activity" of "providing post-secondary education." Instead, the court of appeals should have recognized, as this Court held in Grove City, that the boundaries of a federally assisted program or activity are defined by the underlying grant statute. Just as tutition grants assist only a college's financial aid program (Grove City, 465 U.S. at 573), so too, grants under the Airport and Airway Improvement Act assist only airport operators in running an airport. Those grants furnish no assistance whatever to the airlines' "program or activity" of transporting people from one place to another. Simply stated, until Congress provides federal financial assistance for flying, there can be no assisted "Program or activity" that embraces the on-board activities of nonsubsidized airlines. II. The court of appeals also erred in its conclusion that the federal air traffic control system constitutes federal financial assistance to the airlines. The legislative history of Title VI, on which Section 504 is modeled, makes it clear that federally conducted programs -- that is, programs funded solely by federal money -- have only beneficiaries; there are no intermediate "recipients" subject to regulation. See 110 Cong. Rec. 13380 (1964) (letter from Deputy Attorney General Katzenbach). This is so because programs like the air traffic control system fall into the general category of "public goods" goods and services from which all citizens and businesses benefit. Arguably, this public benefit may "assist" airlines more directly than it assists other enterprises that use the airlines or fly private planes in the course of their business. It also protects those on the ground from plane crashes. It does not, however, constitute "Federal financial assistance" to anyone. The court of appeals was able to reach a contrary conclusion only by distorting a consistent administrative interpretation of "Federal financial assistance" that dates back to 1964. The FAA'S original Title VI regulations included the "detail" of Federal personnel "as an example of "Federal financial assistance." 14 C.F.R. 15.23(3) (1965) (emphasis added). Clearly, the operation of the air traffic control system does not involve the "detail" of any federal personnel to the airlines. In 1978, however, the Department of Health, Education and Welfare substituted the word "services" for "detail," so that federal financial assistance under Section 504 included the "(s)ervices of Federal personnel." 43 Fed. Reg. 2137 (1978) (emphasis added). But the regulatory history demonstrates that no substantive change was intended, and thus the "service of Federal personnel" should be interpreted in the same manner as the "detail of Federal personnel." So construed, it is clear that the federally operated air traffic control system does not constitute federal financial assistance to the airlines. ARGUMENT I. FEDERAL FINANCIAL Assistance TO AIRPORT OPERATORS DOES NOT RENDER THE ON-BOARD ACTIVITIES OF NONSUBSIDIZED AIRLINES SUBJECT TO SECTION 504 A. Nonsubsidized Airlines Are Not Recipients Of Federal Financial Assistance For The Conduct Of Inflight Activities. 1. The court of appeals' conclusion that commerical airlines, by virtue of their use of federally assisted airports, become "recipients" of federally financial assistance in the conduct of their on-board activities totally obliterates any distinction between a "recipient" operating a federally assisted "program or activity" and an entity that "participates in," or receives the benefits of a federally assisted program. The two are not the same. Section 504, like other similarly-worded statutes, prohibits those who receive federal financial assistance -- i.e., recipients from discriminating in the conduct of their assisted programs against, inter alia, the intended beneficiaries of that assistance. /16/ Importantly, however, Congress did not intend to regulate the intended beneficiaries of the federal funding. See Bob Jones University v. Johnson, 396 F. Supp. 597, 601 n.15 (D.S.C. 1974), aff'd, 529 F.2d 514 (4th Cir. 1975) (Table) (a recipient under Title VI "is the intermediary entity whose nondiscriminatory participation in the federally assisted program is essential to the provision of benefits to the identified class which the federal statute is designed to serve. * * * The requirements of Title VI cover recipients but not beneficiaries."). Similarly, federal tuition grants assist the financial aid program of a college and subject that program to government regulation. Grove City College v. Bell, 465 U.S. 555 (1984). Students receiving federal scholarships (or on whose behalf a college receives scholarships money) are not, on the other hand, "recipients" subject to governmental regulation; instead, they are beneficiaries entitled to governmental protection against discrimination by "recipients" in federally assisted programs. Under this scheme, airport operators clearly are "recipients" of funds extended under the Airport and Airway Improvement Act of 1982, 49 U.S.C. App. 2201 et seq., and its predecessor statutes (see note 3, supra). This is so not merely because the airport operators literally "receive" federal grants, but also because they are not the intended ultimate beneficiaries of the federal assistance. The beneficiaries of federal grants to airport operators are those who use airports to enhance their commerical enterprises or personal convenience. Thus, airlines, businesses requiring air travel, and individuals all are beneficiaries of, or participants in, the program receiving federal aid. See Section 502(a)(2) of the Airport and Airway Improvement Act of 1982, 49 U.S.C. App. 2201(a)(2) (purpose of Act is to meet the needs of aviation, interstate commerce, the Postal Service, and the national defense). Judge Bork, in his opinion dissenting from the denial of rehearing en banc, recognized the clear import of the court of appeals' failure to distinguish between "recipients" and "participants" or "beneficiaries" (Pet. App. 80a-81a): (The panel's) reading of section 504's statutory language would make every commerical enterprise a "recipient" of federal aid when it merely makes use of a service or facility that receives any federal assistance. That idea has great potential. Trucking and bus companies use federally constructed and maintained highways, and their businesses are thus inextricably interwined with a federally assisted program. Many electric companies rely on dams constructed and maintained with federal funds. Without the National Weather Service farmers would be unable to plan, protect, and cultivate their crops in an effective manner. It ought surely to be true that federal funding of federal couts results in the regulation of law firms since courts are inextricably interwined with and indispensable to lawyering. There is no merit, therefore, to the court of appeals' rationale that an "indissoluble nexus" (Pet. App. 50a) between airports and airlines transforms all of the airlines' activities, including those discrete activities that take place inside the aircraft, into federally assisted programs or activities. Virtually the same argument would apply with equal force to all businesses that rely on air travel to sell goods and services in a nationwide market. Most if not all of the Nation's major corporations require extensive air travel by their personnel. Under the court of appeals' reasoning, all of those businesses, like the airlines, would be transformed into "recipients" of federal financial assistance. Yet Congress clearly did not intend that all those who rely on air travel be deemed "recipients" of federal financial assistance to airports. The lower courts have in fact recognized the distinction between "recipients" of federal financial assistance and "participants" in or "beneficiaries" of federally assisted programs. See, e.g., Disabled in Action v. Mayor & City Council, 685 F.2d 881 (4th Cir. 1982). There, the court of appeals rejected the notion that the Baltimore Orioles' use of a federally assisted municipal stadium transformed the team into a "recipient" of federal financial assistance. The court stated (685 F.2d at 884-885 (emphasis added)): At the very least, it is plain that the City is no mere conduit of federal assistance to the Club. Here, * * * the benefits of federal assistance have accured both to the direct recipient (* * * the city) and to another entity (* * * the Club) which shares in those benefits by virtue of business dealings with the direct recipient. If the Rehabilitation Act extends to such indirect beneficiaries of federal largesse, consistency would demand that it apply to every customer of every enterprise subsidized by the federal government. Nothing in the language or legislative history of the Act indicates a congressional intention to reach so far. Disabled in Action, as well as the dissenting opinion below, thus clearly demonstrate that the court of appeals erred in concluding that nonsubsidized airlines, insofar as their on-board activities are concerned, are anything other than "beneficiaries" of or "participants" in the program or activity conducted by airport operators. To expand the scope of Section 504 to reach the airlines' on-board activities would be to embrace a concept that is incapable of principled limitation and bears no relationship to the statute Congress actually enacted. 2. The failure of the court of appeals to distinguish between "recipients" subject to regulation and participants or beneficiaries entitled to governmental protection is most apparent in its facile assumption that one can label as a "recipient" of federal financial assistance the person or entity most in need of, or who benefits the most from, that assistance. See, e.g., Pet. App. 43a (footnote omitted) ("The fact is that the air traffic control system is indispensable to the very existence of modern commerical aviation, and * * * if it were not provided by the federal program now in place, it would have to be provided, and paid for, by the airlines themselves."). In fact, it should be obvious that, in general, the person or entity most in need of or benefiting the most from federal financial assistance normally is not the recipient, but the beneficiary. Recipients such as state agencies, for example, do not "need" Aid to Families with Dependent Children (AFDC) or food stamps. But it certainly does not follow that those who benefit most -- AFDC families -- are the "recipients" Congress intended to regulate. See Bob Jones University, 396 F.Supp. at 601 n.15. Nor does it advance the analysis to use such words as "indissoluble" or "inextricable" to describe the relationship between recipients and beneficiaries (Pet. App. 50a). No matter how indispensable a federally sponsored scholarship may be to a student's college education, the student remains a beneficiary of that aid, not a recipient subject to federal regulation. It is thus totally irrelevant to the issue in this case that airlines may benefit more directly from the use of federally assisted airports than members of the travelling public or other businesses that are dependent on commerical aviation for their profitability. /17/ 3. The decision below is also in error because it ignores the fact that Section 504, like the statutes on which it is modeled, applies only to entities that elect to receive federal financial assistance in the conduct of their programs and activities. As was the case with the enactment of Title VI, Congress's predominant concern in enacting Section 504 was to ensure that federal funds not be used to assist programs or activities that engage in discrimination. See e.g., 110 Cong. Reg. 6562 (1964) (remarks of Sen. Kuchel) (A recipient ought not to receive federal aid "if it is dedicated to use it in an unconstitutional manner."). In this respect, Section 504 is markedly different from other statutes that apply automatically to businesses engaged in interstate commerce, whether or not they receive federal funding. See, e.g., Age Discrimination in Employment Act, 29 U.S.C. 621 et seq.; and Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq. Moreover, the element of choice inherent in the language employed by Congress in Section 504 is not accidental. Rather, as this Court recognized in Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 633 n.13 (1984): Congress chose to ban employment discrimination against the handicapped, not by all employers, but only by the Federal Government and recipients of federal contracts and grants. As to the latter, Congress apparently determined that it would require contractors and grantees to bear the cost of providing employment for the handicapped as a quid pro quo for the receipt of federal funds. See also Grove City, 465 U.S. at 566 n.13 (colleges "remain free to opt out of federal student assistance programs"); id. at 575 ("Grove City may terminate its participation in the (student assistance) program and thus avoid the requirements of (Title IX("); 110 Cong. Rec. 6562 (1964) (remarks of Sen. Kuchel) (requirements of Title VI are voluntarily assumed by the decision to accept federal aid). As a practical matter, the "indissoluble nexus" (Pet. App. 50a) that the court of appeals used to bind airports and airlines makes it impossible for the airlines to "opt out" of the federally assisted program into which the court has thrust them. The only "choice" available to the airlines would be to go out of business, because they cannot control the airport operators' decisions to accept or reject federal financial assistance. In the face of a grant statute intended to meet the needs of aviation, interstate commerce, the Postal Service, and the national defense (see page 23, supra), however, it strains credulity to suppose that Congress intended to limit the airlines' choices to the involuntary acceptance of federal financial assistance or the termination of commerical aviation throughout the nation. In essence, the court of appeals have rewritten Section 504 to make coverage mandatory for all businesses that have no choice but to use federally assisted airports. If the reach of the statute is to be extended, that is a decision for Congress to make. B. The Court Of Appeals' Decision In This Case Is Inconsistent With The "Program Specificity" Requirement Established In Grove City College v. Bell. 1. In deciding that the "program or activity" that is federally assisted in this case is the "provi(sion of) commerical air transportation" by all certificated carriers (Pet. App. 50a), the court of appeals seriously misapplied this Court's decision in Grove City. There, the Court reaffirmed the doctrine that where a statute prohibits discrimination in a "program or activity" receiving "Federal financial assistance," the reach of the statute is "program specific." See also Consolidated Rail Corp. v. Darrone, 465 U.S. at 635-636; and North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 539-540 (1982). In this case, however, the court of appeals effectively invented its own "program or activity" of "providing commerical air transportation" (Pet. App. 50a) and then held that all of the constituent parts of that fictional "program or activity" are covered by Section 504. The problem with the court of appeals' approach is that there is no federally assisted "program or activity" of "providing commerical air transportation." Rather, even if one construes "program or activity" broadly, there is still a program or activity of building and maintaining airports and an entirely separate (and unsubsidized) program or activity of flying passengers from one place to another. Grove city plainly teaches that the "program specificity" limitation contained in Section 504 cannot be evaded merely by lumping together "interrelated" services and calling them a single "program or activity." If "interrelatedness" were the test, this Court presumably would have identified the "program or activity at issue in Grove City as "providing post-secondary education." Of course, the Court did not do so. Instead applying "program specific" reasoning to tuition grants, the Court held that Congress did not intend the Department of Education (or the courts) to attempt to trace federal money "from classroom to classroom, building to building, or activity to activity." Grove City, 465 U.S. at 573. The obvious purpose of tuition grants, the Court found, was to assist a school's financial aid program. Ibid. Accordingly, receipt by the school (or its students) of tuition grants meant that only the schools's financial aid program was subject to regulation under Title IX. 465 U.S. at 573-574. Thus, the clear teaching of Grove City is that the boundaries of a federally assisted program or activity are defined by the underlying grant statute. The government has no authority under Section 504 to regulate entities, or parts of entities, not receiving funds under a federal grant. See Bd. of Public Instruction v. Finch, 414 F.2d 1068, 1077-1079 (5th Cir. 1969), cited with approval in North Haven, 456 U.S. at 539. Grants under the Airport and Airways Improvement Act (and its predecessor statutes) are made to airport operators to support "program(s) or activit(ies) involved in running an airport. The grant statute provides, in general terms, for the construction and improvement of airports and associated ground facilities; it furnishes no funds whatever for the purpose of transporting people from one place to another. (It is undisputed in this case that not one penny of federal funds is given to airlines under the Airport and Airway Improvement Act or its predecessor statutes). Accordingly, it is clear that all federally assisted activities at airports, including the ground operations (e.g., ticketing and baggage handling) of all airlines using such airports, are indeed subject to Section 504. See 49 C.F.R. Pt. 27, 44 Fed. Reg. 31442 et seq. (1979) (DOT'S Section 504 regulations). But it is equally clear that Section 504's coverage cannot extend beyond the program or activity conducted by or under the auspices of the grant recipient. Neither the agency granting funds to airports operators nor the airport operators themselves have the authority under Section 504 to regulate an airline's practices on board its planes, because air transport is simply not within the scope of the grant program. Contrary to the court of appeals' view that any distinction between an airline's activities at the airport and its activities on board its planes is "nonsensical" (Pet. App. 47a), we submit that such a distinction is the only interpretation consistent with the program-specific limitation on coverage mandated by this Court's decision in Grove City. The court of appeals' analysis would lead to the conclusion that it is equally "nonsensical" to distinguish between a financial aid program and an entire college. Simply stated, Section 504 is inapplicable to the "program or activity" of "providing commerical air transportation" (Pet. App. 50a) unless and until Congress furnishes the airlines with federal financial assistance for flying. 2. As was the case with its analysis of the air traffic control system (see pages 35-38, infra), the court of appeals was able to conclude that the on-board acitivities of commerical airlines are part of a federally assisted "program or activity" only by distorting two decades of consistent administrative interpretation. The history of the Section 504 regulations, set forth at pages 4-14, supra, demonstrates that the regulatory agencies never understood Title VI to reach the on-board activities of airlines not receiving subsidies from the CAB. Regulation of such activities was to be accomplished, however, under Section 404(b) of the Federal Aviation Act, which had been judically interpreted to prohibit racial discrimination in air travel. See note 8, supra. It is true that both DOT and the Board initially expected the Board to promulgate regulations prohibiting all certificated carriers from discriminating against handicapped air travellers; this was to be accomplished, however, through renewed reliance on Section 404(b), and not Section 504 alone. But the congressionally mandated "sunset" of Section 404(b) made it impossible for the Board to carry out its original intent to write regulations that would cover both subsidized and nonsubsidized carriers. The court or appeals erred in failing to acknowledge that, with the expiration of Section 404(b), the Board lost the authority it intended to invoke to issue the all-encompassing regulations mandated by the court. Neither DOT /18/ nor the Board ever expressed the view that Section 504 alone provided the Board with such sweeping authority and the court of appeals should have respected the agencies' determination of their own jurisdiction. See, e.g., United States v. Riverside Bayview Homes, Inc., No. 84-701 (Dec. 4, 1985), slip op. 9-10, 13. /19/ C. Legislative Reports Expressing General Concern For The Transportation Problems Of The Disabled Are Not Substitute For The Statute Actually Enacted By Congress. The court of appeals was clearly unhappy with the limitations inherent in the scope of Section 504. To overcome these difficulties, the court relied heavily (Pet. App. 41, 53a), on congressional reports demonstrating that, in enacting Section 504, Congress was acutely aware of the degree to which access to transportation is essential to the independence and employemnt opportunities of disabled persons. These concerns are real, but the inescapable conclusion is that the court of appeals put far more weight on Section 504 that the statute will bear. Despite Congress's concern with accessible transportation for the disabled, not all transportation activities received federal financial assistance. By including the "program or activity" limitation in Section 504 Congress necessarily enacted a statute that covers less than the entire field of transportation. As it happens, many forms of public transportation, including buses, subways, and trains, are covered by Section 504 by virtue of federal assistance programs such as those provided under the Urban Mass Transportation Act of 1964, 49 U.S.C. App. 1601 et seq., and the Amtrak Improvement Act of 1981, 45 U.S.C. 601 et seq. But statements of congressional concern about an issue -- even if they appeared in the Rehabilitation Act itself -- would not support the extension of Section 504 to anything other than federally assisted programs. Cf. Pennhurst State School & Hospital v. Haldeman, 451 U.S. 1, 18-22 (1981). A fortiori, statements in committee reports (see Pet. App. 41a & n.116, 54a & n.151, 55a & n.152) cannot be read to extend the coverage of Section 504 or to dispense with the statute's program specificity limitation. The court of appeals' emphasis (Pet. App. 5a-57a) on the vact that the Architectural and Transportation Barriers Compliance Board (ATBCB) urged the CAB to adopt a broad construction of Section 504 likewise misses the mark. Section 502 of the Rehabilitation Act of 1973, 29 U.S.C. 792, created the ATBCB primarily to ensure compliance with federal accessibility standards prescribed pursuant to the Architectural Barriers Act of 1968, 42 U.S.C. 4151 et. seq. Those standards apply only to federal facilities and to certain facilities built with the assistance of federal funds. It is true that the ATBCB has a number of other advisory and study functions (see 29 U.S.C. 792(b) and (c)), but those functions are not relevant to the legal questions before this Court. Thus, the ATBCB has expertise in certain substantive areas of concern to disabled peop6e, but the legal constraints imposed by the "program specificity" limitations on Section 504's coverage are not one of its areas of particular competence. The ATBCB'S comments on the CAB'S proposed regulations, therefore, may represent its views on appropriate social policy, but they do not advance the inquiry in this case. II. THE FEDERAL AIR TRAFFIC CONTROL SYSTEM DOES NOT CONSTITUTE FEDERAL FINANCIAL ASSISTANCE TO AIRLINES The court of appeals also erred in holding that the services of federal air traffic controllers constitute federal financial assistance to airlines. The legislative history of Title VI makes it clear that federally conducted programs -- that is, programs funded solely by federal money -- such as dams, harbors, or the air traffic control system -- have only "beneficiaries"; there are no intermediate "recipients." As then-Deputy Attorney General Katzenbach explained (110 Cong. Rec. 13380 (1963) (footnote omitted)): Activities wholly carried out by the Untied States with Federal funds, such as river and harbor improvements and other public works, defense installations, veterans' hospitals, mail service, etc., are not included in the list (of federally assisted programs). Such activities, being wholly owned by, and operated by or for, the United States, cannot fairly be described as receiving Federal "assistance." While they may result in general economic benefit to neighboring communities, such benefit is not considered to be financial assistance to a program or activity within the meaning of title VL. Stated differently, programs like the air traffic control system fall in the general category of "public goods" -- goods and services from which all citizens and businesses benefit. The air traffic control system helps to ensure "safe skies." Arguably, this public benefit may "assist" airlines more directly than it assists other enterprises, yet it also assists all enterprises that use the airlines or fly private planes in the course of their business. It also protects those on the ground from plane crashes. It does not, however, constitute "federal financial assistance" to anyone. The court of appeals was able to reach a contrary conclusion only by distorting a consistent administrative interpretation of "Federal financial assistance" that dates back to 1964. The FAA'S original Title VI regulations included the "detail of Federal personnel" as an example of "Federal financial assistance." 14 C.F.R. 21.23(c)(3). Clearly, the operation of the air traffic control system does not involve the "detail" of any federal personnel to the airlines. Indeed, as earlier noted (see pages 35-36, supra), the air traffic control system is far more aptly described as a self-contained federally conducted program. In 1978, the Department of Health, Education and Welfare published guidelines for other agencies to follow in promulgating regulations under Section 504 (see note 10, supra). HEW'S guidelines substituted the word "services" for "detail," so that "Federal financial assistance" under Section 504 included the "(s)ervices of Federal personnel." 43 Fed. Reg. 2137 (1978) (emphasis added). It is clear, however, that HEW did not intend by this change to work any substantive alteration in the definition of "Federal financial assistance" (43 Fed. Reg. 2132 (1978)): Despite some difference in the wording of the definitions of federal financial assistance in the regulations implementing section 504 and title VI, the substance of the two definitions does not differ. When the Department of Justice assumed oversight responsibility for Section 504 (see note 10, supra), it retained 0HEW's definition of "Federal financial assistance," including the "(s)ervices of Federal personnel." 28 C.F.R. 41.3(e). Again, however, there is nothing to indicate that "services" of federal personnel was to be construed any differently than the "detail" of federal personnel. But only by concluding that the "services" of federal personnel means something entirely different than the "detail" of federal personnel was the court of appeals able to hold that the federally operated air traffic control system constitutes federal financial assistance to airlines (Pet. App. 39a-40a). The court clearly erred in disregarding the longstanding ane consistent administrative interpretation of the agencies charged with administering Title VI and Section 504. See e.g., Chevron U.S.A. Inc. v. NRDC, No. 82-1005 (June 25, 1984), slip op. 5-7; Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566 (1980). CONCLUSION The judgment of the court of appeals should be reversed. Respectfully submitted CHARLES FRIED Solicitor General WM. BRADFORD REYNOLDS Assistant Attorney General CAROLYN B.KUHL Deputy Solicitor General MARK R. DISLER Deputy Assistant Attorney General KATHRYN A. OBERLY Assistant to the Solicitor General MIRIAM R. EISENSTEIN Attorney December 1985 /1/ The CAB ceased operations on December 31, 1984. See Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92 Stat. 1705 et seq.; Civil Aeronuatics Board Sunset Act of 1984, Pub. L. No. 98-443, 98 Stat. 1703 et seq. Section 3(e) of the Sunset Act (98 Stat. 1704) developed all remaining authority of the CAB on the Department of Transportation, unless otherwise provided. Section 12(a) of the Sunset Act (98 Stat. 1710) preserved all CAB rules and regulations in effect at the time of transfer. /2/ The FAA became a component of the Department of Transportation by virtue of Section 3(e)(1) of the Department of Transportation Act of 1966, Pub. L. No. 89-670, 80 Stat. 932, recodified at 49 U.S.C. 106. /3/ See the Federal Airport Act, ch. 251, 60 Stat. 170 et seq.; the Airport and Airway Development Act of 1970, Pub. L. No. 91-258, 84 Stat. 219 et seq.; and the Airport and Airway Improvement Act of 1982, 49 U.S.C. App. 2201 et seq. /4/ Title VI is widely recognized as the congressional model for subsequently-enacted statutes prohibiting discrimination in federally assisted programs or activities, and case law interpreting Title VI is generally applicable to issues arising under the later-enacted statutes, including the Rehabilitation Act. See Grove City College v. Bell, 465 U.S. 555, 566 (1984); S. Rep. 93-1297, 93d Cong., 2d Sess. 39 (1974); Pet. App. 29a-30a & nn. 86-88. Accordingly, regulations issued by the FAA and the CAB to implement Title VI form the critical backdrop for consideration of the Board's Section 504 regulations. /5/ See also C.F.R. 379.3(b) (1965), 29 Fed. Reg. 19287 (1964): Specific discriminatory actions prohibited. No air carrier shall subject any person to discrimination on the ground of race, color, or national origin in connection with any air transportation for which such carrier is receiving or has claimed compensation payable by the Board under section 406 of the Federal Aviation Act of 1958. Similarly, the only definition the Board specified for the term "Federal financial assistance" was "grants of Federal funds under section 406 of the Federal Aviation Act of 1958." 14 C.F.R. 379-12 (1965), 29 Fed. Reg. 19289 (1964). /6/ The FAA'S original Title VI regulations provided (14 C.F.R. 15.5(c) (1965), 29 Fed. Reg. 19283 (1964)): Examples. The following examples illustrate the application of the non-discrimination provisions ofTitle VI of the Civil Rights Act and this part: (1) The operator of an airport who is the recipient of Federal financial assistance must give assurance that an entrepreneur who rents space at the airport and there operates a restaurant will not in any manner discriminate between patrons for reasons of race, color, or national origin. (2) The operator of an airport who is the recipient of Federal financial assistance is bound by the conditions and covenants in the conveyance that prohibit, among other things, discrimination for reasons of color, race, or national origin in admission of the public to waiting rooms, sightseeing areas, sanitary facilities, and any other facilities under the control of the airport operator himself. /7/ Appendix C to DOT'S Title VI regulations gave the following examples of FAA programs subject to regulation (49 C.F.R. Pt. 21, App. C(a)(1) (1971), 35 Fed. Reg. 10085 (1970): Federal Aviation Administration. (i) The airport sponsor or any of his lessees, concessionaires, or contractors may not differentiate between members of the public because of race, color, or national origin in furnishing, or admitting to, waiting rooms, passenger holding areas, aircraft tiedown areas, restaurant facilities, restrooms, or facilities operated under the compatible land use concept. (ii) The airport sponsor and any of this lessees, concessionaries, or contractors must offer to all members of the public the same degree and type of service without regard to race, color, or national origin. This rule applies to fixed base operators, restaurants, snack bars, gift shops, ticket counters, baggage handlers, car rental agencies, limousines, and taxi franchised by the airport sponsor, insurance underwriters, and other businesses catering to the public at the airport. (iii) An aircraft operator may not be required to park his aircraft at a location that is less protected, or less accessible from the terminal facilities, than locations offered to others, because of his race, color, or national origin. (iv) The pilot of an aircraft may not be required to help more extensively in fueling operations, and may not be offered less incidental service (such as windshield wiping), than other pilots, because of race, color, or national origin. (v) No pilot or crewmember eligible for access to a pilot's lounge or to unofficial communication facilities such as a UNICOM frequency may be restricted in that access because of his race, color, or national origin. (vi) Access to facilities maintained at the airport by air carriers or commerical operators for holders of first-class transportation tickets or frequent users of the carrier's or operator's services may not be restricted on the basis of race, color, or national origin. (vii) Passengers and crewmembers seeking ground transportation from the airport may not be assigned to different vehicles, or delayed or embarrassed in assignment to vehicles, by the airport sponsor or his lessees, concessionaires, or contractors, because of race, color, or national origin. /8/ Although Title VI was never construed to reach the onboard activities of nonsubsidized air carriers, courts had early interpreted the general "antidiscrimination" clause of Section 404(b) of the Federal Aviation Act, 49 U.S.C. (1976 ed.) 1374(b), to prohibit racial discrimination by all air carriers. See Fitzgerald v. Pan American World Airways, Inc., 229 F.2d 499 (2d Cir. 1956); United States v. City of Montgomery, 201 F.Supp. 590 (M.D. Ala. 1962). As described at pages 11-12, infra, however, Section 404(b) "lapsed" on January 1, 1983, as part of the phase-out of the CAB. /9/ That this was the Board's view is demonstrated by its explanation for deciding not to regulate the employment practices of the airlines (44 Fed. Reg. 32402 (1979) (emphasis added)): In accordance with the Airline Deregulation Act of 1978, the Board will be phasing out its operations over the next 6 years. * * * Under the circumstances, it would be very difficult to develop a new program in an area where we have little experience or background and then to allocate and train staff to implement it. This use of resources would be particularly unwise because the benefits that would flow from Board regulation of employment would be small. The Board extends direct Federal subsidies only to a small number of air carriers, so that the reach of our section 504 jurisdiction would not have a significant effect on industry employment. While we can prevent discrimination in air transportation under section 404 of the Federal Aviation Act without clear section 504 jurisdiction, the same is not true of employment. The Board would have no authority to regulate employment practices of unsubsidized carriers unless those practices somehow caused discrimination in transportation. /10/ Pursuant to Executive Order No. 12,250, 3 C.F.R. 298 (1981), the Attorney General was directed to coordinate the implementation and enforcement by Executive agencies of the nondiscrimination provisions contained in a number of civil rights, statutes, including Section 504 of the Rehabilitation Act. Previously, this coordinating function had been exercised by the Secretary of Health, Education, and Welfare (see Executive Order No. 11,914 3 C.F.R. 117-118 (1977)) and, later, by the Secretary of Health and Human Services. /11/ Whether the Board's conclusion that the "safe and adequate service" clause of Section 404(a) could be interpreted as encompassing a general ban on discrimination was correct, and, if so, whether the Board could have construed that same clause more broadly to impose specific antidiscrimination regulations on all carriers, are interesting legal questions, but they are not before this Court. Instead, this case is limited to the scope of coverage under Section 504. /12/ Subpart B deals with such matters as the availability of information for deaf persons, guide dogs, wheelchairs, special lifts to help handicapped passengers board and deplane, and the carrying of medically-needed oxygen on board the aircraft. /13/ The Board did, however, urge nonsubsidized carriers to look to Subpart B of the Section 504 regulations for guidance in complying with the general antidiscrimination provision of Subpart A applicable by virtue of Section 404(a) alone. 47 Fed. Reg. 25938 (1982) (Pet. App. 90a-91a). /14/ With respect to operating certificates, the court endorsed the CAB'S reliance (Pet. App. 88a) on Gottfried v. FCC, 655 F.2d 297 (D.C. Cir. 1981), in which the court had held that broadcast licenses issued by the FCC do not constitute federal financial assistance for purposes of Section 504 (Pet. App. 34a). With respect to tax credit, the court of appeals doubted that "Congress * * * intend(ed), by granting a limited tax incentive to a particular industry or group, to thereby encompass every such individual or group, or, for that matter, individual within some ever-widening and potentially almost limitless definition of 'federal financial assistance.'" Id. at 37a. The court also expressed the view that it would be anomalous to allow the airlines themselves to determine whether they wished to comply with Section 504 simply by deciding whether or not to take advantage of tax credits (Pet. App. 37a-38a). /15/ Respondents also challenged two specific aspects of the Board's final regulations -- the Board's definition of "qualified handicapped person" and a requirement that handicapped persons who require "extensive special assistance" notify the airlines 48 hours in advance of flight. These challenges were resolved in the Board's favor (Pet. App. 62a-72a), and respondents did not seek further review. /16/ Employees are protected by Section 504 from discrimination in federally assisted programs because they "participate in" such programs (see Consolidated Rail Corp. v. Darrone, 465 U.S. 624 (1984)), but they are not necessarily "beneficiaries." In any event, the issue of Section 504's applicability to the employees of entities that conduct federally assisted programs is not involved in this case. /17/ In Jacobson v. Delta Airlines, Inc., 742 F.2d 1202, 1213 (9th Cir. 1984), cert. dismissed; No. 84-1409 (Apr. 27, 1985), the court of appeals, considering arguments remarkably similar to those advanced by respondents in this case, found it unnecessary to decide "whether a person (or entity) can become subject to the Rehabilitation Act by benefiting to a substantially greater degree than the general public from services provided primarily for the general public." Instead, the court concluded that neither the use of federally assisted airports nor the air traffic control system constitutes federal financial assistance to airlines within the meaning of Section 504 because the airlines pay for those services through taxes imposed on aviation fuel, airplane tires and tubes, and other aviation products (742 F.2d at 1213-1214). Although the Ninth Circuit reached the correct result when it held that the airlines are not "assisted," its rationale was flawed. Nothing in the legislative history of Title VI or Section 504 suggests that Congress considered the relationship between specific taxes or taxpayers and federal grants as relevant to the legislative scheme. Moreover, the Ninth Circuit's "user fee" premise was incorrect. In fact, commerical airlines do not make special payments for the services they use. (We note in this regard that the federal government was not a party in Jacobson, and thus the court may not have been fully informed with respect to the operation of the airport trust fund used to finance grants to airport operators.) We are advised by the Department of Transportation that the vast majority of contributions to the airport trust fund -- 87% in fiscal year 1985 -- is derived from an 8% tax on airline tickets (see 26 U.S.C. 4261) that, by statute, must be paid by passengers (26 U.S.C. 4261(d)). The remainder of moneys in the trust fund comes from taxes on cargo and general aviation fuel. The air traffic control system, on the other hand, is financed through general tax revenues. Accordingly, we do not urge the Court to endorse the Ninth Circuit's Jacobson rationale. As demonstrated in text, however, the same result should obtain in this case, albeit for different reasons. /18/ Contrary to the view of the court of appeals (see Pet. App. 48a), it is clear that DOT understood the Board's position with respect to its Section 504 jurisdiction. In the preamble to DOT'S final Section 504 regulations, the Department noted that "the CAB determined that it had statutory authority to issue regulations governing air transportation of handicapped persons, both under Section 504 of the Rehabilitation Act and under sections 404 and 411 of the Federal Aviation Act." 44 Fed. Reg. 31451 (1979) (emphasis added). /19/ Significantly the court of appeals did not hold that the CAB erred in its interpretation of Section 404 of the Federal Aviation Act; indeed, the court was never asked to rule on the question. See note 11, supra.