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 The Acting Solicitor General, on behalf of the United States Department of Transportation and the Federal Aviation Administration, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the District of Columbia Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit 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 and the Federal Aviation Administration. 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 1, 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. In addition to Paralyzed Veterans of America, the petitioners in the court of appeals included the American Coalition of Citizens with Disabilities, Inc. and the American Council of the Blind. All three organizations are respondents in this Court. TABLE OF CONTENTS Question 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 Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-76a) is reported at 752 F.2d 694. The opinion dissenting from the denial of rehearing en banc (App., infra, 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 (App., infra, 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 jurisdiction of this Court is invoked under 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 part as follows: No otherwise qualified handicapped individual in the United States, as defined in section 706 (7) of this title, shall, solely by 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 this petition (App., infra, 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 handicapped 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 commercial 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 commercial 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 Section 406 or 419 of the Federal Aviation Act and instructed the CAB's successor agency, the Department of Transportation, to promulgate new regulations applicable to all commercial airlines. /1/ 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, 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) and (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, Section 24, 92 Stat. 1725; Act of Oct. 2, 1982, Pub. L. No. 97-276, Section 130, 96 Stat. 1196-1197; Department 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, Section 33, 92 Stat. 1732. This program, which is to operate through 1988, is unrelated to the provision 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, prohibiting discrimination on the basis of race, color, or national origin in federally assisted programs and activities. /4/ Both aviation agencies, the CAB and the 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/ After 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 of 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) (1971), set forth at note 7, supra). Significantly, however, the exhaustive 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 commercial 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 ultimately assuming responsibility only for the on-board activities of subsidized carriers. Initially, however, both agencies expected the CAB to be able to promulgate regulations governing the on-board activities of all certificated airlines, using authroity 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 "subject(ing) 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, Section 40(a), 92 Stat. 1744 (to be 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) (App., infra, 85a-91a). In reaching this conclusion, the Board carefully considered, but ultimately rejected, the contention that all certificated 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) (App., infra, 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) (App., infra, 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. Subpart A is a general prohibition against discrimination in air transportation against qualified handicapped persons. Subpart B of the Board's final rules sets forth specific requirements to be followed by each regulated carrier in providing air transport service to the handicapped. /11/ Subpart C established 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 prohibition applies to all certificated carriers, whether or not they receive federal financial assistance. In recognition os 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 Section 406 or 419 of the Federal Aviation Act. /12/ 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 commercial 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. /13/ 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 (App., infra, 39a-40a, 43a (footnotes omitted)): It cannot be seriously disputed that the safe and efficient operation of commercial 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 commercial 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 commercial 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 commercial 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, No. 82-792 (Feb. 28, 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" (App., infra, 45a). On the other hand, the court reasoned that, if the assisted "program or activity" were deemed to be that of "commercial 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 commercial airlines (App., infra, 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 commercial air carriers" because of the federal government's funding of airports and airways used by those carriers. App., infra, 45a. The court stated (id. at 50a-51a (footnotes omitted)): Airports and airlines are inextricably intertwined. The indissoluble nexus between them is the provision of commercial 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 commercial air transportation certainly does. Accordingly, the court vacated the CAB's regulations insofar as they failed to apply to all commercial airlines and remanded the regulations to the Department of Transportation (the CAB's successor) for repromulgation in accordance with its opinion. /14/ 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) (App., infra, 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. It would unduly extend this dissent, however, to deal with those contentions in detail. The Supreme Court has been over this ground, and we ought to accept, rather than evade, its conclusion. REASONS FOR GRANTING THE PETITION The court of appeals' decision that all commercial airlines, by virtue of their use of federally assisted airports, are thereby subject to regulation under Section 504 in their "program or activity" of "providing commercial air transportation" completely ignores the distinction between a "recipient" operating a federally assisted "program or activity" and a "beneficiary" of that assistance; disregards the "program specific" limitation on Section 504's coverage required by this Court's decisions in Grove City College v. Bell, No. 82-792 (Feb. 28, 1984); Consolidated Rail Corp. v. Darrone, No. 82-862 (Feb. 28, 1984), slip op. 11-12; and North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 540 (1982); and conflicts with the decision of the Ninth Circuit in Jacobson v. Delta Airlines, Inc., 742 F.2d 1202 (1984). Maintenance of the distinction between a "recipient" operating a federally assisted 'program or activity" and a "beneficiary" of that assistance, as well as the "program specific" mandate contained in the language of Section 504, is essential if Congress's expressed intent to impose some limits on the reach of the statute is to be respected. The court of appeals' decision, which distorts longstanding administrative interpretations of the key concepts at issue, requires the regulation of activities that the administering agencies have consistently regarded as beyond the purview of Section 504. Moreover, the recipient/beneficiary dichotomy and the program-specific limitation at issue in that case apply not only to Section 504, but also to Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d, Title IX of the Education Amendments of 1972, 20 U.S.C. 1681, and to a host of other general and specific revenue sharing statues. See, e.g., 31 U.S.C. 6716. Accordingly, the court of appeals' decision may well have substantial impacts beyond this case. Finally, the conflict within the circuits means that neither the Department of Transportation nor the airlines can be certain of their obligations under Section 504. In these circumstances, review by this Court is appropriate. 1. a. The court of appeals' conclusion that commercial airlines are "recipients" of federal financial assistance by virtue of their use of federally assisted airports totally obliterates any distinction between a "recipient" operating a federally assisted "program or activity" and a "beneficiary." 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 the intended beneficiaries of that assistance. Importantly, however, the intended beneficiaries of the federal funding are not themselves regulated by the statute. 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). In this case, airport operators clearly are "recipients" of funds extended under the Airport and Airway Improvement Act of 1982, Pub. L. No. 97-248, Tit. V, 96 Stat. 671 et seq., and its predecessor statutes (see note 3, supra). Members of the travelling public, on the other hand, are "beneficiaries" of federal grants to airport operators, because the purpose of the federal grants is to benefit those who use airports. For the same reason, airlines using federally assisted airports are beneficiaries of grants to airport operators, but they are not, by virtue of use alone, "recipients" of federal financial assistance. As Judge Bork recognized in his opinion dissenting from the denial of rehearing en banc, the court of appeals' approach to the "recipient" issue is boundlessly latitudinal (App., infra, 80a-81a): (The panel's) reading of section 504's statutory language would make every commercial 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 intertwined 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 courts results in the regulation of law firms since courts are inextricably intertwined with and indispensable to lawyering. There is no merit, therefore, to the court of appeals' rationale that an "indissoluble nexus" (App., infra, 50a) between airports and airlines transforms the airlines into "recipients" of grants to airport operators. 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, those businesses, like the airlines, all would have to be treated as "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. b. The court of appeals also erred in holding that the services of federal air traffic controllers constitute federal financial assistance to airlines. /15/ 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. Reg. 13380 (1964) (footnote omitted)): Activities wholly carried out by the United 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 VI. 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. 15.23(3) (1965), 29 Fed. Reg. 19286 (1964) (emphasis added). DOT's current Title VI regulations continue the use of that phrase. 49 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 page 22, 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 defintions 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 HEW'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 the term "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 (App., infra, 39a-40a). The court clearly erred in disregarding the longstanding and 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). c. In Jacobson v. Delta Airlines, Inc., 742 F.2d 1202 (9th Cir. 1984), the court of appeals held 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. The court below did not discuss Jacobson, but it is clear that the two decisions cannot be reconciled. The result of the conflict is that neither the airlines nor the Department of Transportation can be certain of their obligations under Section 504. Consistency in the administration of this nationwide program requires resolution of the conflict. The plaintiff in Jacobson, who was confined to a wheelchair because of cerebral palsy, challenged the airline's requirement that he sign a statement, in advance of flight, acknowledging the airline's right to refuse him passage or to remove him at any stop "if it becomes necessary for the comfort and safety of other passengers" (742 F.2d at 1204). The court of appeals agreed that the airline had subjected him to unlawful discrimination, reasoning that the "antidiscrimination" clause of the Federal Aviation Act, 49 U.S.C. (1976 ed.) 1374(b), incorporated Section 504's basic prohibition against discrimination on the basis of handicap (742 F.2d at 1205). /16/ Having prevailed on his basic claim, plaintiff then sought attorney's fees. The request for fees required the court of appeals to determine whether plaintiff had stated a claim under Section 504 itself, because the Federal Aviation Act contains no fee-shifting provision. Considering arguments remarkably similar to those advanced by respondents in this case, the Ninth Circuit held that plaintiff had not stated a claim under Section 504 because the airline did not receive federal financial assistance (742 F.2d at 1208). Although he apparently recognized that, in general, airlines, like other corporations and persons, are simply beneficiaries of government-supported services, the plaintiff in Jacobson argued that airlines benefit so much more than others from the use of federally assisted airports and the air traffic control system that they should be treated as recipients of federal financial assistance (742 F.2d at 1213). The court of appeals found it unnecessary to decide "whether a person 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" (ibid.). Instead, the court concluded that "even though air carriers benefit from federal airport grants and federal air traffic control * * * to a greater degree than the general public, they also pay for those services, as Congress intended them to, to a greater degree than the general public does" (ibid.). This was so, the court concluded, because the trust fund from which grants to airport operators are made is supported in large part by taxes on aviation fuel, airplane tires and tubes, and other products used by the airlines (id. at 1213-1214). Because Congress established a user fee system under which the airlines were to pay for services rendered, the Ninth Circuit concluded that Congress could not simultaneously have intended that the airlines' use of federally assisted airports and the air traffic control system would constitute federal financial "assistance" (id. at 1215). /17/ Accordingly, the court held that plaintiff had not stated a claim under the Rehabilitation Act and that he could not recover attorney's fees under that Act (ibid.). /18/ 2. a. In deciding that the "program or activity" that is federally assisted in this case is the "provi(sion of) commercial air transportation" by all certificated carriers (App., infra, 50a), the court of appeals seriously misapplied this Court's decision in Grove City College v. Bell, No. 82-792 (Feb. 28, 1984). In Grove City, 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, No. 82-862 (Feb. 28, 1984), slip op. 11-12; and North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 539-540 (1982). Applying "program specific" reasoning to tuition grants, the Court held in Grove City 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, slip op. 17. 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 school's financial aid program was subject to regulation under Title IX. Ibid. 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. Grants under the Airport and Airway Improvement Act (and its predecessor statutes) are made to airport operators to support "program(s) or activit(ies)" involved in running an airport. /19/ 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 airport 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 it would be "nonsensical" to distinguish between an airline's activities at the airport and its activities on board its planes (App., infra, 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. Simply stated, Section 504 is inapplicable to the "program or activity" of "providing commercial air transportation" (App., infra, 50a) unless and until Congress furnishes the airlines with federal financial assistance for flying. b. As was the case with its analysis of the air traffic control system (see pages 23-24, supra), the court of appeals was able to conclude that the onboard activities of commercial airlines are 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 4-13, 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 judicially 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 of 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 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. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. CHARLES FRIED Acting Solicitor General WM. BRADFORD REYNOLDS Assistant Attorney General CHARLES J. COOPER MARK R. DISLER Deputy Assistant Attorneys General KATHRYN A. OBERLY Assistant to the Solicitor General JESSICA DUNSAY SILVER MIRIAM R. EISENSTEIN Attorneys AUGUST 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 Aeronautics 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) devolved 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, Pub. L. No. 97-248, Tit. V, 96 Stat. 671 et seq. (to be codified at 49 U.S.C. 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, No. 82-792 (Feb. 28, 1984), slip op. 10; App., infra, 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 at issue in this case. /5/ See also 14 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 of Title 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 reason 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 pertinent 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 his lessees, concessionaires, 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 taxis 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 his 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 commercial 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 on-board 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 12-13, infra, however, Section 404(b) "lapsed" 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 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. Of course, the Board's statement was issued prior to this Court's decision in North Haven Bd. of Educ. v. Bell, 456 U.S. 512 (1982), and Consolidated Rail Corp. v. Darrone, No. 82-862 (Feb. 28, 1984). But those decisions, holding that Title IX of the Education Amendments of 1972, 20 U.S.C. 1681 et seq., and Section 504 encompass employment discrimination, are not pertinent to the issue here, which is whether nonsubsidized carriers receive "Federal financial assistance" that would render their "program or activity" of transporting passengers from one place to another subject to Section 504 at all. Contrary to the view of the court of appeals (see App., infra, 48a), it is also clear that DOT understood the Board's position with respect to its Section 504 jurisdiction. In the preamble of 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). /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/ 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. /12/ 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) (App., infra, 90a-91a). /13/ With respect to operating certificates, the court endorsed the CAB's reliance (App., infra, 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 (App., infra, 34a). With respect to tax credits, 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 noted the anomaly that would result from allowing 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 (App., infra, 37a-38a). /14/ 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 (App., infra, 62a-72a), and they are not pertinent to the issues before this Court. /15/ As previously noted (see page 16, supra), the court of appeals did not base its ultimate holding on this conclusion. Nevertheless, we believe that the issue is properly before the Court. The situation is comparable to that presented by North Haven Bd. of Educ. v. Bell, 456 U.S. 512 (1982), in which the Court held that Title IX of the Education Amendments of 1972, 20 U.S.C. 1681 et seq., encompasses employment discrimination on the basis of gender, but declined to define the federally-funded program at issue (456 U.S. at 540). See also Consolidated Rail Corp. v. Darrone, No. 82-862 (Feb. 28, 1984), slip op. 11-12. Here, too, the court of appeals held that the air traffic control system constitutes federal financial assistance to all airlines within the meaning of Section 504, but declined to define the program or activity covered by that assistance. Thus, if this Court were to grant review and reverse only that part of the decision holding that federal assistance to airports requires airlines to comply with Section 504 in their "program or activity" of "providing commercial air transportation" (App., infra, 50a), the Department of Transportation still would be left with a holding that all airlines receive federal financial assistance within the meaning of Section 504 by virtue of their use of the air traffic control system. Although it would be open to the Department to define the relevant "program or activity" in the first instance, it still would presumably be required to repromulgate the challenged regulations in some fashion. On the other hand, a decision by this Court that the air traffic control system is not federal financial assistance at all would obviate the need for further administrative and judicial proceedings regarding the scope of the "program or activity." /16/ There is no indication that either the Ninth Circuit or the parties were aware of the fact that Section 404(b) of the Federal Aviation Act expired on January 1, 1983. See page 12, supra. In any event, the discrimination of which plaintiff complained occurred in 1980 (see 742 F.2d at 1204). /17/ The Ninth Circuit recognized that the airport trust fund is supplemented as necessary with general tax revenues and that an FAA study prepared in 1978 reported that the airlines were not contributing to the trust fund to the same extent that they were benefitting from federal services (742 F.2d at 1214). For two reasons, these facts did not alter the court of appeals' conclusion that the airlines are not "recipients" of federal financial assistance. First, the court observed that "Congress might reasonably have concluded that the services provided by the FAA confer benefits on the general public over and above the benefits they confer on the users of the system," thus making it reasonable for the general public to bear some of the costs (ibid.). Second, the court deemed it irrelevant that, at any given point in time, airlines might be paying less than their "fair share" as calculated under a strict user fee system. Any temporary distortions meant only that the user fee system required fine-tuning to implemenet congressional intent; they did not suggest that Congress ever conceived of the airlines as "recipients" of federal financial assistance (id. at 1214-1215). Moreover, the court thought it would be anomalous for the determination of "recipient" status under Section 504 to vary from day to day, depending on "whether the congressionally mandated system is operating flawlessly or whether accountants' studies demonstrate that changes in allocation formulas are required" (742 F.2d at 1215 (footnote omitted)). /18/ We note that the Ninth Circuit's reasoning in Jacobson is by no means the only route to a conclusion that a "beneficiary" of federal services is not a "recipient" of federal financial assistance. Indeed, most beneficiaries of federal financial assistance are in quite a different position than the airlines -- like the students receiving tuition grants in Grove City, beneficiaries generally pay little or nothing for the benefits they receive. It does not follow, however, that they should be treated as "recipients" of federal financial assistance. Stated simply, "beneficiaries" of federal financial assistance are those that Congress intended to benefit; they are not, however, those that Congress intended to regulate. "Recipients," on the other hand, are the entities that are carrying on an assisted "program or activity" with the help of federal aid, and it is the receipt of that federal aid that subjects them to regulation in the conduct of such a "program or activity." /19/ As the court of appeals recognized (App., infra, 46a (footnote omitted)), the grants are used for such purposes as "airport land acquisition, runway construction, passenger terminals, airport lighting, airport access and service roads, electronic and visual approach aids, taxiway construction, obstruction removal, and fire/rescue equipment and buildings." APPENDIX