Flytenow, Inc. v. Federal Aviation Administration

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 25, 2015 Decided December 18, 2015

No. 14-1168

FLYTENOW, INC.,

PETITIONER

v.

FEDERAL AVIATION ADMINISTRATION, ADMINISTRATOR,

RESPONDENT

On Petition for Review of an Order

of the Federal Aviation Administration

Jonathan Riches argued the cause for petitioner. With

him on the briefs were Gregory S. Winton, Clint Bolick, and

Aditya Dynar.

Sydney A. Foster, Attorney, U.S. Department of Justice,

argued the cause for respondent. With her on the brief were

Benjamin C. Mizer, Acting Assistant Attorney General,

Ronald C. Machen Jr., U.S. Attorney at the time the brief was

filed, and Mark R. Freeman, Attorney.

Before: PILLARD and WILKINS, Circuit Judges, and

GINSBURG, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge PILLARD.

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PILLARD, Circuit Judge: Flytenow, Inc., developed a

web-based service through which private pilots can offer their

planned itineraries to passengers willing to share the pilots’

expenses. After starting operations in early 2014, Flytenow

sought a legal interpretation from the Federal Aviation

Administration (FAA) regarding its business plan’s

compliance with the Federal Aviation Act of 1958 and the

FAA’s regulations. The FAA responded with a Letter

Interpretation, concluding that pilots offering flight-sharing

services on Flytenow’s website would be operating as

“common carriers,” which would require them to have

commercial pilot licenses. Flytenow’s members, licensed

only as private pilots, thus would violate FAA regulations if

they offered their services via Flytenow.com.

Flytenow asks us to set aside the FAA’s Interpretation as

arbitrary and capricious and inconsistent with statutory and

constitutional law. Because we conclude that the FAA’s

Interpretation is consistent with the relevant statutory and

regulatory provisions and does not violate Flytenow’s

constitutional rights, we deny Flytenow’s petition for review.

I.

Flytenow.com facilitates connections between pilots and

“general aviation enthusiasts” who pay a share of the flight’s

expenses in exchange for passage on a route predetermined by

the pilot. Enthusiasts must be members of Flytenow to search

for flights, but anyone may become a member by filling out

an online form. Pilots using Flytenow’s service “initially and

unilaterally dictate the time, date, and points of operation” of

their proposed flights. J.A. 48. After a member-enthusiast

expresses interest in being a passenger on a particular flight, a

pilot may “accept or reject an enthusiast’s request . . . for any

or no reason.” Id. If a pilot carries one or more passengers,

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Flytenow facilitates the sharing of expenses on a pro rata

basis between passengers and pilot. Id. Around the same

time that Flytenow publicly launched its flight-sharing

website and requested the FAA’s legal opinion, another firm

proposing a substantially similar service, AirPooler, Inc.,

submitted a parallel request for a legal interpretation on the

same issue.

The FAA is charged with “promot[ing] safe flight of civil

aircraft.” 49 U.S.C. § 44701. To that end, the FAA is

empowered to regulate nearly every aspect of private and

commercial flight, including licensing and regulation of pilots

and their operations. See, e.g., id. §§ 44701(a), 44703, 44705.

At issue here is whether the FAA permissibly concluded that

private pilots using Flytenow’s service to offer flights to

potential passengers hold themselves out as common carriers

transporting persons from place to place for compensation in

violation of the terms of their noncommercial licensure.

The FAA issues several categories of “airman

certificates” licensing qualified pilots to fly in various

capacities subject to specified terms. See id. §§ 44702,

44703; 14 C.F.R. §§ 61.81-95, 61.102-17, 61.121-33.

Relevant to this petition are “commercial pilot” licenses, id.

Part 61, subpart F, and “private pilot” licenses, id. subpart E.

Certified commercial pilots are qualified to transport

passengers or property for compensation. See id.

§ 61.133(a)(1). Private pilots, by contrast, are barred from

receiving compensation. See id. § 61.113(a).

Seven narrow, enumerated exceptions to the

compensation bar permit private pilots to receive

compensation in specified circumstances. Id. § 61.113(b)-(h).

Those exceptions authorize, for example, private pilots to

accept compensation for certain charity events, id.

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§ 61.113(d), search-and-location operations, id. § 61.113(e),

or airplane-sale-related flights, id. § 61.113(f). One of the

seven exceptions to the compensation bar provides that a

private pilot may share expenses with passengers, provided

that the pilot does “not pay less than the pro rata share of the

operating expenses” and that the expenses “involve only fuel,

oil, airport expenditures, or rental fees.” Id. § 61.113(c). The

pro rata sharing of expenses is further limited by the FAA’s

“common-purpose test,” which requires private pilots and

their expense-sharing passengers to share a “bona fide

common purpose” for their travel. See FAA Legal

Interpretation Letter from Rebecca B. MacPherson, Assistant

Chief Counsel for Regulations, to Mark Haberkorn (Oct. 3,

2011) (Haberkorn Interpretation), J.A. 41-44. Private pilots’

receipt of compensation outside of the seven exceptions is a

violation of section 61.113 subject to civil penalties under 49

U.S.C. § 46301.

In addition to pilot licensing, the FAA regulates the

conduct of aircraft and pilots in flight. The regulations make

an important distinction between private carriage and

common carriage, with the latter subject to more stringent

operating requirements.

Part 91 of the FAA’s regulations establishes baselines

that apply to all aircraft operating in the United States. See 14

C.F.R. § 91.101; see generally id. §§ 91.101-47. Part 91

governs, for example, the use of seat belts, id. § 91.107,

minimum safe altitudes, id. § 91.119, aircraft speed, id.

§ 91.117, and rights of way among aircraft, id. § 91.113.

Part 119 of the FAA’s regulations subjects flights

operating as air carriers to safety requirements beyond what

Part 91 requires of all flights. See 14 C.F.R. § 119.1. An “air

carrier” under the Federal Aviation Act is a person

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undertaking to provide “air transportation,” 49 U.S.C.

§ 40102(a)(2), defined to include “foreign air transportation,

interstate air transportation, or the transportation of mail by

aircraft,” id. § 40102(a)(5). Interstate air transportation, the

category relevant to this case, “means the transportation of

passengers or property by aircraft as a common carrier for

compensation . . . .” Id. § 40102(a)(25). Anyone piloting as

an air carrier must have “an air carrier operating certificate”

and operate only in compliance with its terms. 49 U.S.C.

§ 44711(a)(4). The term “[a]ir carrier” for purposes of Part

119 of the regulations tracks the statutory definition. See 14

C.F.R. § 1.1. Thus, as relevant here, under the statutory and

regulatory definitions, an “air carrier” is a person engaged in

transportation of passengers as a “common carrier.”

The statute does not define “common carrier” or

“compensation.” See 49 U.S.C. § 40102(a). Instead, the FAA

has relied for nearly thirty years on a definition of common

carriage it announced in an advisory circular. FAA Advisory

Circular 120-12A (April 26, 1986) (FAA Advisory Circular),

J.A. 30-32. That circular noted the common-law heritage of

“common carriage” and “private carriage” and determined

that, because the Act left those terms undefined, FAA

“guidelines giving general explanations” of the terms “would

be helpful.” Id. ¶ 3, J.A. 30.

The FAA Advisory Circular distinguished “private

carriage” from “common carriage.” It explained that

“[p]rivate carriage for hire is carriage for one or several

selected customers, generally on a long-term basis.” Id.

¶ 4.d., J.A. 31. As long as she does not hold herself out to the

public generally, and any compensation she receives does not

exceed the passenger’s pro rata share of expenses, a private

pilot may offer private carriage consistently with the

regulations. See generally FAA Advisory Circular, J.A. 30-

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31. In contrast to private carriage, the FAA’s Advisory

Circular defined “common carriage” as service meeting four

elements: “(1) a holding out of a willingness to (2) transport

persons or property (3) from place to place (4) for

compensation.” Id. ¶ 4, J.A. 30. The two “common carriage”

definitional factors at issue here are the first and fourth—

holding oneself out as willing to transport passengers, and

doing or offering to do so for compensation.

As noted above, a pilot with a commercial license is

qualified to offer carriage for compensation; a private pilot

may only receive compensation pursuant to one of the seven

exceptions in section 61.113. 14 C.F.R. § 61.113. Under the

FAA Advisory Circular, a pilot’s receipt of compensation

may be evidence that a pilot’s operations are “air

transportation,” meaning common carriage, requiring a higher

level of pilot qualification. FAA Advisory Circular, J.A. 31.

For example, notwithstanding the regulatory permission for

private pilots to carry selected customers and share flight

costs with them pursuant to the express exception set forth in

section 61.113(c), even carriers flying members of only “one

organization may be . . . common carrier[s] if membership in

the organization and participation in the flights are, in effect,

open to a significant segment of the public.” Id. ¶ 4.f., J.A.

31. The FAA also noted that a private pilot’s provision of

“free transportation” for a hotel or casino that requested

“nominal charges” for “gifts and gratuities” has been held to

be “common carriage based on the fact that the passengers

[we]re drawn from the general public and the nominal charge

constituted compensation.” Id. ¶ 4.g., J.A. 31.

The FAA Advisory Circular defined “holding out” as

making representations “to the public, or to a segment of the

public” that a carrier is “willing to furnish transportation

within the limits of its facilities to any person who wants it.”

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Id. The FAA warned that a private pilot may intend to offer

only private carriage, but the pilot’s flights could come to be

treated as common carriage: “The number of contracts must

not be too great, otherwise it implies a willingness to make a

contract with anybody.” Id. ¶ 4.d., J.A. 31. The FAA

emphasized that its definition of “holding out” as a factor in

the definition of common carriage is broad and flexible:

“‘holding out’ which makes a person a common carrier can be

done in many ways and it does not matter how it is done.” Id.

¶ 4, J.A. 30. If a carrier were to show that it did not have rate

schedules, that it offered services only pursuant to separately

negotiated contracts, or that the carrier occasionally refused

service to would-be customers, such facts would not

necessarily be “conclusive proof” that a carrier is a private—

as opposed to common—carrier. Id. ¶ 4, J.A. 30. A carrier

cannot avoid a “holding out” determination and its regulatory

implications simply by avoiding advertising on its own

behalf; “‘holding out’ may be accomplished through the

actions of agents, agencies, or salesmen who may,

themselves, procure passenger traffic from the general public

. . . .” Id. ¶ 4.b., J.A. 31.

The FAA responded to Air Pooler’s and Flytenow’s

requests for legal interpretations in separate letters on August

13 and August 14, respectively. The letter to Flytenow

incorporated by reference the letter to AirPooler. The letters

concluded that pilots offering services on Flytenow.com or

AirPooler.com would be engaged in common carriage as the

FAA defines it, which would subject them to Part 119, the

more stringent regulations governing pilots in air commerce.

First, in its letter to AirPooler, the FAA explained the

general rule that a private pilot may not act as pilot-in-

command of an aircraft carrying passengers or property for

compensation or hire. That general rule admits of a narrow

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exception for private pilots’ “accept[ance] [of] compensation

in the form of a pro rata share of operating expenses” from

their passengers. J.A. 58. That expense-sharing provision is

cast as “an exception to the compensation or hire prohibition,”

that is, it specifies a circumstance in which compensation is

permitted. Id.

Second, the FAA explained that it treats flight-sharing

services as “common carriage.” Under the FAA’s definition

of “common carriage,” flight-sharing services meet the

compensation element of the common-carriage definition

because expense sharing is compensation. J.A. 59. The

“holding out” element is met by pilots’ use of the online

service to “post[] specific flights” to the website. J.A. 60. In

its letter to Flytenow, the FAA explained that “[h]olding out

can be accomplished by any ‘means which communicates to

the public that a transportation service is indiscriminately

available’ to the members of that segment of the public it is

designed to attract.” J.A. 62 (quoting Transocean Airlines, 11

C.A.B. 350 (1950) (enforcement proceeding)). The FAA

concluded that, “[b]ased on [Flytenow’s] description, the

website is designed to attract a broad segment of the public

interested in transportation by air.” J.A. 62. The FAA thus

concluded that a pilot holding out his services and receiving

expense-sharing compensation is engaged in “common

carriage” and requires a Part 119 certificate.

Flytenow timely filed this petition for review challenging

the FAA’s Interpretation.

II.

We have jurisdiction to review Flytenow’s petition under

section 46110 of the Federal Aviation Act, whether or not the

FAA’s interpretation is a final order. Even where no party

contests jurisdiction, “it is well established that a court of

9

appeals must first satisfy itself of its own jurisdiction, sua

sponte if necessary, before proceeding to the merits.”

Blackman v. District of Columbia, 456 F.3d 167, 174 (D.C.

Cir. 2006) (quoting Citizens for Abatement of Aircraft Noise,

Inc. v. Metro. Wash. Airports Auth., 917 F.2d 48, 53 (D.C.

Cir. 1990), aff’d, 501 U.S. 252 (1991)). Neither party has

identified any jurisdictional defect in this appeal, and we

perceive none.

The Federal Aviation Act authorizes review in this court

by any “person disclosing a substantial interest in an order

issued by” the FAA Administrator. 49 U.S.C. § 46110(a).

There would perhaps be an obstacle to our review of the

FAA’s Interpretation if the Administration’s letter were not

final action, but the FAA has not objected to our reviewing

the letter as an “order” under section 46110(a) or otherwise

contended that the Interpretation is unreviewable as non-final.

See Br. of Respondent 1. At oral argument, the FAA

disclaimed any non-finality bar to our review. We need not

address finality sua sponte because finality is not

jurisdictional under either the Administrative Procedure Act

or the Federal Aviation Act.

The APA authorizes judicial review of “final agency

action for which there is no other adequate remedy in a

court,” as well as “[a]gency action made reviewable by

statute.” 5 U.S.C. § 704. After a period of uncertainty in our

circuit, it is “now firmly established” that finality under the

APA is non-jurisdictional. Vietnam Veterans of Am. v.

Shinseki, 599 F.3d 654, 661 (D.C. Cir. 2010).

Like the APA’s section 704, section 46110 of the Federal

Aviation Act, on which Flytenow relies, authorizes judicial

review of an “order.” Unlike the APA, however, section

46110 does not impose any explicit finality requirement.

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Rather, we have incorporated generally applicable finality

principles into the analysis of what counts as an “order” under

section 46110. See, e.g., CSI Aviation Servs., Inc. v. U.S.

Dep’t of Transp., 637 F.3d 408, 411 (D.C. Cir. 2011) (citing

Bennett v. Spear, 520 U.S. 154, 178 (1997)); Vill. of

Bensenville v. Fed. Aviation Admin., 457 F.3d 52, 68 (D.C.

Cir. 2006) (same); Puget Sound Traffic Ass’n v. Civil

Aeronautics Bd., 536 F.2d 437, 438-39 (D.C. Cir. 1976)

(noting that the Federal Aviation Act’s review provision,

“which gives this court power to review Board orders, has

been judicially restricted to review of final agency orders”).

Because the finality requirement under section 46110(a) is

judicially imported from the APA, it is no more jurisdictional

than the APA’s own finality requirement. Our precedent

confirms that finality under the Federal Aviation Act is a

matter of judicial creation, allowing us to “avoid premature

intervention in the administrative process.” CSI, 637 F.3d at

411 (citing Puget Sound, 536 F.2d at 438-39).

Because finality is non-jurisdictional, we accept the

FAA’s decision not to pursue any such defense it might have

had. This case presents no exceptional circumstances

warranting our consideration of the potential finality bar

despite its forfeiture. See District of Columbia v. Air Fla.,

Inc., 750 F.2d 1077, 1084-85 (D.C. Cir. 1984). Government

litigants may sometimes “want to waive or forfeit certain non-

jurisdictional, non-merits threshold defenses so as to permit or

obtain a ruling on the merits.” Grocery Mfrs. Ass’n v. Envtl.

Prot. Agency, 693 F.3d 169, 185-86 n.5 (D.C. Cir. 2012)

(Kavanaugh, J., dissenting). We do not second-guess the

FAA’s decision here.

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III.

Flytenow characterizes the FAA’s Interpretation as a

significant deviation from the Administration’s prior

interpretation of its own regulations and asserts that such a

shift requires notice and comment rulemaking under the

Administrative Procedure Act. That argument is foreclosed

by Perez v. Mortgage Bankers Ass’n, in which the Supreme

Court expressly abrogated the doctrine of our circuit upon

which Flytenow relies. 135 S. Ct. 1199, 1207 (2015)

(abrogating Paralyzed Veterans of Am. v. D.C. Arena L.P.,

117 F.3d 579 (D.C. Cir. 1997)). As the Supreme Court in

Perez explained, the APA’s “notice-and-comment

requirement ‘does not apply . . . to interpretative rules.’” Id.

at 1206 (quoting 5 U.S.C. § 553(b)(A)) (omission in original).

Perez tells us that its “exemption of interpretive rules from the

notice-and-comment process is categorical . . . .” Id. The

Interpretation at issue here is a quintessential interpretative

rule, as it was “issued by an agency to advise the public of the

agency’s construction of the statutes and rules it administers.”

Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 99 (1995)

(quoting Chrysler Corp. v. Brown, 441 U.S. 281, 302 n.31

(1979)). We thus reject Flytenow’s contention that the

Interpretation is invalid for want of notice and comment

rulemaking.

A.

On the merits, Flytenow objects that its pilots do not

engage in “common carriage” and so cannot be required to

comply with Part 119’s common-carrier licensure

requirements. Flytenow argues that the FAA has

misconstrued the definition of common carriage. When we

consider a challenge to the FAA’s interpretation of its own

regulations, the familiar Auer v. Robbins framework requires

12

us to treat the agency’s interpretation as controlling unless

“plainly erroneous or inconsistent with the regulation.” 519

U.S. 452, 461 (1997). Even without such deference, we have

no difficulty upholding the FAA’s interpretation of its

regulations in this case.

The FAA concluded that pilots offering their services on

Flytenow.com would be common carriers. That conclusion

rests on the FAA’s interpretations of “compensation” and

“holding out” as the FAA uses those two terms in its

regulations. Flytenow objects that: (1) the FAA

misinterpreted its regulations in finding that expense sharing

under Flytenow’s service would be “compensation” to

participating pilots; and (2) the FAA erroneously concluded

that pilots’ participation on Flytenow.com would amount to

“holding out” an offer of transportation to the public. Both of

Flytenow’s objections are unpersuasive.

1. Compensation. The FAA correctly interpreted its

regulation prohibiting private pilots from receiving

compensation. The FAA concluded that the exception from

the general ban on receipt of compensation—allowing private

pilots to engage in expense sharing in certain circumstances—

did not redefine expense sharing as something other than

compensation. That exception instead narrowly authorized

some expense sharing notwithstanding the otherwise-

applicable general ban on private pilots’ receipt of

compensation. Flytenow argues that the FAA’s reading

impermissibly treats the “exception to the definition [as] the

same as the definition”—i.e., that it “contort[s]” the exception

by treating what Flytenow says the regulation identifies as

“not compensation” as if it were still compensation. Reply

Br. 9. Flytenow misapprehends the FAA’s analysis. The

expense-sharing rule, by excepting certain expense sharing

13

from the ban on private pilots’ receipt of compensation,

creates a category of compensated flight that is permitted.

The text and structure of the regulation make clear that

allowable expense sharing is still compensation, albeit an

authorized subcategory. Under the heading “Private pilot

privileges and limitations: Pilot in command,” the rule

explains that, “except as provided in paragraphs (b) through

(h) of this section, no person who holds a private pilot

certificate may act as pilot in command of an aircraft that is

carrying passengers . . . for compensation or hire.” 14 C.F.R.

§ 61.113(a). In other words, section 61.113 defines the only

circumstances in which private pilots may receive

compensation. Those are set forth in seven categories of

compensation, including expense sharing, that are exempted

from the general bar. Id. § 61.113(b)-(h). The most natural

reading of that rule’s language and structure—and the reading

the FAA adopted—is that the exempted expense sharing is

“compensation,” but is nevertheless permitted in the identified

contexts. The exceptions in paragraphs (b) through (h)—

including the limited expense-sharing exception—set out

acceptable forms of compensation; they do not change the

underlying definition of compensation.

The FAA’s position that expense sharing can be

permitted compensation is consistent and well established.

Since at least the 1980s, the FAA has explained that “any

payment for a flight, even a partial payment, means that the

flight is for compensation or hire.” FAA Legal Interpretation

Letter from John H. Cassady, Assistant Chief Counsel,

Regulations & Enforcement Div., to Hal Klee, Executive

Director, Pilots & Passengers (undated, identified by FAA as

1985), J.A. 26-27. “This is true even if the payment is made

under the ‘expense sharing’ provisions . . . .” Id.; see also

FAA Legal Interpretation from John H. Cassady, Assistant

14

Chief Counsel, Regulations & Enforcement Div., to Thomas

Chero, Vice President – Legal, AVEMCO Ins. Co. (Dec. 26,

1985) (Chero Interpretation), J.A. 28. And as recently as

2011, the FAA explained that it “construes the term

compensation very broadly; any reimbursement of expenses,

including a pro rata share of operating expenses, constitutes

compensation.” Haberkorn Interpretation, J.A. 42 n.1. The

FAA correctly concluded here, in keeping with its prior

interpretation, that expense sharing is always compensation.

Flytenow argues that, where a pilot and her passengers

share a common purpose, as Flytenow’s service contemplates,

expense sharing cannot be compensation within the meaning

of the “common carrier” definition. Br. of Petitioner 19-21.

But that analysis confounds two issues. The FAA applies the

“common-purpose” test to identify the narrow circumstances

in which admittedly private pilots may share expenses under

section 61.113. See FAA Legal Interpretation Letter from

Kenneth E. Geier, Regional Counsel, to Paul D. Ware (Feb.

13, 1976) (Ware Interpretation), J.A. 23; Chero Interpretation;

FAA Legal Interpretation from Rebecca MacPherson,

Assistant Chief Counsel for Regulations, to Guy Mangiamele

(Mar. 4, 2009), J.A. 35-36; Haberkorn Interpretation. Here,

however, the question is whether Flytenow pilots would be

acting as private pilots, or instead as common carriers without

adequate licensure. The common-purpose test has no bearing

on whether compensation in the form of passengers’ expense

sharing, together with holding out to the general public, tends

to show that a private pilot is operating as a common carrier.

Flytenow invokes an interpretation from a local field

office that, it claims, read the regulations differently from all

of the interpretations issued by the FAA’s Office of the Chief

Counsel. See Br. of Petitioner 20 (citing Legal Interpretation

Letter from Loretta E. Alkalay, Regional Counsel, to Ron

15

Levy (Oct. 25, 2005)). To the extent that the Levy

Interpretation concluded that, so long as the passenger and

pilot share a common purpose, a private pilot may generally

hold herself out as providing flights on an expense-sharing

basis and remain in compliance with Part 119, it was

erroneous. An anomalous local field office interpretation

cannot control. Cf. Paralyzed Veterans of Am., 117 F.3d at

587 (“A speech of a mid-level official of an agency, however,

is not the sort of ‘fair and considered judgment’ that can be

thought of as an authoritative departmental position.”),

abrogated on other grounds by Perez, 135 S. Ct. 1199. In

sum, we reject Flytenow’s effort to recast the common-

purpose limitation as part of the definition of compensation

rather than as part of an exception under which the FAA

permits private pilots to receive compensation.

2. Holding Out. Flytenow’s argument regarding the

“holding out” element of common carriage is question-

begging and incorrect. Flytenow contends that the limitation

against pilots “holding out” is “codified in” section 119.5(k),

which bars advertising or offering unauthorized service. Br.

of Petitioner 24; 14 C.F.R. § 119.5(k). Section 119.5(k)

states: “No person may advertise or otherwise offer to

perform an operation subject to this part [governing air

carriers] unless that person is authorized by the [FAA] to

conduct that operation.” Flytenow reads that restriction to

mean that any pilot not subject to Part 119’s stringent rules

for air carriers may “advertise or otherwise offer” herself or

himself as willing to provide expense-sharing services,

without that conduct establishing the “holding out” element of

the “common carrier” definition. See Brief of Petitioner 24-

25.

As the FAA rightly notes, section 119.5(k) is not the

codification of the “holding out” requirement. Rather, section

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119.5(k) is a prohibition on advertisement of unauthorized

services. The statute and regulations do not define “holding

out”; the FAA instead uses “holding out” as that concept is

defined through the common law, see CSI Aviation, 637 F.3d

at 415; FAA Advisory Circular, J.A. 30, and applies it in a

functionalist, pragmatic manner, see FAA Advisory Circular,

J.A. 30; Haberkorn Interpretation, J.A. 42-43.

Flytenow’s reliance on section 119.5(k) has the reasoning

backwards. The central question in this case is whether

Flytenow’s pilots are “subject to this part”—i.e. Part 119 on

commercial operation—and the answer depends on whether

the pilots are acting as “air carriers,” see 14 C.F.R.

§ 119.1(a)(1) (“This part applies to each person operating or

intending to operate civil aircraft . . . [a]s an air carrier . . . .”).

As noted above, an “air carrier” is a “common carrier.” See

14 C.F.R. § 1.1 (defining “air carrier”). Section 119.5(k) does

not define, but depends on, whether a pilot is operating as a

common carrier, which turns in part on whether the pilot is

“holding out.”

Under the definition of “holding out” the FAA articulated

in the 1986 circular, J.A. 30, we have no trouble finding that

Flytenow’s pilots would be doing so. Flytenow.com is a

flight-sharing website putatively limited to members, but

membership requires nothing more than signing up. Any

prospective passenger searching for flights on the Internet

could readily arrange for travel via Flytenow.com.

Flytenow’s statement to its members that its pilots may on a

case-by-case basis decide not to accept particular passengers

is not to the contrary. As the FAA noted in its circular, no

“conclusive proof” that a pilot is not a common carrier can be

gleaned from the absence of rate schedules, or pilots

occasionally refusing service or offering it only pursuant to

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separately negotiated contracts. FAA Advisory Circular, J.A.

30.

Finding that Flytenow’s pilots are “holding out” does not

lead to the absurd consequences of which Flytenow warns.

See Br. of Petitioner 25. It is simply not accurate, as

Flytenow fears, that “any pilot communicating an expense-

sharing flight, for the sole purpose of identifying a common

purpose, will now be considered holding out to provide

common carriage.” Id. Pilots communicating to defined and

limited groups remain free to invite passengers for common-

purpose expense-sharing flights. See Br. of Respondent 30.

As the FAA notes, id., nothing in the challenged

Interpretation calls into question the FAA’s reasoning or

conclusions in its 1976 Ware Interpretation, in which the FAA

opined that posting on a bulletin board is permitted in certain

circumstances. J.A. 23. Nor does the Interpretation call into

question the continuing vitality of the expense-sharing rule.

See Br. of Petitioner 33. Private pilots continue to enjoy the

right to share expenses with their passengers, so long as they

share a common purpose and do not hold themselves out as

offering services to the public.

B.

In its reply brief, Flytenow raises a new line of attack

against the Interpretation, contending that it must be set aside

because the FAA’s definition of common carriage

contravenes the common-law definition. “Ordinarily, we will

not entertain arguments or claims raised for the first time in a

reply brief.” Forman v. Korean Air Lines Co., 84 F.3d 446,

448 (D.C. Cir. 1996). As we have explained, considering

such arguments “is not only unfair to an appellee, but also

entails the risk of an improvident or ill-advised opinion on the

legal issues tendered.” McBride v. Merrell Dow & Pharm.,

18

Inc., 800 F.2d 1208, 1211 (D.C. Cir. 1986) (internal citations

omitted).

In its opening brief to this court, Flytenow did not contest

the FAA’s definition of common carriage. To the contrary, it

invoked the FAA Advisory Circular’s articulation of the

FAA’s understanding of common carriage. See Br. of

Petitioner 6 n.6, 11, 25. Thus, in its response, the FAA did

not defend its Interpretation on the ground that its definition

of common carriage is in keeping with the common law, aside

from making passing reference to a decision in this court that

noted the common-law pedigree of “common carriage.” See

Br. of Respondent 30 (citing CSI, 637 F.3d at 415). We

therefore do not consider Flytenow’s argument that the FAA’s

decision contravenes the common law. That argument is

forfeited.

IV.

Flytenow raises several other statutory and constitutional

claims. The government argues that these claims are barred

by the Federal Aviation Act’s exhaustion requirement, 49

U.S.C. §46110(d), because Flytenow did not raise them

before the agency. The exhaustion requirement does not

apply here, however, because there was a “reasonable

ground” for Flytenow’s failure to raise its arguments before

the agency. Id. The Interpretation did not result from the

type of administrative “proceeding” in which Flytenow was

notified of an agency proposal and had a chance to raise

statutory or constitutional objections. See Elec. Privacy Info.

Ctr. v. U.S. Dep’t of Homeland Sec., 653 F.3d 1, 8 (D.C. Cir.

2011); cf. Cont’l Air Lines v. Dep’t of Trans., 843 F.2d 1444,

1455-56 (D.C. Cir. 1988). Remand to the FAA in this case

would not serve the policies that exhaustion is meant to

protect. The agency has not identified any factual disputes

19

relevant to Flytenow’s statutory or constitutional objections,

nor does it hint that it missed any opportunity to apply its

expertise or revise its rule to avoid Flytenow’s objections.

See generally McKart v. United States, 395 U.S. 185, 194

(1969). Flytenow was not required to have raised these

challenges before the FAA.

A.

Flytenow argues that the FAA has exceeded its

jurisdiction under the Federal Aviation Act by regulating

private communications on a website. That argument

misreads the statute and misapprehends the role of the FAA.

The Federal Aviation Act directs the FAA to regulate

common carriers. 49 U.S.C. § 44705. As noted above, the

“sine qua non” of a common carrier is “some type of holding

out to the public.” CSI, 637 F.3d at 415.

The FAA must consider whether air carriers hold

themselves out to the public to determine which FAA rules

apply. In considering what information pilots communicate

via Flytenow.com, and to whom, the FAA relies on the

communications as evidence of “holding out,” thereby

reaching conduct the Act indisputably authorizes it to

regulate. Flytenow’s complaint that the FAA treats “all

Internet-based communications by a pilot, concerning a

proposed expense-sharing flight” as “necessarily ‘holding

out’” is inaccurate. Br. of Petitioner 27. The FAA opined

only on the type of flight-sharing program described in

Flytenow’s and AirPooler’s requests for legal interpretation.

See J.A. 60, 61-62. Other kinds of internet-based

communications, such as e-mail among friends, for example,

seem unlikely to be deemed “holding out” under the FAA’s

Interpretation.

20

If accepted, Flytenow’s argument that the FAA lacks

statutory authority to consider the evidentiary value of

Flytenow’s speech would frustrate the FAA’s enforcement of

the Federal Aviation Act. The Act calls on the FAA to

regulate certain aspects of the commercial speech of pilots

and airlines. For example, the FAA regulates in detail airline

computerized reservation systems, requiring that they display

particular information, including schedules and fares, in

particular ways. 14 C.F.R. §§ 255.1-.8. The FAA requires

that airline websites disclose on-time performance data for

any domestic flight for which the sites provide schedule

information. Id. § 234.11(b). The FAA also requires

disclosure of code-sharing arrangements among airlines, and

bans airlines from holding out code-sharing flights for sale

without such disclosure. Id. §§ 257.4-.5. In each such case,

the FAA’s speech-related requirement is consistent with its

statutory mandate.

B.

Flytenow’s three constitutional arguments are unavailing.

1. First Amendment. Flytenow challenges the

Interpretation as a First Amendment violation on the grounds

that: (1) the Interpretation imposes an unconstitutional prior

restraint on Flytenow’s commercial speech; and (2) the

Interpretation is an impermissible content-based regulation.

Flytenow misdescribes the Interpretation as a prior

restraint. See generally Alexander v. United States, 509 U.S.

544, 549-54 (1993). The Interpretation does not bar any

speech in advance, but sets forth the FAA’s view that pilots

advertising their services on Flytenow.com risk liability if

they are not licensed for the offered services. Thus, the

Interpretation explains the possible consequences of speech,

but does not enjoin it. In any event, the advertising of illegal

21

activity has never been protected speech. See, e.g., Pittsburgh

Press Co. v. Pittsburgh Comm’n on Human Relations, 413

U.S. 376, 388-89 (1973).

The FAA’s reliance on Flytenow’s speech as evidence of

“holding out” is fully compatible with the First Amendment.

It is well settled that “the First Amendment allows ‘the

evidentiary use of speech to establish the elements of a crime

or to prove motive or intent.’” Whitaker v. Thompson, 353

F.3d 947, 953 (D.C. Cir. 2004) (quoting Wisconsin v.

Mitchell, 508 U.S. 476, 489 (1993)). In Whitaker, the court

upheld the FDA’s reliance on a drug company’s speech (via

its drug labeling) to infer that company’s intent to sell a drug

for purposes for which it was not authorized. Id. In this case,

the FAA is doing much the same thing: it is using speech

(postings on Flytenow.com) as evidence that pilots are

offering service that exceeds the limits of their certifications.

Any incidental burden the FAA’s regulations impose on

pilots’ speech does not violate the First Amendment because

the regulations further an important government interest

unrelated to the suppression of free expression. United States

v. O’Brien, 391 U.S. 367, 377 (1968). Barring pilots from

holding themselves out to the public to provide services for

which they are not licensed directly advances the

government’s interest in “promot[ing] safe flight of civil

aircraft in air commerce.” 49 U.S.C. § 44701(a). Seeking to

prevent advertising of services by or on behalf of pilots not

licensed to offer them is a constitutionally permissible way to

advance the policy that “the general public has a right to

expect that airlines which solicit their business operate under

the most searching tests of safety.” Woolsey v. Nat’l Transp.

Safety Bd., 993 F.2d 516, 522 (5th Cir. 1993).

22

2. Equal Protection. Flytenow’s Equal Protection

challenge also fails. Flytenow makes no claim that the FAA’s

classification implicates any fundamental right or categorizes

on any inherently suspect basis, but contends that the FAA’s

regulations cannot be sustained under rational basis review.

See, e.g., Fed. Commc’ns Comm’n v. Beach Commc’ns, Inc.,

508 U.S. 307, 313-15 (1993). To succeed, Flytenow would

have to negate “every conceivable basis which might support”

the challenged classification. Id. at 315 (quoting Lehnhausen

v. Lake Shore Auto Parts Co., 40 U.S. 356, 364 (1973))

(internal quotation marks omitted).

The FAA’s distinction between pilots offering expense-

sharing services on line to a wide audience and those offering

expense-sharing services to a limited group is justified:

holding out to the public creates the risk that unsuspecting

passengers, under the impression that the service and its pilots

lawfully offer common carriage, will contract with pilots who

in fact lack the experience and credentials of commercial

pilots. Regulators have good reasons to distinguish between

pilots who are licensed to offer services to the public and

those who are not, as other courts have recognized. See

Woolsey, 993 F.2d at 522.

3. Vagueness. Finally, there is no credible claim that the

Interpretation is unconstitutionally vague. The FAA

announced that pilots offering expense-sharing flights on

Flytenow.com are holding themselves out to provide common

carriage and are therefore subject to Part 119. The Agency

was clear in its application of its regulation to Flytenow:

“You suggest there is no holding out . . . . We disagree. . . .

[Flytenow.com] is designed to attract a broad segment of the

public interested in transportation by air.” J.A. 62. Flytenow

is in no position to assert a facial vagueness challenge. “[A]

plaintiff who engages in some conduct that is clearly

23

proscribed cannot complain of the vagueness of the law as

applied to the conduct of others.” Holder v. Humanitarian

Law Project, 561 U.S. 1, 18-19 (2010) (quoting Hoffman

Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495

(1982)).

***

For the foregoing reasons, Flytenow’s petition for review

is denied.

So ordered.