## Facts

- Section 504 of the Rehabilitation Act of 1973 prohibits disability discrimination in any “program or activity receiving Federal financial assistance.”
- Federal grants under airport trust fund statutes were awarded to airport operators for airport development and improvements; the federal government also operated a nationwide air traffic control system.
- The Civil Aeronautics Board (later succeeded by the Department of Transportation) interpreted § 504 to reach only the limited set of airlines receiving direct federal subsidies, not all commercial airlines.
- Disability-rights organizations challenged that interpretation, arguing that all airlines should be covered because they benefited from federally assisted airports and air traffic control services.
- The D.C. Circuit held that federal assistance to airports (and the air traffic control system) made all air carriers subject to § 504, vacated the narrower regulations, and directed issuance of broader regulations.
- The Supreme Court granted review.

## Issues

1. Whether commercial airlines that benefit from federal grants to airport operators and from a federally operated air traffic control system are “program[s] or activit[ies] receiving Federal financial assistance” under § 504.

## Decision

- The Supreme Court reversed the D.C. Circuit (6–3).
- The Court held that § 504 does not apply to commercial airlines based solely on their benefiting from federal assistance provided to airport operators or from the air traffic control system.
- The case was remanded for further proceedings consistent with the Court’s interpretation.

## Legal Principles

- Section 504 coverage is limited to entities that actually “receive” federal financial assistance; mere beneficiaries of federally assisted programs are not recipients.
- Spending Clause nondiscrimination conditions attach to the acceptance of federal funds; the regulated entity must be in a position to accept or reject the obligations by deciding whether to take the funds.
- Economic advantages derived from federally funded infrastructure or government services, without direct receipt of federal assistance, do not trigger § 504 obligations.
- Interpreting “assistance” to include any downstream economic benefit would expand § 504 to near-boundless scope, contrary to the recipient-focused statutory design.

## Conclusion

The Court confined § 504’s nondiscrimination duties to direct recipients of federal financial assistance, holding that airlines are not covered merely because they gain economic benefits from federally funded airport improvements or the federal air traffic control system.


Dep’t of Transp. v. Paralyzed Veterans of Am., 477 U.S. 597 (1986)