UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


AK PROF HUNTERS ASSN

v.

FAA


98-1051a

D.C. Cir. 1999


*	*	*


Randolph, Circuit Judge: In January 1998 the Federal  Aviation
Administration published a "Notice to Operators"  aimed at Alaskan
hunting and fishing guides who pilot light  aircraft as part of their
guiding service. The Notice required  these guide pilots to abide by
FAA regulations applicable to  commercial air operations. The question
in this petition for  judicial review, brought by a guide organization
and individu- al guides, is whether s 553 of the Administrative
Procedure  Act required the FAA to proceed by way of notice and 
comment rule making rather than by announcement in the  Federal


Fishing and hunting are big business in the State of  Alaska. A large
proportion of the State's population depends  on the income these
activities generate. Small lodges in  remote regions of the State
cater to hunters and fisherman,  providing food and shelter, guide
services, and air transporta- tion to and from the lodge and on side
trips, all for a flat fee.  It is common for a fishing or hunting
guide to serve as the  pilot of the light aircraft typically used in
these operations.  Beginning in 1963, the FAA, through its Alaskan
Region,  consistently advised guide pilots that they were not governed
 by regulations dealing with commercial pilots.


The advice stemmed from Administrator v. Marshall, 39  C.A.B. 948
(1963), a decision rejecting the FAA's attempt to  sanction Ralph E.
Marshall, a registered Alaskan hunting and  fishing guide and the
holder of an FAA-issued private pilot's  license. On a hunting trip,
Marshall flew his customer out of  Kotzebue, Alaska, searching for
polar bear. Regulations then  in effect said that a "private pilot may
pilot aircraft in  connection with any business or employment if the
flight is  merely incidental thereto and does not involve the carriage
of  persons or property for compensation or hire." See Mar- shall, 39
C.A.B. at 948 n.1. The Civil Aeronautics Board,  adopting the hearing
examiner's opinion as its own, ruled that  Marshall's flight with the
hunter in search of polar bear was  "merely incidental" to his guiding
business, in part because he 


had not billed for it separately. See id. at 950-51. We will  have more
to say about Marshall in a moment.


The versions of parts 121 and 135 of the FAA's regulations  (14 C.F.R.
pts. 121 & 135) in effect in the early 1960s applied  to (among
others) "commercial operator[s]": those persons  operating aircraft
"for compensation or hire."1 14 C.F.R.  ss 121.1(a)(5), (d),
135.1(a)(2) (1965). In view of Marshall,  the FAA's Alaskan Region
concluded that these regulations  did not govern guide pilots whose
flights were incidental to  their guiding business and were not billed
separately. There- fore only part 91, which provides general
instructions regard- ing the operation of aircraft within the United
States, applied  to them. See 14 C.F.R. s 91.1. Despite many
amendments  during the last 35 years, parts 121 and 135 continue to
apply  to "commercial operator[s]," still defined as those persons 
who, "for compensation or hire," carry persons or property by 
aircraft. See 14 C.F.R. ss 1.1, 119.1(a)(1), 121.1(a),  135.1(a)(1).2




__________

n 1 Part 121, promulgated in December 1964, prescribed rules 
"governing the certification and operations of ... each commercial 
operator." It stated that "[f]or the purpose of determining whether  a
person is a commercial operator under this part, operations are 
considered to be for compensation or hire when they are a major 
enterprise for profit and not merely incidental to the person's other 
business." See 29 Fed. Reg. 19,186, 19,190 (1964). Part 135, also 
added in 1964, prescribed rules "governing ... the carrying in air 
commerce by any person, other than an air carrier, of persons or 
property for compensation or hire (commercial operations) in small 
aircraft." See 29 Fed. Reg. 2,988, 2,992 (1964). Both parts have  been
amended numerous times since then.


2 After amendments to parts 121 and 135 in December 1995, and  the
addition of part 119, parts 121 and 135 no longer apply to  commercial
operators directly. See Commuter Operations and Gen- eral
Certification and Operations Requirements, 60 Fed. Reg.  65,832,
65,879 (1995). Parts 121 and 135 currently apply to certain 
operations of persons who hold, or are required to hold, an Operat-
ing Certificate under part 119. See 14 C.F.R. ss 121.1(a), 
135.1(a)(1). Part 119 preserves the application of parts 121 and 135 
to "commercial operator[s]," because it applies to persons who 


interpretation of parts 121 and 135 in a written statement, all  agree
that FAA personnel in Alaska consistently followed the  interpretation
in official advice to guides and guide services.


Whether FAA officials in Washington, D.C. were aware of  the advice
being given by their counterparts in Alaska is  uncertain. No
correspondence or other writing bearing on  the question has surfaced.
This may be attributable to the  FAA's organizational structure from
the 1960's through the  late 1980's. "The agency's first Administrator
favored a  management system under which officials in Washington 
exercised direct control over programs in the field. In 1961, 
however, his successor began a decentralization process that 
transferred much authority to regional organizations. This  pattern
generally endured until a 1988 'straightlining' again  charged
managers at national headquarters with more di- rection of field
activities." A Brief History of the Federal  Aviation Administration


In 1990, after the agency had reorganized, an FAA attor- ney in the
Alaskan Region corresponded with the FAA's  Washington, D.C.
headquarters regarding an inquiry he had  received from the manager of
a fishing lodge. In a twist on  Marshall, this lodge manager proposed
to pick up clients  staying at another lodge, fly them to a fishing
spot, guide  them, and then return the clients to their lodge. The
manag- er wanted to know whether he could provide this service 
consistent with part 91 of the regulations. The Alaskan  Region
believed that Marshall controlled, but an Assistant  Chief Counsel in
the FAA's Washington office disagreed.  Although he expressed the need
for more facts, the Assistant  Chief Counsel thought the manager's




__________

n operate civil aircraft as "commercial operator[s]" (or air carriers)
in  air commerce. See 14 C.F.R. s 119.1(a)(1). It consolidates the 
certification and operations requirements for persons who operate 
under parts 121 and 135 and provides a roadmap for certificate 
holders to lead them to the operating rules in those parts that they 
must comply with. See Commuter Operations, 60 Fed. Reg. at  65,879.


because--as he read Marshall--the guide pilot there took off  from the
hunting camp and returned without landing else- where, whereas the
manager intended to take off from a  lodge, land at a fishing spot,
and then return. To the  Assistant Chief Counsel, this meant the
flight would not be  "merely incidental" to the guiding service and
would be "for  compensation or hire." Hence, the pilot had to be
certified  under, and comply with, the requirements of part 135.


The record does not reveal whether the FAA issued a  formal opinion in
the lodge manager's case. All that appears  is the internal agency
correspondence we have just summa- rized. What occurred after the
Assistant Chief Counsel's  analysis reached the Alaskan Region in 1991
is uncertain.  The material before us indicates that the Alaskan
Region did  not begin advising guide pilots to comply with part 135.
We  also know, from a decision included in the parties' Supple- mental
Joint Appendix, that in 1992 an administrative law  judge rejected the
FAA's attempt to sanction an Alaskan  guide pilot in a situation
comparable to that in Marshall.  Cecil V. Humble, a guide, a pilot and
the manager of the  Rainy Pass fishing and hunting lodge in Alaska,
sold a  hunting package to two men, who were accompanied by their 
wives. After staying at the lodge for a few days, the wives  decided
to leave before the hunt ended. Humble, who did not  have part 135
credentials, flew them back to Anchorage.  Citing a Civil Aeronautics
Board pronouncement but not the  decision in Marshall, the ALJ ruled
that the flight was  merely "incidental" to Humble's business, "simply
an adjunct  to the hunting package for which they had contracted," and
 therefore Humble did not need to comply with part 135.  Supp. Joint


In the meantime, the FAA had begun studying guiding  operations in
Alaska. An FAA report, issued in 1992, ex- pressed concern about the
safety of guide pilots operating  pursuant to part 91 rather than part
135. In recognition of 




__________

n 3 The ALJ did sanction Humble for directing one of his Rainy  Pass
pilots to fly clients of another guide and lodge owner between 
Anchorage and Neal Lake (Supp. Joint App. 237).


the longstanding practice in Alaska and of the agency's advice 
beginning in 1963 that guide pilots were covered by part 91,  the
report found that "[a]ny departure from the established  practice
could have an economical impact on a portion of the  commercial
guiding populace." See A Study of Aviation  Commercial Guiding
Activities Within the State of Alaska,  prepared by the Technical
Analysis Branch, Alaskan Flight  Standards Division, at 9 (December
1992). The report there- fore recommended amending part 135.1 to allow
the FAA "to  issue a letter of authorization" to hunting and fishing
guide  pilots, allowing them to transport clients under limited condi-
tions. See id. at 8-9. The FAA did not implement the 


In January 1997, petitioner Alaska Professional Hunters  Association,4
aware that the FAA was still considering a new  regime for regulating
Alaskan guide pilots, submitted a peti- tion for rule making.5 See
Petition for Rulemaking, 63 Fed.  Reg. 16,913, 16,914 (1998). The
Association proposed that the  FAA amend part 91 to enhance the safety
of guiding opera- tions. See id. In January 1998, without having
responded to  the Association's petition, the FAA published its
"Notice to  Operators" in the Federal Register. See Compliance with 
Parts 119, 121 and 135 by Alaskan Hunt and Fish Guides  Who Transport
Persons by Air for Compensation or Hire, 63  Fed. Reg. 4 (1998).


The Notice, which is the subject of the Association's peti- tion for
judicial review, announced that Alaskan guides who  transport
customers by aircraft to and from sites where they  provide guiding
services, with transportation included in the 




__________

n 4 The Alaska Professional Hunters Association is an organization  of
more than six hundred individual guides, outfitters and other  persons
interested in hunting or recreational activities in the State  of
Alaska. Many are, or rely on, guide pilots who fly customers to 
remote hunting and fishing sites as part of their guiding services.


5 The Administration did not publish the Alaska Professional  Hunters
Association's petition for rule making until more than a  year later,
in April 1998. See Petition for Rulemaking, 63 Fed.  Reg. at 16,913.


package price of the trip, henceforth must comply with the  regulations
of parts 119, 121 and 135, as applicable. See 63  Fed. Reg. at 4-5. In
the future the FAA would treat these  guides as commercial operators
or air carriers, transporting  passengers for compensation or hire.
See 63 Fed. Reg. at 5.  The FAA acknowledged that the Alaskan Region
had not  enforced parts 121 or 135 against guide pilots in the past. 
But it attributed this to a misreading of the Marshall case.  See id.
A guide's use of aircraft is, the FAA stated, integral  to his
business, and the customer pays for the transportation  regardless
whether there is or is not a separate charge for it.  See id. The
Notice also stated that guide pilot operations  would be safer if they
were conducted pursuant to the stricter  aviation standards of parts
119, 121 and 135. See id.


The Association, joined by two Alaskan guide pilots, con- tends that
the Notice to Operators altered the FAA's well- established
interpretation of its regulations and should have  been promulgated
pursuant to notice and comment rule mak- ing. The FAA raises several
defenses, among which are that  the Alaskan Region's interpretation of
the regulations did not  represent the FAA's view because it rested on
a misreading  of Marshall and that the Notice to Operators was merely
an  interpretative rule, exempt from the notice and comment 
requirements of APA s 553. See 5 U.S.C. s 553(b)(A).


Our analysis of these arguments draws on Paralyzed Veter- ans of
America v. D.C. Arena, 117 F.3d 579, 586 (D.C. Cir.  1997), in which
we said: "Once an agency gives its regulation  an interpretation, it
can only change that interpretation as it  would formally modify the
regulation itself: through the  process of notice and comment
rulemaking." We there ex- plained why an agency has less leeway in its
choice of the  method of changing its interpretation of its
regulations than  in altering its construction of a statute. "Rule
making," as  defined in the APA, includes not only the agency's
process of  formulating a rule, but also the agency's process of
modifying  a rule. 5 U.S.C. s 551(5). See Paralyzed Veterans, 117 F.3d
 at 586. When an agency has given its regulation a definitive 
interpretation, and later significantly revises that interpreta- tion,
the agency has in effect amended its rule, something it 


may not accomplish without notice and comment. Syncor  Int'l Corp. v.
Shalala, 127 F.3d 90, 94-95 (D.C. Cir. 1997), is  to the same effect:
a modification of an interpretive rule  construing an agency's
substantive regulation will, we said,  "likely require a notice and
comment procedure."


The FAA thinks Paralyzed Veterans is inapposite because  its January
1998 Notice to Operators did not fundamentally  change any
"authoritative interpretation" of its regulations.  See Paralyzed
Veterans, 117 F.3d at 586. The FAA is  confident that the Alaskan
Region's advice to guide pilots for  more than 30 years stemmed from a
misreading of the  Marshall decision and so could not have represented
the view  of the agency.6 The Notice to Operators put it this way: 
"there appears to have been a misinterpretation of the scope  and
effect of a 1963 enforcement case involving a registered  hunting
guide, Administrator v. Marshall, 39 CAB 948 (1963)  (decided on an
extremely narrow set of facts that involved a  registered guide's
single flight from base camp to spot game  from the air and return to
base camp, with no landing at a  point other than the point of


We do not share the FAA's confidence that the ruling in 
Marshall--piloting was "merely incidental to [the pilot's]  business
as a registered Alaska guide," Marshall, 39 C.A.B.  at 950--applied
only to a guide pilot flying his customer from  a base camp and
returning to the camp without landing in  between. The FAA believes
these were the "extremely nar- row set of facts" in Marshall because
the opinion stated: "On  the polar bear hunt respondent [the guide]
utilizes his aircraft  only to the extent of getting the hunter from
the base camp  out over the ice in order to spot the polar bear and
return  hunter to the camp." See id. at 949. According to the FAA, 
this means the pilot did not land his plane on the ice; the  guide
pilot and his passenger merely spotted the bear from  the air and then




__________

n 6 Respondent's brief also asserts that the Alaskan Region's advice 
to guide operators was not pursuant to any FAA regulation. This  is
clearly not the case.


This reading of Marshall is, we suppose, possible but it is  quite
implausible. For one thing, the guide's client was not in  Alaska for
sightseeing. His objective was to hunt and kill a  polar bear and the
guide's objective was to help him do just  that: "in the event a polar
bear was not killed, there was to  be no payment of money made by [the
customer] to the  guides." See id. Why use a plane? The opinion
explained:  "It is the general practice in Alaska to utilize aircraft
in  transporting hunters over the ice in the hunt of polar bears 
where formerly dog sleds were used." See id. The guide  was not
searching for a polar bear so that his customer could  see what one
looked like. He and his customer were hunting,  and hunting involves
killing the quarry.7 This must be why  the opinion says several times,
before and after the sentence  that mentions spotting a bear, that the
"sole" purpose of the  flight was "hunting polar bear." See id. at
949, 951. How  could this be done without landing? The plane
substituted  for a dog sled. It would therefore be very unlikely for
the  hunter and guide, after spotting a bear from the air, to return 
to camp and then set out on foot over the ice to shoot it.  Perhaps
the customer could fire at the bear from the air  (although Alaskan
hunting regulations might have prohibited  this). Even so, one would
expect the hunter to want his  "trophy," which he could only recover
if the plane landed. If  the FAA's current reading of Marshall were
correct, the  existence of a regulatory violation would depend on the 
success of the hunt, a senseless regulatory approach. Fur- thermore,
the Marshall opinion's failure even to mention  whether the plane
landed outside the base camp is powerful  evidence that the decision
turned on no such consideration.  Compare 14 C.F.R. s 119.1(e)(2)
(exempting nonstop "sight- seeing flights"). On the face of the
Marshall opinion--all  that the FAA in Washington had before it--we
think it fairly  implicit that a landing away from the camp was




__________

n 7 International treaties now prohibit the hunting, capturing or 
killing of polar bears. See, e.g., Agreement on the Conservation of 
Polar Bears, Nov. 15, 1973, 27 U.S.T. 3918.


contemplated. At the least, there is severe doubt that the  FAA's
Alaskan Region had been misinterpreting the Mar- shall decision and
its import.


We are unpersuaded by the FAA's additional claim that the  Alaskan
Region's interpretation of parts 119, 121 and 135  represented simply
a local enforcement omission, in conflict  with the agency's policy in
the rest of the country. It is true  that when a local office gives an
interpretation of a regulation  or provides advice to a regulated
party, this will not necessar- ily constitute an authoritative
administrative position, particu- larly if the interpretation or
advice contradicts the view of the  agency as a whole. See, e.g.,
Paralyzed Veterans, 117 F.3d at  587; Drummond Coal Co. v. Hodel, 796
F.2d 503, 508 (D.C.  Cir. 1986); N.Y. State Dep't of Social Servs. v.
Bowen, 835  F.2d 360, 365 (D.C. Cir. 1987). But the situation here is
quite  different. Agency officials in the Alaskan Region uniformly 
advised all guides, lodge managers and guiding services in  Alaska
that they could meet their regulatory responsibilities  by complying
with the requirements of part 91 only. FAA  officials gave that advice
for almost thirty years. As for the  agency as a whole, the FAA noted
in 1992 that its "past  policy" permitted guide pilots and lodge
operators to operate  aircraft under Part 91. And it acknowledged in
1997 that  "[u]ntil recently, lodge/guide operators have been advised 
that Part 135 did not address their operation of aircraft."  This must
be why the National Transportation Safety Board,  in its 1995 Study of
Aviation Safety in Alaska, described  "current FAA policy" as
permitting guides to fly their cus- tomers "as noncommercial
operations under the general oper- ating rules of 14 CFR Part 91,
which are less restrictive than  those in Part 135."


Even if the FAA as a whole somehow had in mind an  interpretation
different from that of its Alaskan Region,  guides and lodge operators
in Alaska had no reason to know  this. Cf. Paralyzed Veterans, 117
F.3d at 587. Those regu- lated by an administrative agency are
entitled to "know the  rules by which the game will be played." See
Holmes,  Holdsworth's English Law, 25 Law Quarterly Rev. 414  (1909).
Alaskan guide pilots and lodge operators relied on 


the advice FAA officials imparted to them--they opened  lodges and
built up businesses dependent on aircraft, believ- ing their flights
were subject to part 91's requirements only.  Cf. Paralyzed Veterans,
117 F.3d at 587. That advice became  an authoritative departmental
interpretation, an administra- tive common law applicable to Alaskan
guide pilots. The  FAA's current doubts about the wisdom of the
regulatory  system followed in Alaska for more than thirty years does
not  justify disregarding the requisite procedures for changing  that
system. Throughout this period, guide pilots and lodge  operators had
no opportunity to participate in the develop- ment of the part 135
regulations and to argue in favor of  special rules for their
operations. Air transportation regula- tions have evolved considerably
since 1963 and part 135 has  been the subject of numerous rule making
proceedings. Had  guides and lodge operators been able to comment on
the  resulting amendments and modifications to part 135, they  could
have suggested changes or exceptions that would have  accommodated the
unique circumstances of Alaskan air car- riage.8 As the FAA pointed
out in its brief, the agency's  regulations have, in several respects,
treated Alaska differ- ently from the continental United States. See,
e.g., 14 C.F.R.  ss 135.261(b)(1), 121.353, 91.323. There is no reason
to sup- pose that with the participation of Alaskan guide pilots and 
lodge operators, the regulations in part 135 would not have  been
affected. If the FAA now wishes to apply those regula- tions to these
individuals, it must give them an opportunity to  comment before doing
so. The Notice to Operators was  published without notice and comment
and it is therefore  invalid. The petition for review is granted.


So ordered.




__________

n 8 For example, in 1994, the National Transportation Safety Board 
recommended that part 135 be amended to establish certification, 
experience, qualification and training requirements specific to pilot 
guide/aerolodge operations. In 1995, it noted that the safety of  such
operations could be improved by applying some, rather than  all, of
part 135's requirements to Alaskan guide pilots. In both  instances,
it suggested that the Administration propose a rule  making if it
chose to place guide pilot operations under part 135.