BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

LOVE FIELD SERVICE Docket OST-98-4363

INTERPRETATION PROCEEDING

*Serve these attorneys.

ATTORNEYS FOR

AMERICAN AIRLINES, INC.

October 2, 1998

BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

LOVE FIELD SERVICE Docket OST-98-4363

INTERPRETATION PROCEEDING

REPLY COMMENTS OF AMERICAN AIRLINES, INC.

American Airlines, Inc., files the following reply comments to initial comments filed by the City of Dallas; the Airports Council International, North America, American Association of Airport Executives, and the Greater Orlando Aviation Authority; Continental Express, Inc.; Southwest Airlines Co.; Legend Airlines, Inc.; the City of Fort Worth; and the Dallas-Fort Worth International Airport Board.

1. REPLY TO THE CITY OF DALLAS

Many of the comments filed by the City of Dallas are simply inexplicable. For example, on page 28 of its comments, Dallas writes as follows:

What do the current writers for the City of Dallas think happened in the late 1960's and early 1970's? At the Order of the CAB and with the CAB's and FAA's direct involvement, Dallas and Fort Worth engaged in regional airport planning, conducting--to paraphrase Dallas's words--a "cooperative effort between local governments and the [CAB]." When Secretary of Transportation John A. Volpe spoke at the formal dedication of DFW Airport on September 22, 1973, he said: "Here are two great cities that have put aside natural rivalries in recognition of a regional need that could only be met by joint action."

When in the late 1960's and early 1970's Dallas and Fort Worth--to borrow Dallas's words--"engaged in regional airport planning and coordination in consultation with the DOT," the result was the Contract and Agreement, then the Concurrent Bond Ordinance, and then DFW International Airport. The question now is whether Dallas may turn its back on its regional planning partner and joint venturer Fort Worth, the contracts and covenants it made in 1968 and has reaffirmed regularly since then, and the airlines it required to move from Love Field to DFW Airport in 1974.

A. Factual Errors

In several respects, Dallas has misstated the historical record. Although American will not attempt to correct all of Dallas's misstatements, American does point out the following:

1. On page 4 of its comments, Dallas makes the wholly unsupported statement that each air carrier then serving Love Field "agreed to move its operations to DFW and to conduct its Certificated Air Carrier Services" there to the extent required by the terms of the Concurrent Bond Ordinance "[i]n exchange for benefits accompanying 'signatory' status." Dallas's statement is incorrect. The major air carriers abandoned their operations at Love Field and moved their operations to DFW Airport because they were told that Dallas intended to close Love Field to Certificated Air Carrier Services and that Dallas would require all airlines serving Love Field to move. American's choice was to move to DFW Airport, under the terms prescribed in 1970 by the Airport Board, or to cease flying into the Dallas-Fort Worth area. American's original agreement with the DFW Airport Board is at Tab 15 to American's original comments. It contains no "benefits" for "signatory status."

Furthermore, American would point out that the circumstances and motivations surrounding its signing the DFW Airport Board's original agreement in 1970, and its move to DFW Airport to commence operations there in 1974, present questions of fact beyond the scope of this proceeding noticed for legal questions of statutory interpretation. If such issues as representations, intent, motivation, and reliance are to be tried, American insists on its right to try them in court, not in a statutory interpretation proceeding before the Department.

2. Dallas spends three pages of its comments misstating both the facts and the significance of the litigation that Dallas, Fort Worth, and the DFW Airport Board lost to Southwest Airlines in the early 1970's. In evaluating that litigation, the Department should start with the Fifth Circuit's observation in City of Houston v. FAA, 679 F.2d 1184, 1194 n.17 (5th Cir. 1982), that the Southwest litigation "involved intrastate aviation and has less than no bearing on our case." (Emphasis added).

Although a federal district court granted judgment against Dallas in the Southwest case on several alternative grounds, 371 F.Supp. 1015 (N.D. Tex 1973), the Fifth Circuit affirmed that judgment on one ground only--a purely Texas state law ground. 494 F.2d 773 (5th Cir. 1974). Under well-established law, neither Dallas nor any other party is bound by the alternative grounds stated in the district court's opinion, but which the Court of Appeals declined to review. E.g., Dow Chemical v. EPA, 832 F.2d 319, 323 (5th Cir. 1987); see also 18 Wright, Miller & Cooper, Federal Practice & Procedure § 4421 at 205 (1981). Yet, those are the grounds that Dallas recites throughout pages 5 and 6 of its comments.

Dallas's discussion of the subsequent litigation which it calls "Southwest III" is badly flawed. It is not true that Delta and American filed suit against Braniff, Fort Worth, and Dallas, as stated on page 7 of Dallas's comments. Dallas must be referring to the Texas state court action filed by Texas International against numerous parties. The sole question in Southwest III was whether Texas International and the other airlines (who had complied with Dallas's order to leave Love Field and move to DFW Airport) were vicariously estopped by Dallas's loss in Southwest I to Southwest Airlines. The federal courts held that the airlines were estopped by Dallas's loss since Dallas litigated as their "governmental representative." 546 F.2d 84. None of that has anything to do with the statutory interpretation proceeding the Department has commenced.

3. Dallas returns to the Southwest litigation even more misleadingly on pages 10-11 of its comments, where it quotes approximately one-third of the anti-suit injunction to which it, Fort Worth, the DFW Airport Board, Continental, American, and others agreed in order to bring an end to Southwest I. When quoted completely, the injunction (signed by United States District Judge William M. Taylor, now deceased) enjoined the parties from:

Attachments to Dallas's comments, Tab 7.

Judge Taylor's agreed anti-suit injunction was entered for the purpose of protecting the Fifth Circuit's judgment in City of Dallas v. Southwest Airlines Co., 494 F.2d 773 (5th Cir. 1974), which held that an order entered by the Texas Aeronautics Commission requiring Southwest to continue to serve Love Field for intrastate Texas service overrode the Concurrent Bond Ordinance. That injunction is no broader than the Fifth Circuit's holding; and the holding, pertaining to the now-defunct Texas Aeronautics Commission and intrastate service, has absolutely no significance in this proceeding for statutory interpretation.

4. Page 8 of Dallas's comments misrepresents the CAB's decision in the Southwest Airlines Automatic Market Entry Investigation, CAB Order 79-9-192, 83 CAB 644 (1979). In that proceeding, the CAB held that the fitness of the carrier was the only question the CAB could consider in granting route certification under the Airline Deregulation Act's Automatic Market Entry ("AME") program. The CAB specifically wrote:

1979 CAB LEXIS 109 at *19 (emphasis added).

In the ruling to which Dallas refers at the bottom of page 8 of its comments, the CAB rejected the different argument that ADA § 102(a)(6), 92 Stat. at 1706--which instructed the CAB to consider regional airport plans along with nine other factors in making its non-AME route certification decisions--required the CAB to reject Southwest's AME application to fly from Love Field to New Orleans. 1979 CAB LEXIS 109 at *12. Contrary to Dallas's claim, that portion of the CAB's decision had nothing to do with "the ADA's 'proprietary rights' exception." Dallas Comments at 8.

B. Dallas's Arguments

Dallas's comments also contain numerous erroneous arguments about law and policy. For example, Dallas repeatedly claims that its proprietary powers and rights are limited to control of noise and ground congestion. Dallas Comments at 8, 21-23, 25. Contrast Dallas's argument with the Solicitor General's comprehensive refutation of that argument on pages 7 through 10 of the Brief for the United States as Amicus Curiae in the Supreme Court in the Western Air Lines case, attached at Tab 9 to American's original comments. See also the Department's clear statement on pages 23-24 of its brief to the Fifth Circuit in the City of Houston case (attached as Tab 16 to Fort Worth's Initial Comments) that an airport owner's proprietary powers and rights are not limited to noise regulations.

American also asks the Department again to consider the two letters from the Secretary of Transportation that are included at Tab 10 to American's initial comments. In the letter of October 23, 1981, to Speaker Wright, the Secretary said that his decision as the proprietor of Washington National and Washington Dulles to impose a perimeter rule on National was necessary to protect passenger service to, and the financial health of, Dulles Airport. In the letter of August 14, 1981, to Senator Bentsen, the Secretary stated that "whether there should be a long-haul or short-haul role designated for National and Dulles Airports is a legitimate airport proprietor's decision."

Dallas also cites the interim Statement of Policy published by the CAB in 1979, 44 Fed. Reg. 9,948 (Feb. 15, 1979), now found at 14 C.F.R. § 399.110. Dallas Comments at 23. That interim Statement of Policy does not say that proprietary powers and rights are limited to measures controlling noise and ground congestion. But even if it did, the law is clear that as an unappealable agency "Statement of Policy" (indeed, in this case, a 20-year old interim Statement of CAB Policy), 14 C.F.R. § 399.110 has neither binding nor precedential force. E.g., Syncor Int'l Corp. v. Shalala, 127 F.3d 90 (D.C. Cir. 1997); Pacific Gas & Elec. Co. v. FPC, 506 F.2d 33 (D.C. Cir. 1974) (holding that if an agency relies on a Statement of Policy, it must justify the policy as if the policy statement had never been issued).

In arguing that the Wright Amendment preempted its proprietary powers and rights over Love Field, Dallas purports to rely on certain language that Congress did not include in the Shelby Amendment. Dallas Comments at 31-32. In 1997, the House-Senate Conference Committee on Appropriations of the 105th Congress rejected certain language proposed by the House Committee that would have stated that the Dallas City Council had a short-lived "right" to veto the Shelby Amendment's new definition of "passenger capacity with 56 passengers or less." From the Conference Committee's failure to accept that House language, Dallas infers that the 96th Congress, which enacted the Wright Amendment, intended to preempt Dallas's proprietary powers and rights over Love Field.

Dallas's argument violates numerous settled principles of statutory construction. The Supreme Court repeatedly has said that "the interpretation given by one Congress (or a committee or Member thereof) to an earlier statute is of little assistance in discerning the meaning of that statute." Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 185-86 (1994). It is inconceivable that the failure of the 105th Congress to include a provision in the Shelby Amendment is of any assistance in determining whether the 96th Congress intended for the Wright Amendment to be preemptive.

Indeed, the Supreme Court has warned directly against relying on Congress's failure to act as a guide for interpreting statutes. The Court has written that such information "is a particularly dangerous ground on which to rest an interpretation of a prior statute when it concerns, as it does here, a proposal that does not become law." PBGC v. LTV Corp., 496 U.S. 633, 650 (1990). In language fully applicable here, the Court wrote that

Id. (quoting United States v. Wise, 370 U.S. 405, 411 (1962)); accord Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 306 (1988).

The 1997 Conference Committee on Appropriations did not state why it rejected the House language purporting to permit Dallas to veto the Shelby Amendment. Nevertheless, Dallas wants the Department to conclude that by dropping that provision, the Committee denied Dallas power to limit operations at Love Field. But another explanation is more plausible: Dallas, through its proprietary rights, already possesses the power outlined in the House version of the Shelby Amendment. As a result, there was no need to authorize Dallas to exercise a proprietary power and right that it already possessed. Furthermore, some in Congress may have thought that enacting a new requirement that Dallas must exercise its purported veto power over the Shelby Amendment within a 60 day window and by "a majority vote of all city council members" was an unwarranted restriction of Dallas's proprietary powers. They may have also thought the restriction conflicted with the Concurrent Bond Ordinance, which the Dallas City Council enacted decades ago (and has repeatedly reaffirmed) and which already limits interstate operations at Love Field.

Thus, contrary to Dallas's suggestion, no meaning can be attributed to the 1997 Appropriations Conference Committee's decision not to accept a particular provision addressing the Dallas City Council. Moreover, the Shelby Amendment makes only two limited amendments to the Wright Amendment. Nothing in the Shelby Amendment even purports to deal with preemption or to change the essential purpose of the Wright Amendment, which was to require federal authorities to ban scheduled interstate passenger service at Love Field, except for limited exceptions. In fact, the conference committee's comments to the Wright Amendment specifically preserved Dallas's proprietary powers over Love Field.

American wishes also to reply to certain of Dallas's arguments about Issue No. 4, which apparently pertains to Section 3.2 of the DFW Airport Board's Use Agreements. Dallas claims that airports can contract with carriers to limit their services at other airports. Although Dallas contends that 49 U.S.C. § 41713(b)(1) proscribes contracts between local governments that would limit the use of one airport, Dallas contends that those same local governments may make any contract whatsoever with airlines to impose the same limitations. As between local governments, Dallas is an advocate of complete federal preemption. As between airport owners and airlines, Dallas is an advocate of unrestricted free market forces. Dallas Comments at 33-35. The distinction that Dallas advocates is certainly not supported by 49 U.S.C. § 41713(b)(1), nor can it be justified in any principled way.

Could DFW Airport offer a financial inducement for airlines to contract not to list connecting flights through O'Hare? Could DFW Airport contract with airlines not to maintain other "hub" airports? Could DFW Airport contract with an airline not to offer nonstop service from other airports in Texas to the West Coast? Could Dallas contract with Southwest not to permit any airline except Southwest to serve Love Field? Obviously not, yet under Dallas's theory all of these contracts would be permissible. Dallas's claimed distinction between airport owner-to-airport owner contracts and airport owner-to-airline contracts is completely result-oriented and arbitrary.

As American has pointed out in its comments on Issue No. 4, local governments owning airports cannot impose requirements by contract that are otherwise prohibited by law. Thus, if as Dallas contends, its Concurrent Bond Ordinance is preempted, then section 3.2 of the DFW Airport Board's standard form Use Agreement is equally preempted. Love Field is either restricted or unrestricted. It cannot be unrestricted for some airlines, but restricted for others.

In advancing its absurd position, Dallas argues at pages 33-34, wholly without the benefit of supporting authority, that in the absence of an express legislative prohibition on contracting per se, parties are free to contract away whatever rights they choose to contract away. The law is to the contrary. Parties are not free to contract in derogation of a Congressional scheme of regulation, see, e.g., Wisconsin Dept. of Industry v. Gould, Inc., 475 U.S. 282 (1986) (even in the absence of an express prohibition on contracting per se, the Supreme Court has held that a state may not, through contracting practices, seek indirectly to regulate labor relation matters committed to the federal sphere), or of federal non-discrimination laws, including those applicable to airports, see, e.g., Niswonger v. American Airlines, Inc., 411 F.Supp. 769, 771 (E.D. Tenn. 1975), aff'd, 529 F.2d 526 (6th Cir 1976); City and County of San Francisco v. FAA, 942 F.2d 1391, 1399 (9th Cir. 1991), cert. denied, 503 U.S. 983 (1992).

Moreover, contrary to Dallas's assertion, the ADA does contain direct limitations upon a state's efforts to regulate through contracting. The ADA preemption provision proscribes state enforcement not only of "laws" or "regulations" related to a price, route or service but of "other provisions" as well. In American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817 (1995), the Supreme Court read the provision broadly, and indicated that, even in the context of purely private contracts, the ADA may operate to preempt state contract laws "to the extent they seek to effectuate a state's public policies." Id. 115 S.Ct. at 824 n. 8. If, as Dallas apparently now contends, the ADA preemption provision did not apply at all to contracts, the Supreme Court would have clearly and directly so held. To the contrary, the Court felt constrained to analyze whether, in merely lending its contractual enforcement regime to a purely private contract, the State was imposing its own substantive standards regarding matters relating to the rates, routes or services of air carriers to such a degree as would be preempted. As discussed more fully in American's initial comments, the Court was not addressing a contract entered into by a state political subdivision, through which the state was seeking to impose substantive standards. Thus, the ADA cannot be read to permit a state political subdivision to impose, through contract, policies otherwise proscribed by 49 U.S.C. § 41713(b)(1). (See American's Comments, pp. 61-65).

Finally, American notes Dallas's misplaced reliance on NLRB v. Nash-Finch Co., 404 U.S. 138 (1971), and Lieter Minerals, Inc. v. United States, 352 U.S. 220 (1957), as a purported defense to Fort Worth's motion to dismiss this action as an affront to basic principles of federalism. Dallas Comments at 17-18. Nash-Finch and Lieter Minerals hold that the Anti-Injunction Act does not apply when the United States comes into federal court as a plaintiff to enforce a federal statute or prevent injury to a federal interest. See Mitchum v. Foster, 407 U.S. 225, 235-36 (1972); State of Texas v. United States, 837 F.2d 184, 186 (5th Cir.), cert. denied, 488 U.S. 821 (1988).

That is not the case in this proceeding. The Department has undertaken to act as a federal court interpreting federal statutes. To the extent that Dallas's analogy applies at all, Continental, Legend, and Dallas--the defendants in the State Court Litigation-- are acting as the "plaintiffs" before the Department. They filed the Federal Court Litigation, but they were met with the Anti-Injunction Act. So they have now come to this Executive Branch Department to seek adjudication of the same issues they brought before the Federal Court.

As American pointed out in Southwest's original comments, if this identical proceeding were pending as a declaratory judgment suit in a federal district court, it would be precluded by the Anti-Injunction Act. If the Department seeks to act as a court, the Department's actions pose the same risks as would a court to the Constitutional principles embodied in the Anti-Injunction Act.

C. Conclusion

Obviously, Dallas is striving mightily to have the Department relieve it of the fiduciary and contractual obligations that it undertook to Fort Worth and the DFW Airport in 1968. Dallas's desire to rid itself of the obligations in Section 9.5 of the Concurrent Bond Ordinance by claiming preemption is a new position. As recently as 1992, long after enactment of the ADA and the Wright Amendment, the Dallas City Council expressly "recognized and reaffirmed the covenants and provisions of Section 9.5 of the Concurrent Bond Ordinance (Tab 8 to Fort Worth's Initial Comments). Almost every year since 1968, Dallas has reaffirmed the Concurrent Bond Ordinance by passing a Supplemental Bond Ordinance authorizing the issuance of additional DFW Airport Revenue Bonds. Dallas has never advised the bond-buying public of its newly-discovered view that the covenants in Section 9.5 have been completely preempted by federal law in the 20 years since the passage of the ADA and the Wright Amendment.

Dallas's effort to find a reason not to honor its obligations to Fort Worth and DFW Airport or its assurances to American and the other airlines Dallas induced to leave Love Field in 1974 may be explainable by a contract Dallas made with Southwest Airlines in 1986, coupled with Southwest's threats towards Dallas under that contract. In essence, Southwest has threatened Dallas with liability in the range of $100 million if Dallas fails to oppose anything--including, no doubt, this action--that might have the effect of limiting noise at Love Field. Dallas's Comments on the issues before the Department should be read with Southwest's threat in mind.

2. REPLY TO AIRPORTS COUNCIL INTERNATIONAL-NORTH AMERICA, ET AL.

American supports the Airports Council's comments on Issue No. 1. After American filed its initial comments, it learned of another situation in which local leaders may be laboring under the assumption that they may construct a modern regional airport located between two substantial cities and agree to limit the permissible uses at their existing close-in airports in order to consolidate scheduled passenger service at the new regional airport.

American calls the Department's attention to the newspaper articles attached at Tab C to these reply comments. The articles report that local authorities in Mobile, Alabama, and Pensacola, Florida, are considering a new regional airport to be located between the two cities, and that Senator Shelby of Alabama is seeking federal funding "to pay for a feasibility study for a new regional airport between Mobile and Pensacola, Florida." Tab C. If the Department were to rule under Issue No. 1 in this proceeding that, as a matter of federal law, Mobile and Pensacola are prohibited from contracting to restrict the types of traffic at their existing airports in order to support a new regional airport, then the Department should immediately object to the expenditure of any federal funds to study the feasibility of a Mobile-Pensacola regional airport. Indeed, perhaps the Department needs to give the Mobile and Pensacola authorities notice of this proceeding and seek their comments.

Note that the Atlanta Constitution article attached at Tab C refers to the Dallas-Fort Worth "consolidation" as being the last "successful" airport built between two cities. If the Department decides to reverse the direction the CAB imposed on Fort Worth and Dallas and now to destroy the Dallas-Fort Worth "consolidation" in order to satisfy the opportunistic demands of Continental, Legend, and Dallas, that should prove to be a very sobering lesson to all other local governments that might be so foolish as to invest billions of dollars and years of their time in regional airport planning.

American disagrees with the Airports Council's comments on Issue No. 4. The Airports Council was responding to a broadly-worded question that was not tied to Love Field; thus, its comments are irrelevant. While American agrees that Issue No. 4 is very broadly worded, no party has suggested that contractual obligations that are not preempted or otherwise in violation of federal law are prohibited. The Airports Council's reading of the issue is too broad. American's point is that if an airport owner or operator is prohibited by federal law from restricting interstate service at an airport, an airport owner or operator may not accomplish that same prohibited result by contract. In the circumstances at issue here, if Dallas is prohibited by federal law from restricting airlines from operating interstate flights from Love Field to destinations beyond Texas and the four contiguous states, then the DFW Airport Board may not accomplish the same result or create unlawful discrimination among airlines by imposing requirements by contract.

American must disagree with the Greater Orlando Aviation Authority's additional suggestion that if the Department opines in this proceeding (which is limited to legal questions of statutory construction) that Congress intended to preempt a particular activity by local airport owners, the Department could make such "preemption" effective only "after the date of the Department's announcement of such pre-emption."

If the Department rules that Congress intended to preempt some form of action by local airport owners, then that preemption occurred when Congress enacted the preempting statute, not when the Department "announces" such preemption. Congress has not given the Department power to suspend the operation of its statutes or to "announce" the dates on which statutes become preemptive.

3. REPLY TO CONTINENTAL EXPRESS, INC.

The opening section of Continental's comments contains considerable hyperbole. The Department may take notice that there is frequent nonstop scheduled passenger service between the Dallas-Fort Worth metropolitan area and Cleveland, Ohio, much of which is operated from DFW Airport by Continental Airlines, Inc. No one has suggested that there is some particularized need for additional long-haul service between Love Field and Cleveland.

Continental makes many of the same arguments that Dallas makes, and American restates the same replies. Continental makes the additional argument that prohibiting its Love Field-Cleveland service "violates grant assurances made by the City of Dallas." Although American disagrees with that assertion, American points out that whether Dallas has violated or may violate grant assurances is not among the statutory construction issues the Department has noticed for consideration in this proceeding. The Department has published procedural rules for deciding alleged violations of grant assurances, and they should be followed. 14 C.F.R. Part 16.

Continental's suggestion that the Department rely on newspaper articles as it construes the Shelby Amendment is surely an invitation to error. Continental Comments at 15-16. Where in the language of the Shelby Amendment does Continental find mention of Legend Airlines? For Continental to argue that by enacting the Shelby Amendment, "Congress considered Legend's proposal to introduce service between Love Field and points throughout the U.S. using DC-9 or B-737 aircraft capable of flying between Love Field and any point in the contiguous United States and clarified that Legend could do so," is to stretch the notion of statutory construction beyond all recognition. In the Shelby Amendment, Congress enacted two very limited amendments to the Wright Amendment. Those amendments are in plain English. They say what they say, and no more. Congress did not enact Legend's business plan into federal law, nor are Legend's press releases reliable sources for ascertaining legislative intent.

Continental cites Hodges v. Delta Airlines, Inc., 44 F.3d 334 (5th Cir. 1995), and Butcher v. City of Houston, 813 F.Supp. 515 (S.D. Tex. 1993) in its response. Neither of those cases had anything to do with the proprietary rights and powers reserved by 49 U.S.C. § 41713(b)(3) to local governments owning or operating airports. Both had to do with whether personal injury claims for alleged negligent conduct by airlines were preempted by 49 U.S.C. § 41713(b)(1). In neither case was the court focused on, or deciding anything about, proprietary powers and rights. In both cases, the courts held that specific claims were not preempted.

Continental's simplistic syllogism seems to be as follows: (1) the limitations on interstate service imposed by the Concurrent Bond Ordinance relate to "routes;" (2) 49 U.S.C. § 41713(b)(1) preempts state police powers with respect to airline routes; (3) therefore the Concurrent Bond Ordinance must be a preempted exercise of state police powers.

Continental's syllogism ignores the facts that 49 U.S.C. § 41713(b)(1) commences with the phrase "except as provided in this subsection," and that 49 U.S.C. § 41713(b)(3) clearly states that "this subsection does not limit" the carrying out of proprietary powers and rights. See American's Original Comments at 6. Thus, 49 U.S.C. § 41713(b)(1) does not preempt a valid exercise of proprietary powers and rights, even it that exercise relates to "routes." This was the precise holding of the Second Circuit in Western Air Lines:

Western Air Lines, Inc. v. Port Authority of New York and New Jersey, 817 F.2d 222, 226 (2d Cir. 1987), cert. denied, 485 U.S. 1006 (1988).

See also the Solicitor General's Brief of Amicus Curiae for the United States in Western Air Lines (Tab 9 to American's Original Comments) at 6:

Finally, Continental is alone in its views on the fifth issue. No other party concurs with Continental's view of what it is supposedly permitted to do under the Wright Amendment. Continental's efforts--in its words--to connect "Love Field to the world" exceed any plausible interpretation of the Wright Amendment.

4. REPLY TO SOUTHWEST AIRLINES

American incorporates its replies to Dallas and Continental, above, in reply to Southwest.

At page 18 of Southwest's comments, Southwest does not do complete justice to Chief Judge Buchmeyer's statement at the conclusion of the oral argument on June 9, 1998, on Southwest's motion for Judge Buchmeyer to enjoin the State Court Litigation. Similarly, in Order 98-8-29 (Aug. 25, 1998), the Department reported what it "understood" about what Judge Buchmeyer had said. Here is what Judge Buchmeyer actually said:

Transcript of Oral Arguments, June 9, 1998, No. 3:75-CV-034-R (N.D. Tex.) at 56-57 (see Tab D to these reply comments).

On pages 24-25 of its comments, Southwest makes arguments that are based without question on specific fact issues pertaining to Love Field. Again, the Department has noticed only a statutory construction proceeding. As American understands what the Department has noticed, the Department intends to opine whether 49 U.S.C. § 41713(b)(1) & (b)(3) prohibit, as a matter of law, all contracts between airport owners in which one agrees to limit service at its airport. There is no way to conclude from the statute that one perimeter rule based on the historical boundaries of states would be prohibited, but one drawn in a circle of 650 (as was originally in place at Washington National) or 1,000 miles would be lawful. In this proceeding, the Department is considering only whether such restrictions are unlawful per se. The Department has not given notice that it intends to determine factually, in this "declaratory ruling" proceeding, whether particular restrictions are reasonable, discriminatory, or beyond the powers of a particular airport proprietor.

On page 25 of its comments, Southwest misrepresents the John Wayne Airport litigation. The Department explained that controversy at page 22 of its Brief to the Fifth Circuit in the City of Houston appeal (Tab 11 to American's original comments). Orange County operated only one airport, John Wayne Airport. Orange County did not accommodate flights to and from points beyond 500 miles at another airport. Furthermore, the CAB had certificated routes into John Wayne from distances beyond 500 miles. Now, the Department does not certificate domestic routes. The Department no longer awards "specific city-by-city authorizations for domestic air service." Order 98-7-6 (Jul. 8, 1998). The Department certainly no longer certificates "airport-by-airport" authorizations for domestic air service. In addition to these distinctions, Orange County had not adopted its perimeter rule as a prerequisite for building a regional airport, as the CAB had ordered Dallas and Fort Worth to do. Nor were the limitations on its airports made a part of representations that Orange County made to bondholders; and there was no showing of reliance by the airlines.

5. REPLY TO LEGEND AIRLINES, INC.

One cannot read the Legend "comments" without recalling Shakespeare's famous line from Macbeth. The comments are "full of sound and fury, signifying nothing."

Legend's comments merely burden the Department and responsible interested parties with allegations of distorted fact. Legend's comments have virtually nothing to do with the questions of statutory construction the Department has noticed. American disagrees with and disputes all of the allegations of wrongdoing made in Legend's comments.

On pages 82-99 of its comments--the few pages in which Legend attempts to focus on this proceeding--Legend offers nothing new. American incorporates its comments to the other parties, discussed above.

6. REPLY TO FORT WORTH AND THE DFW AIRPORT BOARD

American supports the comments of Fort Worth and the DFW Airport Board on all of the issues except Issue No. 4. American believes it has addressed all of Fort Worth's and DFW's arguments on Issue No. 4 in its original comments or above.

7. CONCLUSION AND REQUEST FOR ORAL ARGUMENT

American restates all of its initial comments in further reply to the comments filed by others. None of the others' comments have changed any of American's views.

American restates the Conclusion on pages 83-84 of its initial comments.

American requests the Department to allow oral argument before the decision-maker in this proceeding and to schedule that oral argument in the Dallas-Fort Worth area or in Washington, D.C., at a time determined by the Department.

Respectfully submitted,

James H. Burnley IV

WINSTON & STRAWN

1400 L Street, N.W.

Washington, D.C. 20005-3502

Telephone: (202) 371-5700

Facsimile: (202) 371-5950

Anne H. McNamara

Senior Vice President and General Counsel

Laura A. Einspanier

Associate General Counsel

Bruce Wark

Senior Attorney

American Airlines, Inc.

P. O. Box 619616, MD-5675

DFW Airport, Texas 75261-9616

Telephone: (817) 967-1284

Facsimile: (817) 967-2937

Carl Nelson

Associate General Counsel

American Airlines, Inc.

1101 17th Street, N.W., Ste. 600

Washington, D.C. 20036

Telephone: (202) 496-5647

Facsimile: (202) 496-5660

William J. Albright

FIGARI & DAVENPORT, L.L.P.

901 Main Street, Suite 4800

Dallas, Texas 75202

Telephone: (214) 939-2000

Michael V. Powell

LOCKE PURNELL RAIN HARRELL

(A Professional Corporation)

2200 Ross Avenue, Suite 2200

Dallas, Texas 75201-6776

Telephone: (214) 740-8520

Facsimile: (214) 740-8800

ATTORNEYS FOR

AMERICAN AIRLINES, INC.

I hereby certify that I have on October 3, 1998, served the foregoing Reply Comments of American Airlines, Inc. on the following persons at the following addresses:

Mr. Rise J. Peters

Spiegel & McDiarmid

1350 New York Avenue N.W.

Washington, D.C. 20005

Ms. Angela Washington

Interim City Attorney

7BN City Hall

1500 Marilla Street

Dallas, Texas 75201

Mr. James E. Coleman

Carrington, Coleman, Sloman & Blumenthal

200 Crescent Court, Suite 1500

Dallas, Texas 75201-1848

Mr. Kevin E. Cox

Deputy Executive Director

DFW International Airport

P. O. Drawer DFW

Dallas/Fort Worth Airport, Texas 75261

Mr. Michael F. Goldman

Bagileo, Silverberg & Goldman

1101 30th Street, N.W., Suite 120

Washington, D.C. 20007

Mr. R. H. Wallace, Jr.

Shannon, Gracey, Ratliff & Miller, L.L.P.

500 Throckmorton Street, Suite 1600

Fort Worth, Texas 76102

Mr. Dee J. Kelly

Kelly, Hart & Hallman, P.C.

201 Main Street, Suite 2500

Fort Worth, Texas 76102

Mr. Wade Adkins, City Attorney

City of Fort Worth, Texas

1000 Throckmorton

Fort Worth, Texas 76102

Mr. David Siegel, President

Continental Express, Inc.

15333 JFK Boulevard

Houston, Texas 77032

Mr. R. Bruce Keiner, Jr.

Crowell & Moring LLP

1001 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2595

Mr. Randall W. Wilson

SUSMAN GODFREY L.L.P.

1000 Louisiana St., Ste. 5100

Houston, Texas 77002-5096

Mr. T. Allan McArtor

President and CEO

Legend Airlines

7701 Lemmon Avenue

Dallas, Texas 75209

Mr. Edward Faberman

Ungaretti & Harris

1747 Pennsylvania Avenue, N.W., Ste. 900

Washington, D.C. 20006-4604

Mr. James F. Parker

Vice President-General Counsel

Southwest Airlines Company

2702 Love Field Drive

Dallas, Texas 75235

Mr. Robert W. Kneisley

Associate General Counsel--Federal Affairs

Southwest Airlines Company

1250 Eye Street, N.W., Ste. 1110

Washington, D.C. 20005

Ms. Patricia A. Hahn

General Counsel

Airports Council International--

North America

1775 K Street, N.W., Ste. 500

Washington, D.C. 20006

Ms. Mara E. Rosales

Office of the City Attorney

San Francisco International Airport

P. O. Box 8097

San Francisco, California 94128

Mr. G. Brian Busey

Morrison & Foerster LLP

2000 Pennsylvania Ave., N.W., Ste 5500

Washington, D.C. 20006

Mr. Egerton K. van den Berg

Executive Director

Greater Orlando Airport Authority

One Airport Boulevard

Orlando, Florida 32827-4399

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