radiate interests in transactions between private parties. The present litigation is purely between private parties and does not touch the rights and duties of the United States." 352 U. S., at 33.

The Court recognized, as we do here, that the application of state law to the issue of good faith did not preclude the application of federal law to questions directly involving the rights and duties of the Federal Government, and found:

"Federal law of course governs the interpretation of the nature of the rights and obligations created by the Government bonds themselves. A decision with respect to the 'overdueness' of the bonds is therefore a matter of federal law, which, in view of our holding, we need not elucidate." Id., at 34.

The parallel between Parnell and these cases is obvious. The question of whether petitioners may sue respondent does not require decision under federal common law since the litigation is among private parties and no substantial rights or duties of the United States hinge on its outcome. On the other hand, nothing we say here forecloses the applicability of federal common law in interpreting the rights and duties of the United States under federal contracts.

Nor is the fact that the United States has a substantial interest in regulating aircraft travel and promoting air travel safety sufficient, given the narrow question before us, to call into play the rule of Clearfield Trust. In Wallis v. Pan American Petroleum Corp., 384 U. S. 63, 68 (1966), the Court discussed the nature of a federal interest sufficient to bring forth the application of federal common law:

"In deciding whether rules of federal common law should be fashioned, normally the guiding principle is that a significant conflict between some federal policy or interest and the use of state law in the premises must first be specifically shown. It is by no means enough that, as

we may assume, Congress could under the Constitution readily enact a complete code of law governing transactions in federal mineral leases among private parties. Whether latent federal power should be exercised to displace state law is primarily a decision for Congress." (Emphasis added.)

The question of whether private parties may, as third-party beneficiaries, sue a municipality for breach of the FAA contracts involves this federal interest only insofar as such lawsuits might be thought to advance federal aviation policy by inducing compliance with FAA safety provisions. However, even assuming the correctness of this notion, we adhere to the language in Wallis, cited above, stating that the issue of whether to displace state law on an issue such as this is primarily a decision for Congress. Congress has chosen not to do so in this case. Actually the application of federal common law, as interpreted by the Court of Appeals here would frustrate this federal interest pro tanto, since that court held that this breach-of-contract lawsuit would not lie under federal law. On the other hand, at least in the opinion of the majority of the panel below, Georgia law would countenance the action. Even assuming that a different result were to be reached under federal common law, we think this language from Wallis all but forecloses its application to these

cases:

"Apart from the highly abstract nature of [the federal] interest, there has been no showing that state law is not adequate to achieve it." Id., at 71.

We conclude that any federal interest in the outcome of the question before us "is far too speculative, far too remote a

5 The Congress has considered, but not passed, a bill to provide for a federal cause of action arising out of aircraft disasters. See Hearings on S. 961 before the Subcommittee on Improvements in Judicial Machinery of the Senate Committee on the Judiciary, pt. 2, 91st Cong., 1st Sess. (1969).

possibility to justify the application of federal law to transactions essentially of local concern." Parnell, 352 U. S., at 33-34.

Although we have determined that Georgia law should be applied to the question raised by respondent's motion to dismiss, we shall not undertake to decide the correct outcome under Georgia law. The dissent to the panel opinion, in a footnote, stated that Georgia law would preclude petitioners from suing as third-party beneficiaries. The panel opinion, of course, held otherwise. We doubt that the Court of Appeals would deem itself bound by the dicta found in the footnote to the dissenting opinion which were simply later adopted by reference in the en banc majority opinion. We therefore vacate the judgment and remand to the Court of Appeals for consideration of the claim under applicable Georgia law.

III

Petitioners have argued in this Court that the Airport and Airway Development Act of 1970 provides an implied civil right of action to recover for death or injury due to violation of the Act. 84 Stat. 219, as amended, 49 U. S. C. § 1701 et seq. (1970 ed. and Supp. V). Petitioners, however, allege only diversity of citizenship as the basis for federal jurisdiction of their lawsuits; they do not rely upon federal-question jurisdiction, 28 U. S. C. § 1331, which would be more consistent with a theory of an implied federal cause of action under that Act. The complaints sought recovery solely on the grounds of negligence, nuisance, and breach of contract. There is no indication that petitioners alleged a violation of a federal statute and a right to recovery for such a violation. The fact

* In language similar to that used in the FAA grant agreements, §§ 1718 (3) and (4) require, as a condition precedent to approval of an airport development project, written assurances that the airport approaches will be safely maintained and that the use of land adjacent to the airport will be restricted to uses compatible with aircraft takeoff and landing.

BURGER, C. J., concurring in judgment

433 U.S.

that this asserted basis of liability is so obviously an afterthought may be some indication of its merit, but since it was neither pleaded, argued, nor briefed either in the District Court or in the Court of Appeals, we will not consider it. Cf. Lawn v. United States, 355 U. S. 339, 362–363, n. 16 (1958).

The judgment is vacated, and the cases are remanded to the Court of Appeals for further proceedings consistent with this opinion.

It is so ordered.

MR. CHIEF JUSTICE BURGER, concurring in the judgment. There is language in the Court's opinion which might be misinterpreted as rigidly limiting the application of "federal common law" to only those situations where the rights and obligations of the Federal Government are at issue. I do not agree with such a restrictive approach.

I cannot read Clearfield Trust Co. v. United States, 318 U. S. 363 (1943), and Bank of America Nat. Trust & Sav. Assn. v. Parnell, 352 U. S. 29 (1956) as, in all circumstances, precluding the application of "federal common law" to all matters involving only the rights of private citizens. Certainly, in a diversity action, state substantive law should not be ousted on the basis of "an amorphous doctrine of national sovereignty' divorced from any specific constitutional or statutory provision and premised solely on the argument that every authorized activity of the United States represents an exercise of its governmental power.' United States v. Little Lake Misere Land Co., 412 U. S. 580, 592 n. 10 (1973), quoting United States v. Burnison, 339 U. S. 87, 91, and 92 (1950). However, I am not prepared to foreclose, at this point, the possibility that there may be situations where the rights and obligations of private parties are so dependent on a specific exercise of congressional regulatory power that "the Constitution or Acts of Congress 'require' otherwise than that state law govern of its own force."

25

BURGER, C. J., concurring in judgment

United States v. Little Lake Misere Land Co., supra, at 592-593.

In such a situation, I would not read Wallis v. Pan American Petroleum Corp., 384 U. S. 63, 68 (1966), to preclude a choice of "federal common law" simply because there is no specific federal legislation governing the particular transaction at issue. Once it has been determined that it would be inappropriate to apply state law and that federal law must govern, "the inevitable incompleteness presented by all legislation means that interstitial federal lawmaking is a basic responsibility of the federal courts." United States v. Little Lake Misere Land Co., supra, at 593. In short, although federal courts will be called upon to invoke it infrequently, there must be "federal judicial competence to declare the governing law in an area comprising issues substantially related to an established program of government operation.'" Ibid., quoting Mishkin, The Variousness of "Federal Law": Competence and Discretion in the Choice of National and State Rules for Decision, 105 U. Pa. L. Rev. 797, 800 (1957).

Although in my view the issue is close, I conclude, on balance, that the cause of action asserted by the plaintiffs is not so intimately related to the purpose of the Airport and Airway Development Act of 1970, 84 Stat. 219, as amended, 49 U.S. C. § 1701 et seq. (1970 ed. and Supp. V), as to require the application of federal law in this case. See H. R. Rep. No. 91-601 (1969). Accordingly, the rule of Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), applies, and I join the judgment of the Court remanding the cases for a determination of the correct outcome under Georgia law.