Scenic America, Inc. v. United States Department of Transportation
2016 WL 4608153, 836 F.3d 42, 2016 U.S. App. LEXIS 16330 (2016)
Rule of Law:
An agency's reasonable interpretation of ambiguities in federal-state agreements it oversees is entitled to deference, similar to Chevron deference, particularly when adapting to new technologies. However, a plaintiff challenging an agency action must establish standing by demonstrating that a favorable court decision will likely redress their injury, a burden significantly heightened when redressability depends on the independent choices of non-party third-parties.
Facts:
- In 1965, Congress enacted the Highway Beautification Act (HBA) to control outdoor advertising signs near Interstate Highways, requiring states to maintain "effective control" over them.
- The HBA mandates that each state negotiate federal-state agreements (FSAs) with the Secretary of Transportation, establishing standards for billboard size, lighting, and spacing, which must be "consistent with customary use."
- Most FSAs, negotiated in the 1960s and 1970s, contain a prohibition against "flashing, intermittent or moving" lights on billboards.
- As billboard technology advanced, states began considering or passing laws permitting digital billboards (Commercial Electronic Variable Message Signs or CEVMS), which use LED lights to display a static advertisement for a period (e.g., ten seconds) before quickly transitioning to another static advertisement (e.g., two seconds).
- FHWA Division Offices, responsible for approving state compliance, differed on whether digital billboards complied with existing FSA lighting standards.
- In 2007, the national FHWA office issued a guidance memorandum titled "Guidance on Off-Premise Changeable Message Signs," interpreting the FSA prohibition on "flashing, intermittent or moving" lights to permit digital billboards that met certain timing and brightness requirements.
- Prior to the 2007 Guidance, many states with FSA bans on intermittent, flashing, or moving lights already permitted digital billboards; after the Guidance, some states like Texas that previously prohibited them began to permit their use.
- Nikki Laliberte, a member of Scenic America, resides near a digital billboard whose bright flash during advertisement transitions mars her view and negatively affects her property value.
- Scenic America, Inc., is a non-profit organization dedicated to preserving and improving the visual character of communities and countryside.
Procedural Posture:
- Scenic America, Inc. sued the United States Department of Transportation, the Federal Highway Administration (FHWA), and relevant officials in the United States District Court for the District of Columbia.
- Outdoor Advertising Association of America, Inc. (OAAA) intervened as a defendant.
- Scenic's suit alleged the 2007 Guidance violated APA § 553 (absence of notice-and-comment rulemaking) and APA § 706 (Guidance was 'contrary to law' by violating the HBA's 'customary use' provision).
- The defendants moved to dismiss, arguing Scenic lacked standing and the Guidance was not a final agency action.
- The District Court denied the motion to dismiss, finding Scenic had standing and the Guidance constituted final agency action.
- The defendants later moved for summary judgment.
- The District Court granted the defendants' motions for summary judgment, ruling that the Guidance was an interpretive rule (not requiring notice-and-comment) and did not violate the HBA's 'consistent with customary use' provision.
- Scenic America, Inc. appealed the District Court's decision to the United States Court of Appeals for the District of Columbia Circuit (appellant).
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the Federal Highway Administration's 2007 Guidance, which interprets state-federal agreements to permit digital billboards meeting certain criteria, violate the Highway Beautification Act's requirement that billboard lighting standards be 'consistent with customary use'?
Opinions:
Majority - Circuit Judge Wilkins
No, the Federal Highway Administration's 2007 Guidance does not violate the Highway Beautification Act's requirement that billboard lighting standards be 'consistent with customary use.' First, the court lacked jurisdiction to hear Scenic America's notice-and-comment claim (alleging a violation of APA § 553) due to a failure to establish standing. Scenic failed to demonstrate redressability, meaning it did not show that vacating the 2007 Guidance would likely reduce its alleged injury of expending greater resources fighting digital billboards. The court reasoned that any reduction in billboards would depend on the "unfettered choices" of independent third parties (FHWA Division Offices and states) not before the court, whose future actions could not be presumed or controlled. Many states permitted digital billboards even before the Guidance, and Division Offices retain discretion to approve them for other reasons. Scenic's argument that Texas might revert to its pre-Guidance prohibition was deemed "unadorned speculation." The Guidance created a voluntary "safe harbor"; Division Offices could still approve billboards outside its parameters or reject them for other FSA violations, meaning its invalidation would not necessarily diminish billboard construction. However, Scenic America did have standing to bring its claim that the Guidance violated APA § 706 (as "contrary to law") by not comporting with the HBA's "customary use" provision. Representational injury-in-fact was demonstrated by member Nikki Laliberte, who experienced concrete harm from a digital billboard near her home, including a marred view and property value concerns. Causation and redressability were established for this claim because a court finding in Scenic's favor would effectively repudiate the FHWA's interpretation of the FSAs, potentially requiring the agency to mandate removal or modification of extant non-compliant billboards, which is a more robust form of relief than mere vacatur. Additionally, the court determined that the 2007 Guidance constituted a final agency action reviewable under the APA. It marked the consummation of FHWA’s decision-making process by reaching a definitive conclusion regarding digital billboards. Furthermore, it had "legal consequences" by creating a safe harbor that altered the legal regime, withdrawing some discretion from Division Offices and states by preventing them from denying permits for digital billboards that met the Guidance's requirements. On the merits of the § 706 claim, the court affirmed the District Court's grant of summary judgment, finding that the FHWA's interpretation of the FSA lighting standards was reasonable. The court applied the principle from Cajun Electric Power Cooperative, Inc. v. FERC that agreements filed and approved by an agency (like the FSAs) lose their strictly private contract status and take on a "public interest gloss," entitling the agency's interpretation of ambiguities in such agreements to deference akin to Chevron deference. Given that the original FSAs were consistent with customary use, and the FHWA's interpretation merely construed, rather than contradicted, the FSA language (e.g., "flashing, intermittent or moving" lights), the interpretation itself was deemed "consistent with customary use," especially in light of changing billboard technology. The interpretation did not "run 180 degrees counter to the plain meaning" of the FSAs.
Analysis:
This case significantly clarifies the strict Article III standing requirements for judicial review of agency actions, particularly the redressability prong. It establishes a high bar for plaintiffs seeking to challenge agency guidance when the ultimate relief depends on the independent actions of non-party third parties, emphasizing that "unadorned speculation" is insufficient. The decision also reinforces the substantial deference courts give to agency interpretations of ambiguities in agreements they supervise, especially when these interpretations address new technologies and do not directly contradict the original meaning, highlighting the agency's practical expertise and need for flexibility. This can make it more challenging for advocacy groups to successfully challenge agency policies that do not require formal rulemaking but have widespread practical effects.
