Scenic America, Inc. v. United States Department of Transportation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SCENIC AMERICA, INC.,
Plaintiff,
v. Civil Action No. 13-93 (JEB)
UNITED STATES DEPARTMENT OF
TRANSPORTATION, RAY LAHOOD,
FEDERAL HIGHWAY
ADMINISTRATION, and VICTOR
MENDEZ,
Defendants,
and
OUTDOOR ADVERTISING
ASSOCIATION OF AMERICA, INC.,
Intervenor-Defendant.
MEMORANDUM OPINION
In 2007, the Federal Highway Administration issued a “Guidance” that paved the way for
the construction of digital billboards along the nation’s highways. Plaintiff Scenic America, a
group dedicated to preserving the country’s visual beauty, wants to put the brakes on that
decision.
Historically, the FHWA believed that digital billboards violated key language in federal-
state agreements related to the Interstate Highway System. But the agency recently shifted gears
and gave the green light to its Division Offices by providing a new interpretation of that
language that would permit digital billboards in certain circumstances. Scenic America says that
this decision bypassed the mandatory notice-and-comment rulemaking route and also collided
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head-on with important federal highway laws. The group cautions that the bright, moving lights
on digital billboards tow a load of safety and aesthetic concerns – that they threaten to turn Route
66 into the Road to Perdition.
Now the case is at a crossroads. Defendants are the Department of Transportation, the
Federal Highway Administration, the Secretary of Transportation, and the Federal Highway
Administrator, and in the passenger seat is an Intervenor, the Outdoor Advertising Association of
America. Both have filed Motions to Dismiss, throwing up roadblocks to Scenic America’s suit.
First, they claim Scenic America lacks standing to sue because the group is driven by mere
ideological objections to the Guidance, not by any actual harm. Second, they say that the Court
must steer clear because the Guidance is not final agency action subject to judicial review.
Although both arguments present difficult and close questions, the Court concludes that
neither gives cause to end this case by fiat. Scenic America has standing to challenge the
Guidance because its case is fueled by concrete harm to the organization’s programs. And
because the Guidance is the end of the road for FHWA decisionmaking on this matter, it
constitutes final agency action. The Court accordingly declines to take either exit proposed by
Defendants and Intervenor and orders that the case should speed on to its next turn.
I. Background
Punning thankfully complete, the Court begins with the Highway Beautification Act,
which Congress enacted in 1965 to govern “the erection and maintenance of outdoor advertising
signs, displays, and devices in areas adjacent to” the interstate highway system. 23 U.S.C. §
131(a). Among other things, the Act requires that each State negotiate a federal-state agreement
(FSA) with the Secretary of Transportation in order to set out rules for the “size, lighting[,] and
spacing” of billboards in the State that come within 660 feet of the nation’s highways. Id.,2
§131(d). All fifty States have done so. See Compl., ¶ 31; e.g., Ark. Code Ann. § 27-74-101 et
seq. (The Arkansas Highway Beautification Act); Or. Rev. Stat. § 377.700 et seq. (The Oregon
Motorist Information Act); Ariz. Rev. Stat. § 28-7901 et seq. (The Arizona Highway
Beautification Act). The Act also requires that States obtain approval from the FHWA before
they make any changes to their outdoor-advertising regulations, in part to ensure that the
regulations comply with their FSAs. See 23 C.F.R. § 750.705(j). A State that fails to ensure
compliance with its FSA faces a 10% cut in its allocated federal highway funds. See id., §
750.705(b); 23 U.S.C. § 131(b).
This case concerns a Guidance document issued by the FHWA to its Division Offices.
The Guidance interpreted certain FSA language to permit States to allow the construction of
digital billboards along interstate highways. Digital billboards use light-emitting diodes that
switch on and off in order to depict action, motion, light, or color changes. See Compl., ¶¶ 36-
38. The majority of FSAs prohibit billboards with dynamic lighting; a typical provision,
contained in 30 FSAs, bars “[s]igns which contain, include, or are illuminated by any flashing,
intermittent, or moving light or lights.” Id., ¶¶ 33 & 34. Because most FSAs were written in the
1960s and 1970s, see id., ¶ 31, they do not make clear whether more modern technologies, such
as digital billboards, fall within their ban. Before 2007, the FHWA had “historically considered”
FSA references to “flashing, intermittent, or moving lights” to forbid digital billboards, see Opp.,
Exh. 3 (FHWA Manual) at 13, although several Division Offices had approved State proposals to
allow them. See Def. Mot., Exh. 1 (FHWA, DOT, Memorandum: Guidance on Off-Premise
Changeable Message Signs (September 25, 2007)) at 1.
In 2007, the FHWA sent a memorandum entitled “Guidance on Off-Premise Changeable
Message Signs” to its regional Division Offices. See id. The Guidance instructed that Offices
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weighing States’ proposals to permit digital billboards in their territories should approve them so
long as they (1) complied with the States’ FSAs and (2) considered certain public safety
requirements. See id. at 1. The Guidance stressed, in bolded typeface: “Proposed laws,
regulations, and procedures that would allow permitting [digital billboards] subject to acceptable
criteria (as described below) do not violate a prohibition against ‘intermittent’ or ‘flashing’ or
‘moving’ lights as those terms are used in the various FSAs that have been entered into during
the 1960s and 1970s.” Id. (emphasis added). The Guidance went on to define the “acceptable
criteria” that State proposals should contain, including regulations for the duration of the
billboards’ messages, the transition times between messages, the billboards’ brightness, the
spacing between the signs, and the locations of the signs. See id. at 3. Since the FHWA issued
the Guidance in 2007, States like Florida and Minnesota have begun to permit the construction of
digital billboards, and the signs have proliferated along America’s roadways, rising from 500 in
2006 to approximately 4,000 today. See Opp. at 7, 10-11.
Scenic America is a nonprofit membership organization that seeks to “preserve and
improve the visual character of America’s communities and countryside.” Compl., ¶ 7.
Although it does not mention why it has waited six years to do so, the group now asks this Court
to vacate the 2007 Guidance on the ground that it was issued in violation of the Administrative
Procedure Act and the Highway Beautification Act. Scenic America highlights three specific
problems it sees with the Guidance. First, it is a legislative rule promulgated without the notice-
and-comment procedure required by the APA. See 5 U.S.C. § 553. Second, it creates new
lighting standards for billboards without “agreement between the several States and the Secretary
[of Transportation],” as required by the HBA. See 23 U.S.C. § 131(d). And finally, it
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establishes lighting standards for billboards that are inconsistent with “customary use,” another
violation of the HBA. See id.Defendants – the Department of Transportation, the Federal Highway Administration, the
Secretary of Transportation, and the Federal Highway Administrator – along with an Intervenor
– Outdoor Advertising Association of America – have now moved to dismiss Scenic America’s
Complaint.
II. Legal Standard
In evaluating Defendants’ Motion to Dismiss under Fed. R. Civ. P. 12(b)(6) and 12(b)(1),
the Court must “treat the complaint's factual allegations as true … and must grant plaintiff ‘the
benefit of all inferences that can be derived from the facts alleged.’” Sparrow v. United Air
Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United States, 617 F.2d
605, 608 (D.C. Cir. 1979)) (internal citation omitted); see also Jerome Stevens Pharms., Inc. v.
FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). This standard governs the Court's considerations of
Defendants’ and Intervenor’s Motions under both Rules 12(b)(1) and 12(b)(6). See Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974) (“[I]n passing on a motion to dismiss, whether on the ground
of lack of jurisdiction over the subject matter or for failure to state a cause of action, the
allegations of the complaint should be construed favorably to the pleader.”); Walker v. Jones,
733 F.2d 923, 925–26 (D.C. Cir. 1984) (same). The Court need not accept as true, however, “a
legal conclusion couched as a factual allegation,” nor an inference unsupported by the facts set
forth in the Complaint. Trudeau v. Fed. Trade Comm’n, 456 F.3d 178, 193 (D.C. Cir. 2006)
(quoting Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal quotation marks omitted)).
To survive a motion to dismiss under Rule 12(b)(1), Plaintiff bears the burden of proving
that the Court has subject-matter jurisdiction to hear its claims. See Lujan v. Defenders of
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Wildlife, 504 U.S. 555, 561 (1992); U.S. Ecology, Inc. v. U.S. Dep’t of Interior, 231 F.3d 20, 24
(D.C. Cir. 2000). A court has an “affirmative obligation to ensure that it is acting within the
scope of its jurisdictional authority.” Grand Lodge of Fraternal Order of Police v. Ashcroft, 185
F. Supp. 2d 9, 13 (D.D.C. 2001). For this reason, “‘the [p]laintiff’s factual allegations in the
complaint ... will bear closer scrutiny in resolving a 12(b)(1) motion’ than in resolving a 12(b)(6)
motion for failure to state a claim.” Id. at 13-14 (quoting 5A Charles A. Wright & Arthur R.
Miller, Federal Practice and Procedure § 1350 (2d ed. 1987) (alteration in original)).
Additionally, unlike with a motion to dismiss under Rule 12(b)(6), the Court “may consider
materials outside the pleadings in deciding whether to grant a motion to dismiss for lack of
jurisdiction.” Jerome Stevens, 402 F.3d at 1253; see also Venetian Casino Resort, L.L.C. v.
E.E.O.C., 409 F.3d 359, 366 (D.C. Cir. 2005) (“[G]iven the present posture of this case—a
dismissal under Rule 12(b)(1) on ripeness grounds—the court may consider materials outside the
pleadings.”); Herbert v. Nat'l Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992).
III. Analysis
Defendants and Intervenor both seek dismissal of Scenic America’s Complaint on two
grounds: first, that Plaintiff lacks standing to challenge the 2007 Guidance, and second, that the
Guidance is not a final agency action subject to judicial review. The standing requirement is a
matter of Article III jurisdiction, and so the Court would typically begin with that question. See
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-101 (1998). Defendants, however, style
their final-agency-action argument as a matter of the federal government’s sovereign immunity,
see Def. Mot. at 16, which would also make it jurisdictional in nature. See FDIC v. Meyer, 510
U.S. 471, 475 (1994). The Court nevertheless believes that this issue is better understood, as
Intervenor frames it, as a Rule 12(b)(6) question of whether Scenic America has stated a claim
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upon which relief can be granted, a non-jurisdictional issue. See Int. Mot. at 18. Indeed, this
Circuit’s precedent makes clear that the final-agency-action requirement is not jurisdictional, see
Trudeau v. Federal Trade Comm’n, 456 F.3d 178, 185 (D.C. Cir. 2006), which suggests that
sovereign immunity cannot be the principle that bars plaintiffs from challenging non-final
agency action. The Court, accordingly, will treat the finality inquiry as a Rule 12(b)(6) issue,
rather than a 12(b)(1) jurisdictional matter. As a result, it will address finality only after
determining whether Scenic America has standing to sue.
A. Standing
Not every disagreement merits a lawsuit. Federal courts decide only “cases or
controversies,” a phrase given meaning by the doctrine of “standing.” See Whitmore v.
Arkansas, 495 U.S. 149, 154-55 (1990); U.S. Const. art. III. To have standing to bring a lawsuit
in federal court, the plaintiff must establish that: (1) he has suffered a concrete and particularized
injury that is actual or imminent, not conjectural or hypothetical; (2) there is a causal relationship
between his injury and the defendant’s conduct; and (3) it is likely that a victory in court will
redress his injury. Lujan, 504 U.S. at 560-61. As an organizational plaintiff, Scenic America
may have standing to sue both on its own behalf, known as “organizational standing,” and also
on its members’ behalf, which is called “representational standing.” See Abigail Alliance for
Better Access to Developmental Drugs v. Eschenbach, 469 F.3d 129, 132 (D.C. Cir. 2006). In
this instance, because Plaintiff has established the former, the Court need not address the latter.
To determine an organization’s standing to sue on its own behalf, the same inquiry
applies as it does for an individual: “Has the plaintiff alleged such a personal stake in the
outcome of the controversy as to warrant his invocation of federal-court jurisdiction?” Havens
Realty Corp v. Coleman, 455 U.S. 363, 378-79 (1982) (internal quotation marks omitted). Just
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like an individual, a group attempting to establish organizational standing to sue must satisfy the
three elements of the “irreducible constitutional minimum of standing” mentioned previously.
Lujan, 504 U.S. at 560. Defendants and Intervenor contend that Scenic America has failed to
meet that constitutional minimum. The Court disagrees.
1. Injury-in-Fact
To sue on its own behalf, Scenic America must first demonstrate that it has suffered a
“concrete and particularized harm.” Id.; see also Nat’l Taxpayers’ Union, Inc. v. United States,
68 F.3d 1428, 1433 (D.C. Cir. 1995). Plaintiff’s Complaint describes three injuries that the 2007
Guidance inflicted on the organization. First, the FHWA’s failure to use notice-and-comment
rulemaking caused an “ongoing procedural and informational harm to Scenic America … by
depriving [it] of an opportunity to influence public policy related to digital billboards and
denying [it] access to information [about digital billboards].” Compl., ¶ 13. Second, the 2007
Guidance forced Scenic America “to pursue costly strategies to oppose … [the] proliferation [of
digital billboards].” Id., ¶ 16. As a result, Scenic America has had to divert funds from its other
scenic-conservation programs, including work on “cellphone tower placement, underground
wiring, historic train station restoration, parkland preservation, storefront and landscape
improvement, context sensitive road design, and scenic byways.” Opp. at 19. Third, Scenic
America claims that the Guidance “impaired [the group’s] … effectiveness in combating
billboard blight.” Compl., ¶ 17. While the first of these harms does not rise to the level of
injury-in-fact, the second two do.
As to the first harm, the Supreme Court and the D.C. Circuit have made pellucid that
“deprivation of a procedural right without some concrete interest that is affected by the
deprivation—a procedural right in vacuo—is insufficient to create Article III standing.”
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Summers v. Earth Island Institute, 555 U.S. 488, 496 (2009); Fund Democracy, LLC v. SEC,
278 F.3d 21, 27 (D.C. Cir. 2002). That includes the deprivation of the right to participate in
notice-and-comment rulemaking – the harm alleged here – which “in and of itself, does not
establish an actual injury.” Int’l Bhd. of Teamsters v. TSA, 429 F.3d 1130, 1135 (D.C. Cir.
2005). Instead, “[i]n order to make out a constitutionally cognizable injury, plaintiffs must
demonstrate that the allegedly deficient procedures implicate distinct substantive interests as to
which Article III standing requirements are independently satisfied.” Freedom Republicans, Inc.
v. Fed. Election Comm’n, 13 F.3d 412, 416 (D.C. Cir. 1994). The fact that the FHWA may have
violated the APA’s prescribed notice-and-comment procedures when it promulgated the
Guidance does not, standing alone, constitute a “concrete and particularized harm” to Scenic
America. Lujan, 504 U.S. at 560. As a result, Plaintiff may not establish organizational standing
on that basis.
The second two harms do describe substantive injuries to Scenic America, but
Defendants and Intervenor maintain that they are still insufficient to bestow organizational
standing on the group. To establish that it has suffered an injury-in-fact, an organizational
plaintiff must show a “concrete and demonstrable injury to [its] activities … more than simply a
setback to [its] abstract social interests.” Havens Realty, 455 U.S. at 379; see also National
Treasury Employees Union v. United States, 101 F.3d 1423, 1430 (D.C. Cir. 1996); American
Legal Foundation v. FCC, 808 F.2d 84, 91-92 (D.C. Cir. 1987). The D.C. Circuit, accordingly,
“has distinguished between organizations that allege that their activities have been impeded from
those that merely allege that their mission has been compromised.” Abigail Alliance, 469 F.3d at
133 (emphasis added). This distinction is not quite as clear as it appears, however, since the
same decision notes that “[f]or standing to be based upon injury to the organization’s activities
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there must … be a direct conflict between the defendant’s conduct and the organization’s
mission.” Id. (emphasis added).
Fortunately, other precedent explains this further and, in fact, is quite generous in
defining harm to an organizational plaintiff’s “activities.” Such a plaintiff is said to suffer an
injury-in-fact if it “undert[akes] expenditures in response to, and to counteract, the effects of [a]
defendant[’s] [challenged conduct].” Equal Rights Center v. Post Properties, Inc., 633 F.3d
1136, 1140 (D.C. Cir. 2011). In Havens Realty Corp. v. Coleman, for example, the Supreme
Court held that an organization promoting equality in housing had been injured by a real estate
company’s discriminatory practices because they had forced the organization “to devote
significant resources to identify and counteract the … racially discriminatory … practices” and
thus “frustrated the organization’s counseling and referral services, with a consequent drain on
resources.” 455 U.S. at 369, 379; see also Spann v. Colonial Village, Inc., 899 F.2d 24, 27 (D.C.
Cir. 1990). Similarly, the D.C. Circuit has recognized organizational standing where an equal-
employment group sued an employment agency for racial discrimination in hiring because the
discrimination “might increase the number of people in need of counseling…[and] reduce[] the
effectiveness of any given level of [the organization’s] outreach efforts.” Fair Emp’t Council of
Greater Washington, Inc. v. BMC Mktg. Corp., 28 F.3d 1268, 1276 (D.C. Cir. 1994); see also
Equal Rights Center, 633 F.3d at 1140-42.
Defendants and Intervenor note, however, that the law is also quite skeptical of alleged
organizational injuries related to lobbying and issue advocacy. For instance, in Center for Law
and Educ. v. Dep’t of Educ., 396 F.3d 1152 (D.C. Cir. 2005), an advocacy group claimed
standing to challenge Department of Education regulations related to federal oversight of State
education standards. The group had suffered “injury to its advocacy,” both because the DOE
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regulations did not adopt a national assessment methodology, which “forced [the group] to
address advocacy issues on an expensive State-by-State basis,” and because the regulations
“failed to require States to provide for public participation.” Id. at 1161-62 & n.4. But the D.C.
Circuit held fast the courthouse doors: “This Court has not found standing when the only ‘injury’
arises from the effect of the regulations on the organizations’ lobbying activities (as opposed to
the effect on non-lobbying activities).” Id. at 1161. The panel distinguished the case from
Havens Realty, where the challenged conduct had “perceptibly impaired [plaintiff’s] ability to
provide counseling and referral services for low- and moderate-income home-seekers…’ Here,
the only ‘service’ impaired is pure issue-advocacy – the very type of activity distinguished by
Havens.” Id. at 1162 (quoting Havens Realty, 455 U.S. at 379).
So on which side of the line does this case fall? On close analysis, it appears that Scenic
America has alleged a sufficient injury to challenge the 2007 Guidance. The Guidance harms
Plaintiff because its effect is to force the organization to combat an increased number of digital
billboards with a concomitant drain on the resources dedicated to other conservation programs.
Concrete examples of the activities that Scenic America undertakes to oppose digital billboards
include:
• Representation of individuals and groups before local zoning
boards to contest the construction of specific digital billboards.
See Opp., Exh. 19 (Declaration of Stephanie Kindt), ¶¶ 10, 11;
• Provision of “legal, policy, safety and procedural information”
in response to requests from Scenic America members and
other interested parties “to help them fight specific signs in
their communities.” Opp., Exh. 21 (Declaration of Margaret
Lloyd), ¶ 11; see also Opp., Exh. 20 (Declaration of Charley
Weeth), ¶ 9; Opp., Exh. 22 (Declaration of Mary Tracy), ¶¶ 11,
16;
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• Creation and management of websites and email-alert systems
related to digital billboards. See Tracy Decl., ¶ 15;
• Lobbying for local moratoriums on new billboard construction
and local ordinances banning digital billboards. See Lloyd
Decl., ¶¶ 12, 16; Weeth Decl., ¶ 15;
• Education of local officials about how to regulate and prohibit
digital billboards. See Lloyd Decl., ¶ 11; Weeth Decl., ¶¶ 8,
15; and
• Coordination of letter-writing and petition campaigns against
digital billboards. See Lloyd Decl., ¶ 12; Weeth Decl., ¶ 15.
While Scenic America could not sue simply on the ground that the Guidance forced the
group to spend more on lobbying against digital billboards in more states, see Center for Law
and Educ. v. Dep’t of Educ., 396 F.3d at 1162, only some of the above-listed activities can fairly
be categorized as the kind of “pure issue-advocacy” that would not suffice to confer
organizational standing. Id. The group’s other anti-billboard efforts – particularly its
participation in local zoning board meetings to challenge specific billboards, its sharing of
information in response to requests from affected communities, and its management of websites
and email-alert systems – are much more like the counseling and referral services provided by
the equality organizations that successfully established standing. See Havens Realty Corp., 455
U.S. at 369, 379; Spann, 899 F.2d at 27; Fair Emp’t Council, 28 F.3d at 1276; Equal Rights
Center, 633 F.3d at 1140-42. With each new state regulation amended in the wake of the 2007
Guidance, Scenic America must spend more resources by, for example, appearing at zoning
board meetings to challenge particular digital billboards and educating local communities about
the legal, policy, safety, and administrative issues related to the different signs. That harm
constitutes an injury-in-fact.
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Defendants and Intervenor offer one last argument against Scenic America’s alleged
injury by noting that the D.C. Circuit has expressed hostility toward organizational standing
premised on the “harm” of having to litigate, or prepare to litigate, against challenged conduct.
See Equal Rights Center, 633 F.3d at 1140-41; Fair Emp’t Council, 28 F.3d at 1276-77. “Were
an association able to gain standing merely by choosing to fight a policy that is contrary to its
mission, the courthouse door would be open to all associations.” Long Term Care Pharmacy
Alliance v. UnitedHealth Group, Inc., 498 F. Supp. 2d 187, 192 (D.D.C. 2007). But, as just
explained, Scenic America’s efforts to combat the construction of digital billboards are not
limited to lobbying and litigation. And even if those efforts were purely litigation based, they
would be separate lawsuits from the one at hand, not the “self-inflicted” simulacrum of harm that
the D.C. Circuit rejected when it dismissed claims of standing founded on the expense of the
plaintiff’s lawsuit itself. Fair Employment Council, 28 F.3d at 1276-77; see also Equal Rights
Center, 633 F.3d at 1140-42.
2. Causation
Having established an “injury-in-fact,” Scenic America next must show that its injury is
“fairly trace[able] to” the 2007 Guidance. Lujan, 504 U.S. at 560-61. Plaintiff describes the
chain of causation as follows: Prior to the Guidance, most States did not allow digital billboards
because they did not believe that the language of their FSAs or the decisionmakers at the FHWA
would permit such proposals. After the Guidance, States may now successfully petition the
FHWA to amend their regulations to allow the construction of such billboards because the
agency has made clear its position that doing so does not violate their FSAs. See Opp. at 14. As
a result, Scenic America now must expend more resources to combat the spread of digital
billboards along the nation’s highway system.
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Of course, as this theory of the case makes clear, it is the States’ decisions to amend their
regulations to permit the construction of digital billboards that causes Scenic America’s harm,
not the 2007 Guidance that merely allowed them to do so. Although the burden is formidable,
see Nat’l Wrestling Coaches Ass’n v. U.S. Dep’t of Educ., 366 F.3d 930, 942 (D.C. Cir. 2004), a
plaintiff may establish standing based on the actions of third parties, so long as there is
“substantial evidence of a causal relationship between the government policy and the third-party
conduct, leaving little doubt as to causation.” Americans for Safe Access v. Drug Enforcement
Admin., 706 F.3d 438, 446 (D.C. Cir. 2013). In this case, Scenic America has submitted
documentary evidence indicating that, in 2006, the FHWA Division Office for Texas responded
to an inquiry from the Texas Department of Transportation by explaining that the language of
that state’s FSA barred it from permitting the construction of digital billboards. See Opp., Exh.
13 (FHWA Texas Division Letter) at 2. Other evidence indicates that the FHWA Division
Office for Kentucky took a similar position before the 2007 Guidance was issued. See Opp.,
Exh. 16 (FHWA Kentucky Division Email) at 3-4. After the Guidance, however, Texas and all
the other States that did not permit digital billboards before 2007 no longer face this obstacle to
permitting the construction of digital billboards in their territory. See, e.g., Lloyd Decl., ¶¶ 6-9
(explaining that Texas began to permit digital billboards along the interstate highway after the
issuance of the 2007 Guidance). The harm that Scenic America suffers by having to expend
more resources to fight against the spread of digital billboards is therefore “attributable to” the
2007 Guidance. Block v. Meese, 793 F.2d 1303, 1308 (D.C. Cir. 1986).
Defendants and Intervenor make three additional arguments as to why the Guidance is
not the cause of Scenic America’s injury, but all three fail to persuade. First, they note that some
FHWA Division Offices approved state proposals to permit digital billboards before the issuance
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of the 2007 Guidance. Of course, that observation does not change the fact that other Division
Offices did not approve such proposals. At least as to those Offices, the Guidance is the cause of
Scenic America’s harm.
Second, they contend that the Guidance leaves Division Offices with the discretion to
reject States’ proposals for allowing digital billboards. The Guidance states that “[digital
billboards] are acceptable for conforming off-premise signs, if found to be consistent with the
FSA and with acceptable and approved State regulations, policies[,] and procedures.” 2007
Guidance at 2 (emphasis added). But that emphasis misses the entire point of the Guidance.
While Division Offices do retain discretion to reject States’ digital-billboard proposals, the
Guidance also makes clear that digital billboards “do not violate a[n] [FSA] prohibition against
‘intermittent’ or ‘flashing’ or ‘moving’ lights,” id. (emphasis added), meaning that Division
Offices, such as the one in Texas, are instructed not to reject proposals on that basis. The
Guidance therefore unquestionably eases the path to approval for States’ digital-billboard
proposals.
Finally, Defendants and Intervenor note that the HBA does not compel States to abide by
their FSAs, but merely imposes a 10% cut in federal highway funds if they disobey, see 23
U.S.C. § 131(b); 23 C.F.R. § 750.705(b), suggesting that there is no causal connection between
FHWA action and the existence of digital billboards. Yet this understates the influence of
federal policy on the matter and overstates the requirements for standing. No State has ever
dared violate its FSA, probably because the cut in federal highway funding would have a
significant effect. Nor does the D.C. Circuit require that a challenged government policy compel
a third party to act in order to establish a causal relationship. See National Parks Conservation
Ass’n v. Manson, 414 F.3d 1, 6 (D.C. Cir. 2005) (plaintiff had standing to challenge federal
15
agency’s withdrawal of an adverse-impact letter, which led state agency to issue power plant
permit, because “[h]ad [the federal agency] not withdrawn its adverse impact report, the [state
agency] would have been bound to consider that report before proceeding with its permitting
decision and, crucially, would have been required to justify its decision in writing if it disagreed
with the federal report”). Here, “federal regulations and [state outdoor-advertising regulations]
are intertwined such that the challenged federal action ‘alters the legal regime to which the
[local] agency action is subject.’” Id. (quoting Bennett v. Spear, 520 U.S. 154, 169 (1997))
(second alteration in original). That is enough to establish causation.
3. Redressability
The last requirement for establishing standing to sue is that Scenic America must show
that a favorable decision in this Court – namely, vacating the 2007 Guidance – would redress its
injuries. See Lujan, 504 U.S. at 560-61. According to Scenic America, victory would force the
FHWA to resurrect its pre-Guidance policy that digital billboards violate FSA prohibitions on
flashing, intermittent, and moving lights. At the very least, vacating the Guidance would return
the FHWA to agnosticism on the question, leaving Division Offices free to draw their own
conclusions. As a result, Scenic America could “restore its broader scenic conservation
platform” because it would not have to police as intensively new digital-billboard construction
around the country. Opp. at 23.
Defendants and Intervenor once again offer a triad of arguments why Scenic America’s
claimed injury is not redressable, but none proves convincing. First, they again emphasize that
some Division Offices approved States’ digital-billboard proposals before the 2007 Guidance.
Again, however, other Division Offices did not, and so vacating the Guidance would at least
affect those Offices.
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Second, they note that the Guidance does not require Division Offices to approve State
digital-billboard proposals, instead leaving them the discretion to give approval “based upon all
relevant information.” 2007 Guidance at 2. Nevertheless, as explained earlier, the Guidance did
remove one important basis on which a Division Office might otherwise reject a proposal: that it
violated an FSA’s ban on flashing, intermittent, or moving flights. Restoring that basis – clearly
the policy of at least the Texas Division Office prior to the issuance of the Guidance – would
help relieve the burden on Scenic America in its fight against digital billboards.
Finally, Defendants and Intervenor claim that vacating the Guidance would not redress
Scenic America’s injury because existing digital billboards would likely remain standing and
new digital billboards would continue to pop up along non-federal roads. Be that as it may,
Scenic America would still benefit from a win in this suit because the group would not have to
fight against the erection of new billboards along interstate highways in States that have not yet
approved their construction.
In sum, Scenic America has satisfied the minimum standing requirements of Article III
by showing that the 2007 Guidance caused it to suffer an injury-in-fact that can be redressed by a
favorable judgment in this lawsuit. There is thus no jurisdictional bar to its prosecution of this
lawsuit. Yet Defendants and Intervenor have another arrow in their quiver: they assert that there
is no final agency action for Plaintiff to challenge in this case. That is the issue to which the
Court will now turn.
B. Final Agency Action
The APA provides a vehicle for plaintiffs to challenge “[a]gency action made reviewable
by statute” and “final agency action for which there is no other adequate remedy in a court.” 5
U.S.C. § 704. Because the HBA only permits judicial review of FHWA decisions in specific
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circumstances not present here, see 23 U.S.C. § 131(l) (permitting States to seek judicial review
of an FHWA order withholding federal highway funds), Scenic America may only challenge the
Guidance if it constitutes “final agency action.” Defendants and Intervenor argue that it does
not; if they are correct, the Court must dismiss the Complaint. See, e.g., Holistic Candlers and
Consumers Ass’n v. FDA, 664 F.3d 940, 943 (D.C. Cir. 2012).
The D.C. Circuit uses a two-part test to determine if agency action is final. First, the
action must reflect the “consummation of the agency’s decision-making process” rather than a
“tentative or interlocutory” step in that process, and second, the action must be one by which
“rights or obligations have been determined or from which legal consequences will flow.”
Center for Auto Safety v. National Highway Traffic Safety Admin, 452 F.3d 798, 806 (D.C. Cir.
2006) (quoting Bennett v. Spear, 520 U.S. 154, 178 (1997)) (internal quotation marks omitted).
The Court will address each part of the test in turn.
It is clear that the 2007 Guidance reflects the “consummation of the [FHWA]’s decision-
making process” on the issue of whether digital billboards violate FSA prohibitions on
“flashing,” “intermittent,” or “moving” lights. Id. The Guidance states plainly, and in bold, that
“Proposed laws, regulations, and procedures that would allow permitting CEVMS subject to
acceptable criteria (as described below) do not violate a prohibition against ‘intermittent’ or
‘flashing’ or ‘moving’ lights.” 2007 Guidance at 1-2 (emphasis added). Nothing else in the
document suggests that the FHWA’s conclusion on this point is “tentative, open to further
consideration, or conditional on future agency action.” City of Dania Beach, Fla. v. FAA, 485
F.3d 1181, 1188 (D.C. Cir. 2007). Although the Guidance states that the FHWA “may provide
further guidance in the future as a result of additional information received through safety
research, stakeholder input, and other sources,” 2007 Guidance at 1, it is clear that the agency
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“has completed its decisionmaking process” as least as to whether digital billboards violate FSA
light prohibitions. Franklin v. Massachusetts, 505 U.S. 788, 797 (1992). The fact that the
Guidance “clarifies” an earlier memorandum from 1996 related to non-digital “tri-vision signs,”
2007 Guidance at 1-2, and that it leaves to Division Offices the final decisions on particular State
digital-billboard proposals, does not detract from the conclusiveness of the document’s central
premise.
Moving on to the second part of the inquiry, the D.C. Circuit has laid out a four-factor
analysis to determine whether agency action has “legal consequences.” See Center for Auto
Safety, 452 F.3d at 806-07. Those four factors are: (1) the agency’s own characterization of the
action; (2) whether the action was published in the Federal Register or the Code of Federal
Regulations; (3) whether the action has binding effects on the agency or has instead genuinely
left the agency and its decisionmakers free to exercise discretion; and (4) whether the action
imposed any rights or obligations or otherwise bound private parties. Id. These factors are not
cumulative, and a case may turn on the analysis of just one factor. See, e.g., National Resources
Defense Council v. EPA, 643 F.3d 311, 319-20 (D.C. Cir. 2011).
The second and fourth factors are relatively straightforward in this case. It is undisputed
that the Guidance was not published in the Federal Register or Code of Federal Regulations and
that it did not impose any legal rights or obligations on private parties. The first factor is slightly
more difficult. The Guidance states that it is “not intended to amend applicable legal
requirements,” id. at 4, but this is “boilerplate” language that should not distract from the rest of
the document. Appalachian Power Co. v. EPA, 208 F.3d 1015, 1023 (D.C. Cir. 2000).
Elsewhere, the Guidance explains that it is intended to “provide information to assist the
Division[] [Offices] in evaluating [digital-billboard] proposals and to achieve national
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consistency given the variations in FSAs, State law, and State regulations, policies[,] and
procedures.” 2007 Guidance at 4. While the first part of that statement makes the Guidance
seem purely informational, the latter reference to “achiev[ing] national consistency” suggests
that the document is intended to have a coordinating effect on Division Office decisionmaking,
as does its instruction that Offices “should re-evaluate their position” on digital billboards based
on the contents of the memorandum. Id. at 1, 4. This factor thus ultimately tips in favor of
Plaintiff.
The third factor – whether the Guidance has a binding effect on the agency – is the most
complicated. Defendants and Intervenor emphasize that although the Guidance reflects the
FHWA’s perspective on the proper interpretation of certain FSA language, the final decisions on
whether to approve particular digital-billboard proposals remain within the discretion of
individual Division Offices. Prior to the Guidance, some Division Offices approved digital-
billboard proposals while others did not, and after the Guidance, Offices remain free to either
accept or reject States’ digital-billboard proposals “based upon all relevant information.” Id. at
2.
The circumstances of this case are almost identical to those in Natural Resources Defense
Council, 643 F.3d 311. That case involved an EPA “Guidance” issued to the agency’s Regional
Air Division Directors, who were responsible for approving States’ proposals for the
implementation of certain federally mandated ozone regulations. See id. at 317. The document
said that Directors should allow States the flexibility either to adopt the mandated ozone program
or to propose an alternative program. See id.The D.C. Circuit held that this EPA Guidance was final agency action. Although the
EPA “insist[ed] that the Guidance changed nothing because prior to its issuance, a regional
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director could have considered an alternative [program],” the panel was swayed by the fact that
“that director [had] also retained discretion, now withdrawn … to reject the alternative solely for
failing to comply with [the statute’s mandated regulations].” Id. at 319. In other words, “[p]ost-
Guidance … the director [could] no longer reject a plan on the … ground” that “alternatives were
categorically unacceptable.” Id. at 320. Because “[t]he permissibility of alternative[] [programs]
is now a closed question,” the panel concluded that “the Guidance binds EPA regional directors
and thus qualifies as final agency action.” Id.The 2007 Guidance works in much the same way. Prior to its issuance, the FHWA’s
Division Offices, like the EPA’s Regional Air Division Directors, “could have considered” the
possibility that States’ digital-billboard proposals did not violate FSA bans on moving, flashing,
or intermittent lights. Id. at 319. Yet, again like the EPA’s Division Directors, the Offices “also
retained discretion, now withdrawn” to reject such proposals “solely” for violating those
provisions. Id. Now that the 2007 Guidance has been issued, the Division Offices “may no
longer reject” a State’s digital-billboard proposal on the ground that digital billboards are
“categorically unacceptable” under FSA moving, flashing, or intermittent light prohibitions. Id.
at 320. The conclusion is inescapable that under the reasoning of Natural Resources Defense
Council, the 2007 Guidance limits agency discretion and therefore has a binding effect that
makes it final agency action.
Unhappy with this binding precedent, Defendants and Intervenor instead attempt to
compare this situation to the one in Center for Auto Safety. In that case, the D.C. Circuit held
that a letter sent by the NHTSA to vehicle manufacturers outlining the circumstances under
which the agency would approve a recall did not constitute final agency action because the letter
merely expressed the agency’s “view of what the law requires.” 452 F.3d at 808 (internal
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quotation marks omitted). In the same way, according to Defendants and Intervenor, the 2007
Guidance simply reflects the FHWA’s view on the meaning of particular FSA language and
leaves the actual decision making to individual Division Offices.
But that analogy expresses only half the story. The 2007 Guidance does not just
announce the FHWA’s vision of the law – that digital billboards are not “flashing,”
“intermittent,” or “moving” lights; it also commands Division Offices to turn that vision into
reality. While “NHTSA’s position … [was] nothing more than a privileged viewpoint in the
legal debate,” id., the 2007 Guidance ends any debate on whether the FSAs’ dynamic-light
prohibitions bar digital billboards. The importance of this distinction was made clear in AT&T
Co. v. EEOC, 270 F.3d 973 (D.C. Cir. 2001), a case relied on by Center for Auto Safety, which
involved the question of whether an EEOC letter stating that AT&T had violated anti-
discrimination law constituted final agency action. Id. at 976. The D.C. Circuit explained:
[T]here are … particular circumstances in which an agency’s
taking a legal position itself inflicts injury or forces a party to
change its behavior, such that taking that position may be deemed
final agency action, see Appalachian Power [Co. v. EPA, 208 F.3d
1015, 1022 (D.C. Cir. 2000)] (holding that “a Guidance” issued by
the Environmental Protection Agency is final because it represents
a settled position that the agency “plans to follow in reviewing
State-issued permits, a position it will insist State and local
authorities comply with in setting the terms and conditions of
permits issued to petitioners, [and] a position EPA officials in the
field are bound to apply”), [but] this is not such a case.…Whereas
“EPA officials in the field [were] bound to apply” the EPA
Guidance, id., … the EEOC is not bound to sue AT&T.
Id. at 975-76 (emphasis added). Similarly, while Division Offices are bound to apply the 2007
Guidance’s interpretation of FSA language, the NHSTA was not bound to enforce recalls in
accordance with the “general” policy it expressed in its letter. Center for Auto Safety, 452 F.3d
22at 810. The two documents therefore do not have equivalent legal effects. Natural Resources
Defense Council, not Center for Auto Safety, is the controlling case here.
In a final effort to derail the litigation, Defendants seize on the APA’s limitation of
judicial review to final agency action “for which there is no other adequate remedy in a court.” 5
U.S.C. § 704. They argue that this language vitiates Scenic America’s claim because state courts
are available for the group to individually challenge each State’s decision to permit digital
billboards. That interpretation of § 704, however, is contrary to the one adopted by the Supreme
Court, which has explained that “adequate remedy” refers only to situations “where the Congress
has provided special and adequate review procedures” – for instance, where “statutes creating
administrative agencies defined the specific procedures to be followed in reviewing a particular
agency’s action.” Bowen v. Massachusetts, 487 U.S. 879, 903 (1988). The Court has also
emphasized that the provision “should not be construed to defeat the central purpose of providing
a broad spectrum of judicial review of agency action.” Id. Under the Supreme Court’s
interpretation, therefore, state court proceedings would not qualify as an “adequate remedy” that
deprives Scenic America of the right to challenge the Guidance in federal court.
The main case that Defendants have mustered in support of their reading of § 704 dealt
with the very different scenario in which a plaintiff challenged a government agency’s failure to
enforce State compliance with federal law. See Def. Reply at 17-20 (citing Coker v. Sullivan,
902 F.2d 84, 86-87 (D.C. Cir. 1990)). There, the D.C. Circuit stressed that “the APA does not
usually provide a right to judicial review of an agency’s failure to enforce statutory provisions
entrusted to agency supervision” and, in that unique context, observed, “[T]he APA specifically
provides that, if other remedies are adequate, federal courts will not oversee the overseer.” Id. at
88-89 (citing Heckler v. Chaney, 470 U.S. 821, 831 (1985)). The other cases Defendants cite
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similarly involved federal agencies’ failure to enforce antidiscrimination laws against third
parties. See, e.g., Wash. Legal Foundation v. Alexander, 984 F.2d 483, 485 (D.C. Cir. 1993);
Women’s Equity Action League v. Cavazos, 906 F.2d 742, 751 (D.C. Cir. 1990); Council of and
for the Blind of Delaware County Valley, Inc. v. Reagan, 709 F.2d 1521, 1531 (D.C. Cir. 1983);
see also El Rio Santa Cruz Neighborhood Health Center, Inc. v. U.S. Dep’t of Health and Human
Services, 396 F.3d 1265, 1271 (D.C. Cir. 2005) (“[T]his court … [has] embraced the doctrinal
view disfavoring suits directly against federal enforcement authorities administering anti-
discrimination laws, holding that remedies against the discriminating entity were … adequate so
as to preclude APA review.”). Here, where Scenic America’s challenge is not to the FHWA’s
failure to enforce the law but rather to its interpretation of the law, the Court believes it better to
stick with the traditional “adequate remedy” inquiry by “focus[ing] on whether [the] statute
provides an independent cause of action or an alternative review procedure.” El Rio Santa Cruz,
396 F.3d at 1270. As Defendants do not allege that HBA provides either in this case, Scenic
America may bring its claim under the APA.
IV. Conclusion
For the foregoing reasons, the Court will deny Defendants’ and Intervenor’s Motions to
Dismiss Plaintiff’s Complaint. A separate Order consistent with this Opinion will be issued this
day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: October 23, 2013
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