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

United States District Court, District of Columbia

October 23, 2013


Page 171


For UNITED STATES DEPARTMENT OF TRANSPORTATION, RAY LAHOOD, Sued in his official capacity only as Secretary of Transportation, FEDERAL HIGHWAY ADMINISTRATION, VICTOR MENDEZ, In his official capacity only as Administrator of FHWA, Defendants: Patrick D. Davis, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Civil Division, Federal Programs Branch, Washington, DC.

For OUTDOOR ADVERTISING ASSOCIATION OF AMERICA, INC., Intervenor Defendant: Kannon K. Shanmugam, LEAD ATTORNEY, Allison B. Jones, WILLIAMS & CONNOLLY LLP, Washington, DC.


JAMES E. BOASBERG, United States District Judge.

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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 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,

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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., § 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

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Changeable Message Signs" to its regional Division Offices. See id. The Guidance instructed that Offices 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 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, 342 U.S.App. D.C. 268 (D.C. Cir. 2000) (quoting Schuler v. United States, 617 F.2d 605, 608, 199 U.S.App. D.C. 23 (D.C. Cir. 1979)) (internal citation omitted); see also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253, 365 U.S.App. D.C. 270 (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, 94 S.Ct. 1683, 40 L.Ed.2d 90 (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, 236 U.S.App. D.C. 92 (D.C. Cir. 1984) (same). The Court need not accept as true, however, " a legal conclusion couched as a factual allegation,"

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nor an inference unsupported by the facts set forth in the Complaint. Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 193, 372 U.S.App. D.C. 335 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (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 Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); U.S. Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24, 343 U.S.App. D.C. 386 (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, 366 U.S.App. D.C. 89 (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, 297 U.S.App. D.C. 406 (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, 118 S.Ct. 1003, 140 L.Ed.2d 210 (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, 114 S.Ct. 996, 127 L.Ed.2d 308 (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 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, 372 U.S.App. D.C. 335 (D.C. Cir. 2006), which suggests that sovereign immunity ...

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