Petition for Writ of Certiorari — National Park Hospitality Association v. Department of the Interior

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No. OFFICE OF THE OLERK

Jn the Supreme Court of the Gnited States

NATIONAL PARK HOSPITALITY ASSOCIATION,

Petitioner,

UNITED STATES DEPARTMENT OF THE INTERIOR, ET AL.

Respondents.

On Petition for a Writ of Certiorari to

the United States Court of Appeals

for the District of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

KENNETH S. GELLER

Counsel of Record

RICHARD B. KATSKEE

DAVID M. GOSSETT

Mayer, Brown, Rowe & Maw

1909 K Street, NW

Washington, DC 20006

(202) 263-3000

Counsel for Petitioner

02 196 Aue 62002

|.)

QUESTION PRESENTED

Whether the Contract Disputes Act of 1978, 41 U.S.C.

§§ 601-613, applies to contracts between the National Park

Service and private parties for the development, operation,

and maintenance of concessions, such as restaurants, lodges,

and gift shops, in the national parks.

i as es

RULE 14.1(b) STATEMENT

In addition to the National Park Hospitality Association,

plaintiffs/appellants in the court of appeals (in four consoli-

dated cases) were Amfac Resorts L.L.C. (since renamed

Xanterra Parks and Resorts L.L.C.), ARAMARK Sports and

Entertainment Services, Inc., and Hamilton Stores, Inc. In

addition to the United States Department of the Interior, re-

spondents are Gale Norton, Secretary of the Interior, Fran P.

Mainella, Director of the National Park Service, and Dela-

ware North Park Services, Inc. (which intervened as a defen-

dant in this and one of the consolidated cases).

RULE 29.6 STATEMENT

The National Park Hospitality Association (“NPHA”) is a

non-profit trade association that has no parent corporations or

stock. The NPHA represents concessioncrs who operate con-

cessions, such as restaurants, lodges, recreational services,

and gift shops, in the national parks.

TABLE OF CONTENTS

Page

QUESTION PRESENTED .............:c:scsccccececececoccesesesesecsseseeeses I

RULE 14.1(b) STATEMENT .00.0.......cccccccccccccscsescscerseseevseseees li

RULE 29.6 STATEMENT .............cccccccccesescecececcecersceseceeceeeees ii

TABLE OF AUTHORITIES. ................cccccccceccccececesescsesessees iv

ce l

ET ae l

STATUTORY AND REGULATORY PROVISIONS

ES Ee l

I aa 2

REASONS FOR GRANTING THE PETITION ................... 8

A. The Decision Below Is Clearly Incorrect And

Is Contrary To The Views Of The

Comptroller General And The Department Of

Interior’s Own Board Of Contract Appeals. .............. 8

B. The Decision Below Creates A Conflict In

The Circuits On Whether The Contract

Disputes Act Applies To Concessions

ae 16

C. The Issue Presented Here Is Of Substantial

Practical Importance. ...............ccccccccccsseeeeseeeeeeeeereeeees 18

ee 21

(IIT)

TABLE OF AUTHORITIES

Page(s)

CASES

Canadian Aviator, Ltd. v. United States,

es Se cniteitnnnciciniininieticiiinmamniaainmmmrnaientinnagss 12

Grunley Constr. Co., ENGBCA No. 6327, 99-1 BCA

§ 30,138, 1998 WL 835156 (Nov. 20, 1998) ................ 11

Harry Pohl KG, ASBCA No. 51523, 01-1 BCA

7 31,329, 2001 ASBCA LEXIS 40 (Feb. 28,

Home Entm't, Inc., ASBCA No. 50791, 99-2 BCA

§ 30,550, 1999 ASBCA LEXIS 126 (Aug. 23,

STE serccsntenntsienaiiniiadinisniihnaniaitiniieiniitaiitiantantiaibsiaabisetianinians 20

J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred

Py ER 12

Libra Eng'g Inc., NASABCA Nos. 1182-17 et ai.,

1984 WL 13526 (July 13, 1984) 200.0... ccceeeeeeeeeeeeee 11

Nat'l Park Concessions, Inc., IBCA No. 2995, 94-3

BCA § 27,104, 1994 WL 462401 (Aug. 18, 1994)....... 12

Niko Contracting Co. v. United States,

39 Fed. Cl. 795 (1997), aff'd, 173 F.3d 437

Ga, Gao. CD Ga recnctenscrcscssscccssnsicnsesvscsssssenseseces 11

Oroville-Tonasket Irrigation Dist. v.

United States, 33 Fed. Cl. 14 (1995) .............-.0++ 4, 18, 20

Pound v. United States, No. 94-496C,

slip op. (Fed. Cl. Aug. 30, 1996)...........-...c00s++ 15, 16, 20

R & R Enters., IBCA No. 2417, 89-2 BCA

q 21,708, 1989 WL 27790 (Mar. 24, 1989)...............0-+- 12

ie me + -

TABLE OF AUTHORITIES -— continued

Page(s)

Senor Tenedor, S.A. de C.V., ASBCA Nos. 48502

et al, 97-2 BCA 4 29,192, 1997 ASBCA LEXIS

ED Cis BU connesnnsensnsnssemmmsemnennsnsessnemesemmnaente 20

Starfleet Marine Transp., Inc., B-290181,

2002 U.S. Comp. Gen. LEXIS 90 (July 5,

Sirti icaasahiathdeteincasatipiueieniaiienatatteadeaiaaiaeininenbasatashriatiaiainiibi intact 14, 15

Stephen Sloan Marine Corp., B-234219, 89-1

eR 13

Total Med. Mgmt., Inc. v. United States,

104 F.3d 1314 (Fed. Cir. 1997)................... 16, 17, 18, 20

Total Procurement Services, Inc., B-255934.3,

1994 WL 450445 (Aug. 16, 1994) o.oo eccccecceeeeees 13

United States v. Rodgers, 466 U.S. 475 (1984) ..........cc0000+ 12

United States v. Utah Constr. & Mining Co.,

ET irtecrsennuunenebeninienmennnine 20

Watch Hill Concessions Inc., IBCA No. 5284-2000,

01-1 BCA 4 31,298, 2001 WL 170911 (Feb. 16

Ee eee Ee 12, 13

West Coast Copy, Inc.; B-254044.2,

1993 WL 476970 (Nov. 16, 1993) ..........c.ccccceesecesereeees 14

Yosemite Park & Curry Co. v. United States,

$82 F.2d 552 (Ct. Cl. 1978)...............00..00.... 11, 16, 17, 18

YRT Services Corp. v. United States, 28 Fed. Cl. 366

Sissies erase etderientinaasiaaaia 13, 15

STATUTES, RULES AND REGULATIONS

An Act to Establish a National Park Service,

Oe +

TABLE OF AUTHORITIES -— continued

Page(s)

SP OE consenenssennsnnnnnnennmmanmennerenenmnnnenieanins passim

National Parks Service Concessions Policy Act,

Pub. L. No. 89-249, 79 Stat. 969 (1965) ........0..0..... 2,5

ee 5

National Parks Omnibus Management Act of 1998,

Pub. L. No. 105-391, 112 Stat. 3497 00. ee eceeeeeees 5

Ses UTI cintrinenementennnnmmnmnnneeemaieeneei passim

eee Sir UNE cisdernsieeesventintenmnemnenstantenenncenmmemsiasts 6, 9,17

is Or ee cdinrecenseinsensernseenenmiantesemenitneninanentinnies 10

Ee l

Competition In Contracting Act of 1984,

Pub. L. 98-369, 98 Stat. 1175 (codified at 31

U.S.C. §§ 3551-3556, 41 U.S.C. § 253)... ce cececeeeeeee 13

I 15

ee ee I cerrettenetevsintcieinednmnmmanninnenniannmensnaien 15

ie EE cnasnrinnesrentnennsnenuninnenininnnnnemeienteaienn 12

ee 12

Contract Disputes Act, 41 U.S.C. § 601-613 ............... passim

Op le 0 cciennsccnenieentansnernnesensnnenteneanemeincnss passim

ey es Se crcnnnnsrennenanenmncenienen 3

ls Oe crmetgrerenncnnreneeemmeneeinimnnns 3

GD ie Oe cneeesnnnemnnnmemene 3, 7,13

GB ie Oe crrneerrememnrsinienmenginenens 4,13

RR APT LA a 4

Se ee eee

vil

TABLE OF AUTHORITIES — continued

Page(s)

Concession Contracts, 64 Fed. Reg. 20,630

(April 17, 2000) (codified at 36 C.F.R. pt. 51)........ 4, 5,6

8 Re 2, 6, 7, 12

Standard Concession Contract, 65 Fed.

Reg. 26,052 (May 4, 2000).............ccccccsseeeeeeeeeeeees 6,9, 10

MISCELLANEOUS

aie incited iaeectleaniniiins 3

C. Kipps, T. KINDNESS, & C. HAMRICK, The Contract

Disputes Act: Solid Foundations, Magnificent

System, 28 PuB. CONT. L.J. 585 (1999) .............000 19, 20

Encourage Contracting Out of Federal Services: A

Legislative Hearing on H.R. 3832, The Services

Acquisition Reform Act of 2002 (SARA), Before

the Subcomm. on Technology and Procurement

Policy, House Comm. on Gov't Reform, 107th

Oe 18

S. REP. No. 89-765, 1965 U.S.C.C.A.N. 3489.........:cccccseeeees 5

S. REP. No. 95-1118, 1978 U.S.C.C.A.N.

Fae ceserensnimnaserteeennmemenseenennuennsemmmenneonmeenans 3, 19, 21

- ~~ ame

PAE tens Mw tm

PETITION FOR A WRIT OF CERTIORARI

Petitioner, the National Park Hospitality Association

(“NPHA”), respectfully petitions for a writ of certiorari to

review the judgment of the United States Court of Appeals

for the District of Columbia Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, 1a-34a)

is reported at 282 F.3d 818. The Memorandum Opinion of

the district court addressing the issue before this Court (App.,

infra, 35a-92a) is reported at 142 F. Supp. 2d 54. Other opin-

ions issued by the district court are reported at 143 F. Supp.

2d 7 and 150 F. Supp. 2d 96.

JURISDICTION

The judgment of the court of appeals was entered on

March 1, 2002, and a timely petition for rehearing was de-

nied on May 8, 2002 (App., infra, 93a-94a). The jurisdiction

of this Court is invoked under 28 U.S.C. § 1254(1).

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

Section 3(a) of the Contract Disputes Act of 1978, 41

U.S.C. § 602(a), provides:

(a) Unless otherwise specifically provided herein,

this chapter applies to any express or implied con-

tract (including those of the nonappropriated fund

activities described in sections 1346 and 1491 of Ti-

tle 28) entered into by an executive agency for —

(1) the procurement of property, other than real

property in being;

(2) the procurement of services;

(3) the procurement of construction, alteration,

repair or maintenance of real property; or,

(4) the disposal of personal property.

36 C.F.R. § 51.3 provides in relevant part:

A concession contract (or contract) means a binding

written agreement between the Director [of the Na-

tional Park Service] and a concessioner entered un-

der the authority of this part or the [National Park

Concessions Policies Act of 1965, Pub. L. No. 89-

249] that authorizes the concessioner to provide cer-

tain visitor services within a park area under speci-

fied terms and conditions. Concession contracts are

not contracts within the meaning of 41 U.S.C. 60] et

seq. (the Contact Disputes Act) and are not service

or procurement contracts within the meaning of

statutes, regulations or policies that apply only to

federal service contracts or other types of federal

procurement actions.

(second emphasis added).

STATEMENT

This case concerns the applicability of the Contract Dis-

putes Act of 1978 (“CDA”) to concessions contracts, and in

particular to contracts between the National Park Service

(“NPS”) and the private concessioners who contract to pro-

vide visitor services and to operate and maintain facilities in

the national parks. The language of the CDA broadly covers

all contracts entered into by a federal agency for the pro-

curement of personal property, services, or the repair and

maintenance of real property. Despite the CDA’s breadth, the

NPS has asserted by regulation that the statute does not apply

to its concessions contracts. In upholding that regulation, the

District of Columbia Circuit disagreed with the Federal Cir-

cuit’s interpretation of the CDA and ignored the views of the

Department of the Interior’s own Board of Contract Appeals.

Furthermore, the Comptroller General has specifically ques-

tioned the D.C. Circuit’s reasoning.

el el Eo A

As Congress recognized when it passed the CDA, “[h]ow

[government] procurement functions has a far-reaching im-

pact on the economy of our society and on the success of

many major Government programs.” S. REP. NO. 95-1118, at

4, 1978 U.S.C.C.A.N. 5235, 5238. Given the importance of

the CDA to government contracting — and the court of ap-

peals’ cramped interpretation of the scope of this important

federal statute — review by this Court is plainly warranted.

1. The Contract Disputes Act of 1978, Pub. L. No. 95-

563, 92 Stat. 2383, 41 U.S.C. §§ 601-613, on its face applies

to all government contracts for “the procurement of services”

or “the procurement of construction, alteration, repair or

maintenance of real property.” 41 U.S.C. § 602(a)(2)-(3).

The statute was designed to replace a system of dispute reso-

lution procedures based on “[t]he predilections of different

agencies” (S. REP. No. 95-1118, at 3) that was “often too ex-

pensive and time consuming for the efficient and cost-

effective resolution of small claims and, on the other hand,

often fail{[ed] to provide the procedural safeguards and other

elements of due process that should be the rights of litigants”

(id. at 4). Thus, the CDA has “broad application in order to

unify the diverse and often inconsistent procedures presently

existing among the many procuring agencies.” Jd. at 17.

The CDA “provides a fair, balanced, and comprehensive

statutory system of legal and administrative remedies in re-

solving Government contract claims.” /d. at 1; see also H.R.

REP. No. 95-1556, at 5. Under the CDA, parties contracting

with the government have a number of important procedural

and substantive rights. The CDA establishes that all claims

“relating to” a contract covered by the CDA are subject to the

Act’s administrative dispute processes. See 41 U.S.C.

§ 605(a). Those processes provide contractors with neutral

arbiters to review decisions reached by the agency’s contract-

ing officer. In particular, the contractor has the choice either

to appeal any decision to the agency’s “Board of Contract

Appeals” (see 41 U.S.C. §§ 606, 607)) or to remove the mat-

ter to the Court of Federal Claims (see 41 U.S.C.

§ 609(a)(1)), which is statutorily required to review the

agency’s decision “de novo” (41 U.S.C. § 609(a)(3)). Sub-

stantively, a major advantage of the CDA over the hodge-

podge of dispute-resolution schemes it replaced is that

contractors are entitled to interest on any amount found due

to them on their claims. See 41 U.S.C. § 611; Oroville-

Tonasket Irrigation Dist. v. United States, 33 Fed. Cl. 14, 23

n.3 (1995).

2. The NPS was created in 1916 “to oversee our national

parks and to ‘conserve the scenery and the natural and his-

toric objects and the wild life therein and * * * provide for

the enjoyment of the same.”” App., infra, 49a (quoting 16

U.S.C. § 1 (omission in original)). In the Act creating the

NPS, “Congress authorized the Interior Secretary to ‘grant

privileges, leases, and permits for the use of land for the

accommodation of visitors’ to each of the ‘various parks,

monuments, or other reservations’ under the Secretary’s au-

thority.” App., infra, 2a (quoting An Act to Establish a Na-

tional Park Service, ch. 408, 39 Stat. 595 (1916)).

“[Pjrovid[ing] for the enjoyment” of the national parks

(16 U.S.C. § 1) generally requires that visitors both be of-

fered various services throughout the parks and be provided

access to facilities, such as lodges, restaurants, and retail out-

lets, where those services are delivered. Because the gov-

ernment has been unable or unwilling to undertake on its own

behalf the huge financial burdens and other responsibilities

associated with the provision of these visitor services and

facilities, throughout its history the NPS has relied on private

concessions contractors to build, maintain, and operate its

visitor-service facilities and to provide many of the other ser-

vices that the public typically associates with a national park,

such as outfitter and guide services. See App., infra, 49a

(NPS has always “relied on private concessioners for the

provision of ‘lodging, food, merchandising, transportation,

outfitting and guiding, and similar activities.””) (quoting 64

Fed. Reg. 20,630 (Apr. 17, 2000)). The national parks con-

cessions program, therefore, historically has been a partner-

ship between the NPS and concessions contractors to develop

and provide access to the national parks for the enjoyment of

the public.

Between 1916 and 1965, there was no specific statutory

scheme governing the relationship between the NPS and the

concessioners that contracted to provide visitor services in

the national parks. In light of growing industry and govern-

mental concern about the NPS’s concessions-contracting

policies (see App., infra, 3a-4a), Congress enacted the Na-

tional Park Service Concessions Policy Act (“1965 Act”),

Pub. L. No. 89-249, 79 Stat. 969 (1965), to govern conces-

sions contracts. The 1965 Act basically codified preexisting

NPS concession policy. See S. REP. No. 89-765, 1965

U.S.C.C.A.N. 3489, 3489 (principal purpose of the 1965 Act

was “to put into statutory form policies which * * * have

heretofore been followed by the [NPS] in administering con-

cessions”). Among other things, the 1965 Act afforded con-

cessioners a preferential right of renewal for their

concessions contracts (16 U.S.C. § 20d) and authorized the

NPS to grant other specified contractual inducements for

making investments in the national parks. See App., infra,

4a, 50a-5la. In exchange, “[c]loncessioners paid the govern-

ment a franchise fee * * * for the privilege of operating on

federal land.” Jd. at 4a.

In 1998, Congress repealed the 1965 Act and passed a re-

placement statute, the National Parks Omnibus Management

Act of 1998 (“1998 Act”), Pub. L. No. 195-391, 112 Stat.

3497 (codified with certain exceptions at 16 U.S.C. §§ 5951-

5966). The 1998 Act altered various technical aspects of the

system under which the NPS enters into private concessions

contracts io provide visitor services in the national parks. The

1998 Act sought to further the mission of the national park

system by protecting the parks for the future while ensuring

that the agency continued to provide the appropriate “ac-

commodations, facilities, and services” that are “necessary

and appropriate for public use and enjoyment.” See 16

U.S.C. § 5951(b)(1). In particular, the 1998 Act specified that

the NPS “shall utilize concessions contracts to authorize a

person, corporation, or other entity to provide accommoda-

tions, facilities, and services to visitors to units of the Na-

tional Park System.” 16 U.S.C. § 5952.

The NPS has since issued regulations implementing the

1998 Act (see Concession Contracts, 65 Fed. Reg. 20,630

(Apr. 17, 2000) (codified at 36 C.F.R. pt. 51)), as well as a

model “Standard Concession Contract” (65 Fed. Reg. 26,052

(May 4, 2000)). The regulations declare that:

Concession contracts are not contracts within the

meaning of 41 U.S.C. 601 et seq. (the Contact Dis-

putes Act) * * *.

36 CFR. § 51.3.

3. In November and December 2000, the National Park

Hospitality Association (“NPHA”), a non-profit trade asso-

ciation that represents many concessioners who do business

in the national parks, and three individual concessioners filed

separate actions challenging aspects of the NPS regulations

and Standard Concession Contract. Among other claims, the

NPHA and the individual plaintiffs (collectively, “NPHA”)

challenged 36 C.F.R. § 51.3 as being contrary to the CDA.

The NPHA alleged that the regulation improperly excluded

NPS concessions contracts from the CDA, despite (1) the

CDA’s plain language, legislative purpose, and legislative

history; (2) contrary decisions of the Federal Circuit and its

predecessor (the Court of Claims); (3) contrary decisions of

the Court of Federal Claims and the Department of Interior’s

Board of Contract Appeals (“IBCA”); (4) the position taken

by the NPS in at least one prior reported decision on a con-

cessions-contract dispute; and (5) the obvious consequent

ability, if the regulation were upheld, of virtually any agency

to circumvent the CDA.

ee ee ee ee ee

The cases were consolidated in the district court. On May

23, 2001, the court granted summary judgment in the NPS’s

favor in most respects, and in particular held that the CDA

does not apply to concessions contracts. See App., infra,

68a-72a. The district court acknowledged that in an NPS

concessions contract “the government is receiving services”

and “is contracting for the provision of amenities to the visi-

tors of its national parks” (id. at 68a), thus fulfilling its statu-

tory obligation to accommodate visitors (see generally 16

U.S.C. §§ 1, 5951). The court also acknowledged that “be-

cause the concession contracts contain various terms relating

to the stewardship of concession areas, * * * it can be said

that the government is also bargaining for the maintenance of

real property.” App., infra, 68a. Despite these conclusions,

the court determined that the CDA is ambiguous as to

whether it applies to concessions contracts. See id. at 68a-

69a. The court then afforded Chevron deference to the NPS

and concluded that 36 C.F.R. § 51.3 was a permissible inter-

pretation of the CDA. See App., infra, 70a.

The court of appeals affirmed. At the outset, the court of

appeals held that the district court’s rationale was erroneous:

the NPS “does not administer the Contract Disputes Act, and

thus may not have interpretative authority over its provi-

sions.” App., infra, 27a.' Accordingly, the court of appeals

agreed with the NPHA that the agency was not entitled to

Chevron deference in its interpretation of the CDA. Never-

theless, the court upheld the determination that the CDA does

not apply to concessions contracts:

The primary purpose of concessions contracts is to

permit visitors to enjoy national parks in a manner

consistent with preservation of the parks. 16 U.S.C.

' Congress explicitly granted authority to implement and inter-

pret the CDA to the Administrator of the Office of Federal Pro-

curement Policy, not to the Secretary of the Interior. See 41

U.S.C. § 607(h).

§ 5951. That the government receives monetary

compensation or incidental benefits from the con-

cessioners’ performance is not enough to sweep

these contracts into the ambit of the Contract Dis-

putes Act.

Id. at 29a. In the D.C. Circuit’s view, concessions contracts

do not fall within the CDA because their purpose is to benefit

“park area visitors,” rather than the government. /d. at 27a.

REASONS FOR GRANTING THE PETITION

The Contract Disputes Act was enacted both to standard-

ize the federal government’s contracting policies and to en-

sure that those who contract with the government receive fair

treatment. The decision below that the CDA is inapplicable

to government contracts that procure goods or services for

the benefit of third parties, rather than for the government

itself, cannot be squared with the plain language of the CDA

and creates a gaping hole in the coverage of this important

federal statute. In addition, the decision is in direct conflict

with the decisions of the Federal Circuit and its predecessor,

the Court of Claims, and has been rejected or questioned by

the Department of Interior’s own Board of Contract Appeals

and by the Comptroller General. Further review is plainly

warranted.

A. The Decision Below Is Clearly Incorrect And Is

Contrary To The Views Of The Comptroller

General And The Department Of Interior’s Own

Board Of Contract Appeals.

The D.C. Circuit’s construction of the Contract Disputes

Act is demonstrably incorrect. The CDA on its face applies

to any “express or implied contract” entered into by “an ex-

ecutive agency” for “the procurement of” either “services” or

the “construction, alteration, repair or maintenance of real

property” (41 U.S.C. § 602(a)(2)-(3)), unless the CDA “spe-

cifically provide[s]” otherwise. Jd. § 602(a). The NPS does

* ON re OE a ee

;

not deny that concessions contracts are “contracts” and that it

is an “executive agency,” nor does it claim that the CDA it-

self specifically exempts these contracts. Thus, the NPS is

left to assert that concessions contracts entail neither the pro-

curement of services nor the procurement of construction,

repair, or maintenance of real property. However, conces-

sions contracts are manifestly of both these sorts.

1. The NPS plainly “procur[es] services” when it con-

tracts with a concessioner. The NPS has a statutory duty to

provide “accommodations, facilities, and services that nis .

are necessary and appropriate for public use and enjoyment

of the national parks. 16 U.S.C. § 5951(b)(1); see also 16

U.S.C. § 1. Rather than undertaking these tasks itself, the

NPS discharges its statutory duty by procuring the services of

contractors who, subject to pervasive regulation and supervi-

sion by the agency, provide visitor services, staff park facili-

ties, construct, maintain, and repair federally-owned

structures, and perform related functions that promote the

public’s use and enjoyment of the national parks. For exam-

ple, under section 3(a)(1) of the Standard Concession Con-

tract, 65 Fed. Reg. at 26,064, the NPS lists for each contract

the “visitor services” that the concessioner “is required to

provide * * * during the term of” the contract. Similarly, sec-

tion 10(a) of the Standard Concession Contract provides that

concessioners “shall be solely responsible . on

repairs, housekeeping, and groundskeeping for onces-

sion Facilities ar satisfaction of the Director.” Id. at

26,068-26,069. Plainly, the NPS is procuring these services

from concessioners.

That visitors to the national parks enjoy a benefit from

concessioners’ actions in no way negates the obvious fact

that the government has “procur[ed] services” — among oth-

ers, the discharge of its statutory duty to accommodate the

public (see 16 U.S.C. §§ 1, 5952) and the upkeep of its facili-

ties within the parks. Thus, as the district court itself ac-

knowledged, “the government is receiving services; it 1s

contracting for the provision of amenities to the visitors of its

national parks” (App., infra, 68a).

2. The NPS is also typically “procur{ing] construction,

alteration, repair, or maintenance of real property” by con-

tracting with concessioners. By statute, all the real property

that concessioner= construct or use in the national parks be-

longs to the geversment, not to the concessioner. See App,

infra, 20a; 16 U.S.C. § 5954(d). Concessioners are nonethe-

less responsible for constructing, maintaining and repairing

that property. For example, under section 9(a) of the Stan-

dard Concession Contract, 65 Fed. Reg. at 26,068, conces-

sioners “construct or install upon lands assigned to the

Concessioner * * * those real property improvements that are

determined by the [NPS] to be necessary and appropriate for

the conduct by the Concessioner of the visitor services re-

quired and/or authorized under [the contract].” Such real

property “will immediately become the property of the

United States.” /bid. Similarly, section 9(d) of the Standard

Concession Contract requires concessioners to “undertake

and complete” a “Concession Facilities Improvement Pro-

gram,” the specifics to be detailed in each contract. Jbid.

Section 6(g) makes concessioners responsible for weed and

pest mauagement at concession facilities. Jd at 26,067. Fi-

nally, as discussed above, section 10(a) provides that conces-

sioners “shall be solely responsible for maintenance, repairs,

housekeeping, and groundskeeping for all Concession Facili-

ties to the satisfaction of the Director.” Jd. at 26,068-26,069.

It is thus beyond question that the government is procuring

construction, repair, and maintenance services — as the dis-

trict court again recognized (App., infra, 69a).

3. The D.C. Circuit nonetheless held that concessions

contracts are not subject to the CDA because “[t]heir func-

tion is * * * to procure services or goods for” “park area visi-

tors” rather than “for the government.” App., infra, 27a. This

statement is both incorrect and irrelevant.

The court of appeals’ statement is incorrect because, as

noted above, concessions contracts provide a “service” to the

government by helping the NPS discharge its statutory obli-

gation to accommodate visitors in their enjoyment of the na-

tional parks. In addition, whoever might be said to “benefit”

from the provision of goods and services in the national

parks, it is beyond question that the government itself is the

principal beneficiary of the concessioners’ contractual

obligation to maintain and repair park facilities owned by the

government. A contract to maintain and repair the E] Tovar

Hotel at Grand Canyon National Park is no different in this

respect than a contract to maintain and repair the John F.

Kennedy Center for the Performing Arts (see Grunley

Constr. Co., ENGBCA No. 6327, 99-1 BCA 4 30,138, 1998

WL 835156 (Nov. 20, 1998)) or the Smithsonian Museums

(see Niko Contracting Co. v. United States, 39 Fed. Cl. 795

(1997), aff'd, 173 F.3d 437 (Fed. Cir. 1998) (table); Libra

Eng'g Inc., NASABCA Nos. 1182-17 et al., 1984 WL 13526

(July 13, 1984)).

Moreover, the court of appeals’ statement is irrelevant

because nothing in the CDA suggests that that statute applies

only to agency contracts that procure goods, services or

maintenance of real estate “for the government.” App., infra,

27a. To the contrary, the CDA unambiguously covers ail

procurement contracts entered into by government agencies,

even those that may be said to benefit third parties. As the

Court of Claims has observed, “{i]t is hoped that every Gov-

ernment purchase ‘benefits the public’ in some way.” Yosem-

ite Park & Curry Co. v. United States, 582 F.2d 552, 559 n.8

(Ct. CL. 1978) (emphasis in original). Indeed, given the pur-

poses of the CDA — to standardize government contracting

and to bring fairness to the government contracting process —

it is hard to see why it would matter whether the goods, ser-

vices, or property repair contracted for by the government

principally benefit “park area visitors” rather than the gov-

ernment itself. The court of appeals was not at liberty to add

limiting language to a statute that Congress intended to be

broad and comprehensive. See J.E.M. AG Supply, Inc. v.

Pioneer Hi-Bred Int'l, Inc., 122 S. Ct. 593, 598 (2001);

United States v. Rodgers, 466 U.S. 475, 480 (1984); Cana-

— Lid. v. United States, 324 U.S. 215, 222

4. As the court of appeals acknowledged (App., infra,

28a-29a), the Department of the Interior’s own Board of

Contract Appeals has long held that NPS concessions con-

tracts are subject to the CDA and has specifically found that

the portion of 36 C.F.R. § 51.3 exempting such contracts

from the CDA is invalid. See Watch Hill Concessions Inc.,

IBCA No. 4284-2000, 01-1 BCA 431,298, 2001 WL

170911, at *6 (Feb. 16, 2001); Nat'l Park Concessions, Inc.,

IBCA No. 2995, 94-3 BCA 427,104, 1994 WL 462401

(Aug. 18, 1994); R & R Enters., IBCA No. 2417, 89-2 BCA

§ 21,708, 1989 WL 27790, at *32 (Mar. 24, 1989), aff'd on

reconsideration, 89-3 BCA 4 22,043, 1989 WL 75890 (July

6, 1989). As the Board stated in Watch Hill,

Congress could not have expressed itself more

clearly to the effect that a// contract claims based on

a valid contractual theory fall within the procuring

* Nor was the court of appeals correct that coverage under the

CDA requires the government to “commit[] to pay out government

funds.” App., infra, 28a (internal citation and quotation marks

omutted). CDA coverage explicitly does not depend on the expen-

diture of appropriated funds. See 41 U.S.C. § 602(a). Thus, the

CDA is different from most other procurement-related statutes,

which are limited to appropriated-fund activities and therefore do

not apply to NPS concessions contracts. (For example, the Davis-

Bacon Act (40 U.S.C. § 276a et seq.) applies only to certain “con-

tract[s] in excess of $2,000” (id. § 276a(a)), and the Service Con-

tract Act (41 U.S.C. § 351 et seg.) applies to contracts “in excess

of $2,500” (id. § 351(a)); neither statute applies to NPS conces-

sions contracts.)

agencies’ jurisdiction under the Contract Disputes

Act. This was essential to Congress’ design that all

contract disputes be resolved according to the same

set of procedures, beginning with the decision of the

contracting officer.

2001 WL 170911, at *6 (emphasis added).

Rather than follow these decisions by the expert IBCA

(see 41 U.S.C. §§ 607(d), 609(a)(1)), the court of appeals re-

lied on YRT Services Corp. v. United States, 28 Fed. Cl. 366

(1993). See App., infra, 28a. But YRT held only that another

set of rules, the Federal Acquisition Regulations (“FAR”), do

not apply to concessions contracts. In addressing the question

of whether the FAR applied to concessions contracts, YRT

analogized to the applicability of yet another federal contract-

ing statute — the Competition in Contracting Act (“CICA”),

Pub. L. 98-369, 98 Stat. 1175 (codified at 31 U.S.C. §§ 3551-

3556, 41 U.S.C. § 253) — which the YRT court opined did not

apply to concessions contracts. See YRT, 28 Fed. Cl. at 392.

In making this CICA-applicability analogy, however, the

YRT decision offered no opinion about the applicability of

the CDA.

Even if YRT were relevant to this case, that decision was

expressly based on the views of the Comptroller General,

who administers the CICA. See 28 Fed. Cl. at 392 (citing

Stephen Sloan Marine Corp., B-234219, 89-1 C.P.D. 4 435

(May 9, 1989)). But the Comptroller General since has clari-

fied that YRT was based on a misunderstanding of his CICA

jurisdiction. Thus, in adopting YRT’s “permits” analogy, the

D.C. Circuit ignored the Comptroller General’s repeatedly-

“permits,” but instead involve services for the agency and

hence are subject to CICA.’

> See Total Procurement Services, Inc., B-255934.3, 1994 WL

450445 (Aug. 16, 1994) (“Where a license agreement or conces-

Underscoring the D.C. Circuit’s error, the Comptroller

General just last month explained the distinction between

NPS ‘permits” and NPS “contracts,” holding that NPS con-

cessions contracts are “procurements” within its CICA juris-

diction:

[Where the award of a concession contract included

the provision of numerous services to the govern-

ment, which the agency might otherwise have had to

purchase or perform itself, we found that the solici-

tation involved a procurement of services. * * * On

the other hand, * * * where the agency’s issuance of

concession permits merely allowed entry by visitors

into @ national park, and did not also include the

provision of services to the government, we did not

exercise jurisdiction.

Starfleet Marine Transp., Inc., B-2901 81, 2002

Gen. LEXIS 90, at *14-15 (July 5, 2002). ee

Indeed, the decision in Starfleet Marine considered and

rejected the D.C. Circuit’s reasoning in this very case:

In reaching its conclusion and holding, the [D.C.

Circuit] seems to have assumed that all concession

contracts result in no more than “incidental bene-

fits” to the government. In its brief discussion of this

sion contract confers a benefit upon the government and furthers

the function of an agency, we view the agreement or contract as

one involving the procurement of property or services and there-

fore subject to our bid protest jurisdiction.”); West Coast Copy

Inc.; B-254044.2, 1993 WL 476970, at *4 (Nov. 16, 1993)

(“Where the government invites private vendors to compete for a

business opportunity, the performance of which will produce a

benefit to the government (such as a reduction in the government

agency's own workload or some other support of the agency's mis-

sion), — necessary to invoke our [CICA] jurisdiction are

issue, the court also appears to have assumed that

the primary purpose of a contractual transaction

makes it exclusively a sale or a procurement. In our

opinion, the court’s view that a concession contract

cannot also involve the procurement of property or

services within the meaning of CICA does not take

into account the specific facts of each situation.

Id. at *16-17."

5. Finally, we note that when it was to the government’s

advantage to do so, the Department of Justice itself argued

that the CDA applies to concessions contracts. See Pound v.

United States, No. 94-496C (Fed. Cl. Aug. 30, 1996); App.

infra, 95a-100a. The concessions contract at issue in Pound

was to operate a marina on land owned by the Army Corps of

Engineers. See id. at 98a. The government argued that the

CDA applied to that concessions contract under, among other

subsections, 41 U.S.C. § 602(a)(3), which covers government

contracts for the repair or maintenance of real property. See

Defendant’s Motion To Dismiss Or, In The Alternative, For

Summary Judgment Upon Count I Of The Complaint And

Motion For Summary Judgment Upon Counts II And III And

Defendant’s Counterclaim, at 10-11 (Apr. 28, 1995), re-

‘ Although the Comptroller General’s reasoning is persuasive

evidence that the CDA applies to NPS concessions contracts, we

agree with the NPS that the CICA in fact does not apply to such

contracts. The CICA applies to “contract(s] for the procurement of

or services” (31 U.S.C. § 3551(1)(A)), which, as the

Comptroller General notes, are also contracts within the scope of

the CDA. See Starfleet Marine, 2002 U.S. Comp. Gen. LEXIS, at

*16 n.10. Like the CDA, the jurisdiction of the CICA “does not

turn on whether appropriated funds are involved.” Jd. at *12. But

the CICA, unlike the CDA, on its face “does not encompass pro-

curement procedures which are otherwise expressly authorized by

other statutes” (YRT, 28 Fed. Cl. at 392-393 (citing 41 U.S.C.

§ 253(a)(1))), such as the 1998 Act.

printed at App., infra, 100a. The government contended that

the CDA was applicable because the concessioner con-

structed structures on and maintained the marina, in much the

same way that NPS concessioners construct structures on and

maintain NPS concessions.”

In sum, both the D.C. Circuit’s decision limiting cover-

age of the CDA to contracts that “procure services or goods

for the government” (App., infra, 27a (emphasis added)) and

its determination that NPS concessions contracts fail to meet

that test are contrary to the plain language and purpose of the

statute and are inconsistent with the views of expert agencies.

The NPS plainly procures both “services” and the “construc-

tion, alteration, repair or maintenance of real property” (41

U.S.C. § 602(a)(2)-(3)) in its concessions contracts.

B. The Decision Below Creates A Conflict In The

Circuits On Whether The Contract Disputes Act

Applies To Concessions Contracts.

The court of appeals’ construction of the Contract Dis-

putes Act cannot be squared with the decision of the Federal

Circuit in Total Medical Management, Inc. v. United States,

104 F.3d 1314, 1320 (Fed. Cir. 1997), and of the Federal

Circuit’s precursor — the Court of Claims — in Yosemite Park

& Curry Co., 582 F.2d 552.

Total Medical Management involved agreements be-

tween the military and a private health care company to pro-

vide medical services to military dependants at an army

hospital. As here, the government argued that the agreements

were not subject to the CDA “because they are not procure-

ment contracts for the benefit of the government,” but instead

“are solely for the benefit of the military dependents who re-

The Court of Federal Claims in Pound did not address substan-

tively the applicability of the CDA, noting instead that the parties

agreed that the Act applied. See Pound v. United States, No. 94-

496C, slip op. at 1 n.1, 10 n.2 (Fed. Cl. Aug. 30, 1996).

ceive the medical care.” See Total Med. Mgmt., 104 F.3d at

1320. The Federal Circuit rejected that argument, explaining

that, “since it is clear that the government has legal obliga-

tions to military dependents and benefits by obtaining said

dependents’ care at a reduced cost,” the agreements were

procurement contracts subject to the CDA. Jbid.

In precisely the same way, the NPS has statutorily de-

fined legal obligations to provide the visiting public with

food, lodging, and other services in the national parks, and it

has elected to discharge those duties by procuring them from

concessioners rather than by furnishing them directly. See 16

U.S.C. §§ 1, 5951, 5952. See generally pages 4-6, supra.

The decision below — that the CDA does not apply to NPS

concessions contracts because their function is to “authorize

third parties to provide services” rather than “to procure ser-

vices or goods for the government” (App., infra, 27a) - is

totally at odds with the Federal Circuit’s view of the CDA in

Total Medical Management.

Indeed, the NPS itself convinced the Court of Claims that

concessions contracts fall within the reach of certain gov-

ernment procurement statutes such as the CDA. In Yosemite

Park & Curry Co., the concessioner argued that NPS conces-

sions contracts were exempt from such statutes. The NPS

disputed that assertion, and the court agreed with the agency.

As the court explained, NPS concessions contracts will be

covered by procurement statutes — assuming other statutory

requirements are met — because the NPS cannot “avoid nor-

mal, legally mandated, procurement procedures” by “charac-

teriz[ing] the procurement of * * * services for the public as

the granting of a ‘concession’ to a specific contractor.” Yo-

semite Park & Curry Co., 582 F.2d at 558. As the court ex-

plained,

[P]laintiff’s attempted argument that a “concession”

purchase is somehow different from a normal pur-

chase because a concession contract “benefits the

public” should * * * be accorded little weight. It is

hoped that every Government purchase “benefits the

public” in some way.

Id. at 559 n.8 (emphasis in original).°

Despite the fact that the NPHA expressly relied on Total

Medical Management, Yosemite Park & Curry Co., and Oro-

ville-Tonasket in its briefs (see Br. Pls.-Appellants at 52, 54;

Reply Br. Pls.-Appellants at 28), the court below never men-

tioned, much less attempted to reconcile, these conflicting

decisions. Certiorari is plainly warranted to resolve this sig-

nificant split of authority.

C. The Issue Presented Here Is Of Substantial

Practical Importance.

. This Court’s review is essential because of the practical

importance of the issue presented. The government contracts

to purchase more than $220 billion in goods and services

each year. See Encourage Contracting Out of Federal Ser-

vices: A Legislative Hearing on H.R. 3832, The Services Ac-

quisition Reform Act of 2002 (SARA), Before the Subcomm.

on Technology and Procurement Policy, House Comm. on

Gov't Reform, 107th Cong. (Mar. 7, 2002) (statement of An-

gela B. Styles, Administrator for Federal Procurement Pol-

icy, at 1). This case has implications not only for NPS

* The Court of Federal Claims - the court to which Congress has

conferred jurisdiction over CDA claims (see page 4, supra) — has

also held that the CDA applies to concessions contracts indistin-

guishable from NPS concession contracts. See, e.g., Oroville-

Tonasket, 33 Fed. Cl. at 22 (concluding that contract to manage a

dam providing irrigation involved both “procurement of services”

and procurement of “construction, alteration, repair or maintenance

of real property” for purposes of CDA because contractor operated

and maintained federally-owned facility, thus fulfilling responsi-

bilities assigned by Congress to Secretary of Interior).

concessions contracts, but also for a significant portion of all

government procurement contracts.

As Congress explained in enacting the CDA,

How procurement functions has a far-reaching im-

pact on the economy of our society and on the suc-

cess of many major Government programs. Both

can be affected by the existence of competition and

quality contractors — or by the lack thereof. The way

po‘ential contractors view the disputes-resolving

system influences how, whether, and at what prices

they compete for Government contract business.

S. REP. No. 95-1118, at 4. “Prior to the CDA, the ‘system’

for resolving federal contract disputes can best be described

as a mess.” C. Kipps, T. Kindness, & C. Hamrick, The Con-

tract Disputes Act: Solid Foundations, Magnificent System

(“Solid Foundations”), 28 PuB. CONT. L.J. 585, 585 (1999).

Thus, the CDA was passed with the express purposes of

standardizing government contracting systems and providing

contractors with an independent method to adjudicate dis-

putes, thus freeing them from “[t]he predilections of different

agencies.” S. REP. No. 95-1118, at 3.

The CDA has been a great success, hailed as “a remark-

able milestone in the field of government contracts for sev-

eral reasons, including the fact that it lifted the disputes

process out of the discretionary realm of agency clauses and

placed the process squarely within a fixed statutory frame-

work.” Solid Foundations, supra, at 591. The CDA has

“worked exceedingly well” for the past two decades. Id. at

585. In the sole previous instance when the courts signifi-

cantly limited the scope of the CDA — by proclaiming restric-

tive rules for “certifying” a claim — Congress eventually

stepped in to overrule that cramped interpretation. See id. at

592-595. Rather than rely on Congress, in this instance the

Court should grant certiorari to resolve the confusion in the

circuits over the coverage of the CDA and to correct the

lower court’s unduly narrow reading of the statute. Cf.

United States v. Utah Constr. & Mining Co., 384 U.S. 394,

400 (1966) (Court granted certiorari “because of the impor-

tance of [questions about the coverage of government con-

tract disputes clause] in the administration of government

contracts”).

The decision below — exempting government contracts

that benefit third parties from the scope of the CDA — un-

. dermines the CDA’s goals of consistency and external ac-

countability and threatens a return to the messy system of

yesteryear, when “contractors were caught in an irrational

patchwork system that limited their access to court, failed to

provide adequate due process protections, and often resulted

in substantial delays.” Solid Foundations, supra, at 587. As

Total Medical Management, Oroville-Tonasket, and Pound

demonstrate, the NPS is far from unique in relying on con-

cessions contracts to fulfill significant portions of its statu-

tory mission.’ The decision below could affect all such

concessions contracts. Even uncertainty about whether con-

cessions contracts include the protections of the CDA is,

from the perspective of a contractor, almost as bad as not

having such protections at all. Yet the D.C. Circuit’s amor-

phous “benefits-third-parties” exception makes it difficult or

impossible for agencies and contractors alike to determine

whether a specific contract is covered by the CDA, or if in-

. Stead its benefits inure to third parties to such an extent that

the CDA does not apply.

The decision below also creates an incentive for agencies

that would rather not expose their contracting decisions to a

” See also, e.g., Harry Pohl KG, ASBCA No. 51523, 01-1 BCA

4 31,329, 2001 ASBCA LEXIS 40 (Feb. 28, 2001); Home Entm’t,

Inc., ASBCA No. 50791, 99-2 BCA 430,550, 1999 ASBCA

LEXIS 126 (Aug. 23, 1999); Senor Tenedor, S.A. de C.V., ASBCA

Nos. 48502 et al., 97-2 BCA 4 29,192, 1997 ASBCA LEXIS 150

(Aug. 15, 1997).

neutral arbiter to design their contracting programs in such a

way that the CDA would not apply. Because it could be ar-

gued that any government service contract benefits the per-

sons served—even if fulfilling a statutory mandate — the

unifying protections and procedures afforded to a large per-

centage of government contracts could unravel quickly.

Finally, the decision below has significant implications

for the mm rortin of the Nation’s national parks. Under the

regulation at issue, NPS concessioners are denied neutral hl

biters in any dispute they may have with the NPS, which “in-

fluences how, whether, anc at what prices they compete for

Government contract business.” S. REP. No. 95-1118, at 4.

The lack of protection afforded by the CDA will damage the

public-private partnership that long has served visitors to the

national parks and fulfilled the statutory mandate of 16

U.S.C. § 1 (see pages 4-5, supra), in ways that may signifi-

cantly undermine the public’s ability to enjoy these national

treasures.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.

KENNETH S. GELLER

Counsel of Record

RICHARD B. KATSKEE

DAVID M. GOSSETT

Mayer, Brown, Rowe & Maw

1909 K Street, NW

Washington, DC 20006

(202) 263-3000

AUGUST 2002

APPENDIX

APPENDIX A

United States Court of Appeals,

District of Columbia Circuit.

AMFAC RESORTS, L.L.C., Appellant,

Vv.

UNITED STATES DEPARTMENT OF THE

INTERIOR, ET AL., Appellees.

Nos. 01-5223, 01-5226, 01-5229 and 01-5233.

Argued Nov. 6, 2001.

Decided March 1, 2002.

Rehearing and Rehearing En Banc Denied May 8, 2002.

_ Before: RANDOLPH and GARLAND, Circuit Judges,

and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge

RANDOLPH.

RANDOLPH, Circuit Judge:

These are four consolidated cases on appeal from the

judgment of the district court sustaining regulations of the

National Park Service governing concession contracts in the

National Park System. Many of the issues are tied to the his-

tory of the National Park System and the functions conces-

sioners perform in the operation of the parks.

The history begins with the discovery of “Old Faithful”

and the other natural wonders of what is now Yellowstone

National Park. In 1872, Congress withdrew the land at the

headwaters of the Yellowstone River from “settlement, occu-

pancy, or sale,” thus creating the first national park in the

United States. Act of Mar. 1, 1872, ch. 24, § 1, 17 Stat. 32.

See also AUBREY L. HAINES, YELLOWSTONE NATIONAL

PARK: ITS EXPLORATION AND ESTABLISHMENT (1974). Not

everyone had been enthusiastic about the plan to create Yel-

lowstone National Park. A local newspaper editorial worried

that “the effect of this measure will be to keep the country a

wilderness, and shut out, for many years, the travel that

would seek that curious region if good roads were opened

through it and hotels built therein.” HAINES, supra, at 127

(quoting the HELENA DAILY HERALD of Mar. 1, 1872). In the

final legislation, Congress responded by authorizing the Sec-

retary of the Interior to lease portions of the park for “the

erection of buildings for the accommodation of visitors.” 17

Stat. 33.

As the United States withdrew more areas from the pub-

lic domain, it continued to favor the interests of park visitors.

In creating the National Park Service in 1916, Congress au-

thorized the Interior Secretary to “grant privileges, leases,

and permits for the use of land for the accommodation of

visitors” to each of the “various parks, monuments, or other

reservations” under the Secretary’s authority. An Act to Es-

tablish a National Park Service, ch. 408, 39 Stat. 595 (1916).

In the view of the first director of the Park Service, Stephen

Mather: “Scenery is a hollow enjoyment to a tourist who sets

out in the morning after an indigestible breakfast and a fitful

sleep in an impossible bed.” Dennis J. Herman, Loving Them

to Death: Legal Controls on the Type and Scale of Devel-

opment in the National Parks, 11 STAN. ENVTL. L. J. 3, 3

(1992).

During its first thirty years, the Park Service followed in-

ternal regulations and policies governing concessioners and

their obligations to park visitors and to the national park

lands. The government also offered financial inducements to

private contractors to convince them to provide and operate

facilities in what were often remote locations. See Park

Concession Policy: Hearings Before the Subcomm. on Na-

tional Parks of the House Comm. on Interior and Insular Af-

fairs, 88th Cong. 5-8 (1964) [hereinafter Park Concession

Policy Hearings] (letter from John A. Carver, Jr., Assistant

Secretary of the Interior).

For our purposes the most significant of these incentives

was a preferential right of renewal, which “contemplated that

every existing contract covering public operations [in the na-

tional parks] will be renewed at the expiration thereof, pro-

vided, of course, that full and satisfactory service to the

public had been given thereunder.” Memorandum for the

Acting Under Secretary, U.S. Department of the Intenor

(Aug. 10, 1940). When the Interior Department sought to

change its policies and withdraw some of these financial in-

centives in the late 1940s, the concessioners and some in

Congress balked. See H.R. RES. 66, 8lst Cong. (1950),

by the Comm. on Public Lands and included in H.R.

REP. No. 81-3133, at 5-6 (1950). In response, the Secretary

announced new guidelines for concession contracts and pre-

served many of the existing financial incentives for conces-

sioners, including the preferential right of renewal. Jd. at 4-5.

The House Committee on Public Lands passed a resolution

endorsing these new guidelines, although the resolution of

course had no legal effect. JNS v. Chadha, 462 U.S. 919

(1983).

By the 1960s, other House committees started expressing

doubt about the soundness of the Interior Department’s con-

tracting policies, particularly the financial incentives it was

giving concessioners. See HOUSE COMM. ON GOVERNMENT

OPERATIONS, SURVEY OF SELECTED ACTIVITIES, H.R. REP.

No. 88-306, pt. 3, at 4-12 (1963) (“The committee’s inquiry

disclosed considerable weakness in the National Park Ser-

vice’s operations in several matters involving concessioners

in the national parks.”). When Congress considered the 1964

appropriations bill for the Department of the Interior, the

House Committee on Appropriations recommended that

“competitive bidding should be required for concession con-

tracts, in lieu of the current practice of granting preferential

ities to existing concessioners to negotiate new con-

tracts.” DEPARTMENT OF THE INTERIOR AND RELATED

AGENCIES APPROPRIATION BILL, H.R. REP. No. 88-177, at 10

(1963). ;

Concerned that “certain other committees that do not

have junsdiction” had “attempted to get into the problem of

concessions,” the House Committee on Interior and Insular

Affairs produced a bill to “put into statutory form” the long-

standing concessions policies of the Park Service, including

the preferential right of renewal. H.R. REP. NO. 89-591, at 1

(1965); Park Concession Policy Hearings at 19. In 1965,

these concession policies were enacted into law. See 111

CONG. REC. 23,632-48 (1965). Part of the legislation pro-

vided that the “Secretary [of the Interior] shall ... giv[e] pref-

erence in the reewal of contracts or permits and in the

negotiation of new contracts or permits to the concessioners

who have performed their obligations ... to the satisfaction of

the Secretary.” National Park Service Concessions Policy

Act, Pub. L. No. 89-249, § 5, 79 Stat. 969, 970 (1965), re-

pealed by National Parks Omnibus Management Act of 1998,

Pub. L. No. 105-391, § 415(a), 112 Stat. 3497, 3515. The

preference gave “incumbent concessioners, upon renewal, the

right to meet any better offer received” by the Park Service.

U.S. DeEP’T OF THE INTERIOR, REPORT OF THE TASK FORCE

ON NATIONAL PARK SERVICE CONCESSIONS 10 (1990).

. The 1965 Act governed all concession contracts entered

into by the Park Service. Concessioners paid the government

a franchise fee, typically less than five percent of gross reve-

nues, for the privilege of operating on federal land. If they

used government-owned facilities they paid an additional fee.

In 1998, after several aborted attempts, Congress re-

pealed the preferential right of renewal and enacted other

rules governing concession contracts. National Parks Omni-

bus Management Act of 1998, 16 U.S.C. §§ 5951-5966.

Plaintiffs are three companies who have current conces-

sions contracts with the Park Service and an association of

concessioners. They brought four separate actions challeng-

ing the Park Service regulations, issued in 2000, to imple-

ment the 1998 Act. 65 Fed. Reg. 20,630 (Apr. 17, 2000) (to

be codified at 36 C.F.R. pt. 51). The district court consoli-

dated the four lawsuits, and granted summary judgment to

the government on all of the claims save one (which has not

been appealed to this court). Amfac Resorts v. United States

Dep't of the Interior, 142 F. Supp. 2d 54 (2001).

The first issue centers on the 1998 Act’s repeal of the

statutory preferential right of renewal in § 5 of the 1965 Act.

The 1998 Act provided that, except for small contracts and

outfitter and guide services, “the Secretary shall not grant a

concessioner a preferential right to renew a concessions con-

tract.” 16 U.S.C. § 5952(7). A savings clause in the 1998

Act, § 415(a), states: “repeal of [the 1965 Act] shall not af-

fect the validity of any concessions contract or permit entered ©

into under such Act, but the provisions of this title shall ap-

ply to any such contract or permit except to the extent such

provisions are inconsistent with the terms and conditions of

any such contract or permit.” Pub. L. No. 105-391, § 415(a),

112 Stat. 3497, 3515 (1998).

The Park Service interpreted the repealing and the sav-

ings clauses in the following narrative regulation:

§ 51.102 What is the effect of the 1998 Act’s re-

peal of the 1965 Act’s preference in renewal?

(a) Section 5 of the 1965 Act required the Secretary

to give existing satisfactory concessioners a prefer-

ence in the renewal (termed a “renewal preference”

in the rest of this section) of its concession contract

or permit. Section 415 of the 1998 Act repealed this

statutory renewal preference as of November 13,

1998. It is the final decision of the Director, subject

to the right of appeal set forth in paragraph (b) of

this section, that holders of 1965 Act concession

contracts are not entitled to be given a renewal pref-

erence with respect to such contracts (although they

may otherwise qualify for a nght of preference re-

garding such contracts under Sections 403(7) and

(8) of the 1998 Act as implemented in this part).

However, if a concessioner holds an existing 1965

Act concession contract and the contract makes ex-

press reference to a renewal preference, the conces-

sioner may appeal to the Director for recognition of

a renewal preference.

(b) Such appeal must be in writing and be received

by the Director no later than thirty days after the is-

suance of a prospectus for a concession contract un-

der this part for which the concessioner asserts a

renewal preference. The Director must make a deci-

sion on the appeal prior to the proposal submission

date specified in the prospectus. Where applicable,

the Director will give notice of this appeal to all po-

tential offerors that requested a prospectus. The Di-

rector may delegate consideration of such appeals

only toa Deputy or Associate Director. The decid-

ing official must prepare a written decision on the

appeal, taking into account the content of the appeal

and other available information.

rector that the 1965 Act concession contract in ques-

tion makes express reference to a _ renewal

preference under section 5 of the 1965 Act, the 1998

Act’s repeal of section 5 of the 1965 Act was incon-

sistent with the terms and conditions of the conces-

sion contract, and that the holder of the concession

contract in these circumstances is entitled to a re-

newal preference by operation of law, the Director

will permit the concessioner to exercise a renewal

preference for the contract subject to and in accor-

dance with the otherwise applicable night of prefer-

ence terms and conditions of this part, including,

without limitation, the requirement for submission

of a responsive proposal pursuant to the terms of an

applicable prospectus. The Director, similarly, will

permit any holder of a 1965 Act concession contract

that a court of competent jurisdiction determines in

a final order is entitled to a renewal preference, for

any reason, to exercise a right of preference in ac-

cordance with the otherwise applicable requirements

of this part, including, without limitation, the re-

quirement for submission of a responsive proposal

pursuant to the terms of an applicable prospectus.

36 C.F.R. § 51.102 (2001).

The Park Service thus will not recognize a preferential

right of renewal for concessioners whose pre-1998 contracts

are expiring, unless the contract expressly so provides. See

65 Fed. Reg. at 20,631-33. In the language of the savings

clause of § 415(a), without such contractual “terms and con-

ditions” it would not be “inconsistent” — as the Park Service

sees it — to refuse to allow a preferential right of renewal.

A typical concession contract runs for 15 or 20 years.

REPORT OF THE TASK FORCE ON NATIONAL PARK SERVICE

CONCESSIONS, supra, at 5. One of the plaintiffs, Amfac Re-

sorts, L.L.C., had a 30-year contract for the Grand Canyon.

A right of renewal for pre-1998 contracts is therefore a mat-

ter of great interest to those holding these contracts. The

concessioners say that the renewal provision of the 1965 Act

represented an “entrenched policy”; that the policy was in-

corporated by law as an unwritten term in every concession

contract signed between 1965 and 1998; and that the Park

Service regulation violates § 415 of the 1998 Act (the savings

clause) because it allows a preferential right of renewal only

if contracts before the 1998 Act expressly so state.

The concessioners’ argument in favor of an “implied”

right of renewal initially rests on the “Christian doctrine,”

named after G.L. Christian & Assocs., 312 F.2d 418, 424 (Ct.

Cl. 1963). As they explain it, the doctrine requires “that

longstanding and deeply-ingrained agency policies, such as

the [Park Service’s] entrenched policy of granting conces-

sioners renewal rights in exchange for concessioner invest-

ments, form a mandatory part of all government contracts.”

Brief for Appellants at 21.

The Federal Circuit has, on occasion, concluded that cer-

tain statutory or regulatory provisions may become part of a

government contract even though the contract does not con-

tain language to that effect. See S.J. Amoroso Constr. Co. v.

United States, 12 F.3d 1072, 1075 (Fed. Cir. 1993); General

Engineering & Machine Works v. O'Keefe, 991 F.2d 775,

779 (Fed. Cir. 1993).

Our court has never adopted the Federal Circuit’s Chris-

tian doctrine. Even if we did so, it would boot the conre¢s-

sioners nothing. In describing the doctrine, they have

omitted a crucial element. The Federal Circuit does not hold

that significant or important federal policies “form part of

government contracts even where absent from those con-

tracts’ explicit text.” Brief for Appellants at 22. If that were

the law, Congressional power to make adjustments in legisla-

tion would be greatly constricted. Statutory provisions would

live on as part of long-term contracts well after their repeal or

modification. This is why, as the Supreme Court put it in

Dodge v. Board of Education, 302 U.S. 74, 79 (1937), there

is a “presumption” that “a law is not intended to create pri-

vate contractual or vested rights but merely declares a policy

to be pursued until the legislature shall ordain otherwise.”

To this the Court added in Nat'l R.R. Passenger Corp. v. At-

chison, Topeka & Santa Fe Ry., 470 U.S. 451, 465-66 (1985)

[hereinafter Atchison]: “Policies, unlike contracts, are inher-

ently subject to revision and repeal, and to construe laws as

contracts when the obligation is not clearly and unequivo-

cally expressed would be to limit drastically the essential

powers of a legislative body.” It is true, as the concessioners

point out, that the holding of Atchison was that a statute did

not itself create a contract. Reply Brief for Appellants at 12.

But it is not true that the case is therefore “irrelevant.” Jd.

The Court’s reasoning applies equally to claims, such as the

concessioners’, that a statute (here the 1965 Act) created a

contractual obligation in all contracts executed before its re-

peal. See General Motors Corp. v. Romein, 503 U.S. 181,

190 (1992).

One element of the Christian doctrine, the element miss-

ing from the concessioners’ statement of the law, saves it

from contradicting this line of Supreme Court authority. Ac-

cording to the Federal Circui’, it is not enough that the legis-

lative or regulatory provision is important or significant

(assuming one could make such rankings). To constitute a

contractual obligation even though not written in the con-

tract, the provision must be a mandatory contract clause, a

clause the legislation — or as in Christian, 312 F.2d at 424,

the regulation — requires to be included in contracts. Thus,

“a mandatory contract clause that expresses a significant or

deeply ingrained strand of public procurement policy is con-

sidered to be included in a contract by operation of law.” S.J.

Amoroso Constr. Co. v. United States, 12 F.3d at 1075. And

the Christian doctrine “applies to mandatory contract clauses

which express a significant or deeply ingrained strand of

public procurement policy.” General Engineering & Ma-

chine Works v. O'Keefe, 991 F.2d at 779.

The renewal provision contained in § 5 of the 1965 Act

was by no stretch a mandatory contract term. The Secre-

tary’s contracting authority was derived from a different part

of the 1965 Act — § 3, which authorized the Secretary to

“include in contracts” such “terms and conditions as, in h's

judgment, are required to assure the concessioner of adequate

10a

protection against loss of investment ... resulting from discre-

tionary acts, policies, or decisions of the Secretary occurring

after the contract has become effective....” § 3, 79 Stat. 969.

Section 5 of the 1965 Act was of another sort. It stated that

the Secretary “shall ... giv[e] preference in the renewal of

contracts or permits....” § 5, 79 Stat. 970. Rather than leav-

ing the matter to individual negotiations, §5 required the

Secretary to grant a right of renewal to all concessioners, re-

gardless of the terms of their individual concession contracts.

The provision thus constituted “legislation which merely de-

clares a state policy, and directs a subordinate body to carry it

into effect.” Dodge v. Bd. of Educ., 302 U.S. at 78. We

agree with the district court that if § 5 meant that the Secre-

tary had to insert a preferential right of renewal clause in all

concession contracts, one would have expected a direction, or

at least an authorization, to this effect. 142 F. Supp. 2d at 72.

There is none.

It is possible that some parties nevertheless insisted on

having a right of renewal written into their contracts and that

the Secretary yielded. Possible, but not likely. The conces-

sioners have identified no such contract and the Park Service

is aware of none. 65 Fed. Reg. at 20,664. The Service’s

standard-form concession contract, in effect from 1965 to

1998, contained no right-of-renewal clause. See 65 Fed. Reg.

at 20,632. The regulation under the 1998 Act nevertheless

allows for the possibility and, in compliance with the saving

clause, states that if a concession contract contains an express

right of renewal the Secretary will honor it. 36 C.F.R.

§ 51.102(c) (2000).

Apart from the Christian doctrine, each of the conces-

sioners maintains that the Park Service’s regulation is “fa-

cially invalid because [it denies] altogether the possibility of

implied contractual rights in individual cases” and prevents

“any concessioner in a future proceeding from offering spe-

r |

‘

lla

cific evidence of a bargained-for and mutually-agreed upon

contractual renewal right. If even one concessioner has such

evidence, the regulations denying those rights across-the-

board are unlawful.” Brief for Appellants at 26, 27. In other

words, although the regulation is valid as applied to dozens

of concession contracts, it is invalid because of the possibil-

ity that one concessioner might have an implied — that is, an

unwritten — preferential right of renewal. The argument,

aimed at the validity of the regulation on its face, does not

accurately state the law.

In United States v. Salerno, 481 U.S. 739, 745 (1987),

the Supreme Court stated:

A facial challenge to a legislative Act is, of course,

the most difficult challenge to mount successfully,

since the challenger must establish that no set of cir-

cumstances exists under which the Act would be

valid. The fact that the [statute] might operate un-

constitutionally under some conceivable set of cir-

cumstances is insufficient to render it wholly

invalid, since we have not recognized an “over-

breadth” doctrine outside the limited context of the

First Amendment.

Justice Stevens believes that only the second sentence of

the Salerno excerpt states the governing principle for facial

challenges. He and Justice Scalia have debated whether the

first sentence from Salerno — what has become known as

the “no-set-of-circumstances” test — is instead controlling.

See City of Chicago v. Morales, 527 U.S. 41, 55 (1999) (plu-

rality opinion by Stevens, J., joined by Justices Souter and

Ginsburg); id. at 74-83 (Scalia, J., dissenting). See also

Anderson v. Edwards, 514 U.S. 143, 155 n.6 (1995); Santa

Fe Indep. Sch. Dist. v. Doe, 530 U.S. 290, 318 (2000)

(Rehnquist, C.J., joined by Justices Scalia and Thomas, dis-

senting). For our part, we have invoked Salerno’s no-set-of-

circumstances test to reject facial constitutional challenges.

12a

See, e.g., James Madison Ltd., by Hecht v. Ludwig, 82 F.3d

1085, 1101 (D.C.Cir.1996); Chemical Waste Mgmt., Inc. v.

EPA, 56 F.3d 1434, 1437 (D.C.Cir.1995); Steffan v. Perry,

41 F.3d 677, 693 (D.C.Cir.1994) (en banc).

The facial attack on § 51.102 is not, of course, on the ba-

sis that the regulation is unconstitutional. The claim is that

§ 51.102 conflicts with § 415 of the 1998 Act. In National

Mining Ass'n v. Army Corps of Engineers, 145 F.3d 1399,

1407 (D.C.Cir.1998), we declined to adopt the Salerno test in

a comparable case, stating that the “Supreme Court has never

adopted a ‘no set of circumstances’ test to assess the validity

of a regulation challenged as facially incompatible with gov-

erning statutory law.”

Our examination of Supreme Court precedent in National

Mining apparently overlooked Reno v. Flores, 507 U.S. 292

(1993). There a class of alien juveniles, arrested on suspicion

of being deportable and then detained pending deportation

hearings, claimed that a regulation preventing their release

except to close relative’ violated the Due Process Clause and

conflicted with the underlying statute. The Court, speaking

through Justice Scalia, described the case as involving only a

facial challenge to the regulation and then held as follows:

“To prevail in such a facial challenge, respondents ‘must es-

tablish that no set of circumstances exists under which the

[regulation] would be valid.’ United States v. Salerno, 481

U.S. 739, 745 (1987). That is true as to both the constitu-

tional chalfienges, see Schall v. Martin, 467 U.S. 253, 268

(1984), and the statutory challenge, see [JNS v. National Cen-

ter for Immigrants’ Rights, 502 U.S. 183, 188 (1991) [here-

inafter NCIR]].” 507 U.S. at 301. See Public Lands Council

v. Babbitt, 167 F.3d 1287, 1301 (10th Cir.1999) (applying

the Reno v. Flores formulation to a statutory challenge to a

regulation). Cf Pharmaceutical Research & Mfrs. v. Con-

cannon, 249 F.3d 66, 77 (1st Cir.2001) (applying Salerno in

a preemption case). See also Marc E. Isserles, Overcoming

13a

Overbreadth: Facial Challenges and the Valid Rule Re-

quirement, 48 AM. U. L. REV. 359, 405 (1998).

When an intervening Supreme Court decision alters the

law of the circuit, a panel of our court must follow the

Court’s decision in all later cases. See, e.g., McKesson Corp.

v. Islamic Republic of Iran, 52 F.3d 346, 350 (D.C.Cir.1995);

National Treasury Employees Union v. FLRA, 30 F.3d 1510,

1516 (D.C.Cir.1994). But here the Supreme Court decision

was not intervening; it was rendered before National Mining.

Whether despite Reno v. Flores, National Mining therefore

must stand as circuit law unless and until the full court over-

rules it is a question unnecessary for us to answer. See

LaShawn A. v. Barry, 78 F.3d 1389, 1395 (D.C.Cir.1996) (en

banc). National Mining dealt only with the no-set-of-

circumstances formulation of Salerno. It did not mention

NCIR, the opinion cited in Reno v. Flores for the proposition

that Salerno applied to statutory challenges. Justice Stevens,

writing for the Court in NCIR, held: “That the regulation

may be invalid as applied in some cases, however, does not

mean that the regulation is facially invalid because it is with-

out statutory authority.” 502 U.S. at 188. NCIR, without cit-

ing Salerno, echoed in a non-constitutional setting the

sentence in Salerno following the no-set-of-circumstances

test — “The fact that the [statute] might operate unconstitu-

tionally under some conceivable set of circumstances is in-

sufficient to render it wholly invalid,” 481 U.S. at 745. See

Janklow v. Planned Parenthood, 517 U.S. 1174 (1996)

(memorandum of Stevens, J., on denial of certiorari).

Either formulation — the no-set-of-circumstances test

adopted from Salerno in Reno v. Flores, or the less strict

NCIR standard — may pose potential problems for judicial

review of agency regulations, especially in this circuit. Lack-

ing a rulemaking record containing evidence relating to the

rule’s application to a particular entity, petitioners ordinarily

mount only facial attacks, often on the ground that the

agency’s product conflicts with the statute. In such cases, the

l4a

consequence of upholding the regulation because it is not in-

valid in all its applications (Reno v. Flores), or because it is

invalid in only some of its applications (NCIR), may be that

petitioners would have to make their challenge in another

circuit and in another setting, in defense of an enforcement

action for instance. Some of the statutes governing jurisdic-

tion prescribe a specific time period for judicial review of

regulations, restrict venue to our circuit, and may prohibit

review outside the time period, except in limited circum-

stances. See, e.g., Clean Air Act, 42 U.S.C. § 7607(b); Com-

prehensive Environmental Response, Compensation, and

Liability Act of 1980 (CERCLA), 42 U.S.C. § 9613(a);

Adamo Wrecking Co. v. United States, 434 U.S. 275 (1978);

United States v. Ethyl Corp., 761 F.2d 1153 (Sth Cir.1985);

Frederick Davis, Judicial Review of Rulemaking: New Pat-

terns and New Problems, 1981 DUKE L.J. 279, 285-90. Al-

though one court has held that the Clean Air Act, 42 U.S.C.

§ 7607(b), deprived it of jurisdiction to review EPA regula-

tions when they are applied, see Potomac Elec. Power Co. v.

EPA, 650 F.2d 509, 513 (4th Cir.1981), we have ruled that

preclusion must be explicit for review to be barred in an en-

forcement action, see Indep. Cmty. Bankers of Am. v. Bd. of.

Governors of Fed. Reserve Sys., 195 F.3d 28, 34

(D.C.Cir.1999), and that even express preclusion may not

operate when the issue would have been unripe during the

period of statutory review. See Clean Air Implementation

Project v. EPA, 150 F.3d 1200, 1204 (D.C.Cir.1998). Per-

haps the congressional intent reflected in judicial review pro-

visions such as § 7607(b) of the Clean Air Act may also

demand adjustments in the Reno v. Flores or NCIR test for

reviewing facial attacks on regulations, assuming the tests are

not constitutionally compelled. See City of Chicago v.

Morales, 527 U.S. at 77 (Scalia, J., dissenting).

Whatever the outcome in such cases, the situation here is

not comparable. Our circuit does not have exclusive jurisdic-

tion over Park Service regulations, and judicial review is not

15a

confined to a particular time period. Nothing would preclude

a concessioner from bringing an action for a declaratory

judgment that the regulation, as applied to the concessioner,

deprives it of a contractual right in violation of the savings

clause. In fact, one of the consolidated actions in the district

court was such a suit. Amfac’s complaint alleged that its

1969 contract for the Grand Canyon was about to-expire, that

the contract contained an implied preferential nght of re-

newal arising “from the circumstances of the formation of the

1969 contract,” that the Park Service’s regulation denied the

existence of such an implied term, and that the regulation as

applied to Amfac therefore violated § 415 of the 1998 Act.

Although § 51.102 may be valid on its face, this would not

necessarily doom Amfac’s as-applied challenge.

With this in mind, we return to the concessioners’ asser-

tion that if “even one concessioner has [evidence showing an

implied right of renewal], the regulations denying those

rights across-the-board are unlawful.” Brief for Appellants at

27. We do not need to choose between Reno v. Flores or

NCIR to dispose of that contention. Not even First Amend-

ment overbreadth analysis — which embodies a far more dif-

ficult standard for laws to satisfy than the one the Court

formulated in Salerno — would render a law facially invalid

because of the prospect of a single invalid application. An

overbreadth attack will succeed only if the legislation is sub-

stantially overbroad — that is, only if the law “reaches a sub-

stantial number of impermissible applications.” New York v.

Ferber, 458 U.S. 747, 771 (1982). That there might be one

invalid application is therefore far from enough to make the

regulation unlawful under any of the standards we have men-

tioned.

Perhaps recognizing as much, the concessioners assert

that “some contracts might as a factual matter include the

[renewal] right as a bargained-for term,” a “possibility” (de-

spite obstacles posed by the parol evidence rule and perhaps

statutes of fraud) they think is enough to render the regula-

16a

tion unlawful. Brief for Appellants at 29. But far more is

demanded before a regulation may be declared facially inva-

lid. Under Reno v. Flores, § 51.102 must of course be sus-

tained on its face because there are circumstances in which

applying the regulation would not be inconsistent with § 415

of the 1998 Act. The regulation’s requirement of an express

contract term, for instance, properly eliminates claims of an

implied renewal right based on the Christian doctrine alone.

Even under the more relaxed standard of NCIR, it is not

enough that “some contracts might as a factual matter” con-

tain an implied renewal night. To repeat, that “the regulation

may be invalid as applied in some cases, however, does not

mean that the regulation is facially invalid because it is with-

out statutory authority.” NCIR, 502 U.S. at 188. We there-

fore reject the concessioners’ facial attack on § 51.102.

In reaching this result we have followed a course differ-

ent than that of the district court. We should explain why.

The district court thought the “lawfulness of the defendants’

regulations turns on whether the plaintiffs each have a con-

tractual right to preference renewal.” 142 F. Supp. 2d at 71.

With this we agree. We also agree — as our discussion of

the Christian doctrine indicates — with the district court’s

conclusion that the 1965 Act did not itself confer a contrac-

tual renewal right on the concessioners. Jd. at 72. As to the

concessioners’ allegations that they had an implied-in-fact

contract embodying their nght of renewal, the court rejected

these claims on the basis that “the administrative record pro-

vides no indication that the parties had the mutual under-

standing that the contract contained the renewal terms.” /d.

at 73. (The court must have had in mind all existing conces-

sion contracts, not just one.) The court added that the admin-

istrative record “is wholly devoid of information suggesting

that the [Park Service] intended the renewal term to be part

of the contract.” Jd. But that is entirely understandable in

light of the fact that the Park Service’s proposed rule dealing

with nights of renewal did not contain the restriction requir-

17a

ing the renewal right to be spelled out as an express term.

See Concessions Contracts, 64 Fed. Reg. 35,516, at 35,535

(proposed June 30, 1999). The concessioners thus had no

reason to submit evidence of implied renewal rights in each

of their contracts, assuming this sort of evidence would have

been allowed in the rulemaking proceeding or could have

been mustered. Moreover, the Park Service never indicated

that its final regulation rested on the district court’s rationale.

See SEC v. Chenery, 332 U.S. 194, 196 (1947). After deny-

ing that the right could be inferred from the 1965 Act, the

Park Service explained that an implied renewal nght “is in-

consistent with the express terms of almost all current NPS

concession contracts,” 65 Fed. Reg. at 20,633. Most con-

tracts, according to the Park Service, contained a provision

along these lines:

This Contract [or permit] and the administration of

it by the Secretary shall be subject to the laws of

Congress governing the Area and rules, regulations

and policies whether now in force or hereafter en-

acted or promulgated.

Id. But that begs the question the concessioners posed here

(and in the rulemaking, see Comments of the National Park

Hospitality Ass’n at 23 (Oct. 14, 1999)). The savings clause

of the 1998 Act is one of the “laws of Congress” to which

this contractual provision refers. If a concessioner has an

implied right of renewal in a pre-1998 contract, the savings

clause preserves it. The Park Service does not deny the pos-

sibility of an implied contractual provision — that is, an un-

written one — in government contracts. See Willard L.

Boyd, III & Robert K. Huffman, The Treatment of Implied-

in-Law and Implied-in-Fact Contracts and Promissory Es-

toppel in the United States Claims Court, 40 CATH. U. L.

REV. 605 (1991); Michael C. Walch, Note, Dealing with a

Not-so-Benevolent Uncle: Implied Contracts with Federal

Government Agencies, 37 STAN. L. REV. 1367 (1985). The

district court, quoting Hercules, Inc. v. United States, 516

18a

U.S. 417, 424 (1996), summarized the law on the subject: an

implied-in-fact contract requires a meeting of the minds,

which may be inferred from the “conduct of the parties show-

ing, in light of the surrounding circumstances, their tacit un-

derstanding.” The concessioners alleged that there have been

such meetings of the mind, at least in some instances. None-

theless, we agree with the district court that the regulation is

facially valid. As we explained earlier, the possibility that

one or some concessioners had an implied-in-fact renewal

right is not a sufficient basis for holding § 51.102 of the regu-

lations invalid on its face.

This still leaves the allegations in Amfac’s complaint that

§ 51.102 was inconsistent with the savings clause of the 1998

Act as applied to Amfac’s concession contract for the Grand

Canyon. Complaint of Amfac Resorts at {J 21, 41. Amfac

entered into that contract in 1969. The contract expired on

December 31, 2001, after the district court’s judgment. Am-

fac turned out to be the only offeror and so the government

argues that its as-applied challenge to the right-of-renewal

regulation is moot: “Amfac can have no ‘preference’ for [the

Park Service] to consider when there are no other offerors.”

Brief for Appellees at 33. Even if Amfac eventually won the

Grand Canyon contract, a subject about which we are not in-

formed, we do not believe its as-applied challenge would

necessarily be moot. Amfac argues that because § 51.102

threw its alleged implied renewal right in doubt, it “was

forced to bid more generously for the Grand Canyon contract

than it otherwise would have.” Reply Brief for Appellants at

16. If this assertion can be proven, see Lujan v. Defenders of

Wildlife, 504 U.S. 555 (1992), then Amfac continues to suf-

fer an injury and the case is not moot. See Scheduled Air-

lines Traffic Offices v. Dep't of Def., 87 F.3d 1356, 1358

(D.C.Cir.1996).

Amfac can succeed in its claim that the regulation is inva-

lid as-applied to its 1969 Grand Canyon contract only if it

can prove the essential predicate — that the regulation, in

19a

contradiction to the savings clause of the 1998 Act, deprived

it of a contractual right. Amfac therefore should be allowed

to adduce proof of its alleged implied right of renewal and

should be permitted reasonable discovery to this end. The

district court refused to allow any discovery on the ground

that judicial review of the regulation must be confined to the

administrative record, except in limited circumstances not

presented here. 143 F. Supp. 2d at 10-13. See Am. Bankers

Ass'n v. Nat’l Credit Union Admin., 271 F.3d 262, 266-67

(D.C.Cir.2001); Esch v. Yeutter, 876 F.2d 976, 991-92

(D.C.Cir.1989). We said in American Bankers, with respect

to a claim that a regulation conflicted with a statute, that the

court did not even need the administrative record to deter-

mine the validity of the regulation. 271 F.3d at 266-67. But

we were speaking there of a facial attack on the regulation.

We agree with the district court’s denial of discovery to that

extent. Amfac’s as-applied claim is another matter. Its evi-

dence of an implied renewal right would not be presented to

show what the Park Service did or did not consider in prom-

ulgating § 51.102 of the regulations. It would be presented

instead to show that the regulation would deprive it of a con-

tractual right in contravention of the savings clause in the

1998 Act. In this respect, the evidence Ainfac proposes to

adduce is akin to proof of its injury. Those challenging

agency action must establish that they have standing and to

do this, they must prove that the action causes injury to them.

Lujan, 504 U.S. at 560-61. They are not confined to the ad-

ministrative record. Far from it. Beyond the pleading stage,

they must support their claim of injury with evidence. Jd. So

here. In mounting an as-applied challenge to a regulation,

whether in defense of an enforcement action or as here in an

action for a declaratory judgment, the party making the chal-

lenge may — indeed, in most instances must — present evi-

dence outside the administrative record to show why its

particular circumstances render the regulation unlawful.

20a

We therefore reverse the district court’s grant of sum-

mary judgment on Amfac’s as-applied challenge to the pro-

spectus for concessions at the Grand Canyon National Park.

In doing so, we recognize that one of the claims of another

plaintiff, Hamilton Stores, Inc., might be construed as an as

applied challenge similar to that of Amfac. Complaint of

Hamilton Stores, Inc. at § 21. But the concessioners’ brief

presents no argument to this effect; in fact, neither the con-

cessioners’ brief nor their reply brief even mentions this por-

tion of the Hamilton Stores complaint. We thus view the

claim, which the district court rejected, as having been

waived on appeal. See, e.g., Doe v. Dist. of Columbia, 93

F.3d 861, 875 n.14 (D.C.Cir. 1996) (per curiam).

Il.

The 1998 Act, as did the 1965 Act, recognized that the

United States owns all capital improvements constructed on

federal land within the National Park System. 16 U.S.C.

§ 5954(d). Nonetheless, the 1998 Act gave concessioners a

“leasehold surrender interest” in any “capital improvement”

the concessioner “constructs” “pursuant to a concession con-

tract.” 16 U.S.C. § 5954(a). The Act defines “capital im-

provement” as “a structure, fixture, or nonremovable

equipment provided by a concessioner pursuant to the terms

of a concession contract.” 16 U.S.C. § 5954(e). When the

concession contract expires or is terminated, the incumbent is

entitled to receive from its successor (or the government) the

valve of this interest. 16 U.S.C. § 5954(c). The amount of

each concessioner’s “leasehold surrender interest” — or, as

the parties call it, LSI — is “equal to the initial value (con-

struction cost of the capital improvement), increased (or de-

creased)” by a percentage measured by the Consumer Price

Index, less depreciation. 16 U.S.C. § 5954(a)(3). If the ex-

piring concession contract is renewed, the concessioner’s LSI

carries over. 16 U.S.C. § 5954(b).

2la

The plaintiff-concessioners are unhappy with the Park

Service’s regulations implementing these and other LSI pro-

visions of the 1998 Act. They say that “‘capital improve-

ment’ is a well-recognized technical accounting term that all

companies, as a matter of financial reporting, tax accounting,

and sound business practice use to distinguish upgrades to

facilities from ordinary ‘repair and maintenance’ costs.”

Brief for Appellants at 41. For support they cite an affidavit

from an accountant submitted by Amfac in the district court.

But the district court refused to consider, in this facial chal-

lenge, affidavits not submitted as part of the administrative

record, 142 F. Supp. 2d at 73, and so shall we. Concession-

ers have not attempted to show why affidavits outside the

agency record should be considered. See Steven Stark &

Sarah Wald, Setting No Records: The Failed Attempt to

Limit the Record in Review of Administrative Action, 36

ADMIN. L. REV. 333, 341-54 (1984). Still, we may acknowl-

edge the standard accounting definition cf capital expendi-

ture — an expenditure that extends the useful life of the asset

or increases the asset’s value, and is not repair and mainte-

nance. Whether an expenditure fits within the first category

and thus must be depreciated or amortized, or the other cate-

gory and thus must be expensed, often calls for difficult, fact-

intensive judgments. See GLENN A. WELSCH & CHARLES T.

ZLATKOVICH, INTERMEDIATE ACCOUNTING 443-46 (8th

ed.1989); GARY L. SCHUGART, ET AL., SURVEY OF ACCOUNT-

ING 197-212 (6th ed.1988); GLENN A. WELSCH & DANIEL G.

SHORT, FUNDAMENTALS OF FINANCIAL ACCOUNTING 448-49

(5th ed.1987). As to tax accounting, which the concessioners

invoke without any citation to the law, we think this is en-

tirely beside the point. The tax code states that no deduction

shall be allowed for “[a]ny amount paid out for new build-

ings or for permanent improvements or betterments made to

increase the value of any property or estate.” 26 U.S.C.

§ 263. In practice, there is a decided tilt to capitalizing many

items because deductions are, as the Supreme Court put it in

22a

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992),

“strictly construed.” That rule of interpretation, of course,

has no bearing on whether a particular expenditure by a con-

cessioner should be treated as an addition to its LSI. Besides,

we do not understand what the concessioners see as the prob-

lem here. The regulation of the Park Service repeats, word

for word, the statute’s definition of “capital improvement.”

Compare 16 U.S.C. § 5954(e) with 36 C.F.R. § 51.51. To

the extent the concessioners are claiming that it was incum-

bent upon the Park Service to add a gloss to the statutory

definition, a gloss drawn from accounting standards, they are

mistaken, as the district court held. See 142 F. Supp. 2d at

83. While agencies may have leeway in interpreting the stat-

utes they administer, there is no rule of law compelling them

to embellish what Congress has enacted.

The concessioners also complain about § 51.67 of the

regulations, 36 C.F.R. § 51.67, and the “Repair and Mainte-

nance Reserve” in the Park Service’s “Standard Concession

Contract,” 65 Fed. Reg. at 26,069. Section 51.67 provides

that concessioners do not earn LSI “for repair and mainte-

nance of real property improvements unless a repair and

maintenance project is a major rehabilitation.” “Major reha-

bilitation” is defined in 36 C.F.R. § 51.51 as a pre-approved

“comprehensive rehabilitation” project the “construction cost

of which exceeds fifty percent of the pre-rehabilitation value

of the structure.” (The phrase “repair and maintenance” is

not defined, in the regulations or in the 1998 Act.) The Stan-

dard Concession Contract requires concessioners to establish

a reserve fund for repairs and maintenance projects, which

“may include repair or replacement of foundations, building

frames, window frames, sheathing, subfloors, drainage, reha-

bilitation of building systems such as electrical, plumbing,

built-in heating and air conditioning, roof replacement and

similar projects.” 65 Fed. Reg. at 26,069.

The concessioners object that § 51.67 allows LSI only for

“projects costing more than 50% of a structure’s replacement

23a

costs....” 36 C.F.R. § 51.67. What types of “projects” they

do not say. If the project is a “capital improvement” it is

added to the LSI no matter what the cost of construction. See

142 F. Supp. 2d at 83. If the project is for repair and mainte-

nance it does not qualify, as even the concessioners agree.

The 50% regulation — § 51.67 — deals with the question

whether an outlay that would otherwise be considered an ex-

penditure for repair and maintenance should constitute a

capital improvement because, for instance, the repairs are so

extensive. How a particular project should be classified will

depend greatly on the particular facts, as it does even in tax

cases. See INDOPCO, Inc., 503 U.S. at 86. Nonetheless, the

parties quarrel about hypothetical projects. The Park Service

says that if a concessioner replaced a damaged dry wall or a

rotted beam in a building these would not qualify as capital

improvements and thus would not be included in the conces-

sioner’s LSI. Brief for Appellees at 36; 65 Fed. Reg. at

20,656. The concessioners argue that the cost of replacing a

hotel’s brick fireplace would be included. 142 F. Supp. 2d at

83. Replacement of a foundation, according to the conces-

sioners, also would clearly be a capital improvement; accord-

ing to the Park Service it would not qualify because a

foundation is “merely a component of a structure,” rather

than a “structure, fixture or nonremoveable equipment.”

Compare Brief for Appellants at 44 with Brief for Appellees

at 39. This last dispute arises because the repair and mainte-

nance reserve clause in the standard contract mentions foun-

dations. But all the clause says is that repair and

maintenance “may” include repair or replacement of founda-

tions. 65 Fed. Reg. at 26,069.

The district court, after considering these arguments and

others, thought it could not give a definitive answer to the

issues thus posed. Echoing Reno v. Flores, 507 U.S. at 301,

and NCIR, 502 U.S. at 188, without citing the cases, the court

ruled as follows: “the Court cannot say that the regulation,

on its face, will be unlawful in its every application. Thus,

24a

this challenge to the regulation must fail.” 142 F. Supp. 2d at

85. The court was referring only to the concessioners’ attack

on the “Repair and Maintenance Reserve” clause but we

think its reasoning applies equally to the 50% rule in § 51.67.

It is entirely possible that a project calling for repairs to a

roof, the replacement of floor boards, the renovation of wir-

ing and plumbing, and so forth would not ordinarily qualify

as a “capital improvement.” Yet if the total cost of the repair

project exceeded 50% of the pre-repair value of the structure

it would be added to the LSI. See 36 C.F.R. §§ 51.51, 51.67.

In that circumstance a concessioner would have no cause for

complaint. On the other hand, if the rehabilitation project

satisfied the statutory and regulatory definition of a “capital

improvement” it would be unlawful for the Park Service to

invoke § 51.67 and refuse to treat the expenditure as an addi-

tion to the concessioner’s LSI. We do not suggest that the

Park Service would do anything of the sort. See 65 Fed. Reg.

at 20,656-57. Our point is that on the face of the regulations,

the most we can imagine is that in some applications — de-

pending on how the Park Service administers the LSI regula-

tions — there may be a conflict with the statute. That is not a

sufficient basis for holding the regulations unlawful on their

face, for the reasons given in part I.B. of this opinion.

The concessioners have two other problems with the LSI

regulations. The first relates to 16 U.S.C. § 5954(a)(3) and

the valuation of LSI: each concessioner’s “leasehold surren-

der interest is equal to the initial value (construction cost of

the capital improvement), increased (or decreased)” by a per-

centage measured by the Consumer Price Index, less depre-

ciation. The implementing regulation, 36 C.F.R. § 51.51,

defines “construction cost” as “the total of the incurred eligi-

ble direct and indirect costs necessary for constructing or in-

stalling the capital improvement....” “Eligible direct and

indirect costs” are costs “in amounts no higher than those

prevailing in the locality of the project,” id. It is this “local-

25a

ity” limitation to which the concessioners object. Projects in

national parks, they tell us, are almost always more expen-

sive to construct than “similar private projects in nearby lo-

calities, and Congress could not reasonably have intended

that concessioners swallow such costs without LSI credit,” a

point the Park Service does not dispute. Brief for Appellants

at 47-48. But as the Park Service points out, the concession-

ers’ argument assumes that “locality” means outside the na-

tional park. The regulations do not so state and we see no

basis for indulging in that assumption. It may be that the

Park Service’s particular interpretation regarding a particular

project in a particular national park could unreasonably limit

the valuation of a concessioner’s LSI. But that is no reason to

hold that the regulation conflicts with the statute or that it is

arbitrary. If a concessioner has its own construction com-

pany, as some apparently do, nothing in the 1998 Act re-

quires the Park Service to accept whatever amount the

concessioner decides to charge itself for the construction

work. See 65 Fed. Reg. at 20,651. Like the district court, we

therefore sustain the regulation.

The concessioners’ remaining problem with the LSI regu-

lations deals with 16 U.S.C. § 5954(a)(5): if the conces-

sioner “makes a capital improvement to an existing capital

improvement in which the concessioner has a leasehold sur-

render interest, the cost of such additional capital improve-

ment shall be added to the then current value of the

concessioner’s leasehold surrender interest.” Their claim is

that § 51.65 of the regulations conflicts with this provision.

The regulation states:

A concessioner that replaces an existing fixture in

which the concessioner has a leasehold surrender in-

terest with a new fixture will increase its leasehold

surrender interest by the amount of the construction

cost of the replacement fixture less the construction

cost of the replaced fixture.

26a

36 C.F.R. § 51.65. This regulation is unlawful, according

to the concessioners, because there is nothing in the statute

allowing subtractions from a concessioner’s LSI. They also

believe the calculations required by the regulation would be

an administrative nuisance. In the Grand Canyon concession,

for instance, there are about 300 structures with many thou-

sands of fixtures.

The district court sustained the regulation for reasons

given by the Park Service, reasons we also find persuasive.

Without the regulation, concessioners would receive a wind-

fall every time they removed a fixture and replaced it with a

new one: -

If a [concessioner] with a leasehold surrender inter-

est in the hotel were to replace the hotel furnace

once every five years for 15 years, the plaintiffs’

proposed accounting would be to increase the lease-

hold surrender interest three separate times by the

cost of the furnace. Under this approach, the [con-

cessioner] would hold a leasehold surrender interest

equal to four furnaces, even though the hotel would

only contain one.

142 F. Supp. 2d at 88 n.16. As to the concessioners’ tex-

tual argument, it is true that the statute speaks only of addi-

tions not subtractions. But under the regulation the

calculation is of net additions to LS] — the difference be-

tween the cost of the new fixture and the discarded one.

When concessioners replace fixtures for a greater cost, their

LSI will increase. The regulation deals with how much the

increase should be. The statute, which speaks in terms of

additions not replacements, does not address that subject.

We therefore reject the concessioners’ argument that § 51.65

of the regulations is inconsistent with 16 U.S.C. § 5954(a)(5).

We reject as well their argument that the regulation is unrea-

sonable. The Park Service’s policy of avoiding the windfalls

that would result without the regulation is reason enough to

27a

sustain § 51.65, despite the administrative burdens it may

generate.

Il.

The concessioners claim the Park Service wrongly ex-

cluded concessions contracts from coverage under the Con-

tract Disputes Act, 41 U.S.C. § 601 et seg. See 36 C.F.R.

§ 51.3; 65 Fed. Reg. at 20,635.

Enacted in 1978, the Contract Disputes Act provides an

alternative forum for government contract disputes. Rather

than seeking judicial relief in the Court of Federal Claims, a

contractor may appeal decisions by a contracting official to

an administrative board within that agency. 41 U.S.C. § 607.

The board’s decision may be appealed to the U.S. Court of

Appeals for the Federal Circuit. 41 U.S.C. § 607(g).

Section 51.3 of the regulations states that concession con-

tracts are not “contracts” within the meaning of the Contract

Disputes Act. 36 C.F.R. § 51.3 (2000). With this we agree.

The Act applies to any “express or implied contract” for the

“procurement” of “property,” “services” or “construction.”

41 U.S.C. § 602(a)(2). A procurement contract, the Park

Service reasoned, “is a contract for which the government

bargains for, and pays for, and receives goods and services.”

65 Fed. Reg. at 20,635. Concession contracts are not of that

sort. Their function is not to procure services or goods for

the government. Instead, as the Park Service put it, conces-

sion contracts “authorize third parties to provide services to

park area visitors.” Jd. While the Park Service does not ad-

minister the Contract Disputes Act, and thus may not have

interpretative authority over its provisions, its reasoning finds

support not only in the terms of that statute but also in the

National Parks Omnibus Management Act of 1998, under

which the Park Service may enter into concession contracts

“to authorize a person, corporation or other entity to provide

accommodations, facilities and services to visitors to” na-

tional parks. 16 U.S.C. § 5952. The Committee reports ac-

28a

companying the 1998 Act also concluded that concession

“contracts do not constitute contracts for the procurement of

goods and services for the benefit of the government or oth-

erwise,” S. REP. NO. 105-202, at 39 (1998); H.R. REP. No.

105-767, at 43 (1998), a position the Park Service had

reached earlier with respect to concession contracts under the

1965 Act. See, e.g., Concessions Contracts and Permits, 57

Fed. Reg. 40,496, at 40,498 (Sept. 3, 1992) (reiterating that

the Park Service “has never considered [concessions con-

tracts] a type of federal procurement contract”). The Court

of Federal Claims, considering the nature of concession con-

tracts, also concluded that “this arrangement does not consti-

tute a procurement, but is a grant of a permit to operate a

business.” YRT Servs. Corp. v. United States, 28 Fed. Cl.

366, 392 n.23 (1993). The decision rested, in part, on the

fact that “the government is not committing to pay out gov-

ernment funds or incur any monetary liability.” Jd.

As against this analysis, the concessioners cite several

decisions of the Interior Department Board of Contract Ap-

peals [IBCA], a body created by Interior Department regula-

tions, see 41 U.S.C. § 607(a); 43 C.F.R. § 4.100 ef seg.

(2000). The IBCA has held that the Contract Disputes Act

applies to concession contracts. See, e.g., Appeal of Watch

Hill Concession, Inc., IBCA No. 4284-2000, 2001 WL

170911 (2001); Appeal of Nat'l Park Concessions, Inc.,

IBCA No. 2995, 1994 WL 462401 (1994). But the decisions

of this body “on any question of law shall not be final or

conclusive.” 41 U.S.C. § 609(b). And the IBCA’s rationale

for determining that concession contracts are procurement

contracts is flawed. In its first opinion to consider the issue,

the IBCA acknowledged that the Contract Disputes Act does

not cover all contracts but then assumed that the Act does

apply unless coverage is explicitly foreclosed. See Appeal of

R & R Enters., IBCA No. 2417, 1989 WL 27790, at 24-25

(Mar. 24, 1989). Nothing in the Act suggests such a sweep-

ing presumption. Another IBCA opinion states that if any

;

wore

29a

“benefit” can be traced to the government, then the Contract

Disputes Act must apply. Appeal of Nat'l Park Concessions,

Inc., IBCA No. 2995, 1994 WL 462401, at 14 (Aug. 18,

1994). The primary purpose of concessions contracts is to

permit visitors to enjoy national parks in a manner consistent

with preservation of the parks. 16 U.S.C. § 5951. That the

government receives monetary compensation or incidental

benefits from the concessioners’ performance is not enough

to sweep these contracts into the ambit of the Contract Dis-

putes Act.

IV.

The concessioners’ last complaint deals with the portion

of the new regulations designed to deal with transactions in-

volving corporate concessioners (see 65 Fed. Reg. at 20,661).

One of the regulations states:

The concessioner may not assign, sell, convey,

grant, contract for, or otherwise transfer (such trans-

actions collectively referred to as “assignments” for

purposes of this part), without the prior written ap-

proval of the Director, any of the following:

(a) Any concession contract;

concession contract;

36 C.F.R. § 51.85(a) & (c). A similar regulation prohibits,

without prior approval, any “encumbrance” of a “controlling

interest in a concessioner.” 36 C.F.R. § 51.86(c). In the con-

cessioners’ view, the regulations extend beyond the statute.

The 1998 Act forbids any “concessions contract” from being

“transferred, assigned, sold, or otherwise conveyed or

pledged by a concessioner” without government approval.

16 U.S.C. § 5957(a). Approval must be given unless “the

30a

entity seeking to acquire a concessions contract is not quali-

fied” or the transfer or conveyance would otherwise ad-

versely affect performance of the contract in a manner

specified in 16 U.S.C. § 5957(b). The crucial difference be-

tween the regulations and the statute, the concessioners say,

is that the regulations require approval of transactions dealing

not only with the transfers or assignments of concession con-

tracts but also with changes in control of the concessioner.

The Park Service responds that its change-of-control rule en-

sures that unqualified persons do not wind up holding con-

cession contracts. Unlike individuals, a corporation can in

effect transfer a concession contract by selling its stock to

another entity. 65 Fed. Reg. at 20,661. As the Park Service

sees it, the regulations are a permissible construction of the

statutory phrase “otherwise conveyed or pledged,” an argu-

— which the district court agreed. 142 F. Supp. 2d at

How the Park Service regulations will operate does not

exactly leap from the pages of the Federal Register. It is easy

enough to see that if X corporation wanted to sell all its as-

sets, including its concession contract, it would first have to

get approval of the Director of the Park Service. No one

doubts that the regulation properly requires as much. The

Park Service also believes that if the non-public X corpora-

tion structured the transaction as a sale of 100% of its stock

instead of an asset sale, there would be no functional differ-

ence as far as the concession contract is concerned. See

Alarm Indus. Communications Comm. v. FCC, 131 F.3d

1066, 1070-71 (D.C. Cir.1997). It is only a short leap to the

conclusion that if, rather than a sale of 100% of the stock, X

corporation sold some lesser amount representing a control-

lations define controlling interest in much the same manner

as the Securities and Exchange Commission, see, e.g., 17

C.F.R. § 210.1-02(g), that is, not in terms of any particular

percentage of outstanding voting stock. Rather, a “controlling

3la

interest” in a corporate concessioner constitutes “sufficient

outstanding voting securities” of “the concessioner or related

entities that permits the exercise of managerial authority”

over the concessioner. 36 C.F.R. § 51.84.

Beyond these simple examples we enter a vale of ambi-

guity. Transactions of the sort just described are not the fo-

cus of the concessioners’ concern. Their problem is that the

regulations--as they read them — require Park Service ap-

proval of transactions undertaken by the concessioners’

“shareholders or their affiliates.” Brief for Appellants at 55.

But do they? The shareholders of incorporated concessioners

are typically not individuals but parent corporations. The

Park Service reports that “many” of its concessioners “are

corporations that hold a concession contract 4s their exclu-

sive business activity” and that almost all of the largest con-

cessioners are “wholly owned subsidiaries of larger

corporations.” 65 Fed. Reg. at 20,661. One of the plaintiffs

here, ARAMARK Sports and Entertainment Services, Inc., is

a wholly-owned subsidiary of ARAMARK/HMS Company,

which is a wholly-owned subsidiary of ARAMARK Sports

and Entertainment Group; Inc., which is a wholly-owned

subsidiary of ARAMARK Corporation, which is listed on the

New York Stock Exchange. Brief for Appellants at iv.

Wholly-owned means, in the case of incorporated sub-

sidiaries, that the parent corporation holds all of the subsidi-

ary corporation’s stock. What worries the concessioners is

that transactions by the parent could potentially require Park

Service approval if a change in control would result. But the

regulations do not read that way. The critical provision is 36

C.F.R. § 51.8. It speaks only of sales, assignments, convey-

ances and so forth by the “concessioner.” The term “conces-

sioner,” in regulatory parlance, “is an individual, corporation,

or other legally recognized entity that duly holds a conces-

sion contract,” 36 C.F.R. § 51.3 — a definition that at least

on its face encompasses only the subsidiary corporation, not

the parent. It therefore appears that if the parent corporation

32a

engages in a sale-of-control transaction, this would not re-

quire approval because the concessioner — the subsidiary

corporation — would not be doing the selling. The attorneys

for the Park Service say, in their brief, that the regulations do

indeed cover transactions by the corporate concessioner’s

parent company. Brief for Appellees at 53-54. But they do

not parse the language of the regulations, and they point to

nothing in the Park Service’s explanation of its regulations

that goes so far. In fact, the Park Service justified its regula-

tions on the basis that it would be “anomalous” if a “corpo-

rate concessioner” could sell “its stock to a new party (sale of

a controlling interest)” without having to seek Park Service

approval. 65 Fed. Reg. at 20,661. If, despite the language of

the regulations, transactions at the parent level are also sup-

posed to be covered, we are far trom certain how the Park

Service intends to implement its rules. An investor might

begin purchasing stock of the parent corporation of a corpo-

rate-concessioner on the open market. Must the concessioner

corporation go to the Park Service and ask for approval of the

outsider’s purchases of the parent when the outsider’s per-

centage of the outstanding shares reaches some magic num-

ber? That makes no sense. Neither the concessioner

corporation nor the parent corporation has any control over

the purchaser. Perhaps this is why the regulation seems to

speak only in terms of the concessioner selling its stock. If

the regulations do not cover the transaction just mentioned,

but do cover a sale of control by a parent corporation, the

Park Service would have to justify a rule that allows an out-

sider, a complete stranger, to gain a “controlling interest”

through open market purchases but requires approval before

the parent makes a block sale to the same person. Control of

the parent, and thus of the subsidiary concessioner, would

transfer in both situations, and under the Park Service’s the-

ory, so would the concession contract, yet the one transaction

would be regulated and the other not.

33a

The short of the matter is that we do not know whether

the problems the concessioners identify exist. We cannot be

sure that the Park Service will apply its sale-of-control regu-

lations to transactions involving only sales of stock by corpo-

rate concessioners (as distinguished from open market sales

by shareholders or sales by a parent company of its stock).

The questions thus raised, and the other questions posed by

the many possible forms of corporate restructuring (see, e.g.,

1 MARTIN D. GINSBURG & JACK S. LEVIN, MERGERS, AC-

QUISITIONS, AND BUYOUTS 105 (2001)), present “too many

imponderables” to permit judicial review at this time. Clean

Air Implementation Project v. EPA, 150 F.3d at 1200. This

aspect of the case, in other words, is not ripe. See Media Ac-

cess Project v. FCC, 883 F.2d 1063, 1070 (D.C.Cir.1989).

The “classic institutional reason” for postponing review is the

“need to wait for a ‘rule to be applied [to see] what its effect

will be,’“ Louisiana Envtl. Action Network v. Browner, 87

F.3d 1379, 1385 (D.C.Cir.1996) (quoting Diamond Sham-

rock Corp. v. Costle, 580 F.2d 670, 674 (D.C.Cir.1978)).

The issues here can be presented in a more “concrete” set-

ting. Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967);

Ass'n of Am. R.R., 146 F.3d 942, 946 (D.C.Cir.1998). The

regulations state that “[a]ssignments” without the prior ap-

proval of the Park Service will be considered “null and void”

and will be viewed as a “material breach of the applicable

concession contract which may result in termination of the

contract for cause.” 36 C.F.R. § 51.88. Whether this means

the Park Service will deem transfers of controlling interests

in a concessioner’s parent as “null and void” is not at all

clear. But the prospect certainly can give rise to an interested

party’s seeking the Park Service’s judgment that its proposed

transaction does not need approval. A lawsuit could be

brought if the concessioner is dissatisfied with the answer.

Then at least the court would have some idea of what the

Park Service thinks its regulations cover. Then too the valid-

ity of the regulations, as thus interpreted, could be deter-

34a

mined in light of the language of the statute, which speaks

only of transfers of concession contracts.

The possible hardship to the concessioners in waiting

does not alter our conclusion that the issues are not ripe. No

concessioner has indicated that a transfer of control is immi-

nent. We therefore have no reason to believe that in the im-

mediate future they will have to alter their conduct to their

disadvantage. Contrast Abbott Labs., 387 U.S. at 152. It

may be that matters cannot be sorted out without further liti-

gation but that is not the sort of hardship we recognize in

evaluating whether a case is ripe for review. See, e.g., Clean

Air Implementation Project, 150 F.3d at 1206.

Our conclusion that this aspect of the case is not ripe dif-

fers from that of the district court, which ruled against the

concessioners’ claim on its merits. We therefore vacate the

district court’s judgment in this respect.

***

The judgment of the district court is affirmed in part, re-

versed in part and vacated in part. The case is remanded for

further proceedings, consistent with this opinion, on Amfac’s

as-applied challenge to regulations concerning the preferen-

tial nght of renewal.

So ordered.

35a

APPENDIX B

United States District Court,

District of Columbia.

AMFAC Resorts, L.L.C., Plaintiff,

UNITED STATES Department OF THE INTERIOR, ET AL., De-

fendants.

NATIONAL PARK Hospitality ASSN., Plaintiff,

Vv.

UNITED STATES DEPARTMENT OF THE INTERIOR, ET AL., De-

fendants.

HAMILTON Stores, INC., Plaintiff,

Vv.

UNITED STATES Department OF THE INTERIOR, ET AL., De-

fendants.

ARAMARK SPORTS AND Entertainment SERVICES, INC., Plain-

tiff,

Vv.

UNITED STATES DEPARTMENT OF THE INTERIOR, ET AL., De-

fendants.

CIV.A. 00-2838, 00-2885, 00-2937,

00-3085.

May 23, 2001.

MEMORANDUM OPINION

LAMBERTH, District Judge.

Now before the Court is a group of cases that implicate a

variety of issues, all of which are covered in the defendants’

motion to dismiss, and the parties’ cross motions for partial

36a

summary judgment. At its heart, the dispute centers on the

National Park Service’s (“NPS”) treatment of current and

potential concessioners at various national parks. The plain-

tiffs — three of which are concessioners and one of which is

an association of concessioners — all allege that various NPS

regulations are contrary to Congressional pronouncements on

national park concession management.

On April 24, 2001, the Court niled that the plaintiffs were

not entitled to discovery beyond the administrative record,

and that certain confidential information could be shared with

experts, provided various conditions were observed. The

Court also ruled that day that Delaware North, Inc., a conces-

sioner, was entitled to intervene in this matter on behalf of

the defendants. Delaware North is a competitor of the plain-

tiffs, and seeks to become a concessioner in certain parks

where the plaintiffs currently hold concession contracts.

To summarize the Court’s holding, the Court first holds

that the plaintiffs’ Rule 56(f) motion to stay summary judg-

ment proceedings and take discovery must be DENIED.'

The Court next holds that the defendants’ motion to dismiss

must be DENIED with respect to the preferential nght to re-

' This issue was substantially addressed in the Court’s April 24,

2001 Opinion. In that Opinion, the Court determined that the

plaintiffs were not entitled to extra-record discovery. See Memo-

randum and Order, Apr. 24, 2001, at 11-13.

Federal Rule of Civil Procedure 56(f) “allows a summary

judgment motion to be denied; or the hearing on the motion to be

continued, if the nonmoving party has not had an opportunity to

make full discovery.” Celotex Corp. v. Catrett, 477 U.S. 317, 326

(1986). As the plaintiffs are not entitled to any discovery, a stay of

proceedings would not increase the plaintiffs’ “opportunity to

make full discovery.” Thus, the plaintiffs’ Rule 56(f) motion must

be denied.

37a

newal issue, but GRANTED with respect two other issues.’

Finally, the Court holds that the disputed regulations are

permissible in all respects save one. The defendants’ regula-

tions are generally concise, well explained, and responsive to

the many comments received from interested parties. The

defendants only run afoul of the law in their requirement that

concessioners bid on prospectuses or else lose their preferen-

tial right of renewal. An order consistent with this Opinion

shall issue separately this date.

As a preliminary matter, the Court 1 otes its jurisdiction

under 28 U.S.C § 1331. The plaintiffs’ well-pleaded com-

plaints present an issue of federal law, and all parties concede

as much. See Bnef for Plaintiffs, Feb. 28, 2001, at 14-15;

Brief for Defendants, Apr. 9, 2001, at 21. The law applicable

to the resolution of this case is federal law, whether in consti-

tutional, statutory, or common law form. See United States

v. Kimbell Foods, Inc., 440 U.S. 715, 726-27 (1979) (quoting

Clearfield Trust Co. v. United States, 318 U.S. 363, 366

(1943)) (“[A]gencies derive their authority to effectuate ...

transactions from specific Acts of Congress passed in the ex-

ercise of ‘constitutional function or power’, [and thus] their

rights, as well, should derive from a federal source.”’).

I. THE DEFENDANTS’ MOTION TO DISMISS

A. Background

The plaintiffs have been concessioners in various national

parks for the past 30 years.” Their concession contracts are

? These two issues are the plaintiffs’ claims regarding the timing

of compensation for a concessioner’s leasehold surrender interest,

see Part.II.N, and Hamilton Stores’ claim regarding the minimum

franchise fee for the Yellowstone Park concession contract. See

~ Part L.B.3.b.

* The Court notes that one of the plaintiffs, the National Park

Hospitality Association (“NPHA”), is not actually a concessioner.

Rather, it is an association of concessioners. Nonetheless, as the

38a

set to expire on December 31, 2001, and they are currently

interested in continuing as concessioners. To achieve this

goal, the plaintiffs must participate in a contracting process

dictated by the NPS. In the spring of 2000, the NPS modified

this process in light of recent legislation.“

The new contracting process is chiefly controlled by an

NPS regulation entitled “Concession Contracts.” 65 Fed.

Reg. 20630 (Apr. 17, 2000); see also 36 C.F.R. 51. This

regulation, states the NPS, has “three major purposes”: (1) to

enhance the competitiveness of contract bidding by diminish-

ing various concessioners’ “preference in renewal”, (2) to

convert the valuation of concessioners’ capital improvements

from a “possessory interest” valuation to a “leasehold surren-

der interest” valuation, and (3) to explain various smaller

provisions that “concession contracts will contain in the im-

plementation of the 1998 Act.” 65 Fed Reg. 20630-31 (Apr.

17, 2000); 36 C.F.R. 51. This regulation is supplemented by

a second regulation, entitled “Standard Concession Con-

tract”, which incorporates the changed terms into a new con-

tract. See 65 Fed. Reg. 26052. It is these two regulations, as

well as any “prospectuses” issued pursuant thereto, that the

plaintiffs challenge in multiple respects.

NPHA comes before the Court on behalf of its members, and for

ease of reference, the Court refers to the NPHA as a “conces-

”

sioner.

* On November 13, 1998, Congress significantly altered conces-

sion management policies by enacting the National Parks Omnibus

Management Act of 1998. 16 U.S.C. §§ 5951-5966. As the mo-

tion to dismiss concerns only standing and ripeness issues, it is not

necessary to discuss the details of the Act at this point.

> In this context, a “prospectus” is in invitation to bid on a con-

tract. It contains various information necessary to formulate a bid,

including a copy of the specific contract up for bidding.

39a

The defendants move to dismiss two of the plaintiffs’

many claims. Specifically, the defendants claim that the law

of standing and ripeness prevent the plaintiffs from pursuing

(1) their joint claim for a preferential right of renewal, and

(2) Hamilton Stores’ claim of unreasonable franchise fee.°

These two claims will now be shortly described.

1. The Plaintiffs’ Joint Claim of a Contractual Right

to Preferential Renewal

All four plaintiffs claim that their concession contracts

give them a preferential right of renewal. This right would

give each plaintiff the right to match the best bid made on a

prospectus, and thereby obtain the concession contract. The

defendants deny that this right even exists, but also argue

that, even if it does, this claim must be dismissed because it

“essentially concerns what might happen to [the plaintiffs]

upon the expiration of [their] Contracts.” Brief for Defen-

dants, Jan. 19, 2001, at 1-2. That is, as the disputed conces-

sion contracts have yet to be awarded, the plaintiffs have yet

to be denied any contract. It is quite possible, argue the de-

fendants, that the plaintiffs may obtain the sought after con-

cession contracts, and thus suffer no harm from the loss of

their preferential right of renewal.

2. Hamilton Stores’ Claim on the Yellowstone Park

Prospectus’ Franchise Fee Requirement

By statutory mandate, the NPS is to set a minimum fran-

chise fee based “upon consideration of the probable value to

the concessioner of the privileges granted by the particular

contract involved.” 16 U.S.C. §§ 5952(4), 5956(a). The

probable value of a contract’s privileges, in turn, “shall be

based on a reasonable opportunity for net profit in relation to

® The defendants also move for dismissal on various jurisdic-

tional grounds, but concede that the Court, at the least, has federal

question jurisdiction. See Brief for Defendants, Apr. 9, 2001, at

21.

40a

the capital invested and the obligations of the contract.” 16

U.S.C. § 5956(a). Thus, by statute, the NPS is required to

determine the capital investment that a new concessioner will

likely make if awarded the contract.

Generally speaking, when a new concessioner obtains a

concession contract, that concessioner is required to purchase

the exiting concessioner’s inventory, equipment, and real

property interests. AR, 17-18. These purchases, among

others, make up the new concessioner’s “capital investment.”

The greater a concessioner’s capital investment will be, the

lower the NPS sets the minimum franchise fee in the

prospectus. Thus, an undervaluing of an exiting

concessioner’s inventory, equipment and real property

interests will result in an overestimate of the minimum

franchise fee required of new concessioners. This

overestimate, in turn, might be unlawful if it were to deny a

concessioner a “reasonable opportunity for net profit.” 16

U.S.C. § 5956(a).

Hamilton Stores alleges that its inventory, equipment,

and real property interests have been significantly

undervalued and that the resulting ininimum franchise fee for

the Yellowstone contract is too high.’ This, Hamilton

argues, “flatly violates the statutory rule requiring NPS to

offer concession contracts that would provide the

concessioner with ‘a reasonable opportunity for net profit in

relation to capital invested.”” Brief for Hamilton Stores, Feb.

28, 2001, at 1.

It is important to recognize that, although Hamilton is

alleging a miscalculation of its current possessory interests,

’ The NPS hired Dornbusch & Company to value Hamilton

Stores’ inventory, equipment, and real property interests. See AR,

1748-62 (memorandums by Dornbusch & Co. explaining the

valuations of Hamilton Stores’ assets, and the appropriate fran-

chise fee in light thereof).

4la

its claim is from the perspective of a future concessioner.

That is, the harm for which Hamilton is seeking redress is its

future disbursement of excessive franchise fees, nor the

insufficient compensation paid to it as an exiting

concessioner.®

The Court now considers the defendants’ arguments to

determine whether the plaintiffs are properly before this

Court.

B. Analysis

1. Standard of Review

If a plaintiff has failed “to state a claim upon which relief

can be granted,” a court may grant a defendant’s motion to

dismiss. Fed. R. Civ. P. 12(b)(6); see also Hishon v. King &

Spalding, 467 U.S. 69, 73 (1984); Sparrow v. United Air

Lines, Inc., 216 F.3d 1111, 1114 (D.C.Cir.2000). In evaluat-

ing a motion to dismiss, a court must construe the complaint

* Hamilton Stores’ compensation for its inventory, equipment,

and real property interests is calculated under the terms of its con-

cession contract, not under any statute or regulation. For example,

section 12 of the Hamilton Stores’ contract provides extensive di-

rections on the determination of Hamilton’s possessory interests.

See Hamilton Stores Concession Contract, AR 212-13 (providing

that the “fair value of a possessory interest shall be the sound value

of the improvement to which it relates at the time of transfer of

such possessory interest, without regard to the term of the contract.

The sound value of any structure, fixture, or improvement shall be

determined upon the basis of reconstruction cost less depreciation

evidenced by its condition and prospective serviceability in com-

parison with a new unit of like kind, but not to exceed fair market

value”).

Thus, if Hamilton were alleging underpayment of its possessory

interests, its claim would lie in contract law, not the arbitrary and

capricious standard of the APA and the Tucker Act.

42a

in the light most favorable to the plaintiff and give the plain-

tiff “the benefit of all inferences that can be derived from the

facts alleged.” Schuler v. United States, 617 F.2d 605, 608

(D.C.Cir.1979); see also Scheuer v. Rhodes, 416 U.S. 232,

236 (1974). “However, legal conclusions, deductions or opin-

ions couched as factual allegations are not given a presump-

tion of truthfulness.” Wiggins v. Hitchens, 853 F. Supp. 505,

508 n.1 (D.D.C.1994) (citing 2A Moore’s Federal Practice,

§ 12.07, at 63 (2d ed.1986) (footnote omitted); Haynesworth

v. Miller, 820 F.2d 1245, 1254 (D.C.Cir.1987)).

2. The Law of Standing and Ripeness

The doctrines of standing and ripeness are “designed to

test the fitness of controversies for judicial resolution.” Lou-

isiana Envtl. Action Network v. Browner, 87 F.3d 1379, 1382

(D.C.Cir.1996). They both contain a “blend of constitutional

requirements and prudential considerations.” Valley Forge

Christian College v. Americans United for Separation of

Church & State, 454 U.S. 464-471 (1982); CC Distributors

v. United States, 883 F.2d 146, 149 (D.C.Cir.1989).

(a) Standing

To have constitutional standing, a plaintiff must show

that (1) it has “suffered an injury in fact” that is (2) “fairly ...

traceable to the challenged action of the defendant” and

which (3) will be “redressed by a favorable decision.” Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (citations

and internal quotations omitted); see alse Allen v. Wright,

468 U.S. 737, 756 (1984); Warth v. Seldin, 422 U.S. 490,

508 (1975). .

A plaintiff's alleged injury qualifies as a constitutional

“injury in fact” if the plaintiff suffers an “invasion of a le-

gally protected interest which is (a) concrete and particular-

ized, and (b) actual or imminent, not conjectural or

hypothetical.” Lujan, 504 U.S. at 560 Whitmore v. Arkansas,

495 U.S. 149, 155 (1990); Los Angeles v. Lyons, 461 U.S.

43a

95, 102 (1983); Sierra Club v. Morton, 405 U.S. 727, 740-

741, n.16 (1972). Of importance in the case sub judice, this

Circuit has repeatedly recognized as an injury the “loss of ...

opportunity to compete for a contract.” CC Distributors, 883

F.2d at 150; see also Lepelletier v. FDIC, 164 F.3d 37, 42

(D.C.Cir.1999); DIREC TV, Inc. v. FCC, 110 F.3d 816, 829

(D.C.Cir.1997).

In CC Distributors v. United States, this Circuit consid-

ered a government contractor’s challenge to an Air Force

policy which diminished the contractor’s opportunity to se-

cure contracts. The government argued that, since the con-

tractor had not yet been denied a contract, it had not yet

sustained a constitutional injury. C.C. Distributors, 883 F.2d

at 149-50. The Court disagreed, and held that “a plaintiff

suffers a constitutionally cognizable injury by the loss of an

opportunity to pursue a benefit ... even though the plaintiff

may not be able to show that it was certain to receive the

benefit had it been accorded the lost opportunity.” Jd. at 150.

In support of this, the Court noted a broad variety of caselaw

that supports the general proposition that the “denial of an

opportunity” is a cognizable injury. Jd. at 150 (citing Village

of Arlington Heights v. Metropolitan Housing Development

Corp., 429 U.S. 252, 264 (1977); Regents of the Univ. of Cal.

v. Bakke, 438 U.S. 265 (1978); West Virginia Ass'n of

Comm. Health Centers v. Heckler, 734 F.2d 1570

(D.C.Cir.1984); National Ass'n of Neighborhood Health

Centers, Inc. v. Mathews, 551 F.2d 321 (D.C.Cir.1976)).

Apart from its constitutional dimensions, standing also

has a prudential aspect. This aspect requires that a court de-

termine whether the plaintiff's interests are “arguably within

the zone of interests to be protected or regulated by the stat-

ute ... in question.” Association of Data Processing Serv.

Organizations, Inc. v. Camp, 397 U.S. 150, 153 (1970). In

other words, a court should ask “whether, in view of Con-

gress’ evident intent to make agency action presumptively

reviewable ... Congress intended for [a particular] class [of

44a

plaintiffs] to be relied upon to challenge agency disregard of

the law.” Clarke v. Securities Industry Ass'n, 479 U.S. 388,

399-400 (1987); see also CC Distributors, 883 F.2d at 151.

(b) Ripeness

Although the ripeness doctrine is often understood to

overlap with the standing doctrine, see Wyoming Outdoor

Council v. United States Forest Serv., 165 F.3d 43, 48

(D.C.Cir.1999), it retains a separate analytical framework.

The framework reveals the doctrine’s dual pedigree — pedi-

gree that is partially traceable to Article III, but mostly trace-

able to the court’s prudential goals of avoiding “abstract

disagreements” and “premature adjudication.” Abbott Labo-

ratories v. Gardner, 387 U.S. 136, 148-49 (1967); see also

13A Charles A. Wright, Arthur R. Miller and Edward H.

Cooper, FEDERAL PRACTICE AND PROCEDURE, § 3532.1, at

118-19 (2d ed.1984) (recognizing the dual underpinnings of

the single analytical framework).

In considering a claim’s ripeness, a court is to evaluate

“the fitness of the issues for judicial decision and the hard-

ship to the parties of withholding court consideration.” Ohio

Forestry Ass'n v. Sierra Club, 523 U.S. 726, 733 (1988); Ab-

bott Laboratories, 387 U.S. at 149. A claim’s fitness for ju-

dicial resolution hinges on “whether the issue is purely legal,

whether consideration of the issue would benefit from a more

concrete setting, and whether the agency’s action is suffi-

ciently final.” George E. Warren Corp. v. EPA, 159 F.3d

616, 621 (1998). From a more pragmatic perspective, courts

often defer judgment if intervening circumstances are likely

to make “[judicial] resolution of the dispute ... unnecessary.”

Edison Elec. Institute v. US. E.PA., 996 F.2d 326,

(D.C.Cir.1993); State Farm Mut. Auto. Ins. Co. v. Dole, 802

F.2d 474, 479 (D.C.Cir.1986). With regard to the hardship

caused by delayed review, courts generally consider hardship

to be a “secondary concern” and only evaluate it if there are

“doubts about the fitness [prong].” Consolidated Rail Corp.

45a

v. United States, 896 F.2d 574, 577 (D.C.Cir.1990); Ameri-

can Petroleum Inst. v. U.S. EPA, 906 F.2d 729, 739 n.13

(1990). In cases where the fitness prong is satisfied, “lack of

hardship cannot tip the balance against judicial review.” /d.;

Askins v. District of Columbia, 877 F.2d 94, 98

(D.C.Cir.1989); Consolidation Coal Co. v. Federal Mine

Safety & Health Review Comm'n, 824 F.2d 1071, 1081-82

(D.C.Cir.1987).

3. The Defendants’ Motion to Dismiss

Viewing these two claims against the law of standing and

ripeness, the Court finds that preferential right claim may

proceed, but that the franchise fee claim must be dismissed.

(a) The Right to Preferential Renewal

At the outset, it is clear that the plaintiffs’ claim of a con-

tractual right to preferential renewal falls squarely within the

rule that a loss of opportunity to compete is an injury in fact.

The plaintiffs allege that they have a legal right, vested in

them through contract, to renew their contract if they can

match the next best bid. By preventing them from participat-

ing in the bidding process in this fashion, the defendants un-

deniably infringe upon interests which the plaintiffs claim are

“legally protected.” Lujan, 504 U.S. at 560. An injury in

fact thus exists.

From a prudential standpoint, the Court finds little reason

to depart from its finding of constitutional standing. As na-

tional park concessioners, the plaintiffs are almost per se

within the “zone of interests to be protected” by the enact-

ment of a statute titled the “National Parks Omnibus Man-

agement Act of 1998.” Association of Data Processing Serv.

Orgs., 397 U.S. at 153. The plaintiffs are all central players

in the concession system which Congress attempted to re-

form.

With regard to ripeness, the Court finds it appropriate to

retain jurisdiction at this time. First, the preferential right of

46a

renewal issue is largely legal; it hinges on statutory and regu-

latory interpretation, and does not implicate a complicated

array of facts. Second, the issue would not “benefit from a

more concrete setting,” as a fully executed contract would

present the Court with substantially the same issues currently

under dispute. Warren Corp., 159 F.3d at 621. Moreover,

the NPS’s policy on this issue is clearly “crystallized” in its

final form. Eagle-Picher Indus. v. U.S. EPA, 759 F.2d 905,

915 (D.C.Cir.1985). The NPS has reviewed and re-reviewed

the issue, and promulgated a lengthy regulation and explana-

tion. Furthermore, the NPS has endorsed this view by issu-

ing prospectuses which are consistent with the details

enunciated in the regulations. See Brief for Plaintiffs, Feb.

28, 2001, at 19.

With regard to the plaintiffs’ hardship should judicial re-

view be delayed, the Court need not find any hardship be-

cause it has little doubt that the issues are currently fit for

judicial review. See Consolidated Rail Corp., 896 F.2d at

577.

(b) Hamilton Stores’ Franchise Fee Claim

The Court finds that Hamilton Stores does not have

standing to bring its franchise fee claim, and also that the

claim is not currently ripe for review.

First, it is entirely conjectural whether the minimum fran-

chise fee of 3.5 percent will provide Hamilton Stores with a

“reasonable opportunity for net profit.” 16 U.S.C. § 5$-4(a).

Not only is 1t pure conjecture whether Hamilton will obtain

the new concession contract, but even if it did, it is even

more conjectural whether the franchise fee, together with the

future economic environment, will deny it the opportunity for

a profit. Thus, Hamilton Stores does not have standing to

bring this claim.

Likewise, Hamilton Stores’ franchise fee claini is also not

cipe. Whether a 3.5 percent franchise fee will permit Hamil-

47a

ton Stores (who may or may not be the new concessioner) a

reasonable opportunity for net profit is not a “purely legal”

issue; to the contrary, it is an issue highly continyent on facts

which are currently unknown and unknowable. Warren

Corp., 159 F.3d at 621. Moreover, the resolution of this issue

would substantially benefit if it were posed in a “more con-

crete setting.” Jd. It is wholly beyond the judiciary’s means

to hypothesize on the economic health of national park con-

cessions at some distant time. The Court is not blind to the

fact that a 3.5 percent franchise fee may indeed be violative

of section 5956(a). If Hamilton obtains the next Yellowstone

concession contract, and thereafter determines there is not a

reasonable opportunity for profit at a franchise fee of 3.5 per-

cent, Hamilton may bring a claim at that time. Until then,

this Court must decline to review the issue.

Hamilton Stores argues at great length that the minimum

franchise fee is flawed because the capital asset valuation

used to set the fee was itself flawed. Even if the Court were

to accept this argument (which it emphatically declines to

do), Hamilton has still failed to show that this flawed analy-

sis Causes it a current or imminent injury. The injury which

Hamilton Stores alleges-the lost opportunity to earn a profit-

is contingent upon several independent factors which may or

may not occur. The occurrence (or non-occurrence) of any

one of these factors could easily make the “resolution of the

dispute ... unnecessary.” Edison Elec. Institute v. U.S.

E.P.A., 996 F.2d at 326; State Farm Mut. Auto. Ins. Co., 802

F.2d at 479. Hamilton Stores’ franchise fee claim must thus

be dismissed for lack of standing and ripeness.

C. Conclusion

ni eet toteste tntee>

tiffs may continue with their preferential renewal right claim.

However, Hamilton Stores may not continue with its fran-

48a

chise fec claim.’ The Court therefore turns to the cross mo-

tions for summary judgment.

Il. THE CROSS MOTIONS FOR SUMMARY

JUDGMENT

A. Standard of Review

Federal Rule of Civil Procedure 56(c) provides that a dis-

trict court shall grant summary judgment “if the pleadings,

depositions, answers to interrogatories, and admissions on

file, together with the affidavits, if any, show that there is (1)

no genuine issue as to any material fact and that (2) the mov-

ing party is entitled to judgment as a matter of law.” See

Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 248 (1986); Diamond v. Atwood, 43 F.3d 1538,

1540 (D.C.Cir.1995). To survive a motion for summary

judgment, the nonmovant must make a “sufficient showing to

establish the existence of an element essential to that party’s

case.” Celotex, 477 U.S. at 322. A “sufficient showing” ex-

ists when the evidence is such that a reasonable jury could

a a verdict for the nonmovant. Anderson, 477 U.S. at

B. Applicable Law

This case challenges the regulations and official policy of

a federal agency. In considering such matters, Article II

courts utilize the rule of deference promulgated in Chevron,

U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S.

837 (1984). Chevron requires a court to analyze agency ac-

tion under a two-step analysis. “First, always, is the question

of whether Congress has directly spoken to the issue. If the

In addition to the franchise fee claim, the Court dismisses one

other claim pursuant to Rule 12(b)(1). See Part II.N. That issue

did not become discrete until the parties briefed it during the sum-

mary judgment proceedings, and is most easily understood in that

context.

49a

intent of Congress is clear, then that is the end of the matter;

for the court, as well as the agency, must give effect to the

unambiguously expressed intent of Congress.” Jd. at 841. If,

however, the statute is “silent or ambiguous with respect to

the specific issue, the question for the court is whether the

agency’s [final action] is based on a permissible construction

of the statute.” Jd. A construction is permissible if it is rea-

sonable. The agency’s construction, however, need not be

the only or most reasonable interpretation, see id. at 843 n.11,

it must merely be “rational and consistent with the statute.”

NLRB v. United Food & Commercial Workers Union, 484

U.S. 112, 123 (1987). See also General Elec. Co. v. United

States Envt'l Protection Agency, 53 F.3d 1324, 1327

(D.C.Cir.1995).

C. The Contractual Right of Preferential Renewal

1. Background

Almost 85 years ago, the National Park Service was cre-

ated to oversee our national parks and to “conserve the scen-

ery and the natural and historic objects and the wild life

therein and ... provide for the enjoyment of the same.” 16

U.S.C. § 1. Throughout this entire period, the NPS has relied

on private concessioners for the provision of “lodging, food,

merchandising, transportation, outfitting and guiding, and

similar activities.” 64 Fed. Reg. 20630 (Apr. 17, 2000).

During the 1960s, Congress and the NPS determined that

certain incentives were necessary to maintain the continuity

of operation in the national parks. With this in mind, Con-

gress enacted the Concessions Policy Act of 1965. Section

20d of that Act stated:

The Secretary shall encourage the continuity of op-

eration and facilities and services by giving prefer-

ence in the renewal of contracts or permits and in

the negotiations of new contracts of permits to the

concessioners who have performed their obligations

50a

under prior contracts or permits to the satisfaction of

the Secretary.

16 U.S.C. § 20d.

After this statute was enacted, the plaintiffs in the instant

case all entered into long-term concession contracts with the

NPS. None of the contracts contained any provision granting

the plaintiffs a preference in the renewal of their contracts.

In 1989, the Department of the Interior began a review of

National Park concessions, with the goal of finding ways to

enhance concession management. Three years later, in 1992,

the Department issued a report making various findings and

recommendations for improvement. Among the findings was

the observation that the right of preference in renewal en-

joyed by incumbent concessioners significantly impeded the

competition for concession contracts. See 57 Fed. Reg.

40508, 40508 (Sept. 3, 1992).

In 1998, after the NPS tried to address this issue with

regulations, Congress enacted the National Parks Omnibus

Management Act of 1998 (the “1998 Act”). 16 U.S.C.

§§ 5951-5966. Section 5952 of the Act orders that the

Secretary shall not grant a concessioner a preferential

night to renew a concessions contract, or any other form of a

preference to a concessions contract.'°

16 U.S.C. § 5952(7)(A). Although the 1998 Act ex-

pressly repealed the 1965 Act, Section 415 of the 1998 Act

stated that:

'° Part (7B) of Section 5952 does permit the Secretary to grant

this right to a small category of concessioners, specifically “outfit-

ter and guide services and small [concession] contracts.” The is-

sues surrounding the rights created by this provision are not

addressed here, but rather in section E, infra.

Sla

the repeal of [the 1965 Act] shall not affect the va-

lidity of any concessions contract or permit entered

into under [the 1965 Act] but the provisions of this

[Act] shall apply to any such contract or permit ex-

cept to the extent such provisions are inconsistent

with the terms and conditions of any such contract

or permit.

Pub. L. No. 105-391, Title IV, § 415(a), Nov. 13, 1998.

After the passage of the 1998 Act, the NPS reformed cer-

tain concession contract regulations to make them, in its

opinion, consistent with the new statute. On the issue of

whether contracts entered into under the 1965 Act contain a

right to a preference in renewal, the NPS stated:

In circumstances where a 1965 Act concession con-

tract does not make express reference to a prefer-

ence in renewal, it is the final administrative

decision of the NPS ... that their repeal of the 1965

Act’s preference in renewal by the 1998 Act is ap-

plicable to holders of 1965 Act concession con-

tracts.

65 Fed. Reg. 20630, 20664 (Apr. 17, 2000); see also 36

C.F.R. § 51.102 (codifying the presumption against a prefer-

ential renewal right in a 1965 Act contract, unless express

language indicates otherwise).

It is this agency policy which the plaintiffs urge the Court

to hold contrary to law. The Court now undertakes that

evaluation.

2. Analysis

The lawfulness of the defendants’ regulations tums on

whether the plaintiffs each have a contractual right to prefer-

ential renewal. If the plaintiffs do have such a right, then the

NPS’s regulations are unlawful because they unilaterally de-

lete a valid contract term. If the plaintiffs do not have such a

52a

right, then the NPS’s regulations are lawful in that they have

not diminished any of the plaintiffs’ contractual nights and

are an otherwise reasonable interpretation of the 1998 Act. In

making this determination, the Court’s review is necessarily

limited to the administrative record. See Citizens to Preserve

Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971).

The Court begins by noting the obvious, which is that no

contract between the NPS and the plaintiffs contains an ex-

press term granting the concessioners a preferential right to

renewal. Thus, the plaintiffs can only be found to have this

right if one of three circumstances exists: (1) the right de-

rives from statute, (2) the nght derives from an implied con-

tract, or (3) the right derives from an implied term in the

current concession contracts. The Court finds that none of

these situations exist, and therefore that the plaintiffs do not

have a right to preferential renewal.

(a) Contract Rights Established by Statute

“The principal function of a legislature is not to make

contracts, but to make laws.” National R.R. Passenger Corp.

v. Atchison Topeka & Santa Fe Ry., 470 U.S. 451, 466

(1985). Thus, there exists a strong “presumption ... that a

law is not intended to create private contractual or vested

rights.” Jd. Of course, a legislature might, if it wishes, be-

stow upon a party a contractual right. But, given the pre-

sumption to the contrary, a legislature, must do so in

“unmistakable terms.” Bowen v. Public Agencies Opposed to

Social Security Entrapment, 477 U.S. 41, 52 (1986) (quoting

Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 138

(1982)). :

The Court need not review the law on this issue further to

conclude that the 1965 Act did not vest in the plaintiffs a

contractual right to preferential renewal. Section 20d of the

1965 Act stated:

53a

The Secretary shall encourage the continuity of op-

eration and facilities and services by giving prefer-

ence in the renewal of contracts or permits and in

the negotiations of new contracts of permits to the

concessioners who have performed their obligations

under prior contracts or permits to the satisfaction of

the Secretary.

16 U.S.C. § 20d. This provision is egregiously short of

conveying in “unmistakable terms” a contractual right to the

plaintiffs. First, the provision is wholly bereft of even the

most standard contractual language. For instance, there is no

clause which notes that the renewal preference is “in consid-

eration of” any act of the concessioners.

Second, the terms of the Act actually belie a contractual

interpretation. By its terms, the Act orders the Secretary of

Interior to “giv[e]” renewal preferences to the concessioners;

it does not order the Secretary to contract with the conces-

sioners for the renewal right. This observation is important,

as elsewhere in the Act, the Secretary is explicitly authorized

to contract for a preferential right of renewal in certain lim-

ited circumstances. See 16 U.S.C. § 20c. This suggests that,

had Congress wished to create contractual renewal rights in

concessioners like the plaintiffs, it would have provided such

discretion to the Secretary. See National Rifle Ass'n v. Reno,

216 F.3d 122, 130-31 (D.C.Cir.2000) (where Congress in-

cludes particular language in one section of a statute, but

omits it in another, the omission is presumed to be inten-

tional). Congress’s failure to do this forecloses any possibil-

ity that the 1965 Act bestowed contractual renewal rights on

the plaintiffs.

(b) Implied Contracts

An implied-in-fact contract exists when parties “manifest

their agreement ... by conduct” instead of words. John D.

Calamari & Joseph M. Perillo, THE LAW OF CONTRACTS,

§ 1.11, at 21 (4th ed.1998). As the Supreme Court has ex-

54a

plained, the “meeting of minds” in an implied-in-fact con-

tract is inferred from the “conduct of the parties showing, in

the light of the surrounding circumstances, their tacit under-

standing.” Hercules, Inc. v. United States, 516 U.S. 417, 424

(1996) (citation omitted).

Common examples include contracts for goods formed

by a raised hand at an auction, or contracts for services

formed by calling a repairman to your house. See RESTATE-

MENT (SECOND) OF CONTRACTS § 4 cmt. b In each case, the

facts of the situation make clear that the parties wish to be

bound in contract, even without an explicit offer and accep-

tance.

To demonstrate an implied-in-fact contract, a party must

show “(1) mutuality of intent to contract, (2) consideration,

(3) unambiguous offer and acceptance, and (4) that the repre-

sentative whose conduct is relied upon had actual authority to

bind the government.” See City of Cincinnati v. United

States, 153 F.3d 1375, 1377 (Fed.Cir.1998); Hoffmann v.

U.S., 53 F. Supp. 2d 483, 488 (D.D.C.1999).

Based on this explanation of law and the administrative

records filed in these cases, the Court finds that the plaintiffs

do not have a preferential right to renewal derived from an

implied contract. The Court finds nothing in the administra-

tive record suggesting that the NPS and the plaintiffs entered

into a contract through mere conduct. Nor, for that matter,

have the plaintiffs provided a single citation to the record on

this issue. Although the plaintiffs repeatedly refer to numer-

ous declarations of individuals who deem the contractual

right to exist; none of these declarations are part of the ad-

ministrative record, and there is no compelling reason for the

Court to look beyond the record and consider them. See Esch

v. Yeutter, 876 F.2d 976, 991-92 (D.C.Cir.1989) (summariz-

ing the instances where a court may look beyond the

- administrative record in evaluating agency action). The

Court thus finds that no implied contract for preferential

renewal exists.

55a

In the field of contract law, courts generally assume that

“every person is ... capable of managing his own affairs.” 11

Lord, WILLISTON ON CONTRACTS, § 31.5, at 298 (4th

ed.1999). Nonetheless, in a small number of circumstances,

courts have been willing to add — or imply — terms into

written and fully integrated contracts. As summarized by one

federal court:

Implied covenants are disfavored. Only two cir-

cumstances are held to warrant implication of a

covenant: (1) the parties thought it so obvious it did

not need stating or (2) it is a necessary result of

what is stated, either as an implication of the lan-

guage used or it is indispensable to effectuate the in-

tention of the parties.

In re KDT Industries, Inc., 30 BR. 252, 254

(S.D.N.Y.1983); see also 11 LORD, WILLISTON ON CON-

TRACTS, § 31.7, at 317-23 (4th ed.1999) (summarizing case-

law on implied contract terms).

‘Often times, the terms sought to be implied are statutes in

existence at the time the contract was formed. In considering

this proposition, the U.S. Supreme Court concluded that a

state law should be implied as a contract term only if the term

is “so central to the bargained-for exchange between the par-

ties, or to the enforceability of the contract as a whole, that it

must be deemed to be a term of the contract.” General Mo-

tors Corp. v. Romein, 503 U.S. 181, 188-89 (1992) (empha-

sis added); see also Sacramento Navigation Co. v. Salz, 273

U.S. 326, 329 (1927) (“A contract includes not only the

promises set forth in express words, but in addition all such

implied provisions as are indispensable to effectuate the in-

tentions of the parties and arise from the language of the con-

tract and the circumstances under which it was made.”’).

56a

A short example illustrates the intuitive nature of this

doctrine. The case involved a contract between the United

States government and a refrigerator contractor. See City of

New York v. U.S., 125 Ct.Cl. 576, 113 F. Supp. 645 (1953).

The government leased a certain quantity of “cooler” space at

a rate of $1.00 per square foot, and another quantity of

“freezer” space at a rate of $1.50 per square foot. After the

parties agreed on a total price of $270,000, the government

sought additional “freezer” space in place of its “cooler”

space. However, the government refused to pay any extra

price, arguing instead that the terms of the lease provided the

government with the option of switching between cooler and

freezer space, but did not provide for an adjustment in con-

tract price. Jd. at 646. The court disagreed, and found it pat-

ently obvious that a change in refrigerator space would

necessitate a change in the total price. The court then sup-

plied the contract with such a clause based on what was un-

doubtedly “intended at the time of the execution of the

[contract].” Id. at 647.

In light of the foregoing law, the Court finds that a pref-

erential right of renewal is not an implied term in the plain-

tiffs’ current concession contracts. First, it can hardly be said

that the preferential right of renewal was “so obvious(ly) [a

part of the contract that] it did not need stating.” The prefer-

ential renewal term is a significant contract term, one that

would clearly be a large component of the bargained-for ex-

change. It is not a routine term, and it is certainly not the

type of term that sophisticated parties such as the NPS and

the plaintiffs would consider “so obvious” as to leave unwnit-

ten. The administrative record provides no indication that the

parties had the mutual understanding that the contract con-

tained the renewal term.

Second, nothing in administrative record suggests that the

renewal term is “indispensable to effectuate the intention of

the parties.” As just stated above, the administrative is

wholly devoid of information suggesting that the NPS in-

57a

tended the renewal term to be part of the contract. Moreover,

the contract is not rendered senseless or ineffectual without

the renewal term. To the contrary, the contract has sufficed

for the past 30 years, and is such that the plaintiffs seek to re-

enter it once again. Thus, the Court finds that the preferential

right of renewal is not an implied term in the plaintiffs’ con-

cession contracts.

. Thus, finding that the plaintiffs do not have a contractual

right of renewal, the Court finds that the NPS’s regulations

and prospectuses are a reasonable interpretation of applicable

law on this issue. The Court now turns to a related issue:

whether the NPS’s regulations are unlawful with respect to

= that have a statutory right of preferential re-

newal.

D. The Statutory Right of Preferential Renewal

In the preceding section, the Court held that the plaintiffs

do not have a contractual right of preferential renewal. This

does not end the renewal issue, however. The 1998 Act ex-

plicitly grants a preferential renewal right to concessioners

with gross receipts of less than $500,000 annually, and to

outfitting and guide concessioners. See 16 U-S.C.

§ 5952(7)(B). Although Amfac, Aramark, and Hamilton

Stores do not fall within these parameters, many members of

the National Park Hospitality Association (““NPHA”) do.

Thus, because the NPHA has associational standing in this

respect, the Court now considers whether the NPS regula-

tions which implement concessioners’ statutory nght of pref-

erential renewal are contrary to law. The NPHA makes six

arguments as to the regulations’ unlawfulness.

1. Matching the Terms of the Best Offer

The NPHA complains that NPS regulations require in-

cumbent concessioners wishing to exercise their preferential

right of renewal to not just match the best proposal, but to

58a

submit a better proposal. More specifically, the NPHA ar-

gues that incumbent concessioners are given the opportunity

to match the “better terms and conditions of the best pro-

posal,” but are not permitted to also adopt the weaker terms

of the best proposal. 36 C .F.R. § 51.32. In this respect, the

final prop

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