Scenic America, Inc. v. Department of
138 S. Ct. 2
SCOTUS2017Background
- Scenic America sued the Department of Transportation over the interpretation of an ambiguous term in a contract between the agency and an outside party.
- The D.C. Circuit deferred to the agency’s interpretation of the disputed contractual term.
- Justice Gorsuch (joined by Chief Justice Roberts and Justice Alito) wrote a statement respecting the denial of certiorari.
- The statement highlighted a split among circuits about whether Chevron-style deference applies to agency interpretations of contracts the agency has made with private parties.
- Gorsuch outlined doctrinal and policy reasons to question extending Chevron deference from statutes to contracts (delegation rationale, agency expertise, public‑interest justification, and tradition of judicial contract interpretation).
- He declined to grant certiorari because the case presented additional complicated, factbound, and jurisdictional questions that would obscure the core legal issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether courts must defer to an administering agency’s interpretation of an ambiguous contract term (Chevron‑type deference for contracts) | Agency interpretation should not automatically override ordinary contract‑interpretation rules; courts should apply traditional contract principles | Agency urges deference, arguing its interpretation is reasonable and entitled to Chevron‑style deference | Certiorari denied; Court did not decide the merits. Justice Gorsuch flagged the issue as important and questioned applying Chevron to contracts but declined review due to case‑specific complications |
| Whether Chevron rationale (delegation to agencies) supports agency authority to resolve contract disputes | Plaintiff: No clear congressional delegation to agencies to adjudicate contractual terms | Defendant: Ambiguity and reasonableness justify deference | Court did not resolve; Gorsuch cast doubt on extending delegation rationale to contracts |
| Whether agency expertise justifies deference in contract interpretation | Plaintiff: Contracts are compromises between parties; agency may lack unique expertise to interpret private agreements | Defendant: Agencies have technical/regulatory expertise relevant to contract terms tied to statutory/regulatory programs | Not decided; Gorsuch questioned the premise that agencies always have superior insight into contract meaning |
| Whether public‑interest rationale for Chevron carries over to contract disputes | Plaintiff: Parties to contracts are often self‑interested; public‑interest rationale is weaker | Defendant: Agency interpretations can serve public goals tied to regulated programs | Not decided; Gorsuch suggested the public‑interest justification is weaker in the contract context |
Key Cases Cited
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (established deference framework for agency statutory interpretation)
- Muratore v. Office of Personnel Management, 222 F.3d 918 (11th Cir. 2000) (refused to apply Chevron deference to agency contract interpretation)
- Koch Gateway Pipeline Co. v. FERC, 136 F.3d 810 (D.C. Cir. 1998) (recognized split over applying Chevron to contracts)
- Mid‑Louisiana Gas Co. v. FERC, 780 F.2d 1238 (5th Cir. 1986) (declined Chevron‑style deference for agency contract interpretation)
- Meadow Green‑Wildcat Corp. v. Hathaway, 936 F.2d 601 (1st Cir. 1991) (Breyer, C.J.) (refused to apply Chevron deference to agency interpretations of contracts)