NATIONAL PARK HOSPITALITY ASSN. v. DEPT. OF THE INTERIOR
The Contract Disputes Act of 1978 (CDA) established rules governing disputes arising out of certain federal government contracts. After Congress enacted the National Parks Omnibus Management Act of 1998, which established a comprehensive concession management program for national parks, the National Park Service (NPS) issued 36 CFR section 51.3, which purported to render the CDA inapplicable to concession contracts. The National Park Hospitality Association challenged 51.3's validity. Upholding the regulation, the District Court concluded that the CDA is ambiguous as to whether it applies to concession contracts and found the NPS's interpretation reasonable. In affirming, the Court of Appeals for the District of Columbia Circuit found the NPS's reading of the CDA consistent with both the CDA and the National Parks Omnibus Management Act of 1998.
Does the Contract Disputes Act of 1978 apply to contracts between the National Park Service and concessioners in the national parks?
The Court did not answer the question. In a 7-2 opinion delivered by Justice Clarence Thomas, the Court held that the controversy was not yet ripe for judicial resolution. The Court reasoned that, because the NPS has no delegated rulemaking authority under the CDA, 51.3 is nothing more than a general policy statement designed to inform the public of NPS's views on the CDA's proper application and thus the National Park Hospitality Association's challenge was a facial one. Given the absence of a concrete dispute, the Court asked the parties provide supplemental briefing on whether the case was ripe for judicial action. Justice John Paul Stevens filed a concurring opinion. Justice Stephen G. Breyer, joined by Justice Sandra Day O'Connor, dissented.
Argument of Kenneth S. Geller
Chief Justice Rehnquist: We'll hear argument now in Number 02-196, the National Park Hospitality Association versus the Department of the Interior.
Mr. Geller: Thank you, Mr. Chief Justice, and may it please the Court:
This case concerns the applicability of the Contract Disputes Act to contracts between National Park Service and the private concessioners who contract to provide visitor services and to operate and maintain facilities in more than 100 of our national parks.
Justice O'Connor: Mr. Geller, I have a couple of preliminary questions.
First of all, this is a facial challenge made by the National Park Hospitality Association, I take it.
How is the claim ripe for adjudication?
Has the association been injured actually?
There's no case pending.
Mr. Geller: Your Honor, to begin with, let me say that as to this facial challenge point, this... this was an argument that was never made below.
It was not made in the district court.
It was not made in the court of appeals.
It was not made in the opposition to certiorari.
Justice O'Connor: Is it one that we're precluded from concerning ourselves with?
Mr. Geller: Well, I'm not sure it's a jurisdictional issue.
Justice O'Connor: Right.
Mr. Geller: So it... it may well be waived.
But let me also say quickly that I think this whole--
Justice Scalia: Mr. Geller, I think that... I think the ripeness issue--
Mr. Geller: --Yes, I was going to address ripeness.
Justice Scalia: --subsists whether or not it's a facial challenge.
Mr. Geller: Right.
I was going to address ripeness separately, Justice Scalia.
In terms of this facial/as-applied, this is an APA challenge to a regulation.
I'm not aware that the Court has really used this facial/as-applied nomenclature--
Unknown Speaker: Okay.
Mr. Geller: --in that... in that context.
After all, under the APA, the question is whether a... an... a regulation is arbitrary or capricious or contrary to law.
Here we have a regulation that categorically states no NPS... no National Park Service concession contracts are subject to the CDA.
If there... there are, in fact, some such contracts that are subject to the CDA, as we believe there are, then that regulation is arbitrary and capricious.
The agency should have to go back and draft a more refined regulation.
Justice Scalia: Is that... is that the standard for ripeness--
Mr. Geller: I--
Justice Scalia: --whether the regulation is arbitrary or--
Mr. Geller: --No, no, no.
Justice Scalia: --Why is this any different... you contend that the agency has no authority to speak authoritatively on this... on this issue anyway.
And therefore, this regulation, as I understand your... your position, is... is of no more effect than the agency's announcement of what its litigating position will be.
Mr. Geller: --Not quite, Justice Scalia.
Justice Scalia: All right.
Mr. Geller: I'm trying to... I'm trying to distinguish the facial/as-applied point that Justice O'Connor raised from the ripeness question, which I'll get to in just a minute.
This is not a... a... there was an as-applied challenge, to begin with, made in the district court.
This is not a facial challenge in the sense that we're asking the Court to strike down the regulation based on hypotheticals or on factual situations that may never arise.
We know what these concessions contracts look like.
The NPS has issued standard concessions contracts.
It seems to us rather easy to determine whether the services that are called for in those contracts bring the contracts within the... within the CDA.
So I don't think there's anything to this facial challenge.
Justice O'Connor: Well, presumably there are many different kinds of concession contracts.
Some might be covered; some might not.
Mr. Geller: Well, I don't think so, Justice O'Connor, because there are standard concessions contracts.
They're in the record and it's clear that they call for certain types of services.
And we think it's clear that the Court, as the two lower courts did, can determine whether those contracts call for the procurement of services that would bring them within the CDA or call for the repair or maintenance of real property.
Justice Scalia: How many... what are there?
10 standard concession contracts?
Mr. Geller: --Three.
There are, I think, three.
Justice Scalia: Three?
Mr. Geller: And they all call for the same types of services at national parks.
There are... there are copies in the... in the record.
Now, in terms of your ripeness argument, Justice Scalia, once again, the... the Government never made any suggestion that this case was not ripe below.
The reason it's not unripe is that the standard concession contracts and the contracts that, in fact, the NPS is putting out for bid incorporate within them the statement that these contracts are not subject to the CDA.
The NPHA and its members need to know now, in terms of deciding whether to bid on certain contracts, what their rights are under those contracts, and therefore--
Justice Ginsburg: But how... how does it hurt you to... in the present posture, as I understand it, the contracts... whatever it's called... the ICBA decides these cases in your favor.
So in the... in the setting of a concrete dispute, the contracting officer rules against one of the concessionaires.
The concessionaires goes to that board if they want to and the board will rule, at least on the jurisdictional point, that... that the Contracts Dispute Act does apply.
So how are you hurting by--
Mr. Geller: --We are harmed, Justice Ginsburg, because it is important for the concessioners to know, at the time that they're deciding whether to bid on a contract and... and the time they're deciding how much to bid on a contract, what their rights are under that contract.
It's a pre-bid... it's a solicitation in which the--
Justice Scalia: --That would be the same case if the agency simply announced, our litigating position in these contracts is going to be that they are not covered by the Contract Disputes Act.
Mr. Geller: --Yes, but the--
Justice Scalia: You'd be in exactly the same position.
Mr. Geller: --And we would be--
Justice Scalia: Would... would you have the ability to sue?
Mr. Geller: --We would be... because it is a provision of these contracts, Your Honor, that incorporates the regulation that states that they are not subject to the CDA.
So this is a proper challenge to the solicitation as including an illegal term.
The contracts, on their face by incorporating this regulation, say you have no rights under the CDA.
It seems to us... and we think the law is clear, although the Government never made this challenge, so it's not been briefed... that the concessioners have a right to know at the outset, in deciding whether or not to bid, whether the Government is right in asserting that they have no rights under the CDA if they enter into these--
Justice Kennedy: Well, if it's an invalid provision, could the contracting party simply contract and then go into court later on and say, well, this clause is unenforceable?
Mr. Geller: --Well, I don't know, Justice Kennedy.
You would be signing a contract that agrees to the provision in the contract that says that you have no rights enforceable under the CDA.
But beyond that, the Government has taken the position you have no rights enforceable under the CDA.
So it's not clear how you would follow through on your rights under that--
Justice Kennedy: Well--
--If you're... if you're right, Mr. Geller, I suppose your client could go into court and ask for a declaratory judgment, even though there's nothing in the contract saying, we want to find out which provision of... as to review applies to us.
Mr. Geller: --But this is a pre-enforcement challenge to a regulation--
Justice Kennedy: But that's... that's the problem.
Mr. Geller: --But--
Justice Kennedy: In the case that I put, I don't think you could get declaratory relief until you've alleged that there was going to be a dispute.
You can say, yes, I--
Mr. Geller: --But there is a--
Justice Kennedy: --I might have an argument down the line and I want to know where I want to go.
That seems to me--
Mr. Geller: --But... but, Justice Kennedy, the--
Justice Kennedy: --speculative.
I just don't see the harm to your client in waiting.
Mr. Geller: --The harm, Your Honor, is in not knowing, at the time you're being asked to bid on contracts, what your rights are under those contracts.
Justice Kennedy: So it's--
Mr. Geller: It's like any other provision.
Justice Kennedy: --Is it established... I mean, my... my guess is it is, but... but if the Government, the Defense Department, any other Department, presents a... a private individual with a contract with 14 conditions and one of those conditions, in the view of the private person, is unlawful, not authorized by statute, contrary to statute, that that person, before bidding on the contract, can go to court and say, I would like this set aside as unlawful.
Mr. Geller: I think that there is a--
Justice Kennedy: Is there authority on that?
Mr. Geller: --I think that there's--
Justice Kennedy: If there is authority on that, I guess that's the end of it.
Mr. Geller: --Yes, I think there is authority under... under the... under the Tucker Act, which is one of the provisions of... that we cited in the complaint, that allows you to bring challenges to bid solicitations on the ground that they--
Justice Kennedy: And these regulations are incorporated into the contract.
Mr. Geller: --And these... these are... absolutely regulations are incorporated into the contract.
Chief Justice Rehnquist: What is the authority, Mr. Geller?
You said there is--
Mr. Geller: I think it's section 1491.
I mean, it... it is one of the provisions that we relied on in the... in the complaint in this case to bring this challenge.
And I might say to the Court--
Chief Justice Rehnquist: --Is there... is there any case that supports this particular--
Mr. Geller: --Yes, there are, but... but I was about to say, Mr. Chief Justice, that this... that the Government has never challenged ripeness, and that's not suggest... it is not to suggest that it's not something that this Court can consider, but I think it's unfair to decide that issue on the... when it hasn't been fully briefed by the parties.
It's never been challenged at any time in this case.
Justice Scalia: --Unless it force... unless the failure to consider it forces us to decide a case on... on facts that we find, you know, rather amorphous.
Mr. Geller: But they're not amorphous, Justice Scalia--
Justice Scalia: That's the purpose of the ripeness doctrine--
Mr. Geller: --because--
Justice Scalia: --to make it easier for us to decide the case.
Mr. Geller: --I'm not suggesting the Court doesn't have the authority to do it.
I'm suggesting the issue has not been briefed, that we did present the Tucker Act as the basis for jurisdiction in the Court--
Justice Scalia: Then is the issue before us--
Mr. Geller: --Excuse me?
Justice Scalia: --Is the issue before us whether the three contracts that are in the record are procurement contracts within the meaning of the statute?
Mr. Geller: Yes.
Justice Scalia: And that's ripe because--
Mr. Geller: Yes.
Justice Scalia: --you have members of your association who are considering bidding on contracts that contain... that those three contracts, which are universal... and they don't want to do it if... or may or may not want to if that... that term is lawful.
But they might do it if it's--
Mr. Geller: That's precisely... that's precisely right.
Justice Kennedy: --And may I ask one other... other question?
The... court of appeals addressed this part of... of the case under its Roman III... Roman III, I think, the Contract Disputes Act.
Did the Contract Disputes Act issue... question have anything to do with the other argument about whether or not these concessions are renewed?
In other words, if a... if it's not a... these are just freestanding--
Mr. Geller: Yes.
Justice Kennedy: --issues unrelated.
Mr. Geller: Yes, yes.
Justice Kennedy: All right.
Mr. Geller: Yes, they are.
Justice O'Connor: Mr. Geller, one other thing that I'm curious about.
Why does it matter?
Why do you care--
Mr. Geller: It--
Justice O'Connor: --whether it's covered by the CDA?
Mr. Geller: --Because the--
Justice O'Connor: What's at stake here--
Mr. Geller: --That's important--
Justice O'Connor: --in the real world?
Mr. Geller: --That's a very important question, Justice O'Connor.
What is at stake are the rights... the... the rights, the substantive and the procedural rights, that are available to... to a Government contractor if it... it gets into a dispute with the... with the contracting agency.
Now, under the CDA, there are very important procedural and substantive rights that are available that would not be available under other law, and that's... that was--
Justice O'Connor: Well, like what?
I mean, what--
Mr. Geller: --For example--
Justice O'Connor: --what's at stake?
Mr. Geller: --What's at stake principally is, first of all, an administrative mechanism, which is these boards of contract appeals, that would... are available to decide these matters expeditiously and particularly with small claims without having to go to court.
Justice O'Connor: As opposed to what?
Mr. Geller: As opposed to having to go to court, as opposed to having to go to the Court of Federal Claims where it's not even clear what the standard of review would be.
The standard of review under the CDA is de novo.
So that's a very important substantive and procedural right, in addition to--
Justice Ginsburg: De novo for who?
For the contract board or for the court if you go--
Mr. Geller: --Both.
After the contracting officer decides an issue adversely to the contractor under the CDA, the contractor has the choice either to go to the Board of Contract Appeals or to file a lawsuit in the Court of Federal Claims.
In either event, the review is de novo.
Justice Ginsburg: --And if he chooses the contract board, then the... the next step, the court step will be--
Mr. Geller: In the Federal Circuit.
Justice Ginsburg: --Directly to the circuit.
Mr. Geller: Right.
Justice Ginsburg: You wouldn't go to the--
Mr. Geller: Right.
Unknown Speaker: --And that wouldn't be de novo, I take it.
Mr. Geller: No, it wouldn't be de novo.
That would be appellate.
Justice Breyer: But the main thing, as I understood it, was that you're trying to get out of the agency appeals.
You don't want to have to go through the agency.
This gets you right into court after the--
Mr. Geller: No.
Justice Breyer: --contracting officer.
Am I right about that?
Mr. Geller: No, and it's not right, Justice Breyer.
Actually what we want to be able to do is to avoid having to follow whatever procedures the agency sets up in its contract for... for seeking review if there's a dispute.
We want to go--
Justice Ginsburg: But why can't you do that?
That's what you've been doing all along.
That's why you... you have the several decisions of the IBCA.
Every time you go to the IBCA, they say, yes.
Mr. Geller: --Yes, but the Interior Department and the NPS has not acceded to those decisions, and it has issued a regulation that is--
Justice Ginsburg: But then isn't... isn't the appropriate thing to go?
You go to the IBCA.
If the Government wants to challenge the jurisdiction that they will exercise, the resolution that they make, then it's up to the Government.
But you can go to the IBCA.
They have been welcoming you.
Mr. Geller: --Well, those were all prior to the Government's issuance of the regulation in this case, a regulation that's now been upheld by the D.C. Circuit.
Chief Justice Rehnquist: Well, but you... you say the Government's issuance of a--
Mr. Geller: The NPS.
Chief Justice Rehnquist: --It's the National Park Service.
Mr. Geller: Yes, yes.
Well, that's what we're dealing with here.
Chief Justice Rehnquist: There's some dispute as to whether they even have the authority to issue it.
Mr. Geller: They don't, in fact, administer the CDA, Your Honor, so we don't think this is a regulation that's entitled to any deference.
Nonetheless, it's their position.
Justice Souter: They... they seem to agree with you on this point.
I mean, they've... they've agreed in their terms that it's not a legislative regulation in that--
Mr. Geller: Right.
Justice Souter: --footnote 5 or 6--
Mr. Geller: Right.
Justice Souter: --whatever it is.
What does that do to... to our jurisdiction?
I mean, is... is... are... are you now both--
Mr. Geller: I don't think--
Justice Souter: --in effect, claiming that this so-called regulation is nothing but the Government's statement of the intention to take a position when and if--
Mr. Geller: --Well, the--
Justice Souter: --the time comes?
Mr. Geller: --Our view is that this is a regulation that represents the views of the NPS.
It's not entitled to any deference because it's not a statute that they administer.
The Government would have to give you its view of how much deference it is entitled to.
Justice Souter: Well, how do you read the--
Mr. Geller: But this is still an APA--
Justice Souter: --How do you read their concession in the footnote?
Mr. Geller: --I find that--
Justice Souter: --I... I take it that is new, by the way.
Mr. Geller: --I find that--
Justice Souter: Am I correct?
Mr. Geller: --footnote very confusing.
Justice Souter: So you... you're recalling challenging not the... not the ineffective regulation, but rather the inclusion of what the regulation says--
Mr. Geller: We're challenging both.
Justice Souter: --in the contracts.
Mr. Geller: We're challenging both.
We brought an APA challenge to the regulation, as well as a Tucker Act challenge and a pre-bid solicitation challenge to the inclusion of these... this... this illegal term in the... in the contracts.
Justice Souter: --But isn't it the case that unless you have an... an APA issue, there's nothing else that you can litigate at this point?
I mean, if the only thing that you have to complain about is that they want to put a term in a contract that you think they shouldn't be putting in, it's up to you to decide whether you want to contract it on those terms or not.
Mr. Geller: No, because I think under the law we're entitled to challenge that solicitation as illegal.
If we have to bid on these contracts, we're entitled to know--
Justice Souter: No, but at this stage of the game, they're not claiming that their regulation is... is what they call a legislative regulation.
Mr. Geller: --They are claiming that that is the position that they're going to take and that it is entitled to some level of deference.
Unknown Speaker: Well--
Mr. Geller: That footnote clearly says that it is entitled to some level of deference.
Unknown Speaker: --And--
Mr. Geller: This is clearly the position, and it's been upheld by the D.C. Circuit.
There's no reason to suggest they're not going to adamantly enforce their... their views.
Justice Ginsburg: --But then... but if the case isn't ripe and we should so hold, I assume the appropriate thing to do would be to vacate the D.C. Circuit's decision to that extent.
Mr. Geller: Yes.
Justice Ginsburg: So then you'll be... what you would be... have is the Government has told you in advance what its litigating position would be and it has no more meaning than a... a statement of what the Government's--
Mr. Geller: But it is--
Justice Ginsburg: --position is with no... no--
Mr. Geller: --But, Justice Ginsburg, as I said, there's still this provision in all of the contracts.
Chief Justice Rehnquist: --The Government would still be asking you to enter a contract--
Mr. Geller: The Government would still be asking us to accede to a position and sign a contract that contains a term which we believe is illegal that says we have no rights under the CDA.
Chief Justice Rehnquist: --Well, what... what if the Government contract had a term that simply said, you know, there would be damages for delay, double damages depending on the amount of delay?
And you say, well, I... we don't think the Government is authorized to put that in a contract.
Could you challenge that?
Mr. Geller: Yes.
I believe so, Mr. Chief Justice.
There is a very large body of Government contracting law... it's not in the briefs because it wasn't raised... allowing--
Chief Justice Rehnquist: Well, is it--
Mr. Geller: --allowing these sorts of challenges to illegal terms in contracts.
Chief Justice Rehnquist: --But where is the law?
I mean, is it in the cases of this Court?
Mr. Geller: Well, obviously, these... these cases are generally litigated in the... in the Court of Federal Claims and in the district courts.
Chief Justice Rehnquist: Is... is that where the law is, in the Court of Federal Claims?
Mr. Geller: Yes.
Well, there are probably some appellate decisions as well, but the law is fairly well-settled in this area.
As I say, the Government has never challenged the ripeness of the CDA--
Justice Ginsburg: Mr. Geller, you say... you say it's settled, and please correct me if I'm wrong if... if Abbott Laboratories has been overtaken.
But my notion was that in order to have a pre-enforcement challenge, you had to have a pretty strong claim that you are hurting now, as they were, if they didn't... if they spent all that money.
Mr. Geller: --Yes.
Abbott Laboratories is... is obviously an APA case.
I think we could meet that standard because we need to know now whether we should bid on these contracts.
But there's a separate body of law involving solicitations for Government contracts is what I'm saying to the Court.
Justice Breyer: And does that get you--
Chief Justice Rehnquist: --That... that's your stronger card I think.
Mr. Geller: Yes.
Justice Breyer: And does that give you an APA cause of action?
Mr. Geller: Well, we brought both an APA cause of action and a challenge under the... under the Tucker Act, and you know, we would maintain that we can challenge this regulation, and in addition, we can challenge this bid solicitation.
The two really overlap because the regulation is incorporated into the contract.
Justice Kennedy: Was there any finding in the district court that the inclusion of this provision was critical as whether or not you'd go ahead with the contract?
Mr. Geller: There was no such--
Justice Kennedy: I mean, I--
Mr. Geller: --There... there was no such--
Justice Scalia: --I find it a little hard... if it's a... if it's a really good contract, you I suppose intend to comply with it and you don't think there's going to be any litigation at all.
Mr. Geller: --Well, Your... there was... there was no finding by the district court, Your Honor, because there was not... there was no challenge to the ripeness by the Government, but the... the complaint, as I recall, did make that allegation.
The complaint made the allegation that the contractors needed to know whether these contracts were covered by the CDA.
Justice Scalia: When you say these--
Justice Kennedy: --Well, could it make the further allegation that if it... if it were not... that if it were... were not covered, it would not engage in the negotiations at all?
Mr. Geller: I don't specifically recall that allegation.
Justice Kennedy: It's a commercial matter.
It's hard for me to see it if there's an advantageous contract, but you're not going to execute it--
Mr. Geller: Well, but it's a question of how--
Justice Kennedy: --if you go through one form of remedy or the other in the event of a breach.
Mr. Geller: --But it's not binary, Justice Kennedy.
Maybe you would still enter into the contract negotiations.
It's one factor in deciding how much you'll bid on the contract.
Justice Scalia: Mr. Geller, you... when you say these contracts--
Mr. Geller: Yes.
Justice Scalia: --you keep referring to these contracts.
They're... actually you're talking about three contract forms.
You're... you're not discussing any particular--
Mr. Geller: Well, there are--
Justice Scalia: --bid solicitation.
You... you have no particular bid solicitation, do you?
Mr. Geller: --Well, no.
Well, that's not precisely true, Justice Scalia, because there were bid solicitations.
In the district court, there were... there were lawsuits brought both by the National Park Hospitality Association on behalf of its members, as well as... as lawsuits brought by several concessioners challenging specific bid solicitations as to them.
And... and therefore, there was both facial and as-applied, in effect, challenges to the... to the CDA point in the... in the--
Justice Breyer: What they say then is the Government... as far as I understand it, the basic point is that this is not a procurement contract regardless of who's entitled to what deference.
And the reason that it isn't is because we are not buying anything, and that isn't a technical point.
That is an important point because you and us... you, the private, and we, the Government... are both in the business of selling things to the Government.
We need somewhat more control over the interpretation of these contracts.
And that's why the number of procedures you have to go through in the parks department is greater, and all the things that you don't like about it are things we do like about it.
Namely, we get a little bit added control.
But that's why legitimately these are not procurement contracts.
Now, your point in response to roughly that, or--
Mr. Geller: --Well--
Justice Breyer: --I'm just trying to get you to the merits, so I thought I'd--
Mr. Geller: --Yes.
I'd like to turn to the merits.
Thank you, Justice Breyer.
Can I... I'd like to begin by saying it's purely a matter of statutory construction, and we think that the statute on its face unambiguously answers the question before the Court.
And I think it would be helpful if the Court could look at section 3(a) of the Contract Disputes Act which... which appears in many places, including page 1 of the blue brief, because you'll see that section 3(a) states that unless specifically excluded therein, the CDA applies to, quote, any express or implied contract entered into by an executive agency for, among other things, the procurement of services or the procurement of construction, repair, or maintenance of real property.
Justice Breyer: --The reason that doesn't help you is because--
Mr. Geller: The--
Justice Breyer: --the question is what's procurement.
Mr. Geller: --Well, I'm not sure that that's necessarily the question, but let me address it this way, Your Honor.
The National Park Service does not contend that its concessions contracts are not contracts within the meaning of the CDA.
It doesn't contend that it's not an executive agency.
And the NPS doesn't contend that any provision of the CDA or, for that matter, any other Federal statute specifically excludes these contracts from the... from the CDA.
And, Justice Breyer, the NPS really doesn't even take issue with the fact that these concessions contracts procure services and procure the construction, repair, and maintenance of real property.
In other words, every single statutory requirement on the face of the statute would seem to be satisfied--
Justice Breyer: But I thought they did challenge that these are... that it's procurement.
Mr. Geller: --They do not challenge, Your Honor, that... that these contracts procure services--
Chief Justice Rehnquist: In the... in the sense of procurement as used in Government contracting?
Mr. Geller: --Well, I think that's the issue in the case.
The Government claims--
Justice Breyer: That's... that's the issue in the case.
Mr. Geller: --The Government--
Justice Breyer: I tried to--
Mr. Geller: --And I would like to turn to that now because the Government claims that these contracts are not within the protection of the CDA.
Its entire argument amounts to the following.
The Government says that the word procurement and the phrase, procurement contract, we are told, have a universally understood and well-settled meaning.
And they tell us that to qualify as a procurement contract, the Government says, an acquisition must be for the direct use and benefit of the Government and it must be paid for with what the Government calls Government funds.
Now, the first thing to be said, Justice Breyer, about the Government's argument is that it is a complete invention.
It is a complete invention.
No Federal statute defines the word procurement or the word, procurement contract, to include the two requirements that the Government tells us are essential.
In fact, the Office of Federal Procurement Policy Act... the Government cites lots and lots of--
Justice Breyer: --Well, the word procurement has a natural meaning.
If they... if they have a concessionaire to come and sell balloons on the Fourth of July, they don't say they've procured some balloons.
They say they've arranged for some balloons.
Mr. Geller: --Well, you'd say arranged.
You could say they procured having someone sell balloons at the Fourth of July.
The... the Office of Federal Procurement Policy Act--
Justice Breyer: No, but that... that... that's not the usual meaning of... of procure, I should think.
Mr. Geller: --But the... but there is no statute that... the Office of Federal Procurement Policy Act, which is a companion statute to the CDA, actually has a definition of the word procurement.
You wouldn't know it from reading the Government's brief because in their... it doesn't refer to that, but it contains a definition of the word procurement that does not contain either of the two requirements that the Government tells us are essential to a Government procurement.
No court has ever construed the word procurement to include the two requirements that the Government tells us are clearly established and well-settled by Federal procurement--
Justice Ginsburg: Mr. Geller--
Unknown Speaker: --What about acquiring--
Justice Ginsburg: --I'm looking at page 19 of the Government's brief, and they... they define procurement.
They're taking it from the... the Federal acquisition regulations to say acquiring by contract with appropriated funds supplies or services by and for the use of the Federal Government.
Mr. Geller: --Yes.
That's... that's not a statute, but let me address that, Justice Ginsburg.
First of all, appropriated funds.
It is clear... and the Government has not challenged the fact... that the CDA applies to contracts even when appropriated funds are not used.
That's clear on the face of the CDA.
So the Government is forced to come... come up with this new phrase, Government funds, which has, as far as we can tell, no basis at all in any prior statute or any Federal procurement law.
And the fact--
Justice Scalia: --It does have a basis in just what Justice Ginsburg was quoting, 48 C.F.R. 2.101.
So they say it's not without foundation in the law.
What... what that's from is, I take it, it's a memo that... or a policy issued jointly by the Secretary of Defense, the Administrator of General Services, and the NPS Administrator.
So when they have a reg like that, I'd... I'd think that it's not so that it isn't somewhere in Federal law.
It's right there.
Now, there are some other things there--
Mr. Geller: --But--
Justice Scalia: --that you say are not necessarily part of procurement.
But that fact that there are other things that overstate it doesn't mean this does.
Mr. Geller: --But, Your Honor, there are many other... the Government principally relies on other statutes that have the... have certain provisions like the ones they would like to introduce into the CDA in them.
But I think it's quite significant that Congress didn't put these provisions in the CDA.
Justice Scalia: But what about... he put one in... in the CDA, 41 U.S.C., section 612(c).
It's discussed at the bottom of page 18 and the top of page 19 of... of the Government's brief.
And what it says is that the monetary awards in favor of a contractor will be paid out of the judgment fund and in turn provides for the reimbursement to the judgment fund, quote, by the agency whose appropriations were used for the contract, which would suggest that in all cases--
Mr. Geller: I don't think it... it does not--
Justice Scalia: --where there's been a judgment--
Mr. Geller: --It doesn't suggest that at all, Justice Scalia.
First of all, they only quote that incompletely.
Justice Scalia: --Yes, well, tell me why.
I... I know that your--
Mr. Geller: --In... in our--
Justice Scalia: --reply brief... I don't see how the... the--
Mr. Geller: --In our reply brief, it says, by such appropriated... by... by the appropriations of that agency or such other appropriations as the agency has to get.
Now, the NPS is a... a--
Justice Scalia: --But... but it clearly envisions appropriations, whether they have it already or they have to get it later.
Mr. Geller: --But the... the CDA on its face... and the Government concedes this... applies to contracts that don't involve appropriated funds agencies.
Justice Scalia: Well, we'll ask the Government about that.
That's a... that's a much more serious point.
Mr. Geller: Yes.
I think it's clear there's no... there's no doubt that the CDA applies to any contract whether or not it's an appropriated funds agency or not.
Let me just say that in addition to being, I think, totally unsupported as a matter of law, the limitations that the NPS asks this Court to read into the CDA would be completely unworkable as a matter of practice.
I think we've already talked about the Government funds point which is, I think, a phrase that they have dreamt up.
It has no basis in law, unlike appropriated funds, which is not the case of the CDA.
But I think it's also the case that this use or benefit to the Government notion is completely unworkable.
If, for example, the NPS were to go out and procure water coolers for use in the Department of Interior building, the NPS would concede that those would be within the Contract Disputes Act because they're... they're for the use and benefit of the Government.
If the Government were to go out and procure the same water coolers for use on the Mall during the Fourth of July, the Court... the NPS would say, well, that's not for the use or benefit of the Government.
I don't know how you could decide what is for the use or benefit of the Government.
When... if the Government... if the NPS issues a contract to build a... the World War II Memorial on the Mall, which is now being... is now happening, is that for the use of the public or it is used for the Government?
We don't think this is a defensible position, and it certainly finds no basis in the CDA.
We think it's an irrational reading of the act that has no support in the language or the legislative history or the purpose of the statute.
And I want to say that even if there was a use or benefit to the Government limitation in the CDA, we think it would... these contracts would still clearly satisfy it because these concessions contracts are being let in part to help the Department of Interior, the NPS fulfill its statutory mission.
If these concessions were not there operating these restaurants or guest facilities, the NPS would have to operate them themselves in order to satisfy its... the statutory requirement that they provide for the use and enjoyment of the national parks.
So we don't think it's possible to say that these concession contracts the... that the NPS is completely indifferent to these concession contracts.
They are clearly for the use and benefit not only of the public, but also of the NPS.
If the Court has no further questions, I'd like to reserve the balance of my time.
Argument of John P. Elwood
Chief Justice Rehnquist: Very well, Mr. Geller.
Mr. Elwood, we'll hear from you.
Mr. Elwood: Thank you, Mr. Chief Justice, and may it please the Court:
Justice O'Connor: Will you tell us why the Government doesn't want the CDA applicable here?
I mean, what's... what's at stake for the Government in not applying it?
Mr. Elwood: --Justice... Justice O'Connor, the reason why the Government doesn't want this applicable here is that the Contract Dispute Act was passed to address specific shortcomings in the remedial scheme that was available for procurement contracts, and because it was designed specifically for those purposes, it have... has terms that we don't think are appropriate in this context.
Justice O'Connor: But that just doesn't tell me, as a practical matter, why the Government doesn't want it applicable here.
Mr. Elwood: --For example, the prejudgment interest remedy.
Justice O'Connor: You don't want to pay prejudgment interest.
Mr. Elwood: --Right, and we don't think it's appropriate.
Congress provided prejudgment interest in the procurement context because procurement contractors would be required to perform under the contract even during the pendency of a dispute when they weren't being paid.
And it was because of that unique position where they were both being required to make outlays without getting any income that Congress thought that because there was a--
Justice O'Connor: Okay.
So at bottom, that's it, the prejudgment interest feature.
Mr. Elwood: --I... I think that and because... there are other things as well.
For example, the purpose of the... one of the purposes of the CDA was to cut through all of these requirements that you exhaust administrative remedies, but those simply aren't present in the concessions context.
Traditionally concessioners had a direct right of access to courts, and Congress has never indicated that they thought the remedial scheme was inadequate for concessioners.
Justice O'Connor: Is this... is this claim ripe?
And why didn't you ever talk about it below?
What's going on?
It's... it comes in such an odd posture.
What is the Government's view on that?
Mr. Elwood: --The reason why we did not raise this... why we did not raise this is because we did not raise it below.
And as you can tell from the pleadings--
Justice O'Connor: Why not?
Mr. Elwood: --is... because the CDA was kind of a side show below.
It was a relatively small issue and it was just not the focus of the proceedings, as you can tell by the opinion.
But I think that the Court has raised valid concerns about the ripeness in this sense.
The Court has traditionally said in a pre-enforcement challenge to a regulation that a claim is ripe if it affects primary conduct so that... so that if they don't comply, they might be held liable.
That's the Abbott Labs line of cases.
And here this doesn't affect primary conduct.
It... it predominantly just says whether or not... which forum you're going to have a remedy in.
Unknown Speaker: Well, I... I would agree--
Justice Scalia: --What about this... what about the... the reply?
I came in thinking ripeness was a problem, and your brother on the other side gave to me what was a very convincing answer.
What's wrong with that answer?
Mr. Elwood: And that is... the thing is because it predominantly just determines which forum you have... which forum you bring your claim in, I don't know--
Justice Scalia: I know it doesn't affect... but what they're saying is that where the Government offers general contracts to the industry and there is a term in all of those contracts which, in the view of the industry, is unlawful, they... it's ripe for them to challenge that.
Now, what I'm afraid here would be that we or you or somebody, in deciding whether that's an incorrect argument, would upset what could be... I have no idea if it is... a practice of contractors objecting to terms in offered contracts as contrary to law.
So are you saying now that that is not ripe?
Are you saying that a contractor who comes into a court and objects to a term in a proposed contract as contrary to law does not have a claim because it is not ripe?
Is that the Government's position?
Mr. Elwood: --No, I don't think that would be our position.
If it affects their primary--
Justice Scalia: No.
I would think probably you would at least want to brief it.
Mr. Elwood: --Right.
I think that if it affects their primary conduct, if affects what their obligations would be under the contract, I think that that claim would be ripe for pre-enforcement review.
But where it simply determines which forum they'll bring the claim in, I don't think it would be covered.
Justice Scalia: But they said it's the first that's at issue here.
Now, is it not because... you heard what he said.
Mr. Elwood: That... that's correct.
But I think simply because it determines which forum you bring your claim in, I don't think it would be covered.
If I were--
Justice Scalia: --So you... so there's a dispute between the two sides on what the case law says as to whether... and it isn't even a general... a general attack upon the form of... upon a form contract.
But as we understand from petitioners, there were particular bids outstanding that were challenged because... because of a term in them that... that was claimed to be unlawful.
And it is your position that you cannot challenge a particular bid because of an unlawful term unless that unlawful term affects your primary conduct.
Mr. Elwood: --No.
If it affects something other, I think, than the forum in which it was brought, I mean, if it affects what you think your obligations will be, if... if it affects the price that you think you should pay or that you should bid on a contract, I think that that would be--
Justice Scalia: Well, it... it does on your analysis.
Mr. Elwood: --subject to pre-enforcement review.
Justice Scalia: Doesn't it?
I mean, you said one of the things that is important is prejudgment interest.
So I... I suppose their liability under the contract is going to be affected by... by the correctness of the reg.
Mr. Elwood: I don't think their liability--
Justice Scalia: Their primary conduct won't be, but their potential liability, if there is a contract dispute, would be.
Mr. Elwood: --Your Honor, I confess that I am not sure if the Government gets prejudgment interest under the CDA or not.
But if it were... if... if it simply ran to the contractors, I think that... that the prospective interest on a claim that has not even arisen yet seems a little vague--
Justice Scalia: Why is that vague?
I mean, they... they have to make a bid.
They have accountants.
These are big companies.
They calculate everything down to the finest penny, and... and they say, you know, we take into account whether we're going to get prejudgment interest, which we... if we have a dispute.
And by the way, we have one dispute every 3 hours, and so it's a lot of money to us.
And we will bid $42.36 less if we're not getting the... whatever.
So they work it all out.
They have accountants who do it.
And so, if that's so... of course, if it isn't so, it's a different story.
But they've said something like that's so.
Mr. Elwood: --I think it... it would turn on... in that case I just don't think that in advance you can say with enough sort of concreteness and specificity that you know how much a particular claim... the... the as-yet unfiled, unrealized contract claims would be worth.
You could say--
Justice Stevens: But, Mr. Elwood, isn't it really... isn't a waiver of prejudgment interest comparable to a waiver of punitive damages, for example, which if you insist on it, would affect the... the amount one would bid for a contract?
I don't understand why you say it's worth nothing.
Mr. Elwood: --I mean--
Justice Stevens: I mean, it's something... if the Government is willing to fight about it here and insist... and put it in every contract, it must be of value to the Government.
Mr. Elwood: --What is actually... just if I could clarify this.
What is put into the contract is just a general term that applicable law will apply and because applicable law includes all regulations, it is incorporated that way.
It doesn't specifically include a CDA waiver or anything of that sort.
Chief Justice Rehnquist: So the contract itself does not specify that the CDA does not apply.
Mr. Elwood: No.
It just says applicable law governs the contract.
But I think it's just a matter--
Justice Ginsburg: And is it... is it your view, since you said your... your interpretation now of the... the position that the Park Service is taking that it... it doesn't constitute law?
How can it constitute law?
First of all, the Contract Dispute Act is not within the Park Service bailiwick.
It isn't... as you concede, it isn't the... doesn't administer this act.
So does that regulation constitute any kind of law?
Mr. Elwood: --I think that that's a valid concern because our position is that this is basically just an interpretive rule announcing the position that the Park Service will take and the Park... and the position that the Park Service employees will take in administering it.
Justice Scalia: So you're saying... you... you claim that this provision is not incorporated in the contracts.
Is that the position the Government is taking?
Mr. Elwood: I think... honestly, Justice Scalia, I think it's just... it's a... it's a new proposition for me, and I think that a good argument could be made that it is not included because it... it really just represents the position of the National Park Service.
Justice Scalia: Even leaving aside the question of inclusion, what is... what do you understand your difference to be from the petitioners with respect to the status of the regulation itself?
Is there any difference at all?
Mr. Elwood: I don't know that there is a... a difference with respect to the petitioner's view.
It's an interpretive rule that the Park Service has--
Justice Scalia: Have we got any jurisdiction left?
Mr. Elwood: --I believe so because it is the announced position.
It's not just a policy statement.
It is basically a directive to the--
Justice Breyer: Yes, but what's the difference between a policy statement and an announced position?
The... the point at which each one is going to have practical effect is the point at which there is a claimed breach and an argument, if there is one, over what the remedial process is.
Mr. Elwood: --Yes, but I think that the only difference would be the... the principal difference would be policy statements are more... involve more variance in that they say as a general policy we will do this, whereas the... as an interpretive rule, it just says that we do not believe that concession contracts are procurement contracts.
Justice Breyer: What... what is the position of the Government?
Now, I know this is hitting you cold, but I think it would be helpful.
We have not thought of ripeness before, and the case has been argued and submitted on the assumption that, for example, the bidding would be affected by this term which is incorporated into the contract.
That's been the assumption, and we see no reason to depart from it.
It's not jurisdictional.
So decide the issue we briefed.
That's position one.
We haven't thought of ripeness before, but now that we think about it, we think it's quite a serious problem and we're not certain what the... what the... what the issue is in ordinary contracts, and we're not certain whether it's incorporated.
So we think you should say that this case is not ripe.
Now, do you take position one, which will mean we perhaps could go to decide the issue for which it was granted, or do you take position two, which means you see ripeness as a big problem here that we ought to look at further?
Mr. Elwood: Well, Justice Breyer, it's clearly been the position of the Court that it is not bound by the failure of the parties to raise it.
That's in Reno versus Catholic Social Services, and of course, you can raise it--
Justice Breyer: I'm not asking you what the law is exactly.
I'm asking you what's the Government's position.
Mr. Elwood: --I... I think our position would be... I mean, we... we filed a brief in opposition and I think, you know, if... if we can win on ripeness grounds, that's great too.
Justice Breyer: Well, you wouldn't necessarily--
Unknown Speaker: [Laughter]
Justice Breyer: You wouldn't necessarily win.
I mean, I... I don't know if you would win.
Mr. Elwood: Right.
We might lose the... the judgment of the D.C. Circuit as well, but--
Justice Ginsburg: --You... you would have to.
If it's not ripe, we'd have to vacate it to that extent.
But this... in the D.C. Circuit--
Unknown Speaker: --Put you back to square one.
Justice Ginsburg: --In the D.C. Circuit, this was a giant, one of those typical wholesale attacks on many, many regulations, on the whole... on the whole rulemaking.
Is that correct?
Mr. Elwood: --That's correct, Your Honor.
Justice Ginsburg: And this was just a tiny, tiny piece of a long, long opinion--
Mr. Elwood: That's correct, Your Honor.
Justice Ginsburg: --treating... so maybe just nobody noticed.
Justice Stevens: It seems unfair to pick it apart in this way.
Just a little part of a major opinion.
Mr. Elwood: Well, I think that it... it just points out the fact that, I mean, they... they had an awful lot on their plate, and it perhaps eluded them for that reason.
Justice Ginsburg: Now, the as-applied/facial.
Was the as-applied challenges... did those center on this issue or did they relate to the... to another issue?
Mr. Elwood: They related to other claims, Justice Ginsburg.
Xanterra has characterized their claim as an as-applied claim although they're... they're not asking for as-applied review in this case.
But if you look at their... their complaint, their complaint involved their intention to bid on an as-yet unreleased prospectus.
And so, in that sense, I don't think that is an as-applied change for two... for two reasons.
Not only is there no contract dispute, but at the time that the complaint was filed, there was no contract.
So we think that it would be a facial challenge.
Justice Scalia: Mr. Elwood, if I can assist you in giving the merits here, is it... is it the case, as the petitioners contend, that the Government concedes that not all contracts covered by the CDA are contracts in which appropriated funds are used?
Mr. Elwood: That's correct.
To the extent that it covers nonappropriated fund instrumentalities, it covers contracts that would involve the expenditure of nonappropriated funds.
Those are, however, Government funds, funds of Government entities known as nonappropriated fund instrumentalities.
Justice Scalia: Well, once you slip off from appropriated into... into Government funds, you don't put any... you don't have any statutory text you can appeal to as... as separating out the CDA from... from your Park Service concessions.
Mr. Elwood: I... I don't agree, Justice Scalia.
Both the... well, to begin with, just in terms of giving an indication of what the commonly accepted meaning of the term was at the time, the Commission on Government Procurement Reform, which was the... which was the impetus for all of these reforms, defined procurement as purchase of product or service for Federal use, which incorporates both a... a notion of expenditure and Federal use.
And both the... the 1969 act--
Justice O'Connor: Yes, but Federal use, of course... it is of use to the Park Service to have facilities available to the public.
So that doesn't really answer the question.
The parks... the Park Service wants parks available to the public with services in them, restrooms and buildings and restaurants and so forth.
So in a sense, it is for the use of the Park Service and the Government as well as for the public.
Mr. Elwood: --It is for the use... well, it is not for the direct use of the National Park Service, and that is where the Federal grant and cooperative agreement comes in.
8 months before passage of the CDA, Congress explained its understanding of what different types of instruments would be used for, and it explained in that that a procurement contract would be an instrument whose principal purpose is the acquisition by purchase, lease, or barter of goods or services for the direct use and benefit of the Government.
Justice O'Connor: Well, it doesn't really say that.
And the language in the CDA is broad, and presumably this was a... an act that was presumed to have broad application.
Mr. Elwood: --It was presumed to have broad application among procurement contracts.
There's no indication that they did not intend the word procurement to have the ordinary meaning that it does in that sense, as indicated in the Commission on Government Procurement Reform and the way it was used there, as indicated in the 1969 act creating the commission and the OFPP Act where the simple use... word procurement was understood to mean--
Justice O'Connor: Was... was there ever any amendment offered in Congress to make clear that it didn't apply to concession contracts?
Mr. Elwood: --There was no... no, there was no indication in the entire legislative history that the... that concessions came up, and in 1,200 pages of reports on both procurement and nonappropriated fund procurement, there was not a single mention of... of... national parks concessions.
Justice O'Connor: And how long... at... at any point did the CDA... was it applied or followed with any concession contracts, or is this something that has arisen recently?
Was it used at one point?
Mr. Elwood: There are a number of Armed Service Board of Contract Appeals that assume CDA jurisdiction, and the Board of Contract Appeals of the Department of Interior started using it in 1989.
But I'm not familiar with usage prior to that--
Justice Scalia: These are for what concessions?
PS... PX concessions, for example?
Mr. Elwood: --Yes, Justice Scalia.
Justice Scalia: Well, why isn't that... I mean... because I was about to ask that question because I thought you're drawing the distinction between a concession to provide food and hot dogs and amusement to visitors to the park, which you say is not covered by the CDA, and it seems to me, a contract to provide food and hot dogs and... I don't know... maybe amusement... I don't know what they have at PX's... to members of the armed forces.
Why isn't at least the latter, although it's a concession contract, why isn't that clearly for the benefit of the Government even... even in the narrow sense in which you use that term?
Mr. Elwood: No, Justice Scalia.
We would... we would agree that that is for the benefit of the Government.
It's... it doesn't involve the expenditure of Government funds, but it's for the benefit of the Government.
And for this reason--
Justice Scalia: So that would be covered by the CDA.
Mr. Elwood: --I... I don't believe it necessarily would because it doesn't involve the expenditure of Government funds.
It's still private contractors coming in and being... and paying the Government for the opportunity to do that.
But as far as the benefit goes, I think agencies have a direct interest in providing benefits to their employees and especially in the PX example because PX's, for example, are basically a fringe benefit for servicemen and women and their dependents in that it's... it's... basically access is limited to them.
And salary and fringe benefits of that sort are how agencies procure employees.
That is how they attract and retain qualified personnel.
And in fact, agencies have drawn a distinction between benefits provided to employees and benefits provided to the entire public--
Chief Justice Rehnquist: But isn't that the--
--You'd say... it still isn't covered, you say, unless the Government pays out cash.
Is that right?
Mr. Elwood: --I think that that would be the better view, but I think obviously a stronger argument could be made for concessioners.
Justice Breyer: Well, why did you say it was not in the legislative history in that respect?
What... what is this?
You... you quote in your brief... I just want a little clarification.
There's a committee report.
The Senate report says that, quote, concessions contracts do not constitute contracts for the procurement of goods and services for the benefit of the Government or otherwise.
And... and there's something odd about that statement, but I got it out of... you quoted it.
And that seems to be the legislative history of the act, and apparently it isn't.
Where... what's... what's the status of that particular remark?
Mr. Elwood: No.
Those are both the... those are committee reports--
Justice Breyer: Yes.
Mr. Elwood: --for the 1998 act.
So it's part of the legislative history.
Justice Breyer: So why isn't that legislative history?
Mr. Elwood: Oh, it is... it is... I don't know that I understand your question.
Justice Breyer: It says concessions contracts are not contracts for procurement of goods and services.
Mr. Elwood: Oh.
I was addressing the... the legislative history of the CDA, not the 1998 act.
Justice Breyer: Well, is... aren't we... oh, the 1998 act is which?
Mr. Elwood: That is the act... the current concession authority, the current authority under which the National Park Service issues concession contracts.
Justice Breyer: --So what we have is in that act--
Justice O'Connor: --That was an act that said they're--
Justice Breyer: --Yes, I see.
Justice O'Connor: --they're not continuously renewed with the same--
Mr. Elwood: That's correct.
It eliminated the--
Justice O'Connor: --provider.
It was the act that said, but we're going to terminate these things.
Mr. Elwood: --That's correct.
Justice Ginsburg: When did the Park Service first install this... when did it first take this position?
It wasn't just under the regulations, as I understand it.
When did the Park Service take the position that concession contracts were not procurement contracts?
Mr. Elwood: The first time they took that position publicly was in 1979 in a Board of Contract Appeals case, Yosemite Park & Curry Company.
The court... the IBCA, rather, did not address it, though, because it was actually before the effective date of the CDA, and they took it specifically with respect to the CDA there.
But traditionally... although it's impossible because of absence of institutional memory, traditionally concession contracts have not been viewed as procurement contracts by the National Park Service.
Justice Ginsburg: But they--
Justice Kennedy: --You indicated that there's a stronger argument in some instances than in others for the fact that it's a concession.
A concession contract can be a procurement contract.
Does that go back to our basic question about ripeness and we don't know what we're involved with here?
Or can we take these contracts where, I take it, they did involve the construction of facilities at national parks, et cetera, which does benefit the Government in the long term?
Mr. Elwood: Well, to the extent that the Court thinks that the specific terms of concession contracts and what is accomplished under them affects the determination of whether or not they're procurements, I think that the Court would have some difficulty in saying authoritatively whether they all are or an unacceptably high portion of them are procurement contracts without having a better idea of what is included with them.
If I could--
Justice Kennedy: But if... on a case-by-case basis, then that would indicate the regulation is deficient because the regulation doesn't purport to... to use this... this kind of fine distinction.
Mr. Elwood: --But still it... it's something that could be addressed in as-applied challenges where you could say, in my particular case, where it requires me to build a lodge or whatever, this is a procurement contract, and under those circumstances it would be very clear exactly what was required of the procurement contractor.
And they could... they could... of the concessions contractor and they could determine whether or not that particular contract was a procurement.
Justice Kennedy: The regulation... the regulation would then be invalid to that extent.
Mr. Elwood: Yes, but the Court has held... this Court has indicated in INS versus National Center for Immigrants' Rights, Babbitt versus Sweet Home, and cases like that that... that merely because a regulation is invalid in some applications, it will not be invalidated on a facial basis.
If I could just address specifically--
Justice O'Connor: Mr. Elwood, is there anyplace we could look to see how much prejudgment interest the Park Service has had to pay each year?
Is it a big-ticket item?
Mr. Elwood: --It's not a big-ticket item.
The only three cases in which the... the CDA has been applied to national park concessions are the three IBCA cases mentioned, and in two of those, the Government wound up winning on the merits, so there was no prejudgment interest paid.
So it's only in that R&R Enterprises case that the Government would have paid any prejudgment interest in this case.
If I could just go to your example, Justice Kennedy, about the building of buildings on national parklands.
I believe that is not a procurement for... for a variety of reasons.
First, just as a statistical matter, 78 percent of concessions contracts do not involve any capital improvements.
And that is a very broad term.
It's much broader than just structures.
It's structures, unremovable property, and fixtures.
But on the merits, many concessions contractors have been required, since the very beginning of the... of... of concessions, 1872, to require... they've been required to build their own buildings.
And historically that has not been considered something that the Government gets.
It doesn't get the benefit of those services because it enters the contracts not for purposes of getting a building, but because it wishes to have concessioners provide services to park visitors.
And in order to do that, it tolerates the building.
The National Park Service doesn't want buildings in the parks.
It wants nature in the parks, and it tolerates the buildings to the extent that they are used to provide visitor services.
And I think this comes across in the way these are treated by the contract.
Even though the Government has bare title in these buildings, in a very real sense it doesn't buy them.
Every concessioner who builds a building in the national parks under a concessions agreement will have a leasehold surrender interest equal to the construction cost of the building plus inflation minus depreciation.
And they cannot be put out of that building by anyone until they are paid that leasehold surrender interest; that is, until the building essentially is bought.
As long as a concessioner is operating out of that building, a concessioner will hold the leasehold surrender interest, not the Government.
Also, I think it's telling that the form contract indicates that if the concessioner ever leaves the... ever abandons the building, ever... that they have constructed, that the Government can require them to knock it down and restore the site to its natural... its natural state.
That's section 9b of the standard contract and in the contract that it's in the joint appendix.
So again, that's an indication that they're not interested really in procuring the construction services.
They're interested in authorizing a concessioner to provide services to visitors to the national parks.
Finally, I think it's noteworthy that Congress obviously knew that concessioners would be building buildings under the 1998 act, which was enacted against the backdrop of this regulation setting forth the Park Service's consistently held view that concessions contracts are not procurement contracts.
And far from displacing that view, they actually seem to embrace it both in the text of the act and in the legislative history that Justice Breyer mentioned.
As far as the text of the act goes, I think it's telling that... the different types of language they use for both the concessions side of the house and the procurement side of the house.
On the concessions side, they use distinct language that I don't think you're going to find in any procurement statute anywhere.
Instead of saying procure or purchase, they say they... the... the Park Service can authorize concessioners to provide services, and it even specifies that the services will not be provided to the Government.
It says they're provided to visitors, which is obviously very different from procurement statutes, many of which specifically state that the service will be provided to the agency.
Justice Scalia: Maybe the Park Service wrote that portion of the committee report.
Mr. Elwood: No.
That... Justice... Justice Scalia, that's the actual text of the statute.
Justice Scalia: Okay.
Mr. Elwood: And by contrast with that, the actual text of the procurement provisions of the 1998... section 5959, used typical procurement language and specified that the Park Service will be benefitting from it.
It says that the... that the service can enter into management consultant agreements whereby management consultants provide services to assist the Secretary in administering the program.
So it's a contrast both... I think in both ways.
Finally, one other thing that I think is telling is that Congress specifically provided that some of the most likely to arise disputes under the act, including specifically franchise-free disputes, which I think people would think would... would arise frequently, would be subject to mandatory arbitration.
And if Congress had thought there was an administrative remedy for this under the CDA, I just don't think there would be any need for them to provide for an... a mandatory arbitral remedy.
Justice Ginsburg: Mr. Elwood, is the petitioner right in saying that... that when the Government sell goods... sells goods, that comes under the CDA?
Mr. Elwood: That is correct.
Under 602(a)(4), the... when the Government disposes of property that is not... when the Government... Government disposes of personal property, those sales are covered by the CDA.
However, petitioner has never raised that theory in this Court... in any court.
Justice Ginsburg: Those are not procurement contracts, are they?
Mr. Elwood: No, but they... they don't purport to be.
If you look at the CDA, the word procurement is always used in the clause for procurement of services, procurement of construction, repair.
And... and that was tacked on at the end basically because GSA at the time subjected sales contracts to the same dispute clause, that was problematic, that procurement contracts were.
But that still... in order to get coverage under the CDA under petitioner's theory, they still must be a procurement contract or must involve the procurement of services.
If there are no further questions from the Court.
Rebuttal of Kenneth S. Geller
Chief Justice Rehnquist: Thank you, Mr. Elwood.
Mr. Geller, you have 2 minutes remaining.
Mr. Geller: Thank you, Mr. Chief Justice.
The complaint... the complaint in this case was filed under the authority of 28 U.S.C. 1491(b).
The Court will find that at page 13 of the joint appendix.
And that... that statute provides for district court jurisdiction to adjudicate challenges to the terms of proposed Government contracts.
And I think if you look at paragraph 62 and 114 of the joint... of the complaint, which is in the joint appendix, you'll see the allegations that were made in the complaint to fall within that provision of... of title 28.
As to the substance of the CDA claim, the Government makes much of the fact that no, quote, Government funds were used here.
And I cannot stress enough that that is a phrase that they've invented for the purposes of this case.
It makes much of the fact that the concessioners received monies here from the visitors to the national park, remit some of it to the NPS as a franchise fee, and keep the rest of it.
But these contracts could just have easily been structured so that the NPS got all the money in the first instance, kept some of it as a franchise fee, and paid the rest of it back to the concessioners.
And in fact, some Government concessions contracts are written that way.
In that case, even the Government, I think, would have to concede that Government funds were used.
We can't believe that the CDA coverage of the CDA, these important procedural and substantive protections, turns on such flimsy determinations as to who gets the money in the first instance.
Now, secondly, we... we've already talked about the fact that so many services are being provided here that are for the use and benefit of the Government, as well as for the visitors of the national parks.
But I also want to point out that the Government is the sole beneficiary of the contractual provisions in virtually every concessions contract requiring the construction, repair, and maintenance of facilities in the national parks.
You know, if the Court will look, for example, at page 96 of the joint appendix, which is a... a provision of the Grand Canyon contract that's in the record, you'll see there that this contract... under this the contract, the NPS is there procuring maintenance, repair, housekeeping, and groundskeeping for all concessions facilities.
It seems to us if you look at the language of that... of that procurement and compare it to section 3(a)(3) of the CDA, which... which provides that CDA coverage for contracts for the procurement of construction or repair or maintenance of real property, it's impossible to conclude, I think, that this procurement contract doesn't fall within the CDA.
Chief Justice Rehnquist: Thank you, Mr. Geller.
The Court wishes supplemental briefs on the issue of ripeness, simultaneous briefs, due 3:00 p.m. Friday.
The case is submitted.
Unknown Speaker: the honorable court is now adjourned until tomorrow at ten [= 10] o'clock.
Argument of Justice Thomas
Mr. Thomas: The second opinion I have to announce for the Court is National Park Hospitality Association versus Department of Interior, No. 02-196.
This case comes to us on a writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.
To make visits to national parks more enjoyable for the public, Congress has authorized a national park service to enter into concession contract for various goods and services.
In regulations issued in April 2000, the park service took the position that concession contracts are not subject to the Contract Disputes Act of 1978, the CDA.
That Act provides certain protections for entities contracting with the United States Government.
Petitioner, an association of concessioners doing business in the national parks challenged the regulation’s validity.
The District Court held in favor of the park service and the Court of Appeals affirmed.
In an opinion filed with the Clerk today, we vacate that judgment of the Court of Appeals and remand with instructions to dismiss because the controversy is not yet ripe.
Determining whether administrative action is ripe for judicial review requires us to evaluate two considerations: First, the fitness of the issues for judicial decision, and second, the hardship for the parties withholding judicial review.
Taking the hardship question first, the regulation here is nothing more than a general policy statement informing the public of the park services views on the proper application of the CDA.
As such, the regulation does not create adverse effects of a strictly legal kind and does not affect a concessioner's primary conduct.
Petitioner argues that delaying judicial resolution of the issue will cause real harm because the CDA’s applicability is one of the factors taken into account by concessioners preparing its bids.
We are not persuaded.
Mere uncertainty as to the validity of a legal rule does not constitute a hardship for purposes of the ripeness analysis.
In short, petitioner has failed to demonstrate the hardship required for the controversy to be ripe
Nor is the issue presented fit for review, even though the question is purely legal and the regulation constitutes final agency action under the APA, both parties rely on specific characteristics of certain types of concession contracts to support their position.
Such reliance demonstrates that further factual development would significantly advance our ability to deal with the legal issue presented.
Justice Stevens has filed an opinion concurring in the judgment; Justice Breyer has filed a dissenting opinion in which Justice O’Connor joined.