Does section 207 of the Passenger Rail Investment and Improvement Act, which allows Amtrak and the government to cooperate in developing railroad-related metrics and standards, give Amtrak unconstitutional regulatory power under the non-delegation doctrine?
The Supreme Court will consider whether section 207 of the Passenger Rail Investment and Improvement Act (“PRIIA”) unconstitutionally delegates legislative power to Amtrak. The Department of Transportation argues that section 207 is a constitutional delegation of power because the government maintains sufficient control over Amtrak and has the final say on any policy that Amtrak develops. The Association of American Railroads, however, argues that section 207 is not a constitutional delegation of power because Amtrak is a private entity with rulemaking authority. The Court’s ruling impacts the government’s accountability for Amtrak’s policies and the efficacy of the passenger rail market.
Questions as Framed for the Court by the Parties
Section 207(a) of the Passenger Rail Investment and Improvement Act of 2008, Pub. L.
No. 110-432, Div. B, 122 Stat. 4916, requires that the Federal Railroad Administration (FRA) and Amtrak “jointly * * * develop” the metrics and standards for Amtrak’s performance that will be used in part to determine whether the Surface Transportation Board (STB) will investigate a freight railroad for failing to provide the preference for Amtrak's passenger trains that is required by 49 U.S.C. 24308(c) (Supp. V 2011). In the event that the FRA and Amtrak cannot agree on the metrics and standards within 180 days, Section 207(d) of the Act provides for the STB to “appoint an arbitrator to assist the parties in resolving their disputes through binding arbitration.” 122 Stat. 4917. The question presented is whether Section 207 effects an unconstitutional delegation of legislative power to a private entity.
In 1970, Congress adopted the Rail Passenger Service Act of 1970 (“RPSA”), which was intended to aid in maintaining a national passenger railway system. The RPSA established Amtrak, a corporation intended to meet the national intercity passenger railway needs. Because of the RPSA, Amtrak has priority over freight trains for use of railroad tracks and facilities, which freight companies own.
In addition, Congress passed the Passenger Rail Investment and Improvement Act in 2008 (“PRIIA”). Under section 207 of PRIIA, the Federal Rail Administration (“FRA”) and Amtrak must develop metrics and standards to evaluate the quality of services of passenger railways. If the FRA and Amtrak cannot reach an agreement on the proper standards, they may appoint an arbitrator who will issue a binding opinion. The purpose of these standards is to improve the on-time performance and quality of services of Amtrak trains. When Amtrak does not meet the standards it has developed, section 213 of PRIIA gives the Surface Transportation Board (“STB”) power to investigate freight companies that own the tracks on which Amtrak trains travel. If the STB finds that freight companies are causing delays by failing to give Amtrak trains preference in using their tracks, the STB may sanction the offending companies.
The FRA and Amtrak first adopted metrics and standards in 2010. The Association of American Railroads (“AAR”) challenged the regulations as unconstitutional in the U.S. District Court for the District of Columbia (“district court”) and claimed that section 207 of PRIIA was an improper delegation of legislative authority to a private entity. Additionally, the AAR asserted that allowing Amtrak to adopt regulations that control Amtrak’s competitors is a violation of the Due Process Clause of the Fifth Amendment to the United States Constitution. The district court rejected the AAR’s arguments and granted summary judgment on behalf of the Department of Transportation (“DoT”).
On appeal, the U.S. Court of Appeals for the District of Columbia (“D.C. Court of Appeals”) considered both of the AAR’s arguments but only reached AAR’s PRIIA claim. The court held that a delegation of legislative power by Congress to a private entity was unconstitutional. While a private party may play an advisory role in regulation, the court reasoned that Amtrak had too much power under PRIIA. Further, the court noted that if Amtrak and the FRA failed to reach an agreement, an arbitrator, who could have been a private party under the statute, would bind the parties. According to the court, this private arbitrator would have the power to make regulations without governmental participation.
Although the AAR maintained that Amtrak was a public entity, the D.C. Court of Appeals ruled that Amtrak was a private company. The court asserted that, because Amtrak was intended to be a for-profit company and was operated as such, Amtrak was a private entity, even when the government owned a substantial portion of Amtrak’s shares and the President appointed many of its board members. Thus, since Amtrak had regulatory power as a private entity, the court held that section 207 of PRIIA was an unconstitutional delegation of power.
The Supreme Court granted the DoT’s petition for certiorari and will determine whether Congress improperly delegated power to Amtrak via PRIIA.
The parties in this case argue over whether section 207 of PRIIA violates the nondelegation doctrine by unconstitutionally allocating legislative power to Amtrak by allowing Amtrak to jointly develop the metrics and standards for Amtrak’s performance with the FRA.
The DoT maintains that section 207 of PRIIA is a constitutional delegation of power because Amtrak is not a private entity with regards to the non-delegation doctrine. Even if Amtrak was such a private entity, the DoT argues that Congress is authorized to allow private entities to be involved in the progress and endorsement of regulatory provisions.
On the other hand, the AAR maintains that section 207 of PRIIA is an unconstitutional delegation of power because section 207 enables Congress to assign legislative power to a private entity that is not a part of the federal government. Further, the AAR argues that Congress allows private entities to advise but not to make rules.
IS SECTION 207 OF PRIIA AN UNCONSTITUTIONAL DELEGATION OF POWER TO AMTRAK?
Both parties agree that the analysis on Amtrak’s status is confined within the non-delegation doctrine; however, they differ as to whether Congress bestowed Amtrak with an unconstitutional delegation of rulemaking authority.
IS AMTRAK A FEDERAL AGENCY OR A PRIVATE ENTITY WITH REGARDS TO THE NON-DELEGATION DOCTRINE?
The DoT argues that Amtrak is not a private entity with regards to the non-delegation doctrine. The DoT explains that, in Lebron v. National Railroad Passenger Corp., the Supreme Court stated that Amtrak “is an agency . . . of the United States for the purpose of individual rights guaranteed against the Government by the Constitution.” Furthermore, the DoT argues that because of the widespread control the government has over Amtrak’s values, objectives, administration, and funding, Amtrak’s for-profit status does not mean Amtrak is furthering its own private interests and acting as a private entity. Additionally, the DoT contends that Amtrak was created to preserve passenger-rail transportation and to achieve specific public policy goals, such as lowering unemployment and purchasing products made in the United States.
The AAR counters that Congress, the President, and Amtrak have declared that Amtrak is not an agency. Additionally, AAR submits that Amtrak’s strong ties to the government do not change that Amtrak is a private entity. Additionally, the AAR argues that, in Lebron, Amtrak was considered an agency specifically for civil rights concerns but not for concerns stemming from the government’s authority to jointly develop (with Amtrak) the metrics and standards for passenger railways. The AAR further adds that Congress explicitly reduced the government’s power over Amtrak by revoking Amtrak’s former status as a “mixed-ownership [g]overnment corporation.”
EVEN IF IT IS A PRIVATE ENTITY, IS AMTRAK CAPABLE OF HOLDING RULEMAKING AUTHORITY?
Even if it is considered a private entity, the DoT asserts that the Supreme Court has approved statutes where private entities meaningfully shape regulatory provisions. The DoT argues that section 207 gives Amtrak a constitutional delegation of power because the government had enough of a say in creating the metrics and standards. The DoT explains that implementation of Amtrak’s metrics and standards required the involvement and approval of the FRA, which is a governmental entity. Additionally, the FRA and Amtrak were required to consult other contributors, who were given the opportunity to comment about possible metrics and standards.
The DoT also maintains that even if private entities cannot meaningfully shape regulatory provisions, the metrics and standards are not rules that “impose binding regulatory requirements on freight railroads.” Instead, the DoT asserts that the metrics and standards are mainly used to evaluate Amtrak. The DoT explains that a railroad can still only be penalized when the Surface Transportation Board (“STB”), a governmental entity, finds that the railroad failed “to provide preference to Amtrak over freight transportation.”
The AAR counters that Congress allows private entities to advise but not to make rules. The AAR argues that Amtrak’s ability to make rules under section 207 allows Amtrak to have a competitive edge in the freight railroad industry. The AAR also adds that section 207 clearly gives Amtrak such a competitive edge by drafting rules that Amtrak’s competitors “cannot meet without modifying their operations and further delaying freight traffic.” Furthermore, the AAR contends that even when a proposed rule is opposed by a governmental entity like the FRA, Amtrak can displace the government from the rulemaking process by either stopping the rule’s drafting or requesting a third-party arbitrator to re-draft the rule.
The AAR also maintains that Amtrak’s metric and standards do “impose binding regulatory requirements on freight railroads.” The AAR explains that section 207 clearly requires freight railroads to “amend their contracts with Amtrak to incorporate the Metrics and Standards to the extent practicable.” The AAR argues that the phrase “to the extent practicable” does not diminish the fact this part of section 207 is still a rule with at least “some regulatory effect.” Further, the AAR explains that, even though section 207 is mainly used to evaluate Amtrak, the metrics and standards are also used to evaluate how well freight railroads accommodate Amtrak trains.
DOES AN ARBITRATOR AFFECT WHETHER SECTION 207 OF PRIIA IS AN UNCONSTITUTIONAL DELEGATION OF POWER TO AMTRAK?
The DoT also argues that section 207 is a constitutional delegation of power because Amtrak and the government do not have “equal authority” in creating the relevant metrics and standards. Rather, the DoT explains that the government always has greater authority due to its power to appoint an arbitrator, who would issue a final order on any rule-drafting disputes. The DoT clarifies that section 207 expressly granted the STB, a governmental entity, with the power to select an appropriate arbitrator. The DoT also argues that the clear text of section 207 prevents private entities from having greater-than-equal authority in drafting any metrics and standards because a private arbitrator cannot be appointed.
The AAR argues that, even though a governmental entity can select an arbitrator, section 207 is not a constitutional delegation of power because the government can select a private arbitrator, who will “override the Government’s proposed regulation.”The AAR explains that the language of section 207(d) necessitates the selection of a government arbitrator over a private arbitrator. The AAR also adds that the Supreme Court’s traditionally interpreted “arbitrator” to mean a “nongovernmental actor.” The AAR argues that adopting the DoT’s interpretation of section 207 will require the statute to be rewritten rather than interpreted, which the Supreme Court historically has refused to do.
The Supreme Court will determine whether section 207 of PRIIA is an “unconstitutional delegation of legislative power to a private entity.” The DoT argues that section 207 is a constitutional delegation of power because Amtrak is essentially a public entity with respect to the non-delegation doctrine. The AAR, however, asserts that section 207 is not a constitutional delegation of power because Amtrak is a private, for-profit entity. The Supreme Court’s ruling impacts the government’s accountability for Amtrak’s policies and the efficacy of the passenger rail market.
GOVERNMENT’S ACCOUNTABILITY OF AMTRAK’S RULES
According to the DoT, the public can hold the government accountable for Amtrak’s rules under PRIIA because the government plays a substantial role in drafting and regulating all rules under PRIIA. The DoT argues that Congress ensured that a government agent would have the final say on rulemaking decisions. Further, although Amtrak maintains veto power over certain adopted standards, the DoT argues that a governmental entity must still approve all regulations in PRIIA’s statutory scheme. And, if Amtrak does not meet its own standards, the DoT explains that the STB (another government agency) will be in charge of investigating the violation and determining who was at fault. Finally, the DoT contends that in the event of a dispute between Amtrak and the government, the STB will appoint a governmental arbitrator to issue a final decision regarding the dispute.
According to the Cato Institute and other amici for AAR, the public cannot hold the government accountable for Amtrak’s rules under PRIIA. The Cato Institute argues that Congress must ensure that the public can hold the government accountable when Congress delegates power to agencies. But the Cato Institute argues that the government cannot be held accountable in this case because both Congress and the President expressly deemed Amtrak a private, for-profit corporation. And the Cato Institute explains that no branch of the government can hold private entities accountable for their decisions. Since the public is unable to hold Congress accountable for its actions, the Cato Institute argues that a favorable ruling for DoT will incentivize Congress to assign its most challenging decisions to private entities and to take credit for popular policies.
EFFICACY OF THE PASSENGER-RAIL MARKET
The Environmental Law and Policy Center (“ELPC”) and other amici for the DoT argue that Amtrak’s rules under PRIIA will not negatively impact the efficacy of the passenger-rail market. The ELPC explains that only Amtrak is required to follow the metrics and standards that Amtrak develops. Indeed, the ELPC contends that the STB can only punish freight rail companies when such companies do not give preference to Amtrak trains. The ELPC also asserts that Amtrak’s standards and metrics are necessary to ensure that more trains are on time. According to the ELPC, the more often that trains are on time, the more passengers will ride trains. Under PRIIA, Amtrak recorded its highest on-time performance rates, which have dropped since the D.C. Court of Appeals in this case deemed the policies unconstitutional. As a result of the decrease in trains that are on time, the ELPC notes that revenue for passenger trains has also decreased.
The Chamber of Commerce of the United States (“Chamber of Commerce”) and other amici for the AAR argue that Amtrak’s rules under PRIIA will negatively impact the efficacy of the passenger-rail market. The Chamber of Commerce asserts that a private entity should not have power over competitors within its own industry. The Chamber of Commerce explains that private companies will develop policies that favor them and that this process will “subvert competition.” The Resolute Forest Products Inc. adds that Amtrak’s metrics and standards leads other passenger rail companies to bear the blame for Amtrak’s failure to meet its own rules. Additionally, the Association of Independent Passenger Rail Operators (“AIPRO”) notes that Amtrak is at a “competitive advantage” because it develops standards that other passenger railways must follow in order to receive federal funding. AIPRO also argues that Amtrak has an inherent advantage because Amtrak has priority over its competitors to use freight rails under PRIIA.
In this case, the Supreme Court will clarify whether section 207 of PRIIA is a constitutional delegation of power to Amtrak. The DoT maintains that section 207 of PRIIA is a constitutional delegation of power because Amtrak is not a private entity for purposes of the non-delegation doctrine. The AAR, however, asserts that Amtrak is a private entity and thus, section 207 of PRIIA is not a constitutional delegation of power. The Court’s ruling implicates the government’s accountability of Amtrak’s policies and the efficacy of the passenger rail market.
The authors would like to thank Professor Cynthia R. Farina for her perspective and insights on this case.
- Vikram David Amar: Whether and Why Delegations of Government Power to Private Actors Are Problematic, Verdict (Oct. 24, 2014).
- Alexander Volokh: The New Private-Regulation Skepticism: Due Process, Non-Delegation, and Antitrust Challenges, Harvard Journal of Law and Public Policy (June 1, 2014).