In a ruling that potentially could disrupt Amtrak’s efforts to make its passenger trains run on time and its ability to earn profits in doing so, a federal appeals court on Friday struck down the corporation’s power to help write rules on the use of railroad tracks across the country.  In a separate part of the ruling, the U.S. Court of Appeals for the District of Columbia Circuit nullified Amtrak’s shared role in settling disputes over those rules.

The D.C. Circuit was carrying out an assignment given to it by the Supreme Court last year, and the result is very likely to lead ultimately to a return to the Supreme Court.  The Obama administration had defended Amtrak on both issues at stake, and government officials almost always feel a duty to appeal a ruling in which a federal law has been struck down.  The government has the option of first trying to get the full D.C. Circuit to rule en banc on the constitutional dispute.

Friday’s ruling did not directly disturb the role of Amtrak as the sole operator of the nation’s passenger train — a duty given to it by Congress when the for-profit corporation was first created in 1970.  But the decision did find invalid key parts of Amtrak’s powers that Congress gave it in a new law in 2008.

A key facet of the new decision was that, although Amtrak is a part of the government (as the Supreme Court ruled in March 2015), it also operates as the private, for-profit firm that competes with freight railroads for the use of the same tracks.  Congress dictated that Amtrak get first priority in the use of those lines, to help assure that passenger trains run on time as often as possible.

Because Amtrak competes with the freight railroads on the use of tracks, the D.C. Circuit declared, it is not a disinterested regulator of the standards for priority use of the tracks.  In fact, the opinion by Circuit Judge Janice Rogers Brown said, Amtrak uses the power it shares with government agencies over those standards to help its bottom line — making a profit.

Putting it astride both its own fortunes and those of the freight railroads, the opinion found, violates the Constitution’s guarantee of due process.  In the second part of the ruling, the D.C. Circuit declared that the shared role assigned to Amtrak in picking an arbitrator to iron out disputes over the rail standards violates the Constitution’s required procedure for appointing those who wield government regulatory power.

The Supreme Court had been drawn into the running controversy between Amtrak and freight railroads after the D.C. Circuit, in 2013, ruled that Amtrak was a private entity and, as such, could not be given a role in setting standards for the use of railroad tracks, which are owned by the freight companies but which have been designated by Congress for priority use by passenger trains run by Amtrak.

The Justices disagreed, ruling last year that Amtrak was a part of the government, not a private entity.  But that ruling by the Justices left open several constitutional questions about what Amtrak — as a part of the government — could do with the powers given it by Congress.

With the case back in the D.C. Circuit, the Association of American Railroads — the trade group of the freight companies — raised the two constitutional questions that the three-judge panel decided in the freight companies’ favor on Friday.  The D.C. Circuit found that it had no authority to decide another challenge raised by the AAR:  whether the makeup of Amtrak’s own governing board was unconstitutional.

In finding that the standards-setting role for Amtrak was invalid, the three-judge panel relied heavily upon a 1936 Supreme Court decision, Carter v. Carter Coal Co.  That decision was one of a string of Supreme Court rulings striking down major parts of President Franklin Roosevelt’s “New Deal” program for pulling the nation out of the Great Depression.  The 1936 decision involved a program allowing private companies in the coal industry to set wages and hours for rival mining companies with which they competed.

Circuit Judge Brown’s thirty-four-page ruling was joined by Senior Circuit Judges David B. Sentelle and Stephen F. Williams.  If Amtrak and the government seek en banc review of the ruling, and the full D.C. Circuit agrees to do so, the panel decision will be set aside.  The case would then go to the eleven active members of the D.C. Circuit, but Judges Sentelle and Williams, even though now in senior status, would be free to participate in that review.

Posted in Department of Transportation v. Association of American Railroads, Cases in the Pipeline, Featured, Merits Cases

Recommended Citation: Lyle Denniston, Round 2 for Amtrak: A major defeat in appeals court, SCOTUSblog (Apr. 29, 2016, 3:00 PM), http://www.scotusblog.com/2016/04/round-2-for-amtrak-a-major-defeat-in-appeals-court/