America’s freight railroads get to continue their argument with Amtrak, America’s passenger rail service.
That is the practical outcome of the Supreme Court’s recent 9-0 decision in Department of Transportation v. Association of American Railroads. Yet if the case returns to the Supreme Court, there is reason to think the justices will engage fundamental questions about the structure and limits of government.
In 1970, hoping to save passenger service from likely extinction, Congress created the National Railroad Passenger Corporation, commonly known as Amtrak. Congress said this would not be a government agency but an entity operated and managed as a private “for-profit corporation,” its purpose being to develop “the potential of modern rail service in meeting the nation’s intercity passenger transportation needs.”
Railroads under the common carrier obligation to offer intercity passenger services no longer had to do so if they allowed Amtrak to use their track and other facilities at rates agreed to by both parties—or, in case of disagreement, set by the Interstate Commerce Commission, a role later assumed by the Surface Transportation Board. Amtrak now uses 97 percent of the track that the freight railroads own—which happens to be almost all of the track there is. And thanks to a 1973 law, the railroads must give a “preference” to Amtrak “in using a rail line, junction, or crossing.”
In 2008, concerned about poor service, unreliability, and delays resulting from freight traffic congestion, Congress granted the Federal Railroad Administration (FRA) and Amtrak joint authority to develop “metrics and standards” for measuring the performance and scheduling of passenger train service. It also provided that if Amtrak and the FRA disagree on metrics and standards, “any party involved in the development of those standards may petition the Surface Transportation Board to appoint an arbitrator to assist the parties in resolving their disputes through binding arbitration.” Congress also said that the metrics and standards may play a role in prompting Surface Transportation Board investigations of passenger train delays and other service problems, and also in enforcement actions, such as levying fines if it turns out that a delay was caused by “a rail carrier’s failure to provide preference to Amtrak over freight transportation.”
Implementing the new law, the FRA and Amtrak jointly drafted metrics and standards and put them out for public comment. Metrics developed to measure on-time performance in particular drew objection, not least from the Association of American Railroads (AAR), which said they were “unrealistic” and would cause “an excessive administrative and financial burden.”
The final version of the metrics and standards took effect in May 2010. But they didn’t satisfy AAR, which filed suit seeking their invalidation on grounds that Amtrak is a private entity and it was therefore unconstitutional for Congress to direct the corporation to exercise joint authority in the development and issuance of metrics and standards. The association’s argument relied on constitutional provisions regarding the separation of powers and on the Fifth Amendment’s due process clause, which provides that “No person shall . . . be deprived of life, liberty, or property, without due process of law.”
The association lost in the district court in Washington, D.C., but prevailed in the circuit court of appeals, which unanimously ruled, on separation of powers grounds, that Congress had made “an unlawful delegation of regulatory power to a private entity.” The circuit court declined to take up the due process question. A unanimous Supreme Court then ruled that Amtrak is not a private but a public entity: “ ‘a federal actor or instrumentality,’ as far as the Constitution is concerned.” While Congress had said the opposite—that Amtrak is “not a department, agency, or instrumentality of the United States”—none of the justices could deny the reality that Amtrak was created by the government, is controlled by the government, and operates for the government’s benefit.