Department of Transportation v. Association of American Railroads

2015-03-09

Headline: Rail service performance rules: Court declares Amtrak a government actor, overturns the circuit court’s private-delegation finding, and sends constitutional questions about the standards back to the appeals court.

Holding:

Real World Impact:

Treats Amtrak as a federal actor for reviewing rail performance rules.
Sends questions about arbitration and appointments back to the appeals court.
Keeps the metrics’ legality unresolved while further review proceeds.

Topics: rail service rules, Amtrak and federal control, arbitration and contracts, who makes federal rules, appointments and accountability

Summary

Background

A trade group for freight railroads sued over performance “metrics and standards” that Amtrak and a federal agency issued under a 2008 law. The group said Amtrak is a private corporation and that Congress could not give it joint authority to write rules that affect freight operations. A federal district court upheld the rules, but the Court of Appeals treated Amtrak as private and struck down the metrics. The case reached the Supreme Court to decide whether Amtrak is a government actor for these purposes.

Reasoning

The Court looked at how Amtrak was created and governed. The Secretary of Transportation holds Amtrak stock and sits on its board. Most directors are appointed by the President and confirmed by the Senate. Amtrak must report to Congress, follow statutory public goals, is subject to transparency rules like FOIA when subsidized, and receives large federal subsidies. Relying on those facts and earlier precedent, the Court concluded Amtrak acted as a governmental entity when it jointly issued the metrics with the Federal Railroad Administration. Because the appeals court had based its decision on the contrary premise, that judgment was vacated.

Real world impact

The ruling means challenges to the metrics must proceed treating Amtrak as a federal actor. Important constitutional questions remain, including whether the arbitration backstop and certain appointment arrangements violate separation of powers or the Appointments Clause. The Supreme Court remanded those unresolved issues to the Court of Appeals for further review, so the ultimate fate of the standards is not yet final.

Dissents or concurrances

Two concurring opinions agree Amtrak is a federal actor but stress further problems: one warns about arbitration and appointment issues; another urges stricter limits on delegating rulemaking power.