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Welcome to an interminable legal donnybrook—a hereditary emolument for involved attorneys—featuring Amtrak and freight railroads over whose privately owned track Amtrak trains operate with diminutive hint of scheduled precision.
The current fisticuffs began in 2008 upon enactment of the Passenger Rail Investment and Improvement Act (PRIIA), whose Sections 207 and 213 aimed to improve an abysmal 42% on-time performance (OTP) for long-distance passenger trains.
Ten years later, Amtrak’s OTP remains dreadful, the PRIIA’s Sections 207 and 213 are on ice, anticipated new court actions could extend for years the status quo, and a legion of lawyers is eyeing 20-year pins.
Roots of this raw saga extend to 1970, when Amtrak was created to relieve privately owned railroads of an unfunded mandate to operate intercity passenger trains whose current-dollar $6 billion annual loss was an intolerable burden on stockholders and freight shippers. The congressionally brokered deal gave Amtrak access to the freight rail network at a regulated fee the freights bemoan as woefully inadequate.
In 1973, with tribalism affecting Amtrak OTP, Congress ordered that freights provide undefined priority handling of passenger trains—a mandate freights allege inconveniences time-sensitive freight fully paying its way. In 2008, with Amtrak’s OTP perennially appalling amidst accusations of discriminatory dispatching, Congress pounced.
PRIIA Section 207 empowered Amtrak and the Federal Railroad Administration (FRA) jointly to establish minimum metrics and standards (M&S) to assess OTP of intercity passenger trains hosted by freight railroads. Section 213 allows the Surface Transportation Board (STB) to investigate poor Amtrak OTP and prescribe damages for delays attributable to host railroads.
When Amtrak and the FRA finalized M&S in 2010, freight railroads went to court, asserting that the transfer of regulatory power by Congress to a private entity—Amtrak, which competes with freight railroads for scarce track space—violated the Constitution’s “non-delegation” doctrine and its Due Process Clause.
Following lower court schisms, the Supreme Court answered the delegation of powers question by ruling that Amtrak, although created by Congress as a “for-profit corporation” (even though it has never turned a profit) is, for purposes of the PRIIA, an arm of the federal government.
On remand, a circuit court of appeals was left to decide the Due Process Clause issue—whether Amtrak’s self-interest in the outcome could be kept “in check” by a disinterested FRA. The court answered in the negative, because were there an “intractable disagreement” between Amtrak and the FRA in writing M&S, the PRIIA problematically provides for binding arbitration by an STB appointed arbitrator.
As binding arbitration would be a “final agency action” by an individual neither appointed by the President of the United States nor whose decisions are reviewable by Presidentially nominated members of the STB, the court saw a violation of the Constitution’s Appointments Clause.
Although railroads argue there “is nothing in the [PRIIA] grant of regulatory power to Amtrak that can be salvaged,” the appellate court, in a split decision, disagreed—ruling that the severing from the statute of the binding arbitration provision cures all remaining constitutional problems, as no M&S will go into effect without approval of a disinterested (in the outcome) FRA.
In a dissent, Judge David S. Tatel said there remains a Due Process Clause violation as Amtrak is “an economically self-interested actor,” and the FRA is not a disinterested party.
Railroads likely will mount another appeal, convinced that if the PRIIA sections stand, Amtrak, with assent from a politicized FRA, will have unconstitutional power to commandeer the assets of privately owned freight railroads.
Of note, the Senate voted 99-0 in July to instruct Amtrak’s inspector general to update OTP performance.
Also, a federal court struck down an attempt by the STB to promulgate its own version of M&S, ruling the STB acted beyond its statutory authority.
Frank N. Wilner is author of six books, including Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and Railroad Mergers: History, Analysis, Insight, all published by Simmons-Boardman Books. Wilner earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Change (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.
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