Association of American Railroads v. United States Department of Transportation
Argued February 19, 2013, Decided July 2, 2013 (2013)
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Rule of Law:
Congress may not delegate regulatory authority to a private entity, especially when that entity is given co-equal power with a government agency to create binding regulations and has a direct financial interest in the outcome of those regulations.
Facts:
- Congress created the National Railroad Passenger Corporation (Amtrak) as a for-profit corporation to operate a national passenger rail system.
- Amtrak operates approximately 97% of its passenger service on tracks owned by private freight railroads.
- Federal law grants Amtrak's passenger trains preference over freight transportation when using the shared rail lines.
- Congress enacted the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) to improve passenger rail service.
- Section 207 of PRIIA directs Amtrak and the Federal Railroad Administration (FRA) to 'jointly' develop metrics and standards to measure passenger train performance.
- These metrics and standards are used to enforce Amtrak's statutory preference and can lead to investigations and damage awards against host freight carriers.
- Section 207 provides that if Amtrak and the FRA disagree on the standards, either party can petition for a binding arbitration process to resolve the dispute.
- The Association of American Railroads (AAR) is a trade association representing the major freight railroads that own the tracks used by Amtrak.
Procedural Posture:
- Pursuant to Section 207 of the PRIIA, the Federal Railroad Administration (FRA) and Amtrak jointly issued final 'metrics and standards' for intercity passenger rail service in May 2010.
- The Association of American Railroads (AAR) filed suit against the Department of Transportation and the FRA in the U.S. District Court for the District of Columbia.
- AAR sought a declaratory judgment that Section 207 was unconstitutional and an order vacating the metrics and standards.
- The district court granted the government's motion for summary judgment and denied AAR's motion.
- AAR, as appellant, appealed the district court's judgment to the U.S. Court of Appeals for the D.C. Circuit.
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Issue:
Does Section 207 of the Passenger Rail Investment and Improvement Act of 2008, which grants Amtrak joint authority with the Federal Railroad Administration to create binding performance standards for freight railroads, constitute an unconstitutional delegation of regulatory power to a private entity?
Opinions:
Majority - Brown, Circuit Judge
Yes, Section 207 constitutes an unconstitutional delegation of regulatory power. Federal lawmakers are prohibited from delegating regulatory authority to a private entity. The court determined that for the purposes of the nondelegation doctrine, Amtrak is a private entity because Congress statutorily defined it as a 'for-profit corporation' and it has a direct financial incentive to create standards that favor its own operations at the expense of the freight railroads it competes with for track usage. The statutory scheme is unprecedented because it grants Amtrak co-equal power with the FRA, rather than a subordinate or advisory role. The provision for binding arbitration in case of a dispute further demonstrates the abdication of governmental authority, as a private arbitrator could potentially impose regulations without any government agency's assent. The Supreme Court's holding in Lebron v. National Railroad Passenger Corp. (treating Amtrak as governmental for First Amendment purposes) is distinguishable because that case prevented the government from evading a constitutional obligation, whereas here, treating Amtrak as governmental would allow Congress to circumvent a constitutional limitation on its structural powers.
Analysis:
This decision strongly reaffirms the private nondelegation doctrine, establishing that a quasi-public entity's status as 'private' or 'public' is context-dependent for constitutional analysis. By focusing on Amtrak's for-profit nature and its competitive self-interest, the court set a precedent that functionally private entities cannot wield direct regulatory power, even in partnership with a government agency. The ruling significantly curtails Congress's ability to create hybrid public-private regulatory bodies where the private actor has a financial stake in the outcome. Future legislative schemes involving such entities will likely need to ensure the private party's role is strictly advisory and subordinate to a government agency that retains ultimate decision-making authority.
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