Tuesday, June 24, 2014

Supreme Court to consider USDOT vs. AAR re: Amtrak

Written by  William C. Vantuono, Editor-in-Chief
In 2008, Congress passed PRIIA (Passenger Rail Improvement and Investment Act). Among its many provisions, it allows Amtrak to work with the Federal Railroad Administration to set metrics and minimum standards for assessing passenger rail service performance. Those standards are meant to be incorporated into Amtrak's operating agreements with its host freight railroads.

Freight railroads can be penalized if Amtrak fails to meet its own performance standards, particularly if Amtrak trains have not been given priority on the freight rights-of-way it uses. The Association of American Railroads strongly objected, calling the law unrealistic and saying that giving authority to Amtrak to participate in the development of rail performance measures with a government agency was unprecedented and untenable. They argued that Congress violated the Constitution by delegating authority to a private entity.

A federal DC Circuit appeals court in Washington D.C. agreed, calling Amtrak “a curious entity” that straddles the public and private sectors, but still a for-profit corporation. It struck down the PRIIA provision as unconstitutional, suggesting the unusual setup was equivalent to giving General Motors authority to help write government regulations that would govern all auto makers.

At the request of the U.S. Department of Justice, the U.S. Supreme Court will consider the case, Department of Transportation vs. Association of American Railroads, during its next term, which begins in October. DOJ said the government should retain sufficient control over Amtrak performance standards to avoid any constitutional concerns.

“The issue in the case is whether PRIIA Section 207, which required the FRA and Amtrak to jointly develop metrics, is an unconstitutional delegation of Congress’ legislative power to a private entity,” says Kevin Sheys, a railroad attorney with Nossaman LLP of Washington, D.C. “The metrics have many purposes, but the important one for this case is that they could be used to measure whether the freights were meeting their statutory obligation to give preference to Amtrak’s passenger trains.”

“The Supreme Court will need to grapple with whether Amtrak is a private entity for purposes of PRIIA Section 207 and, if so, whether Amtrak had too much influence over the development of the metrics,” Sheys observes. “The USDOT will argue that Amtrak is not a private entity for 207 purposes and in any case it did not have too much influence over the development of the metrics. The freights, represented by the AAR, believe the DC Circuit properly decided the case and probably will make a second argument (not reached by the DC Circuit) that the metrics violate their Fifth Amendment due process rights.”