Federal Court Condemns Congress for Giving Unconstitutional Regulatory Powers to Amtrak

The National Railroad Passenger Corporation, also known as Amtrak, was chartered by Congress in 1970 under the explicit mandate that it “shall be operated and managed as a for-profit company.” Yet under the terms of the Passenger Rail Investment and Improvement Act of 2008, this “for-profit company” was permitted to craft federal rules governing the entire railroad industry, including timetables and other scheduling regulations that benefit Amtrak while harming Amtrak’s competitors in the freight-hauling sector. On Friday the U.S. Court of Appeals for the District of Columbia Circuit ruled against the 2008 federal statute. “The due process of law is violated,” observed Judge Janice Rogers Brown for a unanimous three-judge panel of the D.C. Circuit, “when a self-interested entity is ‘intrusted with the power to regulate the business…of a competitor.'”

Friday’s ruling in Association of American Railroads v. United States Department of Transportation was not the first time that Judge Brown sought to prevent Amtrak from using government authority against its competitors. In 2013 Judge Brown struck down portions of the Passenger Rail and Improvement Act on the grounds that by granting Amtrak “unprecedented regulatory powers,” Congress violated the constitutional principle which says that lawmaking authority may not be delegated to a non-government entity. The federal government’s treatment of Amtrak, Judge Brown observed, “vitiates the principle that private parties must be limited to an advisory or subordinate role in the regulatory process.”

Two years later, however, that judgment was overturned by the U.S. Supreme Court. “Amtrak is a governmental entity, not a private one, for purposes of determining the constitutional issues presented in this case,” the Court said. (Never mind that Amtrak was explicitly chartered as a “for-profit company.”). But the Supreme Court also sent the case back down to the lower court because other “substantial questions respecting the lawfulness of the [railroad regulations]…may still remain.”

Friday’s decision by the D.C. Circuit dealt with those remaining matters. “The abstract legal question at the heart of this case is whether it violates due process for Congress to give a self-interested entity rulemaking authority over its competitors,” Judge Brown observed. “While freight operators and Amtrak may not directly compete for customers, they compete for scarce track, and Amtrak’s authority to manipulate that competition entails the power to modify freight schedules to accommodate Amtrak trains, reschedule maintenance work, or reroute freight traffic.” The Constitution, Judge Brown held, forbids a “self-interested market participant” like Amtrak from wielding that sort of governmental regulatory power.

The D.C. Circuit’s opinion in Association of American Railroads v. United States Department of Transportation is available here.