470 U.S. 451 (1985), 83-1492, National Railroad Passenger Corporation v. Atchison,

Docket Nº:No. 83-1492
Citation:470 U.S. 451, 105 S.Ct. 1441, 84 L.Ed.2d 432, 53 U.S.L.W. 4285
Party Name:National Railroad Passenger Corporation v. Atchison,
Case Date:March 18, 1985
Court:United States Supreme Court

Page 451

470 U.S. 451 (1985)

105 S.Ct. 1441, 84 L.Ed.2d 432, 53 U.S.L.W. 4285

National Railroad Passenger Corporation



No. 83-1492

United States Supreme Court

March 18, 1985

Topeka & Santa Fe Railway Co.

Argued January 15, 1985




The Rail Passenger Service Act of 1970 (Act or RPSA) was enacted in an attempt to revive the failing intercity passenger train industry. For this purpose, the Act established the National Railroad Passenger Corporation (Amtrak), a private, for-profit corporation, authorized to operate, or contract with private railroads for the operation of, intercity rail passenger service. Most private railroads offering such service entered into "Basic Agreements" with Amtrak, and thereby, as provided by the Act, shed their intercity rail passenger obligations. Section 7.5 of each Basic Agreement, which concerned railroad employees' privileges to travel on Amtrak trains for free or at reduced fares, gave Amtrak discretion to determine such privileges. When a controversy arose over Amtrak's decision to cut back on these privileges, Congress in 1972 added § 405(f) to the RPSA to restore the privileges as they existed when Amtrak took over passenger rail service in 1971. But § 405(f) also required the railroads to pay, at a reimbursement rate determined by the Interstate Commerce Commission, for such costs as might be incurred by Amtrak in providing for the pass privileges. In 1979, Congress decided that the ICC's reimbursement rate resulted in inadequate compensation to Amtrak, and accordingly amended § 405(f) to require the railroads to reimburse Amtrak for pass-rider service at the rate of "25 percent of the systemwide average monthly yield per revenue passenger mile" for two years. In 1981, § 405(f) was again amended to provide that the 25 percent reimbursement requirement remain in effect indefinitely. Five railroads filed suit against Amtrak in Federal District Court, challenging the constitutionality of § 405(f) on the grounds that the reimbursement requirement violated the Due Process Clause of the Fifth Amendment. The United States intervened in the suit as a defendant. The District Court granted summary judgment in favor of Amtrak and the United States, holding that the Act did not constitute a contract between the United States and the railroads, that therefore

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§ 405(f) did not impair an obligation of the United States under a contract, and that, moreover, § 405(f) did not impair the Basic Agreements. The Court of Appeals affirmed in part and reversed in part, holding that the railroads could be compelled to reimburse Amtrak for the incremental cost of carrying the pass riders, but that the "windfall" to Amtrak under the 1979 amendment, whereby the railroads were required to pay more than the incremental cost, violated the Due Process Clause, because it unreasonably and illegally impaired the railroads' rights under the Basic Agreements.


1. Section 405(f) is constitutional. Pp. 465-479.

(a) The RPSA does not constitute a binding obligation of Congress. Neither the language of the Act nor the circumstances surrounding its passage manifest any intent on Congress' part to bind itself contractually to the railroads. Pp. 465-470.

(b) The Basic Agreements do not grant the railroads a contractual right against the United States to be free from all obligation to provide passenger service. Those Agreements are not contracts between the railroads and the United States, but simply between the railroads and Amtrak. Pp. 470-471.

(c) Section 405(f)'s payment obligation does not unconstitutionally impair the railroads' private contractual rights under the Basic Agreements. Those Agreements relieved the railroads only of common carriage responsibilities, and not of the responsibility [105 S.Ct. 1445] to provide their employees with pass privileges, for no state or federal law imposed that responsibility on them, as common carriers, when the Agreements were executed. It was not until after the Agreements were signed and Amtrak operations were underway that Congress imposed new obligations on both parties to the Agreements. Pp. 472-475.

(d) Even if the railroads have a private contractual right not to pay more than the incremental cost of the pass privileges, the Due Process Clause does not limit Congress' power to choose a different reimbursement scheme. Congress' decision to assess the railroads was rational, and the railroads have not met their burden of proving irrationality, and thus have not proved a due process violation. Pp. 475-478.

2. The railroads have no contractual right to be free from the obligation to make any payments to Amtrak, even for incremental costs. Nothing in the RPSA or the Basic Agreements suggests that the railroads were relieved of the responsibility to reimburse Amtrak for the pass privileges in question. Pp. 478-479.

723 F.2d 1298, reversed.

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MARSHALL, J., delivered the opinion of the Court, in which all other Members joined, except POWELL, J., who took no part in the decision of the cases.

MARSHALL, J., lead opinion

JUSTICE MARSHALL delivered the opinion of the Court.

The question presented in these cases is whether Congress violates the Due Process Clause of the Fifth Amendment by requiring private railroads to reimburse the National Railroad Passenger Corporation (Amtrak) for rail travel privileges that Amtrak provides to the railroads' employees and former employees, and their dependents.



From the middle of the 19th century, the railroad passenger coach played a significant and sometimes romantic role in American cultural and economic life. By the middle of this century, however, "this time-honored vehicle" threatened to "take its place in the transportation museum along with the

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stagecoach, the sidewheeler, and the steam locomotive."1 Whereas in 1929 about 20,000 intercity trains operated in the country,2 by 1946, there were only about 11,000 such passenger trains; by 1971, fewer than 500 passenger trains still operated.3 As cars, buses, and airplanes displaced the passenger railroads, those railroads that continued to provide passenger carriage incurred heavy and continuing losses. At the same time, as common carriers, these railroads were bound to continue providing service until the Interstate Commerce Commission (ICC) or state regulatory authorities relieved them of this responsibility. Given the tremendous operating losses, many of the remaining handful of railroads operating passenger coaches sought ICC permission to discontinue passenger train service.

The Rail Passenger Service Act of 1970 (Act or RPSA), 84 Stat. 1327, 45 U.S.C. § 501 et seq. (1970 ed.), which took effect on May 1, 1971, was Congress' effort to "revive the failing intercity passenger train industry and retain a high-quality rail passenger service for the Nation."4 On concluding that a reorganized and restructured rail passenger system [105 S.Ct. 1446] could be successful, Congress established the National Railroad Passenger Corporation, a private, for-profit corporation that has come to be known as Amtrak.5 The corporation is not "an agency or establishment" of the Government, but is authorized by the Government to operate or

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contract for the operation of intercity rail passenger service.6 The Act outlined a procedure under which private railroads could obtain relief from their passenger-service obligations by transferring those responsibilities to Amtrak;7 the Act authorized the new corporation to enter into standardized contracts with the private railroads, under which a railroad would be relieved

of all [its] responsibilities as a common carrier of passengers by rail in intercity rail passenger service under [Subtitle IV of Title 49] or any State or other law relating to the provision of intercity passenger service.

45 U.S.C. § 561(a)(1) (1970 ed.).8

To obtain relief from their common carrier obligations, the railroads had to agree to several conditions. First, "[i]n consideration of being relieved of this responsibility," a railroad was to pay Amtrak an amount equal to one-half of that railroad's financial losses from intercity passenger service during 1969. § 561(a)(2). Participating railroads also were to provide Amtrak with the use of tracks, other facilities, and services at rates to be agreed upon by the parties or, in the event of disagreement, to be set by the ICC. §§ 561, 562. The Act also included a labor protection provision requiring the railroads to

provide fair and equitable arrangements to

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protect the interests of employees affected by discontinuances of intercity rail passenger service.

§ 565(a). Participating railroads were required to enter into "protective arrangements" with their unions, in which the railroads promised to protect dislocated employees and to preserve employee benefits, including pension rights and fringe benefits. §§ 565(a)-(e).

Finally, in § 301 of the Act, 45 U.S.C. § 541 (1970 ed.), Congress "expressly reserved" its right to "repeal, alter or amend this Act at any time."

All but five private railroads offering intercity passenger service took up the option provided by the Act and entered into contracts, known as "Basic Agreements," with Amtrak.9 The participating railroads made the required payments to Amtrak and shed their intercity rail passenger obligations. On May 1, 1971, Amtrak began rail passenger service.

The Basic Agreements between the railroads and Amtrak mirrored the provisions of the Act. For example, § 2.1 of each Basic Agreement, entitled "Relief from Responsibility," relieved the signatory railroad "of its entire responsibility for the provision of Intercity Rail Passenger Service." [105 S.Ct. 1447] App. 13. The Agreements also required the railroads to make services, tracks, and facilities available and...

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