721 F.3d 666 (D.C. Cir. 2013), 12-5204, Association of American Railroads v. United States Dept. of Transp.
|Citation:||721 F.3d 666|
|Opinion Judge:||BROWN, Circuit Judge:|
|Party Name:||ASSOCIATION OF AMERICAN RAILROADS, Appellant v. UNITED STATES DEPARTMENT OF TRANSPORTATION, et al., Appellees.|
|Attorney:||Thomas H. Dupree, Jr. argued the cause for appellant. With him on the briefs was Louis P. Warchot. Michael S. Raab, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Stuart F. Delery, Acting Assistant Attorney General, Ronald C. Machen Jr., U.S. Atto...|
|Judge Panel:||Before: :BROWN, Circuit Judge, and WILLIAMS and SENTELLE, Senior Circuit Judges.|
|Case Date:||July 02, 2013|
|Court:||United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit|
Argued Feb. 19, 2013.
Appeal from the United States District Court for the District of Columbia (No. 1:11-cv-01499).
Imagine a scenario in which Congress has given to General Motors the power to coauthor, alongside the Department of Transportation, regulations that will govern all automobile manufacturers. And, if the two should happen to disagree on what form those regulations will take, then neither will have the ultimate say. Instead, an unspecified arbitrator will make the call. Constitutional? The Department of Transportation seems to think so.1
Next consider a parallel statutory scheme— the one at issue in this case. This time, instead of General Motors, it is Amtrak (officially, the " National Railroad Passenger Corporation" ) wielding joint regulatory power with a government agency. This new stipulation further complicates the issue. Unlike General Motors, Amtrak is a curious entity that occupies the twilight between the public and private sectors. And the regulations it codevelops govern not the automotive industry, but the priority freight railroads must give Amtrak's trains over their own. Whether the Constitution permits Congress to delegate such joint regulatory authority to Amtrak is the question that confronts us now.
Section 207 of the Passenger Rail Investment and Improvement Act of 2008 empowers Amtrak and the Federal Railroad Administration (FRA) to jointly develop performance measures to enhance enforcement of the statutory priority Amtrak's passenger rail service has over other trains. The Appellant in this case, the Association of American Railroads (AAR), is a trade association whose members include the largest freight railroads (known in the industry as " Class I" freight railroads), some smaller freight railroads, and— as it happens— Amtrak. Compl. ¶ 10, at 4. Challenging the statutory scheme as unconstitutional, AAR brought suit on behalf of its Class I members against the four Appellees— the Department of Transportation, its Secretary, the FRA, and its Administrator (collectively, the " government" ). Id. ¶¶ 14-17, at 6-7. We conclude § 207 constitutes an unlawful delegation of regulatory power to a private entity.
To reinvigorate a national passenger rail system that had, by mid-century, grown moribund and unprofitable, Congress passed the Rail Passenger Service Act of 1970, Pub.L. No. 91-518, 84 Stat. 1327. See Nat'l R.R. Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 453-54, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985). Most prominently, the legislation created the passenger rail corporation now known as Amtrak, which would " employ[ ] innovative operating and marketing concepts so as to fully develop the potential of modern rail service in meeting the Nation's intercity passenger transportation requirements." Rail Passenger Service Act, § 301, 84 Stat. at 1330. The act also made railroad companies languishing under the prior regime an offer they could not refuse: if these companies consented to certain conditions, such as permitting Amtrak to use their tracks and other facilities, they
could shed their cumbersome common carrier obligation to offer intercity passenger service. See Nat'l R.R. Corp., 470 U.S. at 455-56, 105 S.Ct. 1441. Pursuant to statute, Amtrak negotiates these arrangements with individual railroads, the terms of which are enshrined in Operating Agreements.2 See 49 U.S.C. § 24308(a). Today, freight railroads own roughly 97% of the track over which Amtrak runs its passenger service.
Naturally, sharing tracks can cause coordination problems, which is why Congress has prescribed that, absent an emergency, Amtrak's passenger rail " has preference over freight transportation in using a rail line, junction, or crossing." Id. § 24308(c). More recently, this same concern prompted enactment of the Passenger Rail Investment and Improvement Act of 2008 (" PRIIA" ), Pub.L. No. 110-432, Div. B, 122 Stat. 4848, 4907. At issue in this case is the PRIIA's § 207, which directs the FRA and Amtrak to " jointly ... develop new or improve existing metrics and minimum standards for measuring the performance and service quality of intercity passenger train operations, including cost recovery, on-time performance and minutes of delay, ridership, on-board services, stations, facilities, equipment, and other services." PRIIA § 207(a), 49 U.S.C. § 24101 (note). If Amtrak and the FRA disagree about the composition of these " metrics and standards," either " may petition the Surface Transportation Board to appoint an arbitrator to assist the parties in resolving their disputes through binding arbitration." Id. § 207(d), 49 U.S.C. § 24101 (note). " To the extent practicable," Amtrak and its host rail carriers must incorporate the metrics and standards into their Operating Agreements. Id. § 207(c), 49 U.S.C. § 24101 (note).
Though § 207 provides the means for devising the metrics and standards, § 213 is the enforcement mechanism. If the " on-time performance" or " service quality" of any intercity passenger train proves inadequate under the metrics and standards for two consecutive quarters, the STB may launch an investigation " to determine whether and to what extent delays or failure to achieve minimum standards are due to causes that could reasonably be addressed by a rail carrier over whose tracks the intercity passenger train operates or reasonably addressed by Amtrak or other intercity passenger rail operators." PRIIA § 213(a), 49 U.S.C. § 24308(f)(1). Similarly, if " Amtrak, an intercity passenger rail operator, a host freight railroad over which Amtrak operates, or an entity for which Amtrak operates intercity passenger rail service" files a complaint, the STB " shall " initiate such an investigation. Id. (emphasis added). Should the STB determine the failure to satisfy the metrics and standards is " attributable to a rail carrier's failure to provide preference to Amtrak over freight transportation as required," it may award damages or other relief against the offending host rail carrier. Id. § 24308(f)(2).
Following § 207's mandate, the FRA and Amtrak jointly drafted proposed metrics and standards, which they submitted to public comment on March 13, 2009. See Metrics and Standards for Intercity Passenger Rail Service Under Section 207 of Public Law 110-432, 74 Fed.Reg. 10,983 (Mar. 13, 2009). The proposal attracted criticism, with much vitriol directed at three metrics formulated to measure on-time performance: " effective speed" (the ratio of route's distance to the average
time required to travel it), " endpoint on-time performance" (the portion of a route's trains that arrive on schedule), and " all-stations on-time performance" (the degree to which trains arrive on time at each station along the route). AAR, among others, derided these metrics as " unrealistic" and worried that certain aspects would create " an excessive administrative and financial burden." The FRA responded to the comments, and a final version of the metrics and standards took effect in May 2010. See Metrics and Standards for Intercity Passenger Rail Service Under Section 207 of the Passenger Rail Investment and Improvement Act of 2008, 75 Fed.Reg. 26,839 (May 11, 2010).
AAR filed suit on behalf of its Class I freight railroad members, asking the district court to declare § 207 of the PRIIA unconstitutional and to vacate the promulgated metrics and standards. The complaint asserted two challenges: that § 207 unconstitutionally delegates to Amtrak the authority to regulate other private entities; and that empowering Amtrak to regulate its competitors violates the Fifth Amendment's Due Process Clause. Compl. ¶¶ 47-54, at 16-17. The district court rejected these arguments, granting summary judgment to the government and denying it to AAR. See AAR v. Dep't of Transp., 865 F.Supp.2d 22, 35 (D.D.C.2012). AAR renews these constitutional claims on appeal.
AAR's argument takes the following form: Delegating regulatory authority to a private entity is unconstitutional. Amtrak is a private entity. Ergo, § 207 is unconstitutional. This proposed syllogism is susceptible, however, to attacks on both its validity and soundness. In other words, does the conclusion actually follow from the premises? And, if it does, are both premises true? Our discussion follows the same path.
We open our discussion with a principle upon which both sides agree: Federal lawmakers cannot delegate regulatory authority to a private entity. To do so would be " legislative delegation in its most obnoxious form." Carter v. Carter Coal Co., 298 U.S. 238, 311, 56 S.Ct. 855, 80 L.Ed. 1160 (1936). This constitutional prohibition is the lesser-known cousin of the doctrine that Congress cannot delegate its legislative function to an agency of the Executive Branch. See U.S. CONST. art. I, § 1 (" All legislative Powers herein granted shall be vested in a Congress of the United States...." ); see A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 529, 55...
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