WASHINGTON (CN) — On remand from the Supreme Court, the D.C. Circuit again ruled that a 2008 law allowing Amtrak to help regulate freight railroads to ensure the timely service of passenger trains is unconstitutional.
Last year, the U.S. Supreme Court unanimously ruled that Amtrak is more a government agency than a private corporation when it helps federal agencies draft rules on railroad scheduling.
But the opinion, written by Justice Anthony Kennedy, suggested that further litigation was required to determine if there are other problems with Amtrak’s involvement in setting the regulations.
On remand, the D.C. Circuit ruled Friday that Amtrak cannot make laws governing railroad operators “when, economically speaking, it has skin in the game.”
The 2008 law, Passenger Rail Investment and Improvement Act (PRIIA), directs Amtrak to work with the Federal Railroad Administration to create standards that let Amtrak keep priority over freight trains along common railroad tracks.
The law was intended to limit passenger train delays caused by the freight railroads that actually own the tracks that Amtrak operates on, limiting such delays to no more than 900 minutes per 10,000 train-miles.
But the nation’s freight railroads, represented by their trade group, the Association of American Railroads, balked at the new rules, claiming in a 2011 lawsuit that the law gave excessive regulation power to a private corporation with a “historically poor record of on-time performance and (a) chronic inability to generate revenue sufficient to cover its operating costs.”
The Supreme Court found that the law is not unconstitutional for giving governmental authority to a private entity, because Amtrak is not a private entity – even if it is operated for profit.
Kennedy, in his opinion for the high court, pointed out that Amtrak was created to serve a broad public purpose, that the government exercises substantial authority over its priorities and operations, and that the passenger rail services is dependent on federal financial support, having received more than $41 billion in federal subsidies in its first 43 years of operation.
But the D.C. Circuit found the law to be unconstitutional again on Friday, on other grounds.
“The power to self-interestedly regulate the business of a competitor is…anathema…to the very nature of governmental function,” Judge Janice Brown said, writing for a three-judge panel. “Delegating legislative authority to official bodies is inoffensive because we presume those bodies are disinterested, that their loyalties lie with the public good, not their private gain.” (Emphasis in original.)
The Supreme Court’s finding that Amtrak is not an autonomous private enterprise does not mean that Amtrak is not a self-interested entity, the D.C. Circuit panel ruled.
“The government of the United States is not a business that aims to increase its bottom line to achieve maximum profitability. Unlike for-profit corporations, government strives — at least in theory — for an equilibrium of revenues and expenditures, where the revenue obtained is no more and no less than the operating costs of the services provided,” Brown wrote. “Amtrak’s charter stands in stark contrast. Its economic self-interest as it concerns other market participants is undeniable.”
It is therefore unreasonable for the government to delegate regulatory authority to Amtrak for it to wield over competitors in the same market, the panel ruled.
“Congress delegated its legislative power to an entity that it designed to be the opposite of ‘presumptively disinterested,'” Brown wrote. “The antagonistic interests of freight operators and Amtrak transform the development of new performance metrics and standards into an unfair game of zero sums.” (Emphasis in original.)
Amtrak is partially government-funded.
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