Amtrak Isn’t a Private Entity, High Court Says

(CN) - Amtrak is more a government agency than a private corporation when it helps federal agencies draft rules on railroad scheduling, a unanimous Supreme Court ruled Monday.

The ruling means that lower courts must consider Amtrak's status in deciding whether Congress can give the passenger rail service power to develop standards other private railroads must follow.

But the opinion, written by Justice Anthony Kennedy, also suggested that further litigation is required to determine if there are problems with Amtrak's involvement in setting the regulations.

A 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 who 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."

U.S. District Judge James Boasberg upheld the law in 2012, but the D.C. Circuit reversed a year later after finding that the challenged provision, Section 207, "constitutes an unlawful delegation of regulatory power to a private entity."

The ruling likened the scheme to one that the Supreme Court invalidated in the 1936 case Carter v. Carter Coal Co.

"Section 207 is as close to the blatantly unconstitutional scheme in Carter Coal as we have seen," the decision said. "The government would essentially limit Carter Coal to its facts, arguing that '[n]o more is constitutionally required' than the government's 'active oversight, participation, and assent' in its private partner's rulemaking decisions. This proposition - one we find nowhere in the case law - vitiates the principle that private parties must be limited to an advisory or subordinate role in the regulatory process."

The court deemed Amtrak a private company because it must "be operated and managed as a for-profit corporation."

"Though the federal government's involvement in Amtrak is considerable, Congress has both designated it a private corporation and instructed that it be managed so as to maximize profit," the decision said.

On Monday, however, the Supreme Court concluded the appellate court was simply and flatly wrong.

"Congressional pronouncement are not dispositive of Amtrak's status as a governmental entity for purposes of separation of powers analysis under the Constitution, and an independent inquiry reveals the Court of Appeals' premise that Amtrak is a private entity was flawed," Justice Kennedy wrote.

He noted that the government controls most of Amtrak's stock, and that the majority of its board of directors are appointed by the president, confirmed by the senate, and "understood by the Executive Branch to be removable by the President at will."

Kennedy went on to point out that Amtrak was created to serve a broad public purpose, that the government exercises substantial authority over its priorities and operations, and finally, 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.

"Given the combination of these unique features and Amtrak's significant ties to the Government, Amtrak is not an autonomous private enterprise. Amtrak was created by the Government, is controlled by the Government, and operates for the Government's benefit. Thus, in jointly issuing the metrics and standards with the FRA, Amtrak acted as a governmental entity for separation of powers purposes," Kennedy wrote.

"Given the combination of these unique features and its significant ties to the Government, Amtrak is not an autonomous private enterprise," Kennedy concluded. "Because the Court of Appeals' decision was based on the flawed premise that Amtrak should be treated as a private entity, that opinion is now vacated."

Chief Justice John Robert, and Justices Antonin Scalia, Ruth Bader Ginsburg, Stephen Breyer, Samuel Alito, Sonia Sotomayor and Elena Kagan joined Kennedy's opinion. Justice Alito filed a concurring opinion, and Justice Clarence Thomas filed an opinion concurring in the judgment.

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