WASHINGTON (CN) – A federal judge upheld a law that gives Amtrak and the Federal Railroad Administration the “authority to promulgate binding rules governing the conduct of its contractual partners, the freight railroads.”
Representing the freight carriers, the Association of American Railroads sued the Department of Transportation over the constitutionality of the Passenger Rail Investment and Improvement Act (PRIIA) in 2011, claiming 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 relied on the Supreme Court’s determination that Amtrak should be considered a governmental entity for the purpose of constitutional individual-rights claims.
“Amtrak was created by special law for the furtherance of governmental objectives, and the government sets its goals; the President appoints eight of the nine directors; Amtrak is required to submit annual reports to Congress and the President; the government owns more than 90% of Amtrak’s stock; Amtrak relies on more than a billion dollars in congressional appropriations annually; and Congress sets salary limits for Amtrak’s employees,” stated the judge, demonstrating how interwoven the passenger train company is with the federal government.
The judge ruled that the government is sufficiently involved to legally render the regulating power to Amtrak, and dismissed the railroads’ claim.
“Amtrak is not a department, agency, or instrumentality of the United States Government,” argued the railroads. “Rather, it is a private entity that is ‘operated and managed as a for-profit corporation.’ PRIIA purports to vest Amtrak with the power to issue binding regulations governing the business operations of the freight railroads. It is a bedrock principle of constitutional law that Congress cannot empower a private entity to regulate other participants in the same industry.”The railroads fear the law will adversely impact their operations because it forces them to ensure that Amtrak meets federal on-time performance standards. They claim that if an Amtrak train dips below 80 percent of the on-time standard for two consecutive calendar quarters, the Surface Transportation Board can investigate Amtrak or the host freight railroad and may order the host rail carrier to pay damages to Amtrak.