Case challenges Amtrak's dual role as government and for-profit entity

On Dec. 8, the Supreme Court heard oral arguments in Department of Transportation vs. Association of American Railroads, a case that will likely have enormous implications for the Constitution’s fundamental structure and the limitations on the growth of the administrative state.  A 2008 statute instructs the Federal Railroad Administration (FRA) and Amtrak to develop jointly what the statute calls “metrics and standards” for Amtrak’s performance. If they fail to agree, FRA appoints an arbitrator to assist the parties in resolving their disagreement.  Once the “metrics and standards” are in place, the law requires Amtrak and the freight railroads (who own almost all the track that Amtrak uses) to incorporate them into their operating contracts. If Amtrak fails to meet certain of these standards, the Surface Transportation Board (STB) can investigate and ultimately award damages and other relief against a freight railroad if Amtrak’s problems were attributable to that freight railroad.

But the requirement that FRA and Amtrak jointly develop the standards creates a problem: Although it has a federal charter, Amtrak is a separate corporation and by law is required to be run as a for-profit entity. Even if the purpose of the statute is to give Amtrak and FRA extra bargaining power against freight railroads (who must, under federal law, grant preference to Amtrak trains), the statute also gives Amtrak power over FRA. After all, Amtrak can withhold consent in an attempt to extract concessions from FRA. Thus, the statute gives Amtrak the shared power to write legally effective rules with FRA. The government’s oral argument centered around the legal significance of whether Amtrak is governmental or private.  Plaintiffs argue that Amtrak wields too much power as both a governmental and for-profit entity negotiating terms that affect the entire railway industry using Carter vs. Carter Coal Co of 1936 as proof.  In response, the justices cited various other precedent cases that hinted at their likely position the case. A ruling is forthcoming on the case in the next months. Stay tuned for this developing story.

Source: National Review Online