The Association of American Railroads v. Department of Transportation Case: Making Tracks Toward the Supreme Court

Coordination and priority between railroads sharing rail has long been a complicated issue.  Most recently, the courts have been asked to decide whether Amtrak, a federally chartered corporation providing passenger service, should have the authority and power to regulate the privately owned freight railroads with which it shares rail.  The United States Supreme Court granted certiorari on June 3, 2014 to decide this issue in the AAR v. DOT case.

Background:  Congress passed the Rail Passenger Service Act of 1970 to reinvigorate a national passenger rail system.  The legislation created the passenger rail corporation now known as Amtrak to employ “innovative operating and marketing concepts so as to fully develop the potential modern rail service in meeting the Nation’s intercity passenger transportation requirements.”  Additionally, the act offered railroad companies the opportunity to shed the common carrier obligation to offer intercity passenger service in exchange for agreeing to allow Amtrak to use their tracks and other facilities.  According to the statute, Amtrak negotiates the track–sharing arrangements (Operating Agreements) with each individual railroad.  Today, freight railroads own approximately 97% of the track over which Amtrak runs its passenger service.  Sharing tracks can cause coordination problems.  Thus, Congress prescribed that, absent an emergency, Amtrak’s passenger rail “has preference over freight transportation.”  The Passenger Railroad Investment and Improvement Act of 2008 (PRIIA) was enacted to further address these coordination concerns.  Section 207 of PRIIA requires the Federal Railroad Administration (FRA) and Amtrak to “jointly” develop standards to evaluate the performance of the Amtrak trains.  In light of this mandate, the FRA and Amtrak issued on-time performance (OTP) metrics and standards.  The final version took effect in May 2010.

The AAR v. DOT Lawsuit:  In 2011, the Railroad Association filed suit on behalf of its Class I freight railroad members against the Department of Transportation and others, challenging the constitutionality of Section 207 of PRIIA and requesting that the court vacate the promulgated OTP metrics and standards.  The AAR asserted that: (1) Section 207 unconstitutionally delegates to Amtrak the authority to relegate other private entities; and (2) empowering Amtrak to relegate its competitors violates the Fifth Amendment’s Due Process Clause.  The parties filed cross-motions for summary judgment on these issues.  On May 21, 2012, the District Court granted summary judgment in favor of the Department of Transportation and the AAR appealed.  On February 19, 2013, the Court of Appeals for the D.C. Circuit reversed the District Court’s decision and held that the metrics developed pursuant to PRIIA Section 207 impermissibly delegated regulatory authority to Amtrak.  The Department of Transportation appealed the decision and the United States Supreme Court granted certiorari.

Amtrak’s Lawsuit:  Meanwhile, Amtrak filed its own lawsuit seeking to impose liability on the freight railroads for less than on-time performance.  In January 2012, Amtrak filed a Petition for Relief Requiring the Initiation of An Investigation of Substandard Performance Under PRIIA Section 213, the enforcement arm of PRIIA Section 207, before the Surface Transportation Board (STB).   Amtrak asks the STB to investigate the reasons passenger train OTP that has fallen below the metrics and standards it promulgated under PRIIA.  Amtrak specifically alleges that freight railroads may be delaying passenger traffic in favor of their own freight trains.

The outcome of the AAR v. DOT case will significantly impact the rights and power of Amtrak and/or the freight railroads going forward.

For the AAR v. DOT decisions in the District Court and United States Court of Appeals, click here.

For a summary story regarding Amtrak’s STB lawsuit, click here.

To read the entire STB complaint, click here.