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Update on AAR v. U.S. DOT: Will PRIIA Survive?

On November 10, 2015, the U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in the Association of Railroads v. United States Department of Transportation case. The AAR argued that the Passenger Railroad Investment and Improvement Act of 2008 (“PRIIA”) violates the railroads’ due process rights and should be struck down.

SCOTUS Remanded Three Constitutional Issues

In its March 9, 2015 controlling opinion, the U.S. Supreme Court overturned the U.S. Court of Appeals for the District of Columbia Circuit’s February 19, 2013, decision that Amtrak was a private entity, and, thus, the metrics developed pursuant to PRIIA impermissibly delegated regulatory authority to a private entity, Amtrak. The U.S. Supreme Court found that Amtrak is a governmental entity, not a corporation acting in a private capacity. While the Court of Appeals had relied heavily on Congress’ statutory pronouncements that Amtrak “is not a department, agency, or instrumentality of the United States Government” and that Amtrak “shall be operated and managed as a for-profit corporation” (49 U.S.C. §24301(a)(2) and (3)), the U.S. Supreme Court looked to Amtrak’s ownership and corporate structure, the governmental regulation and control of Amtrak, and its dependency on federal financial support. The U.S. Supreme Court found the results of its in-depth analysis weighed in favor of finding that Amtrak is a governmental entity.

The Court remanded the case to the D.C Circuit Court of Appeals to decide three constitutional issues.

First, having found Amtrak to be a governmental entity, the Court of Appeals must determine whether the appointment of Amtrak’s president violates constitutional law requiring election of governmental officials.

Second, the Court of Appeals must examine whether the Due Process Clause is violated by PRIIA in that it grants Amtrak the power to control the freight trains.

Finally, the Court of Appeals must decide whether the current arbitrator selection procedures for settling disputes regarding the standards for use of railroad facilities violate the constitutional rule that Congress cannot delegate its own legislative powers and whether such procedures additionally violate the constitutional requirements for electing officials exercising governmental powers.

D.C. Circuit Court of Appeals

Three judges, Circuit Judge Janice Rogers Brown, and Senior Circuit Judges Stephen F. Williams and David B. Sentelle, sat on the panel that heard oral arguments. The RRA argued that due process does not allow Congress to say one market competitor may regulate another. U.S. DOT argued that many governmental controls precluded Amtrak from biased performance metrics that tilt in its favor. One judge’s comments appeared to favor the AAR’s position. On the final constitutional issue relating to the arbitrator selection process, Judge Sentelle said “I think you know you’ve got one vote on that issue.”

Given the gravity of the outcome for both Amtrak and the freight trains, it is likely that the losing side will appeal the decision and this matter will again be in front of the U.S. Supreme Court. Thus, a final decision regarding the constitutionality of PRIIA is likely at least two years away.