Brian Schmidt

WASHINGTON – A ruling issued Thursday by the U.S. District Court for the District of Columbia is likely to be the final decision in a case that dates back to 2010. District Judge James E. Boasberg, an Obama appointee, found the entirety of Section 207 of the 2008 Passenger Rail Investment and Improvement Act to be unconstitutional and voided the metrics and standards that the Federal Railroad Administration issued in 2011 pursuant to the section. The Association of American Railroads (AAR), representing the Class I, first filed a lawsuit against DOT challenging Section 207 railroads whose tracks Amtrak trains use. Given that Thursday’s ruling was made on remand from the Supreme Court, an appeal by DOT is likely not possible.



Boasberg’s ruling, which is not yet available online, was based on clauses in the U.S. Constitution that state that no person shall be deprived of life, liberty, or property without due process of law (the Due Process Clause), and that the regulatory authority of the federal government may only ultimately rest with individuals appointed by the President of the United States and confirmed by the Senate (the Appointments Clause). In keeping with the precedent set by an 1886 Supreme Court ruling in a case involving the Southern Pacific, all rights the Constitution grants to persons are also granted to corporations. Boasberg found that Section 207’s vesting of regulatory power with an entity that is also a participant in the industry subject to regulation violated the Due Process Clause, and that vesting the ultimate power to settle disputes concerning the metrics and standards with an arbitrator appointed by the DOT violated the Appointments Clause.



In July 2013, the U.S. Court of Appeals for the D.C. Circuit panel comprised of George W. Bush appointees, in the same case, ruled in AAR’s favor by finding that Amtrak is a private company that may not be granted regulatory powers, overturning a May 2012 ruling by the District Court that Amtrak is a governmental entity. But in a unanimous March 2015 decision, the Supreme Court overturned that ruling, declaring that for the purposes of the constitutional clauses in question, Amtrak shall be considered as part of the government, but remanded the questions of due process and appointments back to the lower courts. Thursday’s District Court ruling establishes the principle that while Congress may create companies that act commercially within an industry, and may also create regulatory bodies, it cannot create entities that do both at the same time. In this case, the thing for which Amtrak and freight railroads are competing is not customers, but rather finite track capacity.



In earlier filings before the Supreme Court, the U.S. Chamber of Commerce, the Cato Institute, the Center for Constitutional Jurisprudence, the Center for the Rule of Law, the Association of Independent Passenger Rail Operators (whose member firms aim to compete with Amtrak in operating intercity passenger trains), and law professor Alexander Volokh sided with AAR, while the National Association of Railroad Passengers, the Environmental Law and Policy Center, and some local rail passenger advocacy groups sided with DOT.



In the 20 months between the D.C. Circuit and Supreme Court rulings, Amtrak’s system wide on-time performance declined.

