United States Court of Appeals, District of Columbia Circuit
March 5, 2018
from the United States District Court for the District of
Columbia (No. 1:11-cv-01499)
Patrick G. Nemeroff, Attorney, U.S. Department of Justice,
argued the cause for appellants.
him on the briefs were Chad A. Readler, Acting Assistant
Attorney General, Jessie K. Liu, U.S. Attorney, Mark B.
Stern, Michael S. Raab, and Daniel Tenny, Attorneys, Steven
G. Bradbury, General Counsel, U.S. Department of
Transportation, James Owens, then-Acting General Counsel,
Paul M. Geier, Assistant General Counsel, Christopher S.
Perry, Acting Deputy Assistant General Counsel for Litigation
and Enforcement, Joy K. Park, Senior Trial Attorney, Juan D.
Reyes III, Chief Counsel, Federal Railroad Administration,
and Zeb G. Schorr, Assistant Chief Counsel.
H. Dupree Jr. argued the cause for appellee. With him on the
brief were David A. Schnitzer, Kathryn Kirmayer, and Daniel
Before: Garland, Chief Judge, and Tatel and Millett, Circuit
MILLETT, CIRCUIT JUDGE
dispute between passenger and freight trains over priority
access to railroad tracks has turned into a legal donnybrook
over the bounds of congressional power. This court previously
went off the constitutional rails by empowering Amtrak to
establish metrics and standards affecting track usage over
the opposition of the private freight railroads that own
those tracks and without the intermediation and control of a
neutral governmental decisionmaker. More specifically, this
court ruled that the Due Process Clause does not allow Amtrak
to use an arbitration process to impose its preferred metrics
and standards on its competitors, notwithstanding their
opposition and that of the Federal Railroad Administration.
question in this case is how to remedy that constitutional
problem. We hold that severing the arbitration provision is
the proper remedy. Without an arbitrator's stamp of
approval, Amtrak cannot unilaterally impose its metrics and
standards on objecting freight railroads. No rule will go
into effect without the approval and permission of a neutral
federal agency. That brings the process of formulating
metrics and standards back into the constitutional fold.
Rail Passenger Service Act of 1970, Pub. L. No. 91-518, 84
Stat. 1327, established Amtrak (a/k/a the National Passenger
Railroad Corporation) to "reinvigorate a national
passenger rail system that had * * * grown moribund and
unprofitable," Association of American R.R. v.
Department of Transp., 721 F.3d 666, 668 (D.C. Cir.
2013) (American Railroads I), and "to fully
develop the potential of modern rail service in meeting the
Nation's intercity passenger transportation
requirements," Rail Passenger Service Act § 301, 84
Stat. at 1330. In passing that legislation, "Congress
recognized that Amtrak, of necessity, must rely for most of
its operations on track systems owned by the [regional]
freight railroads." Department of Transp. v.
Association of American R.R. (American Railroads II),
135 S.Ct. 1225, 1229 (2015).
years later, Congress granted Amtrak's passenger rail
service "preference over freight transportation in using
a rail line[.]" 49 U.S.C. § 24308(c). To implement
that priority system, Congress authorized Amtrak to enter
into agreements with rail carriers and regional
transportation authorities "to use [the] facilities of,
and have services provided by, the carrier or authority under
terms on which the parties agree." Id. §
24308(a). Congress added that the "terms shall include a
penalty for untimely performance" by either party.
Id. If Amtrak and the carrier or authority could not
agree on governing terms, Congress empowered the federal
Surface Transportation Board to "order that the
facilities be made available and the services provided to
Amtrak," and to "prescribe reasonable terms and
compensation for using the facilities and providing the
2008, Congress enacted the Passenger Rail Investment and
Improvement Act ("2008 Rail Act"), Pub. L. No.
110-432, 122 Stat. 4848, codified at 49 U.S.C.
§ 24101 note. That statute reconfigured the
process for Amtrak to coordinate its rail access with private
freight railroads. As is most relevant here, the Act directed
that Amtrak and the Department of Transportation's
Federal Railroad Administration "shall jointly * * *
develop new or [shall] improve existing metrics and minimum
standards for measuring the performance and service quality
of intercity passenger train operations, including cost
recovery, on-time performance and minutes of delay,
ridership, on-board services, stations, facilities,
equipment, and other services." Id. §
207(a). As part of that process, the 2008 Rail Act requires
Amtrak and the Administration to "consult with"
the Surface Transportation Board, rail carriers over whose
rail lines Amtrak trains operate, States, passenger
representatives, and Amtrak employees about the appropriate
metrics and standards. Id.
Amtrak and the Administration are unable to develop those
metrics and standards within 180 days, Congress authorized
"any party involved in the development of those
standards" to "petition the Surface Transportation
Board to appoint an arbitrator to assist the parties in
resolving their disputes through binding arbitration."
2008 Rail Act § 207(d), 49 U.S.C. § 24101 note.
tracing the history of this litigation, we write on a full
slate. In March 2009, Amtrak and the Federal Railroad
Administration published a Federal Register notice inviting
comments on proposed metrics and standards pertaining to
Amtrak's invocation of its right under the 2008 Rail Act
to priority access to the railways. The Association of
American Railroads ("Railroad Association") is a
group of large freight railroad owners that operate tracks
that Amtrak uses. The Railroad Association and its members
submitted numerous comments, mostly concerning the increased
expense associated with expanding and maintaining the needed
track capacity and the timing metrics. See, e.g.,
J.A. 165, 171, 176.
final metrics and standards that issued in May 2010 did not
alleviate the Railroad Association's concerns. So the
Railroad Association filed suit in federal district court
challenging the facial constitutionality of Section 207's
scheme for promulgating metrics and standards. The Railroad
argued that the provision unconstitutionally delegated
regulatory power over private entities to Amtrak, an
allegedly non-governmental entity, by allowing it to
influence or control the content of the metrics and standards
imposed on its competitors. American Railroads Mot. for Summ.
J., Association of American R.R. v. Department of
Transp., Civ. No. 11-1499 (D.D.C. May 31, 2012), ECF No.
8 at 7. The district court found no constitutional problem
and granted summary judgment for the government.
Association of American R.R. v. Department of
Transp., Civ. No. 11-1499 (D.D.C. May 31, 2012), ECF No.
17 at 2.
appeal, this court deemed Amtrak to be a private entity and
ruled that Section 207 unconstitutionally delegated authority
to a private party "to jointly develop performance
measures to enhance enforcement of the statutory priority
Amtrak's passenger rail service has over other [private
freight] trains." American Railroads I, 721
F.3d at 668.
Supreme Court vacated that constitutional ruling.
American Railroads II, 135 S.Ct. at 1234. The Court
emphasized that "Amtrak was created by the Government,
is controlled by the Government, and operates for the
Government's benefit." Id. at 1232.
Consequently, when undertaking "its joint issuance of
the metrics and standards with the [Federal Railroad
Administration], Amtrak acted as a governmental entity for
the purposes of the Constitution's separation of powers
provisions." Id. at 1232-1233. The Supreme
Court then remanded the case for this court to address
whether Section 207 ran afoul of the Fifth Amendment's
Due Process Clause by giving Amtrak, a "for-profit
corporation[, ] regulatory authority over its own
industry," and whether the arbitration provision
violated the Appointments Clause, U.S. Const., Art. II,
§ 2, cl. 2. American Railroads II, 135 S.Ct. at
remand, this court again held Section 207 unconstitutional.
Association of American R.R. v. Department of Transp.
(American Railroads III), 821 F.3d 19 (D.C. Cir. 2016).
We held that Section 207 unconstitutionally delegated to
Amtrak, a "self-interested entity," id. at
31, the authority to "regulate its resource
competitors," id. at 23, in violation of the
Due Process Clause.
court rejected the government's argument that the Federal
Railroad Administration's joint role in promulgating the
metrics and standards tempered any due process concerns. We
explained that the Administration "is powerless to
overrule Amtrak" because, if there is "intractable
disagreement between the two, the matter is resolved by an
arbitrator, who may ultimately choose to side with
Amtrak" in binding arbitration. American Railroads
III, 821 F.3d at 35. Because the arbitration provision
prevents the Administration from "keep[ing] Amtrak's
naked self-interest in check," we concluded, "the
requirement of joint development does not somehow sanitize
the Act." Id.; see id. at 34. n.4
(distinguishing Supreme Court precedent upholding joint
regulatory efforts by "a self-interested group and a
government agency" because the Administration's
"authority to hold the line against overreaching by
Amtrak is undermined by the power of the arbitrator" to
independently authorize Amtrak's metrics and standards).
this court held that appointment of the arbitrator violated
the Constitution's Appointments Clause. This court
concluded that the arbitrator's binding decision
constituted final agency action. Yet the arbitrator was not
appointed by the President, but rather by an independent
agency, the Surface Transportation Board, which also had no
oversight or review of the arbitrator's decision.
American Railroads III, 821 F.3d at 38-39.
case then returned to district court to remedy the
constitutional violations. With the agreement of both the
Railroad Association and the government, the district court
vacated the May 2010 metrics and standards. Association
of American R.R. v. Department of Transp., Civ. No.
11-1499 (D.D.C. Mar. 23, 2017), ECF No. 27 at 6. The district
court then declared Section 207's entire
Amtrak-influenced process for formulating metrics and
standards unconstitutional, rejecting the government's
argument that severing Section 207(d)'s arbitration
provision by itself would cure the identified constitutional
infirmities. Id. at 5.
district court had jurisdiction over this case under 28
U.S.C. § 1331, and we have jurisdiction to review its
final order under 28 U.S.C. § 1291. We review de
novo questions concerning the remediation of a
statute's unconstitutionality and questions of statutory
construction. See Stop This Insanity Inc. Employee
Leadership Fund v. FEC, 761 F.3d 10, 13 (D.C. Cir.