U.S. DEPARTMENT OF TRANSPORTATION v. ASSOCIATION OF AMERICAN RAILROADS
In 1970, Congress created the National Railroad Passenger Corporation (Amtrak) through the Rail Passenger Service Act and gave them the priority to use track systems owned by freight railroads for passenger travel. In 2008, Congress gave Amtrak and the Federal Railroad Administration (FRA) joint authority to issue metrics and standards addressing scheduling, including on-time performance and train delays. The Association of American Railroads (AAR) sued the Department of Transportation, the FRA, and two officials alleging that the metrics and standards are unconstitutional. The AAR alleged that allowing a private entity, like Amtrak, to exercise joint authority in their issuance violated the Fifth Amendment Due Process Clause by vesting the coercive power of government in an interested private party, and also violated the constitutional provisions regarding separation of powers by placing legislative authority in a private entity.
The district court rejected the AAR’s argument, but the U.S. Court of Appeals for the District of Columbia reversed holding that Amtrak is a private corporation and Congress violated the constitutional provisions regarding separation of powers.
Are the metrics and standards invalid because Congress gave a private entity, Amtrak, the authority to create them?
Legal provision: 49 U. S. C. §24301
No. Justice Anthony M. Kennedy delivered the opinion for the majority. The Court held that, for purposes of determining the validity of the metrics and standards, Amtrak is a governmental entity. The members of Amtrak’s Board of Directors are appointed by the President and confirmed by the Senate, and Amtrak is required by statute to pursue broad public objectives. Because of Amtrak’s significant ties to the government, Amtrak is not a private enterprise, and therefore, treating Amtrak as a governmental entity is consistent with the constitutional separation of powers.
Justice Samuel A. Alito, Jr. wrote a concurring opinion in which he addressed the issues of accountability and the constitutional questions that arise out of the recognition that Amtrak is functionally a governmental entity. First, unlike other governmental officers, Amtrak’s board members are not required to take an oath to uphold the Constitution. Next, the arbitration clause of the PRIIA is potentially unconstitutional if it is interpreted to allow for a private arbitrator because private parties are not vested with legislative powers. Finally, although all of the other board members are appointed by the President and confirmed by the Senate, Amtrak’s president is not but is rather selected by the other board members.
In his opinion concurring in the judgment, Justice Clarence Thomas argued that Amtrak is a private entity and therefore should be subject to generally applicable rules of private conduct created through the proper exercise of legislative power. Because Congress has permitted Amtrak, a private corporation, to make legally binding rules, there are serious constitutional questions that the majority opinion failed to address.
ORAL ARGUMENT OF CURTIS E. GANNON ON BEHALF OF THE PETITIONERS
Chief Justice John G. Roberts: We'll hear argument next this morning in Case 13-1080, Department of Transportation v. Association of American Railroads.
Curtis E Gannon: Mr. Chief Justice, and may it please the Court:
The court of appeals held that Section 207 of PRIIA was unconstitutional because it believed that the statute constituted an actual delegation of regulatory authority to a private entity.
And none of those three things is true about this statute.
First, under Lebron, Amtrak should not be considered a private corporation for nondelegation purposes.
Second, the metrics and standards are not regulatory.
The regulatory effect here comes from the longstanding statutory preference requirement, which was enacted by Congress, not Amtrak, and is enforced by an independent adjudicative agency, the Surface Transportation Board.
Justice Anthony Kennedy: Go ahead, please.
Curtis E Gannon: --And third, requiring Amtrak to approve the metrics and standards before they went into effect is not a delegation outside the government under this Court's cases.
Justice Anthony Kennedy: I think the Lebron argument, Marsh v. Alabama, the company town case, no one says that it was a governmental agency.
It was just exercising governmental-like powers which entitled the person to exercise free speech.
That's all Lebron can stand for.
You wouldn't say that Marsh v. Alabama, the company town, was a governmental agency after reading that opinion, would you?
Curtis E Gannon: No.
I would say that after reading the opinion in Lebron, that the Court concluded that Amtrak is a governmental entity for things that Congress doesn't have control over.
Justice Anthony Kennedy: Well, you could say the same thing about Marsh v. Alabama.
Curtis E Gannon: Well, I think that the difference is that the Court recognized in Lebron that Amtrak is a government-created corporation that is under the government's control and that under the government's control both because of the management control that it has over it and because it created the purposes for which Amtrak exists and the things that it has to do.
And the Court there distinguished between whether Amtrak is governmental for constitutional purposes that were beyond Congress's control, but acknowledged that Congress could control whether Amtrak was governmental for other purposes, other powers and privileges of government.
Justice Samuel Alito: If Amtrak is governmental for nondelegation purposes, is it also governmental for appointments clause purposes?
Curtis E Gannon: Well, I think that that follows from the -- the way the Court approached the question about the PCAOB and Free Enterprise Fund where Congress had also enacted a statute that said the PCAOB was not an agency or instrumentality of government, that no board members or employees were going to be considered officers or employees of the Federal government.
The parties in that case, which included the United States, did not dispute that the appointments clause and separation of powers concerns that were at issue there were applicable to the PCAOB, notwithstanding those general statements by Congress.
And we do think here--
Chief Justice John G. Roberts: I was just going to say your argument that Amtrak is governmental for purposes of -- that doesn't get you to the finish line, right?
I mean, if you had a law that said the Department of Defense and the Department of State will consult and jointly issue regulations and if they don't, this private individual resolved it for them, that would still present the same problems.
Curtis E Gannon: --Well, I think, Mr. Chief Justice, you are referring to the arbitrator provision.
Chief Justice John G. Roberts: Right.
Curtis E Gannon: Before we get to the arbitrator provision, I do think that -- that this would resolve the question.
And ultimately, if this is not regulatory authority that cannot be conditioned--
Justice Antonin Scalia: Well, it wouldn't resolve the question.
Only -- only perhaps for delegation purposes.
But -- but it doesn't resolve the -- the other issue in the case, which is due process.
That is to say, even if this is a governmental entity, there are some things that governmental entities can't do.
And, indeed, I think that the case law in this area relies on the due process clause more than on the distinction simply between public and private entities.
Curtis E Gannon: --Well, to be sure, the Carter Coal case talked about both nondelegation ideas and also due process issues.
We -- we would be surprised if the Court wanted to decide the due process issue here since it wasn't decided by the court of appeals.
Justice Antonin Scalia: It was raised.
Curtis E Gannon: It certainty was raised.
Justice Antonin Scalia: And it's -- and it's argued here.
Curtis E Gannon: It -- it has been argued in the red brief here.
And we do think that we're correct on the merits with respect to the due process issue and that -- for two principal reasons.
One is that what is at stake here is not the equivalent of what was going on in the due process cases.
This is not like the de-licensing of optometrists in the Gibson v. Berryhill case.
It's not like the wage and hour requirements in Carter Coal, because -- because the analogy to those things here is the statutory preference requirement rather than the antecedent metrics and standards.
Justice Antonin Scalia: Yes.
But the statutory preference requirement requires -- would require consideration of whatever is determined by this body, right?
Curtis E Gannon: The statutory preference requirement is independent of the metrics and standards and preexists them.
That is what the Surface Transportation Board would be enforcing in a proceeding under Section 24308(f).
The metrics and standards--
Justice Antonin Scalia: What must it consider?
Curtis E Gannon: --The metrics and standards play a triggering and gatekeeping role.
The -- these provisions are reprinted in the government's brief on pages 15A and 16A of the appendix, that the -- the investigation by the Surface Transportation Board is triggered by their having been a failure by Amtrak to satisfy the metrics and standards.
But I think that -- that -- that is -- and if we're talking about the due process cases, that is not the prohibition that the Court has been concerned about.
If you look at cases like Roberge, which talked about Cusack, it said that it's okay to have something that is presumptively bad banned by the legislature.
Here, the analogy to that is the statutory preference, and it's okay, then, to allow a private party to relax its application in certain circumstances.
And we think that's the role that the metrics and standards play here, because Congress could have allowed Amtrak to ask for an STB investigation into violations of the statute any time it wanted to.
And instead what they said is that it is only -- you are only going to get that investigation when you have failed to -- to perform at an adequate level such that we think there's been adequate injury.
And then in that investigation, you are going to have to establish that the injury to you was caused by the violation of the statute.
Justice Anthony Kennedy: So in your -- in your view, the case would come out the same way if Amtrak could issue these metrics and standards entirely on its own, without consultation with the -- or cooperation with the government.
Same -- same case--
Curtis E Gannon: One of the--
Justice Anthony Kennedy: --same result?
Curtis E Gannon: --One prong of our argument is, yes, that because this is not regulatory in that sense, this is more like the neighbors being able to veto the billboard in the neighborhood in Cusack, which the Court said was okay in Roberge, because the statutory preference is presumptively bad.
Violations of the statutory preference by the freight railroads were the thing that Congress wanted to be enforceable here, and the metrics and standards just cabin the circumstances in which Amtrak can seek that type of enforcement.
If I could return to the Chief Justice's question about the--
Chief Justice John G. Roberts: You may.
Justice Sonia Sotomayor: That doesn't stop -- do the metes and standards stop you from initiating or stop the agency from initiating a review, even if a carrier meets the metes and standard?
Curtis E Gannon: --Well, it's -- it's not the carrier.
It's not the host railroad that would meet the standards.
Justice Sonia Sotomayor: No, it would be--
Curtis E Gannon: It would be Amtrak's own performance.
But there is -- there is -- that would depend upon the reading of the beginning clause of (f)(1) which refers to if on-time performance fails to satisfy 80 percent for two consecutive quarters or the service quality isn't complied with for two quarters, then those are the circumstances in which an investigation could be requested and -- in which instance the STB would need to start the investigation or the STB could initiate the investigation.
And there is an open question about that first clause about whether the 80 percent on-time performance reference is something that has to be predicated upon the metrics and standards.
That's been briefed before the Surface Transportation Board in the proceeding brought against Canadian National, the complaint of which is reprinted -- a snippet from which is reprinted at the end of the joint appendix.
And so the question there would be whether on-time performance there depends upon a pre-PRIIA definition rather than the ones that are included in the metrics and standards.
So there's a possibility that the agency could--
Justice Sonia Sotomayor: --If we were -- if we were to rule that this is not a regulatory action, would that satisfy the entire case?
We wouldn't have to go to the delegation issue or to whether it was public or private, et cetera.
Curtis E Gannon: --I -- I think that that is right.
And I think even in those circumstances, because it -- because if it's not regulatory, it's okay for private persons to have that power, and I think that would cover even the question of whether -- if -- if the arbitrator is assumed to be private.
That is not what we think is the case.
And we also think that we don't have to win on that argument either on -- on the question of--
Justice Sonia Sotomayor: On--
Chief Justice John G. Roberts: If the -- if the actions are not regulatory, why -- why did Amtrak's performance drop dramatically as soon as the Court issued its decision in this case?
Curtis E Gannon: --Well, I think that's because of the -- that it decreased the threat of enforcement of the statutory preference.
I do think that the -- it is the statutory preference that is having the regulatory impact here.
The freight railroads are not going to be held liable for Amtrak's failure to satisfy the metrics and standards.
They're going to be held liable for failing to--
Chief Justice John G. Roberts: They're going to be -- Amtrak can then force a proceeding at which the freight carriers will have to defend, right?
Curtis E Gannon: --That -- that is correct.
And the same thing--
Chief Justice John G. Roberts: Well, that's a significant regulatory impact, to tell railroads I, a private party, get to start a governmental proceeding and you have to show up to defend it.
Curtis E Gannon: --Yes.
But that -- that happens--
Chief Justice John G. Roberts: And, by the way, if I don't -- it's triggered if I don't comply with standards that I get to set.
Curtis E Gannon: --It's -- but we allow private parties to initiate governmental investigations and enforcement proceedings all the time, either before administrative agencies or courts, and we don't think that that is a delegation of legislative power--
Justice Elena Kagan: Mr. Gannon--
Curtis E Gannon: --to the person who is beginning the investigation.
Justice Elena Kagan: --Is the -- is the government able to award damages without the showing that there's been a violation of the metrics and standards?
Curtis E Gannon: No.
That is -- that is going to be a threshold determination.
But as I said, that is a -- it's serving as a threshold gatekeeping function to -- of -- of limiting the circumstances in which the investigation can begin and when there will be damages.
Justice Elena Kagan: But I would think if that's the case, if the statutory preference does not get -- is a -- if a violation of the statutory preference doesn't get you all the way to damages, if there is essentially a second requirement which is a violation of the metrics and standards, I mean, in effect what the -- a statute does is it says there are two things you need to show, a violation of the preference and a violation of the metrics and standards, in order to get to damages.
That seems -- if -- if that's the case, it seems kind of regulatory.
Curtis E Gannon: Well, I -- I -- I understand the impulse, but I think that seems -- it -- it also seems like the ability of the neighbors to veto the billboards in Cusack because what Amtrak -- all Amtrak has done is relax certain circumstances in which the freight railroads can be held liable for violating the statutory preference.
A violation of the statutory preference is presumptively a bad thing.
And what has happened here is Congress has recognized that if it doesn't actually cause Amtrak to be -- to have sufficiently subpar performance, then we are not going to make a Federal case out of it and we're not going to let Amtrak do so.
But -- and -- and there aren't going to be damages at the end of the day.
But I do think that the real-world reason of why the freight railroads had greater incentive to cooperate and Amtrak believes that it was their cooperation under the regime in which the metrics and standards were in effect, and there was still the possibility that there would be enforcement proceedings before the STB to determine whether the freight railroads had failed to comply with the statute--
Justice Samuel Alito: The statute says that the--
Justice Ruth Bader Ginsburg: Can we -- can we get back to the arbitrator?
I think the Chief asked that question that -- and we passed it and assume it's regulatory.
Curtis E Gannon: --Yes.
Justice Ruth Bader Ginsburg: The arbitrator, it's argued, need not be a government officer.
It could be a private officer.
I have a question to ask about that provision.
Is it -- is this a one-time operation, that is, the setting these metrics and standards?
In -- in fact, there were no arbitrator in this picture.
Will there be a renewal of this, a repetition where there might be an arbitrator?
Curtis E Gannon: Well, I -- I don't think that the terms of 207(d) contemplate that the arbitrator will come into effect again.
I think that because the beginning of it says that it -- it is only triggered if a development of the metrics and standard is not completed within the 180-day period required by subsection (a), which is the 180 days after PRIIA was enacted in 2008.
And so the arbitration provision was, I think, good for one time only.
It was never invoked.
Chief Justice John G. Roberts: Well, but does that matter?
I mean, the idea is that having the arbitrator -- arbitration provision there affected the issuance of the regulations.
Curtis E Gannon: Yes, I -- I understand that question, Mr. Chief Justice.
I -- I think that's -- it -- it mattered the first time around.
To the extent that there may be any amendments to the metrics and--
Chief Justice John G. Roberts: If--
Curtis E Gannon: --standards in the future--
Chief Justice John G. Roberts: --Right.
Curtis E Gannon: --the arbitrator wouldn't be applicable.
We do not think that the best reading of the arbitrator reference is that that would be a private person.
We think that--
Chief Justice John G. Roberts: Well, I know -- if I could -- there's -- the issues are pretty intertwined here, so I know it's a difficult thing to keep track of for you.
But if -- if -- and for us.
But if we think that the regulations have a regulations -- not to load the question--
Curtis E Gannon: --The metrics and standards have a regulatory affect.
Chief Justice John G. Roberts: --Okay.
Metrics and standards are regulations.
And if we think there is nothing in the statute that requires -- well, I guess it doesn't -- doesn't -- doesn't really matter.
If that's the case, is the arbitrator an officer of the United States?
In other words, if he is the one that ends up issuing what we will hypothetically conclude are regulations, I assume he has to be an officer of the United States.
Curtis E Gannon: I -- I think that would constitute significant governmental authority under Buckley against Valeo, and that would be--
Justice Stephen G. Breyer: Well, you know, I'm quite interested in the government's view of this case, and I hope you will calm me down.
The reason that I find it interesting is because it seems to me there are hundreds, maybe thousands of organizations that set standards for the industry.
And some of them operate under government memoranda or authority that ask them to do it, most noted being ICANN which sets all the standards for the internet.
Now, it also seems to me very possible that a member of such an organization that fails to follow the standard could run afoul of other government rules or other agency rules or other laws, for example, by stalling the internet delivery of services and being delayed, and violating some FCC requirement.
And since I know that there are about 2 or 300 international organizations that we belong to, to do such things, I just wonder what the implications would be if you lose this case.
That is to say, if this Court held here that if a government, say, Congress, agency, Commerce Department, says to a group of private people set standards, and then if they fail -- or if they do so and a member fails to meet a standard, it runs afoul of a different rule, such as a rule that you have to have a certain speed on the Internet or some such thing.
Were we to hold that unconstitutional, I have a feeling -- this is what I want assurance on that I'm wrong -- that it would work havoc, possibly with the Internet, possibly with industry throughout the United States, I know not where, possibly in communications, possibly with the 200 or so organizations regulated by treaty.
Now, you've looked into this more than I and, therefore, I want you to calm me down and say no, this isn't a big-deal case.
Don't worry about it.
Curtis E Gannon: --I think it depends upon how broad the Court's ruling is.
Justice Stephen G. Breyer: No, no.
The ruling is narrow.
It just says the following.
It says, these are standards which equal legislation and as a result of these standards being legislated by this, I think, Quango or something, or whatever, by -- by this particular entity, bad things happen to freight trains when they fail to meet the standards or something and they violate some other law and that's all unconstitutional.
Curtis E Gannon: --And I frankly--
Justice Stephen G. Breyer: Going back to Carter v. Carter Coal.
Curtis E Gannon: --Yes.
Justice Stephen G. Breyer: We could go back to Lochner.
Curtis E Gannon: I don't think that -- that Respondent is asking for a ruling of that nature.
And I think that the question here would be because of the role that the metrics and standards play in the STB investigation.
I think that would be the only way in which the Court would conclude that it is -- is tantamount to regulations.
We don't believe that they have that effect.
We don't think that other standards that are conditions for application of -- of the law out there in the world have necessarily the same effects under even Respondent's view of the case.
But I -- and so I -- I think that the one you want to get reassurances from is actually Respondent, that the nature of their challenge is -- is narrower than that.
But if I could return to the arbitrator--
Chief Justice John G. Roberts: Thanks.
I know it's a -- if he is an officer, is the government's issue a principal officer or an inferior officer?
Curtis E Gannon: --I think that he would be an inferior officer given the limited nature of the--
Chief Justice John G. Roberts: Okay.
Then who -- which principal officer supervises him?
Curtis E Gannon: --It -- it would be the STB that appointed him.
Chief Justice John G. Roberts: But he's an arbitrator.
Curtis E Gannon: He's an arbitrator.
Chief Justice John G. Roberts: One of the parties to the arbitration.
Curtis E Gannon: I don't think the STB is a party to the arbitration.
I think that the -- the two parties who have to issue the -- their metrics and standards are Amtrak and the Federal Railroad Administration.
If they don't agree, then an arbitration -- the arbitrator would be resolving a dispute not -- the STB wouldn't be a party to that.
Chief Justice John G. Roberts: So if the STB doesn't like the arbitrator's decision, can the STB change it under the law?
Curtis E Gannon: I doubt it because it's supposed to be a binding arbitration.
But we think that from the beginning, this is yet another reason to construe the arbitrator as being somebody who is governmental, probably somebody who is actually at the STB.
Justice Antonin Scalia: I don't -- I don't see how you can say he's an inferior officer.
He's supervised by nobody.
That's what we have held to be the -- the touchstone of principal versus inferior.
Curtis E Gannon: He's appointed by the super -- the Surface Transportation Board--
Justice Antonin Scalia: That's it.
And supervised by nobody.
Curtis E Gannon: --to perform a limited task.
He could be removed by the STB.
Justice Antonin Scalia: A limited task is -- is not the touchstone.
I mean, that's what we said in Morrison and we repudiated it in a later case, which said the touchstone of a -- of a principal officer is whether that person is not subject to control by somebody else.
And I don't see how this person is subject to any control in -- in the task that he's assigned.
Curtis E Gannon: Well, in that sense, it's consistent with Morrison, and it is not consistent with what the Court said was sufficient to enter the question in Edmund, but did not say was necessary to answer the question in Edmund about there being review within the Executive Branch of the decisions being made by the Coast Guard judges there.
Justice Antonin Scalia: Let me -- let me talk about regulatory effect.
As I understand it, once these -- what do you call them?
Curtis E Gannon: The metrics and standards.
Justice Antonin Scalia: The metrics and standards.
Once they were issued, wow, the -- the on-time record of Amtrak went way, way up.
So they had a very immediate and clear effect on the behavior of -- of the parties.
Now, do you think that because the sentencing guidelines are now just advisory that we could have the sentencing guidelines issued by some private party that -- that is not appointed pursuant to the requirements of the Constitution?
Because after all, they're just advisory.
Now, the reality is, they have a significant effect on -- on the behavior of -- of lower courts.
And I think it's the same thing here.
There's a significant effect.
I don't know--
Curtis E Gannon: I -- I don't think that this is the same as the sentencing guidelines, the effect that it has on the judges, because those are advice to the judges.
Here, what the metrics and standards do is they satisfy conditions in the world when -- when the Federal statute is going to be applicable.
It's in that sense, just like the Court contemplated in JW Hampton or indeed in cases like Currin v. Wallace and Rock Royal Cooperative, where the policy was established by the Federal government, the Secretary of Agriculture wanted to put a price order in effect or to say that a particular tobacco market would be subject to a Federal inspection regime and that could not occur until -- until there was approval from private entities.
Justice Antonin Scalia: --Why did the record improve so -- so rapidly and so promptly?
Curtis E Gannon: Because for the first time in decades there was a meaningful threat that there would be an enforcement proceeding, not to enforce the metrics and standards, but to enforce the statutory preference requirement, which is not challenged here, which was not written by Amtrak, and which would be enforced by the Surface Transportation Board in an independent adjudication in which they would take evidence from both sides and determine what the real story was.
Justice Sonia Sotomayor: --Can -- can I go back to my question, okay?
Can the STB on its own start an investigation?
Curtis E Gannon: --I--
Justice Sonia Sotomayor: If -- if it gets--
Curtis E Gannon: --That depends, Justice Sotomayor, on -- on the answer to what I said is an unresolved question about whether the 80 percent on-time performance trigger at the beginning of 24308(f)(1) is -- is read as being confines to the on-time performance metrics and standards that were adopted under PRIIA or whether that can be a reference to a pre-PRIIA, on-time performance metric.
And so for decades, Amtrak, pursuant to ICC -- originally pursuant to an ICC order used endpoint on-time performance metrics that looked very much like the ones that were ultimately adopted--
Justice Stephen G. Breyer: So doesn't this show something?
Actually, the sentencing guidelines are a pretty good example.
You do have the Model Penal Code.
We have law professors telling judges what to do all the time.
We have judges who receive information in briefs.
We had lots of guidelines promulgated by the states.
There are all kinds of systems, and judges do use them, and some of them do have a practical effect and make a difference.
But once this Court starts down the road -- and it would be starting, because I am aware of no precedent -- once we start down the road of saying Congress cannot tell even a private agency to go and make some standards, which we all know will be followed, once we start down that road there is no stopping place and, therefore, the measure has nothing to do with separation of powers.
It is exactly what Justices Cardozo, Hughes, Brandeis and Stone said in Carter Coal, the measure is the due process clause, and we're all off on something of a wild goose chase in this case.
That's what is suggested to me by the sentencing guideline analogy.
Justice Antonin Scalia: Wow, I didn't mean that.
Curtis E Gannon: --To the extent that Justice Scalia also doesn't see a nondelegation problem in Carter Coal, then I -- I take it you are agreeing, but I think here that -- that the criminal sentencing context may present different issues.
And I do think that the basic -- the basic reasons why the due process issue is not one where we would have a problem is both because of the -- what we think is the -- the fact that this is relaxing the regulatory effect of -- of the statutory preference.
And secondly, because those cases about bias in the due process context involve the entity that's actually doing the adjudication.
And here the analogy is that's the STB is acting as the Board of Optometrists in -- in the Gibson v. Berryhill.
Justice Anthony Kennedy: I think it was the Respondent's brief in which they gave the hypothetical.
Suppose that the government together with auto manufacturer A made standards, but then auto manufacturers B and C had to follow them.
That seems wrong.
Why is this different?
Curtis E Gannon: I take the point that that seems wrong.
We don't think that this is the equivalent of regulating the automotive industry because Congress has put the regulation in place.
That's the statutory preference requirement.
This is something in which automobile manufacturer A would be, in advance, saying, I, automobile manufacturer--
Justice Anthony Kennedy: Suppose Congress put that in place?
Suppose Congress said, and once this is promulgated, all manufacturers have to obey it.
Curtis E Gannon: --I think that that would -- without the federal agreement that we also have here, the federal railroad administration contemporaneous agreement with the standards, that would present non delegation problems.
But, if I could reserve the remainder of my time.
Chief Justice John G. Roberts: Thank you, counsel.
ORAL ARGUMENT OF THOMAS H. DUPREE, JR. ON BEHALF OF THE RESPONDENT
Thomas H Dupree Jr: Mr. Chief Justice and may it please the Court:
The constitution does not permit Congress to create a corporation, deem it non governmental, and then launch it into the commercial sphere with a for-profit mandate and then vest it with regulatory authority over other companies in the same industry.
The text of the constitution places all legislative power in the Congress.
Although this Court has approved, granted rulemaking authority to executive branch agencies or judicial branch agencies, it has never approved a grant of regulatory power to a private corporation.
Justice Ruth Bader Ginsburg: What do you do about--
Justice Antonin Scalia: That's the big problem here, regulatory authority.
As far as I'm concerned, that's the big difficulty.
Why is this an exercise of regulatory authority when all it does is enable an investigation?
Thomas H Dupree Jr: Well, Justice Scalia, I don't think it's quite correct to say all it does is enable an investigation.
For one thing, there is the provision in Section 207 (c) that requires the freight railroads to amend their contracts with Amtrak to the extent practicable to incorporate the metrics and standards.
So there is a direct regulatory command on the freight railroads.
Justice Elena Kagan: Well, but to the extent practicable, I mean, what does that mean?
Thomas H Dupree Jr: Well, unless it's a null set, Justice Kagan, it has to mean something.
And I don't think the government has ever said that the freight railroads--
Justice Sonia Sotomayor: So instead you want a rule that lets the STB investigate even when you have one failure to accommodate?
Thomas H Dupree Jr: --Well, I'm not sure that's the rule we want, Justice Sotomayor, but at least that would have the merit--
Justice Sonia Sotomayor: But you would prefer that?
Thomas H Dupree Jr: --Well, it would at least have the merit of being constitutional.
In other words, the problem here is not necessarily the scope of the investigatory power.
It's the fact that Congress gave Amtrak the pen or co-authorship of the regulation.
That's the constitutional vice here--
Justice Stephen G. Breyer: Just like the Department of Commerce acting under authority from Congress gave Icon the power to write standards for the internet.
Thomas H Dupree Jr: --Well, and, Justice Breyer, let me address your concern head on.
Because we've been litigating this case against the government for several years now and to my knowledge no party involved -- the parties, the amici have foreseen the dire consequences that you honor posits--
Justice Stephen G. Breyer: I'm not saying it's a dire consequence.
By coincidence, I happen to be reading about the internet.
I'm trying to learn about something.
Thomas H Dupree Jr: --Well, Justice Breyer, I can make a few points in response.
One is that in the Icon case that's not a situation where you have a company trying to regulate other competitors in the market.
That is one difference.
Another difference is that a lot of these organizations tender their proposed standards to the agency for approval.
So at the end of the day, it's the agency that has the final say in many cases.
That's this model that Congress enacted.
And here, Congress plainly could have given Amtrak an advisory role, Section 207 (a) gives all sorts of entities and participants with a stake in these rules an advisory role.
And there is absolutely no reason that Congress could not easily have drafted that statute to give Amtrak an advisory role.
Justice Ruth Bader Ginsburg: --But if the government agency, the FRA, it says, you know, what Amtrak proposes, the government's assent is essential to this scheme, right?
Thomas H Dupree Jr: That's correct, Justice Ginsburg.
But I think the key point here is that Amtrak's assent is also essential.
So, to be sure, the government could halt a regulation that Amtrak wanted to put in effect, but the constitutional vice here is that Amtrak has the same power.
It could prevent the government from putting the government's preferred regulation in place.
And that's giving too much power to a private entity to be able to dictate to the federal government what regulations will be issued--
Justice Stephen G. Breyer: You don't have to answer this question, but have you thought through what this means -- what I think is called the Baal conference where you have groups of regulators and banks meeting together to determine what they are going to do about interest rates, money supplied, et cetera.
You have not, is the answer, and I don't know enough about it, so skip it.
Thomas H Dupree Jr: --Very good.
Justice Sonia Sotomayor: Well, but then, how do you -- do you say that we were just plain wrong when we let the tobacco industry and milk producers veto regulations in our two prior cases Currin and Rock Royal?
Thomas H Dupree Jr: Yes, the difference in those cases, Justice Sotomayor, is that in those cases it was a federal government that drafted the regulation.
And what happened at that point was that Congress gave the industry -- or in those cases the super majority of the industry the power to vote whether to subject themselves to the regulation.
And the distinction there is between the government exercising the legislative authority and the private company determining when that authority becomes effective.
Justice Sonia Sotomayor: That's -- that line is too thin for me.
Because consent to me means it has to satisfy both parties.
And that's no different than a veto.
This is the STB saying, this satisfies us, this is what we would like to do.
Amtrak is this -- are you willing to be regulated, just like the tobacco produce -- the tobacco industry and the milk producers.
Thomas H Dupree Jr: --Well, for one thing my clients, the regulated parties, were not given a say in this.
So to say Amtrak, is this what you want--
Justice Sonia Sotomayor: That's the due process.
That's the due process.
Thomas H Dupree Jr: --Fair enough.
Then, with regard to Your Honor's point--
Justice Sonia Sotomayor: And that's fair enough by the way.
That's an issue that's fair enough.
But -- and subject to more talk.
But I'm not quite sure why this becomes--
Thomas H Dupree Jr: --With regard to Your Honor's earlier point about that being a thin line, I understand that but at the same time that is the line, the precise line that this Court explicitly drew both in Curran and in J.W. Hampton where it said that allowing this vote of the regulated parties, that doesn't amount to legislative action.
Agreed it may be a fine line but it is the line that this Court has reverted to time and time again.
Justice Sonia Sotomayor: --I don't know what they meant because they were subjecting themselves to standards.
Thomas H Dupree Jr: Well, and I would simply go back to our point that we never had a vote in this process.
Justice Samuel Alito: What do you make of the provision to which you referred earlier that says that the metrics and standards shall be incorporated into the operating agreements to the greatest extent practicable or to the extent practicable.
If a particular railroad took the position that it will never agree to the incorporation of the metrics and standards into an operating agreement, is there anything that the federal government could do?
Thomas H Dupree Jr: Well, Justice Alito, I think in that situation what would likely happen if Amtrak and the freight railroad could not reach agreement and therefore there was no agreement on the terms of the operating agreement, is that the Surface Transportation Board ultimately would be called upon to step in and essentially dictate terms or help the parties reach terms and proscribe the terms of the operating agreement.
And I think in that situation -- again, it hasn't yet arisen but it would not surprise me in the slightest if Amtrak's argument at that point to the Surface Transportation Board was pointing to the language of 207 (c) and saying, this freight railroad is under a statutory mandate that it shall amend its agreements to the extent practicable.
And nothing in the statute suggests that the determination as to practicability is something that falls within the exclusive jurisdiction of the freight railroads.
The statutory language doesn't suggest that.
If this Court were to hold that, I certainly wouldn't quarrel with it, but I'm not quite sure the statutory language gets you there.
I think one fundamental flaw with the statute which we've not yet touched on, an additional flaw, is the problem of accountability.
That, of course, is the concern that has animated this Court's non delegation and due process jurisprudence.
And here you have a situation where Congress, the President and Amtrak itself have repeatedly declared to the public in explicit terms that Amtrak is not the government.
Justice Elena Kagan: Do you think that's dispositive?
Because I've always thought that the labels that Congress decides to put on these things is not of particular relevance.
Thomas H Dupree Jr: I'm not so sure I would go so far as to say it's dispositive, Justice Kagan.
But I do think it's highly relevant.
I think when this Court has spoken about transparency and accountability in the legislative process, what it's been talking about is the ability of the public to look at a regulation or a law and make a judgment as to where to assign blame.
And when you have all parties involved assuring the public that Amtrak is not a government actor, I think the public is entitled to take the President and the Congress at their word and say that this is not the--
Justice Ruth Bader Ginsburg: And not look at the animal as it exists?
Lebron said that the government exerts control over Amtrak as a policy maker.
This -- Amtrak, you will agree, is not like a private corporation.
It's -- there's a great deal of federal involvement in Amtrak, right?
Thomas H Dupree Jr: --I agree.
But I think what resolves this case is the fact that Amtrak operates under a statutory mandate to conduct its affairs as though it were a non-governmental entity and a for-profit corporation.
In fact, in the briefing--
Justice Elena Kagan: Well, the post office is supposed to be a for-profit corporation, too, to the same extent, right?
Thomas H Dupree Jr: --Well, yes, Justice Kagan, keep in mind the post office is expressly created as a federal entity, it's in our Constitution and in Federal statutory law it says the post office is an agency or an entity within the executive branch.
Justice Elena Kagan: But then that all goes back to labels.
I mean, I guess I'm just wondering what about Amtrak is not governmental other than the label.
Thomas H Dupree Jr: Well--
Justice Elena Kagan: Subject to the policy control of Congress, which Congress exercises pretty much on a routine basis, it's entirely funded by Congress, all the members of the board are appointed by the President with the advice and consent of the Senate, save the -- save one.
You know, I guess I'm just wondering other than this label, what suggests that this is not the government?
Thomas H Dupree Jr: --Well, first, I would take issue with just the label.
In other words, the organic statute of Amtrak in the US Code says it is not the government.
So it may be a little more than just a label.
But taking Your Honor's point, I think what makes Amtrak not the government for nondelegation purposes is that Amtrak's officers and employees are not Federal employees, they don't take an oath of office and they are constrained by various financial incentives and statutory mandates to operate Amtrak not in the common good, not as a neutral, disinterested regulator would, but as a for-profit commercial actor.
That's actually the very point that Amtrak made to this Court in its Lebron brief where it said keep in mind, we are not neutral government regulators, we are hungry capitalists.
That's how we run Amtrak.
We have a--
Justice Elena Kagan: Yes.
We rejected that argument.
Thomas H Dupree Jr: --Well, it rejected the ultimate constitutional conclusion for purposes of the First Amendment claim, but I don't think this Court took issue with the fact that Amtrak's officers and directors have said from day one very publicly that we don't govern in any sense.
We are not neutral, disinterested regulators.
We are a for-profit business.
And that's what makes this case different, Justice Kagan.
Justice Antonin Scalia: So for -- I mean, for that purpose, what difference does it make whether it's a governmental entity or not, so long as it is operating on a for-profit basis and is giving -- is given the last word on some regulatory matters that disadvantage its competitors, there's a violation of due process.
I -- I don't see how it makes any difference whether you call it governmental or not.
Thomas H Dupree Jr: Justice Scalia, I certainly agree a hundred percent with you on the due process point.
I think that whether it is government or nongovernmental may play a role if this Court were to approach this case through the lens of nondelegation, but as far as due process goes, Your Honor is exactly correct.
No matter what we call Amtrak, the question ultimately at the end of the day is whether this Federally-chartered corporation with all of the various financial incentives, statutory mandates and commands, can exercise regulatory power over other commercial actors in the marketplace.
Justice Ruth Bader Ginsburg: The due process question wasn't -- the due process question wasn't aired below at all; isn't that so?
Thomas H Dupree Jr: It was aired below, Justice Ginsburg.
We have fully briefed due process at every stage of this case, as has the government.
The district court resolved it on the merits and the D.C. Circuit didn't need to reach it because it resolved it on nondelegation grounds, but it did drop a footnote and said, nondelegation and due process are so closely intertwined in this context and, frankly, we're not sure, as Justice Scalia suggested, whether ultimately it would make a difference.
So that's why I took the nondelegation route.
But there's no question that due process is fully briefed, fully teed up for this Court's review.
Justice Ruth Bader Ginsburg: And not decided by the D.C. Circuit.
Thomas H Dupree Jr: I beg your pardon?
Justice Ruth Bader Ginsburg: And not decided--
Thomas H Dupree Jr: That's correct.
Justice Ruth Bader Ginsburg: --because the D.C. Circuit went on a delegation.
Thomas H Dupree Jr: That's correct.
But as I said, they said in the footnote, Footnote 3 toward the beginning of the opinion, that they didn't see much of a difference in this context because Carter Coal speaks both to nondelegation and due process and it did an analysis under Carter Coal.
So regardless if this Court thinks that Carter Coal is more properly characterized as nondelegation of due process, the merits of that question are squarely before this Court.
Justice Sonia Sotomayor: So are you attacking the statute that says that competitors have to accommodate Amtrak?
Is that what you're saying is the due process violation?
Thomas H Dupree Jr: It's not, Justice Sotomayor.
The statute that we're attacking is Section 207 of PRIIA.
Justice Sonia Sotomayor: But the -- but the investigation is only going to determine whether you violated the statute's failure to accommodate Amtrak.
Thomas H Dupree Jr: I don't think that's quite right, Your Honor.
In other words, the -- a necessary predicate for liability is not just violation of the preference statute, but also a violation of the metrics and standards.
The government needs to prove both.
It needs to prove violation of the metrics and standards and violation of the preference requirement.
Justice Stephen G. Breyer: Can the government -- what is the due process violation?
That is to say, if the Department of Energy under delegated authority says that the makers of the bulbs that are energy efficient must use, and they may choose any one of the five methods that produces green light or white light or whatever it is, and they are -- they are to choose the method, and that's just it.
Now, that puts at a disadvantage those competitors who do not use energy-efficient bulbs.
Is that a violation of due process?
Thomas H Dupree Jr: Well, if I'm understanding Your Honor's hypothetical, it doesn't sound like it because you have a situation where it's the government that's prescribing the regulations.
Justice Stephen G. Breyer: No.
It gives them considerable leeway as to make subsidiary decisions.
I was trying to make it realistic.
They make subsidiary decisions as to how they go about fulfilling the basic energy efficiency mandate.
Thomas H Dupree Jr: Right.
It -- it -- the way Your Honor described that--
Justice Stephen G. Breyer: Well, I just described it now.
Thomas H Dupree Jr: --Right.
Justice Stephen G. Breyer: They have broad authority but they have to meet certain energy-efficient mandates and they can prescribe standards and so forth that will allow them to do it.
Does that violate due process because it hurts the manufacturers of ordinary energy bulbs?
Thomas H Dupree Jr: If -- when you say “ prescribe standards ”, it would pose a problem if the standards they're prescribing apply to others in the industry.
If the way Your Honor posited it originally, it sounded as though Congress was essentially giving--
Justice Stephen G. Breyer: It applies.
They don't have to meet it.
What happens is it gives them an advantage the way they choose over non-energy efficient bulbs.
Thomas H Dupree Jr: --That doesn't sound like a due process violation.
Justice Stephen G. Breyer: Then what is your violation here?
I'm trying to figure out what your violation--
Thomas H Dupree Jr: The violation here is that Congress has given Amtrak the pen.
Justice Stephen G. Breyer: --The what?
Thomas H Dupree Jr: The pen.
To write the Federal regulations.
Justice Antonin Scalia: You have to posit that the energy department manufactures bulbs.
Thomas H Dupree Jr: No.
Justice Antonin Scalia: And that it keeps the profit from the bulbs on its own.
It doesn't have to go deposit it in the treasury.
So the -- so the -- it is a profit-making entity and it prescribes standards, as Justice Breyer suggested, that harms other people.
That would be a parallel to this.
Thomas H Dupree Jr: Well -- and if that's the situation where the government is both acting in the marketplace as a commercial actor and as a regulator of the industry, that's a problem.
But what makes this case, I think, so difficult is that being a commercial for-profit actor is fundamentally incompatible with the notion of being a disinterested government regulator.
That's because the essence of a--
Justice Stephen G. Breyer: That's what I was -- I'm trying to get at -- I started with the statement, I think, that due process -- your argument -- it didn't matter whether you called them private or public; am I right?
Thomas H Dupree Jr: --That's right.
Justice Stephen G. Breyer: Okay.
Now, let's imagine they're just a company, not the Department of Energy.
The Department of Energy has a broad energy efficient standard.
It delegates to the people who make that kind of bulb all kinds of minor interstitial standards to make.
They make them.
They hurt the energy bulbs, the ordinary energy bulbs.
Is that a violation of due process?
If so, why?
If not, how is yours different?
Thomas H Dupree Jr: Well, that -- I think that might be a violation of due process because in that situation what happens is that the Department of Energy is giving authority to private corporations to set rules, standards that govern the conduct of other private corporations.
Justice Stephen G. Breyer: It will hurt the other private organizations.
Thomas H Dupree Jr: Right.
Justice Stephen G. Breyer: My reaction was the way you deal with that normally is the statute would be interpreted not to give them the authority to write anticompetitive regulations and you'd attack it under the antitrust laws.
There may be other ways to do it.
I've never heard of an example where the due process problem really was a constitutional problem under due process.
Now -- now, maybe there's some cases I've overlooked.
The only one coming close, it seemed to me, is Carter v. Carter Coal, which I always put in the same box as Lochner.
Now -- now, are we supposed to resurrect that?
Is there other authority for that proposition?
What is it?
Thomas H Dupree Jr: Well, Justice Breyer, I do believe that this Court on multiple occasions subsequent to the Lochner era has reaffirmed the core holding of Carter Coal about delegations to private parties are forbidden.
This Court said that in Mistretta.
A number of justices have said in separate opinions that that holding remains--
Justice Stephen G. Breyer: But your due process, I want some authority for your due process point on the private agencies.
Thomas H Dupree Jr: --Well, our -- the foundational case we have for due process in this context is Carter Coal.
But again, I simply take issue with Your Honor's suggestion that it's a remnant of the Lochner era.
I think it retains its vitality today as many subsequent opinions of this Court have recognized.
Let me address Mr. Gannon's point very briefly, if I may, on the notion that it was somehow the preference requirement that was driving the dramatic change in Amtrak's performance.
The preference requirement was enacted in the early 1970s.
So Mr. Gannon is unable to explain why this magical change didn't occur until the metrics and standards came into effect.
Justice Antonin Scalia: Well, he said the metrics and standards for the first time made it realistic that there would be enforcement of that requirement.
Thomas H Dupree Jr: Well, first, I would say if that's true, that, to me, strikes me as a pretty plain regulatory effect in that the metrics and standards are on the books and the freight railroads know that they now need to comply or they're going to face enforcement actions.
Justice Antonin Scalia: No.
I think -- I think you can allow a private party to bring an enforcement action.
Thomas H Dupree Jr: --You can allow a private party--
Justice Antonin Scalia: I mean, even if they just said an enforcement action shall be commenced if Amtrak requests it.
I think that would be perfectly constitutional.
Thomas H Dupree Jr: --I agree, Justice Scalia, but at the same time the problem here is that Congress has given Amtrak the power to define the terms and to draft the regulations in which it may bring an enforcement action.
Justice Elena Kagan: Mr. Dupree, I mean, one way to look at this on the delegation question, not on the due process question but on the delegation question, is that there is government all over this at every step, that there is all kinds of supervision of Amtrak itself, no matter what Amtrak does that; but with respect to the metrics and standards, particularly, that there is no way Amtrak is actually going to be able to get anything unless the FRA comes aboard, and that furthermore, that even those metrics and standards are useless unless the Surface Transportation Board decides to enforce the preference requirement.
So there is, like, no place at which a private actor can do something itself in this scheme, it would seem to me.
Thomas H Dupree Jr: --Well, I -- I take the point that the FRA is involved in the development of the standards, but I don't think it follows from -- from that premise to say that Congress can give a private company and the Federal government joint ownership of the pen in drafting the regulations.
That's the problem.
And with regard to the issue of government control over Amtrak, the government conceded in the D.C. Circuit that it did not control Amtrak on a day-to-day basis and that includes, for present purposes, the rulemaking at issue.
In fact, Congress certainly did not view the Federal government as controlling Amtrak in the rulemaking, because if it did, it would not have inserted the arbitration provision.
Congress clearly understood that in the context of this rulemaking, the Federal government did not control Amtrak.
That is why the arbitration provision is in there.
Unless there are further questions, I will ask that the judgment below be affirmed.
Chief Justice John G. Roberts: Thank you, counsel.
Mr. Gannon, you have four minutes remaining.
REBUTTAL ARGUMENT OF CURTIS E. GANNON ON BEHALF OF PETITIONERS
Curtis E Gannon: Thank you, Mr. Chief Justice.
Mr. Dupree stressed the question of accountability, and I think as Justice Kagan was just pointing out that there is plenty of accountability here for the Federal government.
The Federal government's fingerprints are all over not just Amtrak but also the metrics and standards because the FRA had to approve them.
On the Amtrak side here, the metrics and standards were approved by Amtrak's president who is somebody who is appointed by the eight presidential appointees and serves at their pleasure.
And so the notion that this is just somebody down in the bowels of -- of a corporation's day-to-day operations that the Federal government had no connection with, I think, is misguided.
Justice Antonin Scalia: Would you talk about the contract provision?
Curtis E Gannon: Yes, we should have--
Justice Antonin Scalia: You should have raised that in your -- I should have raised it in your principal.
Curtis E Gannon: --We think that the contract's provisions are -- the statutory provision there in 207 does require the contracts to be incorporated to the extent practicable.
We have actually said in our brief that we think that that is something that is largely due to negotiation between the parties.
There are certain aspects of the metrics and standards that it would not make sense to incorporate in the contracts, and what the statute--
Justice Antonin Scalia: But if they can't come to an agreement, who decides what the contract--
Curtis E Gannon: --As Mr. Dupree said, that the -- then the dispute goes before the surface transportation board, it's in 24308--
Justice Antonin Scalia: --And the STB--
Curtis E Gannon: --Will determine what are, quote, “ reasonable terms and conditions ”.
Justice Antonin Scalia: --Which would include -- which would include the requirement that, to the extent practicable, the standards set forth by Amtrak be followed.
Curtis E Gannon: But we -- we don't think that that requires they be -- they are not things that would be binding on the freight railroads.
The statute provides that there needs to be an incentive payment.
For instance, the statute provides that there needs to be an incentive payment in the contracts.
But it doesn't mean that that -- that the incentive payment now has to correspond precisely to what the metrics and standards are.
That is something that's subject to negotiation between the parties, and--
Justice Antonin Scalia: Well, as -- as your friend said, to the extent practicable, unless the whole thing is nugatory, certainly does not wash out the whole provision.
Curtis E Gannon: --Well, I think that--
Justice Antonin Scalia: It must have some bite.
What bite does it have?
Curtis E Gannon: --I think it was to encourage the parties to ensure that they are now collecting data in systematic ways, that they can nationalize things, that -- that they now measure things in the same fashion, they use minutes instead of seconds or whatever, and also that there are some parts of the metrics and standards that wouldn't make sense to go in the contracts at all, things that have to do with customer service surveys about -- satisfaction surveys about the cleanliness of the cars.
And so -- and ultimately even the canon of constitutional avoidance could be used to prevent that from doing the work that would -- that would make it regulatory in this context if that were to make it a problem here.
I think that it's also the case that Mr. Dupree is talking about Amtrak as a competitor of the freight railroads, and we think that that's the wrong analogy, that Amtrak is effectively like a customer of a common carrier that is entitled to get services from the railroads at a particular rate.
And that's the way it's always been.
And under Respondent's approach, there would be both nondelegation problems and due process problems, apparently, with the type of thing that occurred in Boston against Maine, where this Court held that Amtrak was able to initiate a condemnation proceeding for rail property before the ICC, and its determination that it needed that particular property had a strong presumption that it was going to be true and governing in that proceeding.
This Court held that that was not an impermissible delegation of eminent domain authority, because the ICC made the ultimate determination there, notwithstanding the fact that Amtrak had to trigger the proceeding and Amtrak's decision to do so created a statutory presumption that there would be need.
I think that Mr. Dupree also is concerned about the need for Amtrak's consent here.
This goes back to the every first argument that we have in our brief that under cases like Currin and Rock Royal Cooperative, the fact that the government needed to secure the consent of Amtrak is not something that makes that a delegation outside the government.
Even though they had the pen along the way, the veto power is what is most important, and we think it's especially easy to get there in the context of an entity like Amtrak which is, at worst, for us quasi-private rather than entirely private.
And we think if you take that into account here, also the limited effect that the metrics and standards have, that this is not a non-delegation problem for any of the three problems the court of appeals believed.
Chief Justice John G. Roberts: Thank you, counsel.
The case is submitted.