Paul R. Hitchcock is a senior policy advisor and William P. Byrne is a partner in Holland & Knight's Jacksonville office
- The Supreme Court declines to review a lower court ruling that the Surface Transportation Board cannot assume regulatory authority that Congress unconstitutionally delegated to the Federal Railroad Administration and Amtrak.
- This decision leaves open only a final effort by the government to revive the delegated authority now pending in the DC Circuit.
The US Supreme Court has turned down a request by Amtrak to review an important lower court decision affecting the relationship between Amtrak and the freight railroads over which it operates. As we reported in July of 2017, following the Eighth Circuit Court of Appeals decision, the Court held that the Surface Transportation Board (STB) did not have the authority to establish regulatory standards for "on-time performance" in exercising its power to require freight railroads to give Amtrak "preference" in operations. See, Union Pacific Railroad Co. v. Surface Transportation Board, 863 F.3d 816 (8th Cir. 2017). In denying Amtrak's petition for certiorari, the Supreme Court lets the lower court decision stand.
This decision comes in one of two important cases that have challenged government efforts to impose detailed passenger performance requirements on the freight railroads. To put the cases in context, Amtrak owns only about three percent of the 21,300 miles of track over which it operates. The remainder of its operations are over tracks owned, maintained and controlled by freight railroads. Under the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) Congress delegated to the Federal Railroad Administration (FRA) and Amtrak the joint power to promulgate metrics and standards to define "on-time performance," and gave the STB the power to penalize a freight railroad if Amtrak trains operating over its tracks were unable to meet those standards.
In the other of the two cases, Ass'n of Am. Railroads v. U.S. Dept. of Transp., the freight railroads challenged the joint FRA/Amtrak authority as an unconstitutional delegation of governmental power to Amtrak – a "for profit" entity. After a trip to the Supreme Court and back to the DC Circuit, the appellate court ruled that it was a violation of the Fifth Amendment's due process clause to give Amtrak, "an economically self-interested actor," the power to regulate its competitors.
Enter the STB, to which PRIIA gave the responsibility of implementing the FRA/Amtrak metrics and standards in complaints brought by Amtrak against individual freight railroads. The STB reasoned that, since FRA and Amtrak had no power to promulgate metrics and standards for on-time performance, it fell to the STB to "fill in the gap." The STB did just that and adopted a regulation. This began the second case, as the freight railroads appealed the STB's regulation to the Eighth Circuit, which rejected the STB's reasoning as described in our earlier post. The Supreme Court's denial of certiorari leaves that lower court's decision in place.
What appears to be the last remaining chapter is an appeal now pending at the DC Circuit in the earlier Ass'n of Am. Railroads v. U.S. Dept. of Transp. case, Docket No. 17-5123, which is scheduled for oral argument on March 5, 2018. There, the government and Amtrak are seeking to have the DC Circuit revive the joint rulemaking authority Congress granted (and the court found unconstitutional) by narrowing the court's prior decision and striking down only a portion of the offending PRIIA provision. Watch this space for further updates on the legal battle over the freight railroads' regulatory obligations to Amtrak.
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