The United States Supreme Court (SCOTUS) today granted certiorari in DOT v. Association of American Railroads (U.S. No. 13-1080) to review of a decision of the United States Court of Appeals for the District of Columbia Circuit that Congress unconstitutionally granted Amtrak regulatory authority over its priority of service among railroads. Such a delegation, according to the D.C. Circuit, violates a “cousin” of the constitutional non-delegation doctrine. The case raises a long dormant non-delegation doctrine issue that could clarify the constitutional limits on Congress’ ability to delegate regulatory authority to a larger set of non-agencies, but raises also other issues that could be problematic for reaching a decision on the substantive issue.
Background: Amtrak – the National Railroad Passenger Corporation – was born from the demise of commercial passenger rail service in a legislative deal that freight railroads would be relieved of the common carrier obligation to carry passengers if they would allow Amtrak to use their rails. At the same time, Congress required that, absent an emergency, Amtrak trains would have preference over freight trains in using the rails. The statute further requires the Department of Transportation (DOT) Federal Railroad Administration (FRA) and Amtrak to “jointly” develop performance and service quality “metrics and minimum standards.” The metrics and standards for Amtrak’s performance are then used in part to determine whether the DOT’s Surface Transportation Board (STB) will investigate a freight railroad for failing to provide Amtrak preference. FRA and Amtrak jointly developed metrics and standards, which was submitted for public comment in 2009, and responded to the public comments and issued final metrics and standards in 2010. This statutory process for the regulations is convoluted, at least substantively meeting the intelligible principle standard, but does the statute create an unconstitutional delegation of legislative power to a private entity?
A digression: The metrics and standards were not proposed or promulgated in the Federal Register, and the notice of availability of the proposed and final metrics and standards was published in the Federal Register only by the FRA. Additionally, the metrics and standards were to be negotiated into the service contracts between Amtrak and the freight rail providers, and do not appear in the Code of Federal Regulations. If these metrics and standards are rules, they must fall under that little used Administrative Procedure Act (APA) exception to publication and constructive notice to “persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law.” Few hallmarks of rulemaking are present, but the issue has been posed to the courts and may yet be the downfall of the case.
Non-delegation Doctrine: A primer on the non-delegation doctrine is in order to understand its cousin. The non-delegation doctrine arises from the vesting of all legislative powers in Congress by Article I, section 1 of the United States Constitution – interpreted by SCOTUS) to mean that Congress cannot “transfer” or “delegate” its authority to enact legislation to another branch. The lesser-known cousin of this non-delegation doctrine holds that Congress cannot delegate regulatory authority to a private entity and SCOTUS has called this a “legislative delegation in its most obnoxious form.”
SCOTUS has also said, however, that Congress can delegate authority to the Executive Branch to implement enacted legislation if Congress provides an “intelligible principle” to its delegee. Congress provides an “intelligible principle” if Congress “clearly delineates the general policy, the public agency which is to apply it, and the boundaries of the delegated authority.” SCOTUS has upheld broad delegations when the “intelligible principle” was little more than to set “fair and equitable” prices, and to grant licenses “as public interest, convenience, or necessity” require. “Intelligible” requires little and SCOTUS has uniformly rejected every non-delegation challenge it has considered with the exception of two depression-era cases long packed away. Non-delegation doctrine is thought, if at all, to be moribund, but now not quite so.
Decision Below: The Association of American Railroads – which includes Amtrak – sued for a declaratory judgment that the regulatory process was unconstitutional and to vacate or set aside the promulgated metrics and standards. The complaint asserted, among other things, that Congress unconstitutionally delegated to Amtrak the authority to regulate other private entities. The D.C. Circuit noted that Amtrak is denominated as a private corporation in its chartering and amending statutes, but Congress has also imposed requirements that Amtrak comply with a number of statutes, e.g. the Freedom of Information Act (FOIA). The D.C. Circuit noted that SCOTUS has also held that Amtrak “is part of the Government for purposes of the First Amendment” otherwise Congress could “evade the most solemn obligations imposed in the Constitution by simply resorting to the corporate form.”
Just as it is impermissible for Congress to employ the corporate form to sidestep the First Amendment, neither may it reap the benefits of delegating regulatory authority while absolving the federal government of all responsibility for its exercise. The federal government cannot have its cake and eat it too.
Taking Congress at its word on the nature of Amtrak, the court of appeals resolved:
We therefore hold that Amtrak is a private corporation with respect to Congress’s power to delegate regulatory authority. Though the federal government’s involvement in Amtrak is considerable, Congress has both designated it a private corporation and instructed that it be managed so as to maximize profit. In deciding Amtrak’s status for purposes of congressional delegations, these declarations are dispositive. Skewed incentives are precisely the danger forestalled by restricting delegations to government instrumentalities. And as a private entity, Amtrak cannot be granted the regulatory power prescribed in [the Act].
On Certiorari: The Department of Justice (DOJ)’s Solicitor General petitioned SCOTUS to review the D.C. Circuit’s decision on behalf of DOT and its Secretary, and the FRA and its Administrator, but not Amtrak. The Solicitor General at least initially succeeded in arguing (because SCOTUS granted certiorari) that the court of appeals had invalidated an important component of an Act of Congress that warranted review. As the decision does not involve an intercircuit conflict or recurring issue, or even a broad based problem, the Solicitor General argued that SCOTUS should hear him because the D.C. Circuit invalidated an Act of Congress.
True, the D.C. Circuit held that the statutory provision “impermissibly delegates regulatory authority to Amtrak” but the court of appeals did not hold that FRA could not, alone in light that holding, exercise the regulatory authority – severability may not have even been raised. SCOTUS may have granted certiorari to more broadly consider the scope of constitutional power to delegate regulatory authority to a larger and more shadowy and arcane world than government agencies – of this case may just be a “one-off.” Briefing over the coming months and oral argument by the end of the year may provide some at least initial answers.