Association of American Railroads v. United States Department of Transportation

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 10, 2015 Decided April 29, 2016

No. 12-5204

ASSOCIATION OF AMERICAN RAILROADS,

APPELLANT

v.

UNITED STATES DEPARTMENT OF TRANSPORTATION, ET AL.,

APPELLEES

On Remand from the

Supreme Court of the United States

Thomas H. Dupree Jr. argued the cause for appellant.

With him on the briefs were Amir C. Tayrani, Lucas C.

Townsend, and Louis P. Warchot.

David B. Rivin, Jr., Andrew M. Grossman, Shannen W.

Coffin, and Michael J. Edney were on the brief for amici

curiae Chamber of Commerce of the United States, et al. in

support of appellant.

Richard B. Katskee and Craig W. Canetti were on the

brief for amicus curiae Association of Independent Passenger

Rail Operators in support of appellant. Dan Himmelfarb

entered an appearance.

2

Christopher J. Paolella was on the brief for amicus

curiae Professor Alexander Volokh in support of plaintiff-

appellant.

Michael S. Raab, Attorney, U.S. Department of Justice,

argued the cause for appellees. With him on the brief were

Benjamin C. Mizer, Principal Deputy Assistant Attorney

General, Vincent H. Cohen, Jr., Acting U.S. Attorney, and

Mark B. Stern, Daniel Tenny, Patrick G. Nemeroff, Attorneys,

Paul M. Geier, Assistant General Counsel for Litigation, U.S.

Department of Transportation, Peter J. Plocki, Deputy

Assistant General Counsel for Litigation, and Joy Park,

Attorney.

Before: BROWN, Circuit Judge and WILLIAMS and

SENTELLE, Senior Circuit Judges.

Opinion of the Court by Circuit Judge BROWN:

BROWN, Circuit Judge: With the Rail Passenger Service

Act of 1970, Congress created Amtrak, a for-profit

corporation indirectly controlled by the President of the

United States. This public venture into private enterprise was,

and remains, unprecedented. With the Passenger Rail

Investment and Improvement Act of 2008 (PRIIA), Congress

piled anomaly on top of anomaly. See 122 Stat. 4907. It

endowed this wholly unique statutory creature with agency

powers, authorizing it to regulate its resource competitors.

See PRIIA § 207(a). It further permitted, under certain

conditions, an arbitrator of unspecified constitutional

authority to issue binding final agency rulings. Id. § 207(d).

The first time this case was before us, we invalidated

PRIIA as an unconstitutional delegation of regulatory power

to what we believed was a private entity. Ass’n of Am. R.R. v.

3

Dep’t of Transp., 721 F.3d 666, 677 (D.C. Cir. 2013). The

Supreme Court reversed. Dep’t of Transp. v. Ass’n of Am.

R.R., 135 S. Ct. 1225 (2015). It held that Amtrak’s

designation and operation as a for-profit corporation doesn’t

mean we can’t also consider it a governmental entity. Id. at

1232–34.

For the freight operators who challenged PRIIA,

however, that decision left three questions unanswered.

Conceding Amtrak’s governmental status, the operators—

represented by the Association of American Railroads—ask:

Does it violate due process for an entity to make law when,

economically speaking, it has skin in the game? Does it

violate the Appointments Clause for Congress to vest

appointment power of a principal officer in the Surface

Transportation Board? And is a government corporation

whose board is only partially comprised of members

appointed by the President constitutionally eligible to exercise

regulatory power? We decline to reach the latter question, but

we side with the freight operators on the former two. We

conclude PRIIA violates the Fifth Amendment’s Due Process

Clause by authorizing an economically self-interested actor to

regulate its competitors 1 and violates the Appointments

Clause for delegating regulatory power to an improperly

appointed arbitrator.

I

Since this controversy’s factual and legal backdrop has

been ably set forth now on two occasions, once in our prior

opinion and again in the Supreme Court’s, we needn’t spill

1

Amtrak and freight railroads do not compete for passengers but do

compete for scarce resources (i.e. train track) essential to the

operation of both kinds of rail service.

4

much more ink repeating what’s already been said. However,

some recitation of the pertinent statutory scheme is necessary,

as well as a brief update on the procedural history of this case.

Section 207 of PRIIA tasks Amtrak and the Federal

Railroad Administration (FRA) with jointly developing

performance metrics and standards as a means of enforcing

Amtrak’s statutory priority over other trains. See PRIIA

§ 207(a). These standards are intended to measure 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. In the event

Amtrak and FRA can’t agree on the composition of these

“metrics and standards,” either “may petition the Surface

Transportation Board to appoint an arbitrator to assist the

parties in resolving their disputes through binding

arbitration.” Id. § 207(d). Once these metrics and standards

have been finalized, Amtrak and its host rail carriers “shall

incorporate” them into their operating agreements “[t]o the

extent practicable.” Id. § 207(c).

In our prior ruling, we determined PRIIA constituted an

unconstitutional delegation of legislative authority to a private

entity. See Ass’n of Am. R.R., 721 F.3d at 677. In our view,

“[t]hough the federal government’s involvement in Amtrak is

considerable,” the fact that “Congress has both designated it a

private corporation and instructed that it be managed so as to

maximize profit” disqualified it from exercising regulatory

power. Id. The Supreme Court reversed. See Dep’t of

Transp., 135 S. Ct. at 1228. Relying on Lebron v. Nat’l R.R.

Passenger Corp., 513 U.S. 374 (1995), the Court concluded

“Amtrak is a governmental entity, not a private one, for

purposes of determining the constitutional issues presented in

this case.” Dep’t of Transp., 135 S. Ct. at 1233. The Court

5

remanded the case for us to consider the freight operators’

remaining challenges to the constitutionality of PRIIA “to the

extent they are properly before” us. Id. at 1234.

Here on remand, the freight operators advance the three

challenges to PRIIA described above. Because these claims

are still before us pursuant to the district court’s summary

judgment ruling, our review is de novo. See Edwards v.

District of Columbia, 755 F.3d 996, 1000 (D.C. Cir. 2014).

II

Before we reach the merits of the freight operators’

challenge, we first pause to consider whether their claims are

properly preserved. Our responsibility as an appellate court is

to review the decisions of lower tribunals, and “[t]he very

word ‘review’ presupposes that a litigant’s arguments have

been raised and considered in the tribunal of first instance.”

Freytag v. C.I.R., 501 U.S. 868, 895 (1991). Where a claim

was not properly preserved below, our authority to decide it

on appeal is “strictly circumscribed.” Puckett v. United States,

556 U.S. 129, 134 (2009).

Given the unique procedural history of this case,

preservation questions attach to each of the freight operators’

three claims. We conclude the due process claim was

properly preserved, and the arbitration clause claim is

properly before us due to the government’s waiver, the

detailed merits briefing, and the purely legal and potentially

jurisdictional nature of the issue. The freight operators’ board

of directors argument is a much closer call, but because our

ultimate disposition in this case does not require us to

consider it, we offer no opinion here as to whether it was

properly preserved.

6

A

In its summary judgment, the district court declined to

reach the freight operators’ due process argument because it

was, in the court’s view, “outside the scope of [the]

Complaint” and not “raised in [the freight operators’] initial

brief.” 865 F. Supp. 2d 22, 31 (D.D.C. 2012). We disagree.

The freight operators raised the argument they now advance

on appeal at every stage of this litigation—in their complaint

and in each brief, from summary judgment to their prior

appeal before this panel to their appeal to the Supreme Court.

The district court’s opposite conclusion derives from a

misreading of the complaint. The freight operators asserted

two claims. AAR Compl. 16–17. The first was

unconstitutional nondelegation to a private entity, the sole

issue addressed in our prior opinion. Id. at 16. The second,

though, was due process. Specifically, the freight operators

alleged, at paragraphs 53 and 54 under a heading titled

“Violation of the United States Constitution (Due Process),”

PRIIA is unconstitutional because it (1) vests rulemaking

authority in the hands of interested private parties, and (2)

empowers Amtrak with power to enhance its commercial

position relative to other market participants. Id. at 16–17.

The district court did not overlook the due process claim

entirely, but did fail to notice the freight operators’ complaint

made not one, but two due process arguments. The court

rejected the freight operators argument because their

complaint’s due process claim was “premised on Amtrak’s

status as a private entity.” 865 F. Supp. 2d at 29. However,

that is only half-true. Paragraph 53 of the complaint alleged

the PRIIA “violates the due process rights of regulated third

parties” by “[v]esting the coercive power of the government

in interested private parties.” AAR Compl. At 17. Then,

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paragraph 54 outlined a separate due process theory, one

premised on Amtrak’s status as a government entity operating

as a market participant. It alleged PRIIA also “violates the

due process rights of the freight railroads because it purports

to empower Amtrak to wield legislative and rulemaking

power to enhance its commercial position at the expense of

other industry participants.” Id. The freight operators’ due

process claim thus can only be seen as premised solely on

Amtrak’s status as a private entity by reading paragraph 54 as

redundant of 53, a view we do not share, especially

considering our well-established practice of “constru[ing] the

complaint liberally, granting [the] plaintiff the benefit of all

inferences that can be derived from the facts alleged.” Barr v.

Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004).

Our reading of the freight operators’ complaint is

corroborated by their summary judgment briefing, which

attacks PRIIA’s constitutionality “even if Amtrak were

somehow deemed a government agency.” District Court ECF

No. 12 at 15–16. In two cogent, detailed paragraphs, the

freight operators made their case, explaining why Amtrak’s

wielding of regulatory authority as a market participant

violated due process and belying the district court’s view of

the argument as “raised only cursorily.” 865 F. Supp. 2d at

32. To be sure, the freight operators could have made a more

robust due process argument, as they did in their briefing here

on appeal. But what they did below was enough to preserve

the issue for our review.

B

The freight operators failed to preserve their arbitration

clause claim. They never so much as hinted at this argument

until their first brief filed in our court. That said, several

8

considerations convince us that deciding the arbitration claim

is an appropriate exercise of our appellate authority.

First, and most important, the government never argued

the arbitration claim was not properly preserved. Instead, the

government devoted more than eight pages of its brief to the

merits of the claim without mentioning preservation. 2 This

objection is waivable and the government seems to have

waived any waiver argument. See United States v. Layeni, 90

F.3d 514, 522 (D.C. Cir. 1996) (“Arguments not raised in the

district court are generally deemed waived on appeal . . . .

The government, however, has waived the waiver argument

by not raising it.”); United States v. Quiroz, 22 F.3d 489, 490–

91 (2d Cir. 1994) (“[W]hen [the government] has neglected to

argue on appeal that a defendant has failed to preserve a given

argument . . . courts have consistently held that the

government has ‘waived waiver.’”); Erhart v. Sec. of Health

& Human Servs., 969 F.2d 534, 537 (7th Cir. 1992)

(addressing an unpreserved argument because “the

government did not object, so it has waived waver”).

Second, as mentioned above, the government thoroughly

briefed the claim. This is not, then, a case in which “the

opposing party los[t] its opportunity to contest the merits” nor

does it risk “an improvident or ill-advised opinion on the legal

issues tendered.” Se. Mich. Gas Co. v. FERC, 133 F.3d 34, 42

n.3 (D.C. Cir. 1998).

Third, the arbitration claim is an abstract legal question,

one that does not turn on facts that would have been

2

The only language that comes close is the government’s reference

to the “never-invoked arbitration provision.” Gov. Br. 40. But this

has nothing to do with preservation. The government is merely

noting that the parties settled their dispute and thus never entered

(or “invoked”) arbitration.

9

developed in district court. In our previous opinion, we

discussed the question at some length, see AAR, 721 F.3d at

673–74, as did Justice Alito in his concurring opinion, Dep’t

of Transp., 135 S.Ct. at 1235–39. Deciding fully briefed,

purely legal questions is a quotidian undertaking for an

appellate court.

Fourth, the Supreme Court has treated certain objections

premised on a violation of the Appointments Clause as

“nonjurisdictional structural constitutional objections that

could be considered on appeal whether or not they were ruled

upon below.” Freytag, 501 U.S. at 878–79; see also Glidden

Co. v. Zdanok, 370 U.S. 530, 535–36 (1962) (reaching

challenge even though not raised below because “[t]he alleged

defect of authority here relates to basic constitutional

objections designed in part for the benefit of the litigants”);

Lamar v. United States, 241 U.S. 103, 117–18 (1916)

(deciding an appointments power claim despite the fact that it

had not been raised below or even in the Supreme Court until

the filing of a supplemental brief upon a second request for

review).

Perhaps none of these considerations would be sufficient

on their own to justify our review of an unpreserved claim.

Cf. Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 388 F.3d

337, 344 (D.C. Cir. 2004) (reaching an argument because

appellants both “consistently raised the claim” and “appellees

do not purport to have argued . . . the claim was waived”).

But taken together, the government’s failure to object, the

extensive briefing, the purely legal character of the freight

operators’ arbitration claim, and the significant structural

constitutional rights at stake convince us that reaching it is an

appropriate exercise of our appellate authority. See Singleton

v. Wulff, 428 U.S. 106, 121 (1976) (“The matter of what

questions may be taken up and resolved for the first time on

10

appeal is one left primarily to the discretion of the courts of

appeals, to be exercised on the facts of individual cases.”).

Accordingly, we conclude the freight operators’ due

process claim and arbitration claim are both properly

presented for our review.

III

No clause in our nation’s Constitution has as ancient a

pedigree as the guarantee that “[n]o person . . . shall be

deprived of life, liberty, or property without due process of

law.” U.S. CONST. amend. V. Its lineage reaches back to

1215 A.D.’s Magna Carta, which ensured that “[n]o freeman

shall be . . . disseised of his . . . liberties, or . . . otherwise

destroyed . . . but by lawful judgment of his peers, or by the

law of the land.” Magna Carta, ch. 29, in 1 E. Coke, The

Second Part of the Institutes of the Laws of England 45

(1797). Since the Fifth Amendment’s ratification, one theme

above all others has dominated the Supreme Court’s

interpretation of the Due Process Clause: fairness. See Snyder

v. Com. of Mass., 291 U.S. 97, 116 (1934) (Cardozo, J.)

(“Due process of law requires that the proceedings shall be

fair, but fairness is a relative, not an absolute, concept. It is

fairness with reference to particular conditions or particular

results.”).

The specific fairness question we face here is whether an

economically self-interested entity may exercise regulatory

authority over its rivals. Two undisputed features of the

unique Amtrak scheme set the stage for this controversy.

First, Amtrak is operated “as a for-profit corporation” charged

with “undertak[ing] initiatives . . . designed to maximize its

revenues.” 49 U.S.C. § 24301(a)(2); id. § 24101(d). Second,

Amtrak, jointly with FRA, is tasked with developing the

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metrics and standards for passenger train operations, which

directly impact freight train operations. See PRIIA § 207(a).

The freight operators perceive a due process defect in this

scheme. They argue an economically self-interested actor

may not exercise regulatory power, and yet here, Amtrak is a

self-interested market participant wielding regulatory power.

The Government denies Amtrak’s self-interest is

constitutionally relevant and avers the established procedures

accord all the process freight operators are due.

We agree with the freight operators. Our view of this

case can be reduced to a neat syllogism: if giving a self-

interested entity regulatory authority over its competitors

violates due process (major premise); and PRIIA gives a self-

interested entity regulatory authority over its competitors

(minor premise); then PRIIA violates due process.

A

The abstract legal question at the heart of this case is

whether it violates due process for Congress to give a self-

interested entity rulemaking authority over its competitors.

The Supreme Court has confronted the question only once.

See Carter v. Carter Coal Co., 298 U.S 238 (1936). The

Carter Coal Court invalidated a delegation that empowered

one set of competitors to regulate a rival set. Id. at 311–12.

That decision predates the Administrative Procedure Act and

the birth of the Court’s modern administrative law

jurisprudence. But aside from Carter Coal, the only other

case to comment on the propriety of rulemaking bias is our

circuit’s Association of National Advertisers, Inc. v. FTC

(ANA), and it cut the other direction, sanctioning the bias.

12

627 F.2d 1151 (D.C. Cir. 1979). 3 That decision, however,

dealt with a different kind of bias than in Carter Coal; it

involved prejudgment rather than financial bias. See id. at

1154. Thus, all we have as our guide are two imperfect

precedents, and unsurprisingly, the freight operators rely on

Carter Coal, while the Government relies on Association of

National Advertisers.

The freight operators’ case of choice, Carter Coal,

involved a challenge to the Bituminous Coal Conservation

Act, which inter alia prohibited the United States or any other

contractor from purchasing bituminous coal from any mine

that did not comply with certain wage and hour requirements.

But the Act itself did not articulate those requirements. See

298 U.S at 310. It delegated the authority to determine them

to “the producers of more than two-thirds of the . . . tonnage

production for the preceding calendar year” and “more than

3

Freight operators invite us to reject the delegation to Amtrak

based on cases like Marshall v. Jerrico, Inc., 446 U.S. 238 (1980),

in which “rigid requirements” of impartiality were applied to

invalidate official action tainted by bias. See also Tumey v. Ohio,

273 U.S. 510 (1927) (finding a due process violation where the

mayor, sitting as judge over a criminal trial, retained whatever fines

he imposed); Ward v. Village of Monroeville, 409 U.S. 57 (1972)

(extending Tumey to a more remote incentive, when the town’s

budget, controlled by the mayor, depended on fines imposed by the

mayor’s court); Gibson v. Berryhill, 411 U.S. 564 (1973) (finding a

due process violation where a Board of Optometry’s “efforts would

possibly redound to the personal benefit of members of the

Board”). These cases, however, involved officials acting in an

adjudicatory capacity, where due process demands are stricter and

courts enforce them with a heavy appellate touch. But our appellate

touch is far lighter when bias presents in the rulemaking context.

See ANA, 627 F.2d at 1168–69. For this reason, we do not rely on

these adjudicatory cases.

13

one-half the mine workers employed.” Id. Put simply, the

Act endowed these majority producers and employers with

the authority to set wage and hour requirements the minority

producers and employers had to comply with or else forfeit all

their customers.

In the Court’s view, for the minority producers “[t]o

‘accept,’ in these circumstances [was] not to exercise a

choice, but to surrender to force.” Id. at 311. The provision

“subject[ed] the dissentient minority . . . to the will of the

stated majority,” and conferred on that majority “the power to

regulate the affairs of [the] unwilling minority.” Id.

Disapproving the scheme, the Court reasoned:

This is legislative delegation in its most obnoxious

form; for it is not even delegation to an official or an

official body, presumptively disinterested, but to

private persons whose interests may be and often are

adverse to the interests of others in the same

business.

Id. (emphasis added). At first blush, it’s not clear precisely

which aspect of the delegation offended the Court. By one

reading, it was the Act’s delegation to “private persons” rather

than official bodies. By another, it was the delegation to

persons “whose interests may be and often are adverse to the

interests of others in the same business” rather than persons

who are “presumptively disinterested,” as official bodies tend

to be. Of course, the Court also may have been offended on

both fronts. But as the opinion continues, it becomes clear

that what primarily drives the Court to strike down this

provision is the self-interested character of the delegatees’:

The difference between producing coal and

regulating its production is, of course, fundamental.

14

The former is a private activity; the latter is

necessarily a governmental function, since, in the

very nature of things, one person may not be

intrusted with the power to regulate the business of

another, and especially of a competitor. And a

statute which attempts to confer such power

undertakes an intolerable and unconstitutional

interference with personal liberty and private

property.

Id. (emphasis added). The power to self-interestedly regulate

the business of a competitor is, according to Carter Coal,

anathema to “the very nature of things,” or rather, to the very

nature of governmental function. Delegating legislative

authority to official bodies is inoffensive because we presume

those bodies are disinterested, that their loyalties lie with the

public good, not their private gain. But here, the majority

producers “may be and often are adverse to the interests of

others in the same business.” Id. That naked self-interest

compromised their neutrality and worked “an intolerable and

unconstitutional interference with personal liberty and private

property.” Id. Accordingly, the Court invalidated the Act as

“so clearly a denial of rights safeguarded by the due process

clause of the Fifth Amendment.” Id.

The Government’s case of choice, Association of

National Advertisers, manifests a higher tolerance for

administrative bias than the Court’s in Carter Coal. It

involved a different kind of rulemaking bias: prejudgment.

An FTC commissioner, speaking at a public conference,

unequivocally expressed his desire for limitations on TV

advertisements targeted at children. Soon thereafter, the FTC

proposed a rule to precisely that end. The Association of

National Advertisers petitioned to set the rule aside because,

in their view, the commissioner had prejudged the outcome

15

and his participation in the rulemaking violated the Due

Process Clause. See ANA, 627 F.2d at 1169–70.

The Association built its argument around this court’s

disqualification test in Cinderella Career & Finishing

Schools, Inc. v. FTC, 425 F.2d 583 (D.C. Cir. 1970), which

asked “whether a disinterested observer may conclude that

(the agency) has in some measure adjudged the facts as well

as the law of a particular case in advance of hearing it.” Id. at

591 (alterations omitted). But the court declined to apply the

Cinderella test to rulemaking procedures and upheld the

FTC’s action under a standard far more tolerant of bias. ANA,

627 F.2d at 1168–69. Effective exercise of legislative or

quasi-legislative authority demands the official “engage in

debate and discussion about the policy matters before him.”

Id. at 1169; see also Home Box Office, Inc. v. FCC, 567 F.2d

9, 57 (D.C. Cir. 1977) (per curiam) (“[I]nformal contacts

between agencies and the public are the bread and butter of

the process of administration . . . .”). Analogizing to

Congress, the court observed that “any suggestion that

congressmen may not prejudge factual and policy issues is

fanciful. A legislator must have the ability to exchange views

with constituents and to suggest public policy that is

dependent upon factual assumptions.” ANA, 627 F.2d at 1165.

But the court stopped short of declaring rulemakers could

never be disqualified for prejudgment. The panel decided

instead that “clear and convincing” evidence (or, later, “the

most compelling proof”) that an “agency member has an

unalterably closed mind on matters critical to the disposition

of the proceeding” would suffice to disqualify a

decisionmaker. Id. at 1170, 1175. “There is no doubt,” the

court acknowledged, “that the purpose of [a rulemaking

proceeding] would be frustrated if a Commission member had

reached an irrevocable decision on whether a rule should be

16

issued prior to the Commission’s final action.” Id. at 1170.

Under this new test, the court found the evidence insufficient

to disqualify the FTC Commissioner. Id. at 1174–75.

What is most instructive about Association of National

Advertisers is not its holding, which is not directly controlling

here, but rather its theory about permissible bias. Ultimately,

it came down to the court’s concern over the propriety of

judicial interference in policy debates. Applying the usual

standard of a “neutral and detached adjudicator” to the

rulemaking context “would plunge courts into the midst of

political battles concerning the proper formulation of

administrative policy.” Id. at 1174. The court observed,

“[w]e serve as guarantors of statutory and constitutional

rights, but not as arbiters of the political process.” Id. at

1174–75. If the FTC Commissioner’s strident views on

advertisements targeted at children troubled the public, the

proper recourse was at the polls, not the courts. This view is

perhaps what motivated the district court to opine, in its

denial of the freight operators’ summary judgment motion,

the “potential for bias appears remote” on account of

“Amtrak’s political accountability.” AAR, 865 F. Supp. 2d at

32.

To conclude that Amtrak’s political accountability—

remote as it is—removes the taint of any potential for bias

would be a simple way to resolve this case. After all,

legislators may legislate in pursuit of their own naked self-

interest. Congress had to pass the STOCK Act just to put a

stop to congressional insider trading. See Tamara Keith, How

Congress Quietly Overhauled Its Insider-Trading Law, NPR,

http://www.npr.org/sections/itsallpolitics/2013/04/16/1774967

34. Those whose rights may be trammeled by legislators

brazen enough to pursue their own economic self-interest “are

protected in the only way that they can be in a complex

17

society, by their power, immediate or remote, over those who

make the rule.” Bi-Metallic Inv. Co. v. State Bd. of

Equalization, 239 U.S. 441, 445 (1915) (Holmes, J.). In fact,

our Constitution’s ingenious system of checks and balances

assumes government officials will act self-interestedly.

“Happy will it be if our choice should be directed by a

judicious estimate of our true interests, unperplexed and

unbiased by considerations not connected with the public

good,” the very first installment of the Federalist Papers

opined. The Federalist No. 1, at 33 (C. Rossiter ed., 1961)

(Hamilton). “But it is a thing more ardently to be wished than

seriously to be expected.” Id. And as Alexander Hamilton

observed elsewhere: “We may preach till we are tired of the

theme, the necessity of disinterestedness in republics, without

making a single proselyte.” Alexander Hamilton, The

Continentalist No. IV, in 3 The Papers of Alexander Hamilton

99, 103 (Harold C. Syrett ed., 1962). Self-interested

lawmaking was not some shocking aberration; it was an

unwelcomed expectation, one our Constitution endeavored to

channel and check. See The Federalist No. 51, at 321–22

(Madison) (C. Rossiter ed., 1961) (“Ambition must be made

to counteract ambition.”).

However, despite acknowledging that “[a] dependence

on the people is, no doubt, the primary control on the

government,” id. at 322, the Framers never expected political

accountability would be sufficient on its own to check self-

interest. Id. “[E]xperience has taught mankind the necessity

of auxiliary precautions.” Id. So the Framers fashioned

devices that would “supply[], by opposite and rival interests,

the defect of better motives.” Id. But of one thing we may be

sure, these “auxiliary precautions” against “ambition” that

were built into our Constitution—bicameralism, presentment,

judicial independence and life tenure, etc.—were designed for

a government of three branches, not four. The Framers

18

“could not have anticipated the vast growth of the

administrative state,” which “with its reams of regulations

would leave them rubbing their eyes.” Fed. Maritime

Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 755 (2002).

Those original checks on self-interest, custom-fitted for

legislators, presidents, and judges, loosely drape

administrators like outsized hand-me-downs.

Indeed, government’s increasing reliance on public-

private partnerships portends an even more ill-fitting

accommodation between the exercise of regulatory power and

concerns about fairness and accountability. Curbing the

misuse of public power was the aim of the Magna Carta, and

the Supreme Court has consistently concluded the delegation

of coercive power to private parties can raise similar due

process concerns. See Eubank v. City of Richmond, 226 U.S.

137 (1912); City of Eastlake v. Forest City Enters., Inc., 426

U.S. 668, 677–78 (1976); see also Silverman v. Barry, 727

F.2d 1121, 1126 (D.C. Cir. 1984). Wherever Amtrak may fall

along the spectrum between public accountability and private

self-interest, the ability—if it exists—to co-opt the state’s

coercive power to impose a disadvantageous regulatory

regime on its market competitors would be problematic. See,

e.g., Alexander Volokh, The New Private-Regulation

Skepticism: Due Process, Non-Delegation, and Antitrust

Challenges, 37 Harv. J. L. & Pub. Pol’y 931 (2004).

For these reasons, Carter Coal, not Association of

National Advertisers, dictates our answer to this constitutional

conundrum. We conclude, as did the Supreme Court in 1936,

that the due process of law is violated when a self-interested

entity is “intrusted with the power to regulate the business . . .

of a competitor.” Carter Coal, 298 U.S. at 311. “[A] statute

which attempts to confer such power undertakes an

intolerable and unconstitutional interference with personal

19

liberty and private property” and transgresses “the very nature

of [governmental function].” Id.

B

We next consider the minor premise of our syllogism.

PRIIA only violates due process if Amtrak is (1) a self-

interested entity (2) with regulatory authority over its

competitors.

1

In its opinion reversing our prior judgment, the Supreme

Court did not decide whether Amtrak is a self-interested

entity. Affirming Amtrak’s status as a governmental entity,

the Court highlighted how Amtrak’s operations are directed

by and dependent on the federal government. It noted that

“rather than advancing its own private economic interests,

Amtrak is required to pursue numerous, additional goals

defined by statute” including “provid[ing] efficient and

effective intercity passenger rail mobility,” “minimiz[ing]

Government subsidies,” “provid[ing] reduced fares to the

disabled and elderly,” and “ensur[ing] mobility in times of

national disaster.” Dep’t of Transp., 135 S. Ct. at 1232.

Moreover, “certain aspects of Amtrak’s day-to-day

operations” are dictated by congressional directive. Id. For

example, Amtrak is required to “maintain a route between

Louisiana and Florida” and to purchase materials “mined or

produced in the United States.” Id. Finally, Amtrak is

“dependent on federal financial support” to the tune of more

than “$1 billion annually.” Id. “Given the combination of

these unique features and its significant ties to the

Government,” the Court concluded, “Amtrak is not an

autonomous private enterprise.” Id.

20

We are bound by the Court’s conclusion, and we do not

disagree with it. Amtrak is clearly dependent on the

government in ways other for-profit corporations are not. But

concluding “Amtrak is not an autonomous private enterprise”

is not the same as concluding it is not economically self-

interested. Though a government entity, Amtrak is still

statutorily obligated to “be operated and managed as a for-

profit corporation.” 49 U.S.C. § 24301(a)(2). Consistent with

that obligation, Amtrak is “to make agreements with the

private sector and undertake initiatives that are consistent with

good business judgment and designed to maximize its

revenues and minimize Government subsidies.” Id.

§ 24101(d). Moreover, Congress built financial incentives

into its scheme to coax its profit-maximizing efforts, allowing

Amtrak’s officers to receive pay greater than “the general

level of pay for officers of rail carriers with comparable

responsibility” for any year in which Amtrak does not receive

federal assistance. Id. § 24303(b). Amtrak’s lack of full

autonomy does nothing to relieve it of its statutory charge to

maximize company profits.

The Government relies on Amtrak’s obligation to fulfill

numerous other statutory goals for the public good as

evidence that it is not economically self-interested. But many

corporations are obligated to compromise profit-seeking

ambitions pursuant to statutory goals aimed at public goods.

Corporations must, for instance, comply with the Americans

with Disabilities Act, the Clean Air Act, and the Affordable

Care Act, even though doing so may not otherwise have been

the most economically prudent choice. Compliance with

these statutory directives does not somehow negate economic

self-interest. Neither does Amtrak’s compliance with its

statutory directives negate its concrete economic self-interest.

The Government identifies no way in which Amtrak’s special

obligations in any way obstruct it from the pure pursuit of

21

profit in the standard-setting exercise that is before us.

Amtrak’s self-interest is readily apparent when viewed,

by contrast, alongside more traditional governmental entities

that are decidedly not self-interested. The government of the

United States is not a business that aims to increase its bottom

line to achieve maximum profitability. Unlike for-profit

corporations, government strives—at least in theory—for an

equilibrium of revenues and expenditures, where the revenue

obtained is no more and no less than the operating costs of the

services provided. Amtrak’s charter stands in stark contrast.

Its economic self-interest as it concerns other market

participants is undeniable.

2

We next consider whether Amtrak has power to regulate

its competitors. Another way to put this question is whether

the “metrics and standards” force freight operators to alter

their behavior. According to the Government, PRIIA merely

allows Amtrak “to participate in the development of metrics

and standards for assessing its own performance.” Gov. Br.

30. And it further asserts that any effect those metrics and

standards have on freight operators is due either (1) to the

operators’ own voluntary consent to “incorporate” the metrics

into their operating agreements or (2) to their violation of the

statutory preference they agreed to back in 1970.

As to the first, the Government suggests the bargaining

positions of Amtrak and the host rail carriers are no different

than those enjoyed by ordinary market entities negotiating at

arm’s length. PRIIA only requires freight operators

“incorporate the metrics and standards” into their agreements

“to the extent practicable.” PRIIA § 207(c). And to the

extent it is impractical and an agreement between Amtrak and

22

a host rail carrier cannot be reached, the Surface

Transportation Board (STB) will “prescribe reasonable terms

and compensation.” 49 U.S.C. § 24308(a)(2)(A)(ii). But

ordinarily, one party doesn’t face statutory pressure to

acquiesce in the other’s demands “to the extent practicable.”

That “the railroads may avoid incorporating the metrics and

standards by arguing that incorporation is impracticable”

doesn’t render the scheme nonregulatory—“they [still] have a

legal duty to try.” Dep’t of Transp., 135 S. Ct. at 1253

(Thomas, J., concurring in the judgment). And since the

pressure to accept Amtrak’s demands might have force when

the STB “prescribe[s] reasonable terms and compensation” in

cases where Amtrak and a carrier cannot reach agreement, see

49 U.S.C. § 24308(a)(2)(A)(ii), carriers may face a

heightened risk of disadvantageous terms or rates as a result

of metrics and standards developed in part by Amtrak.

And as to the second, the Government attempts to

downplay the enforcement effects of these metrics and

standards on freight operators. PRIIA permits the STB to

“initiate an investigation” whenever Amtrak’s on-time

performance “averages less than 80 percent for any 2

consecutive calendar quarters,” regardless whether the metrics

and standards were incorporated into the operating

agreements of any affected freight operators. See PRIIA

§ 213(a), id. § 24308(f)(1). PRIIA also triggers STB

investigation where the “service quality of intercity passenger

train operations for which minimum standards are established

under section 207 . . . fails to meet those standards for 2

consecutive calendar quarters.” Id. The STB’s investigation

will determine, in part, whether the “failure to achieve

minimum standards” is “attributable to a rail carrier’s failure

to provide preference to Amtrak over freight transportation.”

Id. § 24308(f)(1)-(f)(2). In the Government’s view, the ability

to initiate an enforcement proceeding is not regulatory

23

authority. But the fact is these “metrics and standards lend

definite regulatory force to an otherwise broad statutory

mandate.” AAR, 721 F.3d at 672. Certainly, the preference is

the ultimate source of freight operators’ liability, but, as we

said before, “the metrics and standards are what channel its

enforcement.” Id. In public comments, FRA and Amtrak

acknowledged the STB “is the primary enforcement body of

the standards.” Id.

The extent to which the metrics and standards could

affect ultimate damages and relief, if at all, in a given case is

not clear to us. See 49 U.S.C. § 24308(f)(3)(A). We need not

know that, however, to see that the statute gives Amtrak the

authority to develop metrics and standards—constrained very

partially, as discussed below, by the FRA and the arbitrator—

that increase the risk that STB will initiate an investigation,

thereby increasing the number of cases in which the STB may

find a failure to provide Amtrak its statutory preference.

“Because obedience to the metrics and standards materially

reduces the risk of liability, railroads face powerful incentives

to obey. That is regulatory power.” Dep’t of Transp., 135 S.

Ct. at 1236 (Alito, J., concurring) (citation omitted).

Accordingly, the Government’s arguments are

unpersuasive. Both PRIIA’s mandate that freight operators

incorporate the metrics and standards “to the extent

practicable” and its grant of authority to STB to investigate

freight operators in the event the metrics and standards are not

satisfied confirm that, in fact, PRIIA grants Amtrak, a self-

interested entity, power to regulate its competitors.

C

The syllogism we introduced at the outset is complete.

Because PRIIA endows Amtrak with regulatory authority

24

over its competitors, that delegation violates due process.

Amtrak is required both to “maximize its revenues” and to

develop new performance metrics, a set of responsibilities

that, if adhered to, will inevitably boost Amtrak’s profitability

at the expense of its competitors. The actual metrics Amtrak

produced in this instance were unfavorable to the freight

operators. The on-time performance standards required the

freight railroads to modify their operations, causing delays.

AAR Br. 32. On some routes, adhering to the standards was

simply impractical, exposing those rail operators to

investigation by the STB and financial penalties payable to

Amtrak. Id. Armed with coercive regulatory power, Amtrak

wields a weapon of considerable advantage in its competitive

battle for scarce track. And while the Constitution may

grudgingly accept the reality of self-interestedness, it does not

endorse it as an unmitigated good.

Congress delegated its legislative power to an entity that

it designed to be the opposite of “presumptively

disinterested.” Carter Coal, 298 U.S. at 311. Like coal

competitors, whose “diversity of view[s]” concerning the

challenges of the industry “[arose] from their conflicting and

even antagonistic interests,” id., the antagonistic interests of

freight operators and Amtrak transform the development of

new performance metrics and standards into an unfair game

of zero sums. While freight operators and Amtrak may not

directly compete for customers, they compete for scarce track,

and Amtrak’s authority to manipulate that competition entails

the power to modify freight schedules to accommodate

Amtrak trains, reschedule maintenance work, or reroute

freight traffic. Put simply, PRIIA entrusts Amtrak “with the

power to regulate the business . . . of a competitor.” Id. “[A]

statute which attempts to confer such power undertakes an

intolerable and unconstitutional interference with personal

liberty and private property” and transgresses “the very nature

25

of” governmental function. Id.

None of the Government’s numerous counterarguments

persuade us otherwise. First, the Government argues Carter

Coal is distinguishable because unlike the empowered private

coal producers, the federal government has considerable

oversight and control over Amtrak. There’s no doubt this is

true. But then, there was also no suggestion that it was the

coal producers’ lack of accountability to government

oversight that offended the Carter Coal Court either. Instead,

what was offensive about the statute was its “attempt[] to

confer” the “power to regulate the business of another, and

especially of a competitor.” Id. Subjecting the coal producers

to government oversight would not have cured a grant of

regulatory power antithetical to the very nature of

governmental function. 4

Second, the Government suggests the FRA’s required

assent to any proposed metrics operates as an “independent

check” on Amtrak’s self-interestedness. To be sure, PRIIA

does require Amtrak and FRA to “jointly” develop the

metrics, but it’s far from clear whether and in what way FRA

“checks” Amtrak. PRIIA § 207(a). Both are subdivisions

4

We recognize that in some cases the Court has upheld

arrangements under which regulatory burdens can be imposed by

the joint action of a self-interested group and a government agency.

See Currin v. Wallace, 306 U.S. 1, 6, 15-16 ((1939); Sunshine

Anthracite Coal Co. v. Adkins, 310 U.S. 381, 388, 399 (1940).

Those cases are inapplicable here, however, because the FRA’s

authority to hold the line against overreaching by Amtrak is

undermined by the power of the arbitrator, an individual who is

appointed, and as we show below appointed unconstitutionally, by

the STB. See Section IV, supra (explaining that any disputes

between Amtrak and the FRA are to be resolved by an arbitrator

through binding arbitration).

26

within the same branch and work in tandem to effectuate the

goals Congress has set. Nowhere in the scheme is there any

suggestion that FRA must safeguard the freight operators’

interests or constrain Amtrak’s profit pursuits. 5 Moreover,

FRA is powerless to overrule Amtrak. As joint developers,

they occupy positions of equal authority. When there is

intractable disagreement between the two, the matter is

resolved by an arbitrator, who may ultimately choose to side

with Amtrak. FRA cannot keep Amtrak’s naked self-interest

in check, and therefore the requirement of joint development

does not somehow sanitize the Act.

Third, the Government cites Friedman v. Rogers, 440

U.S. 1 (1979), as proof that some forms of bias are

inoffensive. Gov. Br. 24–25. Friedman involved a Texas

statute requiring a majority of the state optometry board be

members of the Texas Optometric Association (TOA), which

is restricted to optometrists who comply with state ethics

requirements. 440 U.S. at 6. The plaintiffs, who were

ineligible for membership because their business model

conflicted with those ethics requirements, alleged the Board

was unconstitutionally biased against them. Id. The Court

disagreed, stating they had “no constitutional right to be

regulated by a Board that is sympathetic to the commercial

5

Nor does the FRA’s charter suggest it is a steward for the interests

of freight operators. See generally 49 U.S.C. § 103. The charter

requires FRA “consider the assignment and maintenance of safety

as [its] highest priority,” id. § 103(c), and requires, as additional

duties, that it “develop and enhance partnerships with the freight

and passenger railroad industry”; “ensure that programs and

initiatives . . . benefit the public and work toward achieving

regional and national transportation goals”; and “facilitate and

coordinate efforts to assist freight and passenger rail carriers . . . by

providing neutral assistance at the joint request of affected rail

service providers,” id. § 103(j).

27

practice of optometry.” Id. at 18. Here, the Government

asserts that Friedman “cannot be reconciled with” a due

process reading of Carter Coal. Gov. Br. 24. But the

Friedman plaintiffs never alleged the Board members would

act out of self-interest instead of fairness, only that the

board’s composition itself was unfair. The Supreme Court

rejected the idea anyway, noting there was “no support in the

record” that “the TOA members on the Board will act in

excess of their authority by discouraging lawful advertising

by optometrists,” a decision that would have evidenced naked

self-interest. Friedman, 440 U.S. at 19 n. 20.

Finally, the Government argues the Constitution does not

prohibit Congress from empowering Amtrak to develop

metrics and standards because Congress itself could have

developed the metrics and standards or could have directed

FRA to develop them alone. Gov. Br. 25. Perhaps. But

notice that, in either of these alternative scenarios, the power

to regulate freight operators would be in the hands of “official

bod[ies], presumptively disinterested.” Carter Coal, 298 U.S.

at 311. Pointing to Congress or FRA’s capacity to develop

these metrics is nothing but a red herring—the due process

question Carter Coal and the freight operators put before us

in this appeal centers on the propriety of self-interested actors

exercising regulatory power.

* * *

The Supreme Court’s conclusion that Amtrak is a

government entity resolved the nondelegation issue that was

the primary focus of our earlier decision. But it left a due

process one. Make no mistake; our decision today does not

foreclose Congress from tapping into whatever creative spark

spawned the Amtrak experiment in public-private enterprise.

But the Due Process Clause of the Fifth Amendment puts

28

Congress to a choice: its chartered entities may either

compete, as market participants, or regulate, as official

bodies. After all, “[t]he difference between producing . . . and

regulating . . . production is, of course, fundamental.” Id.

(emphasis added). To do both is an affront to “the very nature

of things,” especially due process.

Next, we consider the other challenge to PRIIA

preserved for our review: whether the arbitration provision

violates the Appointments Clause.

VI

As the foregoing analysis suggests, among the Framers’

chief concerns at the constitutional convention were questions

of who should be permitted to exercise the awesome and

coercive power of the government. Tyrannous abuse of that

power precipitated revolution against Great Britain. Overly

restrictive access to it crippled our young nation under the

Articles of Confederation. The novel equipoise the

Constitution struck was to vest the legislative, executive, and

judicial powers in independent branches of government and

then empower each to check the others.

The Appointments Clause, at issue here, is one of “the

significant structural safeguards of th[at] constitutional

scheme.” Edmond v. United States, 520 U.S. 651, 659

(1997). It requires every “Officer of the United States”

exercising “significant authority pursuant to the laws of the

United States” to be appointed in a specific manner, as

prescribed in Article II, section 2, clause 2. Buckley v. Valeo,

424 U.S. 1, 126 (1976). The prescribed manner differs

depending on the type of “Officer” to be appointed.

“Principal officers” are appointed by the President with the

“advice and consent of the Senate,” ensuring “public

29

accountability for both the making of a bad appointment and

the rejection of a good one.” Edmond, 520 U.S. at 660. But

Congress, for the purpose of “administrative convenience,”

id., may vest the exclusive appointment power of inferior

officers—those “whose work is directed and supervised at

some level” by principal officers, id. at 663— in “the

President alone, in the Courts of Law, or in the Heads of

Department,” id. at 660. These limitations on the

appointment power “ensure that those who wield[] it [are]

accountable to political force and the will of the people.”

Freytag, 501 U.S. at 884.

The freight operators claim PRIIA’s arbitration provision

violates this important safeguard. PRIIA requires that, in the

event Amtrak and FRA cannot agree, either party “may

petition the Surface Transportation Board to appoint an

arbitrator to assist the parties in resolving their disputes

through binding arbitration.” PRIIA § 207(d). Conspicuous

by its absence in this provision is any mention whether the

appointed arbitrator is a private individual or public official.

But in the freight operators’ view, it hardly matters, as the

provision is unconstitutional regardless. Either the arbitrator

is a private individual and the clause unlawfully deputizes a

private person to issue binding regulations, or she is a public

official and her appointment by the STB, rather than “the

President with the advice and consent of the Senate,” violates

the Appointments Clause. 6

6

The Government contends it is improper to reach this question

because the arbitration provision was “never invoked.” Gov. Br.

40–42. For reasons we explained in our previous opinion, this

argument fails to acknowledge how the provision “still polluted the

rulemaking process” by “stack[ing] the deck in favor of

compromise.” AAR, 721 F.3d at 674; see also Dep’t of Transp., 135

S. Ct. at 1236 (Alito, J., concurring) (“[W]hen Congress enacts a

compromise-forcing mechanism, it is no good to say that the

30

We needn’t concern ourselves much here with the

amici’s arguments concerning the propriety of giving

regulatory power to private individuals. Our prior opinion

detailed extensively why private entities cannot wield the

coercive power of government, AAR, 721 F.3d at 670–74, and

seeing as the Supreme Court reversed on other grounds, we

stand by that analysis. See also Dep’t of Transp., 135 S. Ct. at

1237 (Alito, J., concurring) (“When it comes to private

entities [exercising governmental powers], however, there is

not even a fig leaf of constitutional justification.”). More

importantly, even assuming, as the Government insists, the

STB appoints a “governmental arbitrator” rather than a

private one, the appointment is nonetheless unconstitutional.

A

Antecedent to deciding the ultimate issue, we first turn to

a central premise of the freight operators’ claim, namely that

the arbitrator is an “Officer of the United States.” After all,

the Appointments Clause is concerned only with the

appointment of officers, not nonofficers. See Edmond, 520

U.S. at 662. The question is whether the “appointee

exercis[es] significant authority pursuant to the laws of the

United States.” See Buckley, 424 U.S. at 126; see also

Edmond, 520 U.S. at 662 (noting the “significant authority”

test “marks, not the line between principal and inferior officer

. . . but rather . . . the line between officer and nonofficer”).

To see why we answer this question with a resounding

“yes,” it is helpful to take stock of the arbitrator’s duty. The

arbitrator is called upon to resolve any impasse between

mechanism cannot be challenged because the parties

compromised.”); Metro. Wash. Airports Auth. v. Citizens for

Abatement of Aircraft Noise, Inc., 501 U.S. 252, 264–65 (1991).

31

Amtrak and FRA through “binding arbitration.” PRIIA

§ 207(d). In other words, it is the arbitrator’s responsibility to

render a final decision regarding the content of the metrics

and standards. That decision would appear in the Federal

Register, see Metrics and Standards for Intercity Passenger

Rail Service under Section 207 of the Passenger Rail

Investment and Improvement Act of 2008, 75 Fed. Reg.

26839, 26839 (2010), and would immediately impact the

freight railroads obligations vis-à-vis Amtrak. The

arbitrator’s power to alter the railroad industry through final

agency action constitutes “significant authority pursuant to

the laws of the United States.” See Edmond, 520 U.S. at 665

(noting the judges in question “have no power to render a

final decision on behalf of the United States unless permitted

to do so by other Executive officers”); see also Dep’t of

Transp., 135 S. Ct. at 1239 (Alito, J., concurring) (asserting

that “nothing final should appear in the Federal Register

unless a Presidential appointee has at least signed off on it”).

For these reasons, the STB’s appointed arbitrator

qualifies as an “Officer of the United States,” and “must,

therefore, be appointed in the manner prescribed by” the

Appointments Clause. See Buckley, 424 U.S. at 126. We

must consider, then, whether PRIIA—which vests the STB

with power to appoint an arbitrator—accords with the manner

prescribed by the Constitution.

B

Perhaps the best explanation of the Appointments Clause

is found in the Supreme Court’s 1878 decision in United

States v. Germaine, 99 U.S. 508 (1878). The Court stated:

The Constitution for purposes of appointment very

clearly divides all its officers into two classes. The

32

primary class requires a nomination by the President

and confirmation by the Senate. But foreseeing that

when offices became numerous, and sudden

removals necessary, this mode might be

inconvenient, it was provided that, in regard to

officers inferior to those specially mentioned,

Congress might by law vest their appointment in the

President alone, in the courts of law, or in the heads

of departments. That all persons who can be said to

hold an office under the government about to be

established under the Constitution were intended to

be included within one or the other of these modes of

appointment there can be but little doubt.

Id. at 509–10.

Accordingly, the starting place for assessing the

constitutionality of an officer’s appointment is determining to

which class the officer belongs. Here, if the arbitrator is a

principal officer, her appointment would clearly violate the

constitution because PRIIA vests the appointing power in the

STB alone, not the President with the advice and consent of

the Senate. See PRIIA § 207(d). Likely in anticipation of this

obvious defect, the Government characterizes the arbitrator’s

authority as “confined to the single impasse over the metrics

and standards,” and asserts it is therefore of such a “limited

nature” that it “would have made the arbitrator an inferior,

rather than a principal, officer.” Gov. Br. 46. If the

Government’s assertion were correct, the appointment would

be valid, since the STB is a “department” within the meaning

of the Clause. See 49 U.S.C. § 1301 (a), (b) (establishing the

STB as “an independent establishment” whose board

members are “appointed by the President”); Free Enter. Fund

v. Public Co. Accounting Oversight Bd., 561 U.S. 477, 511

(2010) (defining a department as “a freestanding component

33

of the Executive Branch, not subordinate to or contained

within any other such component”).

However, as the Supreme Court’s opinion in Edmond

clarified, the degree of an individual’s authority is relevant in

marking the line between officer and nonofficer, not between

principal and inferior officer. Edmond, 520 U.S. at 662.

Recognizing its cases had not yet “set forth an exclusive

criterion for distinguishing between principal and inferior

officers,” id. at 661, the Edmond Court identified the

dispositive feature as whether an officer is “directed and

supervised at some level by others who were appointed by

Presidential nomination with the advice and consent of the

Senate,” id. at 663. Thus, the Government’s reliance on the

“limited nature” of the arbitrator’s duties confuses a question

of supervision for one of authority.

And while it may seem peculiar to demand “primary

class” treatment for a position as banal as the PRIIA

arbitrator, it also seems inescapable. Nowhere does PRIIA

suggest the arbitrator “is directed and supervised at some

level by others who were appointed by Presidential

nomination with the advice and consent of the Senate.”

PRIIA doesn’t provide any procedure by which the

arbitrator’s decision is reviewable by the STB. Instead, it

empowers the arbitrator to determine the metrics and

standards “through binding arbitration.” See Dep’t of

Transp., 135 S. Ct. at 1239 (Alito, J., concurring) (“As to that

‘binding’ decision, who is the supervisor?”). The result? A

final agency action, the promulgation of metrics and standards

as though developed jointly by Amtrak and the FRA.

Without providing for the arbitrator’s direction or supervision

by principal officers, PRIIA impermissibly vests power to

appoint an arbitrator in the STB.

34

V

Train schedules are a matter of pride and of

apprehension to nearly everyone. When, far up the

track, the block signal snapped from red to green and

the long, stabbing probe of the headlight sheered the

bend and blared on the station, men looked at their

watches and said, ‘On time.’ There was pride in it,

and relief too. The split second has been growing

more and more important to us. And as human

activities become more and more intermeshed and

integrated, the split tenth of a second will emerge, and

then a new name must be made for the split

hundredth, until one day, although I don’t believe it,

we’ll say, ‘Oh, the hell with it. What’s wrong with an

hour?’ . . . One thing late or early can disrupt

everything around it, and the disturbance runs

outward in bands like the waves from a dropped stone

in a quiet pool.

JOHN STEINBECK, EAST OF EDEN 533 (Penguin Books 2002).

It may be said that PRIIA’s architects shared Steinbeck’s

pride in the punctuality of train schedules. But as we’ve

shown, there are limits to how far Congress may go to ensure

Amtrak’s on-time performance. The Constitution’s drafters

may not have foreseen the formidable prerogatives of the

administrative state, but the Due Process Clause effectively

guarantees the regulatory power of the federal government

will be wielded by “presumptively disinterested” and “duly

appointed” actors who, in exercising that awesome power, are

beholden to no constituency but the public good. Because

PRIIA grants this power to the economically self-interested

Amtrak and to an unconstitutionally appointed arbitrator, it

transgresses that vital guarantee. We therefore

Reverse.