Association of American Railroads v. United States Department of Transportation

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 19, 2013 Decided July 2, 2013

No. 12-5204

ASSOCIATION OF AMERICAN RAILROADS,

APPELLANT

v.

UNITED STATES DEPARTMENT OF TRANSPORTATION, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:11-cv-01499)

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

With him on the briefs was Louis P. Warchot.

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

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

Stuart F. Delery, Acting Assistant Attorney General, Ronald

C. Machen Jr., U.S. Attorney, Mark B. Stern and Daniel

Tenny, 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.

2

Before: BROWN, Circuit Judge, and WILLIAMS and

SENTELLE, Senior Circuit Judges.

BROWN, Circuit Judge: Imagine a scenario in which

Congress has given to General Motors the power to coauthor,

alongside the Department of Transportation, regulations that

will govern all automobile manufacturers. And, if the two

should happen to disagree on what form those regulations will

take, then neither will have the ultimate say. Instead, an

unspecified arbitrator will make the call. Constitutional? The

Department of Transportation seems to think so. 1

Next consider a parallel statutory scheme—the one at

issue in this case. This time, instead of General Motors, it is

Amtrak (officially, the “National Railroad Passenger

Corporation”) wielding joint regulatory power with a

government agency. This new stipulation further complicates

the issue. Unlike General Motors, Amtrak is a curious entity

that occupies the twilight between the public and private

sectors. And the regulations it codevelops govern not the

automotive industry, but the priority freight railroads must

give Amtrak’s trains over their own. Whether the Constitution

permits Congress to delegate such joint regulatory authority to

Amtrak is the question that confronts us now.

Section 207 of the Passenger Rail Investment and

Improvement Act of 2008 empowers Amtrak and the Federal

Railroad Administration (FRA) to jointly develop

performance measures to enhance enforcement of the

statutory priority Amtrak’s passenger rail service has over

1

Counsel for the Appellees embraced precisely this position at

oral argument, albeit with some preliminary hemming and hawing.

See Oral Arg. 30:20–33:00.

3

other trains. The Appellant in this case, the Association of

American Railroads (AAR), is a trade association whose

members include the largest freight railroads (known in the

industry as “Class I” freight railroads), some smaller freight

railroads, and—as it happens—Amtrak. Compl. ¶ 10, at 4.

Challenging the statutory scheme as unconstitutional, AAR

brought suit on behalf of its Class I members against the four

Appellees—the Department of Transportation, its Secretary,

the FRA, and its Administrator (collectively, the

“government”). Id. ¶¶ 14–17, at 6–7. We conclude § 207

constitutes an unlawful delegation of regulatory power to a

private entity.

I

A

To reinvigorate a national passenger rail system that had,

by mid-century, grown moribund and unprofitable, Congress

passed the Rail Passenger Service Act of 1970, Pub. L. No.

91-518, 84 Stat. 1327. See Nat’l R.R. Corp. v. Atchison,

Topeka & Santa Fe Ry. Co., 470 U.S. 451, 453–54 (1985).

Most prominently, the legislation created the passenger rail

corporation now known as Amtrak, which would “employ[]

innovative operating and marketing concepts so as to fully

develop the potential of modern rail service in meeting the

Nation’s intercity passenger transportation requirements.”

Rail Passenger Service Act, § 301, 84 Stat. at 1330. The act

also made railroad companies languishing under the prior

regime an offer they could not refuse: if these companies

consented to certain conditions, such as permitting Amtrak to

use their tracks and other facilities, they could shed their

cumbersome common carrier obligation to offer intercity

passenger service. See Nat’l R.R. Corp., 470 U.S. at 455–56.

4

Pursuant to statute, Amtrak negotiates these arrangements

with individual railroads, the terms of which are enshrined in

Operating Agreements. 2 See 49 U.S.C. § 24308(a). Today,

freight railroads own roughly 97% of the track over which

Amtrak runs its passenger service.

Naturally, sharing tracks can cause coordination

problems, which is why Congress has prescribed that, absent

an emergency, Amtrak’s passenger rail “has preference over

freight transportation in using a rail line, junction, or

crossing.” Id. § 24308(c). More recently, this same concern

prompted enactment of the Passenger Rail Investment and

Improvement Act of 2008 (“PRIIA”), Pub. L. No. 110-432,

Div. B, 122 Stat. 4848, 4907. At issue in this case is the

PRIIA’s § 207, which directs the FRA and Amtrak to

“jointly . . . develop new or improve existing metrics and

minimum standards for measuring the performance and

service quality of intercity passenger train operations,

including cost recovery, on-time performance and minutes of

delay, ridership, on-board services, stations, facilities,

equipment, and other services.” PRIIA § 207(a), 49 U.S.C.

§ 24101 (note). If Amtrak and the FRA disagree about 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), 49 U.S.C. § 24101

(note). “To the extent practicable,” Amtrak and its host rail

carriers must incorporate the metrics and standards into their

Operating Agreements. Id. § 207(c), 49 U.S.C. § 24101

(note).

2

If the parties cannot reach agreement, the Surface

Transportation Board (STB) will “order that the facilities be made

available and the services provided to Amtrak” and “prescribe

reasonable terms and compensation.” 49 U.S.C. § 24308(a).

5

Though § 207 provides the means for devising the

metrics and standards, § 213 is the enforcement mechanism. If

the “on-time performance” or “service quality” of any

intercity passenger train proves inadequate under the metrics

and standards for two consecutive quarters, the STB may

launch an investigation “to determine whether and to what

extent delays or failure to achieve minimum standards are due

to causes that could reasonably be addressed by a rail carrier

over whose tracks the intercity passenger train operates or

reasonably addressed by Amtrak or other intercity passenger

rail operators.” PRIIA § 213(a), 49 U.S.C. § 24308(f)(1).

Similarly, if “Amtrak, an intercity passenger rail operator, a

host freight railroad over which Amtrak operates, or an entity

for which Amtrak operates intercity passenger rail service”

files a complaint, the STB “shall” initiate such an

investigation. Id. (emphasis added). Should the STB

determine the failure to satisfy the metrics and standards is

“attributable to a rail carrier’s failure to provide preference to

Amtrak over freight transportation as required,” it may award

damages or other relief against the offending host rail carrier.

Id. § 24308(f)(2).

B

Following § 207’s mandate, the FRA and Amtrak jointly

drafted proposed metrics and standards, which they submitted

to public comment on March 13, 2009. See Metrics and

Standards for Intercity Passenger Rail Service Under Section

207 of Public Law 110-432, 74 Fed. Reg. 10,983 (Mar. 13,

2009). The proposal attracted criticism, with much vitriol

directed at three metrics formulated to measure on-time

performance: “effective speed” (the ratio of route’s distance to

the average time required to travel it), “endpoint on-time

6

performance” (the portion of a route’s trains that arrive on

schedule), and “all-stations on-time performance” (the degree

to which trains arrive on time at each station along the route).

AAR, among others, derided these metrics as “unrealistic”

and worried that certain aspects would create “an excessive

administrative and financial burden.” The FRA responded to

the comments, and a final version of the metrics and standards

took effect in May 2010. 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. 26,839 (May 11, 2010).

AAR filed suit on behalf of its Class I freight railroad

members, asking the district court to declare § 207 of the

PRIIA unconstitutional and to vacate the promulgated metrics

and standards. The complaint asserted two challenges: that

§ 207 unconstitutionally delegates to Amtrak the authority to

regulate other private entities; and that empowering Amtrak to

regulate its competitors violates the Fifth Amendment’s Due

Process Clause. Compl. ¶¶ 47–54, at 16–17. The district court

rejected these arguments, granting summary judgment to the

government and denying it to AAR. See AAR v. Dep’t of

Transp., 865 F. Supp. 2d 22, 35 (D.D.C. 2012). AAR renews

these constitutional claims on appeal.

II

AAR’s argument takes the following form: Delegating

regulatory authority to a private entity is unconstitutional.

Amtrak is a private entity. Ergo, § 207 is unconstitutional.

This proposed syllogism is susceptible, however, to attacks on

both its validity and soundness. In other words, does the

conclusion actually follow from the premises? And, if it does,

are both premises true? Our discussion follows the same path.

7

A

We open our discussion with a principle upon which both

sides agree: Federal lawmakers cannot delegate regulatory

authority to a private entity. To do so would be “legislative

delegation in its most obnoxious form.” Carter v. Carter Coal

Co., 298 U.S. 238, 311 (1936). This constitutional prohibition

is the lesser-known cousin of the doctrine that Congress

cannot delegate its legislative function to an agency of the

Executive Branch. See U.S. CONST. art. I, § 1 (“All legislative

Powers herein granted shall be vested in a Congress of the

United States . . . .”); see A.L.A. Schechter Poultry Corp. v.

United States, 295 U.S. 495, 529 (1935). This latter

proposition finds scarce practical application, however,

because “no statute can be entirely precise,” meaning “some

judgments, even some judgments involving policy

considerations, must be left to the officers executing the law

and to the judges applying it.” Mistretta v. United States, 488

U.S. 361, 415 (1989) (Scalia, J., dissenting). All that is

required then to legitimate a delegation to a government

agency is for Congress to prescribe an intelligible principle

governing the statute’s enforcement. See J.W. Hampton, Jr., &

Co. v. United States, 276 U.S. 394, 409 (1928).

Not so, however, in the case of private entities to whom

the Constitution commits no executive power. Although

objections to delegations are “typically presented in the

context of a transfer of legislative authority from the Congress

to agencies,” we have reaffirmed that “the difficulties sparked

by such allocations are even more prevalent in the context of

agency delegations to private individuals.” Nat’l Ass’n of

Regulatory Util. Comm’rs v. FCC (“NARUC”), 737 F.2d

8

1095, 1143 (D.C. Cir. 1984) (per curiam). 3 Even an

intelligible principle cannot rescue a statute empowering

private parties to wield regulatory authority. Such entities

may, however, help a government agency make its regulatory

decisions, for “[t]he Constitution has never been regarded as

denying to the Congress the necessary resources of flexibility

and practicality” that such schemes facilitate. Pan. Ref. Co. v.

Ryan, 293 U.S. 388, 421 (1935). Yet precisely how much

involvement may a private entity have in the administrative

process before its advisory role trespasses into an

unconstitutional delegation? Discerning that line is the task at

hand.

Preliminarily, we note the Supreme Court has never

approved a regulatory scheme that so drastically empowers a

private entity in the way § 207 empowers Amtrak. True, § 207

has a passing resemblance to the humbler statutory

frameworks in Currin v. Wallace, 306 U.S. 1 (1939), and

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

In Currin Congress circumscribed its delegations of

3

At least one commentator has suggested that the “doctrine

forbidding delegation of public power to private groups is, in fact,

rooted in a prohibition against self-interested regulation that sounds

more in the Due Process Clause than in the separation of powers.”

A. Michael Froomkin, Wrong Turn in Cyberspace: Using ICANN

To Route Around the APA and the Constitution, 50 DUKE L.J. 17,

153 (2000). Carter Coal offers some textual support for this

position, describing the impermissible delegation there as “clearly a

denial of rights safeguarded by the due process clause of the Fifth

Amendment.” 298 U.S. at 311. While the distinction evokes

scholarly interest, neither party before us makes this point, and our

own precedent describes the problem as one of unconstitutional

delegation. See NARUC, 737 F.2d at 1143 n.41. And, in any event,

neither court nor scholar has suggested a change in the label would

effect a change in the inquiry.

9

administrative authority—in that case, by requiring two thirds

of regulated industry members to approve an agency’s new

regulations before they took effect. See 306 U.S. at 6, 15.

Adkins, meanwhile, affirmed a modest principle: Congress

may formalize the role of private parties in proposing

regulations so long as that role is merely “as an aid” to a

government agency that retains the discretion to “approve[],

disapprove[], or modif[y]” them. 310 U.S. at 388. Like the

private parties in Currin, Amtrak has an effective veto over

regulations developed by the FRA. And like those in Adkins,

Amtrak has a role in filling the content of regulations. But the

similarities end there. The industries in Currin did not craft

the regulations, while Adkins involved no private check on an

agency’s regulatory authority. 4 Even more damningly, the

agency in Adkins could unilaterally change regulations

proposed to it by private parties, whereas Amtrak enjoys

authority equal to the FRA. Should the FRA prefer an

alternative to Amtrak’s proposed metrics and standards, § 207

leaves it impotent to choose its version without Amtrak’s

permission. No case prefigures the unprecedented regulatory

powers delegated to Amtrak. 5

4

For what it is worth, Currin also involved the collective

participation of two thirds of industry members, and the regulations

in Adkins arose from district boards comprising multiple members of

the regulated industry. Neither upheld a statute that favored a single

firm over all its market rivals.

5

The government also cites various decisions from other

Circuits that purportedly support its position. All are

distinguishable. Several upheld schemes like that in Currin in which

the effect of regulations was contingent upon the assent of a certain

portion of the regulated industry. See Ky. Div., Horsemen’s

Benevolent and Protective Ass’n v. Turfway Park Racing Ass’n, 20

F.3d 1406, 1416 (6th Cir. 1994); Sequoia Orange Co. v. Yeutter,

10

The government also points out that the metrics and

standards themselves impose no liability. Rather, they define

the circumstances in which the STB will investigate whether

infractions are attributable to a freight railroad’s failure to

meet its preexisting statutory obligation to accord preference

to Amtrak’s trains. See PRIIA § 213(a), 49 U.S.C. § 24308(f).

We are not entirely certain what to make of this argument.

Taken to its logical extreme, it would preclude all

preenforcement review of agency rulemaking, so it is probably

unlikely the government is pressing so immodest a claim. 6 If

973 F.2d 752, 759 (9th Cir. 1992). The others resemble Adkins

insofar as they approve structures in which private industry

members serve in purely advisory or ministerial functions. See

Pittston Co. v. United States, 368 F.3d 385, 394–97 (4th Cir. 2004);

United States v. Frame, 885 F.2d 1119, 1128–29 (3d Cir. 1989),

abrogated on other grounds by Glickman v. Wileman Bros. &

Elliott, Inc., 521 U.S. 457 (1997); Sorrell v. SEC, 679 F.2d 1323,

1325–26 (9th Cir. 1982); First Jersey Sec., Inc. v. Bergen, 605 F.2d

690, 697 (3d Cir. 1979); Todd & Co. v. SEC, 557 F.2d 1008,

1012–13 (3d Cir. 1977); R.H. Johnson & Co. v. SEC, 198 F.2d 690,

695 (2d Cir. 1952). In none of these cases did a private party stand

on equal footing with a government agency.

6

AAR’s Reply Brief treated this argument as an ordinary

ripeness challenge. See Br. 18–21. If that is what the government

intended, then we are not persuaded. As a purely legal question,

§ 207’s constitutionality is appropriate for immediate judicial

resolution. See Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967),

overruled on other grounds by Califano v. Sanders, 430 U.S. 99

(1977). And depriving AAR of review at this stage would result in

considerable hardship. See United Christian Scientists v. Christian

Sci. Bd. of Dirs., First Church of Christ, Scientist, 829 F.2d 1152,

1160 n.29 (D.C. Cir. 1987). The record is replete with affidavits

from the freight railroads describing the immediate actions the

11

the point is merely that the STB adds another layer of

government “oversight” to Amtrak’s exercise of regulatory

power, this precaution does not alter the analysis. Government

enforcement power did not save the rulemaking authority of

the private coal companies in Carter Coal, nor the power of

private landowners in Washington ex rel. Seattle Title Trust

Co. v. Roberge, 278 U.S. 116 (1928), to impose a zoning

restriction on a neighbor’s tract of land. As is often the case in

administrative law, the metrics and standards lend definite

regulatory force to an otherwise broad statutory mandate. See,

e.g., Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 465

(2001). The preference for Amtrak’s traffic may predate the

PRIIA, but the metrics and standards are what channel its

enforcement. Certainly the FRA and Amtrak saw things that

way, responding to one public comment by noting the STB “is

the primary enforcement body of the standards.” J.A. 63

(emphasis added). Not only that, § 207 directs “Amtrak and

its host carriers” to include the metrics and standards in their

Operating Agreements “[t]o the extent practicable.” PRIIA

§ 207(c), 49 U.S.C. § 24101 (note). The STB’s involvement is

no safe harbor from AAR’s constitutional challenge to § 207.

As far as we know, no court has invalidated a scheme like

§ 207’s, but perhaps that is because no parallel exists.

Unprecedented constitutional questions, after all, lack clear

and controlling precedent. We nevertheless believe Free

Enterprise Fund v. Public Co. Accounting Oversight Board,

130 S. Ct. 3138 (2010), offers guidance. There the Supreme

Court deemed it a violation of separation of powers to endow

inferior officers with two layers of good-cause tenure

metrics and standards have forced them to take. See Decl. of Paul E.

Ladue ¶¶ 6–9, at 3–5; Decl. of Mark M. Owens ¶ 9, at 4; Decl. of

Virginia Marie Beck ¶¶ 9–11, at 4–6; Decl. of Peggy Harris ¶¶

8–14, at 3–5.

12

insulating them from removal by the President. See id. at

3164. Two principles from that case are particularly resonant.

To begin with, just because two structural features raise no

constitutional concerns independently does not mean

Congress may combine them in a single statute. Free

Enterprise Fund deemed invalid a regime blending two

limitations on the President’s removal power that, taken

separately, were unproblematic: the establishment of

independent agencies headed by principal officers shielded

from dismissal without cause, see Humphrey’s Ex’r v. United

States, 295 U.S. 602, 629–31 (1935), and the protection of

certain inferior officers from removal by principal officers

directly accountable to the President, see Morrison v. Olson,

487 U.S. 654, 691–93 (1988). See 130 S. Ct. at 3146–47. So

even if the government is right that § 207 merely synthesizes

elements approved by Currin and Adkins, that would be no

proof of constitutionality.

As for the second principle, Free Enterprise Fund also

clarifies that novelty may, in certain circumstances, signal

unconstitutionality. That double good-cause tenure, for

example, lacked an antecedent in the history of the

administrative state was one reason to suspect its legality:

“Perhaps the most telling indication of the

severe constitutional problem with the PCAOB

is the lack of historical precedent for this

entity. Neither the majority opinion nor the

PCAOB nor the United States as intervenor has

located any historical analogues for this novel

structure. They have not identified any

independent agency other than the PCAOB that

is appointed by and removable only for cause

by another independent agency.”

13

Id. at 3159 (quoting Free Enter. Fund v. Pub. Co. Accounting

Oversight Bd., 537 F.3d 667, 699 (D.C. Cir. 2008)

(Kavanaugh, J., dissenting)); accord Nat’l Fed’n of Indep.

Bus. v. Sebelius, 132 S. Ct. 2566, 2586 (2012). In defending

§ 207, the government revealingly cites no case—nor have we

found any—embracing the position that a private entity may

jointly exercise regulatory power on equal footing with an

administrative agency. This fact is not trivial. Section 207 is

as close to the blatantly unconstitutional scheme in Carter

Coal as we have seen. The government would essentially limit

Carter Coal to its facts, arguing that “[n]o more is

constitutionally required” than the government’s “active

oversight, participation, and assent” in its private partner’s

rulemaking decisions. Appellee’s Br. 19. This

proposition—one we find nowhere in the case law—vitiates

the principle that private parties must be limited to an

advisory or subordinate role in the regulatory process.

To make matters worse, § 207 fails to meet even the

government’s ad hoc standard. Consider what would have

happened if Amtrak and the FRA could not have reached an

agreement on the content of the metrics and standards within

180 days of the PRIIA’s enactment. Amtrak could have

“petition[ed] the Surface Transportation Board to appoint an

arbitrator to assist the parties in resolving their disputes

through binding arbitration.” PRIIA 207(d), 49 U.S.C.

§ 24101 (note). And nothing in the statute precludes the

appointment of a private party as arbitrator. 7 That means it

7

The government notes § 207’s arbitration provision does not

require the arbitrator be a private party. This is irrelevant. “[A]n

agency can[not] cure an unlawful delegation of legislative power by

adopting in its discretion a limiting construction of the statute.”

Whitman, 531 U.S. at 472. Nor does the canon of constitutional

14

would have been entirely possible for metrics and standards to

go into effect that had not been assented to by a single

representative of the government. Though that did not in fact

occur here, § 207’s arbitration provision still polluted the

rulemaking process over and above the other defects besetting

the statute. As a formal matter, that the recipients of illicitly

delegated authority opted not to make use of it is no antidote.

It is Congress’s decision to delegate that is unconstitutional.

See Whitman, 531 U.S. at 473. As a practical matter, the

FRA’s failure to reach an agreement with Amtrak would have

meant forfeiting regulatory power to an arbitrator the agency

would have had no hand in picking. Rather than ensuring

Amtrak would “function subordinately” to the FRA, Adkins,

310 U.S. at 399, this backdrop stacked the deck in favor of

compromise. Even for government agencies, half an apple is

better than none at all.

We remain mindful that the Constitution “contemplates

that practice will integrate the dispersed powers into a

workable government.” Youngstown Sheet & Tube Co. v.

Sawyer, 343 U.S. 579, 635 (1952) (Jackson, J., concurring).

But a flexible Constitution must not be so yielding as to

become twisted. Unless it can be established that Amtrak is an

organ of the government, therefore, § 207 is an

unconstitutional delegation of regulatory power to a private

party.

B

avoidance offer a solution. The statute’s text precludes the

government’s suggestion that we construe the open-ended language

“an arbitrator” to include only federal entities. The constitutional

avoidance canon is an interpretive aid, not an invitation to rewrite

statutes to satisfy constitutional strictures. Reno v. ACLU, 521 U.S.

844, 884–85 (1997).

15

Now the crucial question: is Amtrak indeed a private

corporation? If not—if it is just one more government

agency—then the regulatory power it wields under § 207 is of

no constitutional moment.

Many of the details of Amtrak’s makeup support the

government’s position that it is not a private entity of the sort

described in Carter Coal. Amtrak’s Board of Directors

includes the Secretary of Transportation (or his designee),

seven other presidential appointees, and the President of

Amtrak. See 49 U.S.C. § 24302(a). The President of

Amtrak—the one Board member not appointed by the

President of the United States—is in turn selected by the eight

other members of the Board. See id. § 24303(a). Amtrak is

also subject to the Freedom of Information Act. See id.

§ 24301(e). Amtrak’s equity structure is similarly suggestive.

As of September 30, 2011, four common stockholders owned

9,385,694 outstanding shares, which they acquired from the

four railroads whose intercity passenger service Amtrak

assumed in 1971. BDO USA, LLP, NATIONAL RAILROAD

PASSENGER CORPORATION AND SUBSIDIARIES (AMTRAK)

CONSOLIDATED FINANCIAL STATEMENTS: YEARS ENDED

SEPTEMBER 30, 2011 AND 2010, at 18 (2011) (J.A. 351). At

the same time, however, the federal government owned all

109,396,994 shares of Amtrak’s preferred stock, each share of

which is convertible into 10 shares of common stock. Id. at 17

(J.A. 350). And, all that stands between Amtrak and financial

ruin is congressional largesse. See id. at 6 (J.A. 339).

That being said, Amtrak’s legislative origins are not

determinative of its constitutional status. Congress’s power to

charter private corporations was recognized early in our

nation’s history. See McCulloch v. Maryland, 17 U.S. (4

16

Wheat.) 316, 409 (1819). And, as far as Congress was

concerned, that is exactly what it was doing when it created

Amtrak. As Congress explained it, Amtrak “shall be operated

and managed as a for-profit corporation” and “is not a

department, agency, or instrumentality of the United States

Government.” 49 U.S.C. § 24301(a). We have previously

taken Congress at its word and relied on this declaration in

deciding whether the False Claims Act applies to Amtrak. See

United States ex rel. Totten v. Bombardier Corp., 380 F.3d

488, 490 (D.C. Cir. 2004) (“Amtrak is not the Government.”);

id. at 491 (“Amtrak is Not the Government.”); id. at 502

(“Amtrak is not the Government.”). Amtrak agrees: “The

National Railroad Passenger Corporation, also known as

Amtrak, is not a government agency or establishment [but] a

private corporation operated for profit.” NAT’L R.R.

PASSENGER CORP., FREEDOM OF INFORMATION ACT

HANDBOOK 1 (2008). And, somewhat tellingly, Amtrak’s

website is www.amtrak.com—not www.amtrak.gov.

How to decide? Since, in support of its claim that Amtrak

is a public entity, the government looks past labels to how the

corporation functions, it is worth examining what functional

purposes the public-private distinction serves when it comes

to delegating regulatory power. We identify two of particular

importance. First, delegating the government’s powers to

private parties saps our political system of democratic

accountability. See Mich. Gaming Opposition v. Kempthorne,

525 F.3d 23, 34 (D.C. Cir. 2008) (Brown, J., dissenting in

part). This threat is particularly dangerous where both

Congress and the Executive can deflect blame for unpopular

policies by attributing them to the choices of a private entity.

See NARUC, 737 F.2d at 1143 n.41; cf. New York v. United

States, 505 U.S. 144, 169 (1992) (“[W]here the Federal

Government directs the States to regulate, it may be state

17

officials who will bear the brunt of public disapproval, while

the federal officials who devised the regulatory program may

remain insulated from the electoral ramifications of their

decision.”). This worry is certainly present in the case of

§ 207, since Congress has expressly forsworn Amtrak’s status

as a “department, agency, or instrumentality of the United

States Government.” 49 U.S.C. § 24301(a)(3). Dislike the

metrics and standards Amtrak has concocted? It’s not the

federal government’s fault—Amtrak is a “for-profit

corporation.” Id. § 24301(a)(2).

Second, fundamental to the public-private distinction in

the delegation of regulatory authority is the belief that

disinterested government agencies ostensibly look to the

public good, not private gain. For this reason, delegations to

private entities are particularly perilous. Carter Coal

specifically condemned delegations made not “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.” 298 U.S. at 311.

Partly echoing the Constitution’s guarantee of due process,

this principle ensures that regulations are not dictated by those

who “are not bound by any official duty,” but may instead act

“for selfish reasons or arbitrarily.” Roberge, 278 U.S. at 122.

More recent decisions are also consistent with this view. See

Pittston Co., 368 F.3d at 398; NARUC, 737 F.2d at 1143–44;

Sierra Club v. Sigler, 695 F.2d 957, 962 n.3 (5th Cir. 1983).

Amtrak may not compete with the freight railroads for

customers, but it does compete with them for use of their

scarce track. Like the “power conferred upon the

majority . . . to regulate the affairs of an unwilling minority”

in Carter Coal, § 207 grants Amtrak a distinct competitive

advantage: a hand in limiting the freight railroads’ exercise of

18

their property rights over an essential resource. 298 U.S. at

311.

Because Amtrak must “be operated and managed as a

for-profit corporation,” 49 U.S.C. § 24301(a)(2), the fact that

the President has appointed the bulk of its Board does nothing

to exonerate its management from its fiduciary duty to

maximize company profits. Also consistent with this purpose,

“Amtrak is encouraged 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). Yet § 207

directs Amtrak and its host carriers to incorporate the metrics

and standards in their Operating Agreements. See id.

§ 24101(c) note. So to summarize: Amtrak must negotiate

contracts that will maximize its profits; those contracts

generally must, by law, include certain terms; and Amtrak has

the power to define those terms. Perverse incentives abound.

Nothing about the government’s involvement in Amtrak’s

operations restrains the corporation from devising metrics and

standards that inure to its own financial benefit rather than the

common good. And that is the very essence of the

public-private distinction when a claim of unconstitutional

delegation arises.

No discussion of Amtrak’s status as a private or public

institution would be complete, however, without an

examination of the Supreme Court’s decision in Lebron v.

National Railroad Passenger Corp., 513 U.S. 374 (1995). 8

8

Strangely, the government’s brief places almost no emphasis

on Lebron. Perhaps this indicates the government’s agreement with

AAR’s reading of the case. Whatever the reason for this

near-silence, we think it important to address the Supreme Court’s

most explicit discussion of Amtrak’s status.

19

There the Court held that Amtrak “is part of the Government

for purposes of the First Amendment.” Id. at 400. Otherwise,

the majority cautioned, the government could “evade the most

solemn obligations imposed in the Constitution by simply

resorting to the corporate form.” Id. at 397. What the Court

did not do in Lebron was conclude that Amtrak counted as

part of the government for all purposes. On some

questions—Does the Administrative Procedure Act apply to

Amtrak? Does Amtrak enjoy sovereign immunity from

suit?—Congress’s disclaimer of Amtrak’s governmental

status is dispositive. See id. at 392; Totten, 380 F.3d at

491–92. This makes sense: Congress has the power to waive

certain governmental privileges, like sovereign immunity, that

are within its legislative control; but it cannot circumvent the

Bill of Rights by simply dubbing something private.

Whether § 207 effects an unconstitutional delegation is a

constitutional question, not a statutory one. But just because

Lebron treated Amtrak as a government agency for purposes

of the First Amendment does not dictate the same result with

respect to all other constitutional provisions. To view Lebron

in this way entirely misses the point. In Lebron, viewing

Amtrak as a strictly private entity would have permitted the

government to avoid a constitutional prohibition; in this case,

deeming Amtrak to be just another governmental entity would

allow the government to ignore a constitutional obligation.

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. In any event, Lebron’s holding was comparatively

narrow, deciding only that Amtrak is an agency of the United

States for the purpose of the First Amendment. 513 U.S. at

20

394. It did not opine on Amtrak’s status with respect to the

federal government’s structural powers under the

Constitution—the issue here.

This distinction is more than academic. When Lebron

contrasted “the constitutional obligations of Government”

from “the ‘privileges of the government,’” it was not drawing

a distinction between questions that are constitutional from

those that are not. Any “privilege” of the federal government

must also be anchored in the Constitution. Id. at 399. As our

federal government is one of enumerated powers, the

Constitution’s structural provisions are the source of

Congress’s power to act in the first place. See United States v.

Lopez, 514 U.S. 549, 552 (1995); THE FEDERALIST NO. 45

(James Madison). And, generally speaking, these provisions

authorize action without mandating it. Congress’s power to

regulate interstate commerce, for example, does not dictate

the enactment of this or that bill within its proper scope. By

contrast, individual rights are “affirmative prohibitions” on

government action that become relevant “only where the

Government possesses authority to act in the first place.”

Nat’l Fed’n of Ind. Bus., 132 S. Ct. at 2577. While often

phrased in terms of an affirmative prohibition, Congress’s

inability to delegate government power to private entities is

really just a function of its constitutional authority not

extending that far in the first place. In other words, rather than

proscribing what Congress cannot do, the doctrine defines the

limits of what Congress can do. And, by designing Amtrak to

operate as a private corporation—to seek profit on behalf of

private interests—Congress has elected to deny itself the

power to delegate it regulatory authority under § 207. Cf.

Religious Freedom Restoration Act of 1993, 42 U.S.C.

§§ 2000bb to bb-4 (requiring, beyond what the Constitution

mandates, that the federal government “not substantially

21

burden a person’s exercise of religion even if the burden

results from a rule of general applicability” unless the

restriction satisfies strict scrutiny).

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 § 207.

III

We conclude § 207 of the PRIIA impermissibly delegates

regulatory authority to Amtrak. We need not reach AAR’s

separate argument that Amtrak’s involvement in developing

the metrics and standards deprived its members of due

process. Accordingly, the judgment of the district court is

Reversed.