May 2015 | Commentary | Fine Print: Supply Chain Legal Issues

How Amtrak’s Supreme Court Case Affects Freight Shippers

Tags: Legislation, Public Policy, and Regulations, Rail, Transportation

Kathryn C. Thomas is Partner, Litigation Practice Group & Transportation Team, Freeborn & Peters LLP, 312-360-6520

Track-sharing among railroads has long been a complicated issue. The U.S. Supreme Court recently reviewed a case determining whether Amtrak has the authority to regulate privately owned freight railroads with which it shares rail.

The Rail Passenger Service Act of 1970 was supposed to reinvigorate a national passenger rail system. The legislation created Amtrak to "fully develop the potential modern rail service in meeting the nation's intercity passenger transportation requirements." The act also let railroad companies shed the obligation of intercity passenger service in exchange for allowing Amtrak to use their tracks and facilities.

Today, freight railroads own nearly 97 percent of the track over which Amtrak runs service. Because of track coordination problems, Congress prescribed that, absent an emergency, Amtrak's passenger rail takes preference over freight transportation.

The Passenger Railroad Investment and Improvement Act of 2008 (PRIIA) addresses these coordination concerns. Section 207 of PRIIA requires the Federal Railroad Administration (FRA) and Amtrak to jointly develop standards to evaluate the performance of Amtrak trains. In light of this mandate, the FRA and Amtrak issued on-time performance (OTP) metrics and standards, the final version of which took effect in May 2010.

Understanding the Lawsuit

In 2011, the Association of American Railroads (AAR) filed suit on behalf of its Class I freight railroad members against the Department of Transportation and others, challenging the constitutionality of Section 207 of PRIIA and requesting that the court vacate the OTP metrics and standards. The AAR asserted that Section 207:

  • Unconstitutionally delegates authority to Amtrak to regulate other private entities.
  • Amtrak's regulation of its competitors violates the Fifth Amendment's Due Process clause.

    The District Court ruled in favor of the Department of Transportation, but the U.S. Court of Appeals reversed the District Court's decision, finding that Amtrak was a private entity and thus, its regulatory authority was unconstitutional. The Department of Transportation appealed the decision and the U.S. Supreme Court granted certiorari.

    Where Are We Now?

    The Supreme Court, in a March 2015 decision, ultimately upheld Amtrak's status as a governmental entity, overturning the Court of Appeals decision. The case was remanded to the Court of Appeals to decide three constitutional issues:

  1. Whether appointing Amtrak's president violates the law requiring election of governmental officials.
  2. Whether PRIIA violates the Due Process clause by granting Amtrak power to control freight trains.
  3. Whether the current arbitrator selection procedures for settling disputes over use of railroad facilities violate the constitutional rule that Congress cannot delegate its own legislative powers.

Rail shippers should pay close attention to these pending determinations. The outcome of DOT v. AAR will significantly impact the rights and power of Amtrak and/or the freight railroads going forward, and potentially impact the cargo those freight railroads carry.

Kathryn C. Thomas co-authors The Freeborn Dispatch Blog and has extensive business litigation experience in matters involving intellectual property, products liability, and general commercial litigation.






Visit Our Sponsors