Assoc. of American Railroads v. 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,
7
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
11
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.