Supreme Court justices seem divided over Amtrak's role in developing railroad regulations

WASHINGTON — The Supreme Court seemed divided Monday on whether Amtrak had the legal authority to help craft federal regulations intended keep its trains running on schedule.

The court heard arguments over a 2008 law that directed Amtrak to work with government agencies to develop new standards for improving the passenger railroad's on-time performance.

The American Association of Railroads, which represents the freight railroad industry, says it was unconstitutional for Congress to give a private company the power to create regulations. The industry objects to some of the new standards that allow Amtrak to keep its priority over freight trains that share common railroad tracks.

The Obama administration argues that Amtrak simply worked with the Federal Railroad Administration to devise the rules and, at any rate, the government retained ultimate control over how they were approved. The government is appealing a decision from the U.S. Court of Appeals for the D.C. Circuit which sided with the freight railroads.

Congress created Amtrak in 1970 as a for-profit corporation. Amtrak is not a government agency, but it's subject to government oversight, receives billions of dollars in federal subsidies and its board is nominated by the president.

Chief Justice John Roberts seemed concerned that the regulations could help Amtrak force proceedings in which freight railroads would have to defend their use of railroad tracks. Roberts said that sounds like "significant regulatory impact."

Under the regulations, if on-time passenger train performance averages less than 80 percent for two consecutive quarters, the federal Surface Transportation Board may investigate whether freight railroads caused the delays. Freight railroads could have to pay damages to Amtrak.

Justice Department lawyer Curtis Gannon said Congress merely wanted to enforce existing law, which already guarantees passenger trains a preference over freight trains on shared tracks.

"There is plenty of accountability here for the federal government," Gannon said.

Justice Stephen Breyer worried that a ruling against the government could have drastic implications for other industries in which the government allows private companies to set compliance standards. He cited regulation of Internet domain names by the non-profit Internet Corporation for Assigned Names and Numbers — or ICANN — which is overseen by the Commerce Department.

"Once we go down that road, there is no stopping place," Breyer said.

Thomas Dupree, attorney for the freight railroads, said in the Internet context, "that's not a situation where you have a company trying to regulate other competitors in the market."

"So long as it is operating on a for-profit basis and is given the last word on some regulatory matters that disadvantage its competitors, there's a violation of due process," Scalia said.