This morning the Supreme Court ruled for the government 9-0 in in Department of Transportation v. Association of American Railroads, an important case about the nondelegation doctrine. Justice Kennedy wrote the opinion for the Court, with Justice Alito writing a concurring opinion and Justice Thomas concurring in the judgment. I previously summarized the case back in December after oral argument, noting that the justices didn’t let much slip and cautiously suggesting that some of the justices were leaning towards the railroads’ position, at least on the substantive due process issue.
If so, they never had the chance to apply so-called “substantive due process.” The Court’s opinion, with Justice Kennedy writing, concluded that Amtrak is a governmental entity for the purposes of nondelegation analysis, thus short-circuiting application of Carter v. Carter Coal Co. (1936), a New Deal-era substantive due process case that forbids delegations of governmental power to private parties.
The issue squarely before the Court was whether Congress violated the nondelegation doctrine by giving Amtrak, a federally-chartered for-profit corporation, the power to develop measurement criteria that would end up regulating freight railroads who had to allow Amtrak to use their track. The railroads had alleged that such power violated the nondelegation doctrine under Carter Coal and that such a delegation would also violate the Due Process Clause, also under Carter Coal.
The Court decided that Amtrak was not a private entity for constitutional purposes (and thus that Carter Coal was inapplicable). To reach its conclusion, the Court took a functional approach, relying on the political branches’ various forms of control over the corporation, such as removal authority of its management, supervision, ownership, and financial dependence. This is also despite statutory provisions pointing to the establishment of Amtrak as a for-profit entity and a declaration that it “is not a department, agency, or instrumentality of the United States Government.”
In concurrence, Justice Alito noted that the Appointments Clause poses serious constitutional problems for Amtrak, both in the way that the statute empowers an arbitrator to settle disputes about Amtrak’s metrics and its board structure. These problems are not just for Amtrak, though, as Justice Alito explains: “Liberty requires accountability.” He goes on to note:
When citizens cannot readily identify the source of legislation or regulation that affects their lives, Government officials can wield power without owning up to the consequences. One way the Government can regulate without accountability is by passing off a Government operation as an independent private concern. Given this incentive to regulate without saying so, everyone should pay close attention when Congress “sponsor[s] corporations that it specifically designate[s] not to be agencies or establishments of the United States Government.”
With that in mind, he turns to the first issue: oaths and commissions. The Constitution requires executive officers to swear an oath to support the Constitution, and requires the President to commission them. These seeming formalities, as Justice Alito observes, are crucial: “There should never be a question whether someone is an officer of the United States because, to be an officer, the person should have sworn an oath and possess a commission.”
The next issue is the U.S. Code’s two-faced approach to Amtrak’s status (citation removed): “In one statute, Congress says Amtrak is not an ‘agency.’ But then Congress commands Amtrak to act like an agency, with effects on private rail carriers. No wonder the D. C. Circuit ruled as it did.” Indeed. Congress’s inconsistency continues: an arbitrator can be appointed to force Amtrak and FRA to compromise, but the statute doesn’t say who the arbitrator might be. That arbitrator – if they are really able to force a federal agency to agree to a decision – has significant power over both private and public entities. “If the arbitrator can be a private person, this law is unconstitutional,” Justice Alito concludes, since this would involve an exclusively legislative authority being delegated. And if the arbitrator is public, then the provision runs squarely into the Appointments Clause issue. The same issue exists for the Board of Amtrak, which is composed of the Secretary of Transportation, seven other members who are appointed by the President of the United States and confirmed by the Senate, and Amtrak’s President, who is picked by the Board.
Finally, a novel issue arises in the context of Amtrak specifically:
[E]ven assuming that Amtrak’s president could be an inferior officer, there would still be another problem: Amtrak’s Board may lack constitutional authority to appoint inferior officers. The Appointments Clause provides an exception from the ordinary rule of Presidential appointment for “inferior Officers,” but that exception has accountability limits of its own, namely, that Congress may only vest the appointment power “in the President alone, in the Courts of Law, or in the Heads of Departments.” Art. II, §2, cl. 2. Although a multimember body like Amtrak’s Board can head a Department, here it is not at all clear that Amtrak is a Department.
It’s not clear whether Amtrak is within the executive branch, or whether it’s subordinate to the Surface Transportation Board, or some part of the Department of Transportation. Justice Alito is right: “All of these are difficult questions.” Although these issues were not immediately necessary to resolve the nondelegation issue, “it does not by any means necessarily follow that the present structure of Amtrak is consistent with the Constitution.”
Justice Thomas’s opinion concurring in the judgment proposes a more expansive originalist nondelegation doctrine that would go beyond the mere “intelligible principle” currently required by existing case law. In Justice Thomas’s view, the Court should return “to the original understanding of the federal legislative power and require that the Federal Government create generally applicable rules of private conduct only through the constitutionally prescribed legislative process.” With substantial discussion of the historical reasons for the separation of powers and an interesting discussion about the distinction between executive fact-determination and policy-making authority, it’s worth a close read. His conclusion: “The end result may be trains that run on time (although I doubt it), but the cost is to our Constitution and the individual liberty it protects.”
I can’t say that I’m surprised by the result. Declaring Amtrak to be a governmental entity for some purposes isn’t an entirely unreasonable interpretation of the facts. The Court also has a tendency to avoid putting limits on Congress using the nondelegation principle and vacating for a remand was one easy way to do that. Unfortunately, the scope of the nondelegation principle is why the case was interesting in the first place.
Although the Supreme Court missed an opportunity here, it’s not the end. Generally speaking, the Court has now given guidance to lower courts on how to determine whether a “independent” government-chartered corporation is actually a tool of the government. Combined with Justice Alito’s analysis in the concurring opinion, the Court’s holding could have enormous implications for the constellation of government-run corporations that try to have it both ways, exercising the advantages of government power and resources, but without accountability.
This case isn’t over, either: the Court vacated the D.C. Circuit opinion and remanded for reconsideration of several issues in light of its holding that Amtrak is governmental. These continue to include the nondelegation issue and the Appointments Clause issues.
Since the case is anything but dead, maybe the Supreme Court could hear round two in 2017?