More on Amtrak and “Company A,” by Daniel Hemel

by Daniel Hemel — Wednesday, May 4, 2016

In a characteristically thoughtful post discussing the D.C. Circuit’s decision in American Association of Railroads v. Department of Transportation, Aaron Nielson writes:

Imagine three companies—let’s call them A, B, and C. Each manufactures cars. Imagine further that Congress authorizes A to regulate B and C, and A uses that power to benefit itself, for instance by requiring B and C to provide valuable inputs to A on preferential terms. Would that be constitutional? [] Certainly not, at least not without upending precedent . . . .

Certainly not indeed. If Congress authorizes A to regulate B and C but the CEO of A is not appointed by the President with the advice and consent of the Senate, then we have an Appointments Clause problem. If the President can’t fire A’s CEO, then we have a removability problem. And if A requisitions goods from B and C without just compensation, then we have a Takings Clause problem.

Let’s assume, though, that the appointment of Company A’s officers conforms to the Constitution’s requirements, that A’s officers are removable by the President, and that B and C assert no takings claim. (The American Association of Railroads argues that there is in fact an Appointments Clause problem with the way that Amtrak’s officers are chosen, but the D.C. Circuit did not reach that question and suggested that AAR might have forfeited the claim.) Is there anything else unconstitutional about the A/B/C setup that Aaron describes?

Maybe a due process problem arises if the officers of Company A (I’ll stop calling it that and start calling it Amtrak) use their regulatory power to benefit themselves: e.g., if an Amtrak board member has a house near a rail line and she uses her authority to make sure that the running of the trains doesn’t disturb her family’s sleep. But there is no such allegation here. By all accounts, Amtrak is trying to do exactly what Congress told it to do: “to provide efficient and effective intercity passenger rail mobility consisting of high quality service that is trip-time competitive with other intercity travel options,” while also “maximiz[ing] its revenues and minimiz[ing] Government subsidies.” And while Amtrak isn’t doing a very good job of minimizing government subsidies, its failures are not of a constitutional dimension.

So what’s the matter with Amtrak? Aaron suggests that the real problem is that Congress has not told Amtrak to “act in the public interest.” That does indeed seem to be what’s bothering the D.C. Circuit: Amtrak, according to the panel, “stands in stark contrast” to “more traditional governmental entities that are decidedly not self-interested.” But what the D.C. Circuit calls “Amtrak’s self-interest” is what Congress thinks is in the public interest: Congress has found in 49 U.S.C. § 24101 that “[p]ublic convenience and necessity require that Amtrak, to the extent its budget allows, provide modern, cost-efficient, and energy-efficient intercity rail passenger transportation between crowded urban areas and in other areas of the United States.” And surely the Due Process Clause doesn’t prohibit Congress from defining the public interest in that way.

Concededly, we might be concerned about Congress giving a politically unaccountable corporate CEO the power to regulate her competitors. But we have a whole jurisprudence of Article II to deal with that: if Congress delegates significant regulatory authority to any individual, that individual must be accountable to the President through appointment and removal. Likewise, we might be concerned about Congress giving an agency the power to extract resources from private parties at below-market rates. But again, we have a Takings Clause to deal with that. What’s so strange about the D.C. Circuit opinion is that it makes a Due Process Clause issue out of a relatively unremarkable institutional arrangement: an agency that competes with private parties at the same time that it regulates them.

That, in my view, is asking the Due Process Clause to do something that it’s not designed to do. Sort of like Amtrak getting into the hamburger business.

@DanielJHemel

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