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Supreme Court to hear Amtrak dispute

Monday - 6/23/2014, 1:58pm  ET

SAM HANANEL
Associated Press

WASHINGTON (AP) -- The Supreme Court said Monday it will consider whether Amtrak can partner with a government agency to create rules that other private railroads must follow.

The justices agreed to hear the Obama administration's appeal of a lower court ruling that said Congress unconstitutionally gave regulatory power to the passenger railroad company.

Congress passed a law in 2008 that directed Amtrak to work with the Federal Railroad Administration to develop standards for improving passenger rail service. The new standards were meant to help Amtrak improve its on-time performance and quality of service.

But the American Association of Railroads sued, arguing that a private company was not allowed to develop regulations. The association, which represents freight railroads, was not pleased with the proposed standards that Amtrak and the government had worked out. They included new standards on how Amtrak would keep its priority over freight trains in using common railroad tracks.

A federal court rejected the freight railroads' arguments, but the U.S. Court of Appeals for the D.C. Circuit disagreed. It ruled that even though Amtrak is subject to government oversight, it remains a for-profit company that cannot be given regulatory authority.

The Transportation Department says it has been nearly 80 years since a court has struck down a law on the grounds that it impermissibly gave regulatory power to a private party. The Obama administration argues that Amtrak's role in developing regulations was limited and that the government retained enough control over the ultimate standards.

The freight railroads say that the Amtrak "can wield its lawmaking authority to its commercial advantage." They argue that allowing Amtrak to help craft the rules would let the passenger railroad pressure freight railroads to rewrite private contracts that govern how common tracks are shared.

The court will hear the case, Department of Transportation v. Association of American Railroads, 13-1080, when its new term begins in the fall.

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