On July 20, 2018, the U.S. Court of Appeals for the District of Columbia Circuit breathed new life into Section 207 of the Passenger Rail Investment and Improvement Act of 2008 (“PRIIA”)—and thus the Surface Transportation Board’s ability to investigate the cause of poor on-time performance by intercity passenger trains operated by Amtrak—in the latest court ruling in litigation spanning over six years.

Under Section 207, Amtrak and the FRA were to jointly develop metrics and standards for the performance and service quality of intercity passenger rail, including, a measure of acceptable on-time performance. If Amtrak and the FRA could not agree to metrics and standards, then either party was afforded a statutory right to invoke binding arbitration. Previously, the D.C. Circuit held that this ability to resort to arbitration—which would allow an arbitrator not appointed by the President of the United States to establish binding federal regulations—rendered Section 207 unconstitutional.

The D.C. Circuit’s recent decision resolves how to remedy that constitutional defect. Over the objection of the Association of American Railroads (“AAR”), the government asked the court to simply sever the arbitration provision and otherwise allow Amtrak and FRA to develop metrics and standards. While the U.S. District Court sided with the AAR on that issue, believing Section 207 to be unconstitutional in its entirety, the D.C. Circuit held that “the constitutional violations previously identified by this court can be fully remedied by excising the binding-arbitration provision.”

The D.C. Circuit’s ruling has significant implications for Amtrak and state sponsors of intercity passenger rail. Under Section 213 of PRIIA, the Surface Transportation Board may investigate the cause of poor on-time performance and, where a host railroad has failed to give preference to Amtrak trains over its freight transportation, prescribe appropriate relief. The Board has been unable to exercise this authority however, because Amtrak and the FRA have been unable to promulgate metrics and standards during the pendency of this litigation and, as determined by the U.S. Court of Appeals for the Eighth Circuit in July 2017, the Board lacks authority to develop on-time performance standards on its own.

The D.C. Circuit’s decision may not be final chapter in the metrics and standards saga. One judge on the three-judge panel authored a dissenting opinion in the case, arguing that the court’s prior decision found any participation by Amtrak in setting metrics and standards, even without recourse to arbitration, offends the Due Process Clause of the U.S. Constitution. The AAR may press this argument by petitioning the court to rehear the case en banc, or by seeking review by the U.S. Supreme Court.  If the D.C. Circuit’s ruling is upheld (or not further challenged), then Amtrak and the FRA may jointly develop metrics and standards and thereby implement Section 207 of PRIIA.

Please contact Chuck Spitlunik or Allison Fultz if you have any questions about this ruling.