## Facts

- Congress enacted the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), including § 207, requiring Amtrak and the Federal Railroad Administration (FRA) to jointly develop performance metrics and standards for passenger rail service, including on-time performance.
- The metrics and standards were designed to help assess whether freight railroads were honoring Amtrak’s statutory preference when Amtrak trains operate on freight-owned tracks.
- PRIIA § 207(d) provided an arbitration process to resolve disagreements in developing the metrics and standards, with the resulting decision having binding effect.
- The Association of American Railroads (AAR), representing freight railroads (and including Amtrak as a member), challenged § 207 on constitutional grounds, arguing that a self-interested entity was given regulatory power over competitors and that the arbitration process could impose binding standards without constitutionally accountable decisionmakers.
- After an earlier D.C. Circuit ruling invalidated § 207 on a private-nondelegation theory, the Supreme Court held that Amtrak is a governmental entity for purposes of evaluating the metrics and standards and remanded for consideration of other constitutional objections.
- On remand, the D.C. Circuit evaluated Appointments Clause and Due Process challenges focused on the arbitration mechanism and sent the case back to address remedy; a later D.C. Circuit decision reviewed whether the arbitration provision could be severed.

## Issues

1. Whether PRIIA § 207(d) violates the Appointments Clause by authorizing a non-Article II–appointed arbitrator to issue binding determinations with the effect of final agency action.
2. Whether PRIIA § 207(d) violates Fifth Amendment Due Process by enabling a self-interested participant to obtain coercive regulatory effect over competitors through an unaccountable decisionmaker.
3. If § 207(d) is unconstitutional, whether the arbitration provision is severable such that the remainder of PRIIA § 207 may remain in force.

## Decision

- The D.C. Circuit held PRIIA § 207(d)’s arbitration mechanism unconstitutional because it empowered an arbitrator of unspecified constitutional status to issue binding rulings with the effect of final agency action.
- The court concluded the arbitration structure implicated the Appointments Clause and Due Process because binding regulatory outcomes could be imposed without constitutionally accountable federal officers and with regulatory consequences for Amtrak’s competitors.
- The case was remanded for determination of the appropriate remedy.
- In a later decision, the D.C. Circuit held the unconstitutional arbitration provision severable, leaving the remainder of § 207 intact.
- After severance, no metrics or standards could take effect without approval by a neutral federal agency, and deadlock would result in no rule rather than an imposed rule.

## Legal Principles

- A decisionmaker exercising binding federal authority akin to final agency action must fit within Article II’s appointment and supervision requirements; Congress may not vest such power in an unappointed, unsupervised arbitrator.
- Due Process limits governmental schemes that effectively allow a self-interested competitor to obtain coercive regulatory outcomes against rivals through a decisionmaker lacking constitutional accountability.
- Severability doctrine generally requires invalidating only the unconstitutional portion of a statute unless the remainder cannot function as Congress intended or Congress would not have enacted it without the invalid portion.
- A cooperative regulatory process that requires approval by a neutral federal agency, and in which disagreement yields no binding rule, can avoid the constitutional defects associated with binding outcomes imposed by an unappointed arbitrator.

## Conclusion

The D.C. Circuit concluded that PRIIA § 207(d)’s arbitration mechanism was unconstitutional because it allowed a non-Article II arbitrator to impose binding outcomes affecting regulated parties, raising Appointments Clause and Due Process problems; the court later preserved PRIIA’s broader metrics-and-standards scheme by severing the arbitration provision so that no binding standards could take effect without neutral federal agency approval.


Ass’n of Am. R.Rs. v. U.S. Dep’t of Transp., 821 F.3d 19 (D.C. Cir. 2016)