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Taking stock of passenger-freight relations in light of court ruling

Posted by Malcolm Kenton
on Friday, March 24, 2017

A seven-year legal battle that could have been avoided had Congress omitted a mere four words from the 2008 Passenger Rail Investment and Improvement Act came to an end yesterday, as I reported in Trains News Wire, when a District Judge of the U.S. District Court for the District of Columbia found the entirety of PRIIA’s Section 207 to be unconstitutional.

An Amtrak Illini or Saluki train meets a Canadian National freight at 16th Street Junction on the St. Charles Air Line in Chicago in November 2010. Photo by Flickr user vxla.
The section provided for the U.S. Department of Transportation and Amtrak to jointly write metrics and standards (M&S) for the performance of Amtrak trains that were then all but required to be incorporated into Amtrak’s operating agreements with its host railroads. By inclusion of the words “and Amtrak shall jointly,” Congress gave an entity that participates in an industry the authority to regulate the same industry, thus depriving the private freight railroads of their right to due process, Judge James E. Boasberg found.

Between July 2013, when the D.C. Circuit Court of Appeals sided with AAR and overturned the M&S on the grounds that Amtrak is a private company and thus cannot be granted regulatory powers, and March 2015, when the Supreme Court reversed that ruling by determining that Amtrak is part of the government for most constitutional purposes, Amtrak’s on-time performance suffered. Now, America’s intercity train passengers should be ready for the same thing to happen again, with possible relief an even more remote possibility.

If PRIIA is to be fixed and new, constitutionally acceptable regulations enforcing passenger trains’ dispatching priority over freight trains are to be enacted, it will be up to Congress to pass a new law (unlikely to occur unless the makeup of Congress changes significantly after the 2018 elections) and the Trump Administration to promulgate regulations enforcing it (also a remote possibility). Had Congress not included those four words, thus giving DOT exclusive power to write the M&S and compel the freight railroads to abide by them, there would be no conflict with the Constitution. Congress could even have required DOT to consult with Amtrak and other passenger rail stakeholders (including groups representing passengers) in crafting the M&S and there would still be no problem.

The principle that this case establishes — that Congress may create entities that either participate and compete in an industry or regulate an industry, but not both simultaneously — is sound.  But there is a hidden underlying legal doctrine on which yesterday’s ruling rests that, at least to my mind (and I’m not a lawyer), is dubious at best. That is the doctrine of corporate personhood, which holds that the rights the Constitution granted to persons also apply to corporations. This doctrine was established in an 1886 Supreme Court ruling involving a dispute between the Southern Pacific Railroad and the California county of Santa Clara over rate regulation. Now, it is being used to grant railroads as corporations (rather than their CEOs and directors as individuals) the right to due process of law under the Fifth Amendment.

While corporate personhood has not been seriously challenged since it was established, the doctrine seems wrong on one level because corporations cannot be treated the same as persons in many respects with regards to the law. They cannot be punished for wrongdoing in the same way as human beings can. But perhaps most importantly, they cannot be imbued with the same responsibilities and moral judgment as human beings because a corporation’s only legal obligation is to earn a profit for its owners or shareholders. All other considerations must legally take a back seat to that objective.

Alas, corporate personhood will almost certainly be in place for the foreseeable future. In the meantime, it would be great if passenger and freight rail stakeholders could sit down and figure out a mutually agreeable regulatory scheme, which FRA would then enforce, that would keep passenger trains running punctually (including at all intermediate stations, not just at endpoints) while not unduly hampering the timely and efficient movement of freight. I realize that much complexity lies within that question, with numerous details within which devils or angels may be lurking. I also realize that freight railroads would rather sort out these issues with Amtrak (and potentially other intercity train operators in the future) without any regulatory “interference.” But the government has a vital interest in ensuring that passenger transportation is safe and reliable. I fear that without regulation, there would be no way of ensuring that railroads respect the interests of their passengers. Host railroads should see Amtrak passengers as their customers as much as freight shippers.

Now is the time for passengers to start or continue conversations with their Congressional representatives and their staff towards more permanent remedies to the thorny difficulties inherent in the current railroading landscape.

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