ST. LOUIS (Legal Newsline) – The U.S. Court of Appeals for the Eight Circuit ruled that the Surface Transportation Board has exceeded its authority to define on-time performance of railway companies.

Judge Lavenski R. Smith stated in the July 12 opinion that “because the board’s interpretation contradicts the Passenger Rail Investment and Improvement Act’s plain language, we grant these consolidated petitions and hold that the board exceeded its authority.”

In 2011, the Association of American Railroads sued to have sections of the Passenger Rail Investment and Improvement Act (PRIIA) declared unconstitutional, claiming that they unlawfully gave the authority to make such rulings to a private entity. 

It also claimed that bestowing government power to a private party violated the Due Process clause. Section 207 instructs the Federal Railroad Administration and Amtrak to develop or improve new systems to evaluate service and performance. Section 213 allows the board to investigate when an Amtrak train fails to meet certain performance standards.

The district court rejected both claims, but the D.C. Circuit reversed, the opinion states. The Supreme Court vacated the D.C. Circuit’s judgment and remanded, holding that Amtrak was a governmental entity, not a private one, so no Constitutional violation had been made. 

However, on remand in April 2016, the D.C. Circuit found the section unconstitutional, concluding that it did violate the Fifth Amendment’s Due Process Clause by authorizing an economically self-interested party to regulate its competitors. The district court on remand entered judgment for the Association of American Railroads.

In 2016 the Board created the Final Rule, saying that because Section 207 was no longer valid, this now left a gap that the board had the delegated authority to fill because of its authority to settle complaints brought by Amtrak. 

The final rule defined on-time performance as arriving at or departing from a given station 15 minutes after the scheduled time based on an “all stations” approach. The board argued that the term “on-time performance” does not mean the on-time performance metric that PRIIA gave to the railroads and Amtrak, but rather a different system entrusted to the board. 

The board largely relied on its gap-filling rationale, saying that its control over railway performances was a necessity, instead of relying on the text of the law.

The Association of American Railroads disputed the final rule’s content and the board’s authority to issue it. The board justified the final rule saying that the only way for the board to fulfill its responsibilities is to define on-time performance as a threshold for such investigations.

The Eighth Circuit found that the final rule is not merely an alternative explanation as the board stated, because it repeatedly refers to situational necessity.

The district court stated that Congress did not intend to give the FRA/Amtrak and the board separate authority to develop two potentially conflicting rules for on-time performance, and the appellate court agreed. 

Smith stated that “the gap-filling rationale does not allow one agency to assume the authority expressly delegated to another," emphasizing that Congress did not intend to establish industry standards that could create competition.

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U.S. Court of Appeals for the Eighth Circuit
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