Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-12-05204/USCOURTS-caDC-12-05204-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 10, 2015 Decided April 29, 2016

No. 12-5204

ASSOCIATION OF AMERICAN RAILROADS,

APPELLANT

v.

UNITED STATES DEPARTMENT OF TRANSPORTATION, ET AL.,

APPELLEES

On Remand from the

Supreme Court of the United States

Thomas H. Dupree Jr. argued the cause for appellant. 

With him on the briefs were Amir C. Tayrani, Lucas C. 

Townsend, and Louis P. Warchot.

David B. Rivin, Jr., Andrew M. Grossman, Shannen W. 

Coffin, and Michael J. Edney were on the brief for amici 

curiae Chamber of Commerce of the United States, et al. in 

support of appellant. 

Richard B. Katskee and Craig W. Canetti were on the 

brief for amicus curiae Association of Independent Passenger 

Rail Operators in support of appellant. Dan Himmelfarb

entered an appearance. 

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Christopher J. Paolella was on the brief for amicus 

curiae Professor Alexander Volokh in support of plaintiffappellant.

Michael S. Raab, Attorney, U.S. Department of Justice, 

argued the cause for appellees. With him on the brief were

Benjamin C. Mizer, Principal Deputy Assistant Attorney 

General, Vincent H. Cohen, Jr., Acting U.S. Attorney, and

Mark B. Stern, Daniel Tenny, Patrick G. Nemeroff, Attorneys, 

Paul M. Geier, Assistant General Counsel for Litigation, U.S. 

Department of Transportation, Peter J. Plocki, Deputy 

Assistant General Counsel for Litigation, and Joy Park, 

Attorney.

Before: BROWN, Circuit Judge and WILLIAMS and 

SENTELLE, Senior Circuit Judges. 

Opinion of the Court by Circuit Judge BROWN:

BROWN, Circuit Judge: With the Rail Passenger Service 

Act of 1970, Congress created Amtrak, a for-profit 

corporation indirectly controlled by the President of the 

United States. This public venture into private enterprise was, 

and remains, unprecedented. With the Passenger Rail 

Investment and Improvement Act of 2008 (PRIIA), Congress 

piled anomaly on top of anomaly. See 122 Stat. 4907. It

endowed this wholly unique statutory creature with agency 

powers, authorizing it to regulate its resource competitors. 

See PRIIA § 207(a). It further permitted, under certain 

conditions, an arbitrator of unspecified constitutional 

authority to issue binding final agency rulings. Id. § 207(d).

 

The first time this case was before us, we invalidated 

PRIIA as an unconstitutional delegation of regulatory power

to what we believed was a private entity. Ass’n of Am. R.R. v. 

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Dep’t of Transp., 721 F.3d 666, 677 (D.C. Cir. 2013). The 

Supreme Court reversed. Dep’t of Transp. v. Ass’n of Am. 

R.R., 135 S. Ct. 1225 (2015). It held that Amtrak’s 

designation and operation as a for-profit corporation doesn’t

mean we can’t also consider it a governmental entity. Id. at 

1232–34.

For the freight operators who challenged PRIIA, 

however, that decision left three questions unanswered. 

Conceding Amtrak’s governmental status, the operators—

represented by the Association of American Railroads—ask: 

Does it violate due process for an entity to make law when, 

economically speaking, it has skin in the game? Does it 

violate the Appointments Clause for Congress to vest 

appointment power of a principal officer in the Surface 

Transportation Board? And is a government corporation 

whose board is only partially comprised of members 

appointed by the President constitutionally eligible to exercise 

regulatory power? We decline to reach the latter question, but 

we side with the freight operators on the former two. We 

conclude PRIIA violates the Fifth Amendment’s Due Process 

Clause by authorizing an economically self-interested actor to 

regulate its competitors1 and violates the Appointments 

Clause for delegating regulatory power to an improperly 

appointed arbitrator. 

I

Since this controversy’s factual and legal backdrop has 

been ably set forth now on two occasions, once in our prior 

opinion and again in the Supreme Court’s, we needn’t spill 

 1 Amtrak and freight railroads do not compete for passengers but do 

compete for scarce resources (i.e. train track) essential to the 

operation of both kinds of rail service.

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much more ink repeating what’s already been said. However, 

some recitation of the pertinent statutory scheme is necessary, 

as well as a brief update on the procedural history of this case. 

Section 207 of PRIIA tasks Amtrak and the Federal 

Railroad Administration (FRA) with jointly developing 

performance metrics and standards as a means of enforcing

Amtrak’s statutory priority over other trains. See PRIIA 

§ 207(a). These standards are intended to measure the 

“performance and service quality of intercity passenger train 

operations, including cost recovery, on-time performance and 

minutes of delay, ridership, on-board services, stations, 

facilities, equipment, and other services.” Id. In the event 

Amtrak and FRA can’t agree on the composition of these 

“metrics and standards,” either “may petition the Surface 

Transportation Board to appoint an arbitrator to assist the 

parties in resolving their disputes through binding 

arbitration.” Id. § 207(d). Once these metrics and standards 

have been finalized, Amtrak and its host rail carriers “shall 

incorporate” them into their operating agreements “[t]o the 

extent practicable.” Id. § 207(c). 

In our prior ruling, we determined PRIIA constituted an 

unconstitutional delegation of legislative authority to a private 

entity. See Ass’n of Am. R.R., 721 F.3d at 677. In our view, 

“[t]hough the federal government’s involvement in Amtrak is 

considerable,” the fact that “Congress has both designated it a 

private corporation and instructed that it be managed so as to 

maximize profit” disqualified it from exercising regulatory 

power. Id. The Supreme Court reversed. See Dep’t of 

Transp., 135 S. Ct. at 1228. Relying on Lebron v. Nat’l R.R. 

Passenger Corp., 513 U.S. 374 (1995), the Court concluded 

“Amtrak is a governmental entity, not a private one, for 

purposes of determining the constitutional issues presented in 

this case.” Dep’t of Transp., 135 S. Ct. at 1233. The Court

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remanded the case for us to consider the freight operators’ 

remaining challenges to the constitutionality of PRIIA “to the 

extent they are properly before” us. Id. at 1234.

Here on remand, the freight operators advance the three 

challenges to PRIIA described above. Because these claims 

are still before us pursuant to the district court’s summary 

judgment ruling, our review is de novo. See Edwards v. 

District of Columbia, 755 F.3d 996, 1000 (D.C. Cir. 2014). 

II

Before we reach the merits of the freight operators’

challenge, we first pause to consider whether their claims are 

properly preserved. Our responsibility as an appellate court is 

to review the decisions of lower tribunals, and “[t]he very 

word ‘review’ presupposes that a litigant’s arguments have 

been raised and considered in the tribunal of first instance.”

Freytag v. C.I.R., 501 U.S. 868, 895 (1991). Where a claim 

was not properly preserved below, our authority to decide it 

on appeal is “strictly circumscribed.” Puckett v. United States, 

556 U.S. 129, 134 (2009). 

Given the unique procedural history of this case, 

preservation questions attach to each of the freight operators’ 

three claims. We conclude the due process claim was 

properly preserved, and the arbitration clause claim is 

properly before us due to the government’s waiver, the 

detailed merits briefing, and the purely legal and potentially 

jurisdictional nature of the issue. The freight operators’ board 

of directors argument is a much closer call, but because our 

ultimate disposition in this case does not require us to 

consider it, we offer no opinion here as to whether it was 

properly preserved.

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A

In its summary judgment, the district court declined to 

reach the freight operators’ due process argument because it 

was, in the court’s view, “outside the scope of [the] 

Complaint” and not “raised in [the freight operators’] initial 

brief.” 865 F. Supp. 2d 22, 31 (D.D.C. 2012). We disagree. 

The freight operators raised the argument they now advance

on appeal at every stage of this litigation—in their complaint 

and in each brief, from summary judgment to their prior 

appeal before this panel to their appeal to the Supreme Court. 

The district court’s opposite conclusion derives from a

misreading of the complaint. The freight operators asserted 

two claims. AAR Compl. 16–17. The first was 

unconstitutional nondelegation to a private entity, the sole 

issue addressed in our prior opinion. Id. at 16. The second, 

though, was due process. Specifically, the freight operators

alleged, at paragraphs 53 and 54 under a heading titled 

“Violation of the United States Constitution (Due Process),”

PRIIA is unconstitutional because it (1) vests rulemaking 

authority in the hands of interested private parties, and (2) 

empowers Amtrak with power to enhance its commercial 

position relative to other market participants. Id. at 16–17.

The district court did not overlook the due process claim 

entirely, but did fail to notice the freight operators’ complaint 

made not one, but two due process arguments. The court 

rejected the freight operators argument because their

complaint’s due process claim was “premised on Amtrak’s 

status as a private entity.” 865 F. Supp. 2d at 29. However,

that is only half-true. Paragraph 53 of the complaint alleged

the PRIIA “violates the due process rights of regulated third 

parties” by “[v]esting the coercive power of the government 

in interested private parties.” AAR Compl. At 17. Then,

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paragraph 54 outlined a separate due process theory, one 

premised on Amtrak’s status as a government entity operating 

as a market participant. It alleged PRIIA also “violates the 

due process rights of the freight railroads because it purports 

to empower Amtrak to wield legislative and rulemaking 

power to enhance its commercial position at the expense of 

other industry participants.” Id. The freight operators’ due 

process claim thus can only be seen as premised solely on 

Amtrak’s status as a private entity by reading paragraph 54 as 

redundant of 53, a view we do not share, especially 

considering our well-established practice of “constru[ing] the 

complaint liberally, granting [the] plaintiff the benefit of all 

inferences that can be derived from the facts alleged.” Barr v. 

Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004).

Our reading of the freight operators’ complaint is 

corroborated by their summary judgment briefing, which 

attacks PRIIA’s constitutionality “even if Amtrak were 

somehow deemed a government agency.” District Court ECF 

No. 12 at 15–16. In two cogent, detailed paragraphs, the 

freight operators made their case, explaining why Amtrak’s 

wielding of regulatory authority as a market participant 

violated due process and belying the district court’s view of 

the argument as “raised only cursorily.” 865 F. Supp. 2d at 

32. To be sure, the freight operators could have made a more 

robust due process argument, as they did in their briefing here 

on appeal. But what they did below was enough to preserve 

the issue for our review. 

B

The freight operators failed to preserve their arbitration 

clause claim. They never so much as hinted at this argument

until their first brief filed in our court. That said, several 

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considerations convince us that deciding the arbitration claim 

is an appropriate exercise of our appellate authority. 

First, and most important, the government never argued

the arbitration claim was not properly preserved. Instead, the 

government devoted more than eight pages of its brief to the

merits of the claim without mentioning preservation.2 This 

objection is waivable and the government seems to have 

waived any waiver argument. See United States v. Layeni, 90 

F.3d 514, 522 (D.C. Cir. 1996) (“Arguments not raised in the 

district court are generally deemed waived on appeal . . . . 

The government, however, has waived the waiver argument 

by not raising it.”); United States v. Quiroz, 22 F.3d 489, 490–

91 (2d Cir. 1994) (“[W]hen [the government] has neglected to 

argue on appeal that a defendant has failed to preserve a given 

argument . . . courts have consistently held that the 

government has ‘waived waiver.’”); Erhart v. Sec. of Health 

& Human Servs., 969 F.2d 534, 537 (7th Cir. 1992) 

(addressing an unpreserved argument because “the 

government did not object, so it has waived waver”).

Second, as mentioned above, the government thoroughly 

briefed the claim. This is not, then, a case in which “the 

opposing party los[t] its opportunity to contest the merits” nor 

does it risk “an improvident or ill-advised opinion on the legal 

issues tendered.” Se. Mich. Gas Co. v. FERC, 133 F.3d 34, 42 

n.3 (D.C. Cir. 1998).

Third, the arbitration claim is an abstract legal question, 

one that does not turn on facts that would have been 

 2 The only language that comes close is the government’s reference 

to the “never-invoked arbitration provision.” Gov. Br. 40. But this 

has nothing to do with preservation. The government is merely 

noting that the parties settled their dispute and thus never entered 

(or “invoked”) arbitration. 

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developed in district court. In our previous opinion, we 

discussed the question at some length, see AAR, 721 F.3d at 

673–74, as did Justice Alito in his concurring opinion, Dep’t 

of Transp., 135 S.Ct. at 1235–39. Deciding fully briefed, 

purely legal questions is a quotidian undertaking for an 

appellate court.

Fourth, the Supreme Court has treated certain objections 

premised on a violation of the Appointments Clause as 

“nonjurisdictional structural constitutional objections that 

could be considered on appeal whether or not they were ruled 

upon below.” Freytag, 501 U.S. at 878–79; see also Glidden 

Co. v. Zdanok, 370 U.S. 530, 535–36 (1962) (reaching 

challenge even though not raised below because “[t]he alleged 

defect of authority here relates to basic constitutional 

objections designed in part for the benefit of the litigants”); 

Lamar v. United States, 241 U.S. 103, 117–18 (1916) 

(deciding an appointments power claim despite the fact that it 

had not been raised below or even in the Supreme Court until 

the filing of a supplemental brief upon a second request for 

review). 

Perhaps none of these considerations would be sufficient 

on their own to justify our review of an unpreserved claim. 

Cf. Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 388 F.3d 

337, 344 (D.C. Cir. 2004) (reaching an argument because

appellants both “consistently raised the claim” and “appellees 

do not purport to have argued . . . the claim was waived”). 

But taken together, the government’s failure to object, the 

extensive briefing, the purely legal character of the freight 

operators’ arbitration claim, and the significant structural 

constitutional rights at stake convince us that reaching it is an 

appropriate exercise of our appellate authority. See Singleton 

v. Wulff, 428 U.S. 106, 121 (1976) (“The matter of what 

questions may be taken up and resolved for the first time on 

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appeal is one left primarily to the discretion of the courts of 

appeals, to be exercised on the facts of individual cases.”).

Accordingly, we conclude the freight operators’ due 

process claim and arbitration claim are both properly 

presented for our review. 

III

No clause in our nation’s Constitution has as ancient a 

pedigree as the guarantee that “[n]o person . . . shall be 

deprived of life, liberty, or property without due process of 

law.” U.S. CONST. amend. V. Its lineage reaches back to 

1215 A.D.’s Magna Carta, which ensured that “[n]o freeman 

shall be . . . disseised of his . . . liberties, or . . . otherwise 

destroyed . . . but by lawful judgment of his peers, or by the 

law of the land.” Magna Carta, ch. 29, in 1 E. Coke, The 

Second Part of the Institutes of the Laws of England 45 

(1797). Since the Fifth Amendment’s ratification, one theme 

above all others has dominated the Supreme Court’s 

interpretation of the Due Process Clause: fairness. See Snyder 

v. Com. of Mass., 291 U.S. 97, 116 (1934) (Cardozo, J.) 

(“Due process of law requires that the proceedings shall be 

fair, but fairness is a relative, not an absolute, concept. It is 

fairness with reference to particular conditions or particular 

results.”). 

The specific fairness question we face here is whether an 

economically self-interested entity may exercise regulatory 

authority over its rivals. Two undisputed features of the 

unique Amtrak scheme set the stage for this controversy. 

First, Amtrak is operated “as a for-profit corporation” charged 

with “undertak[ing] initiatives . . . designed to maximize its 

revenues.” 49 U.S.C. § 24301(a)(2); id. § 24101(d). Second, 

Amtrak, jointly with FRA, is tasked with developing the 

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metrics and standards for passenger train operations, which 

directly impact freight train operations. See PRIIA § 207(a). 

The freight operators perceive a due process defect in this 

scheme. They argue an economically self-interested actor 

may not exercise regulatory power, and yet here, Amtrak is a 

self-interested market participant wielding regulatory power. 

The Government denies Amtrak’s self-interest is 

constitutionally relevant and avers the established procedures 

accord all the process freight operators are due. 

We agree with the freight operators. Our view of this 

case can be reduced to a neat syllogism: if giving a selfinterested entity regulatory authority over its competitors 

violates due process (major premise); and PRIIA gives a selfinterested entity regulatory authority over its competitors

(minor premise); then PRIIA violates due process. 

A

The abstract legal question at the heart of this case is 

whether it violates due process for Congress to give a selfinterested entity rulemaking authority over its competitors. 

The Supreme Court has confronted the question only once. 

See Carter v. Carter Coal Co., 298 U.S 238 (1936). The 

Carter Coal Court invalidated a delegation that empowered 

one set of competitors to regulate a rival set. Id. at 311–12. 

That decision predates the Administrative Procedure Act and 

the birth of the Court’s modern administrative law 

jurisprudence. But aside from Carter Coal, the only other 

case to comment on the propriety of rulemaking bias is our 

circuit’s Association of National Advertisers, Inc. v. FTC

(ANA), and it cut the other direction, sanctioning the bias. 

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627 F.2d 1151 (D.C. Cir. 1979).

3

 That decision, however, 

dealt with a different kind of bias than in Carter Coal; it 

involved prejudgment rather than financial bias. See id. at 

1154. Thus, all we have as our guide are two imperfect 

precedents, and unsurprisingly, the freight operators rely on 

Carter Coal, while the Government relies on Association of 

National Advertisers. 

The freight operators’ case of choice, Carter Coal,

involved a challenge to the Bituminous Coal Conservation 

Act, which inter alia prohibited the United States or any other 

contractor from purchasing bituminous coal from any mine 

that did not comply with certain wage and hour requirements. 

But the Act itself did not articulate those requirements. See 

298 U.S at 310. It delegated the authority to determine them

to “the producers of more than two-thirds of the . . . tonnage 

production for the preceding calendar year” and “more than 

 3 Freight operators invite us to reject the delegation to Amtrak 

based on cases like Marshall v. Jerrico, Inc., 446 U.S. 238 (1980), 

in which “rigid requirements” of impartiality were applied to 

invalidate official action tainted by bias. See also Tumey v. Ohio, 

273 U.S. 510 (1927) (finding a due process violation where the 

mayor, sitting as judge over a criminal trial, retained whatever fines 

he imposed); Ward v. Village of Monroeville, 409 U.S. 57 (1972) 

(extending Tumey to a more remote incentive, when the town’s 

budget, controlled by the mayor, depended on fines imposed by the 

mayor’s court); Gibson v. Berryhill, 411 U.S. 564 (1973) (finding a 

due process violation where a Board of Optometry’s “efforts would 

possibly redound to the personal benefit of members of the 

Board”). These cases, however, involved officials acting in an 

adjudicatory capacity, where due process demands are stricter and 

courts enforce them with a heavy appellate touch. But our appellate 

touch is far lighter when bias presents in the rulemaking context. 

See ANA, 627 F.2d at 1168–69. For this reason, we do not rely on 

these adjudicatory cases. 

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one-half the mine workers employed.” Id. Put simply, the 

Act endowed these majority producers and employers with 

the authority to set wage and hour requirements the minority 

producers and employers had to comply with or else forfeit all 

their customers. 

In the Court’s view, for the minority producers “[t]o 

‘accept,’ in these circumstances [was] not to exercise a 

choice, but to surrender to force.” Id. at 311. The provision 

“subject[ed] the dissentient minority . . . to the will of the 

stated majority,” and conferred on that majority “the power to 

regulate the affairs of [the] unwilling minority.” Id.

Disapproving the scheme, the Court reasoned:

This is legislative delegation in its most obnoxious 

form; for it is not even delegation to an official or an 

official body, presumptively disinterested, but to 

private persons whose interests may be and often are 

adverse to the interests of others in the same 

business.

Id. (emphasis added). At first blush, it’s not clear precisely 

which aspect of the delegation offended the Court. By one 

reading, it was the Act’s delegation to “private persons” rather 

than official bodies. By another, it was the delegation to 

persons “whose interests may be and often are adverse to the 

interests of others in the same business” rather than persons 

who are “presumptively disinterested,” as official bodies tend 

to be. Of course, the Court also may have been offended on 

both fronts. But as the opinion continues, it becomes clear 

that what primarily drives the Court to strike down this 

provision is the self-interested character of the delegatees’:

The difference between producing coal and 

regulating its production is, of course, fundamental. 

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The former is a private activity; the latter is 

necessarily a governmental function, since, in the 

very nature of things, one person may not be 

intrusted with the power to regulate the business of 

another, and especially of a competitor. And a 

statute which attempts to confer such power 

undertakes an intolerable and unconstitutional 

interference with personal liberty and private 

property.

Id. (emphasis added). The power to self-interestedly regulate 

the business of a competitor is, according to Carter Coal, 

anathema to “the very nature of things,” or rather, to the very 

nature of governmental function. Delegating legislative 

authority to official bodies is inoffensive because we presume

those bodies are disinterested, that their loyalties lie with the 

public good, not their private gain. But here, the majority 

producers “may be and often are adverse to the interests of 

others in the same business.” Id. That naked self-interest 

compromised their neutrality and worked “an intolerable and 

unconstitutional interference with personal liberty and private 

property.” Id. Accordingly, the Court invalidated the Act as

“so clearly a denial of rights safeguarded by the due process 

clause of the Fifth Amendment.” Id. 

The Government’s case of choice, Association of 

National Advertisers, manifests a higher tolerance for 

administrative bias than the Court’s in Carter Coal. It 

involved a different kind of rulemaking bias: prejudgment. 

An FTC commissioner, speaking at a public conference,

unequivocally expressed his desire for limitations on TV 

advertisements targeted at children. Soon thereafter, the FTC 

proposed a rule to precisely that end. The Association of 

National Advertisers petitioned to set the rule aside because, 

in their view, the commissioner had prejudged the outcome 

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and his participation in the rulemaking violated the Due 

Process Clause. See ANA, 627 F.2d at 1169–70. 

The Association built its argument around this court’s 

disqualification test in Cinderella Career & Finishing 

Schools, Inc. v. FTC, 425 F.2d 583 (D.C. Cir. 1970), which 

asked “whether a disinterested observer may conclude that 

(the agency) has in some measure adjudged the facts as well 

as the law of a particular case in advance of hearing it.” Id. at 

591 (alterations omitted). But the court declined to apply the

Cinderella test to rulemaking procedures and upheld the 

FTC’s action under a standard far more tolerant of bias. ANA, 

627 F.2d at 1168–69. Effective exercise of legislative or 

quasi-legislative authority demands the official “engage in 

debate and discussion about the policy matters before him.” 

Id. at 1169; see also Home Box Office, Inc. v. FCC, 567 F.2d 

9, 57 (D.C. Cir. 1977) (per curiam) (“[I]nformal contacts 

between agencies and the public are the bread and butter of 

the process of administration . . . .”). Analogizing to 

Congress, the court observed that “any suggestion that 

congressmen may not prejudge factual and policy issues is 

fanciful. A legislator must have the ability to exchange views 

with constituents and to suggest public policy that is 

dependent upon factual assumptions.” ANA, 627 F.2d at 1165. 

But the court stopped short of declaring rulemakers could 

never be disqualified for prejudgment. The panel decided 

instead that “clear and convincing” evidence (or, later, “the 

most compelling proof”) that an “agency member has an 

unalterably closed mind on matters critical to the disposition 

of the proceeding” would suffice to disqualify a 

decisionmaker. Id. at 1170, 1175. “There is no doubt,” the 

court acknowledged, “that the purpose of [a rulemaking 

proceeding] would be frustrated if a Commission member had 

reached an irrevocable decision on whether a rule should be 

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issued prior to the Commission’s final action.” Id. at 1170. 

Under this new test, the court found the evidence insufficient 

to disqualify the FTC Commissioner. Id. at 1174–75. 

What is most instructive about Association of National 

Advertisers is not its holding, which is not directly controlling 

here, but rather its theory about permissible bias. Ultimately, 

it came down to the court’s concern over the propriety of 

judicial interference in policy debates. Applying the usual 

standard of a “neutral and detached adjudicator” to the 

rulemaking context “would plunge courts into the midst of 

political battles concerning the proper formulation of 

administrative policy.” Id. at 1174. The court observed, 

“[w]e serve as guarantors of statutory and constitutional 

rights, but not as arbiters of the political process.” Id. at 

1174–75. If the FTC Commissioner’s strident views on 

advertisements targeted at children troubled the public, the 

proper recourse was at the polls, not the courts. This view is 

perhaps what motivated the district court to opine, in its 

denial of the freight operators’ summary judgment motion, 

the “potential for bias appears remote” on account of 

“Amtrak’s political accountability.” AAR, 865 F. Supp. 2d at 

32.

To conclude that Amtrak’s political accountability—

remote as it is—removes the taint of any potential for bias 

would be a simple way to resolve this case. After all, 

legislators may legislate in pursuit of their own naked selfinterest. Congress had to pass the STOCK Act just to put a 

stop to congressional insider trading. See Tamara Keith, How 

Congress Quietly Overhauled Its Insider-Trading Law, NPR, 

http://www.npr.org/sections/itsallpolitics/2013/04/16/1774967

34. Those whose rights may be trammeled by legislators 

brazen enough to pursue their own economic self-interest “are 

protected in the only way that they can be in a complex 

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society, by their power, immediate or remote, over those who 

make the rule.” Bi-Metallic Inv. Co. v. State Bd. of

Equalization, 239 U.S. 441, 445 (1915) (Holmes, J.). In fact, 

our Constitution’s ingenious system of checks and balances 

assumes government officials will act self-interestedly. 

“Happy will it be if our choice should be directed by a 

judicious estimate of our true interests, unperplexed and 

unbiased by considerations not connected with the public 

good,” the very first installment of the Federalist Papers

opined. The Federalist No. 1, at 33 (C. Rossiter ed., 1961) 

(Hamilton). “But it is a thing more ardently to be wished than 

seriously to be expected.” Id. And as Alexander Hamilton 

observed elsewhere: “We may preach till we are tired of the 

theme, the necessity of disinterestedness in republics, without 

making a single proselyte.” Alexander Hamilton, The 

Continentalist No. IV, in 3 The Papers of Alexander Hamilton

99, 103 (Harold C. Syrett ed., 1962). Self-interested 

lawmaking was not some shocking aberration; it was an 

unwelcomed expectation, one our Constitution endeavored to 

channel and check. See The Federalist No. 51, at 321–22 

(Madison) (C. Rossiter ed., 1961) (“Ambition must be made 

to counteract ambition.”). 

However, despite acknowledging that “[a] dependence 

on the people is, no doubt, the primary control on the 

government,” id. at 322, the Framers never expected political 

accountability would be sufficient on its own to check selfinterest. Id. “[E]xperience has taught mankind the necessity 

of auxiliary precautions.” Id. So the Framers fashioned 

devices that would “supply[], by opposite and rival interests, 

the defect of better motives.” Id. But of one thing we may be 

sure, these “auxiliary precautions” against “ambition” that 

were built into our Constitution—bicameralism, presentment, 

judicial independence and life tenure, etc.—were designed for 

a government of three branches, not four. The Framers 

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“could not have anticipated the vast growth of the 

administrative state,” which “with its reams of regulations 

would leave them rubbing their eyes.” Fed. Maritime 

Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 755 (2002). 

Those original checks on self-interest, custom-fitted for 

legislators, presidents, and judges, loosely drape 

administrators like outsized hand-me-downs. 

Indeed, government’s increasing reliance on publicprivate partnerships portends an even more ill-fitting 

accommodation between the exercise of regulatory power and 

concerns about fairness and accountability. Curbing the 

misuse of public power was the aim of the Magna Carta, and 

the Supreme Court has consistently concluded the delegation 

of coercive power to private parties can raise similar due 

process concerns. See Eubank v. City of Richmond, 226 U.S. 

137 (1912); City of Eastlake v. Forest City Enters., Inc., 426 

U.S. 668, 677–78 (1976); see also Silverman v. Barry, 727 

F.2d 1121, 1126 (D.C. Cir. 1984). Wherever Amtrak may fall 

along the spectrum between public accountability and private 

self-interest, the ability—if it exists—to co-opt the state’s 

coercive power to impose a disadvantageous regulatory 

regime on its market competitors would be problematic. See, 

e.g., Alexander Volokh, The New Private-Regulation 

Skepticism: Due Process, Non-Delegation, and Antitrust 

Challenges, 37 Harv. J. L. & Pub. Pol’y 931 (2004).

For these reasons, Carter Coal, not Association of 

National Advertisers, dictates our answer to this constitutional 

conundrum. We conclude, as did the Supreme Court in 1936, 

that the due process of law is violated when a self-interested 

entity is “intrusted with the power to regulate the business . . . 

of a competitor.” Carter Coal, 298 U.S. at 311. “[A] statute 

which attempts to confer such power undertakes an 

intolerable and unconstitutional interference with personal 

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liberty and private property” and transgresses “the very nature 

of [governmental function].” Id. 

B

We next consider the minor premise of our syllogism. 

PRIIA only violates due process if Amtrak is (1) a selfinterested entity (2) with regulatory authority over its 

competitors. 

1

In its opinion reversing our prior judgment, the Supreme 

Court did not decide whether Amtrak is a self-interested 

entity. Affirming Amtrak’s status as a governmental entity, 

the Court highlighted how Amtrak’s operations are directed 

by and dependent on the federal government. It noted that 

“rather than advancing its own private economic interests, 

Amtrak is required to pursue numerous, additional goals 

defined by statute” including “provid[ing] efficient and 

effective intercity passenger rail mobility,” “minimiz[ing] 

Government subsidies,” “provid[ing] reduced fares to the 

disabled and elderly,” and “ensur[ing] mobility in times of 

national disaster.” Dep’t of Transp., 135 S. Ct. at 1232. 

Moreover, “certain aspects of Amtrak’s day-to-day 

operations” are dictated by congressional directive. Id. For 

example, Amtrak is required to “maintain a route between 

Louisiana and Florida” and to purchase materials “mined or 

produced in the United States.” Id. Finally, Amtrak is 

“dependent on federal financial support” to the tune of more 

than “$1 billion annually.” Id. “Given the combination of 

these unique features and its significant ties to the 

Government,” the Court concluded, “Amtrak is not an 

autonomous private enterprise.” Id.

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We are bound by the Court’s conclusion, and we do not 

disagree with it. Amtrak is clearly dependent on the 

government in ways other for-profit corporations are not. But 

concluding “Amtrak is not an autonomous private enterprise” 

is not the same as concluding it is not economically selfinterested. Though a government entity, Amtrak is still 

statutorily obligated to “be operated and managed as a forprofit corporation.” 49 U.S.C. § 24301(a)(2). Consistent with 

that obligation, Amtrak is “to make agreements with the 

private sector and undertake initiatives that are consistent with 

good business judgment and designed to maximize its 

revenues and minimize Government subsidies.” Id.

§ 24101(d). Moreover, Congress built financial incentives 

into its scheme to coax its profit-maximizing efforts, allowing 

Amtrak’s officers to receive pay greater than “the general 

level of pay for officers of rail carriers with comparable 

responsibility” for any year in which Amtrak does not receive 

federal assistance. Id. § 24303(b). Amtrak’s lack of full 

autonomy does nothing to relieve it of its statutory charge to 

maximize company profits. 

The Government relies on Amtrak’s obligation to fulfill 

numerous other statutory goals for the public good as 

evidence that it is not economically self-interested. But many

corporations are obligated to compromise profit-seeking 

ambitions pursuant to statutory goals aimed at public goods. 

Corporations must, for instance, comply with the Americans 

with Disabilities Act, the Clean Air Act, and the Affordable 

Care Act, even though doing so may not otherwise have been 

the most economically prudent choice. Compliance with 

these statutory directives does not somehow negate economic 

self-interest. Neither does Amtrak’s compliance with its 

statutory directives negate its concrete economic self-interest. 

The Government identifies no way in which Amtrak’s special 

obligations in any way obstruct it from the pure pursuit of 

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profit in the standard-setting exercise that is before us.

Amtrak’s self-interest is readily apparent when viewed, 

by contrast, alongside more traditional governmental entities 

that are decidedly not self-interested. The government of the 

United States is not a business that aims to increase its bottom 

line to achieve maximum profitability. Unlike for-profit 

corporations, government strives—at least in theory—for an 

equilibrium of revenues and expenditures, where the revenue 

obtained is no more and no less than the operating costs of the 

services provided. Amtrak’s charter stands in stark contrast. 

Its economic self-interest as it concerns other market 

participants is undeniable. 

2

We next consider whether Amtrak has power to regulate 

its competitors. Another way to put this question is whether 

the “metrics and standards” force freight operators to alter 

their behavior. According to the Government, PRIIA merely 

allows Amtrak “to participate in the development of metrics 

and standards for assessing its own performance.” Gov. Br. 

30. And it further asserts that any effect those metrics and 

standards have on freight operators is due either (1) to the 

operators’ own voluntary consent to “incorporate” the metrics 

into their operating agreements or (2) to their violation of the 

statutory preference they agreed to back in 1970. 

As to the first, the Government suggests the bargaining 

positions of Amtrak and the host rail carriers are no different

than those enjoyed by ordinary market entities negotiating at 

arm’s length. PRIIA only requires freight operators 

“incorporate the metrics and standards” into their agreements 

“to the extent practicable.” PRIIA § 207(c). And to the 

extent it is impractical and an agreement between Amtrak and 

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a host rail carrier cannot be reached, the Surface 

Transportation Board (STB) will “prescribe reasonable terms 

and compensation.” 49 U.S.C. § 24308(a)(2)(A)(ii). But 

ordinarily, one party doesn’t face statutory pressure to 

acquiesce in the other’s demands “to the extent practicable.”

That “the railroads may avoid incorporating the metrics and 

standards by arguing that incorporation is impracticable” 

doesn’t render the scheme nonregulatory—“they [still] have a 

legal duty to try.” Dep’t of Transp., 135 S. Ct. at 1253 

(Thomas, J., concurring in the judgment). And since the 

pressure to accept Amtrak’s demands might have force when 

the STB “prescribe[s] reasonable terms and compensation” in 

cases where Amtrak and a carrier cannot reach agreement, see 

49 U.S.C. § 24308(a)(2)(A)(ii), carriers may face a 

heightened risk of disadvantageous terms or rates as a result 

of metrics and standards developed in part by Amtrak. 

And as to the second, the Government attempts to 

downplay the enforcement effects of these metrics and 

standards on freight operators. PRIIA permits the STB to 

“initiate an investigation” whenever Amtrak’s on-time 

performance “averages less than 80 percent for any 2 

consecutive calendar quarters,” regardless whether the metrics 

and standards were incorporated into the operating 

agreements of any affected freight operators. See PRIIA 

§ 213(a), id. § 24308(f)(1). PRIIA also triggers STB 

investigation where the “service quality of intercity passenger 

train operations for which minimum standards are established 

under section 207 . . . fails to meet those standards for 2 

consecutive calendar quarters.” Id. The STB’s investigation 

will determine, in part, whether the “failure to achieve 

minimum standards” is “attributable to a rail carrier’s failure 

to provide preference to Amtrak over freight transportation.”

Id. § 24308(f)(1)-(f)(2). In the Government’s view, the ability 

to initiate an enforcement proceeding is not regulatory 

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authority. But the fact is these “metrics and standards lend 

definite regulatory force to an otherwise broad statutory 

mandate.” AAR, 721 F.3d at 672. Certainly, the preference is 

the ultimate source of freight operators’ liability, but, as we 

said before, “the metrics and standards are what channel its 

enforcement.” Id. In public comments, FRA and Amtrak 

acknowledged the STB “is the primary enforcement body of 

the standards.” Id. 

The extent to which the metrics and standards could 

affect ultimate damages and relief, if at all, in a given case is 

not clear to us. See 49 U.S.C. § 24308(f)(3)(A). We need not 

know that, however, to see that the statute gives Amtrak the 

authority to develop metrics and standards—constrained very 

partially, as discussed below, by the FRA and the arbitrator—

that increase the risk that STB will initiate an investigation, 

thereby increasing the number of cases in which the STB may 

find a failure to provide Amtrak its statutory preference.

“Because obedience to the metrics and standards materially 

reduces the risk of liability, railroads face powerful incentives 

to obey. That is regulatory power.” Dep’t of Transp., 135 S. 

Ct. at 1236 (Alito, J., concurring) (citation omitted).

Accordingly, the Government’s arguments are 

unpersuasive. Both PRIIA’s mandate that freight operators 

incorporate the metrics and standards “to the extent 

practicable” and its grant of authority to STB to investigate 

freight operators in the event the metrics and standards are not 

satisfied confirm that, in fact, PRIIA grants Amtrak, a selfinterested entity, power to regulate its competitors. 

C

The syllogism we introduced at the outset is complete. 

Because PRIIA endows Amtrak with regulatory authority 

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over its competitors, that delegation violates due process. 

Amtrak is required both to “maximize its revenues” and to 

develop new performance metrics, a set of responsibilities 

that, if adhered to, will inevitably boost Amtrak’s profitability 

at the expense of its competitors. The actual metrics Amtrak 

produced in this instance were unfavorable to the freight 

operators. The on-time performance standards required the 

freight railroads to modify their operations, causing delays. 

AAR Br. 32. On some routes, adhering to the standards was 

simply impractical, exposing those rail operators to 

investigation by the STB and financial penalties payable to 

Amtrak. Id. Armed with coercive regulatory power, Amtrak 

wields a weapon of considerable advantage in its competitive 

battle for scarce track. And while the Constitution may

grudgingly accept the reality of self-interestedness, it does not 

endorse it as an unmitigated good.

Congress delegated its legislative power to an entity that 

it designed to be the opposite of “presumptively 

disinterested.” Carter Coal, 298 U.S. at 311. Like coal 

competitors, whose “diversity of view[s]” concerning the 

challenges of the industry “[arose] from their conflicting and 

even antagonistic interests,” id., the antagonistic interests of 

freight operators and Amtrak transform the development of 

new performance metrics and standards into an unfair game 

of zero sums. While freight operators and Amtrak may not

directly compete for customers, they compete for scarce track, 

and Amtrak’s authority to manipulate that competition entails 

the power to modify freight schedules to accommodate 

Amtrak trains, reschedule maintenance work, or reroute 

freight traffic. Put simply, PRIIA entrusts Amtrak “with the 

power to regulate the business . . . of a competitor.” Id. “[A] 

statute which attempts to confer such power undertakes an 

intolerable and unconstitutional interference with personal 

liberty and private property” and transgresses “the very nature 

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of” governmental function. Id. 

None of the Government’s numerous counterarguments 

persuade us otherwise. First, the Government argues Carter 

Coal is distinguishable because unlike the empowered private 

coal producers, the federal government has considerable 

oversight and control over Amtrak. There’s no doubt this is 

true. But then, there was also no suggestion that it was the 

coal producers’ lack of accountability to government 

oversight that offended the Carter Coal Court either. Instead, 

what was offensive about the statute was its “attempt[] to 

confer” the “power to regulate the business of another, and 

especially of a competitor.” Id. Subjecting the coal producers 

to government oversight would not have cured a grant of 

regulatory power antithetical to the very nature of 

governmental function.4 

Second, the Government suggests the FRA’s required 

assent to any proposed metrics operates as an “independent 

check” on Amtrak’s self-interestedness. To be sure, PRIIA

does require Amtrak and FRA to “jointly” develop the 

metrics, but it’s far from clear whether and in what way FRA 

“checks” Amtrak. PRIIA § 207(a). Both are subdivisions 

 4 We recognize that in some cases the Court has upheld 

arrangements under which regulatory burdens can be imposed by 

the joint action of a self-interested group and a government agency. 

See Currin v. Wallace, 306 U.S. 1, 6, 15-16 ((1939); Sunshine 

Anthracite Coal Co. v. Adkins, 310 U.S. 381, 388, 399 (1940). 

Those cases are inapplicable here, however, because the FRA’s 

authority to hold the line against overreaching by Amtrak is 

undermined by the power of the arbitrator, an individual who is 

appointed, and as we show below appointed unconstitutionally, by 

the STB. See Section IV, supra (explaining that any disputes 

between Amtrak and the FRA are to be resolved by an arbitrator 

through binding arbitration).

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within the same branch and work in tandem to effectuate the 

goals Congress has set. Nowhere in the scheme is there any 

suggestion that FRA must safeguard the freight operators’

interests or constrain Amtrak’s profit pursuits.5 Moreover, 

FRA is powerless to overrule Amtrak. As joint developers, 

they occupy positions of equal authority. When there is 

intractable disagreement between the two, the matter is 

resolved by an arbitrator, who may ultimately choose to side 

with Amtrak. FRA cannot keep Amtrak’s naked self-interest 

in check, and therefore the requirement of joint development 

does not somehow sanitize the Act. 

Third, the Government cites Friedman v. Rogers, 440 

U.S. 1 (1979), as proof that some forms of bias are 

inoffensive. Gov. Br. 24–25. Friedman involved a Texas 

statute requiring a majority of the state optometry board be 

members of the Texas Optometric Association (TOA), which 

is restricted to optometrists who comply with state ethics 

requirements. 440 U.S. at 6. The plaintiffs, who were 

ineligible for membership because their business model 

conflicted with those ethics requirements, alleged the Board 

was unconstitutionally biased against them. Id. The Court 

disagreed, stating they had “no constitutional right to be 

regulated by a Board that is sympathetic to the commercial 

 5 Nor does the FRA’s charter suggest it is a steward for the interests 

of freight operators. See generally 49 U.S.C. § 103. The charter 

requires FRA “consider the assignment and maintenance of safety 

as [its] highest priority,” id. § 103(c), and requires, as additional 

duties, that it “develop and enhance partnerships with the freight 

and passenger railroad industry”; “ensure that programs and 

initiatives . . . benefit the public and work toward achieving 

regional and national transportation goals”; and “facilitate and 

coordinate efforts to assist freight and passenger rail carriers . . . by 

providing neutral assistance at the joint request of affected rail 

service providers,” id. § 103(j). 

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practice of optometry.” Id. at 18. Here, the Government 

asserts that Friedman “cannot be reconciled with” a due 

process reading of Carter Coal. Gov. Br. 24. But the 

Friedman plaintiffs never alleged the Board members would 

act out of self-interest instead of fairness, only that the 

board’s composition itself was unfair. The Supreme Court 

rejected the idea anyway, noting there was “no support in the 

record” that “the TOA members on the Board will act in 

excess of their authority by discouraging lawful advertising 

by optometrists,” a decision that would have evidenced naked 

self-interest. Friedman, 440 U.S. at 19 n. 20. 

Finally, the Government argues the Constitution does not 

prohibit Congress from empowering Amtrak to develop 

metrics and standards because Congress itself could have 

developed the metrics and standards or could have directed 

FRA to develop them alone. Gov. Br. 25. Perhaps. But 

notice that, in either of these alternative scenarios, the power 

to regulate freight operators would be in the hands of “official 

bod[ies], presumptively disinterested.” Carter Coal, 298 U.S. 

at 311. Pointing to Congress or FRA’s capacity to develop 

these metrics is nothing but a red herring—the due process 

question Carter Coal and the freight operators put before us 

in this appeal centers on the propriety of self-interested actors 

exercising regulatory power. 

* * *

The Supreme Court’s conclusion that Amtrak is a 

government entity resolved the nondelegation issue that was 

the primary focus of our earlier decision. But it left a due 

process one. Make no mistake; our decision today does not 

foreclose Congress from tapping into whatever creative spark 

spawned the Amtrak experiment in public-private enterprise. 

But the Due Process Clause of the Fifth Amendment puts 

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Congress to a choice: its chartered entities may either 

compete, as market participants, or regulate, as official 

bodies. After all, “[t]he difference between producing . . . and 

regulating . . . production is, of course, fundamental.” Id.

(emphasis added). To do both is an affront to “the very nature 

of things,” especially due process. 

Next, we consider the other challenge to PRIIA 

preserved for our review: whether the arbitration provision 

violates the Appointments Clause. 

VI

As the foregoing analysis suggests, among the Framers’ 

chief concerns at the constitutional convention were questions 

of who should be permitted to exercise the awesome and 

coercive power of the government. Tyrannous abuse of that 

power precipitated revolution against Great Britain. Overly

restrictive access to it crippled our young nation under the 

Articles of Confederation. The novel equipoise the 

Constitution struck was to vest the legislative, executive, and 

judicial powers in independent branches of government and 

then empower each to check the others. 

The Appointments Clause, at issue here, is one of “the 

significant structural safeguards of th[at] constitutional 

scheme.” Edmond v. United States, 520 U.S. 651, 659 

(1997). It requires every “Officer of the United States” 

exercising “significant authority pursuant to the laws of the 

United States” to be appointed in a specific manner, as 

prescribed in Article II, section 2, clause 2. Buckley v. Valeo, 

424 U.S. 1, 126 (1976). The prescribed manner differs 

depending on the type of “Officer” to be appointed. 

“Principal officers” are appointed by the President with the 

“advice and consent of the Senate,” ensuring “public 

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accountability for both the making of a bad appointment and 

the rejection of a good one.” Edmond, 520 U.S. at 660. But 

Congress, for the purpose of “administrative convenience,”

id., may vest the exclusive appointment power of inferior 

officers—those “whose work is directed and supervised at 

some level” by principal officers, id. at 663— in “the 

President alone, in the Courts of Law, or in the Heads of 

Department,” id. at 660. These limitations on the 

appointment power “ensure that those who wield[] it [are] 

accountable to political force and the will of the people.” 

Freytag, 501 U.S. at 884. 

The freight operators claim PRIIA’s arbitration provision 

violates this important safeguard. PRIIA requires that, in the 

event Amtrak and FRA cannot agree, either party “may 

petition the Surface Transportation Board to appoint an 

arbitrator to assist the parties in resolving their disputes 

through binding arbitration.” PRIIA § 207(d). Conspicuous 

by its absence in this provision is any mention whether the 

appointed arbitrator is a private individual or public official. 

But in the freight operators’ view, it hardly matters, as the 

provision is unconstitutional regardless. Either the arbitrator 

is a private individual and the clause unlawfully deputizes a 

private person to issue binding regulations, or she is a public 

official and her appointment by the STB, rather than “the 

President with the advice and consent of the Senate,” violates 

the Appointments Clause.6

 6 The Government contends it is improper to reach this question 

because the arbitration provision was “never invoked.” Gov. Br. 

40–42. For reasons we explained in our previous opinion, this 

argument fails to acknowledge how the provision “still polluted the 

rulemaking process” by “stack[ing] the deck in favor of 

compromise.” AAR, 721 F.3d at 674; see also Dep’t of Transp., 135 

S. Ct. at 1236 (Alito, J., concurring) (“[W]hen Congress enacts a 

compromise-forcing mechanism, it is no good to say that the 

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We needn’t concern ourselves much here with the 

amici’s arguments concerning the propriety of giving

regulatory power to private individuals. Our prior opinion 

detailed extensively why private entities cannot wield the 

coercive power of government, AAR, 721 F.3d at 670–74, and 

seeing as the Supreme Court reversed on other grounds, we 

stand by that analysis. See also Dep’t of Transp., 135 S. Ct. at 

1237 (Alito, J., concurring) (“When it comes to private 

entities [exercising governmental powers], however, there is 

not even a fig leaf of constitutional justification.”). More 

importantly, even assuming, as the Government insists, the 

STB appoints a “governmental arbitrator” rather than a 

private one, the appointment is nonetheless unconstitutional. 

A

Antecedent to deciding the ultimate issue, we first turn to 

a central premise of the freight operators’ claim, namely that 

the arbitrator is an “Officer of the United States.” After all, 

the Appointments Clause is concerned only with the 

appointment of officers, not nonofficers. See Edmond, 520 

U.S. at 662. The question is whether the “appointee 

exercis[es] significant authority pursuant to the laws of the 

United States.” See Buckley, 424 U.S. at 126; see also

Edmond, 520 U.S. at 662 (noting the “significant authority” 

test “marks, not the line between principal and inferior officer 

. . . but rather . . . the line between officer and nonofficer”). 

To see why we answer this question with a resounding 

“yes,” it is helpful to take stock of the arbitrator’s duty. The 

arbitrator is called upon to resolve any impasse between 

 

mechanism cannot be challenged because the parties 

compromised.”); Metro. Wash. Airports Auth. v. Citizens for 

Abatement of Aircraft Noise, Inc., 501 U.S. 252, 264–65 (1991). 

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Amtrak and FRA through “binding arbitration.” PRIIA 

§ 207(d). In other words, it is the arbitrator’s responsibility to 

render a final decision regarding the content of the metrics 

and standards. That decision would appear in the Federal 

Register, see Metrics and Standards for Intercity Passenger 

Rail Service under Section 207 of the Passenger Rail 

Investment and Improvement Act of 2008, 75 Fed. Reg. 

26839, 26839 (2010), and would immediately impact the 

freight railroads obligations vis-à-vis Amtrak. The 

arbitrator’s power to alter the railroad industry through final 

agency action constitutes “significant authority pursuant to 

the laws of the United States.” See Edmond, 520 U.S. at 665 

(noting the judges in question “have no power to render a 

final decision on behalf of the United States unless permitted 

to do so by other Executive officers”); see also Dep’t of 

Transp., 135 S. Ct. at 1239 (Alito, J., concurring) (asserting 

that “nothing final should appear in the Federal Register 

unless a Presidential appointee has at least signed off on it”). 

For these reasons, the STB’s appointed arbitrator 

qualifies as an “Officer of the United States,” and “must, 

therefore, be appointed in the manner prescribed by” the 

Appointments Clause. See Buckley, 424 U.S. at 126. We 

must consider, then, whether PRIIA—which vests the STB 

with power to appoint an arbitrator—accords with the manner 

prescribed by the Constitution. 

B

Perhaps the best explanation of the Appointments Clause 

is found in the Supreme Court’s 1878 decision in United 

States v. Germaine, 99 U.S. 508 (1878). The Court stated: 

The Constitution for purposes of appointment very 

clearly divides all its officers into two classes. The 

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primary class requires a nomination by the President 

and confirmation by the Senate. But foreseeing that 

when offices became numerous, and sudden 

removals necessary, this mode might be 

inconvenient, it was provided that, in regard to 

officers inferior to those specially mentioned, 

Congress might by law vest their appointment in the 

President alone, in the courts of law, or in the heads 

of departments. That all persons who can be said to 

hold an office under the government about to be 

established under the Constitution were intended to 

be included within one or the other of these modes of 

appointment there can be but little doubt.

Id. at 509–10. 

Accordingly, the starting place for assessing the 

constitutionality of an officer’s appointment is determining to 

which class the officer belongs. Here, if the arbitrator is a 

principal officer, her appointment would clearly violate the 

constitution because PRIIA vests the appointing power in the 

STB alone, not the President with the advice and consent of 

the Senate. See PRIIA § 207(d). Likely in anticipation of this 

obvious defect, the Government characterizes the arbitrator’s 

authority as “confined to the single impasse over the metrics 

and standards,” and asserts it is therefore of such a “limited 

nature” that it “would have made the arbitrator an inferior, 

rather than a principal, officer.” Gov. Br. 46. If the 

Government’s assertion were correct, the appointment would 

be valid, since the STB is a “department” within the meaning 

of the Clause. See 49 U.S.C. § 1301 (a), (b) (establishing the 

STB as “an independent establishment” whose board 

members are “appointed by the President”); Free Enter. Fund 

v. Public Co. Accounting Oversight Bd., 561 U.S. 477, 511 

(2010) (defining a department as “a freestanding component 

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of the Executive Branch, not subordinate to or contained 

within any other such component”).

However, as the Supreme Court’s opinion in Edmond

clarified, the degree of an individual’s authority is relevant in 

marking the line between officer and nonofficer, not between 

principal and inferior officer. Edmond, 520 U.S. at 662. 

Recognizing its cases had not yet “set forth an exclusive 

criterion for distinguishing between principal and inferior 

officers,” id. at 661, the Edmond Court identified the 

dispositive feature as whether an officer is “directed and 

supervised at some level by others who were appointed by 

Presidential nomination with the advice and consent of the 

Senate,” id. at 663. Thus, the Government’s reliance on the 

“limited nature” of the arbitrator’s duties confuses a question 

of supervision for one of authority. 

And while it may seem peculiar to demand “primary 

class” treatment for a position as banal as the PRIIA 

arbitrator, it also seems inescapable. Nowhere does PRIIA 

suggest the arbitrator “is directed and supervised at some 

level by others who were appointed by Presidential 

nomination with the advice and consent of the Senate.” 

PRIIA doesn’t provide any procedure by which the 

arbitrator’s decision is reviewable by the STB. Instead, it 

empowers the arbitrator to determine the metrics and 

standards “through binding arbitration.” See Dep’t of 

Transp., 135 S. Ct. at 1239 (Alito, J., concurring) (“As to that 

‘binding’ decision, who is the supervisor?”). The result? A 

final agency action, the promulgation of metrics and standards 

as though developed jointly by Amtrak and the FRA. 

Without providing for the arbitrator’s direction or supervision 

by principal officers, PRIIA impermissibly vests power to 

appoint an arbitrator in the STB. 

USCA Case #12-5204 Document #1611061 Filed: 04/29/2016 Page 33 of 34
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V

Train schedules are a matter of pride and of 

apprehension to nearly everyone. When, far up the 

track, the block signal snapped from red to green and 

the long, stabbing probe of the headlight sheered the 

bend and blared on the station, men looked at their 

watches and said, ‘On time.’ There was pride in it, 

and relief too. The split second has been growing 

more and more important to us. And as human 

activities become more and more intermeshed and 

integrated, the split tenth of a second will emerge, and 

then a new name must be made for the split 

hundredth, until one day, although I don’t believe it, 

we’ll say, ‘Oh, the hell with it. What’s wrong with an

hour?’ . . . One thing late or early can disrupt 

everything around it, and the disturbance runs 

outward in bands like the waves from a dropped stone 

in a quiet pool.

JOHN STEINBECK, EAST OF EDEN 533 (Penguin Books 2002).

It may be said that PRIIA’s architects shared Steinbeck’s

pride in the punctuality of train schedules. But as we’ve 

shown, there are limits to how far Congress may go to ensure 

Amtrak’s on-time performance. The Constitution’s drafters 

may not have foreseen the formidable prerogatives of the 

administrative state, but the Due Process Clause effectively

guarantees the regulatory power of the federal government 

will be wielded by “presumptively disinterested” and “duly 

appointed” actors who, in exercising that awesome power, are 

beholden to no constituency but the public good. Because 

PRIIA grants this power to the economically self-interested 

Amtrak and to an unconstitutionally appointed arbitrator, it 

transgresses that vital guarantee. We therefore 

Reverse.

USCA Case #12-5204 Document #1611061 Filed: 04/29/2016 Page 34 of 34