Ass'n of Am. Railroads v. U.S. Dep't of Transp., 896 F.3d 539

Background

Congress enacted the Passenger Rail Investment and Improvement Act of 2008 (§207) to require Amtrak and the Federal Railroad Administration (FRA) to jointly develop metrics and minimum standards for intercity passenger rail performance; those standards can be incorporated into agreements with freight rail carriers that own tracks used by Amtrak.
§207(d) authorized any party to petition the Surface Transportation Board to appoint an arbitrator to resolve disputes by binding arbitration if Amtrak and the FRA could not agree within 180 days.
The Association of American Railroads sued, arguing §207 unlawfully vested regulatory power in Amtrak (a self‑interested actor) in violation of the Due Process Clause and that the arbitration appointment violated the Appointments Clause.
This Court (American Railroads III) previously held §207 violated the Due Process Clause because it allowed Amtrak to regulate competitors, and also held the arbitration appointment raised Appointments Clause problems; the Supreme Court earlier had held Amtrak is a governmental actor for separation‑of‑powers purposes (American Railroads II).
On remand the district court vacated the May 2010 metrics and declared all of §207 unconstitutional; the government proposed severing only §207(d) instead of invalidating the whole subsection; this appeal concerns the proper remedial scope.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §207's process violates Due Process by empowering Amtrak to regulate competitors	§207 endows Amtrak with regulatory authority over freight competitors, violating due process	Government conceded prior constitutional rulings for purposes of remedy question; argued the arbitration clause is the constitutional culprit and can be severed	Court accepts prior holdings as binding and treats arbitration provision as the critical flaw; excising §207(d) cures the due process problem
Whether the arbitration provision (§207(d)) violates the Appointments Clause	Arbitrator issues final agency‑type decisions though not appointed under Appointments Clause	Government defended constitutionality but consented to severance remedy	Court treats Appointments Clause issue as moot on appeal (metrics vacated and Amtrak Board appointment process changed by Congress)
Remedy: whether to sever only §207(d) or invalidate entire §207	Sought full invalidation of §207	Proposed severance of §207(d) to preserve remainder	Court holds severance of §207(d) is proper: presumption of severability, statute remains functional, severance better aligns with congressional objectives, no waiver by government
Mootness of Amtrak Board Appointments challenge	Argues Board/president appointment implicated past metrics process	Government notes statutory amendment requiring Presidential appointment and Senate confirmation of voting Board members	Court finds Appointments Clause challenge moot and declines to decide

Key Cases Cited

Department of Transportation v. Ass'n of American R.R., 135 S. Ct. 1225 (2015) (Supreme Court: Amtrak acts as a governmental entity for separation‑of‑powers analysis)
Ass'n of American R.R. v. Department of Transp., 721 F.3d 666 (D.C. Cir. 2013) (panel decision addressing Amtrak's status and §207)
Ass'n of American R.R. v. Department of Transp., 821 F.3d 19 (D.C. Cir. 2016) (panel decision holding §207 violates the Due Process Clause and addressing arbitration/Appointments issues)
Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (presumption in favor of severability; partial invalidation preferred)
United States v. Booker, 543 U.S. 220 (2005) (remedial severability and statutory construction principles)
Carter v. Carter Coal Co., 298 U.S. 238 (1936) (Due Process limits on entrusting regulatory power to self‑interested private entities)
Currin v. Wallace, 306 U.S. 1 (1939) (upholding joint private/government regulatory schemes where government retains ultimate control)
Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381 (1940) (similar upholding where an agency could modify or reject industry‑proposed rules)