[00:00:02] Speaker 00: Case number 12-5204, Association of American Railroad Appellant versus United States Department of Transportation at L. Mr. Dupree for the appellant, Mr. Rab for the appellee. [00:00:21] Speaker 06: Good morning. [00:00:22] Speaker 06: May it please the Court, Tom Dupree on behalf of the Association of American Railroads. [00:00:27] Speaker 06: This is a constitutional challenge to a statute that gives Amtrak, the for-profit government railroad, regulatory authority over private sector railroads. [00:00:38] Speaker 06: The statute further provides that if Amtrak does not exercise its regulatory authority, then an unspecified arbitrator will step in and draft and issue the federal regulation. [00:00:51] Speaker 06: This scheme is unconstitutional. [00:00:53] Speaker 06: The Supreme Court's ruling that Amtrak must be deemed a government entity for purposes of this case does not change the outcome this court previously reached, because this statute is constitutionally flawed in several respects. [00:01:07] Speaker 02: Now, let me stop you there before you get to the flaws of the statute. [00:01:12] Speaker 02: Because of the somewhat peculiar posture of this case, as you have pointed out, the first thing that we have to figure out is what is still before this Court. [00:01:23] Speaker 02: So it would be very helpful if you could start there telling us what you think is preserved and why. [00:01:28] Speaker 06: Absolutely, Judge Brown. [00:01:29] Speaker 06: We think there are three general arguments that are preserved for this Court's review. [00:01:34] Speaker 06: Those arguments include our due process challenge, [00:01:38] Speaker 06: They include our challenge to Amtrak's constitutional eligibility to be the delegated recipient of rulemaking power, and they concern our challenge to the arbitrator provision. [00:01:50] Speaker 06: As far as establishing that these are preserved, I suppose the arbitrator provision is probably the clearest because it's long been consented in the government before this court agrees that's fair game for challenge. [00:02:02] Speaker 06: So I think that's settled. [00:02:04] Speaker 06: As far as our first two challenges, which the government does contest, let me first take due process. [00:02:09] Speaker 06: We preserved our due process challenge to Section 207 in several different ways. [00:02:15] Speaker 06: The first way it was preserved is it set forth in our complaint. [00:02:18] Speaker 06: Paragraph 54, which is reproduced on page 21 of the Joint Appendix, pleads our due process claim broadly. [00:02:25] Speaker 06: It does not say that the due process violation depends on a determination that Amtrak is a private actor. [00:02:33] Speaker 06: Paragraph 53, to be sure, does. [00:02:37] Speaker 06: But obviously, it's quite common in pleadings to have different paragraphs, different claims. [00:02:42] Speaker 06: Some are narrowly phrased, and some, like paragraph 54, broadly framed. [00:02:47] Speaker 06: Even if that weren't sufficient, it's undisputed that we raised our due process argument in the district court in our opposition to the government's motion for summary judgment. [00:02:58] Speaker 06: Keep in mind that this case reaches this court on a grant of summary judgment in the government's favor. [00:03:05] Speaker 06: That's the decision that's currently under review. [00:03:09] Speaker 06: And I think it's well-settled that when a party raises an argument in opposition to a summary judgment motion and then loses on summary judgment, that those arguments are preserved for review. [00:03:20] Speaker 04: They have to have your favor. [00:03:21] Speaker 04: It sounds logical. [00:03:22] Speaker 04: Do you have any cases other than Center for Auto Safety? [00:03:25] Speaker 04: Center for Auto Safety seems to be distinguishable. [00:03:28] Speaker 04: Well, again, I'm not sure. [00:03:29] Speaker 04: It's reasonable in the sense that the issue presented there in the response to the most summary judgment related to how the court should sort of procedurally maneuver in resolving the substantive claims. [00:03:45] Speaker 04: And that seems to be somewhat different from a new constitutional claim. [00:03:51] Speaker 06: Well, there's also, again, I would take issue with the notion that it's a new constitutional claim. [00:03:56] Speaker 06: In other words, we did present it in our complaint. [00:03:58] Speaker 04: But even if for some reason- No, no, I'm talking about the way in which Amtrak is constituted. [00:04:05] Speaker 06: Ah, I take your point, Judge Williams. [00:04:06] Speaker 06: Thank you for clarifying. [00:04:08] Speaker 06: The Appointments Clause challenge, which is part of our basis for Amtrak's, the way it was constituted, that was an argument that we raised, again, in our opposition. [00:04:16] Speaker 06: Right. [00:04:17] Speaker 06: And in addition to the Center for Auto Safety case, I believe it's also the 1L case, which the government relies on where the court said an issue was waived because it was not raised in the response brief. [00:04:28] Speaker 06: And of course, I think it was perfectly fair game for us to raise. [00:04:31] Speaker 04: That was a case where the district court specified very clearly, if you want to do something, do it now. [00:04:39] Speaker 04: The counsel didn't do it, let it go, then raises it much later. [00:04:43] Speaker 04: So unsurprising that that move didn't work. [00:04:47] Speaker 06: Right. [00:04:47] Speaker 06: And the way that this arose here, Judge Williams, is that in the government summary judgment briefing, where, as this court is well aware, the government has always taken a very amorphous protean position as to whether Amtrak is the government. [00:04:59] Speaker 06: And when they suggested that, well, maybe Amtrak could be deemed the government, we then fired back and said, no, that's not permissible because it would raise an appointments clause problem. [00:05:08] Speaker 06: Again, raised in our opposition in summary judgment. [00:05:11] Speaker 06: We lost on summary judgment. [00:05:12] Speaker 06: That's fair game. [00:05:14] Speaker 06: I think even if the court were to overlook our complaint, the briefing in the district court, it's certainly fair to say that we raised these claims in our first appeal before this court. [00:05:23] Speaker 06: We raised them in the Supreme Court. [00:05:25] Speaker 06: And to be sure, the Supreme Court's [00:05:27] Speaker 06: decision I think could fairly be characterized as an intervening change in law. [00:05:30] Speaker 06: The Supreme Court has now come out and said Amtrak must be deemed the government for constitutional purposes in this case. [00:05:37] Speaker 06: And as Justice Alito said, deeming Amtrak the government raises a host of constitutional questions. [00:05:42] Speaker 06: And there's very good authority for when there's an intervening change in the law, such as a Supreme Court decision that says, litigate this case going forward on this premise, that even if we hadn't raised the Appointments Clause challenge before, which I think we have, [00:05:54] Speaker 06: But even if we had it, I think the Supreme Court's intervening decision would give this Court more than an ample basis to address it on the merits. [00:06:01] Speaker 05: In the extent that you were raising it on appeal and hadn't preserved it below, and I realize that's not your position, but the extent that that is the government's position, have they waived the waiver by not telling us that the last time they were at your [00:06:16] Speaker 06: Judge Sintel, I think that's right. [00:06:18] Speaker 06: And as Your Honor correctly notes, there is a fairly robust case law saying waiver arguments themselves can be waived. [00:06:24] Speaker 06: And the government, you're right. [00:06:26] Speaker 06: The government has not taken the position that we've waived these arguments. [00:06:30] Speaker 06: I suppose the due process challenge is an exception. [00:06:32] Speaker 06: They have taken that position. [00:06:34] Speaker 06: But I think we're correct on the merits there. [00:06:36] Speaker 06: But as to the other arguments, you're right, Judge Sintel. [00:06:38] Speaker 06: They haven't. [00:06:39] Speaker 06: I think all three arguments are properly preserved for this court's review. [00:06:42] Speaker 06: Of course, Justice Thomas. [00:06:43] Speaker 06: delivered the most robust opinion of any of the Supreme Court opinions in this case. [00:06:47] Speaker 06: And he prefaced his opinion by saying, I write for the purposes of identifying the issues that are preserved for the DC Circuit's consideration on remand. [00:06:56] Speaker 06: I don't think Justice Thomas was engaging in an empty exercise. [00:06:59] Speaker 06: He obviously thoroughly reviewed the record. [00:07:01] Speaker 06: And he set forth what he thought are the issues that remain in this case, as does Justice Alito, who exhaustively examined or reasonably exhaustively examined the Appointments Clause issue, as well as all the other issues that we've been discussing. [00:07:13] Speaker 06: If there are no further questions on the preservation issues, I'd be delighted to jump into the merits, and perhaps I could begin with due process. [00:07:25] Speaker 06: We believe that it is self-evident that due process does not allow Congress to say one market competitor may regulate another. [00:07:34] Speaker 06: That black letter rule was first articulated, and was clearly articulated, in the Carter-Cole case, where the court said it violates due process to allow a corporation to exercise regulatory authority over its market competitors. [00:07:50] Speaker 06: That's exactly what's happening here. [00:07:53] Speaker 02: But does it permit Congress to say an entity that is sort of the government can have that kind of authority? [00:08:03] Speaker 06: Well, Judge Brown, this is a great question. [00:08:04] Speaker 06: And I think, ultimately, it turns on, is Amtrak, as constituted by Congress, capable of acting as a neutral and disinterested regulator? [00:08:15] Speaker 06: That is to say, a regulator that can act for the common good in the public interest and not through a narrowly focused Amtrak-only lens. [00:08:25] Speaker 06: We think the answer to that question is no, for many reasons. [00:08:29] Speaker 06: For one thing, Amtrak has a for-profit mandate. [00:08:33] Speaker 06: Congress sent in the statute, you shall run Amtrak as a for-profit corporation, not as a government regulator. [00:08:40] Speaker 06: In fact, [00:08:40] Speaker 06: If the court were to log on to Amtrak's website this morning, they continue to say, we are not a public entity. [00:08:46] Speaker 06: We are a for-profit corporation. [00:08:49] Speaker 06: That's how they view themselves and their mission, and that's undergirded by the statutory mandate as to how they conduct operations. [00:08:55] Speaker 06: Now, to be short, Amtrak does pursue a variety of goals that are set forth in the statute, so-called public-focused goals, such as they need to operate a train line between Florida and Louisiana. [00:09:09] Speaker 06: They have to offer reduced rates to disabled passengers. [00:09:12] Speaker 06: They have to buy American goods, those sorts of things. [00:09:15] Speaker 06: But the critical point for due process purposes is that nothing in Amtrak's statute [00:09:20] Speaker 06: or the way it's constituted or the goals it's supposed to pursue ensures that they will take into account the interests of the freight railroads, the regulated parties. [00:09:32] Speaker 06: It doesn't say they'll take into account the interests of the passenger railroads against whom Amtrak directly competes to provide passenger service. [00:09:41] Speaker 06: There's a very [00:09:43] Speaker 06: And the criteria by which these franchises are awarded [00:09:58] Speaker 06: are the metrics and standards that Amtrak drafted, and then it gets awarded the franchise. [00:10:03] Speaker 04: Surprise, surprise. [00:10:04] Speaker 04: One of the arguments, at least, that the government has is that the RFA will insist on the public interest, because its sign-off is necessary for anything to take effect, alongside the arbitrator. [00:10:25] Speaker 04: The STD, Your Honor? [00:10:27] Speaker 04: I'm sorry. [00:10:28] Speaker 04: It's the regulatory agency. [00:10:29] Speaker 02: Right. [00:10:29] Speaker 02: The STB? [00:10:30] Speaker 02: Well, you have two. [00:10:32] Speaker 04: The FRA. [00:10:33] Speaker 02: The FRA. [00:10:33] Speaker 02: The FRA. [00:10:34] Speaker 06: I'm sorry. [00:10:35] Speaker 06: That's right. [00:10:35] Speaker 06: The FRA. [00:10:37] Speaker 06: That's right. [00:10:37] Speaker 06: And I think this court addressed that question in its prior decision. [00:10:41] Speaker 06: In other words, it's a joint 50-50 split of regulatory authority. [00:10:45] Speaker 06: But the key here, of course, is that if Amtrak wants to do one thing and the FRA wants to do another thing, the FRA is powerless to overrule [00:10:56] Speaker 06: Amtrak's desire, and vice versa. [00:10:58] Speaker 05: That's the situation where the arbitrator steps in. [00:11:01] Speaker 05: And the arbitrator comes in. [00:11:02] Speaker 06: Exactly right, Judson. [00:11:03] Speaker 06: The arbitrator is. [00:11:04] Speaker 06: Whoever he or she may be. [00:11:07] Speaker 06: But the point, Judge Williams, is that it's a power sharing agreement. [00:11:11] Speaker 06: The government, the FRA, does not have the final say. [00:11:16] Speaker 06: It is powerless to say, we are going to trump Amtrak's decision here. [00:11:21] Speaker 06: In that situation, again, the arbitrator comes in. [00:11:24] Speaker 06: That's why it's a problem. [00:11:27] Speaker 06: The FRA doesn't have the final word. [00:11:30] Speaker 02: Do you think if the problem here is who is deciding what these metrics would be, would there be a constitutional question here at all if Congress had simply enacted the metrics? [00:11:46] Speaker 06: Not of the type we're discussing, Judge Brown. [00:11:50] Speaker 06: I'm sure I could come up with other reasons why it would be unconstitutional, but for present purposes, that's right. [00:11:55] Speaker 06: I think for present purposes, the problem is that Congress has given regulatory power to a self-interested for-profit market participant. [00:12:03] Speaker 06: that's been given the power to regulate the very industry where it's trying to get business and to gain market share to regulate its competitors. [00:12:09] Speaker 06: It's a patent due process violation. [00:12:12] Speaker 06: Had Congress done what Your Honor posited and simply enacted it, I think most of the problems we're discussing today would evaporate. [00:12:19] Speaker 06: Similarly, if Congress had vested the FRA [00:12:22] Speaker 06: with authority to issue the regulations. [00:12:24] Speaker 06: I think a lot of these problems we're discussing would evaporate. [00:12:27] Speaker 06: And I think that's a very telling point in that what we are asking this court to rule would not in any sense hamstring Congress from pursuing its objectives in the same way that Congress for centuries has pursued its objectives by giving a regulatory agency that is not a commercial business [00:12:45] Speaker 06: regulatory authority over an industry. [00:12:48] Speaker 06: That's the way that Congress has legislated for well over a century. [00:12:52] Speaker 06: The government has never identified a single other government corporation that regulates in the way that this statute allows Amtrak to regulate. [00:13:02] Speaker 06: And of course, as the Supreme Court has said, the fact that there is no historic precedent for this type of entity is a telling indicator of unconstitutionality. [00:13:13] Speaker 06: I think another way that the due process violation is stark is Section 207C. [00:13:20] Speaker 06: That's the contract provision. [00:13:22] Speaker 06: That's the provision that says the freight railroads and Amtrak shall rewrite their contracts to the extent practicable, but they shall rewrite their contracts to implement and to integrate the metrics and standards. [00:13:37] Speaker 06: So you have a world in which Amtrak negotiates these contracts with my clients wearing its hat as a commercial, private business. [00:13:47] Speaker 06: Then it puts on its regulator hat, and it says, now we're going to amend those contracts. [00:13:53] Speaker 06: It's a clear due process violation. [00:13:55] Speaker 02: Can the railroads refuse to do that? [00:13:59] Speaker 02: I mean, it says as practical, as practicable, I guess, is the word. [00:14:03] Speaker 06: That's right, Judge Brown. [00:14:04] Speaker 06: And our position would be that unless what's practicable is a null set, it has to have some effect. [00:14:10] Speaker 06: I think what would happen if we were in a situation where Amtrak said, this is practicable, the railroad said it's not practicable, is that ultimately the dispute would be resolved perhaps even up to the surface transportation board, which would decide what's reasonable. [00:14:26] Speaker 06: And in that posture, I am very confident that Amtrak would come forward and say, it's perfectly practicable for them to do this. [00:14:33] Speaker 06: And so we're under a legal duty, if the SDB agrees, to comply. [00:14:37] Speaker 06: So the practicable limitation is some limitation, but again, unless it's a null set, it means we don't have to do anything, which I can't imagine the government would agree is the case. [00:14:46] Speaker 06: It has to mean something, and it has to have some regulatory effect. [00:14:50] Speaker 06: Let me say a few words about the arbitration provision. [00:14:53] Speaker 06: This notorious provision says that if the government or the FRA and Hamtrak don't reach agreement, a potentially private arbitrator will step in. [00:15:03] Speaker 06: It's a shocking provision without precedent, as far as we can tell in American law. [00:15:08] Speaker 06: The notion that a private individual could issue federal regulations that are published in the Federal Register. [00:15:14] Speaker 05: Yeah, I wonder why you're saying a few words about that. [00:15:17] Speaker 05: I would have thought that would have been your legal fitter. [00:15:18] Speaker 06: Judge, we have so many good arguments today, it's difficult to know the order in which to structure them, but I think it's a very powerful argument. [00:15:25] Speaker 06: The government agrees that it's fully preserved for this Court's review. [00:15:28] Speaker 06: I don't think there could be a serious argument that a private individual could issue federal regulations. [00:15:34] Speaker 05: I think the government— There may be a difference whether the arbitrator is a private individual or is coincidentally a government employee. [00:15:43] Speaker 06: For purposes of our challenge, it would not judge Centella, because, of course, the acid test is what is in the statute. [00:15:49] Speaker 06: And as Justice Alito said, if the statute allows for the potential for a private individual to serve, it's invalid. [00:15:55] Speaker 05: Yeah, I think you know you've got one vote on that issue. [00:15:58] Speaker 06: I feel reasonably confident, yes. [00:16:00] Speaker 05: So the whole point about the article. [00:16:05] Speaker 06: Yeah, I agree with your honor. [00:16:07] Speaker 06: And I think the government's suggestion that this court should essentially rewrite the statute is far-fetched. [00:16:14] Speaker 06: Not only would this court need to insert language requiring a government arbitrator, which doesn't appear in the statute, but this court would also need to draft appointment provisions. [00:16:24] Speaker 05: Because, of course, any individual- That's what I'm wondering. [00:16:27] Speaker 05: If it makes any difference, if it's a government employee, coincidentally a government employee, since the statute doesn't require it or set any [00:16:35] Speaker 05: parameters on what sort of government employee, nor does any statute empower some government employee to serve in that capacity. [00:16:45] Speaker 05: I don't know how it makes any difference if it's coincidentally a government employee. [00:16:49] Speaker 06: That's right, Judge Santelli. [00:16:50] Speaker 06: I don't think it does. [00:16:51] Speaker 06: I think the statute is void ab initio because this court, in addition to inserting the government language, would have to draft appointment provisions. [00:16:59] Speaker 06: It would also frankly have to draft removal provisions. [00:17:01] Speaker 06: to ensure that the arbitrator could constitutionally exercise his or her duties. [00:17:06] Speaker 06: So when the government, as I anticipate they will, stands up in a minute and urges this court to redraft the statute, it's a big lift. [00:17:13] Speaker 06: This court will have to do a lot of drafting. [00:17:15] Speaker 06: It's not one or two words. [00:17:17] Speaker 06: If I could reserve the remainder of my time for rebuttal, I'd appreciate it. [00:17:20] Speaker 06: Thank you. [00:17:26] Speaker 03: May it please the court. [00:17:28] Speaker 03: The plaintiff brought this suit initially based on the view that Section 207 was unconstitutional. [00:17:36] Speaker 03: it impermissibly delegated authority to a private entity. [00:17:42] Speaker 03: Now that the Supreme Court has made clear that Amtrak is a governmental entity for purposes of these claims, they rely on the same case, Carter Cole, to argue that this constitutes a violation of the due process clause. [00:17:57] Speaker 04: The passage of Carter Cole on which they rely particularly [00:18:00] Speaker 04: does not seem to be focused on the government delegi issue, this government status of the delegi. [00:18:12] Speaker 03: Well, it is focused on Carter Cole. [00:18:15] Speaker 04: Private status of the delegate. [00:18:17] Speaker 03: Of course, what Carter Cole involved was an unbridled delegation of authority to an unaccountable private entity. [00:18:24] Speaker 03: And what the Supreme Court made clear was that that is not what Amtrak is. [00:18:28] Speaker 03: It is not a private entity. [00:18:30] Speaker 03: It is by no means unaccountable to the political branches. [00:18:33] Speaker 03: To the contrary, the political branches, as the Supreme Court recognized, control the composition of the board, [00:18:40] Speaker 03: hold all of Amtrak's preferred stock. [00:18:45] Speaker 03: It exercises all sorts of important controls, including on the board members, eight of the nine of whom are appointed by the president and confirmed by the Senate, include the Secretary of Transportation and his delegate to serve on the board is the Federal Railroad Administration. [00:19:02] Speaker 03: So Carter Cole involved circumstances far removed from what we have here. [00:19:07] Speaker 03: And moreover, the Supreme Court subsequently has explained in our brief [00:19:10] Speaker 03: in Freedmen Against Rogers rejected a due process challenge to a board, the composition of which was a majority of individuals antagonistic to the economic interests of the plaintiff there. [00:19:25] Speaker 03: And although [00:19:28] Speaker 03: It's clear from the Supreme Court's decision that there may have been a due process problem with that board exercising adjudicatory functions, which, of course, here there's an independent adjudicator, the STB, to resolve any disputes. [00:19:42] Speaker 03: The court was at pains to note that there was no due process problem with regard to the regulatory actions of the board. [00:19:50] Speaker 04: It seems to me the classification of this decision is not that easy. [00:19:57] Speaker 04: In other words, it would be what emerges from Amtrak and the agency would be a rule within the meaning of the APA. [00:20:08] Speaker 04: That does not necessarily make it a regulation for purposes of the due process clause, right? [00:20:16] Speaker 03: Exactly right. [00:20:17] Speaker 03: And we would emphasize, as we noted in our brief, that all these metrics and standards [00:20:25] Speaker 03: an investigation with regard to the pre-existing statutory preference requirement of a long-standing fidget dating back to 1973. [00:20:33] Speaker 04: What Congress... Yeah, but also amendment of the contract and imposition of fines, right? [00:20:40] Speaker 03: Well, no, with regard to... Well, no fines of any kind or other relief as the statute of experiment imposed unless there's been a violation of the pre-existing statutory preference requirement. [00:20:52] Speaker 03: All that the metrics do... [00:20:55] Speaker 04: Don't the metrics affect the pre-existing statutory preference? [00:21:00] Speaker 03: No, Your Honor. [00:21:01] Speaker 03: What they do is control the circumstances under which a proceeding can be instituted by Amtrak or a freight railroad. [00:21:11] Speaker 03: So the sole work they're doing [00:21:13] Speaker 03: Congress could have said any time Amtrak or a private railroad, that you think that there is a violation of the statutory preference requirement, you can go to the STB and start a proceeding. [00:21:26] Speaker 03: There's nothing unusual or problematic about a private, even a private individual, let alone a government entity like Amtrak, from instituting an adjudicatory proceeding before an independent body. [00:21:38] Speaker 03: What Congress did with regard to the metrics and standards is say, we're going to limit [00:21:42] Speaker 03: that circumstance in which you can require an investigation by the independent STB, that can only happen if you [00:21:51] Speaker 03: these metrics and standards, which were co-authored by the FRA and which serve as to inform the important public policy objective that Congress had to ensure reliable inner-city passing. [00:22:03] Speaker 04: But why do you put a parole on your view of the amendment of the contracts between Amtrak and the host railroads? [00:22:09] Speaker 03: Yeah, with regard to that, as Judge Brown recognized, the reference is to the extent practicable. [00:22:15] Speaker 03: And this court, in other circumstances, like with regards to the Endangered Species Act, has indicated that that [00:22:21] Speaker 03: It connotes not a mandatory obligation, but to the contrary, suggests that it's not mandatory. [00:22:26] Speaker 03: And moreover, we think that in context, what Congress was likely getting at was many of these metrics didn't even address on-time performance at all. [00:22:35] Speaker 03: But to the extent it wouldn't make sense even to put into the contract, to the extent any of them would make sense to be put into the contract, these are bilateral negotiated agreements [00:22:46] Speaker 04: Are you saying that each host railroad has a complete right, the way they would in an ordinary market, of saying no? [00:23:00] Speaker 03: Well, they do. [00:23:01] Speaker 03: We think that they would have a right to demand compensation to the extent that they perceive the inclusion [00:23:09] Speaker 03: a metric or standard in any of these complicated bilateral negotiated agreements should be put in. [00:23:15] Speaker 03: If Amtrak is saying we want this in, it's certainly open to the freight railroad to say, well, if you want it in, you're going to have to pay for it. [00:23:23] Speaker 03: And that could, in turn, determine the practicability of whether Amtrak wanted to pay for it. [00:23:29] Speaker 03: And any disputes [00:23:30] Speaker 03: would go ultimately to the independent STB to be resolved, which has the authority to resolve disputes over contract negotiations and to impose reasonable terms on the parties. [00:23:43] Speaker 03: That's the independent STB. [00:23:45] Speaker 03: At each stage, [00:23:46] Speaker 03: there is ample process being provided here. [00:23:50] Speaker 03: And again, to get back to Freedmen Against Rogers, to explain there, the board in that case, contrary to what was indicated in the plaintiff's reply brief, if you look at Rogers's brief before the Supreme Court there, [00:24:05] Speaker 03: What's clear is that that board was issuing what it called interpretations of the relevant statute, that it violated, that had the force of law in the board's view, and that it violated could form the basis for an adjudicatory proceeding brought before that very board. [00:24:27] Speaker 03: There's nothing close to what the metrics and standards don't even come close to that type of regulatory conduct. [00:24:34] Speaker 03: And even there, the Supreme Court recognized that there's no due process problem. [00:24:40] Speaker 03: and Olin refused to apply the strict standards that apply with regard to adjudications, which, again, it mentioned the adjudicatory powers of the board, and it said that could very well present a problem, citing to earlier decisions like Gibson v. Berryhill, but it said with regard to the regulatory aspects, it rejected the due process challenge. [00:25:03] Speaker 05: So order hell suggests that there's a problem here, and that is another case upon which [00:25:09] Speaker 05: the other side of the line. [00:25:13] Speaker 03: Yeah, I don't think that Carter Cole is properly understood. [00:25:15] Speaker 03: Again, what Carter Cole involved was, as I was indicating to Judge Williams, is an unbridled grant of authority [00:25:23] Speaker 03: to a purely private coal company, or set of coal companies, Amtrak, as the Supreme Court made clear, includes ample control on the part of the political branches. [00:25:37] Speaker 04: You talk about ample control, but are any of those controls directed to the protection of the host railroads? [00:25:44] Speaker 03: Yeah, we think the fact that the Federal Railroad Administration is the delegate of the Secretary of Transportation and sits in on board meetings. [00:25:52] Speaker 03: The Secretary of Transportation, who is no stranger to the need for proper fare standards to govern the freight railroad industry, plays an important role on the board. [00:26:05] Speaker 03: That Congress, as well, is sensitive to the interests of the freight railroads. [00:26:10] Speaker 03: And as the Supreme Court recognized, [00:26:13] Speaker 03: exerts ample, substantial control over all sorts of Amtrak operations and regularly supervises it. [00:26:23] Speaker 03: And there are all sorts of other structural accountability mechanisms. [00:26:26] Speaker 03: There's an inspector general of Amtrak that's subject to the FOIA. [00:26:31] Speaker 03: Regular hearings before Congress are held. [00:26:34] Speaker 03: There is no indication that the freight railroads had their due process rights violated. [00:26:39] Speaker 03: by having a governmental entity, the FRA, co-author the metrics and standards with another governmental entity, Amtrak. [00:26:50] Speaker 05: I'm not sure why that co-authoring is determinative. [00:26:59] Speaker 05: If you've got half the authority, you've got another authority to litigate over. [00:27:03] Speaker 05: It would seem to me that if it's unconstitutional to give all the authority, it would be unconstitutional to give half. [00:27:09] Speaker 05: And I ask you to beg the question and assume that it is unconstitutional, but the fact that it's half rather than a hundred doesn't really matter, does it? [00:27:17] Speaker 03: Well, in this case, where the other half is Amtrak that has on its board the Secretary of Transportation, and where there are all these other accountability mechanisms in place, we do think it's different in kind from what might otherwise be problematic. [00:27:34] Speaker 05: But we don't think in any way there's... That's why that was big. [00:27:39] Speaker 05: If it were unconstitutional for them to have this power, [00:27:43] Speaker 05: Why isn't it unconstitutional for them to have powerful power? [00:27:46] Speaker 03: Well, we don't think that it's unconstitutional for them to have the power. [00:27:50] Speaker 03: I know that. [00:27:50] Speaker 03: That's why I put the word yes at the beginning. [00:27:53] Speaker 03: Yeah. [00:27:53] Speaker 03: We think that the many accountability mechanisms identified by the Supreme Court and noted in our brief sort of make clear that there's ample governmental neutral sufficiently unbiased governmental control. [00:28:07] Speaker 03: But it's important to recognize that even if [00:28:10] Speaker 03: The metrics and standards were an actual regulation. [00:28:17] Speaker 03: This court has indicated that due process concerns operate in much more relaxed fashion with regard to rulemaking proceedings than they do with regard to adjudication. [00:28:27] Speaker 04: Yeah, but there are rulemakers and rulemakings. [00:28:31] Speaker 04: Remember, there's a pair of cases, London versus Denver, and bi-metallic. [00:28:36] Speaker 04: those seem to apply different due process standards, depending upon whether you have a focused decision, a decision which is focused narrowly on very specific parties as opposed to a general rule. [00:28:54] Speaker 04: In other words, the way in which the APA includes both general and particular does not reach out to the due process clause. [00:29:02] Speaker 03: I don't think that the nature of this rulemaking sets it apart from cases like the FTC case that we cited in the brief and all of the progeny that followed, including the cases that were earlier this year. [00:29:14] Speaker 04: Let me give you a hypo. [00:29:16] Speaker 04: Let's take Judge Brown's opening hypothetical in the beginning of the 2013 opinion and adjust it slightly. [00:29:23] Speaker 04: You have an automaker, which is 100% owned by the government. [00:29:28] Speaker 04: And because the government, let's assume, has imposed a ceiling price on steel, there's a need to allocate steel. [00:29:38] Speaker 04: And government motors, plus the Department of Transportation, have the given authority to allocate steel as between government motors and all its competitors. [00:29:51] Speaker 04: Is that free of due process problems? [00:29:54] Speaker 03: We don't think that's a due process problem, but we do emphasize that. [00:29:58] Speaker 04: Was it not? [00:29:59] Speaker 04: I mean, it certainly sounds very, due process slip rate, it certainly sounds very troubling. [00:30:05] Speaker 03: Well, again, we would point the court to cases like Friedman against Rogers, where there was clearly [00:30:10] Speaker 04: Yeah, that involved simply the composition of the board, and it hadn't reached the question of what the board's actually doing anything to any particular person. [00:30:26] Speaker 03: Well, but as I was indicating, if you read the opening brief filed by Rogers before the Supreme Court, it's clear that they were issuing interpretations of the statute that they said, the board said, were binding, had the force of law, and could form the basis it violated for an adjudicatory proceeding before that very board. [00:30:48] Speaker 03: And so I don't think, and the Supreme Court, again, did not hesitate in finding no due process problem with regard to the regulatory aspects of things. [00:30:57] Speaker 02: I want to be clear in following up on Judge Williams' question that you're saying that even a situation like that would not raise any due process concerns as far as the government is concerned. [00:31:12] Speaker 03: We don't think that would be a due process problem, but we do hesitate. [00:31:19] Speaker 03: that the differences with regard to Amtrak here and all of the controls that Congress exercises, that the executive branch exercises, the control over the composition of the board, the fact that the government owns its stock, and the fact that the Secretary of Transportation, attuned as he is to the freight railroads as well, serves as a board member of Amtrak. [00:31:39] Speaker 02: And we don't think- But you can have that same circumstance in what Judge Williams just described. [00:31:46] Speaker 02: It's government motors, right? [00:31:48] Speaker 02: They own the stock. [00:31:49] Speaker 02: It's a governmental entity, but it's a governmental entity that is involved in private sector enterprise. [00:31:59] Speaker 02: And so I'm just trying to understand, you know, what I don't see here then is any cutoff. [00:32:06] Speaker 02: I mean, it seems like once the government puts its imprimatur on something and says, well, it's really ours, but it's playing, you know, in the private sector against private companies, [00:32:19] Speaker 02: Is the government's position that then whatever that entity chooses to do, there could never be a due process problem because it is quasi-governmental or sort of the government? [00:32:33] Speaker 03: Well, there may very well be important distinctions depending on how much control that the government retains over the entity. [00:32:39] Speaker 03: And moreover, here, it's important to remember that any bias is really in here is in the fact that Congress enacted in 1973 the preference requirement. [00:32:48] Speaker 03: And as I heard, I did not hear any definitive, anyway, constitutional objection. [00:32:53] Speaker 03: There certainly has never been any suggestion prior to Congress not being able to enact that preference requirement in order, as part of taking over the public responsibility of ensuring reliable inner-city rail, that Congress properly exercises its authority to say, OK, then we're going to [00:33:17] Speaker 03: have Amtrak perform this public objective and function, then it's got to have preferred access to the freight railroad's track. [00:33:29] Speaker 03: And that's what's going on here. [00:33:31] Speaker 03: There's a pre-existing statute that makes these judgments that [00:33:35] Speaker 03: that create any perceived bias here. [00:33:39] Speaker 03: And there's no due process problems there. [00:33:41] Speaker 03: We really are in the bimetallic world. [00:33:43] Speaker 04: And if I'm just to go back to an earlier point you made, your position, I think, is that for the host railroad's obligations to be increased, [00:33:56] Speaker 04: under this scheme. [00:33:57] Speaker 04: There must, in addition, be a renegotiation of the contract, and with respect to that renegotiation, the host railroads are [00:34:10] Speaker 04: in a position an ordinary market entity would be? [00:34:13] Speaker 04: Is that correct? [00:34:15] Speaker 03: Yeah, we don't. [00:34:15] Speaker 03: Well, we see them at arm's length with AMFRA. [00:34:18] Speaker 03: We don't see this contract provision as imposing an immediate regulatory requirement. [00:34:24] Speaker 04: Well, let's strike immediate. [00:34:27] Speaker 03: An irregulatory requirement. [00:34:29] Speaker 03: We think that by virtue of it saying, to the extent practicable, nothing is imposed by virtue of this. [00:34:35] Speaker 04: Well, who decides whether it's practicable? [00:34:37] Speaker 03: Well, at the end of the day, if there is any dispute, that it goes to the SCB, the disinterested SCB. [00:34:44] Speaker 03: So again, to suggest that that's a due process problem, that's who would determine. [00:34:49] Speaker 04: OK, but if I'm going to stand in your position, [00:34:53] Speaker 04: A decision arrived at by Amtrak and the FRA puts the host railroads in a position where they either cave in accepting new obligations, or they have a hope of a decision before the STB, which will refrain from imposing everything that [00:35:20] Speaker 04: Amtrak and the FRA demand. [00:35:25] Speaker 03: Well, what they have is a right to negotiate at arm's length with our Amtrak over what, in the beginning, Amtrak would have. [00:35:33] Speaker 04: But anyway, it's all very well to talk about negotiating at arm's length. [00:35:36] Speaker 04: The question is, what happens if you end up disagreeing? [00:35:39] Speaker 04: Normally, when you have a real arm's length negotiation, and A says, forget it. [00:35:46] Speaker 04: It's not going to be a deal. [00:35:47] Speaker 04: That is the end of the matter. [00:35:50] Speaker 03: No, there would be, the Amtrak would have the opportunity to go to the impartial disinterested STB to determine what the content of the contracts should be, just as with any other aspect of these contracts. [00:36:05] Speaker 03: And the fact that the disinterested STB would be the ultimate arbiter makes clear that there's no due process problem. [00:36:12] Speaker 04: Well, it doesn't make it all together clear because the, I mean, [00:36:19] Speaker 04: It assumes the STB has the power to mandate a shift in the contract against the host railroads. [00:36:29] Speaker 03: Well, again, to show how far removed we have come in this case, they've never introduced any of these contracts into the record, let alone explain how these... [00:36:43] Speaker 05: very early in the game. [00:36:44] Speaker 05: It's not surprising that we don't have the same full record we would have if we had a full administrative procedure. [00:36:51] Speaker 05: I don't know why you expect them to have introduced any kind of contract. [00:36:55] Speaker 05: You're emphasizing that this is at the rulemaking phase and that it's a summary judgment concerned with regulatory phase as opposed to adjudicatory. [00:37:07] Speaker 05: Normally we don't see examples of what would happen if the rule were enacted. [00:37:12] Speaker 05: They haven't introduced any contracts. [00:37:14] Speaker 05: They haven't given any yet. [00:37:15] Speaker 05: We're still at this stage of it. [00:37:17] Speaker 03: Well, there are existing contracts. [00:37:19] Speaker 03: And what would happen and what the provision envisioned was that the parties, to the extent practicable, no mandatory obligation would consider whether they would come to an agreement as to whether to put these contracts into law or produce any of these measures. [00:37:35] Speaker 05: Your own further argument assumes that, did William suggest, [00:37:41] Speaker 05: You're assuming that it can go on and become a mandatory obligation. [00:37:48] Speaker 03: There's no indication that the STB, in performing its role, there's no indication that anybody has insisted that anything be put into the contracts at the present time. [00:38:01] Speaker 04: In terms of the original negotiation of contracts when Amtrak was created, does the statute have an explicit provision on what happens in the event of disagreement over the insertion of the contract of the statutory preference? [00:38:21] Speaker 03: Well, the statutory preference has its own, in the preference requirement itself, it provides for, in the current version, it provides for the A freight railroad. [00:38:31] Speaker 03: If it's concerned about the way it's being interpreted, I can go to the STB to complain and seek some sort of adjustment about it. [00:38:38] Speaker 04: I'm sorry, the way what's being, the way the preference is being interpreted? [00:38:42] Speaker 03: Yeah, exactly. [00:38:44] Speaker 03: If they feel that the preference, as it currently stands, is imposing an undue interference with the railroad's operations, they have the opportunity to go to the STB to complain. [00:38:56] Speaker 04: And with regard to their... And that is the standard before the STB? [00:39:00] Speaker 04: Is it an undue... Undue what was your term? [00:39:05] Speaker 03: No, it's not that standard. [00:39:08] Speaker 03: If you look at the statute, it talks about what would be the standard subsection C of the relevant provision of the statute. [00:39:16] Speaker 03: But what the statute also makes clear though, Your Honor, is that with regard to other [00:39:22] Speaker 03: disputes with regard to their contracts between the freight railways and Amtrak, that's a standing role of STB to resolve them and to determine what reasonable condition should be put into the contracts. [00:39:40] Speaker 03: next year yeah we think so as explained in our brief the arbitrator first of all or sure your honor the arbitrator we think need not be read to have to to be a private person that that has indicated you do agree that the arbitrator forms the [00:40:09] Speaker 05: final role in the regulatory decision if there has been a deadlock between the two co-authors, right? [00:40:17] Speaker 03: It's not entirely clear what the arbitrator would, the hypothetical arbitrator would have done if he or she would have been appointed, but it talks about binding arbitration. [00:40:24] Speaker 05: But we think that... So that makes it sound as if the rulemaking authority is being delegated to this undefined arbitrator, does it not? [00:40:36] Speaker 03: And we don't think to the extent it was a government person that there'd be any Carter Cole concerns about that. [00:40:42] Speaker 05: I don't understand really why it would make any difference if it were a coincidentally government person, where the statute doesn't define what sort of government person, and there's no statute giving a person the authority to act as that arbitrator. [00:40:54] Speaker 05: Why isn't the coincidental fact that he's a janitor at the courthouse immaterial to whether he can constitutionally receive a delegation of the authority to conduct this room, to decide this room? [00:41:06] Speaker 03: Well, the appointment of power and the removal power rests with the STB, and the STB [00:41:13] Speaker 05: They can pick, unilaterally pick the arbitrator. [00:41:19] Speaker 05: And the arbitrator could be anybody they pick as far as the statute. [00:41:23] Speaker 05: But even if they do, I'm not sure why that matters if there's no statute that defines [00:41:29] Speaker 05: what the qualifications for this arbitrator are in terms of government positions, and some other grant that gives that person the authority to make that rule-making. [00:41:41] Speaker 05: Rule-making is something we have lots of depravity to do. [00:41:44] Speaker 05: I don't know any of them that says you can just pick out a given employee and make him or her the final decision maker on the content of a room or regulation. [00:41:54] Speaker 03: Yeah we don't well of course we would disagree respectfully with the characterization of these metrics and standards as as regulations in the sense that would even amount to a significant exercise of government authority within the meaning of Buckley because for the reasons we've explained they're really their role is. [00:42:10] Speaker 05: Assume we're past that. [00:42:12] Speaker 03: If you're past that, we still think that the SCB could appoint an appropriate person with familiarity with the transportation business. [00:42:21] Speaker 05: Do you know of any other precedent for giving an undefined arbitrator the authority to make the final decision on a rule or regulation? [00:42:31] Speaker 05: I know you're not going to consider a rule or regulation, but do you know of any parallel case? [00:42:37] Speaker 05: Even if you don't call it a [00:42:39] Speaker 03: I'm not, but again, I don't think that that means that what the, first of all, that the hypothetical arbitrator that was never appointed would have been inappropriate. [00:42:55] Speaker 03: That's correct. [00:42:56] Speaker 03: It's statutorily authorized. [00:42:57] Speaker 05: What am I making a hypothetical? [00:42:58] Speaker 03: Well, it's statutorily authorized, but no arbitrator. [00:43:01] Speaker 03: It was a one-shot deal with limited duties to resolve any disputes that might have arisen. [00:43:08] Speaker 03: No disputes arose within the specified statutory 180-day period. [00:43:13] Speaker 03: And the STB would have ample authority, as explained in our brief, to appoint an appropriate government, certainly an appropriate governmental person to serve as a- Well, who makes that person appropriate? [00:43:25] Speaker 05: There's nothing in the statute that defines A, government employee, or B, appropriate. [00:43:32] Speaker 03: I mean, we think any of a number of possibilities, including individuals within the STB that might be appropriately appointed by the STB to serve that role, we think is explained that, again, it wouldn't even be the exercise of significant governmental authority, but even if it were, it would be at most an inferior officer by virtue of the removal powers that are inherent in the authority [00:43:53] Speaker 05: I'm not talking about an appointment clause problem, I'm talking about a delegation clause. [00:43:58] Speaker 05: If this is rulemaking or regulation, then there's plenty of cases that say Congress can delegate this, but I don't know of any that says that you delegate it to an undefined recipient of the power. [00:44:11] Speaker 03: I'm not sure again that this, I mean, [00:44:15] Speaker 03: I don't want to anger the judge, but I don't want to suggest that these are regulatory, but even if they were, we're not aware of any case that limits. [00:44:29] Speaker 03: I thought you were insisting they're regulatory, not adjudicative. [00:44:34] Speaker 03: Well, at most they're regulatory. [00:44:36] Speaker 03: They're certainly not adjudicative, but we don't think- I'm sorry. [00:44:40] Speaker 04: What's the third category? [00:44:42] Speaker 03: What are they instead? [00:44:43] Speaker 03: They are triggers for a possible investigation by the STB, and that's not something that constitutes impermissible regulatory. [00:44:55] Speaker 05: They do that without being regulatory. [00:44:58] Speaker 03: because all they're doing, it's a common place to have even private individuals institute adjudications before entities like the STB. [00:45:09] Speaker 03: As indicated before, all these do is relax the circumstances under which [00:45:16] Speaker 03: a freight railroad might potentially be the subject of one of these investigations. [00:45:20] Speaker 03: The metrics and standards limit the Amtrak's authority to begin a proceeding before the STB. [00:45:30] Speaker 03: Thank you, Your Honor. [00:45:31] Speaker 03: No further questions. [00:45:35] Speaker ?: Thank you. [00:45:35] Speaker 02: Thank you. [00:45:42] Speaker 02: You have three minutes remaining for rebuttal. [00:45:44] Speaker 06: Thank you, Judge Brown. [00:45:45] Speaker 06: My good friend Mr. Rab is asking this court to endorse a massive expansion of government power at the expense of free enterprise. [00:45:53] Speaker 06: Under Mr. Rab's theory, the government could launch the government cola corporation [00:45:59] Speaker 06: put the head of the FDA as one of a dozen board members, and then the government cola corporation can go out and put Coke and Pepsi out of business by regulating in a way that favors the government cola corporation over its private sector competitors. [00:46:14] Speaker 06: Mr. Raff's point, and the only point I heard as to why he thought in response to Judge Williams' question that Amtrak was capable of regulating the public interest rather than through a narrow Amtrak-focused lens, is the presence of the Secretary of Transportation on the board. [00:46:28] Speaker 06: But let's look at this. [00:46:30] Speaker 06: There are nine board members. [00:46:31] Speaker 06: The secretary is one. [00:46:33] Speaker 06: So even if one were to accept the notion that the secretary is going to be a valiant defender of the interests of freight railroads, he gets outvoted eight to one. [00:46:42] Speaker 06: Next, Mr. Rabb argued that the Friedman case supports him. [00:46:46] Speaker 06: But Judge Williams, I think you correctly note, all the Friedman court said was that it didn't have sufficient evidence before it to determine that the board members in that case did have a pecuniary self-interest in the subject of their regulations. [00:47:01] Speaker 06: I think a much more [00:47:03] Speaker 06: on point case is the Gibson versus Berryhill case, which also involved a challenge to an optometry board. [00:47:09] Speaker 06: And in that case... That is very clearly adjudicative, right? [00:47:13] Speaker 06: I take the point, yes it is Judge Williams, but I don't think that this due process protection evaporates depending on whether you're in an adjudicative posture or what's considered more of a pure regulatory posture. [00:47:27] Speaker 06: Certainly Carter Cole supports us. [00:47:29] Speaker 06: And the whole point of Gibson versus Berryhill is that persons exercising government power shouldn't have a personal financial self-interest in what they're doing. [00:47:39] Speaker 06: One point that we harped on in our brief that they did not respond to in their brief, and Mr. Raab did not address the oral argument, is the fact that not only does Amtrak have an institutional commercial interest, but Amtrak officers have a personal financial self-interest in the subject of their regulations. [00:47:56] Speaker 06: In the statute, it says they get paid more in salary if Amtrak is profitable. [00:48:02] Speaker 04: Does that provision apply to the board members or only to management? [00:48:06] Speaker 04: I think to officers, Judge Williams. [00:48:08] Speaker 04: Meaning? [00:48:10] Speaker 06: Well, it certainly would apply to the senior core of officers. [00:48:15] Speaker 06: I don't know whether it would apply to board members. [00:48:17] Speaker 06: Yes. [00:48:18] Speaker 06: Well, I don't know if it would apply to board members or not. [00:48:20] Speaker 06: But my point is that Amtrak's senior officials and the people who are drafting these metrics and standards, and I'm confident the Secretary of Transportation didn't put pen to paper in this case, the people who are actually implementing these regulations have a strong personal financial interest. [00:48:36] Speaker 05: Unless they're the board, that doesn't matter, though. [00:48:39] Speaker 05: And as Judge Williams suggested, [00:48:40] Speaker 05: officers would not be normally the same thing as war. [00:48:45] Speaker 05: If it's made like a private corporation, [00:48:48] Speaker 06: Right. [00:48:49] Speaker 06: I take the point, Judge Sintel. [00:48:50] Speaker 06: I mean, if the board members themselves were free of financial self-interest, I think that would offer some degree of protection. [00:48:58] Speaker 06: But again, we're operating in a universe where the senior officials of Amtrak, and it's not just the statute. [00:49:04] Speaker 06: They also have adopted a compensation plan that says when Amtrak meets certain financial targets, they get paid more in bonuses than that. [00:49:11] Speaker 04: So my only point would be- But the say of that is the managers, not the [00:49:14] Speaker 04: the board. [00:49:15] Speaker 05: That's a fair point. [00:49:16] Speaker 05: That's correct. [00:49:20] Speaker 05: That's correct. [00:49:21] Speaker 05: That's correct. [00:49:25] Speaker 04: That's correct. [00:49:25] Speaker 04: That's correct. [00:49:26] Speaker 04: That's correct. [00:49:27] Speaker 04: Could you address Mr. Rob's argument that essentially we have nothing more than the original [00:49:35] Speaker 04: or a trivial spin on the original requirement of preference for Amtrak, which I must say is that the process of that negotiation is not developed anywhere that I've seen in the briefs. [00:49:55] Speaker 04: And he says this is just essentially more of the same. [00:50:01] Speaker 06: Right, and he's mistaken on that. [00:50:02] Speaker 06: I mean, look, Justice Alito had it exactly right where he said this scheme is obviously regulatory, obviously has a regulatory impact. [00:50:08] Speaker 04: I'm not talking about the classification. [00:50:09] Speaker 04: I'm talking about what happens if a host railroad says, [00:50:15] Speaker 04: Absolutely not. [00:50:16] Speaker 04: I will not play. [00:50:17] Speaker 06: Right. [00:50:18] Speaker 06: In that circumstance, what happens is we go before the STB, ultimately, and the STB determines what's, quote unquote, reasonable. [00:50:28] Speaker 06: And I would expect. [00:50:30] Speaker 04: Is that the same as what happened originally when Amtrak was created? [00:50:36] Speaker 06: Well, originally when Amtrak was created, you had the freight railroads and Amtrak negotiating individualized operating agreements, just as private businesses would. [00:50:48] Speaker 06: But over time, and this may have been several years after Amtrak was created, there was originally the ICC, which then was replaced by the STB. [00:50:56] Speaker 06: But that serves as the arbiter for whether or not terms and conditions are reasonable. [00:51:03] Speaker 06: Amtrak and the freight railroads have a dispute as to what goes into the contract. [00:51:08] Speaker 06: Ultimately, the STB is called in to prescribe reasonable terms and conditions. [00:51:13] Speaker 06: And our point is that that determination is now carried out against the statutory backdrop that says if a term demanded by Amtrak is practicable, the contracts have to be amended. [00:51:29] Speaker 04: I don't mean to be reductionist here, but is the essence [00:51:32] Speaker 04: of the innovation here, the change from STB ruling on reasonableness to STB ruling on practicability? [00:51:43] Speaker 06: Well, the STB's ultimate legal determination is still reasonableness, but [00:51:51] Speaker 06: It's my view, and I suspect the government would probably agree, that in determining what is reasonable, the STB would likely be guided by a federal statute that says if the terms demanded by Amtrak are practicable, they have to go in the contract. [00:52:09] Speaker 06: That's the regulatory power. [00:52:11] Speaker 06: And Mr. Rav's point about, well, ultimately you're going to have the STB adjudicating all of this, that doesn't change the fact that these metrics and standards have an immediate and a strong regulatory impact on us. [00:52:25] Speaker 06: They're writing the law, the fact that a [00:52:28] Speaker 06: independent judge is someday going to determine whether or not we violated the law is immaterial to the constitutional problem, which is that Amtrak is essentially writing the law, even if adjudications are determined by the SQB. [00:52:42] Speaker 04: I'm sorry, isn't there an intermediate step in which something rather flowing from the metrics and standards goes into the contracts between the host railroads and Amtrak? [00:52:55] Speaker 06: Well, it would be in negotiation. [00:52:58] Speaker 06: In other words, the way this works, and by the way, in the record, we have affidavits, I believe it's JA276, where we have affidavits from our clients saying that Amtrak has already approached them and say, we expect you to start integrating these into the contract. [00:53:11] Speaker 06: So they've already made that demand. [00:53:13] Speaker 05: OK. [00:53:13] Speaker 05: That's in the record. [00:53:14] Speaker 06: That's in the record. [00:53:15] Speaker 06: That's in the record. [00:53:16] Speaker 06: Now, again, to be sure, this is not yet elevated to the point where the STB would be called in to adjudicate it. [00:53:24] Speaker 06: But our view is that unless we're prepared to say or the government's prepared to say that nothing will ever be practicable, there have to be at least some terms that Amtrak is going to try to unilaterally force down on us. [00:53:38] Speaker 06: There have to be some terms that are going to be deemed practicable. [00:53:41] Speaker 06: And in that case, it's a clear due process violation. [00:53:44] Speaker 06: And that Amtrak's writing 100 different terms, it says, incorporate all of these, and maybe we'll ultimately be ordered to incorporate 5 or 10, or who knows. [00:53:52] Speaker 04: My understanding is that at the outset, [00:53:55] Speaker 04: there were deals between Amtrak and the host railroads, and at least some degree of provision for compensation of the host railroads. [00:54:04] Speaker 04: Is that true? [00:54:05] Speaker 04: That's true, that's true. [00:54:06] Speaker 04: So, I mean, if that's the case, would it, if the burden is increased on the host railroads pursuant to this process, would not the host railroads have an entitlement to compensation as they did [00:54:24] Speaker 04: back in the origins of Amtrak? [00:54:28] Speaker 06: It's possible we would, Judge Williams. [00:54:30] Speaker 06: In other words, to the extent that we are burdened by Amtrak's demands, ultimately we would take the position that we have a right to be compensated. [00:54:39] Speaker 06: But I don't think that alleviates the due process problem, which is that we're being forced to modify the terms of our contract. [00:54:46] Speaker 06: You're only being forced to modify them [00:54:52] Speaker 04: under the original rules plus the practicability provision. [00:54:56] Speaker 04: Is that right? [00:54:57] Speaker 04: That's right. [00:54:58] Speaker 04: And if it's the case that the original forcing allowed, invited, I'm not sure what the right verb is, compensation for a significant shift against the host railroads, why would it not do so here? [00:55:18] Speaker 06: Well, I mean, again, Judge Williams, we're not sure ultimately how it would play out. [00:55:23] Speaker 06: I mean, it could. [00:55:24] Speaker 06: But I guess my point is simply that Your Honor's analysis is more in the realm of the takings, that they can take away our property rights as long as the government, in theory, which I think is a practical matter, would probably not happen, because the railroads are not fully compensated for hosting Amtrak. [00:55:40] Speaker 06: even if there was some sort of mechanism whereby we could get redress from any contract provisions that were forced on us, I still don't think that solves the fundamental due process and non-delegation problems in this case. [00:55:51] Speaker 06: It might address a takings argument. [00:55:53] Speaker 06: If we had said this amounts to an unconstitutional taking, I think that would be a fair point to say you're going to get compensated at the end of the day. [00:56:00] Speaker 06: But our challenge is to the fact that Congress has given Amtrak the power to write the law. [00:56:05] Speaker 06: And I don't think it's a satisfactory response to say it's OK. [00:56:08] Speaker 06: to have these unconstitutional delegations in due process violations because the STB will true it up at the end. [00:56:16] Speaker 06: I think that addresses a different constitutional concern. [00:56:18] Speaker 04: One other point is, in addition to all... Suppose you have a government redevelopment agency, which is empowered to take land, subject to a duty of compensation, [00:56:30] Speaker 04: Is that parallel to what we have here? [00:56:33] Speaker 04: And the redevelopment agency, let's assume, is told to go out and develop things and make a profit, and so forth. [00:56:43] Speaker 06: I think it would pose very similar problems. [00:56:46] Speaker 04: Again, I don't think that's... Would that not be answered by the duty to pay compensation? [00:56:52] Speaker 06: Well, I'm not sure it would, Your Honor. [00:56:54] Speaker 06: In other words, certainly if they did what Your Honor posits, I think you would have a valid takings claim if you weren't justly compensated. [00:57:03] Speaker 06: But I don't think it would address the other constitutional violation, which is giving a for-profit government corporation the power to write the law. [00:57:11] Speaker 06: It's a separate constitutional violation that doesn't have [00:57:14] Speaker 06: to do with whether or not we're ultimately compensating at the end of the day. [00:57:17] Speaker 06: The bottom line is, Congress can't empower one for-profit corporation to regulate another, even if it's going to somehow make us whole at the end of the day. [00:57:25] Speaker 06: It's a separate constitutional violation. [00:57:27] Speaker 06: The other problem we have, even aside from the contract provision, of course, is the fact that we are also subject to penalties if we don't satisfy or we don't allow the Amtrak trains running on our tracks to satisfy the metrics and standards. [00:57:41] Speaker 04: Is that separate from the contract? [00:57:45] Speaker 06: It is. [00:57:46] Speaker 06: It's a separate regulatory impact. [00:57:48] Speaker 06: This is the provision that says if the Amtrak trains don't satisfy the metrics and standards, Amtrak's request [00:57:56] Speaker 06: They can bring an enforcement proceeding against us in the surface transportation board. [00:58:02] Speaker 06: Now, ultimately, that determination will look at, for example, whether or not we've satisfied the preference requirement. [00:58:09] Speaker 06: But the point is, is that the government, in order to get the penalties, need to prove two things. [00:58:13] Speaker 06: They need to prove a violation of the metrics and standards, and then they need to prove a violation of the preference requirement. [00:58:19] Speaker 06: So as Justice Alito correctly noted, if we comply with the metrics and standards, we don't get dragged into an enforcement proceeding where we can get sanctioned. [00:58:28] Speaker 06: If we do comply with the metrics and standards, we can't get dragged into an enforcement proceeding. [00:58:32] Speaker 06: That's regulatory power. [00:58:41] Speaker 06: I have nothing further. [00:58:43] Speaker 02: All right. [00:58:45] Speaker 02: Thank you. [00:58:45] Speaker 02: The case will be submitted.