[00:00:31] Speaker 03: Stand, please. [00:00:43] Speaker 03: Oyez, oyez, oyez. [00:00:46] Speaker 03: All persons having business before the Honorable, the United States Court of Appeals for the District of Columbia Circuit, heart and mind is to draw near and give their attention, for the Court is now sitting. [00:00:57] Speaker 03: God save the United States and its Honorable Court. [00:01:00] Speaker 03: Be seated, please. [00:01:02] Speaker 03: Case number 17-5123, Association of American Railroads versus United States Department of Transportation at L. Appellates. [00:01:10] Speaker 03: Mr. Nemiroff for the Appellates. [00:01:12] Speaker ?: Mr. Dupree for the Appellate. [00:01:16] Speaker 00: Mr. Nemiroff. [00:01:16] Speaker 00: May it please the Court. [00:01:17] Speaker 00: Patrick Nemiroff on behalf of the government. [00:01:20] Speaker 00: This Court's prior due process holding in this case has three necessary conclusions. [00:01:25] Speaker 00: First, that Amtrak is self-interested. [00:01:27] Speaker 00: Second, that the metrics and standards had regulatory effect. [00:01:31] Speaker 00: And third, that the FRA's role in developing the metrics and standards did not cure the due process concerns. [00:01:38] Speaker 00: Now, that third conclusion was necessary because, as the Court recognized, due process allows for even purely private, self-interested entities to be involved in the rulemaking process, as long as a neutral government entity ultimately has authority to prevent the issuance of any unfair rule. [00:01:56] Speaker 00: The court held that the FRA's role here was insufficient because of subsection 207D's arbitration provision. [00:02:02] Speaker 00: The court reasoned that had the FRA and Amtrak been unable to agree to metrics and standards, that dispute would have been resolved by the arbitrator, who the court held would have been unconstitutionally appointed and who might have sided with Amtrak, thus undermining the FRA's authority. [00:02:19] Speaker 00: But that problem is resolved by severing subsection 207D from the statute. [00:02:24] Speaker 00: Without the arbitration provision, Section 207 would resemble schemes allowing for the joint issuance of rules by neutral and self-interested entities that the Supreme Court upheld in Curran, Sunshine Anthracite, and Rock Royal. [00:02:38] Speaker 00: The statute would also be operational without the arbitration provision, and it would continue to serve Congress's interests in enacting PREA. [00:02:46] Speaker 00: The Supreme Court, of course, has directed that in considering constitutional claims, courts should upheld as much of a statute as possible, [00:02:54] Speaker 00: And consistent with that direction, this Court should sever subsection 207D, uphold the rest of section 207, and allow Amtrak and the FRA to issue new metrics and standards. [00:03:05] Speaker 02: I just want to make sure I'm understanding how these metrics and standards affect freight railroad to begin with. [00:03:13] Speaker 02: So if I tell you my understanding, please tell me where I'm wrong, if it's wrong. [00:03:17] Speaker 02: And that is these metrics and standards apply to their performance standards and metrics for Amtrak. [00:03:22] Speaker 02: That's right. [00:03:22] Speaker 02: On time, clean stations, these types of things. [00:03:27] Speaker 02: And they don't [00:03:28] Speaker 02: regulate in that regard the freight railroads, but if Amtrak is found to have failed some of those metrics then the surface transportation board may choose to investigate and if they choose to investigate and if they discover that the cause is freight railroad not seating track [00:03:52] Speaker 02: or anything else, I'm not sure, then there could be an investigation of the freight railroads. [00:03:58] Speaker 02: Is that the only potential impact on them? [00:04:01] Speaker 02: Because it keeps talking about regulating the freight railroads and I'm trying to understand that. [00:04:05] Speaker 00: There's that and there's one other aspect which I can explain and before I do, you know, even the prior opinion [00:04:12] Speaker 00: did find that they had some regulatory effect, but even that opinion recognized that, you know, it was uncertain the extent to which they could directly affect freight railroads. [00:04:23] Speaker 00: So as Your Honor explained, there is the potential to trigger these STB adjudications. [00:04:29] Speaker 00: But ultimately, any finding in an STB adjudication, a negative finding for a freight railroad, would be because of a violation of the separate statutory preference requirement, which has long been a part of the scheme. [00:04:43] Speaker 00: So not because of a violation of the metrics and standards. [00:04:46] Speaker 00: The second aspect is that the statute directs Amtrak and the freight railroads to the extent practicable. [00:04:53] Speaker 00: to incorporate the metrics and standards into operating agreements that are negotiated between the Amtrak and the ferry railroads. [00:05:02] Speaker 00: But that's a negotiation, and if the sides were unable to agree, ultimately, the STB would have authority to prescribe reasonable terms. [00:05:10] Speaker 02: I just, I don't get, so it's one thing to say in there, all right, so in a mutual agreement, it will sort of make clear what Amtrak's performance expectations are. [00:05:19] Speaker 02: You just now said something about direct regulation. [00:05:22] Speaker 02: I'm still having trouble understanding what direct regulation there is. [00:05:27] Speaker 00: To be clear, we certainly agree with Your Honor that the metrics and standards do not directly regulate the freight railroads. [00:05:34] Speaker 00: It's at most an indirect effect, and that further supports our argument that the statute would be constitutional without subsection 207D. [00:05:42] Speaker 00: Once you remove that arbitration provision, [00:05:45] Speaker 00: The statute is directly analogous to the schemes in Curran and Rock Royal, where a neutral government entity jointly issued rules with a self-interested entity. [00:05:55] Speaker 00: And in fact, in those cases, the rules clearly had binding effect. [00:06:01] Speaker 00: It was minimum milk prices that milk handlers had to pay to milk producers. [00:06:05] Speaker 00: Here, as Your Honor pointed out, the metrics and standards don't have the same direct regulatory effect. [00:06:10] Speaker 00: So if anything, that just supports our argument that the scheme would be constitutional without that arbitration provision. [00:06:18] Speaker 05: So your basic argument, is it what the panel feel to do a severability analysis, and that that's the defect, right? [00:06:30] Speaker 00: I wouldn't call it a defect. [00:06:32] Speaker 00: The issue simply wasn't before the court. [00:06:37] Speaker 05: All of your arguments so far, your responses to Judge Millett and your analysis about why the panel should have done a severability analysis or sent it back to the district court to do that is a very powerful argument for why the panel decision is wrong. [00:06:54] Speaker 05: But it wasn't the time to have corrected that with a petition for rehearing on bank. [00:07:00] Speaker 05: In other words, this panel is, just like the district court, bound even by wrong decisions, aren't we? [00:07:07] Speaker 00: Yes, Your Honor, but our argument is that cyberability wasn't even before the panel when it issued its prior opinion. [00:07:14] Speaker 00: And to see that, I think what's important to remember is that the district court order on review had upheld the statute as constitutional in its entirety, had upheld the metrics and standards. [00:07:25] Speaker 00: So, and we've cited a number of cases that show that [00:07:28] Speaker 00: in that posture, when you're on appeal from that sort of order, the government ordinarily doesn't have to raise severability arguments. [00:07:40] Speaker 05: Normally, I would understand your severability argument if the panel had invalidated D, and the question was could it be severed, but it invalidated [00:07:51] Speaker 05: A, B, and C. So I'm not even sure how severability fits into, how this case even fits into normal severability analysis. [00:08:03] Speaker 05: Well, I think it's a- Why would the panel have even, why would it have even occurred to them to do it? [00:08:08] Speaker 05: They thought, the panel thought, the panel thought after 10 pages of analysis that 207 violated due process. [00:08:22] Speaker 05: That's my point. [00:08:23] Speaker 05: I don't understand severability here. [00:08:26] Speaker 00: The issue that was before the panel really was whether the metrics and standards themselves should be upheld or invalidated. [00:08:31] Speaker 00: And there's no doubt that the panel's opinion required invalidation of the metrics and standards. [00:08:37] Speaker 00: But severability is a separate question. [00:08:40] Speaker 00: It's a remedial question that most naturally comes up after a constitutional violation has actually been identified. [00:08:46] Speaker 00: So at the point that the appeal was before the court, [00:08:49] Speaker 00: severability wasn't an issue because the statute had been upheld as constitutional. [00:08:53] Speaker 00: Now once the court identified a constitutional violation, the next step, of course, is that remedial step. [00:09:00] Speaker 00: And the fact that the court didn't say anything about severability doesn't foreclose the issue. [00:09:06] Speaker 05: But if a panel is going to declare a law unconstitutional, doesn't it have an obligation on its own? [00:09:14] Speaker 05: to consider severability or at least remand it to the district court? [00:09:18] Speaker 05: I mean, declaring a law unconstitutional is a big deal. [00:09:22] Speaker 05: It's hard for me to imagine that a panel would not consider severability simply because someone didn't raise it. [00:09:31] Speaker 00: Well, precisely because severability is so fundamental to constitutional analysis, the court should not lightly infer that the panel decided the issue. [00:09:39] Speaker 00: And one way to think about this, [00:09:41] Speaker 05: But I still don't understand why anybody would think about severability in the context of this case, since it had declared all of 207 unconstitutional. [00:09:52] Speaker 01: It didn't declare anything unconstitutional. [00:09:54] Speaker 01: It just reversed the district court's opinion and said that because the PRIIA grants its power, economically interested Amtrak and to an unconstitutionally [00:10:08] Speaker 01: appointed arbitrator, it transgresses the vital guarantee. [00:10:11] Speaker 01: We don't know what and means. [00:10:13] Speaker 01: Normally and means both. [00:10:15] Speaker 01: So it doesn't mean or. [00:10:17] Speaker 01: It means and. [00:10:18] Speaker 01: And so your argument is that the panel said that the 207 as constituted was unconstitutional because of both reasons. [00:10:29] Speaker 01: And your argument is the first reason doesn't continue once you eliminate the second. [00:10:33] Speaker 00: That's exactly right, Your Honor. [00:10:34] Speaker 00: And the fact that the court simply reversed the grant of summary judgment to the government is telling, you know, in silence, the fact that it didn't direct the district court to do something on remand, I don't think should preclude the district court. [00:10:47] Speaker 01: Well, normally we, or often, we direct the district court to issue an order vacating, vacating 207. [00:10:55] Speaker 01: It didn't do that. [00:10:56] Speaker 00: Exactly. [00:10:57] Speaker 00: And it was still left. [00:10:57] Speaker 01: And it did not do that. [00:10:59] Speaker 01: So the truth is, [00:11:00] Speaker 01: We don't know what the panel intended in that respect. [00:11:05] Speaker 00: Right, and I think an important, one way to think about this is if Congress tomorrow passed a statute that was identical to Section 207, but omitted the arbitration provision, the court's prior opinion wouldn't control completely, it wouldn't determine that that statute was unconstitutional. [00:11:23] Speaker 00: Of course it would control much of the analysis, but there would still be an open question whether the FRA's role, now that the arbitration provision is not part of the scheme, solved the... Chief Desgarland's question gets to just some ambiguity in the prior [00:11:35] Speaker 02: The Supreme Court has been quite clear in instructing that if a court has a narrow way and a broad way to go in a constitutional ruling, it is bound as a matter of constitutional avoidance and the separation of powers that reflects to go narrow, not broad. [00:12:00] Speaker 02: Are you proposing that as a rule of interpretation for a prior panel to say if we're unclear if there's ambiguity, should we assume they did, assuming it's sufficient to dispose of the case as their constitutional duty, they went narrow rather than broad? [00:12:12] Speaker 00: That's absolutely right, Your Honor. [00:12:14] Speaker 00: I mean, the court's obligation, as the Supreme Court has made clear, is to invalidate as little of a statute as possible. [00:12:21] Speaker 00: So where a court is simply silent on the issue, it should not be inferred that the court therefore intended to preclude severability analysis. [00:12:29] Speaker 00: Of course it was left to the district court. [00:12:31] Speaker 00: to enter judgment as required by the court's opinion. [00:12:34] Speaker 00: And everyone agrees that the district court was correct to invalidate the metrics and standards. [00:12:40] Speaker 00: That judgment needed to be issued. [00:12:41] Speaker 00: But then there's a next question, which is whether the FRA and Amtrak can issue metrics and standards going forward [00:12:49] Speaker 00: once the statute has been severed, in some respect. [00:12:51] Speaker 00: And that issue simply wasn't addressed by the prior opinion. [00:12:54] Speaker 00: It was left open to the district court to address. [00:12:56] Speaker 01: That's not a severability question, but as I understand the government's position, you don't regard the panel as ambiguous with respect to why it decided [00:13:05] Speaker 01: You regard the substantive due process argument as one based on the fact that the agency was unable to provide a check because of the appointment of an arbitrator. [00:13:22] Speaker 01: That's the way you read the panel decision in at least two places, right? [00:13:26] Speaker 00: That's right. [00:13:27] Speaker 01: So that's not, you know, it's ambiguous panel and we should adopt some rule of construction of our own panels. [00:13:33] Speaker 01: It's that your reading of the prior panel is that its basis was [00:13:39] Speaker 01: on the existence of the arbitrator. [00:13:42] Speaker 01: If you remove the arbitrator, then as you point out, if you thought about a separate case with a new statute, it would be constitutional. [00:13:50] Speaker 01: Is that right? [00:13:51] Speaker 00: That's right. [00:13:52] Speaker 00: The opinion's reasoning clearly [00:13:55] Speaker 00: indicates that the statute would be constitutional without the arbitration provision. [00:13:59] Speaker 00: You can see that by going through pages 34 and 35 of the opinion. [00:14:03] Speaker 00: The court first addresses whether Carter Cole applies despite the fact that Amtrak is a government entity. [00:14:10] Speaker 00: It holds that it does, but it immediately has that footnote that recognizes that the holding of Carter Cole was limited by Curran and Sunshine Anthracite. [00:14:18] Speaker 00: because those cases held that the joint participation of a neutral government entity can cure the due process concern. [00:14:26] Speaker 00: And the only basis the court gave for distinguishing those cases was the arbitration provision. [00:14:31] Speaker 00: Then, directly after the footnote on page 35 in the text of the opinion, the court addressed the government's argument, the same substantive point that the FRA's involvement in the development of the metrics and standards addressed the due process concern. [00:14:45] Speaker 00: And again, [00:14:45] Speaker 00: the court explained that because of the arbitration provision, the FRA would be unable to hold the line against Amtrak's self-interest. [00:14:53] Speaker 00: So it's clear from that reasoning that once you take out the arbitration provision, FRA's role would cure the due process concerns the court identified in the prior opinion. [00:15:08] Speaker 00: I have no additional points I want to make at this time if I can reserve the rest of my time for rebuttal. [00:15:13] Speaker 01: Unless we have questions. [00:15:15] Speaker ?: Thank you. [00:15:23] Speaker 04: Good morning. [00:15:23] Speaker 04: May it please the court, Tom Dupree, on behalf of the Association of American Railroads. [00:15:28] Speaker 04: The government is asking this court to effectively reverse the prior panel's decision. [00:15:33] Speaker 04: The prior panel held that the grant of rulemaking authority to Amtrak was not constitutional. [00:15:39] Speaker 01: That's right, rulemaking authority, but it doesn't have any rulemaking authority after the arbitration clause is removed. [00:15:45] Speaker 01: Can you explain how it does? [00:15:46] Speaker 04: Well, it does, Your Honor. [00:15:48] Speaker 04: How is that? [00:15:48] Speaker 04: Well, in other words, even absent the arbitration clause, the statute would provide that the FRA and Amtrak shall jointly issue the metrics and standards. [00:15:56] Speaker 01: Well, that means that unless the FRA agrees, [00:15:59] Speaker 01: It doesn't issue metrics and standards, isn't that right? [00:16:02] Speaker 04: I think that's fair if the FRA doesn't agree, but I don't think that there's anything in the prior panel's decision that suggests that that scheme would be constitutional. [00:16:12] Speaker 01: In fact... Let me just read you parts of the opinion and tell me why they don't. [00:16:17] Speaker 01: The principal point of the opinion is that giving a self-interested entity regulatory authority... The arbitrator is no longer there. [00:16:28] Speaker 01: Amtrak no longer has regulatory authority because the FRA has to approve, isn't that right? [00:16:34] Speaker 04: I don't think that's right, Your Honor. [00:16:36] Speaker 04: That's what I want to know why. [00:16:37] Speaker 04: Okay, because it is a joint rulemaking scheme. [00:16:40] Speaker 04: In other words, Amtrak and the FRA would each be vested with 50% authority to issue the rules. [00:16:45] Speaker 01: But the rule can't be issued unless the FRA agrees. [00:16:49] Speaker 01: Amtrak on its own can't issue the rule, right? [00:16:51] Speaker 04: That's true, but the problem is that even in that scheme where there's joint co-sharing authority, you are still going to have Amtrak's bias present in the rule that issues. [00:17:02] Speaker 04: In other words, it's not as though... Maybe, or the FRA can just not issue any metrics at all. [00:17:07] Speaker 04: Well, for one thing, the statute says that Amtrak and the FRA shall issue. [00:17:11] Speaker 01: So I'm not... Well, that's very nice. [00:17:13] Speaker 01: But if it also says both have to agree, we have to read that as a whole. [00:17:18] Speaker 01: What do you think it means? [00:17:20] Speaker 01: What do you think happens if the FRA does not says no and Amtrak says yes? [00:17:25] Speaker 01: If they issue it anyway? [00:17:26] Speaker 04: Well, I think one of two things would happen. [00:17:28] Speaker 04: Either the parties would compromise, because both are operating under a statutory mandate to issue these regulations within a time certain. [00:17:34] Speaker 04: If that didn't happen, no rule would issue. [00:17:37] Speaker 04: But the point is, is that the cases that the government is relying on to suggest that this sort of extraordinary and frankly unprecedented power sharing approach is constitutional. [00:17:48] Speaker 04: The cases that the government relies on are plainly distinguishable. [00:17:52] Speaker 04: And in footnote four and on page 35 of the prior panel's opinion, [00:17:56] Speaker 04: To be sure, the court notes the presence of the arbitration provision as one way to distinguish these cases. [00:18:03] Speaker 01: It's the only way in footnote four, isn't that right? [00:18:06] Speaker 01: In footnote four it says, those cases are inapplicable here because the FRA's authority to hold the line against overreaching by Amtrak is undermined by the power of the arbitrator. [00:18:19] Speaker 01: That is the only reason in footnote four, isn't it? [00:18:22] Speaker 04: In footnote four, yes, but I would direct. [00:18:24] Speaker 01: That's where you directed me to, footnote four. [00:18:27] Speaker 01: And page 35. [00:18:28] Speaker 01: And on page 35, it says, moreover, FRA is powerless to overrule Amtrak. [00:18:33] Speaker 01: As joint developers, they occupy positions of equal authority. [00:18:37] Speaker 01: When there is intractable disagreement, the matter is resolved by an arbitrator who may ultimately choose to side with Amtrak [00:18:44] Speaker 01: FRA cannot keep Amtrak's naked self-interest in check, and therefore the requirement of joint development is not sanitized yet. [00:18:53] Speaker 04: Right, but Your Honor read the second part of the paragraph, the first part of the paragraph before the portion Your Honor read says that [00:18:59] Speaker 04: It is far from clear whether in what way FRA checks Amtrak. [00:19:03] Speaker 04: Both are subdivisions within the same branch and work in tandem to effectuate the goals Congress has set. [00:19:08] Speaker 04: Nowhere in the scheme is there any suggestion that FRA must safeguard the freight operator's interests or constrain Amtrak's profit pursuits. [00:19:15] Speaker 04: Moreover, FRA is powerless to- I read you the second part. [00:19:18] Speaker 01: Right, but- So it doesn't say that both of those two reasons [00:19:23] Speaker 01: that are independently sufficient for the court's judgment. [00:19:28] Speaker 01: It lists both of them. [00:19:30] Speaker 01: And the first reason it gives, it's not clear. [00:19:34] Speaker 01: So it's not clear to me that the issue is anything other than the failure or the inability of FRA to check here. [00:19:44] Speaker 04: Well, Your Honor, I don't think, in all fairness, I don't think it's a plausible reading of the prior panel's opinion to say that they devoted ten pages of the Federal Reporter to explaining why the grant of rulemaking authority, absent the arbitration clause, just the grant of rulemaking authority, violates due process and then effectively unright everything they did in a sentence in a footnote [00:20:06] Speaker 04: where all they did was distinguish these two cases that the government hadn't even cited in the brief. [00:20:11] Speaker 01: These are Supreme Court opinions that were distinguished. [00:20:14] Speaker 01: And if the only reason they gave for distinguishing those Supreme Court opinions no longer lasts, then we are stuck with the Supreme Court opinions. [00:20:23] Speaker 01: We don't have a rule that says, don't pay any attention to our footnotes. [00:20:27] Speaker 01: We do have a rule that says, don't pay any attention to your footnotes. [00:20:31] Speaker 01: But we don't have that rule with respect to our own. [00:20:34] Speaker 04: But Your Honor, I think that the courts, the prior panel's ultimate decision, the mandate in this case, as Judge Tatel noted, was to strike down Section 207 in its entirety. [00:20:44] Speaker 04: The government conceded that point in the district court. [00:20:46] Speaker 04: They told Judge Boasberg, they said yes. [00:20:48] Speaker 04: The DC Circuit struck down 207 in its entirety. [00:20:51] Speaker 04: The government, throughout the five years this case has been litigated, both in two prior appeals to this court, one to the US Supreme Court, has never asserted that the statute was severable. [00:20:59] Speaker 04: Even when we said in our briefs the statute was severable, as the court knows, [00:21:03] Speaker 04: This court has an independent obligation to assess severability. [00:21:07] Speaker 04: It did not assess severability. [00:21:09] Speaker 04: It did not in any sense suggest that there was more to do vis-a-vis severability. [00:21:13] Speaker 01: In fact, it directed Congress... It also didn't direct the elimination of the section. [00:21:22] Speaker 01: It didn't say no severability. [00:21:24] Speaker 01: It could have easily have said that as well. [00:21:26] Speaker 01: It's a difficult problem because the court says that the freight operators fail to preserve their arbitration claim at all. [00:21:34] Speaker 01: And yet they let you raise the claim. [00:21:36] Speaker 01: So it's a little much to claim that the government should have thought that the court was going to allow you to raise the arbitration claim. [00:21:44] Speaker 01: and then having raised the arbitration claim ruled against you and then have to argue severability. [00:21:50] Speaker 04: The arbitration claim was raised both in the prior appeals to this court and the Supreme Court. [00:21:57] Speaker 04: I think what the prior panel was saying was that in our original complaint, you know, five or six years ago, we didn't raise it. [00:22:04] Speaker 04: But by the time the relevant moment came for the government to argue severability, [00:22:09] Speaker 04: Either in the prior appeal to this court or in the Supreme Court, the arbitration provision, as the prior panel noted, had been fully briefed on the merits. [00:22:16] Speaker 01: This wasn't a surprise. [00:22:17] Speaker 01: It had been briefed, but it wasn't preserved. [00:22:19] Speaker 01: They let you out of that problem. [00:22:21] Speaker 01: We don't generally have a rule that says you can come up with a tax on statutes that you don't put into the complaint. [00:22:28] Speaker 01: This was not in the complaint at all. [00:22:30] Speaker 04: Well, again, Your Honor, I think, with respect, the prior panel has decided that the arbitration claim was in the complaint. [00:22:37] Speaker 04: It has been fully litigated in the last three or four iterations of this lawsuit. [00:22:42] Speaker 04: In all those iterations, when we were fully briefing and arguing arbitration, we were arguing no severability. [00:22:48] Speaker 04: The government never said anything to the contrary. [00:22:51] Speaker 01: As the government said, it was winning. [00:22:53] Speaker 01: And when you're winning, you don't have to raise the severability claim. [00:22:56] Speaker 01: And their request to the Supreme Court was to overturn your position. [00:23:00] Speaker 01: It wasn't to sever your position. [00:23:01] Speaker 01: It was to overturn it. [00:23:02] Speaker 01: And the Supreme Court did. [00:23:04] Speaker 01: So not clear why. [00:23:06] Speaker 01: And just again, I'm just going to read you again what the prior panel said. [00:23:10] Speaker 01: The freight operators failed to preserve their arbitration clause claim. [00:23:14] Speaker 01: They never so much as hinted at this argument until the first brief filed in our court. [00:23:19] Speaker 01: The court does not say it was really hidden in your complaint somewhere. [00:23:23] Speaker 01: It says, we're going to let you do it anyway, basically because the court thinks it's an important argument. [00:23:29] Speaker 01: But that's not a reason why we should take away from the government the ability to raise severability. [00:23:36] Speaker 01: We have an obligation to preserve congressional statutes, if they're constitutional, and to not throw the whole thing out. [00:23:44] Speaker 01: That's what the Supreme Court has told us. [00:23:48] Speaker 01: That's what we said in our own copyright royalty truck. [00:23:50] Speaker 04: But this court, as the panel knows, this court has an independent obligation to assess severability. [00:23:55] Speaker 04: And the court's traditional practice, as all the parties acknowledge, is either to address severability, as it does in many cases itself, [00:24:01] Speaker 04: Or if it thinks that a portion of the statute may be sustained, it would remand to the district court to conduct the severability analysis. [00:24:09] Speaker 02: Given the importance of the sort of constitutional command to us to go narrow, if we can, if the opinion is silent, it doesn't undertake a severability analysis. [00:24:21] Speaker 02: Why should we assume? [00:24:23] Speaker 02: It doesn't do it either way. [00:24:25] Speaker 02: What should we assume from this silence? [00:24:28] Speaker 02: Why doesn't the constitutional command assume that it either wasn't decided or was decided narrowly? [00:24:33] Speaker 04: Because in a typical severability case, Your Honor, there is a portion of a statute which is deemed unconstitutional. [00:24:40] Speaker 04: And that's the focus of the court's opinion. [00:24:41] Speaker 04: And the severability inquiry then looks at whether a separate portion of the statute that was not declared unconstitutional can nonetheless survive. [00:24:49] Speaker 04: In this case, the panel devoted [00:24:51] Speaker 04: ten extensive pages to explaining why 207A, the grant of rulemaking power, was unconstitutional. [00:24:58] Speaker 02: I submit there's no plausible... But as Chief Judge Garland said, what empowered that rulemaking authority to be unconstitutional was that there was no governmental intermediation, like there was in the other cases. [00:25:10] Speaker 02: And why? [00:25:11] Speaker 02: Because the arbitration provision took that away. [00:25:14] Speaker 02: So if there is still [00:25:16] Speaker 02: a colorable, plausible, severability argument to be made, and the opinion's absolutely silent. [00:25:22] Speaker 02: I don't understand why constitutional principles would forbid us from just assuming [00:25:28] Speaker 02: They went as broad as possible and took the whole thing down. [00:25:30] Speaker 04: Well, because I don't think that the premise, the first part of Your Honor's question, accurately reflects the opinion. [00:25:36] Speaker 04: I don't think it's a fair reading of the prior panel's decision to say that the only due process flaw in this statute was the arbitration clause. [00:25:46] Speaker 04: I think that ignores the first 10 to 15 pages of the opinion. [00:25:51] Speaker 05: But what's your related thing? [00:25:54] Speaker 05: Could you just say once again, what's your clearest answer? [00:25:58] Speaker 05: to Chief Judge Garland's question that he asked you ten minutes ago, namely that without the arbitration clause, no regulation can issue without the affirmative support of the FRA. [00:26:16] Speaker 05: Do you disagree with that? [00:26:20] Speaker 05: In other words, without the arbitration clause, there's no constitutional infirmity in the statute. [00:26:30] Speaker 04: And that's wrong. [00:26:31] Speaker 05: That's what I asked you the question. [00:26:33] Speaker 05: Tell me again why it's wrong. [00:26:36] Speaker 04: Right. [00:26:37] Speaker 04: It's wrong because, first of all, it does not fit the model of the cases that the government says the statute shorn of the arbitration provision. [00:26:48] Speaker 05: But just this statute. [00:26:49] Speaker 05: His question was about this statute. [00:26:52] Speaker 05: His question to you was, without the arbitrator, [00:26:56] Speaker 05: Isn't the due process problem resolved because Amtrak on its own can't issue any regulations that bind its competitors? [00:27:08] Speaker 04: But the due process problem is not solved, Your Honor, and the reason why is because Amtrak would still have 50% of the authority, and that the end product of the regulations would necessarily be a compromise between a bot... But if there is no... If the FRA refuses, it can't issue, correct? [00:27:30] Speaker 05: Because it has 50% too, right? [00:27:33] Speaker 05: That's right. [00:27:34] Speaker 04: If the FRA refuses, yes. [00:27:35] Speaker 05: So your argument then is that, well, because it's 50-50, they'll compromise, right? [00:27:44] Speaker 05: And therefore, the Amtrak's role will, in terms of its [00:27:52] Speaker 05: competition with its competitors will be, that that will be the due process problem, because it has the ability to force or to encourage the FRA to compromise, right? [00:28:07] Speaker 05: That's right, because I think what the FRA- Still, at bottom, you agree, right, that if the FRA doesn't want to compromise, then the regulation will not issue, correct? [00:28:17] Speaker 04: If the FRA doesn't want to compromise, the regulation would not issue. [00:28:20] Speaker 05: But what I would say... So your whole argument then is that it remains unconstitutional because Amtrak, a non-governmental agency, has [00:28:33] Speaker 05: has influence over how the federal agency might decide what to do. [00:28:40] Speaker 04: It's a co-equal with the federal agency. [00:28:42] Speaker 04: I certainly think at this court we're confronting a statute that vested say the Department of Defense and Raytheon with equal legislating authority that there would be a constitutional problem with that, particularly if added to that statute was the requirement you have here, which is to say you shall issue regulations within a time certain. [00:28:59] Speaker 04: I think there is [00:29:00] Speaker 04: There is a statute. [00:29:02] Speaker 01: How would that be compelled? [00:29:04] Speaker 01: You would come in and say, actually, we want this set of metrics. [00:29:09] Speaker 01: It shall be issued. [00:29:10] Speaker 01: And the two sides would say, well, I'm sorry. [00:29:13] Speaker 01: We don't agree. [00:29:13] Speaker 01: How would this ever be compelled, this word shall in the example you're giving? [00:29:18] Speaker 04: Well, I would say, Your Honor, if that's a problem, that would suggest the statute can't be severed along those lines because the statute's not workable. [00:29:25] Speaker 01: Or it would suggest shall doesn't always mean absolutely must. [00:29:29] Speaker 04: But I think that government actors, as all do, they act in good faith, and if they are given a congressional command from Congress that you shall issue this, I think a typical good faith government agency would seek to issue something even if it means compromising. [00:29:43] Speaker 01: Well, they wouldn't typically, good faith government agency wouldn't seek to issue something that wasn't in the public interest, which is its obligation. [00:29:50] Speaker 01: So there's lots of regulatory compromise. [00:29:56] Speaker 01: There was an entire theory of administrative law based on NEGRAG negotiated regulations where there's negotiations between the regulated industry and the agency and in the end the agency tries to come up with a regulation that industry agrees with. [00:30:11] Speaker 01: The fact that there's influence from the agency and that the agency tries to accommodate industry doesn't make these things unconstitutional. [00:30:20] Speaker 04: We have never identified a statute and the government has never identified a statute that gives 50-50 power sharing. [00:30:25] Speaker 02: Is it really 50-50? [00:30:26] Speaker 02: I mean, the Supreme Court was pretty clear that in issuing these metrics and standards, Amtrak acts as a governmental entity. [00:30:34] Speaker 02: Now, the prior panel was concerned that with the arbitration provision in its pocket, its naked self-interest would [00:30:41] Speaker 02: empower it to override that. [00:30:42] Speaker 02: But if that's gone, it doesn't have that in its pocket. [00:30:46] Speaker 02: Don't we have to assume that at least to some degree Amtrak will act, as the Supreme Court said it would, as a governmental entity, pursuing governmental ends and setting these metrics and standards? [00:30:58] Speaker 04: But I don't think what the Supreme Court did not say that just because Amtrak must be treated as a governmental entity that therefore it is not self-interested, that it doesn't have a profit motive. [00:31:09] Speaker 02: Well, they have a profit motive because Congress, that's Congress's judgment. [00:31:12] Speaker 02: That's the public good, and Congress's view is that they make money. [00:31:16] Speaker 02: But the Supreme Court was quite clear that when it comes to issuing metrics and standards, they act as a governmental entity. [00:31:21] Speaker 02: So I'm not sure it's 50-50. [00:31:23] Speaker 02: How's it 50-50 if they're also at least imbued with a governmental aspect? [00:31:31] Speaker 04: Because it's 50-50 in the sense that it is a system where you have one quote-unquote pure government entity and you have another entity that is a for-profit government corporation. [00:31:42] Speaker 04: And what the prior panel said at length [00:31:44] Speaker 04: is that the fact that Amtrak must be treated as governmental doesn't make it appropriate in a due process context for it to regulate its competitors. [00:31:54] Speaker 04: Because it is motivated by profit. [00:31:56] Speaker 04: It is not regulating in some larger public interest untainted by its profit motive pursuits. [00:32:03] Speaker 04: That's what the prior panel held. [00:32:05] Speaker 04: I would also point out that the government filed a rehearing petition in this case. [00:32:10] Speaker 04: It never mentioned severability, even after this panel had acted. [00:32:14] Speaker 04: This court has said in many contexts that an issue is waived if it's something that could have been raised in the prior appeal and wasn't. [00:32:21] Speaker 04: There is absolutely no reason why the government could not have raised it. [00:32:25] Speaker 02: Is severability really waivable? [00:32:26] Speaker 02: I mean, you know, if someone brought a challenge to a teeny tiny provision in the huge tax act that was just adopted, [00:32:33] Speaker 02: and then didn't bother to argue severability. [00:32:35] Speaker 02: Would the court have no choice but to take the entire statute down? [00:32:39] Speaker 02: I think we have our own obligation to invoke it, do we not? [00:32:42] Speaker 04: Yes, but that, I guess I agree with that, but at the same time, the prior court had [00:32:49] Speaker 04: the same issue. [00:32:49] Speaker 04: The prior panel had the exact same issue. [00:32:51] Speaker 04: And you're absolutely right. [00:32:52] Speaker 04: That court had an obligation to act in the narrowest possible way. [00:32:56] Speaker 04: And the fact that it didn't do what this court almost invariably does, either do severability itself or remand with instructions to conduct severability, I think leads to no other conclusion than that it determined the statute was not severable. [00:33:07] Speaker 01: Our job is not to psychoanalyze the prior panel. [00:33:10] Speaker 01: Our job is to decide what the prior panel actually decided. [00:33:14] Speaker 01: Clearly did not decide severability expressly one way or the other. [00:33:18] Speaker 01: You may say it impliedly decided that. [00:33:20] Speaker 01: That's also not our job. [00:33:22] Speaker 01: Our job is to determine what the panel actually said. [00:33:25] Speaker 01: And it didn't say anything about severability. [00:33:27] Speaker 01: And Judge Millett's point, which is that even if the government made a mistake here, the consequence of the mistake can't – that is, even if the executive branch made a mistake here, the consequence can't be that we can't – that we have to take down a congressional statute. [00:33:45] Speaker 01: Unless, of course, it's actually unconstitutional. [00:33:47] Speaker 01: But now we're on the question of whether we can even consider separability. [00:33:52] Speaker 01: It would be something if the government could fail to defend a congressional statute, maybe even malevolently fail to defend a congressional statute, and its lack of defense would require us to strike down Congress's work. [00:34:08] Speaker 04: Well, first, I would say that we cite in our brief half a dozen cases where courts of appeals have said that severability, like any non-jurisdictional argument, can be waived, even when it's the government. [00:34:19] Speaker 01: Wouldn't you agree waiver is the wrong word here? [00:34:21] Speaker 01: I know that the courts have been using this, but ever since Justice Scalia's opinion in Olano, isn't the correct word forfeiture here? [00:34:28] Speaker 01: Forfeiture might be a better way of putting it, but- And forfeiture is, as we have said, as Justice Scalia said, as Judge Williams said in his opinion on the subject of law of the case, this is prudential. [00:34:40] Speaker 01: This is not jurisdictional. [00:34:42] Speaker 01: And we have the authority to determine whether even in face of the government's forfeiture, the issue ought to be decided. [00:34:50] Speaker 01: And when we have a situation, as Judge Maletz described, [00:34:55] Speaker 01: This is the most significant thing we ever do, the judicial branch ever does, is strike down a congressional statute. [00:35:03] Speaker 01: We need to hesitate and consider a severability analysis. [00:35:06] Speaker 01: We can't just say it was impliedly decided. [00:35:09] Speaker 04: Your honor, what I would say is I would say that you don't need to, to rule in our favor, you don't need to say anything was impliedly decided. [00:35:16] Speaker 04: All your honor has to do is look at page 35 of the prior panel opinion, when before getting to the point your honor read to me from the bench, they give additional reasons why the involvement of the FRA in this scheme [00:35:31] Speaker 04: didn't salvage the statute. [00:35:33] Speaker 04: At the end of that paragraph, you're right. [00:35:35] Speaker 04: They do go on to say, oh, and moreover, by the way. [00:35:38] Speaker 01: They don't say, oh, and moreover. [00:35:39] Speaker 01: They say, moreover. [00:35:41] Speaker 04: Fair enough. [00:35:41] Speaker 04: It was a rhetorical embellishment on my part. [00:35:44] Speaker 04: But they did say moreover, and then they provided an additional reason. [00:35:48] Speaker 04: And so I think that to say that the due process flaw, the only due process flaw was the arbitration provision, I respectfully submit is not a fair reading of what this panel decided. [00:35:58] Speaker 04: This case comes to this court on a motion for entry of judgment [00:36:03] Speaker 04: We respectfully submit that it is not a fair memorialization of the decision of the prior panel striking down 207 in its entirety, a point the government has conceded, to memorialize that decision in something that says, well, you know, it's actually constitutional. [00:36:20] Speaker 01: Thank you. [00:36:20] Speaker 01: For other questions. [00:36:22] Speaker 04: Thank you. [00:36:22] Speaker 04: Thank you. [00:36:23] Speaker 01: Government has more time. [00:36:31] Speaker 00: Thank you, Your Honors. [00:36:32] Speaker 00: My opposing counsel still has not identified a persuasive reason why the statute would be unconstitutional once the arbitration provision is removed. [00:36:41] Speaker 00: Without the arbitration provision, the FRA would have unfettered authority to prevent the issuance of any unfair rule. [00:36:47] Speaker 02: That's not quite fair to them. [00:36:49] Speaker 02: They said the panel gave a list of reasons, only one of which was the arbitrator. [00:36:55] Speaker 02: And the other problem is that the FRA doesn't protect freight operators or isn't [00:37:02] Speaker 02: charged with constraining Amtrak's avaricious profit motive. [00:37:06] Speaker 00: So that language on page 35, I think, is best read as premised on the arbitration provision, not as an independent basis to hold the statute unconstitutional. [00:37:16] Speaker 00: And we know that because if you go back and look at Curran and Sunshine Anthracite, which the court immediately cited immediately before that discussion, the mutual government entity there also did not have a directive to safeguard [00:37:29] Speaker 00: the other private entities' interests. [00:37:32] Speaker 00: In fact, if you look at Rock Royal, there the Secretary of Agriculture was directed to issue minimum milk prices that could be approved by milk producers over the objection of milk handlers who had to pay the price. [00:37:45] Speaker 00: And the statute stated that those orders were intended to benefit the milk producers. [00:37:52] Speaker 00: So the Secretary of Agriculture actually had a directive to benefit the same party that could approve the prices over the objection of another government entity. [00:38:00] Speaker 00: So it was actually on the other end. [00:38:02] Speaker 00: There certainly wasn't a requirement that the government entity have a mandate to oppose the private party that is involved in the regulatory process. [00:38:11] Speaker 00: And here, once you take away the arbitration provision, there's also the fact that Amtrak is not a private entity. [00:38:17] Speaker 00: It's a government entity as the Supreme Court held. [00:38:19] Speaker 00: not an unaccountable actor, and that the metrics and standards do not have direct regulatory effect on the freight railroads, unlike the orders at issue in those other cases. [00:38:31] Speaker 00: So once you take the arbitration provision, the scheme certainly compares favorably to those schemes that have been upheld, and there is no longer any due process problem. [00:38:40] Speaker 00: Now, I'm happy to answer any other questions the court may have otherwise. [00:38:46] Speaker 00: Thank you. [00:38:47] Speaker 01: Take the matter under submission. [00:38:48] Speaker 01: Thank you all.