Constitution Check: Is an old anti-New Deal precedent getting new life — again?

Lyle Denniston, the National Constitution Center’s constitutional literacy adviser, looks at the dispute over Amtrak’s role in writing railroad track rules, and why the case seems destined for the Supreme Court.

“We conclude, as did the Supreme Court in 1936, that the due process of law is violated when a self-interested entity is ‘intrusted with the power to regulate the business of a competitor.’ [Referring to the 1936 ruling in Carter v. Carter Coal Co.] ‘A statute which attempts to confer such power undertakes an intolerable and unconstitutional interference with personal liberty and private property’ and transgresses ‘the very nature of government function.’…The Due Process Clause of the Fifth Amendment puts Congress to a choice: its chartered entities may either compete, as market participants, or regulate, as official bodies….To do both is an affront to the very nature of things, especially due process.”

– Excerpt from a decision on April 29 by the U.S. Court of Appeals for the District of Columbia Circuit, striking down the authority of Amtrak – the nation’s railroad passenger service – to take part in writing rules that govern the use of railroad tracks as part of Amtrak’s efforts to make its trains run on time and assure its profits. The dispute over Amtrak’s powers has been to the Supreme Court once before, and seems destined to go back.

WE CHECKED THE CONSTITUTION, AND…

A series of Supreme Court decisions in the 1930s, striking down much of President Franklin Roosevelt’s “New Deal” plan to pull America out of the Great Depression, brought on a constitutional crisis when Roosevelt attempted to “pack” the Court with sympathetic Justices. Both FDR’s reaction, and several if not most of the decisions that provoked him, have gone down in history as misuses — if not outright abuses — of government power.

In recent years, however, an ongoing feud between the nation’s freight railroads and Amtrak, the private corporation set up by Congress to run the passenger trains, seems to keep bringing back to life one of those supposedly discredited 1930s decisions by the court. That has happened again, for the second time in three years. And a return trip to the Supreme Court, to sort it out again, appears to be assured.

The operations of Amtrak are vitally important to many Americans, who either use it for daily business commuting or travel on its cars to keep alive the romance of a more serene mode of travel. But what happens to its service is also turning out to be important to modern understandings of how the Constitution distributes governing authority.

Amtrak is, in fact, a strange creature, as far as government agencies go. It actually was created by Congress is 1970 as a private corporation that is supposed to make a profit, running the passenger trains that the existing railroad companies felt was dragging down their business and keeping them from focusing on rail freight deliveries, the real money-maker for them.

But Congress, as a condition for giving the freight lines liberation from the passenger-carrying business, ordered the freight companies to give Amtrak priority use of their tracks so as to help assure that passenger trains run on time.

And Congress went even further, to the deep dismay of the freight companies: it let Amtrak share in the governmental task of writing rules and standards on the use of the tracks, and a share in enforcing those rules against the freight firms. The freight lines had no role in either task.

When the freight carriers’ constitutional challenge first came up in a federal appeals court in Washington, D.C., two years ago, that court ruled that Congress had wrongly given away the power of the government to a private entity, Amtrak. The appeals court relied upon the Supreme Court’s 1936 decision in Carter v. Carter Coal Co., nullifying Franklin Roosevelt’s New Deal plan to give the coal companies authority to write rules to regulate the coal-mining industry’s wage costs.

Disagreeing flatly with the appeals court, the Justices declared that Amtrak was not a private entity, after all; it had enough attributes to make it governmental in nature. So, the dispute over Amtrak went back to the appeals court, to settle other challenges that the freight companies had in store.

Once more, the appeals court (the U.S. Court of Appeals for the District of Columbia Circuit) pulled from history the Carter Coal precedent. Turning to a part of the Constitution that only applies to actions of the federal government (the Due Process Clause of the Fifth Amendment), the appeals court said the same vice that the Supreme Court saw in the New Deal coal industry regulatory regime was present in Amtrak’s assignments of power. Since the Supreme Court turned Amtrak into a public entity, it had to obey the Due Process rights of the freight companies, the appeals court made clear.

And Amtrak, governmental or not, remained a direct competitor of the freight companies in the use of the tracks that belong to those companies, the appeals court said. So, it concluded, the Carter Coal precedent still provided the constitutional standard: Amtrak could not exercise governmental power to serve its own on-time aspirations and its profit potential, at the expense of their rival carriers.

Because the Justice Department almost always feels the need to defend the constitutionality of laws passed by Congress when a court strikes them down, it seems predictable that Amtrak is scheduled for a trip back to the Supreme Court. Of course, Congress could always step in and try to cure the constitutional defect that the appeals court has found this time, but it is far from clear that the lawmakers could agree on what that solution might be.

But, for those who pay attention to how the Constitution develops, the Amtrak woes provide a further demonstration that the “administrative state” that Congress has been putting into place since at least the New Deal days, and probably before – erecting a massive “fourth branch of government” – still stirs constitutional suspicions among regulated entities in industry and commerce.

And, just as in the Thirties, there are courts and judges of today who will find that government has to be reined in. The old precedents, it is clear, are ready at hand to provide the checks and balances on Big Government.