and standards” addressing the performance and scheduling of passenger railroad services.
The D.C. declared unconstitutional Amtrak's regulation of the railroad industry, on the basis that the U.S. Congress may not delegate a governmental function to a for-profit corporation.
"Because Amtrak must "be operated and managed as a for-profit corporation," 49 U.S.C. § 24301(a)(2), the fact that the President has appointed the bulk of its Board does nothing to exonerate its management from its fiduciary duty to maximize company profits."
And that purpose to maximize profits may run afoul of the governmental interest to promote the best interests of the public in such regulation.
On March 9, 2015, the U.S. Supreme Court reversed and remanded, saying that the status of Amtrak as a for-profit corporation, does not preclude it from being ALSO appointed as a regulator of an industry.
On remand, the stubborn D.C. appellate court struck at Amtrak for the second time.
On April 29, 2016, the D.C. court invalidated the arrangement as unconstitutional once again, now on due process grounds.
The question that the D.C. court resolved was now, after the U.S. Supreme Court's reversal on governmental status grounds, this:
"Conceding Amtrak’s governmental status, the operators—
represented by the Association of American Railroads—ask:
Does it violate due process for an entity to make law when,
economically speaking, it has skin in the game?"
The freight railroads, competitors of Amtrak, argued that the statute in question
"is unconstitutional because it (1) vests rulemaking
authority in the hands of interested private parties, and (2)
empowers Amtrak with power to enhance its commercial
position relative to other market participants".
Ok, so the argument was that "the PRIIA “violates the due process rights of regulated third parties” by “[v]esting the coercive power of the government in interested private parties.”
The D.C. Court provided a great fairness analysis of the issue:
And even greater is the conclusion:
giving a self-interested entity regulatory authority over its competitors violates due process.
The D.C. Court cited to the a U.S. Supreme Court case, Carter v Carter Coal Co., which "invalidated a delegation that empowered one set of competitors to regulate a rival set".
This is yet another illustration that the U.S. Supreme Court does not adhere to its own precedents and creates a patchwork of precedents that contradict one another, hurting rather than helping litigants and undermining the whole concept of predictability of application of the law, which is the main principle of the rule of law.
In analyzing the Carter case, the D.C. court found:
The court then referenced a law review article on self-interest in private-pubic partnerships,
That law review article itself cited as one of the cases the North Carolina Board of Dental Examiners controversy (the law review was written in 2004)
The controversy in the North Carolina Board of Dental Examiners culminated, 11 years after the law review was written, in February of 2015, in a U.S. Supreme Court decision striking immunity of self-interested market players in occupational regulation as to antitrust liability.
Here is the conclusion of the D.C. Court based on Carter v Carter Coal (a 1936 U.S. Supreme Court case that the U.S. Supreme Court seems to have forgotten):
I wholeheartedly agree.
Due process is violated when a self-interested entity is entrusted with the power to regulate the business of a competitor.
So, what now about the disciplinary boards of professionals regulating their own competitors?
Dentists regulating dentists?
Doctors regulating doctors?
Plumbers regulating plumbers?
Lawyers regulating lawyers?
It appears that there is a strong case in support of a notion that such regulation and discipline imposed as a result of such regulation, discipline affecting people's right to earn a living, is:
- a violation of due process;
- an "intolerable interference with personal liberty and private property", and
- "transgresses the very nature of governmental function".
Thank you, the U.S. Court of Appeals for the D.C. Circuit, for putting yet another nail into the closing coffin of competitor-run regulation of professions in the United States.
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