By Julian Hattem - 07/02/13 07:39 PM EDT
To better manage the system of shared tracks, Congress directed the company to work with the Federal Railroad Administration (FRA) in 2008. The two were tasked with developing rules that maintain the priority of Amtrak's service over other trains on the track.
Other train companies lambasted the draft metrics and standards that Amtrak and the FRA came up with.
After final rules were issued in 2010, the Association of American Railroads, a freight group, filed a lawsuit, claiming that the government was unconstitutionally allowing a private company to develop regulations.
In its ruling, the court agreed with that idea.
The court found no prior case that asserted that a private company could jointly develop regulations alongside an agency, and worried that federal regulations would have been subject to a private company's whim if the two had not been able to reach an agreement.
"As a practical matter, the FRA’s failure to reach an agreement with Amtrak would have meant forfeiting regulatory power to an arbitrator the agency would have had no hand in picking," Judge Janice Brown wrote on behalf of the three-member panel.
Though Amtrak is subject to some government control, the court ruled that it should, for the purposes of regulation, be considered private, since it is run as a for-profit corporation. As such, the arrangement with the FRA was ruled unconstitutional.
"Though the federal government’s involvement in Amtrak is considerable, Congress has both designated it a private corporation and instructed that it be managed so as to maximize profit," Brown wrote.
She added, "And as a private entity, Amtrak cannot be granted the regulatory power" under the law.
The Association of American Railroads cheered the statement.
In a statement, organization President and Chief Executive Edward Hamberger hoped for an end to "a one-size-fits all approach" to federal regulations.
The case before the court was Association of American Railroads v U.S. Department of Transportation.