Notice & Comment

D.C. Circuit Review – Reviewed: Breaking News (From About Three Weeks Ago)

One of the most important cases the D.C. Circuit decided last year was the so-called Amtrak case. As I mentioned last month, the government’s cert petition was due February 6th. No petition, however, was filed. Instead, the United States determined that it would not seek certiorari at all. Accordingly, the panel decision — with its two constitutional holdings — will not be reviewed by the Supreme Court (at least for now).

On February 10th, the Surface Transportation Board filed a letter with the Eighth Circuit addressing the status of the D.C. Circuit’s Amtrak opinion. Attached to that letter was another letter, dated February 1st, from Acting Attorney General Dana Boente to Speaker of the House Paul Ryan. Here is the full text of the letter:

Dear Mr. Speaker:

Consistent with 28 U.S.C. 530D, I write to you concerning the above-referenced decision of the United States Court of Appeals for the District of Columbia Circuit. A copy of the decision is enclosed.

The decision addressed a constitutional challenge to Section 207 of the Passenger Railroad Investment and Improvement Act of2008, Pub. L. No. 110-432, Div. B, 122 Stat. 4916. Section 207(a) authorizes the Federal Railroad Administration (FRA) and Amtrak to “jointly * * * develop” metrics and standards for evaluating Amtrak’s performance and service quality. Among other things, the metrics and standards may be used by the Surface Transportation Board (STB) in deciding whether to investigate freight railroads for failing to provide a preference to Amtrak over freight transportation, as required by 49 U.S.C. 24308(c). In the event that the FRA and Amtrak could not agree on the metrics and standards within 180 days, Section 207(d) provided for the STB to “appoint an arbitrator to assist the parties in resolving their disputes through binding arbitration.” Pursuant to Section 207(a), FRA and Amtrak jointly adopted metrics and standards, after receiving and considering public comments, in May 2010.

In this case, an association of major North American freight railroads has challenged the metrics and standards on several constitutional grounds. The district court granted summary judgment for the government, but the Court of Appeals reversed, holding that Section 207 “constitutes an unlawful delegation of regulatory power to a private entity.” 721 F.3d 666, 668 (D.C. Cir. 20 13). The government successfully petitioned for a writ of certiorari, and the Supreme Court reversed, holding that “Amtrak is a governmental entity, not a private one,” for purposes of determining the constitutional validity of the metrics and standards. 135 S. Ct. 1225, 123 3 (20 15). The Court remanded the case for consideration of any remaining constitutional challenges. Id. at 1234.

On remand, the Court of Appeals invalidated the metrics and standards for two reasons. First, the Court ruled that Section 207 violates due process by allowing Amtrak, an economically self-interested entity, to regulate its competitors. 821 F.3d 19,27-36 (D.C. Cir. 2016). Second, the Court ruled that Section 207 violates the Appointments Clause, U.S. Canst. art. II, § 2, cl. 2, insofar as the arbitration provision vests the power to resolve disputes between FRA and Amtrak in an arbitrator who has not been properly appointed. 821 F.3d at 36-39.

Although the Department has defended the constitutionality of Section 207 in this case, I write to advise you that the Department of Justice has decided, based on the particular circumstances of the case, not to seek Supreme Court review of the Court of Appeals’ decision at the present time. Instead, the Department intends to argue in the district court that, under the Court of Appeals’ decision, the arbitration provision should be severed from the rest of the statute. FRA and Amtrak could then jointly develop metrics and standards pursuant to the remaining provisions of Section 207, unencumbered by the arbitration provision. See 821 F.3d at 34-35 & n.4. The determination not to seek Supreme Court review of the Court of Appeals’ decision at this time, however, would not prevent the Department from pursuing such review after further proceedings, should that course be appropriate.

A petition for a writ of certiorari would be due on February 6, 2017. Please do not hesitate to contact this office if we can be of further assistance in this matter.

Interesting. This was news to me.

Two of the other important cases decided by the D.C. Circuit last year, however, are not done yet. This week the Court decided to rehear en banc both PHH Corp. v. CFPB and Raymond J. Lucia Companies, Inc. v. SEC. PHH concerns the constitutionality of the Consumer Financial Protection Bureau’s removal provisions; Raymond J. Lucia concerns the constitutionality of the Securities and Exchange Commission’s administrative law judges. Both will be heard on May 24, 2017. That will be a huge day for administrative law.*

The D.C. Circuit decided three cases this week.

In United States v. Halliburton Co., a False Claims Act case, Judge Wilkins, joined by Judges Kavanaugh and Williams, agreed with the district court that Relator-Appellant Julie McBride “failed to offer evidence that any misrepresentation regarding headcount data (if one existed) was material to the Government’s decision to pay KBR.” The “headcount” data “purported to track how many U.S. troops frequented [Kellogg Brown & Root, Inc]’s recreation centers at certain camps in Iraq.”

In United States v. Jackson, Judge Randolph, joined by Judges Kavanaugh and Pillard, rejected any suggestion that the district court hadn’t explained why the appellant was given an above-guidelines sentence: “It is little wonder that Jackson’s attorney did not interpose the objection now raised on appeal. Jackson, and anyone else present at his sentencing hearing, must have understood why the district court imposed an above-Guidelines sentence of 42 months. A central, uncontested consideration at the hearing was Jackson’s commission of this crime while he was being sentenced and placed on probation for committing a crime with a common element – namely, stealing his employees’ withholding taxes to use for his personal benefit.”

And in National Security Counselors v. Department of Justice, Judge Srinivasan, joined by Judges Brown and Wilkins, addressed fees under the Freedom of Information Act. After an interesting discussion of exhaustion, the Court addressed the Department’s policy of processing FOIA requests in 500-page batches. Long story short: That’s okay but the Department still has to explain why it takes so long to process those batches. “Of course, FOIA does not require an agency to document its labor or other production costs with the exactitude of minute-by-minute detail.” But if someone has a plausible argument that the time and expense it takes to produce documents has been overstated, the government must rebut that argument.

I’ll go out on a limb and predict that none of this week’s cases will be reheard en banc.

* The D.C. Circuit will get a chance to enforce its new line-standing policy that day!

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