Lebron v. National Railroad Passenger Corporation

By a majority ruling (8-1), the Supreme Court reversed the decision of the U.S. Court of Appeals for the Second Circuit. The Court relied on the confluence of a number of factors to conclude that Amtrak, a federally chartered for-profit corporation, is "part of the government" for "the purpose of individual rights guaranteed against the Government by the Constitution." Amtrak is wholly owned by the United States, and the government controls its board of directors. In incorporating Amtrak, Congress declared that it "will not be an agency or establishment of the United States Government," although it subjected Amtrak to the Government Corporation Control Act, and classified it as a mixed-ownership government corporation.

Amtrak was created by the Rail Passenger Service Act of 1970 (RPSA) to avert the threatened extinction of passenger trains in the interest of "the public convenience and necessity." The legislation established detailed goals for Amtrak, set forth its structure and powers, and assigned the appointment of a majority of its board of directors to the president.

In giving the majority opinion, Justice Scalia distinguished between two types of government corporations. The first type was that such as Conrail, in which the responsibilities of the federal directors are not different from those of the other directors. Each director had a role to operate the corporation at a profit for the benefit of its shareholders. In the second type of government corporations, such as Amtrak, the public directors had other duties besides profit.

The Court ruled that "where, as here, the government created a corporation by special law for the furtherance of governmental objectives, and retains for itself permanent authority to appoint a majority of that corporation's directors, the corporation is part of the Government for purposes of the First Amendment." There was a long history of corporations created and participated in by the United States for the achievement of governmental objectives. Amtrak's authorizing statute provided that it will not be an agency or establishment of the United States Government.

The Court relied on a number of factors to conclude that Amtrak is an agency of the United States for the purpose of individual rights guaranteed against the government by the Constitution. This conclusion accords with the public, judicial and congressional understanding over the years that government-created and government-controlled corporations are part of the government itself.