The National Basketball Association (“NBA”) regulates American professional basketball.. After acquiring the New Orleans Hornets in 2010, the NBA temporarily became both the league regulator and a franchise owner. As owner, the NBA vetoed a trade that would have sent the Hornets’s best player to another team. Was the NBA acting out of self-interest when it blocked the trade? In other words, was its trade block fair?
Federal Courts have recently dealt with this issue in Association of American Railroads v. U.S. Department of Transportation. Following a decade of litigation, the D.C. Circuit Court of Appeals decided that granting Amtrak regulatory authority violates due process because it is a self-interested market participant.
This note argues that the D.C. Circuit’s decision to invalidate Amtrak’s regulatory power based on a finding of self-interest was error. The market history of private passenger rail service and Amtrak’s statutory purpose demonstrate that Amtrak, like the NBA, serves to protect its industry, rather than compete against private participants. Public entities should not be exposed to judicial inquiries of self-interest. However, if they are, federal courts should adopt a more rigorous analysis than the one (or lack thereof) employed by the D.C. Circuit.
Ultimately, the outcome in American Railroads is concerning because it exposes public regulatory bodies to constitutional challenges based on self-interest without regard to public or private status. Public regulators’ functionality and the public’s confidence in their neutral status is now at risk.
Blayne Justus Yudis,
For Once, A Defense of Amtrak: Do Market Participants With Regulatory Authority Violate Due Process?,
28 U. MIA Bus. L. Rev.
Available at: https://repository.law.miami.edu/umblr/vol28/iss1/9