STB: Nothing’s the something it does best

(Source: Railway Age 12/10/2018)

Written by Frank N. Wilner, Capitol Hill Contributing Editor

Watching Washington, December 2018 Railway Age: New leadership arrives at railroad-focused congressional committees in January, and unless Surface Transportation Board (STB) Chairman Ann Begeman ingests breakfast Wheaties and gains courage to produce decisions, Congress may prescribe more than a potent laxative.

The motivation will be rail captive shippers begging prompt adjudication of grievances, and could result in sunset of the independent STB, a shift of most of its regulatory functions to the Executive Branch Department of Transportation (DOT), and a transfer to the Executive Branch Justice Department of rail merger authority and power to revoke STB-approved antitrust immunity.

Shippers increasingly are agitated that Precision Scheduled Railroading (PSR)—a strategy to reduce operating ratios, boost profit and hike stock price—is degrading service quality, and fear worse should institutional investors goad railroads into a new round of merger applications before an STB historically more disposed toward corporate marriages than the Justice Department’s Antitrust Division.

Shippers equally are distraught that the STB has postponed for years simplifying and making more efficient and less costly its maximum freight-rate-review methodologies; revising procedures for determining rail revenue adequacy and its use in establishing maximum reasonable freight rates, and establishing regulations allowing sole-served shippers access to a competing railroad.

The uncertainty for all parties of interest is just how willing the new leadership of the House Transportation & Infrastructure (T&I) Committee and Senate Commerce Committee will be in accommodating shipper disquiets.

Expect Sen. Roger F. Wicker (R-Miss.), labeled the Senate’s “most pro-Amtrak Republican,” but whose freight issue views are uncertain, to chair the Commerce Committee, succeeding generally rail-friendly Sen. John Thune (R-S. Dak.), who becomes majority whip. Significantly, the Senate Commerce Committee’s senior Democrat, Florida’s rail-friendly Bill Nelson, lost his election, leaving in Congress only six lawmakers who served when the 1980 Staggers Rail Act, which partially deregulated railroads, was passed. Succeeding Nelson as Commerce Committee senior Democrat will be Washington State Sen. Maria Cantwell, termed “not very friendly” toward Class I freight railroads.

Rep. Peter DeFazio (D-Ore.), historically a supporter of short lines, but less tested on Class I issues, will chair the House T&I Committee, succeeding the retiring Bill Shuster (R-Pa.), the railroads’ most dependable defender.

During the 1980s and early 1990s, lawmakers considered splitting rail regulatory authority between the DOT and Justice Department, as was the fate of the independent Civil Aeronautics Board following 1978 airline deregulation, and most motor carrier regulatory oversight following 1980 trucking deregulation.

An STB sunset could now become reality owing to bipartisan congressional urgency to cut federal spending, a typically greater commiseration among Democrats for shipper grievances, Trump-inspired Republican enthusiasm to expand Executive Branch power, and a 2020 target date for reauthorizing—or not—the STB.

It is difficult to defend a do-nothing federal agency. For the past 23 months, Chairman Begeman has postponed advancing long-festering rulemaking proceedings, and declined to set new deadlines. She prefers awaiting reinforcements to fill three vacant seats rather than pursue common ground with Democratic-member Deb Miller, with whom she has previously found agreement.

Such timid performance is uncharacteristic of Begeman. For five years prior to becoming chairman in January 2017, her scores of probing, imposingly reasoned and crisply written dissents and separate expressions evoked a regulatory tiger, not the passive chairman she became.

The inaction is not necessarily a nod to a railroad-preferred status quo given Begeman’s proclivities—similarly seen in Miller—to comprehend shipper concerns. She told CSX that with PSR, it is “doing less with less,” and criticized Union Pacific as “expecting many customers to modify their own operations, at [shipper] time and expense, to accommodate UP’s new operating plan.”

Believe that captive shippers, grasping the difference between words and deeds, have been talking with the incoming new congressional leadership. Former Federal Aviation Administration chief counsel and later rail regulator Gregory S. Walden wrote in 1994 that to ensure “a unitary federal transportation policy,” Congress should “place all elements under control” of the DOT to avoid being the “Department of Most Transportation.”

How persuasive such an argument will be in 2019, given changes in Congress, may depend on whether and when Begeman grasps, with determination, the leadership baton.

Frank N. Wilner is author of six books, including Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and Railroad Mergers: History, Analysis, Insight, all published by Simmons-Boardman Books. Wilner earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Leadership (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.