STB: EFFECTS OF BOARD EXPANSION AND CHANGE

SURFACE TRANSPORTATION BOARD RISING TO FULL STRENGTH JUST AS BEGEMAN'S TERM CLOSES AND THE POLITICAL SEAS (POTENTIALLY) CHANGE.

The United States Surface Transportation Board (STB) is on the verge of a significant transition. Coming changes are in the Board’s composition and the possible effects on its regulatory process. Rail transportation professionals should consider ways in which these changes may impact their business decisions.
The Background
In 2015, Congress passed an amendment expanding the STB from three members to five. Partisanship has prevented the full complement from being confirmed thus far. (Ironically, in January 2019, after Vice Chairman Deb Miller’s term expired, the STB was briefly reduced to a single member, Chairman Ann Begeman.) In mid-January 2019, the Senate finally confirmed Republican Patrick Fuchs, an Office of Management and Budget and Senate Commerce Committee veteran, and Democrat Martin Oberman, a career trial attorney from Chicago, who had served as an alderman and as Chairman of Chicago’s Metra commuter railroad.
Begeman, Fuchs, and Oberman have fostered a more proactive culture, encouraging greater interaction between Board members and stakeholders. Further, Begeman has elevated the level of discipline and accountability in the STB’s processing of cases and regulatory proceedings. The current Board has distinguished itself by holding comprehensive public hearings and oral arguments, during which all three members have aggressively questioned railroad and shipper witnesses for lengthy periods of time.
Dynamics aside, it’s evident that the current STB listens to its stakeholders well and is genuinely striving for improvement. Under Begeman, the STB has held numerous proceedings to address key issues identified by rail shippers – such as demurrage and accessorial charges, and the need to improve rate reasonableness review standards and procedures.
On Deck
The next chapter of the STB’s story involves two additional players: Michele Schultz and Robert Primus are expected to be sworn in soon, bringing the STB to its full quota of five members. Schultz is a Republican and former deputy general counsel for the Southeastern Pennsylvania Transportation Authority. Primus is a long-time Democratic Congressional staffer, and has served Sen. Frank R. Lautenberg and Rep. Michael Capuano, two lawmakers esteemed in the railroad community. On 16.September, Primus was reported favorably out of the Senate Commerce, Science, and Transportation Committee. He and Schultz are expected to be confirmed and take their seats on the STB soon.

What to Watch

The STB expansion comes at a time of uncertainty at the STB:
  • Begeman’s second term expires at the end of 2020, and there has been no indication that she intends to remain for a permitted “holdover” year while her replacement is found. Thus, the major proceedings before the STB could be slowed or stalled while a new-member majority is brought up to speed. This also raises the likelihood that the STB would be composed of two Democrats and two Republicans, for a period.
  • The 2020 presidential election outcome will affect the STB’s operations, as the winning party appoints the Board’s Chairman. Accordingly, one could expect that Fuchs would be named chairman if President Donald Trump is reelected, and that Oberman would be named chairman if former Vice President Joe Biden is elected. Each would bring a very different approach to the role. It is also quite possible that the next Chairman is not currently serving on the Board.
  • Under the “sunshine laws,” a majority of the STB currently may hold a meeting on official agency business that is “not open to public observation,” only if the meeting attendees are disclosed and a summary of the meeting is posted on the STB’s website. This rule has substantially chilled and even prevented STB members on a three-person Board from communicating with each other. A five-member Board will free members to communicate discreetly about official agency business and pending matters.
  • It is unknown how Primus’s and Schultz’s policy views will mesh with those of the current members, or how Begeman’s replacement will relate with the incumbents. Undoubtedly, the STB’s internal dynamic will change once its full complement is reached.
GKG Law Principal Tom Wilcox has 30 years of broad regulatory, transactional and litigation expertise in practically all modes of transportation, specializing in the area of representing users of freight railroad transportation.