Monday, September 25, 2017

Dan Elliott departing STB

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Dan Elliott departing STB

Former Surface Transportation Board (STB) chairman and now STB member Dan Elliott announced Sept. 25 he is resigning Sept. 30 to join, in early October, the Washington, D.C., office of the law firm, Connors & Winters, whose specialization is employee compensation, health and benefit plans, and employment law.

A former rail union attorney, Elliott was nominated as a Democrat to the STB in 2009 by President Obama, with strong support from a second-cousin, Sen. Sherrod Brown (D-Ohio), who was the swing vote on the Affordable Care Act, otherwise known as Obamacare.

Upon his Senate confirmation in August 2009, Elliott was named by Obama as the STB’s permanent chairman. As often occurs with those who attempt to stake out middle ground, Elliott quickly found himself the subject of criticism by railroads and shippers and was left dangling by the White House for almost a year before renomination to a second term.

When the Senate failed to act on that renomination, it was returned to the White House in December 2014. Speculation was that then-Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.), a captive shipper advocate, was sending a message to Elliott that he was “a disappointment.”

Absent Senate confirmation, Elliott was forced to depart the STB Dec. 31, 2014, during which time fellow Democrat Deb Miller served as acting chairman. When again renominated, by Obama in January 2015, and subsequently Senate-confirmed to a second term that extends through Dec. 31, 2018, Obama again designated Elliott the STB chairman. Upon President Trump’s election in January 2017, Trump designated Republican Ann Begeman as “acting chairman,” owing to her desire not to be a permanent chairman.

Begeman, currently the STB’s lone Republican, remains acting chairman, and Miller will become the lone Democrat. While the 2015 Surface Transportation Board Reauthorization Act created two new seats to make the STB a five-person agency, there have been no White House nominations under Obama or Trump to fill the vacancies.

As a majority of the STB’s seats can be controlled by the political party in power, Republican nominees will have the opportunity to fill the existing two vacancies. Elliott’s departure at month’s end will create an opening for a second Democrat to join Miller, whose own term expires Dec. 31. By statute, she may remain (“held over”) for up to 12 months beyond her term expiration—or must step aside if Trump nominates, and the Senate confirms, another Democrat in her place. Legally, the agency could function with three Republicans and no Democrats, but Senate Democrats are procedurally unlikely to allow that to occur.

There is no quorum requirement for voting at the STB, meaning Begeman and Miller may continue to decide cases, with a voting tie considered a negative result. In fact, former STB Chairman Roger Nober served as his own majority for many months in 2004 when STB membership dwindled to one.

There has been a hint of the late and former Republican Chairman Reese Taylor in Elliott. Taylor, who served as President Reagan’s choice as chairman of the STB predecessor Interstate Commerce Commission during implementation of the 1980 Staggers Rail Act (1981-1985), found himself in disfavor with railroads for allegedly slowing the pace of the law’s intended regulatory reform. Taylor likened his approach to that of a deep-sea diver, rising to the surface slowly to avoid potentially fatal decompression sickness (the bends).

While Taylor led the implementation of the Staggers Rail Act’s provisions that intended, through partial deregulation, to restore railroads to financial self-sufficiency, the law also intended a brake on rate freedoms once railroads achieved revenue adequacy (return on investment at least equal to the cost of capital).

Elliott, in the manner of Taylor’s deep-sea diver, said he wanted to avoid drastic action on determining if and when those brakes should be applied, preferring an incremental approach. In fact, he has not been alone. All three current members agreed informally in 2016 to delay voting on sensitive issues pending nomination and confirmation of two new Board members.

Those cases include evaluating what constitutes revenue adequacy and its influence in attracting capital for new investment in plant and equipment; whether to limit rail rate increases when railroads meet the STB revenue adequacy test; setting standards under which railroads may impose fuel surcharges; and whether and how to allow so-called competitive switching at certain sole-served facilities that would allow shippers a second railroad choice.

During Elliott’s years as chairman, Begeman wrote a record number of dissents, and Miller frequently withheld a second vote pending revisions to Elliott’s initial draft decisions (STB chairmen typically write the draft decisions). Begeman and Miller publicly expressed displeasure with Elliott’s failure to invite their input or review of two Elliott-ordered consultancy studies.

During a Senate Commerce Committee oversight hearing into the STB, Begeman said, “I have had many frustrations. I certainly was aware of the Board’s reputation for its sometimes glacial pace … but to experience it first-hand, in a position from which I expected to positively influence that pace through collaboration with my fellow members, I was in for a big surprise. I strongly disagree with the chairman’s stated view that he alone is ‘the person responsible for moving the docket forward.’ I want to embrace the functioning of the agency, not embrace the status quo.”

Miller said at that Senate oversight hearing, “Unilateral actions [by Chairman Elliott] are contrary to the reason Congress established a multi-member Board.”

Elliott, considered an attentive listener, exceptionally bright and typically a quick study, had minimal public policy and commerce law experience prior to his arrival at the STB, having been involved primarily in labor relations issues as an attorney at the United Transportation Union (now the Transportation Division of the Sheet Metal, Air, Rail and Transportation Union).

By contrast, few rail regulators in modern history are as well-equipped as is Begeman. For two decades, she advised Senate Republicans on transportation policy. Miller, meanwhile, is a former Kansas transportation secretary under governors of both political parties, is well respected among state rail planners, and has experience in transportation consulting.

All seems forgiven now that Elliott is departing.

“During the six years I have worked with Dan, I have always appreciated his genuine dedication and commitment to the Board’s work and to the transportation community—both shippers and railroads alike,” Begeman said in a STB prepared press release.

In that same press release, Miller said, “When I first came to the Board, the agency was in the midst of several difficult issues, and as the chairman at the time, Dan helped me quickly transition into my new role. Since then, the Board has undertaken a number of important regulatory initiatives in which he was instrumental. Dan will be missed.”

Said Elliott in a prepared statement:

“It has been an honor to serve the United States at the Surface Transportation Board. My tenure as Chairman and Vice Chairman of the agency has brought both rewards and challenges, but most of all an appreciation for the sophisticated rail transportation industry and its shippers that serve as the backbone of our nation’s economy.”

“A lot has occurred since I first joined the Board … But one thing has remained constant, and that is the distinguished group of professionals and good people at the agency that I have had the privilege of working with for the past eight years,” Elliott said.

Frank N. Wilner, Contributing Editor

Frank N. Wilner is author of six books, including, Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and, Railroad Mergers: History, Analysis, Insight. He 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 Change (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.

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