Monday, September 29, 2014

Is FRA’s Szabo headed to the STB?

Written by  Frank N. Wilner, Contributing Editor
Is FRA’s Szabo headed to the STB?
Joe Szabo, the former union boss and now embattled Federal Railroad Administrator, may be on his way out—to another federal railroad regulatory agency, actually, if rumors involving his former Chicago condo neighbor and friend, Senate Majority Whip Dick Durbin (D-Ill.), are correct.

While it is so that those who know don’t talk, and those who talk don’t know, there is sufficient saloon whispering on Capitol Hill among those who could and typically do know so as to give the rumor—that Durbin supports a Szabo move from the Federal Railroad Administration (FRA) to the Surface Transportation Board (STB)—credibility.

Durbin’s reason would be to allow strengthening of management credibility at the FRA while remaining loyal to an unwavering political supporter in assuring Szabo, now 56, job security through his 60th birthday in December 2017, when Szabo becomes eligible for full Railroad Retirement benefits and a union pension.

If this speculation is correct, Democrat Szabo would fill the expired Democratic seat of STB Chairman Dan Elliott, whose renomination increasingly appears kaput. Elliott’s first five-year term expired Dec. 31, 2013, and by statute he may remain at the STB only until this Dec. 31 unless renominated and reconfirmed—less likely every day, meaning a vacancy that could be filled by Szabo.

Durbin’s position as Senate Majority Whip makes him the second-most powerful United States senator, and it is established he has considerable sway over lower-level White House nominees. Indeed, Szabo’s March 2009 nomination as FRA chief had much to do with his buddy Durbin, whom Szabo courted not merely as a Chicago condo neighbor, but more intensely while Szabo was Illinois Legislative Director for the political action committee (PAC)-rich United Transportation Union (now the Transportation Division of the Sheet Metal, Rail, Air and Transportation Workers, or SMART).

Were Durbin to engineer this move of Szabo to the STB, it wouldn’t be the first time Durbin used his political wallop to influence STB appointments. It is well understood that former STB member Frank Mulvey, a Democrat, was rejected for the chairmanship of the agency early in Mulvey’s second term because of Mulvey’s support for the 2008 CN acquisition of the Elgin, Joliet & Eastern, and his rebuff (on the advice of STB’s general counsel) of Durbin’s request for a private meeting. (Durbin—along with then Illinois Sen. Barack Obama—opposed the transaction, citing concerns as to its environmental and grade-crossing safety impact on western Chicago suburbs and Amtrak operations.)

Durbin isn’t now dissatisfied with Elliott—who was named by Obama as chairman, in place of the better qualified Mulvey—but Elliott would have to pay the price of departure were a vacancy needed to move Szabo to the STB. Were that to occur, the assumption is that the new STB chairman would be Democrat Deb Miller, not Szabo—a choice that will be made by President Obama.

Such an elevation for Miller would have strong support of Kansas City Southern and BNSF, as her leadership skills at the Kansas DOT, under Democratic and Republican administrations, won for her considerable praise from those railroads and other Kansas transportation stakeholders. In her short tenure at the STB, Miller has earned support of captive shippers, who praise her fresh approach to seemingly intractable regulatory problems.

Elliott moved to the STB owing to strong political support of his own. His second cousin, Sen. Sherrod Brown (D-Ohio), was the swing vote for President Obama’s $787 billion economic stimulus package. To cast that swing vote, Brown hastily departed his mother’s funeral in February 2009 to board a White House-supplied aircraft back to Washington, where Senate Democratic leaders extended voting until 10:30 that night to coincide with Brown’s return.

Five months later, after obligatory background checks, Elliott, a labor attorney for the United Transportation Union, and with little commerce law experience, was nominated by President Obama to an STB vacancy, and named by Obama as STB chairman upon his Senate confirmation. The fact of Elliott’s being named chairman over Mulvey, a Ph.D. economist and the chairman heir apparent owing to his extensive experience in rail economic issues, was the validation that the highly qualified Mulvey was a victim of Durbin’s and Obama’s displeasure.

There appear no exertions by railroads or shippers for an Elliott adios, reinforcing speculation that Elliott is collateral damage in this assumed political caper to protect Szabo. Indeed, Elliott’s STB votes, while mildly more pro-shipper than some of his predecessors, are not so shipper-favorable to upset railroads. While some consider Elliott’s plight a result of discontent by Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.), who has advocated more shipper-friendly outcomes at the STB, captive shippers say that is not the case; that they do not wish Elliott to depart.

So what’s the deal with Joe Szabo? In part, Durbin must recognize that Szabo is on thin ice as FRA chief owing to harsh criticism of his agency leadership by the Department of Transportation’s inspector general (IG) and the National Transportation Safety Board (NTSB). At FRA sister safety agency PHMSA (Pipeline and Hazardous Materials Safety Administration), Administrator Cynthia Quarterman already walked the plank under a cloud of accusations regarding that agency’s lax managing of crude oil transportation safety.

Consensus may be building within DOT and at the White House similarly to see a leadership change at the FRA. But Szabo, unlike Quarterman, has special friends—earned with union political contributions—in Durbin and Obama. Elliott may be a second cousin of Sen. Brown, but that IOU was paid by the White House, and Elliott’s political connections are no match for those of Szabo.

Aside from IG and NTSB criticism of his management at FRA, there is no masking that Szabo has run into problems with the White House Office of Management and Budget, which is troubled by Szabo’s attempt to force what could be an arbitrary and capricious rulemaking on crew-consist size that, if allowed to proceed, could result in an Administration black eye delivered by a federal court.

Szabo’s gallop to push, through an agency rulemaking, a minimum crew-consist rule affecting all railroads is being undertaken absent a required (by White House Executive Order 12866) benefit-cost analysis, and in contravention of the Regulatory Flexibility Act that requires consideration of small business impacts (such as on regional and short line railroads having to double the size of crews, notwithstanding no showing by the FRA that their collectively bargained one-person crews are unsafe). Moreover, Szabo allegedly failed to seek consensus, and consider all comments, of an FRA-created labor-management Rail Safety Advisory Committee (RSAC) established specifically for that purpose.

Thus a move for Szabo from the FRA to the STB would allow administration face-saving changes to be made at the FRA while assuring Szabo job security through at least until his 60th birthday. By remaining at the FRA, Szabo would be only 59 on Inauguration Day 2017, when all political appointees resign to permit the next president to choose their own political appointees. The move to the STB would permit him job security at least until he becomes eligible for full Railroad Retirement benefits at age 60.

So why is Szabo on thin ice at the FRA?

The Department of Transportation’s Inspector General recently criticized the FRA for its management of the High-Speed Rail Grant Program, saying it “continues to lack the policies, procedures, training, and measurable performance goals needed to ensure that grant funds are appropriately awarded and obligated and to hold grantees accountable for the significant public investment.” That program also has been under fire in Congress, with allegations that the money was spread like pollen—more for positive political effect than demonstrating that high and higher-speed rail could deliver on the advertised.

Then, in late September, the National Transportation Safety Board criticized the FRA’s inattention to deaths of track and trackside workers, saying the FRA failed to provide national inspection protocols for work activities to ensure their safety. At a briefing on the report, an NTSB official said the FRA lacks a “vigorous roadway inspection program” even though that is where 80% of all rail worker fatalities occur.

Instead, Szabo has devoted the agency’s attention to pushing a union-sought minimum crew consist rule based on a horrific accident at Lac-Mégantic, Quebec, where had the same federal regulations then been in place as in the U.S., the accident may not have occurred. (Canada later adopted the same regulation as to proper setting of hand brakes.) More telling, Szabo is prefacing the need for a minimum crew-consist rule on the dangers of transporting crude oil by rail, even though not a single U.S. crude by rail accident has been tied to human error.

The Lac-Mégantic tragic accident was a result of several factors, none of which are relevant to the product carried or to crew size. The Transportation Safety Board (TSB) of Canada found no causal link between crew size and the accident. “Accidents never come down to a single individual, a single action, or a single factor,” said TSB Chairman Wendy Tadros. “You have to look at the whole context. In our investigation, we found 18 factors played a role in this accident.”

It would be unfortunate if STB Chairman Dan Elliott, who has earned extraordinary respect from all stakeholders while at the STB, is forced out to create new job security for Joe Szabo—ironically both having been recruited by the Obama Administration from the United Transportation Union.

Alas, the late Sen. Daniel Patrick Moynihan observed, “The world is a dangerous place.” Politically, that is especially so in Washington, D.C.

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