Monday, January 23, 2017

STB's Begeman: Head, heart in conflict

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STB's Begeman: Head, heart in conflict

News item: Republican Ann Dawn Begeman, 52, was confirmed by the Senate in December to a second term—expiring Dec. 31, 2020—on the five-person Surface Transportation Board (STB). Expect her to be named STB Chairman by President Trump, succeeding Democrat Dan Elliott, who was President Obama’s choice as Chairman.

Elliott, whose second term expires Dec. 31, 2018, remains a voting member, as does Democrat Deb Miller, whose first term expires Dec. 31, 2017. By statute, STB members are limited to two terms.

Two vacant seats, created by the 2015 Surface Transportation Board Reauthorization Act, have yet to be filled. The nominees will be Republicans, giving the STB a 3-2 Republican majority.

A pregnant question is whether Begeman, with an eventual Republican majority whose orthodoxy is less government intrusion in private sector affairs, will embark on a more rail-friendly course than did Elliott. Three cases are progressing toward final decisions under Begeman’s chairmanship. None has a voting deadline, meaning she could hold each in abeyance, pending a majority vote for her position.

One is a shipper request that, at certain points and under certain conditions, a sole-serving railroad be required to carry traffic to an interchange with a competitor (reciprocal switching). In preliminary votes, Begeman expressed skepticism as to the practical effect of so doing.

A second case considers whether to implement a rate cap or other mechanism for limiting rate increases on railroads meeting a “revenue adequacy” means test determining the ability of railroads to attract sufficient capital to assure normalized maintenance and facilities renewal.

In a third pending case, and to the displeasure of railroads, Begeman is opponent-in-chief of the STB’s complex, time-consuming and expensive stand-alone-cost test by which captive shippers dispute rate reasonableness. The difficulty is formulating an equitable alternative standard.

During her first term that began in 2011, Begeman was meticulous in parsing Elliott-written decisions, issuing a bevy of dissents—often harsh in tone—to the Elliott-Miller majority. In personal letters and public comments to congressional leaders, she has expressed frustration that Elliott engages in regulatory overreach.

A fiercely independent thinker, and sphinx-like in collegial settings, Begeman sometimes shunts aside Republican tenets of less government involvement, alternatively expressing empathy with shipper concerns.

A South Dakota farm upbringing exposed her to recurrent prairie populist distrust of railroads. Indeed, her childhood home of Humboldt, whose population has never exceeded 600, lost its rail service to abandonment a generation ago. That left three local grain elevators less competitive with those enjoying direct rail service in a state where half the grain and oil seeds move by rail, and 45% of the state’s some 2,000 rail miles are owned and operated by BNSF.

Much of Begeman’s work history has been in the employ of two similarly independent thinking U.S. senators—Humboldt native Larry Pressler (R-S.D.), now in private law practice; and Sen. John McCain (R-Ariz.). Both chaired the Senate Commerce Committee and looked to Begeman for expert counsel on rail policy issues. In 2008, she worked on McCain’s presidential campaign.

Begeman also is professionally close to current Senate Commerce Committee Chairman John Thune (R-S.D.), principal author of the 2015 Surface Transportation Reauthorization Act. During the 1990s—notable for rail mergers and line abandonments that contributed to rural America losing some 70% of its rail competition since the 1970s—Thune was South Dakota’s state rail director, and later a lobbyist for Dakota, Minnesota & Eastern Railroad (now Rapid City, Pierre & Eastern Railroad, a Genesee & Wyoming short line).

Other professional friends of Begeman include Amy Hawkins, a BNSF lobbyist who was an aide to former Sen. Kay Bailey Hutchison (R-Tex.); and Mary Phillips, a former freight railroad policy analyst and McCain aide, now a rail adviser to House Republicans.

The Association of American Railroads reacted to Begeman’s reconfirmation by praising her “appreciation of the importance of empirical data in the decision-making process.” An attorney for captive shippers, asking not to be identified, said she “becomes most interesting when her heart and head go in different directions.”

 

 

 

 

 

 

 

 

 

 

 

 

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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