Tuesday, June 23, 2015

Unemployed no more, Elliott returns to STB

Written by 
Unemployed no more, Elliott returns to STB

Following almost six months of unemployment, and nearly a year of dining on the gristle of uncertainty, Dan Elliott is returning to the Surface Transportation Board following voice-vote Senate confirmation June 22. President Obama previously said he would rename Elliott as agency chairman upon confirmation. Fellow Democrat Deb Miller has been serving as acting chairman of the three-member STB since Jan. 1.

Elliott, age 52, who had served as STB chairman since 2009, stepped aside Dec. 31 after the Senate failed to act on his renomination by President Obama to a second five-year term. For reasons still not clear, former Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) declined to hold a committee hearing on that renomination in 2014 and the Senate adjourned without Elliott’s name reaching the Senate floor for a vote.

President Obama renominated Elliott in early January, but it was not until late May that Rockefeller’s successor as Commerce Committee chairman, John Thune (R-S.D.), held a hearing on the renomination. The committee voted in May to send Elliott’s nomination to the Senate floor for a vote, but again he found himself in limbo. The reason this time was clear. Sen. Tammy Baldwin (D-Wis.) blocked the unanimous consent required by Senate Majority Leader Mitch McConnell (R-Ky.) to move nominations to the Senate floor for a vote.

In a June 2 letter to McConnell in which she objected to unanimous consent, Baldwin echoed concerns of self-proclaimed captive shippers—“Wisconsin manufacturers, utility companies, the agriculture industry, and countless small businesses”—who allege the STB is mostly deaf to their complaints of “poor service and high rates.” She demanded a meeting with Elliott before removing her objection. What transpired at that meeting is not known, but Elliott would be in violation of the STB’s ethics rules—and perhaps be inviting a criminal charge—had he traded future votes for Baldwin’s support.

Perhaps Elliott, the lone attorney on the board, had no choice but to meet with Baldwin, hear her concerns, smile and promise to do his duty to God and country, obey the Boy Scout oath and help others at all times. Indeed, former STB member and Democrat Frank Mulvey, on the advice of STB’s ethics officer, declined a 2008 requested meeting with then-Senate Majority Whip Dick Durbin (D-Ill.) to discuss a pending STB matter affecting Chicago. Mulvey, one of the most qualified of rail regulators by experience and education, paid dearly in not being named STB chairman, as anticipated, with President Obama, at the urging of Durbin, instead naming commerce law newcomer Elliott as the STB’s chairman. Stinging political lessons are retained and self-interest is a powerful motivator.

If Rockefeller similarly was sending a message by denying Elliott a hearing, he was as ignorant of Elliott’s STB record as is Baldwin and shippers she represents. Elliott’s voting record shows him in support of easing evidentiary thresholds for smaller shipment complaints and raising the ceiling on maximum rate relief for such cases; backing a more shipper friendly method for evaluating allegations of captivity; and rejecting a railroad request to permit the use of product and geographic competition in defending shipper captivity allegations.

During Elliott’s hiatus, Miller took charge of the agency’s docket, declining to move to vote cases likely to cause disagreement with the lone Republican member, Ann Begeman, who, in just four years at the STB, has issued 40% of all dissents over the 19-year-life of the agency (since it emerged in 1996 as the successor of the Interstate Commerce Commission, or ICC).

Where Elliott—according to one long-term practitioner before the STB and its predecessor—pursued a “get along with staff” attitude, Miller, in her almost six months as chairman, pushed staff “to improve performance metrics,” meaning move cases faster and smarter. By statute, a majority of Senate-confirmed federal agency officials may not confer privately on issues before them. Thus, at a three-member STB, members are prohibited from meeting privately to discuss cases, leaving the chairman as a majority of one in deciding staff and agency decision-making priorities.

Elliott’s return—he will be sworn in this week—gives the STB a full-complement of members to process two significant policy issues and three major rate cases expected now to move forward with alacrity.

In July, the STB will hold a hearing on railroad revenue adequacy issues, chief among them being whether the STB should determine rate of return on investment (ROI) using historical or replacement costs, and the appropriate length of a business cycle over which revenue adequacy is determined.

Also expected to be considered shortly is a hearing on a petition of the National Industrial Transportation League seeking that all one-railroad served origins and destinations be open to reciprocal switching by another railroad whose tracks pass within 30 miles.

Three major rate cases also await decisions, including Total Petrochemicals v. CSX, which involves four commodities and some 120 origin/destination points and is considered the most complex stand-alone cost (SAC) test ever before the STB.

Also on the STB agenda is the Uniform Rail Costing System (URCS), which is used to apply the Stand Alone Cost (SAC) test in major rate cases and which is outdated and alleged to be unreliable. Changes to URCS, and a congressional directive to simplify the SAC test, are priorities. Miller and Begeman are on record that a better, cheaper and faster test must be found. Separately, a STB commissioned study on simplifying the SAC test is under way.

There is speculation one or more railroad applications to merge could be filed in the months ahead. At a recent Railway Age-sponsored conference, Miller said the agency’s 140-employee staff, already beset with budget limitations, could face gridlock were a new round of railroad mergers to commence.

The lone attorney board member, Democrat Elliott’s new terms extends through December 2018. Republican Begeman’s term expires at the end of this year. Democrat Miller’s term expires Dec. 31, 2017. The STB statute permits a maximum one-year holdover if the incumbent is not renominated and confirmed, or until a successor is nominated and confirmed.

As Elliott’s new term extends almost two years into the next presidency, his chairmanship most likely would end should a Republican enter the White House in January 2017. A new Democratic president could also name a different chairman.

The Senate on June 19 passed S. 808, the Surface Transportation Board Reauthorization Act, which, among other provisions, would increase the size of the STB from three to five members. There has been no indication from the House Transportation & Infrastructure Committee or House Republican leadership on that bill’s prospects in the House.

Of interest to STB junkies, Elliott becomes the first Senate confirmed member in the 128-year history of the STB and its predecessor ICC to depart upon the expiration of a term and then be renominated and confirmed to another term. Since 1887, 112 separate individuals have served on the ICC and STB.

Jacob J. (Jake) Simmons had an intermezzo, but under different circumstances. Simmons, having been nominated by President Reagan and confirmed to the ICC by the Senate in April 1982, voluntarily resigned his seat in February 1983 to become Under-Secretary of the Interior, only to return 19 months later following a second nomination by Reagan and confirmation by the Senate in September 1984. During his second act, Simmons served from 1984 to 1996 when his term expired.

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.

Get the latest rail news

Rail news and analysis from Railway Age, IRJ and RT&S by email