Can STB Avoid Political Division?

Written by Frank N. Wilner, Capitol Hill Contributing Editor
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WATCHING WASHINGTON, RAILWAY AGE OCTOBER 2022 ISSUE: Surface Transportation Board (STB) Chairperson Martin J. Oberman remains as difficult to categorize today as when he arrived in January 2019. In many respects, he brings to mind mythical Roman god Janus, who, in seeing forward and backward, symbolizes change and transition.

Clearly one-of-a-kind, even at age 76, Oberman’s favored ride to work is a bicycle. Likely to roll his eyes when addressed as “Mr. Chairman,” he displays little tolerance for fools and time wasters, a trait retained from his stint as an elected Chicago alderman. Colleagues describe Oberman, who controls the agency’s docket, as consensus driven with inordinate patience to hear contrarian theories, and willing to allow cases to move even when the majority is not on his side.

““Except for intermodal and a handful of other areas, generally speaking, I think shippers have very little bargaining power these days.” – STB Chair Martin Oberman

Not a large man, Oberman’s favored bow ties for office attire cast him as a contemplative law professor rather than a big-stick, menacing rail regulator, even though his sound bites are more the stuff of the latter:

• “There’s just not real effective competition among rail carriers.”

• “Except for intermodal and a handful of other areas, generally speaking, I think shippers have very little bargaining power these days.”

• “If [carriers] need another 400 crews to move trains … pay whatever price you need to get them. I don’t oversee [collective] bargaining, but I do oversee service.”

Railroads haven’t heard such bully pulpit lectures since A. Daniel O’Neal, who chaired STB predecessor Interstate Commerce Commission, walked the plank in 1979 at the urging of economic deregulation advocate President Jimmy Carter, who recruited rail regulators more likely to have on their night stands books by Ayn Rand, Milton Friedman and William F. Buckley than John Maynard Keynes, Ralph Nader and John Kenneth Galbraith.

Oberman is influenced by provisions of National Transportation Policy that include fostering “sound economic conditions,” promoting a rail system “to meet the needs of the public,” allowing to the “maximum extent possible” competition and demand to establish “reasonable” rates, and encouraging “fair wages and safe and suitable working conditions.” His view is that “if we let railroad share price drive all decisions, we won’t have an economy that can rely on freight rail.”

Clashing with that perspective are railroad shareholders and boards of directors expecting CEOs to “right size” plant and work force in advance of approaching economic recessions, a looming cratering of high-margin coal traffic, and the impact on truck-competitive pricing and market share of a collectively bargained 24% unionized employee wage increase.

Oberman’s aggressive use of the bully pulpit is not incompatible with his efforts to encourage better industry behavior voluntarily, thereby facilitating unanimous votes among members with starkly differing views and politics. An example was his gaining Board consensus on approving CSX’s acquisition of Pan Am Railways. His use of probing questions and preliminary determinations elicited voluntary agreements between CSX and concerned parties, avoiding third-party regulatory edicts rarely satisfying to any stakeholder.

Oberman also formed consensus to expand publicly accessible railroad-reported service-metrics—again in expectation that public shaming, including from investors, would lead to voluntary rather than regulatory fixes.

While there are deep political divisions in Congress, there are no Democratic or Republican “gang” colors flashed at the STB. “We have neither idealism nor polarization,” Oberman says.

“True to his word [when President Biden named him chairperson], Marty has worked indefatigably to achieve consensus on the vast majority of our decisions, spending countless nights listening to members’ concerns and identifying solutions,” says STB Republican member Patrick J. Fuchs.

As the Board finalizes pending matters and initiates others—promising indelible impacts on shippers and railroads—collegiality will be tested. Pending decisions may expand access to rate relief for smaller-valued cases; develop new rate-reasonableness methodology; establish minimum standards under the statutory common carrier obligation; require a railroad open its privately owned track to permit two-railroad competition (reciprocal switching); and define revenue adequacy’s relationship to maximum reasonable rates.

Oberman’s fellow Board Democrat Robert Primus says, “[We all] want railroads to figure out ways to solve their own problems.” As they do, and with increasing congressional interest, the question is whether the STB can continue to work collegially and ignore Washington’s political divide and dysfunction.

Frank N. Wilner

Capitol Hill Contributing Editor Frank N. Wilner is author of six books, among them Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and Railroad Mergers: History, Analysis, Insight, all published by Simmons-Boardman Books. Publication of his seventh book, “Railroads & Economic Regulation,” is pending by Simmons-Boardman Books. Wilner earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been Assistant Vice President, Policy at 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 Leadership (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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