Shipper Frustration Turns Contemptuous

Written by Frank N. Wilner, Capitol Hill Contributing Editor
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WATCHING WASHINGTON, MAY 2019 - Oh, the contempt that drippeth from a judicial petition of the Western Coal Traffic League (WCTL), whose members ship and receive by rail some 175 million tons of coal annually. It accuses the Surface Transportation Board (STB) of impersonating a regulatory agency by not acting on long-pending rulemakings, and asks a federal court to order the STB to do as its statute instructs—timely decide cases brought before it.

The WCTL wants the U.S. Court of Appeals for the District of Columbia Circuit to issue a writ of mandamus—an order to a government agency to fulfill properly its official duties and “take action” in a proceeding lingering almost five years.

The case cited stems from a $181 million shipper overcharge where the STB acknowledged a flaw in its mechanism by which railroads recover higher locomotive fuel costs. In 2014, the STB opened a rulemaking to determine a fix. And that is when the STB’s gears stopped rotating. Other rulemakings also loiter.

More than 132 years ago, when STB predecessor Interstate Commerce Commission (ICC) was created, its framers foresaw grievances presented to the agency being decided promptly.

Yet Congress occasionally has had to step in, such as after the ICC wiggled, waggled, waffled and wavered for more than a decade in deciding a railroad merger application (Union Pacific+Rock Island). Subsequently, statutory deadlines were imposed for deciding merger and rate reasonableness cases. But not for rulemakings with broad public policy implications.

Now festering—beside a fix for a flawed fuel-cost recovery formula—are rulemakings on how more accurately to measure revenue adequacy; to resolve when and how rate relief should be applied when revenue adequacy is achieved; to determine whether sole-served shipper facilities are to be opened to a second railroad via mandated reciprocal switching or trackage rights; and how to make more efficient and less costly the review of maximum rate cases.

Alleging justice delayed is justice denied, affected shippers are confounded, frustrated and contemptuous, as evidenced by this WCTL pleading.

STB chairmen, appointed by the President from among Senate-confirmed agency members, exclusively control the docket and staff work assignments. Since 2015, when Congress increased STB membership from three to five, former Democratic Chairman Dan Elliott did not resolve these rulemakings, and current Republican Chairman Ann Begeman has declined to move them, awaiting reinforcements yet to arrive.

But the STB statute has no quorum requirement. As recently as 2003, the STB operated efficiently for 54 weeks with but a single member—Roger Nober. Moreover, there is no indication the STB will reach five members soon. Democrat Deb Miller wasn’t renominated, departing Dec. 31 following term expiration. That leaves Republican nominee Michelle A. Schultz awaiting a Democrat with whom to be paired for Senate confirmation—with no indication another nominee is even being considered by the White House.

The relief sought by the WCTL—and, by extension, other shippers similarly invested in long-pending rulemakings—is that the STB either decide or dismiss them, enabling shippers at least to seek judicial relief.

While railroads today may benefit from this delay—although the decisions could be in their favor—circumstances change. Not long ago, amidst shipper unrest, lawmakers came within a single committee vote of advancing legislation reversing the partial economic deregulation afforded railroads by the 1980 Staggers Rail Act. The consequence of regulatory inaction can be more wicked than shipper contempt.

While the STB still has but three members, relatively new arrivals—Republican Patrick J. Fuchs and Democrat Martin J. Oberman—seem impatient change agents. Begeman has joined them in utilizing statutory provisions enacted in 2015—written, in part, by Fuchs when a senior Senate staffer—allowing STB members to meet collectively with staff to exchange views. They also are utilizing relaxed rules to meet with stakeholders.

As former Chairman Linda J. Morgan said at her 1999 second-term confirmation hearing, “Parties that bring disputes to the board want and should have the certainty of resolution … we are here to make decisions in hard cases.”

Voluntary forward movement may help burnish an image tarnished by protracted inaction.

Editor’s note: On May 17, a three-judge panel of the District of Columbia Circuit Court of Appeals unanimously ordered the STB to reply to the shipper petition within 30 days, and invited the Western Coal Traffic League to respond to the STB filing within 14 days following its submission.

Frank N. Wilner is author of six books, including Amtrak: Past, Present, FutureUnderstanding the Railway Labor Act; and Railroad Mergers: History, Analysis, Insight, all published 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, 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 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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