Trump nominates two for STB

Written by Frank N. Wilner, Contributing Editor
Surface Transportation Board

A Senate committee staffer and a lawyer for a commuter rail agency have been nominated to fill vacant seats at the Surface Transportation Board. Current Acting Chairman Ann Begeman is expected to be named permanent chairman.

Patrick J. Fuchs, a senior staff member of the Senate Commerce Committee, reporting to Chairman John Thune (R-S.D.), and Michelle A. Schultz, associate general counsel for the Southeastern Pennsylvania Transportation Authority (SEPTA), are President Trump’s nominees for the two vacant Republican STB seats.

The STB has exclusive jurisdiction over railroad common carrier unreasonable rate and service disputes and railroad mergers.

Michelle Schultz

Michelle Schultz

The vacant seats to which Fuchs and Schultz have been nominated were created by the 2015 Surface Transportation Board Reauthorization Act but have yet to be filled. Their creation expanded the authorized size of the agency to five Senate-confirmed members. The STB staff numbers fewer than 120.

As the two newly-created seats have never been filled, the five-year terms will begin upon confirmation of nominees.

There also is a vacant Democratic seat, but with fewer than 10 months remaining on its term. There is no indication when a nomination to that seat will be made. The STB has no statutory quorum requirement, and has functioned with a single member. Currently, there are two members – Republican Acting Chairman Ann Begeman and Democrat Deb Miller. The STB and its predecessor Interstate Commerce Commission (ICC) have not had a political independent since 1977, and in their history dating to 1887, there have been but three political independents confirmed by the Senate.

Patrick Fuchs

The nominations of Fuchs and Schultz are expected to be transmitted to the Senate within a week. The Senate Commerce Committee subsequently will interview the nominees at a public hearing before determining whether to recommend confirmation by the entire Senate. Senate Democrats could maneuver a hold on a confirmation vote by the entire Senate pending nomination of a Democrat so that the resulting STB membership would be three Republicans and two Democrats, rather than a 3-1 Republican majority.

The statute provides that there can be no more than three members of a single political party. The political party controlling the White House earns the right to a majority of STB members, and the President designates a permanent chairman. Railway Age has learned that President Trump will designate Begeman as chairman. She had been designated acting chairman following Trump’s inauguration, but at the time communicated to the White House she did not want the job permanently. Sources say she has reconsidered.

The open Democratic seat, which expires Dec. 31, 2018, was voluntarily vacated in 2017 by former Chairman Dan Elliott, who resigned to enter private law practice. A nominee confirmed to that seat would serve out the remainder of that term and be eligible for a one-year holdover to Dec. 31, 2019. There is a provision in the statute allowing the second-term nomination to move forward at the same time the nominee is confirmed to the unexpired portion of a first term. STB members are limited to two terms, regardless of the time remaining on the first term to which they are confirmed.

As for Miller, her first term expired Dec. 31, 2017, and she is serving a statutory 12-month holdover. She has not signaled a preference for re-nomination, nor is there indication she will receive one. There has also been speculation she may voluntarily depart early. The STB could be without a single Democrat if the Elliott seat is not soon filled and Miller departs.

Since the Staggers Rail Act, which provided railroads with partial economic deregulation, was passed in 1980, 22 members of the STB and its ICC predecessor have been nominated and confirmed. Of those 22, 14 have been attorneys and 14 had either congressional staff or other federal government experience. Only three have had degrees in economics (none currently), and only one worked directly for a railroad. The previous rail regulator with a rail shipper background was nominated by President Eisenhower in 1955.

If confirmed, Fuchs, who turned 30 in February, will become the second-youngest member of the ICC/STB. Former Chairman Heather Gradison was 29 when confirmed in 1982. Fuchs’ work experience and level of responsibility suggests someone considerably older.

Since joining the Senate Commerce Committee staff in January 2015, Fuchs has participated in the drafting and passage of five bills directly affecting freight and passenger railroads, including the 2015 Surface Transportation Board Reauthorization Act, intended to improve the Board’s dispute resolution processes.

Fuchs also participated in drafting the rail and hazardous materials titles of Fixing America’s Surface Transportation (FAST) Act. It was the first rail passenger-service reauthorization in almost a decade, instituting reforms to improve Amtrak’s performance and to permit and encourage private-sector competition on at least three Amtrak long distance routes.

Previously, Fuchs was a policy analyst with the White House Office of Management and Budget, a State Department Presidential Management Fellow serving in The Hague, Netherlands, and a research assistant at the National Center for Freight and Infrastructure Research and Education.

From the University of Wisconsin, Fuchs earned a double-major undergraduate degree in economics and political science, and a master’s degree in public policy analysis and management, with an emphasis on transportation policy, economics and statistics. He participated in an international academic program with the University of Singapore, focusing on international policy and economics.

“While I will miss Patrick and his expertise at the Commerce Committee, I am excited for him to have this opportunity to serve on the Surface Transportation Board,” said Chairman John Thune. “Railroads and their customers will benefit from his sense of fairness and his talent that we utilized over the past three years at the Commerce Committee to help pass legislation reauthorizing passenger railroad service, making resources available to improve safety, and reforming the Surface Transportation Board. Once the committee receives the formal nomination and other required submissions, I expect we will move quickly to convene a confirmation hearing.”

Schultz has been SEPTA’s deputy general counsel since January 2014, focusing primarily on procurement, major capital projects and commuter-rail regulation. She joined SEPTA in 2006 as manager, and later director, of legislative affairs.

Earlier in her career, Schultz was an associate with the Philadelphia-based law firm of White and Williams, dealing with bankruptcy and commercial litigation, and a law clerk with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania.

Schultz earned an undergraduate degree in English from Penn State, a master’s degree in government administration from the University of Pennsylvania, and a law degree from Widener University. Her husband, James. D. Schultz, served as associate White House counsel to President Trump from Jan. 23, 2017, to November, when he returned to private law practice.

The STB has been ducking decision-making on high-profile cases since Elliott’s departure in 2016, with Acting Chairman Begeman choosing to hold in abeyance decision-making on those cases pending the arrival of additional board members. The STB chairman controls the docket.

Among the significant policy issues awaiting STB action are whether and how to allow so-called competitive switching at certain sole-served facilities to allow shippers a second railroad choice; evaluating what constitutes railroad revenue adequacy and whether to limit rail rate increases for revenue-adequate railroads; setting standards under which railroads may impose fuel surcharges, and finding a less costly and more efficient method of determining rate reasonableness than its current Stand-Alone Cost (SAC) test.

Railroads have been content with the status quo, as there is little upside for them in any of the pending decisions. Some shipper groups have spoken internally of bringing a federal court action to force the STB to decide cases before it.


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