Market Matters Blog

US Surface Transportation Board Still Waiting for Three New Members

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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BNSF train moving east along the Northern Transcon at dusk. (Photo by Kelly Moshier, Maple Grove Minnesota)

For the first time since its creation, Congress passed the Surface Transportation Board (also known as STB or Board) Reauthorization Act of 2015 that became law on Dec. 18, 2015. Among other things, the new act expanded the STB from three members to five.

Here is a link to the Surface Transportation Board Reauthorization Act of 2015: https://www.congress.gov/…

When President Trump was elected, he became responsible for nominating three new STB members, which would be subject to Senate confirmation. The political party in power can control the majority of the STB seats; meaning Republicans now have the opportunity to fill two of the three vacancies. Currently, the STB still consists of two members: Chairman Ann Begeman, a Republican, and Vice Chairman Deb Miller, a Democrat.

In March of 2018, President Trump nominated two Republicans: Patrick Fuchs, a senior staff member of the Senate Commerce Committee and Michelle Schultz, associate general counsel for the Southeastern Pennsylvania Transportation Authority (SEPTA). On July 6, 2018, President Trump nominated Martin J. Oberman, a Democrat and attorney from Chicago. All are awaiting review and confirmation by the Senate.

Hon. Ann Begeman, STB Chairman, told participants on July 25 at the NGFA Ag Transportation Summit in Washington, D.C., that she is "hopeful" the three nominees are confirmed very soon. She said that rulemaking issues were on hold until the new members are confirmed, because they "need to be decided by all five members, not just two."

Begeman is referring to these two issues: The rail rate case process and reciprocal switching. The rail rate case process has been under discussion since late 2013. Begeman noted what most shippers are painfully aware of this, and that is the current methodology used to challenge freight rail rates is unreasonable, time consuming and extremely costly for a shipper to file. Begeman said that, "rate reform is my top priority."

The other issue, reciprocal switching, is perhaps the most contentious. Reciprocal switching refers to situations in which a Class I railroad that has physical access to a specific shipper’s facility switches traffic from the facility to another railroad that does not have physical access, in exchange for compensation in the form of an access fee/switch charge. "This is a complicated issue," said Begeman. "We need to make sure we know what we’re doing so there are no unintended consequences."

Begeman added, "I want good rail service to where a shipper wants to go for the price they are willing to pay and don't have to worry about reciprocal switching costs."

I asked Begeman if her hands were tied until the Board officially had five members, or were she and Miller able to rule on day-to-day issues, especially rail service issues.

She said that other than the major rulemaking issues, the current Board is on top of service issues and shipper-related complaints. On March 16, 2018, the STB responded to industry concerns of poor rail service by sending a letter to all U.S. Class I railroads, requesting that they provide their service outlook plans in the near term and for the remainder of 2018, "due to increased concerns over deteriorating service." The STB asked for information about each railroad's network, including locomotive availability, employee resources, local service performance, service demand, communication strategies and capacity constraints.

Here is a link to the letters received by the STB from the railroads: https://www.stb.gov/…

Begeman said that shippers could contact her office at any time through the STB Rail Customer and Public Assistance Program. "This program solves problems in ways ranging from a simple answer to a telephone inquiry to lengthy informal mediation efforts," she said. Topics including questions on rates and other charges, railroad-car supply and service issues, claims for damage, interchange issues, employee complaints and community concerns. Begeman said that this program has been "successful for shippers."

Here is a link to more information, including phone numbers and other ways for shippers to submit a complaint: https://www.stb.gov/…

"We can't fix everything," said Begeman, "but we sure will try."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

(BAS/BE)

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