Will The STB Resist The Urge To Re-Regulate The Railroads?

While the media likes to focus on the turmoil amidst the shutdown, work still gets done between Congress and the Executive Branch. One of the last acts in the Senate before the 115th Congress adjourned was to confirm two commissioners to the Surface Transportation Board (STB). The commission now has 3 of 5 members. Joining Chair Ann D. Begeman (R) are Patrick Fuchs (R), former senior counsel for the Senate Commerce Committee – which oversees the agency – and Martin Oberman (D), former Chicago rail system chairman and city alderman.  Two slots remain, which could include recently renominated Republican Southeastern Pennsylvania Transportation Authority attorney Michelle Schultz, and Democrat Deb Miller, a Commissioner from 2014-2019 until her term fully expired.

The STB is a little-known regulatory agency overseeing a rail shipping industry that drives $219.5 billion annually to the US economy. It is charged with resolving railroad service disputes, reviewing railroad mergers, and regulating certain transportation rates.  Like many regulatory agencies that were established without an exit strategy or sunset clause, the STB is grappling with how to be relevant in the information age when technology has made its purpose all but obsolete.

Not having the agency at full strength has tabled the “forced switching” regulatory proposal, blunt force regulation that enables the federal government to control how third parties use privately owned freight networks, potentially rewarding politically favored shippers which otherwise would have to engage in bona fide negotiation for shipping rates. Similar to how the largest internet platform companies have used net neutrality to win free and reduced transit costs at the expense of consumers, America’s largest rail shippers have banded together to see whether they can squeeze price reductions and traffic controls from the railroads. As Lawrence J. Spiwak, president of the Phoenix Center for Advanced Legal and Economic Public Policy Studies, explains, it is merely backdoor rate regulation intended to evade existing statute regarding direct rate regulation.

Read more of this Forbes article by Roslyn Layton by clicking here.