POTUS 47 on Aug. 27 fired Surface Transportation Board member Robert Primus, The Wall Street Journal reported Aug. 28, noting that the STB is “the railroad regulator weighing the proposed megamerger between Union Pacific and Norfolk Southern.”
“Primus, a Democrat, was nominated by [POTUS 47] to the Surface Transportation Board in 2020 and began serving in 2021,” The WSJ reported. “He was the only member of the Board to oppose the merger of Canadian Pacific and Kansas City Southern, a tie-up approved by the regulator in 2023. At the time, Primus said the deal wasn’t in the public interest. Primus said {Aug. 27] that he planned to challenge the termination.
“‘This is deeply troubling and legally invalid,’ Primus wrote in an email to The Wall Street Journal. He said he planned to continue his duties as a board member and that if he was prevented from doing so, he would seek legal options. The White House didn’t immediately respond to a request for comment.
“Primus received an email shortly after 5 p.m. [Aug. 27] from Mary Sprowls, who works in the White House Presidential Personnel Office. ‘On behalf of [POTUS 47], I am writing to inform you that your position as a member of the Surface Transportation Board is terminated, effective immediately,’ she wrote. She gave no explanation for the termination. Primus was removed from the list of Board members on the regulator’s website … [He] said the White House’s actions would weaken the Board and ‘adversely affect the freight rail network in a way that may ultimately hurt consumers and the economy.’”
TD Cowen Insight
“[POTUS 47] has now stepped into the rail M&A arena and shown his cards on a potential transcon in favor of a merger,” comment TD Cowen’s Jason H. Seidl (Railway Age Wall Street Contributing Editor), Elliot Alper and Uday Khanapurkar. “The firing now leaves two seats open at the STB, an independent agency that may now be under scrutiny. A Democrat on the Board serving his second and final term, Primus vocally disavowed rail industry consolidation and was the sole dissenter in the STB’s CP-KCS final merger approval as well as the recent smaller acquisition by CN of Iowa Northern Railway.
“The rail industry has long benefited from an independent STB that may now be under scrutiny of the Administration. This announcement may hinder the Board’s ability to focus on its core duties at a very busy time ahead of a major proposed transcon merger. We worry political pressure could hinder the Board in fact-focused due diligence and may limit outspoken opposition in an effort to avoid confrontation with the President. No statement has yet been made by Chairman Fuchs. Our understanding is that the STB is an independent agency, though it is unclear if the President has the authority to fire Primus, considering no cause was listed in his termination email, per The WSJ.
“The ousting leaves the STB with a 2-1 Republican majority, and we believe the move comes in an effort to clear the path for the potential transcontinental merger of Union Pacific and Norfolk Southern. The STB should be allowed to issue decisions despite the vacancies since the U.S. Code states that this ‘does not impair the right of the remaining members to exercise all of the powers of the Board.’ With the move, an appointment to the formerly vacant seat does not appear essential to a voting majority though we believe a Republican appointment could still be forthcoming as channel checks indicated four candidates in contention, potentially leaving the Board with a 3-1 Republican majority by the time a UP+NS decision has to be made in early 2027. The Board can legally have no more than three people from the same party. Hence, [POTUS 47] could move to stack the Board even further if he wishes.”
Further Reading: Commentary from Railway Age Capitol Hill Contributing Editor Frank N. Wilner.
