STB member Michelle Schultz, renominated by POTUS 47 to a second five-year term, and Richard Kloster, a first-time nominee by POTUS 47, found themselves in awkward positions when challenged by Democratic Sens. Tammy Baldwin of Wisconsin and Ben Ray Lujan of New Mexico as to whether they supported an email sent to STB staff by STB Chairperson and Republican Patrick Fuchs blaming Democrats for the government shutdown now in its 37th day.
Lujan asked the nominees how the STB can function effectively “if subject to political interference and coercion”—suggesting, more broadly, that POTUS 47 had directed the agency to approve a Union Pacific (UP)-Norfolk Southern (NS) merger, and that the President’s alleged illegal firing of STB member and Democrat Robert E. Primus was a warning to the nominees that they could be next if they oppose the transaction.
Both nominees, having earlier in the hearing pledged to be “impartial” in all matters coming before the STB, appeared startled by the question. And there was good reason.
The accusation made by the Democratic senators regarding the email was incorrect. It was not authored by Fuchs, but was, in fact, a standardized temporary furlough notice created by the Executive Branch Office of Management and Budget and distributed to all federal agencies—including Democratic-chaired ones such as the National Transportation Safety Board—for redistribution to all agency employees. Schultz was startled because she knew the facts, which she then quietly explained. Kloster, not a federal worker nor yet a federal official, was unaware of the memo.
Baldwin subsequently made clear the purpose of the email question, tying the “independence and integrity” of the STB’s decision making to whether Schultz and Kloster could be bullied by the POTUS, following Union Pacific CEO Jim Vena’s Oval Office meeting, subsequent contribution to the $300 million White House ballroom construction and the POTUS saying the merger sounded “good” to him.
Baldwin has a long history of advocating legislatively on behalf of rail shippers. As a House member in 2009, she supported legislation to place railroads more fully under the antitrust laws; and as a senator in 2015, delayed a Senate floor vote on confirmation of fellow Democrat Daniel R. Elliott III to a second term, citing concerns of Wisconsin “manufacturers, utility companies, the agriculture industry and countless small business” as to the agency’s commitment to greater rail competition.
What Baldwin, as Lujan and Republican Sen. Tim Sheehy of Montana, were seeking of Schultz and Kloster—and which each had pledged in their opening statements, and re-pledged under questioning—was commitment “to follow the rigorous and comprehensive evaluations required” by the STB’s merger rules in evaluating a UP-NS merger. A formal merger application is expected to be filed by those railroads by early December.
Kloster acknowledged he faces a learning curve if confirmed, having stumbled over Lujan questions as to what “the record” means in a formal regulatory agency hearing as opposed to opinions he may hear uttered by politicians on television—saying he does not follow social media. Sitting behind Kloster during the hearing was his son, Andrew R. Kloster, general counsel to the Office of Personnel Management and former associate director of the White House Office of Presidential Personnel during POTUS 47’s first term.
December likely will be the soonest the Commerce Committee votes whether to recommend Schultz and Kloster for confirmation by the entire Senate. There are no indications their nominations are in trouble, as the Democratic senators’ line of questioning was to emphasize the Commerce Committee’s oversight role in preserving the agency’s decision making independence and to signal that UP CEO Jim Vena’s efforts, whatever their intent, have not gone unnoticed. Senate Democrats may, however, seek to stall a floor vote on Schultz and Kloster pending a court decision on whether POTUS-ousted Democrat Primus is to be returned to his STB seat.
If confirmed, Republican Kloster would fill a seat vacant since the May 2024 retirement of Democrat Martin J. Oberman—at term expiring Dec. 31, 2028. Schultz’ second term would expire Nov. 30, 2030.
By statute, STB members serve only two terms for a maximum of five years each, although they may remain a maximum of 12 months beyond term expiration if a successor has not been Senate-confirmed. The STB’s political majority matches that of the President’s party, explaining why Republican Kloster was nominated to fill Democrat Oberman’s vacant seat.
Primus’ Democratic seat on the five-person STB remains vacant, with the second Democratic seat held by Karen J. Hedlund. Republican Fuchs remains as POTUS 47’s designated chairperson.
Kloster, 67, is president and founder of rail equipment consultancy Integrity Rail Partners and has an extensive career in rail fleet management. He earned an undergraduate degree in business from Northern Illinois University and a master’s in marketing from the University of Alabama. His initial post-college employment was in pricing and marketing roles for Chicago & North Western Railway (now part of UP) and later as vice president, marketing and sales, at 250-mile regional Indiana Rail Road (INRD), which, at the time of Kloster’s hiring, began operating engineer-only trains. “He was a good thinker,” former INRD CEO Thomas Hoback told Railway Age.
Schultz, 53, was general counsel to the Southeastern Pennsylvania Transportation Authority (SEPTA), where she was director of legislative affairs, prior to her first STB term that began in January 2021. She earned an undergraduate degree from Penn State, a master’s degree in government administration from the University of Pennsylvania and a juris doctor degree from Widener University Law School. She is described to Railway Age by those working with her as “a conscientious attorney who makes her decisions within the four-corners of the law.”
