Notice2022-25855
Oversight Hearing Pertaining to Union Pacific Railroad Company's Embargoes
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Published
November 28, 2022
Issuing agencies
Surface Transportation Board
Abstract
The Surface Transportation Board (Board) will hold an in- person public hearing on December 13 and 14, 2022, with Union Pacific Railroad Company (UP), pertaining to the significant increase in its use of embargoes. The hearing will be held in the Hearing Room of the Board's headquarters, located at 395 E Street SW, Washington, DC 20423-0001. The Board will direct the following executive-level officials of UP to appear in person: Lance M. Fritz, Chairman, President, and Chief Executive Officer; Kenny Rocker, Executive Vice President--Marketing and Sales; Eric Gehringer, Executive Vice President--Operations; and Bradley Moore, Vice President--Customer Care and Support. UP may bring additional personnel to the hearing who may be able to provide helpful information to the Board. In addition, the Board invites testimony from shippers and other stakeholders who can contribute to the Board's understanding of the cause and/or impact of the embargoes.
Full Text
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<title>Federal Register, Volume 87 Issue 227 (Monday, November 28, 2022)</title>
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[Federal Register Volume 87, Number 227 (Monday, November 28, 2022)]
[Notices]
[Pages 73062-73064]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25855]
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SURFACE TRANSPORTATION BOARD
[Docket No. EP 772]
Oversight Hearing Pertaining to Union Pacific Railroad Company's
Embargoes
AGENCY: Surface Transportation Board.
ACTION: Notice of public hearing.
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SUMMARY: The Surface Transportation Board (Board) will hold an in-
person public hearing on December 13 and 14, 2022, with Union Pacific
Railroad Company (UP), pertaining to the significant increase in its
use of
[[Page 73063]]
embargoes. The hearing will be held in the Hearing Room of the Board's
headquarters, located at 395 E Street SW, Washington, DC 20423-0001.
The Board will direct the following executive-level officials of UP to
appear in person: Lance M. Fritz, Chairman, President, and Chief
Executive Officer; Kenny Rocker, Executive Vice President--Marketing
and Sales; Eric Gehringer, Executive Vice President--Operations; and
Bradley Moore, Vice President--Customer Care and Support. UP may bring
additional personnel to the hearing who may be able to provide helpful
information to the Board. In addition, the Board invites testimony from
shippers and other stakeholders who can contribute to the Board's
understanding of the cause and/or impact of the embargoes.
DATES: The hearing will be held on December 13 and 14, 2022, beginning
at 9:30 a.m. ET, in the Hearing Room of the Board's headquarters and
will be open for public observation. Interested stakeholders who wish
to provide testimony at the hearing about the topics described in this
notice should file with the Board a notice of intent to participate
(identifying the party, proposed speaker, and amount of time requested)
as soon as possible but no later than December 5, 2022. UP may bring
other persons in addition to the executive-level officials directed to
appear, and they may also provide testimony. If UP intends for any
additional persons to appear, it should notify the Board by December 5,
2022. Furthermore, by December 6, 2022, UP is directed to file certain
information and documents, detailed below, pertaining to its embargoes
and how UP is using and plans to use the Customer Inventory Management
System (CIMS) as a tool to reset inventory levels in the short-term and
for continual maintenance in the long-term. Interested stakeholders may
file written testimony or comment about the topics described in this
Notice by December 14, 2022.
ADDRESSES: All filings should be submitted via e-filing on the Board's
website at <a href="http://www.stb.gov">www.stb.gov</a>. Filings will be posted to the Board's website
and need not be served on any other party to the proceeding.
FOR FURTHER INFORMATION CONTACT: Nathaniel Bawcombe at (202) 245-0376.
Assistance for the hearing impaired is available through the Federal
Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: Rail network reliability is essential to the
Nation's economy and is a foremost priority of the Board. As discussed
in prior decisions in Docket No. EP 770 and Docket No. EP 770 (Sub-No.
1), the Board has heard from a broad range of stakeholders about the
significant challenges they have experienced because of inconsistent
and unreliable rail service from BNSF Railway Company; CSX
Transportation, Inc.; Norfolk Southern Railway Company; and UP,
including substantial increases in problems arising from tight car
supply and unfilled car orders, delays in transportation for carload
and bulk traffic, increased origin dwell time for released unit trains,
missed switches, and ineffective customer assistance. The Board has
received reports, from the Secretary of Transportation, the Secretary
of Agriculture, members of the U.S. Congress, and other stakeholders,
about the serious impact of these service trends on rail users,
particularly shippers of agricultural and energy products.\1\
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\1\ See Letter from Hon. Jim Costa, Ralph Norman, Mary E.
Miller, Charles J. Fleischmann, James R. Baird, Kat Cammack, W.
Gregory Steube, Glenn Grothman, John Rose, Austin Scott, Trent
Kelly, Rick W. Allen, Dan Newhouse, Mark E. Green, M.D., Louie
Gohmert, Frank D. Lucas, Tracey Mann, Vicky Hartzler, Mike Thompson,
Jimmy Panetta, Clay Higgins, David Rouzer, Byron Donalds, Tim
Burchett, Darin LaHood, Josh Harder, Salud Carbajal, Cynthia Axne,
Kim Schrier, M.D., David G. Valadao, Randy Feenstra, Julia Letlow,
Sanford D. Bishop, Jr., Lisa C. McClain, Mariannette Miller-Meeks,
M.D., Robert E. Latta, Daniel Meuser, Bob Gibbs, Cathy McMorris
Rodgers, Jefferson Van Drew, Ashley Hinson, Daniel T. Kildee,
Sharice L. Davids, Ro Khanna, John R. Moolenaar, David Kustoff, Al
Lawson, Tom O'Halleran, Andrew S. Clyde, Michael Cloud, & Angie
Craig, June 29, 2022, Urgent Issues in Freight Rail Serv., EP 770;
Letter from Hon. Jim Costa, June 21, 2022, Urgent Issues in Freight
Rail Serv., EP 770; Letter from Hon. Alex Padilla & Dianne Feinstein
to Chairman Martin J. Oberman, June 1, 2022, Urgent Issues in
Freight Rail Serv., EP 770; Letter from Hon. Kevin Cramer, Tammy
Baldwin, Chuck Grassley, Shelley Moore Capito, Sherrod Brown, M.
Michael Rounds, Patty Murray, Joni Ernst, Marco Rubio, Tammy
Duckworth, Mike Crapo, James Risch, Tina Smith, Mark Kelly, John
Hoeven, John Kennedy, Joe Manchin III, Roger Marshall M.D., Amy
Klobuchar, Mike Braun, & Richard J. Durbin to Chairman Martin J.
Oberman, May 24, 2022, Urgent Issues in Freight Rail Serv., EP 770;
Letter from SMART-Transp. Div. to Chairman Martin J. Oberman (Apr.
1, 2022), available at <a href="http://www.stb.gov">www.stb.gov</a> (open tab ``News &
Communications'' & select ``Non-Docketed Public Correspondence'');
Letter from Hon. Thomas J. Vilsack, U.S. Dep't of Agric., Mar. 30,
2022, Reciprocal Switching, EP 711 (Sub-No. 1); Letter from Hon.
Shelley Moore Capito to Board Members Martin J. Oberman, Michelle A.
Schultz, Patrick J. Fuchs, Robert E. Primus, & Karen J. Hedlund
(Mar. 29, 2022), available at <a href="http://www.stb.gov">www.stb.gov</a> (open tab ``News &
Communications'' & select ``Non-Docketed Public Correspondence'');
Letter from the Nat'l Grain & Feed Ass'n to Board Members Martin J.
Oberman, Michelle A. Schultz, Patrick J. Fuchs, Robert E. Primus, &
Karen J. Hedlund (Mar. 24, 2022), available at <a href="http://www.stb.gov">www.stb.gov</a> (open tab
``News & Communications'' & select ``Non-Docketed Public
Correspondence'').
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As a Class I rail carrier, UP occupies a major and essential role
in the movement of goods across the country. It carries approximately
26.8% of freight served by rail \2\ and approximately 10.7% of all
long-distance freight volume.\3\ Therefore, disruptions in UP's service
levels have a significant detrimental impact on the supply chain and
the economy of the United States. As such, the Board has been closely
monitoring UP's recent use of embargoes \4\ and has observed a
disturbing upward trend in their usage. In recent years, there has been
a significant increase in UP's use of embargoes, and congestion is the
stated cause for almost of all of the embargoes, as shown in the below
chart.\5\
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\2\ This figure is derived from the Class I railroads' Annual
Report of Operations and Finances, known as R-1 reports, submitted
to the Board.
\3\ This figure is derived from the Association of American
Railroads (AAR) at <a href="http://www.aar.org/facts-figures">www.aar.org/facts-figures</a>.
\4\ According to AAR Circular No. TD-1, an embargo is ``a method
of controlling Traffic movements when, in the judgment of the
serving railroad, an actual or threatened Physical or Operational
Impairment, of a temporary nature, warrants restrictions against
such movements.''
\5\ This information was obtained from the AAR Embargo System at
<a href="https://embargo.railinc.com/#/home">https://embargo.railinc.com/#/home</a>.
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Percentage
Number of Percentage Percentage caused by Percentage
Year embargoes caused by caused by catastrophic caused by
congestion weather event other
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2017.......................... 27.............. 19 70 11 22
2018.......................... 140............. 99 .............. 1 ..............
2019.......................... 413............. 74 21 .............. 5
2020.......................... 251............. 85 .............. 9 6
2021.......................... 662............. 94 6 .............. ..............
2022.......................... 886 (as of 98 .............. .............. 2
October 2022).
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This pattern shows no signs of abating. Between November 1, 2022,
and November 17, 2022, UP issued an additional 126 embargoes with
congestion as the stated cause. Of those 126 embargoes, 89 were issued
on November 16, 2022; as of November 17, 2022, UP had 128 active
embargoes in place and, for all, congestion was the stated cause. The
Board understands that embargoes may vary in scope and that all
carriers do not report and use embargoes in the same way. Nevertheless,
the use of embargoes by all other Class I carriers, combined, pales in
comparison to the number of embargoes issued by UP. Given UP's sizeable
role in freight rail, its increased use of embargoes in recent years,
and the considerable increase just this month, it is imperative that
the Board hear from UP directly about this matter and how UP plans to
reduce, if not eliminate, the use of embargoes to control congestion.
The Board will hold a public hearing on December 13 and 14, 2022,
beginning at 9:30 a.m. ET, at its offices in Washington, DC, to hear
firsthand from senior officials of UP about the substantial increase in
the use of embargoes in recent years. The Board will direct the
following executive-level officials of UP to appear at the hearing:
Lance M. Fritz, Chairman, President, and Chief Executive Officer; Kenny
Rocker, Executive Vice President--Marketing and Sales; Eric Gehringer,
Executive Vice President--Operations; and Bradley Moore, Vice
President--Customer Care and Support. UP is directed to ensure that its
representatives can provide the Board with detailed information
pertaining to UP's embargoes. Accordingly, in addition to those
directed, UP may bring additional personnel to the hearing that may be
able to provide helpful information to the Board. If UP intends to have
any other persons appear, UP should notify the Board by December 5,
2022.
At the hearing, UP should be prepared to discuss in detail the
following topics:
<bullet> UP's decision-making process in determining to issue an
embargo, including underlying causes (e.g., network issues and crew
shortages), whether UP's market power plays a role in the decision
making, and UP's consideration of alternatives to embargoes;
<bullet> How UP measures congestion and total excess cars
throughout its system;
<bullet> The explanations for the dramatic increase in embargoes
since 2017, including whether UP has maintained sufficient resources
during that time period;
<bullet> UP's practices and policies with respect to notification
and outreach to shippers;
<bullet> UP's consideration of shippers' operational needs,
including alternative avenues to meet their shipping requirements;
<bullet> UP's implementation and use of the CIMS;
<bullet> Whether UP has considered the impact of its embargoes on
its common carrier and other legal obligations, and if so, the
specifics of that consideration; and
<bullet> UP's plans, if any, to decrease the need for embargoes
going forward.
Additionally, in advance of the hearing, UP is directed to file
with the Board information and documents in support of the above topics
so that the Board may understand UP's processes for deciding when and
how to use embargoes. Furthermore, UP is directed to file with the
Board information and documents so that the Board may understand how UP
is using and intends to use the CIMS as a tool to reset inventory
levels in the short-term and for continual maintenance in the long-
term.
UP is also directed to preserve all paper and electronic records,
including all correspondence, related to its embargoes and the CIMS.
In addition to directing UP's participation at the hearing, the
Board will invite shippers and other stakeholders who can contribute to
the Board's understanding of the cause and/or impact of UP's embargoes
and the CIMS to testify.\6\
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\6\ The Board's public hearing is not intended to replace the
informal and confidential dispute resolution process facilitated by
the Board's Rail Customer and Public Assistance, and stakeholders
are encouraged to continue communicating through that office.
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Board Releases and Transcript Availability: Decisions and notices
of the Board, including this notice, are available on the Board's
website at <a href="http://www.stb.gov">www.stb.gov</a>. The Board will issue a separate notice
containing the schedule of appearances. A transcript of the hearing
will be posted on the Board's website once it is available.
It is ordered:
1. A public hearing will be held on December 13 and 14, 2022,
beginning at 9:30 a.m. ET, in the Hearing Room of the Board's
headquarters, located at 395 E Street SW, Washington, DC 20423-0001.
2. The following executive-level officials of UP are directed to
appear at the public hearing: Lance M. Fritz, Chairman, President, and
Chief Executive Officer; Kenny Rocker, Executive Vice President--
Marketing and Sales; Eric Gehringer, Executive Vice President--
Operations; and Bradley Moore, Vice President--Customer Care and
Support. By December 5, 2022, UP must notify the Board if it intends to
bring additional persons to appear.
3. By December 5, 2022, interested stakeholders who wish to provide
testimony at the hearing about the topics described in this Notice
shall file with the Board a notice of intent to participate identifying
the party, the proposed speaker(s), and the time requested. Interested
stakeholders may file written testimony or comment about the topics
described in this Notice by December 14, 2022.
4. By December 6, 2022, UP is directed to file information with the
Board, as discussed above.
5. UP is directed to preserve all records, including all
correspondence, pertaining to its embargoes and the CIMS.
6. Filings will be posted to the Board's website and need not be
served on any other party to the proceeding.
7. This decision is effective on its service date.
8. This decision will be published in the Federal Register.
Decided: November 22, 2022.
By the Board, Board Members, Fuchs, Hedlund, Oberman, Primus,
and Schultz.
Eden Besera,
Clearance Clerk.
[FR Doc. 2022-25855 Filed 11-25-22; 8:45 am]
BILLING CODE 4915-01-P
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