[Federal Register Volume 87, Number 227 (Monday, November 28, 2022)]
[Notices]
[Pages 73062-73064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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 www.stb.gov. 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 www.stb.gov (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 www.stb.gov (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 www.stb.gov (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 www.aar.org/facts-figures.
    \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 
https://embargo.railinc.com/#/home.

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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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[[Page 73064]]

    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:
     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;
     How UP measures congestion and total excess cars 
throughout its system;
     The explanations for the dramatic increase in embargoes 
since 2017, including whether UP has maintained sufficient resources 
during that time period;
     UP's practices and policies with respect to notification 
and outreach to shippers;
     UP's consideration of shippers' operational needs, 
including alternative avenues to meet their shipping requirements;
     UP's implementation and use of the CIMS;
     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
     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 www.stb.gov. 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