The Surface Transportation Board (STB) on Jan. 20 denied Union Pacific’s (UP) motion for a protective order regarding documents requested at a hearing on the railroad’s institution of embargoes.
The STB in November ordered UP Chairman, President and CEO Lance Fritz and other top UP executives to appear at a Dec. 13-14 public hearing on what it called a “substantial increase” in the Class I railroad’s use of embargoes aimed at reducing network congestion.
An embargo suspends a shipper’s right to common carriage by restricting freight movements. Issued by a railroad when weather, congestion, labor strife, natural disasters or track conditions prevent fluid operations, embargoes may not be used as an alternative to seeking regulatory approval for line abandonments, to avoid handling unprofitable or undesired traffic, or to influence routing. Shippers may ask the STB to cancel an embargo.
The STB reported that UP embargoes had increased from a total of 27 in 2017 to more than 1,000 as of Nov. 17, 2022. According to agency, between Nov. 1, 2022, and Nov. 17, 2022, UP issued 126 embargoes with congestion as the stated cause. Of those, 89 were issued on Nov. 16; as of Nov. 17, UP had 128 active embargoes in place and, for all, congestion was the stated cause, the agency wrote in its Nov. 22 decision to hold the hearing. “The Board understands that embargoes may vary in scope and that all carriers do not report and use embargoes in the same way,” the STB reported. “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 STB said it expected UP testimony to cover the following eight 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 [Customer Inventory Management System].
- “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.
- “UP’s plans, if any, to decrease the need for embargoes going forward.”
In response, UP on Dec. 6 filed a seven-slide PowerPoint presentation of explanation. STB Chairman Martin J. Oberman, finding that UP’s presentation “failed to provide any detail” on the “eight different topics related to the significant increase in UP’s institution of embargoes aimed at network congestion since 2017,” on Dec. 8 sent a letter to Lance Fritz stating that the railroad’s response “has hindered the Board in its efforts to understand this increase in the use of embargoes, and their causes and impacts.” Oberman said he would “look forward to a productive hearing and a good-faith exchange of information and views from all participants.”
The Dec. 13-14 hearing included comments from various groups, among them the U.S. Department of Transportation; Freight Rail Customer Alliance; National Coal Transportation Association; National Association of Chemical Distributors; National Stone, Sand and Gravel Association; Corn Refiners Association; and Amtrak. Oberman and his fellow STB members grilled Fritz repeatedly on the eight topics, at times appearing frustrated and dissatisfied with the explanations.
And on Dec. 22, the railroad filed its motion for a protective order.
The STB reported in its Jan. 20 decision (download below) the “motion states that during the public hearing, members of the Board asked UP to submit certain documents and that these documents contain information that qualifies as ‘confidential commercial information’ under the Board’s regulations. … UP argues that these documents should be classified as exempt from release under Exemption 4 of the Freedom of Information Act (FOIA). … The motion requests that the Board issue an order (i) allowing UP to designate information submitted in response to the requests as ‘confidential commercial information’ by indicating on documents it produces to the Board that they contain ‘Confidential Commercial Information, Subject to Exemption 4 of FOIA,” and (ii) providing that the Board will treat any information so designated as nonpublic, confidential commercial information and treat UP as the submitter of the information subject to all the protections provided in 49 C.F.R. § 1001.4. …”
A shipper group and a union group both opposed UP’s motion in separate filings submitted to the STB earlier this month.
“‘Sunlight is said to be the best of disinfectants,’ in the words of [former U.S. Supreme Court Associate] Justice [Louis D.] Brandeis,” wrote the Freight Rail Customer Alliance (FRCA) and the National Coal Transportation Association (NCTA). “Having chosen to limit and deny service in the first place, UP now seeks to prevent shippers, customers, receivers and the public from being able to scrutinize UP’s actions and rationales for that denial of service. The Board should not facilitate such efforts.”
They further argued “that UP should not be permitted to protect information from FOIA disclosure under Exemption 4 in advance,” summarized the STB in its Jan. 20 decision. “FRCA and NCTA state that they recognize that disclosure of some information UP might submit could cause ‘substantial competitive harm’ but that any determination of such harm should be made only after the information is submitted, based on a weighing of competing considerations.”
The unions argued the motion should be denied “because UP has failed to identify what information it seeks to label as ‘confidential commercial information’ and that UP might seek to apply that label to everything it produces,” according to the STB. The unions include the Brotherhood of Maintenance of Way Employes Division/IBT; Brotherhood of Railroad Signalmen; International Association of Sheet Metal, Air, Rail and Transportation Workers Mechanical Division; International Brotherhood of Boilermakers; National Conference of Firemen and Oilers/32BJ SEIU; and the Brotherhood of Locomotive Engineers and Trainmen.
While seeking a protective order allowing UP to designate information it submits as “confidential commercial information” and protected from public disclosure is “not inappropriate,” a protective order will not be issued “at this time because UP has failed to submit an appropriate proposed protective order,” the STB wrote in its decision.
The STB said it “agrees with FRCA and NCTA that transparency should be pursued in this proceeding to the greatest degree possible and any information submitted by UP should be made publicly available to the extent that it will not cause UP substantial competitive harm or constitute confidential commercial information. … UP may not use a blanket designation for everything it submits. Rather, UP must carefully consider what information could cause substantial competitive harm if disclosed and designate only that information as ‘confidential commercial information.’”
According to the STB, this will require UP to create and submit “a confidential version and a public version of any submissions that contain confidential commercial information. In the public versions of submissions, UP should redact the portions of the documents it considers to be confidential commercial information. Moreover, UP must submit a draft protective order for review by the Board that includes a requirement to file confidential and public versions of any documents that contain confidential commercial information and to apply appropriate designations for confidential information.”
The STB denied “without prejudice” UP’s motion for a protective order and directed the Class I railroad “to submit a draft protective order consistent with this decision” by Jan. 27, 2023.
Railway Age Contributing Editor Frank N. Wilner—a former STB chief of staff, Association of American Railroads officer and a past president of the STB’s bar association—comments:
“It is more than five weeks since the hearing at which UP was castigated for not having submitted more information. And still UP has not filed anything. There certainly appears on the part of the Board a frustration over the railroad’s arrogance.”
Separately, the STB on Dec. 30 directed UP to deliver certain unit trains of corn from origins in the Midwest to California on behalf of Foster Poultry Farms to alleviate “immediate service issues” while it further considered the chicken and feed producer’s exparte petition for an emergency service order.