Regulators end probe of Union Pacific’s use of embargoes, but slam railroad’s ‘delay and obfuscation’

WASHINGTON — The Surface Transportation Board today closed the book on its investigation of Union Pacific’s record use of congestion-related embargoes in 2022 – but not before scolding the railroad for failing to comply with board orders and requests for information.

“UP’s conduct in this regard bordered on the contumacious and cannot be viewed as acceptable conduct by a railroad subject to the Board’s statutory authority,” the STB said in its decision. “Contumacious” is defined as “stubbornly disobedient,” according to Merriam Webster.

The STB cited UP’s initial “insufficient response” to a request for information in advance of a two-day hearing that was scheduled for December 2022. During the hearing, UP executives referred to embargo-related documents that they should have previously provided to the board, the STB said. In addition, the board said UP provided an “incomplete” response to a May 2023 order that sought information about the railroad’s hiring plans and detailed employment statistics broken down by operating division.

UP produced the documents the board sought, but not until filings the railroad made in November 2023 — more than five months after a May deadline.

“While UP ultimately attempted to address its previous failures to fully respond to the Board’s information requirements in this proceeding, the Board cannot condone UP’s repeated and extended failure to provide the Board with information in a timely and responsive manner when requested. Rarely has a rail carrier engaged in such delay and obfuscation in response to the Board’s requests for information,” the STB said.

Union Pacific defended its embargo-related responses.

“Union Pacific responded to the STB’s inquires with thousands of documents and through many meetings and touchpoints,” the railroad said in a statement today. “The STB’s ruling is a positive step forward and our service performance indicators have improved significantly over the past year. As a common carrier, embargoes are an important tool to maintain fluidity for all customers.”

With UP running short of train crews in 2022, the railroad issued more than 1,000 embargoes in response to congestion, compared with just 27 in 2017 – the year before it adopted a lean Precision Scheduled Railroading operating model.

After the December 2022 hearing, UP said it would stop issuing congestion-related embargoes under its pipeline management system. UP also pledged to improve customer visibility into the car pipeline, provide customers with more time to resolve congestion issues; provide an expiration date for embargoes; launch a proactive customer engagement plan; and increase its spot and pull threshold before issuing an embargo.

“These changes, along with an increase in its workforce and improved service, dropped the use of congestion embargoes precipitously, from 1,081 in 2022 to 181 in 2023. This represents a more than 80% reduction in UP’s use of congestion embargoes from the previous year. UP’s effort to drastically reduce its use of congestion embargoes is a positive and welcome step,” the STB said. “In light of that dramatic reduction, we conclude that this proceeding has served a useful purpose and can be closed.”

But the STB also warned UP that it will continue to monitor UP’s use of congestion-related embargoes.

“We do note, however, that even after the significant reduction in UP’s congestion embargoes from 2022 to 2023, the 181 congestion embargoes issued by UP in 2023 still exceeded the number issued by all the other Class I railroads combined,” the board said. “The Board therefore expects UP, notwithstanding the closure of this proceeding, to continue to work to reduce and minimize its use of congestion embargoes going forward. The Board intends to monitor UP’s progress in this regard.”