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Feds Mull Union Pacific’s Progress

December 2, 1997

WASHINGTON (AP) _ Federal regulators are considering whether Union Pacific railroad has moved aggressively enough to solve the congestion and service problems disrupting shippers in recent months.

Executives at the nation’s largest railroad contend the worst headaches are largely over, thanks to a service recovery plan implemented Oct. 1. Many customers disagree, saying their operations continue to be disturbed.

The Surface Transportation Board, which regulates railroad activities, will decide whose perception is more accurate. The board, which in October issued a 30-day emergency order designed to nudge the railroad back to normal operations, meets Wednesday to weigh the progress.

The problems on the 36,000-mile network have rippled throughout the U.S. economy, stranding bumper grain crops in the Midwest, clogging California ports, and disrupting production at Gulf Coast petrochemical plants, Northwest lumber yards and steel mills.

Appearing before the board in late October, Union Pacific chairman Dick Davidson promised restoration of normal service by year’s end. He apologized for the rail congestion, lack of equipment and crews, and a rash of wrecks that have plagued the railroad.

The company is seeking to make the case that further government intervention is unwarranted and that the ``extraordinary″ corrective actions taken by the railroad are working. At most, rail officials say, the board should extend its emergency order by 30 days.

``The serious congestion of recent months is gone,″ the Nebraska-based railroad said in a service recovery report filed Monday. ``In most corridors, shippers’ products are moving much more reliably, and overall operations are regaining strength and velocity.″

That rosy assessment isn’t shared by some major shippers, who filed progress reports of their own with the board.

Formosa Plastics Corp. ``fears that a return to normal service on UP will not be accomplished within the next few days or by the end of 1997,″ said the company’s traffic manager, Pablo Rodriguez.

Dow Chemical Co., whose plants in Louisiana and Texas have suffered from railroad delays, remains dissatisfied despite repeated meetings with the railroad.

``Unfortunately, all this attention has not led to any measurable improvement in service on Dow traffic,″ said company official William Gebo, who estimated the disruption has cost Dow $5 million in the last five weeks.

Dow, Formosa and other customers are urging the board to issue a long-term extension of its emergency order.

The order required the railroad to open some Texas track to a competitor and to facilitate other railroads’ operations in the Houston area, where the congestion began in early summer and then spread elsewhere.

The board’s decision to grant the Texas Mexican Railway Co. access to some of Union Pacific’s Texas track hasn’t been trouble-free, Union Pacific says. In a Nov. 24 filing, Union Pacific accused its tiny competitor of ``opportunistic behavior″ that is interfering with the service recovery plan.

``Government intervention in rail operations, even in the interest of addressing an emergency, can produce new conflicts rather than simplifying matters,″ a Union Pacific attorney, Arvid Roach, wrote the board.

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