Facts Regarding Oxbow Lawsuit
Oxbow long threatened Union Pacific with litigation unless UP provided exceptional commercial concessions. Union Pacific vigorously denies the allegations in Oxbow’s complaint.
Following are the facts related to the case.
Accusation: Oxbow claims Union Pacific conspired with other railroads to fix prices through the implementation of fuel surcharges.
The Facts
- Union Pacific has not violated the antitrust laws and has not conspired with any other railroad to fix prices or reduce competition for rail transportation of any customer or commodity.
- Union Pacific developed its own fuel surcharge programs unilaterally.
- Union Pacific did not implement a universal fuel surcharge rate for its more than 25,000 customers. Instead, the railroad developed a variety of fuel surcharge programs over the period alleged in the Oxbow complaint. In an effort to be responsive to customers’ requests, Union Pacific developed a number of approaches to recover its fuel costs, including a variety of fuel surcharges for Oxbow.
- Union Pacific created a separate fuel surcharge program for coal customers that was carefully designed to recover costs associated with its unique coal movements. These included programs for Colorado and Utah trains and another for Southern Powder River Basin trains.
- UP’s fuel surcharges were instituted to merely recover fuel costs. Fuel surcharges are not and have never been a profit center for Union Pacific.
- From 2002 to 2008, UP’s diesel fuel prices soared 250 percent.
- From 2000 to 2010, UP invested nearly $9 billion of its total $28 billion capital spend to benefit Energy customers.
Accusation: Oxbow claims Union Pacific agreed not to compete with other major rail carriers or encroach on each other’s territories by offering lower prices to customers. The effect has been rising costs to shippers, electricity consumers and virtually every product sold in the U.S.
The Facts
- Union Pacific is and will remain an aggressive competitor against BNSF. Union Pacific and BNSF are integral parts of the most efficient transportation system for America’s most-used and most-affordable form of energy – coal. The railroad and coal industries are foundational to supporting the country’s energy needs.
- Since entering Wyoming’s Powder River Basin as a direct competitor to BNSF in 1984, Union Pacific has allocated nearly one-third of its capital to sustain and grow its Energy business, of which coal is a primary component.
- Coal and petroleum coke customers often have transportation options and have changed carriers, including moving to truck and other railroads, as well as choosing other sources for their needs.
- Rail is the safest and most fuel-efficient form of ground freight transportation.
- Average inflation-adjusted Industry freight rail rates actually decreased 55 percent between 1981 and 2009, while service and safety improved. More specifically, Union Pacific’s coal rates as measured by revenue per ton mile fell by over 60% in real dollars from 1984 to 2010.
July 8, 2011