Union Pacific 2005 Annual Report Download - page 18

spill from an above-ground storage tank for storm water with a secondary containment area in a railyard in Dupo,
St. Clair County, Illinois. The State seeks to enjoin UPRR from further violations and a monetary penalty. The
amount of the proposed penalty is uncertain.
On October 25, 2005, the State of Washington Department of Ecology notified us that it had assessed a
$106,000 penalty against the Railroad as a result of a November 15, 2003, incident near Kelso, Washington. In that
incident, one of our trains collided with a BNSF train, derailing three of our locomotives. The Department of
Ecology contends that diesel fuel and lube oil from the derailed locomotives entered waters of the State of
Washington. We have asked the state to reconsider the penalty amount.
The South Coast Air Quality Management District (the District) issued a Notice of Violation (NOV) to
UPRR on or about August 20, 2003, and November 2, 2003, asserting that we violated our air permit relating to
locomotive diesel fueling at our Dolores Yard in Carson, California, by dispensing fuel in excess of permit limits
over the course of 21 months. The District proposed that we pay $105,000 to settle this NOV. We settled this
matter and others in July 2005 for $78,000 as part of a group of alleged violations.
We received notices from EPA and state environmental agencies alleging that we are or may be liable under
federal or state environmental laws for remediation costs at various sites throughout the United States, including
sites on the Superfund National Priorities List or state superfund lists. We cannot predict the ultimate impact of
these proceedings and suits because of the number of potentially responsible parties involved, the degree of
contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the
speculative nature of remediation costs.
Information concerning environmental claims and contingencies and estimated remediation costs is set forth
in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting
Policies – Environmental, Item 7.
Other Matters
As we reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, we were
notified that a qui tam, or private citizen, complaint was filed in the United States District Court for the Central
District of California against, among other parties, the City of Long Beach, City of Long Beach Harbor
Department, Port of Long Beach (the Port), Union Pacific Corporation, Union Pacific Railroad Company, and
Union Pacific Resources Company, also known as Union Pacific Resources Group Inc. (Resources), a former
subsidiary of UPC. A private citizen filed the action because the federal government and the State of California
elected not to pursue the claims. The complaint alleges that the defendants violated the Federal Civil False Claims
Act and the California False Claims Act by conspiring to use public funds to (1) shift environmental cleanup
liability to the Port when Resources sold its Terminal Island oil field property to the Port in 1994 and (2) effect the
acquisition by the Port of the Terminal Island property in which the Port (or the State of California) allegedly
already held certain incidents of title. The complaint, which has not been served on us, seeks damages of $2.405
billion, unspecified costs for remediating groundwater contamination, and triple damages and civil penalties of
$10,000 per day. The plaintiff’s extended time to serve the complaint expired on April 4, 2005, and the
Corporation filed a motion to dismiss for plaintiff’s failure to make timely service. However, the Court extended
the plaintiff’s time to provide service. On December 7, 2005, we learned that a summons for service of the
Complaint had been issued, but we have not been sued. We dispute the factual and legal bases of the complaint.
We notified Anadarko Petroleum Corporation (Anadarko), as successor to Resources after its acquisition in 2000,
that an indemnification agreement between Resources and the Corporation obligates Anadarko to indemnify us
for all damages, costs, and expenses related to the complaint.
As we reported in a report on Form 8-K filed on April 12, 2005, we received a complaint in a purported
shareholder derivative lawsuit, which names as defendants all the current directors and one former director of the
Corporation. The complaint, filed in state court in Salt Lake County, Utah, on April 4, 2005, alleges that the
director defendants breached their fiduciary duty to the Corporation and its shareholders by, among other things,
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