Union Pacific 2009 Annual Report Download - page 18

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18
ENVIRONMENTAL MATTERS
As we reported in our Annual Report on Form 10-K for 2005, the EPA considers the Railroad a
potentially responsible party for the Omaha Lead Site. The Omaha Lead Site consists of approximately 25
square miles of residential property in the eastern part of Omaha, Nebraska, allegedly impacted by air
emissions from two former lead smelters/refineries. One refinery was operated by ASARCO. The EPA
identified the Railroad as a potentially responsible party because more than 60 years ago the Railroad
owned land that was leased to ASARCO. The Railroad disputes both the legal and technical basis of the
EPA’ s allegations. It has nonetheless engaged in extensive negotiations with the EPA. These negotiations
reached an apparent impasse. The EPA issued a Unilateral Administrative Order with an effective date of
December 16, 2005, directing the Railroad to implement an interim remedy at the site at an estimated cost
of $50 million. Failure to comply with the order without just cause could subject the Railroad to penalties
of up to $32,500 per day and triple the EPA’ s costs in performing the work. The Railroad believes it has
just cause not to comply with the order, but it offered to perform some of the work specified in the order
as a compromise. On August 5, 2009, the Railroad received a Special Notice Letter from EPA directing
us to perform environmental remediation at approximately 9,000 residential yards in Omaha and to take
other remedial measures as part of a final remedy. The Railroad continues to contest its purported liability
for these costs but has submitted an offer to the EPA to attempt to negotiate a resolution of the matter. To
date, the EPA has rejected all of the Railroad’ s offers to settle or resolve this matter.
As we reported in our Annual Report on Form 10-K for 2005, the Illinois Attorney General’ s office filed
a complaint against the Railroad in the Circuit Court for the Twentieth Judicial Circuit (St. Clair County)
for injunctive and other relief on November 28, 2005, alleging a diesel fuel spill from an above-ground
storage tank in a rail yard in Dupo, St. Clair County, Illinois. The State of Illinois seeks to enjoin UPRR
from further violations and a monetary penalty. The amount of the proposed penalty, although uncertain,
could exceed $100,000.
As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, the Railroad
received notice from the United States Department of Justice on May 8, 2008, indicating its intent to file
suit for civil penalties in connection with a March 6, 2005 derailment near Kamela, Oregon. The
derailment resulted in the release of approximately 900 gallons of diesel fuel from ruptured fuel tanks of
derailed refrigerator cars. Some of this fuel entered Dry Creek, a tributary to the Grande Ronde River.
While the amount of the ultimate penalty is uncertain, it could exceed $100,000. Additionally, on June 9,
2009, the Oregon Department of Environmental Quality notified the Railroad that it would be seeking
$40,000 in civil penalties from the Railroad under state law in connection with this incident.
As we reported in our Annual Report on Form 10-K for 2008, the Colorado Department of Public Health
and Environment issued a Notice of Violation/Cease and Desist Order to the Railroad on April 26, 2007,
involving certain alleged violations of the Railroad’ s stormwater permits at its Burnham Shops and North
Yard facilities in Denver, Colorado. The Order required the Railroad, among other things, to evaluate the
effectiveness of the best management practices (BMPs) that were in place to control stormwater and
pollutant discharges from the regulated portions of those facilities, take appropriate remedial actions,
implement additional BMPs to control the discharge of pollutants at each of the facilities, and report the
results of its evaluation and demonstrate compliance with its stormwater permits to the agency. The
Railroad and the Colorado Department of Public Health and Environment reached an agreement during
the fourth quarter of 2009 under which we will pay a penalty of $106,808 to resolve these matters.
We received notices from the 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.