Union Pacific 2001 Annual Report Download - page 35

9
Environmental Matters
On January 30, 2002, the Louisiana Department of Environmental Quality (LDEQ) issued to the Railroad a notice of a
proposed penalty assessment in the amount of $195,700 in connection with the release of water potentially impacted by
the derailment of a train near Eunice, Louisiana on May 27, 2000. The Railroad previously met with the LDEQ regarding
this matter to present documentation indicating that no penalty should be assessed and intends to vigorously defend this
matter.
The State of Illinois filed a complaint against the Railroad with the Illinois Pollution Board on May 14, 2001, seeking
penalties for an alleged violation of state air pollution laws arising out of a release of styrene from a tank car near Cora,
Illinois, which occurred on August 29, 1997. The car contained styrene monomer, a hazardous substance, stabilized by
an inhibitor by the origin shipper. The car was delayed in transit for a number of different reasons including rerouting
and reconsignment by the shipper. The Railroad was not notified that such delays could jeopardize the shipment.
Eventually the effect of the inhibitor wore off and the styrene went into a reactive state resulting in pressure and venting
near Cora, Illinois. A sparsely-populated area was evacuated for a few hours. The situation was controlled and
remediated promptly. Styrene has since been put on the Railroad’s list of time sensitive shipments for special monitoring.
The State of Illinois seeks to assess a penalty in excess of $100,000. The Railroad believes the penalty should be
significantly less than $100,000 and is vigorously defending the case. A hearing of the complaint is scheduled for March
22, 2002.
The Corporation and its affiliates have received notices from the EPA and state environmental agencies alleging that
they are or may be liable under certain federal or state environmental laws for remediation costs at various sites
throughout the United States, including sites which are on the Superfund National Priorities List or state superfund lists.
Although specific claims have been made by the EPA and state regulators with respect to some of these sites, the ultimate
impact of these proceedings and suits by third parties cannot be predicted at this time 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/or the speculative nature of remediation costs. Nevertheless, at many
of the superfund sites, the Corporation believes it will have little or no exposure because no liability should be imposed
under applicable law, one or more other financially able parties generated all or most of the contamination, or a
settlement of the Corporation's exposure has been reached although regulatory proceedings at the sites involved have not
been formally terminated.
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 – Other Matters –
Environmental Costs, Item 7, and in note 12 to the Consolidated Financial Statements, Item 8.
Other Matters
As previously reported in the Corporation's Annual Report on Form 10-K for 2000, Western Resources (Western) filed
a complaint on January 24, 2000, in the U.S. District Court for the District of Kansas alleging that UPRR and BNSF
materially breached their service obligations under the transportation contract to deliver coal in a timely manner to
Western's Jeffrey Energy Center. The original complaint sought recovery of consequential damages and termination of
the contract, excusing Western from further performance. In an amended complaint filed September 1, 2000, Western
claimed the right to retroactive termination and added a claim for restitution. On October 23, 2001, Western moved for
leave to file a second amendment to its complaint to add counts for innocent misrepresentation and negligent
misrepresentation and to request rescission of the contract. The railroads are vigorously defending this lawsuit and
oppose amendment of the complaint. The suit currently is scheduled for trial in May 2002. If, however, Western is
permitted to file the second amended complaint, the trial date likely will be postponed. UPRR and BNSF have filed two
motions seeking dismissal of the termination and restitution claims, both of which are still pending. The railroads believe
they have substantial defenses in the case and intend to continue to defend it aggressively.