Union Pacific 2002 Annual Report Download - page 36

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Chowchilla and Sacramento, California, on December 27, 2001, and another incident in which lime leaked from a railcar
between Chowchilla and Stockton, California, on February 21, 2002. On December 20, 2002, the District Attorney of
Stanislaus county filed criminal charges against the Railroad, and on December 23, 2002, the District Attorneys of Merced and
Madera counties filed criminal charges against the Railroad relating to these incidents. They contend that criminal violations
occurred by virtue of the alleged failure by the Railroad to timely report the release of a hazardous material, its alleged disposal
of hazardous waste and the alleged release of material into the waters of the State of California. The District Attorneys of San
Joaquin and Sacramento Counties are still evaluating these incidents, as well as other alleged releases. The Railroad disputes
both the factual and legal bases for these claims and intends to vigorously defend any action that might be filed.
As previously reported in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002,
the United States Environmental Protection Agency, Region 9, has filed two administrative complaints against UPRR, the
first of which alleges that the Railroad violated the Clean Water Act in 1997 by discharging dredged or fill materials into the
Carpenteria Salt Marsh in Santa Barbara County, California, and seeks civil penalties from the Railroad in an amount up to
$137,500. The second complaint alleges that the Railroad violated the Clean Water Act in 1999 by discharging dredged or
fill materials into Laguna Creek, in Santa Barbara County, California, without a Section 404 permit and likewise seeks civil
penalties up to $137,500. UPRR disputes the allegations set forth in these complaints and intends to defend the matters in
any subsequent administrative proceedings.
As previously reported in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002,
the South Coast Air Quality Management District has filed an action against the Railroad in the Los Angeles County
Superior Court, in which it seeks civil penalties in an amount up to $225,000 from the Railroad. The complaint alleges that
the Railroad has violated certain provisions of the California Health and Safety Code and District rules, as a result of air
emissions from idling diesel locomotives in Los Angeles, California. The complaint further alleges that the Railroad has
violated the California Health and Safety Code and District rules as a result of fugitive dust emissions from railroad property
located in Colton, California. The Railroad disputes the allegations of the complaint and maintains that the claims relating
to idling locomotives are preempted by federal law. The Railroad has reached an agreement to settle these claims for a
payment of $25,500 in penalties.
As previously reported in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, on
April 26, 2002, UPRR received written notice of a proposed $250,000 penalty from the Illinois Environmental Protection
Agency relating to a collision between trains from Conrail and the Railroad. The collision occurred near Momence, Illinois,
on March 23, 1999 when an eastbound Conrail train failed to stop at a signal and struck a UPRR train that was properly
occupying a crossing. The collision resulted in a release of diesel fuel from the fuel tanks of a Union Pacific locomotive,
which was promptly reported and remediated. The Railroad received notice in January 2003 that the amount of the
proposed penalty, including oversight costs has been reduced to $127,000. The Railroad will vigorously oppose this
proposed penalty.
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 10 to the Consolidated Financial Statements, Item 8.
Other Matters
As previously reported, Western Resources, Inc. (Western) filed a complaint on January 24, 2000 in the U.S. District Court
for the District of Kansas alleging that UPRR and The Burlington Northern and Santa Fe Railway Company (BNSF)