Union Pacific 2005 Annual Report Download - page 13

significant demand and weather events, and the extensive maintenance and restoration program on the SPRB line
that is jointly-owned with BNSF (SPRB Joint Line). The weather events affected both our operations and
operations of certain of our customers. Although we have recovered from these events, further network
improvement will be driven by the ongoing redesign of our transportation plan to better manage traffic on our
system and adding more capacity. We cannot be sure that these measures will fully or adequately address any
service shortcomings. We also cannot be sure that we will not experience other difficulties related to network
capacity, dramatic and unplanned increases of demand for rail service in one or more of our commodity groups,
or other events that could have a negative impact on our operational efficiency, any of which could have a
material adverse effect on our results of operations, financial condition, and liquidity.
We May Be Subject to Various Claims and Lawsuits That Could Result in Significant Expenditures – The nature of
our business exposes us to the potential for various claims and litigation related to labor and employment,
personal injury, property damage, environmental liability, and other matters. Any material changes to litigation
trends or a catastrophic rail accident involving property damage, personal injury, or environmental liability could
have a material adverse effect on our results of operations, financial condition, and liquidity.
We Are Subject to Significant Governmental Regulation – We are subject to governmental regulation by a
significant number of federal, state, and local authorities covering a variety of health, safety, labor, environmental
(as discussed below), and other matters. Our failure to comply with applicable laws and regulations could have a
material adverse effect on us. Governments may change the legislative or regulatory frameworks within which we
operate without providing us with any recourse for any adverse effects on our business. Economic re-regulation of
the rail industry would negatively impact our ability to determine prices for rail services and reduce capital
spending on our rail network, resulting in a material adverse effect on our results of operations, financial
condition, and liquidity. Also, some laws and regulations require us to obtain and maintain various licenses,
permits, and other authorizations, and we cannot guarantee that we will continue to be able to do so. In addition,
one or more consolidations of Class I railroads could lead to future re-regulation of the rail industry.
We Are Required to Transport Hazardous Materials – Federal laws require railroads, including UPRR, to transport
hazardous materials. Any rail accident involving the release of hazardous materials could involve significant costs
and claims for personal injury, property damage, and environmental penalties and remediation, which could have
a material adverse effect on our results of operations, financial condition, and liquidity.
We Are Subject to Significant Environmental Laws and Regulations – Our operations are subject to extensive
federal, state, and local environmental laws and regulations concerning, among other things, emissions to the air;
discharges to waters; handling, storage, transportation, and disposal of waste and other materials; and hazardous
material or petroleum releases. We generate and transport hazardous and non-hazardous waste in our operations,
and we did so in our former operations. Environmental liability can extend to previously owned or operated
properties, leased properties, and properties owned by third parties, as well as to properties we currently own.
Environmental liabilities have arisen and may also arise from claims asserted by adjacent landowners or other
third parties in toxic tort litigation. We have been and may be subject to allegations or findings that we have
violated, or are strictly liable under, these laws or regulations. We could incur significant costs as a result of any of
the foregoing, and we may be required to incur significant expenses to investigate and remediate known,
unknown, or future environmental contamination, which could have a material adverse effect on our results of
operations, financial condition, and liquidity.
Severe Weather Could Result in Significant Business Interruptions and Expenditures – Severe weather conditions,
events, and other natural phenomena, including earthquakes, hurricanes, fires, floods, extreme temperatures, and
significant precipitation may cause business interruptions, including line outages on our rail network, that can
adversely affect our entire rail network, and result in increased costs, increased liabilities, and decreased revenues,
which could have an adverse effect on our results of operations, financial condition, and liquidity.
Rising Fuel Costs Could Materially and Adversely Affect Our Business – Fuel costs constitute a significant portion of
our transportation expenses. Diesel fuel prices are subject to dramatic fluctuations. Significant price increases may
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