Union Pacific 2007 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2007 Union Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

14
mitigation and potential penalties. To date, we have not reached an agreement with the EPA, and, therefore,
the ultimate amount of the civil penalty cannot be determined. However, the penalty component of the
settlement will exceed $100,000.
As we reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, the Illinois
Attorney General’s office filed an Agreed Order and Complaint and a Complaint for Injunctive and Other
Relief on October 7, 2004, in the Circuit Court for the Twentieth Judicial Circuit (St. Clair County) against
The Alton & Southern Railway Company, a wholly-owned subsidiary of the Railroad, as a result of a collision
and derailment on September 21, 2004. The State of Illinois seeks to enjoin The Alton & Southern Railway
Company from further violations, as well as a monetary penalty. The Railroad reached a tentative agreement
with the State of Illinois that will require the payment of a penalty in the amount of $48,000. The agreement
should be executed in the first quarter of 2008.
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 12,800 acres 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. To date, the EPA has rejected all of the
Railroad’s offers to settle or resolve this matter. The Railroad will vigorously contest liability and the
imposition of any penalties.
As we reported in our Annual Report on Form 10-K for 2005, the Illinois Attorney General’s office filed a
complaint in the Circuit Court for the Twenty-First Judicial Circuit (St. Clair County) seeking injunctive relief
and civil penalties against the Railroad relating to a collision between UPRR and Norfolk Southern Railway
Company (NS) trains near Momence, Illinois, on November 24, 2005. The collision derailed approximately
five locomotives and 30 railcars. Two of the UPRR locomotives and two of the NS locomotives caught fire,
and four of the locomotives released approximately 16,000 gallons of diesel fuel. Other cars carrying food
products derailed and released an unknown amount of product. The State of Illinois seeks a permanent
injunction against the Railroad ordering UPRR to continue remediation. The State of Illinois seeks to enjoin
UPRR from further violations and payment of a monetary penalty. Union Pacific reached a tentative
agreement with the State of Illinois that will require payment of $60,000, which includes a penalty payment
and the amount of the State’s response costs. The agreement should be executed in the first quarter of 2008.
As we reported in our Annual Report on Form 10-K for 2005, the Illinois Attorney General’s office filed a
complaint in the Circuit Court for the Twentieth Judicial Circuit (St. Clair County) for injunctive and other
relief on November 28, 2005, against the Railroad, 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 is uncertain.
As we reported in our Annual Report on Form 10-K for 2003, the United States Attorney for the Central
District of California notified the Railroad that the office intended to pursue criminal charges against the
Railroad for alleged violations of federal environmental laws, including the federal Clean Water Act, in
connection with releases of oil contaminated wastewater from our Taylor Yard in 2001 and 2003. On July 31,
2006, the United States Attorney filed criminal misdemeanor charges against us for these releases in the United
States District Court for the Central District of California, and we received the Summons from the Court on
August 8, 2006. We will vigorously defend the charges.