Union Pacific 2007 Annual Report Download - page 46

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Our environmental site activity was as follows:
2007 2006 2005
Open sites, beginning balance................................................................ 367 370 384
New sites ................................................................................................. 72 50 56
Closed sites.............................................................................................. (100) (53) (70)
Open sites, ending balance at December 31.......................................... 339 367 370
When we identify an environmental issue with respect to property owned, leased, or otherwise used in our
business, we and our consultants perform environmental assessments on the property. We expense the cost of
the assessments as incurred. We accrue the cost of remediation where our obligation is probable and we can
reasonably estimate such costs. We do not discount our environmental liabilities when the timing of the
anticipated cash payments is not fixed or readily determinable.
The liability includes future costs for remediation and restoration of sites, as well as ongoing monitoring costs,
but excludes any anticipated recoveries from third parties. Cost estimates are based on information available
for each site, financial viability of other potentially responsible parties, and existing technology, laws, and
regulations. The ultimate liability for remediation is difficult to determine because of the number of
potentially responsible parties, site-specific cost sharing arrangements with other potentially responsible
parties, 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. Estimates of liability may vary over time
due to changes in federal, state, and local laws governing environmental remediation. Current obligations are
not expected to have a material adverse effect on our consolidated results of operations, financial condition, or
liquidity.
Personal Injury – The cost of personal injuries to employees and others related to our activities is charged to
expense based on estimates of the ultimate cost and number of incidents each year. We use third-party
actuaries to assist us in measuring the expense and liability, including unasserted claims. The Federal
Employers’ Liability Act (FELA) governs compensation for work-related accidents. Under FELA, damages are
assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive
variety of services and rehabilitation programs for employees who are injured at work.
Our personal injury liability is discounted to present value using applicable U.S. Treasury rates. Approximately
89% of the recorded liability related to asserted claims, and approximately 11% related to unasserted claims.
Estimates can vary over time due to evolving trends in litigation. Our personal injury liability activity was as
follows:
Millions of Dollars 2007 2006 2005
Beginning balance................................................................................... $ 631 $ 619 $ 639
Accruals................................................................................................... 165 240 247
Payments................................................................................................. (203) (228) (267)
Ending balance at December 31............................................................. $ 593 $ 631 $ 619
Current portion, ending balance at December 31 ................................ $ 204 $ 233 $ 274