Union Pacific 2010 Annual Report Download - page 44

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Our asbestos-related claims activity was as follows:
2010 2009 2008
Open claims, beginning balance 1,670 1,867 2,086
New claims 216 249 256
Settled or dismissed claims (449) (446) (475)
Open claims, ending balance at December 31 1,437 1,670 1,867
We believe that our estimates of liability for asbestos-related claims and insurance recoveries are
reasonable and probable. The amounts recorded for asbestos-related liabilities and related insurance
recoveries were based on currently known facts. However, future events, such as the number of new
claims to be filed each year, average settlement costs, and insurance coverage issues, could cause the
actual costs and insurance recoveries to be higher or lower than the projected amounts. Estimates also
may vary in the future if strategies, activities, and outcomes of asbestos litigation materially change;
federal and state laws governing asbestos litigation increase or decrease the probability or amount of
compensation of claimants; and there are material changes with respect to payments made to claimants
by other defendants.
Environmental – We are subject to federal, state, and local environmental laws and regulations. We
identified 294 sites at which we are or may be liable for remediation costs associated with alleged
contamination or for violations of environmental requirements. This includes 31 sites that are the subject
of actions taken by the U.S. government, 17 of which are currently on the Superfund National Priorities
List. Certain federal legislation imposes joint and several liability for the remediation of identified sites;
consequently, our ultimate environmental liability may include costs relating to activities of other parties,
in addition to costs relating to our own activities at each site.
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. At December 31,
2010, approximately 5% of our environmental liability was discounted at 2.8%, while approximately 12%
of our environmental liability was discounted at 3.4% at December 31, 2009. Our environmental liability
activity was as follows:
Millions 2010 2009 2008
Beginning balance $ 217 $ 209 $ 209
Accruals 57 49 46
Payments (61) (41) (46)
Ending balance at December 31 $ 213 $ 217 $ 209
Current portion, ending balance at December 31 $ 74 $ 82 $ 58
Our environmental site activity was as follows:
2010 2009 2008
Open sites, beginning balance 307 339 339
New sites 44 49 82
Closed sites (57) (81) (82)
Open sites, ending balance at December 31 294 307 339
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