Union Pacific 2011 Annual Report Download - page 9

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Partnership Against Terrorism, a partnership designed to develop, enhance, and maintain effective
security processes throughout the global supply chain.
Cooperation with Customers and Trade Associations – Along with other railroads, we work with the
American Chemistry Council to train more than 200,000 emergency responders each year. We work
closely with our chemical shippers to establish plant security plans, and we continue to take steps to more
closely monitor and track hazardous materials shipments. In cooperation with the Federal Railroad
Administration (FRA) and other railroads, we are also working to develop additional improvements to tank
car design that will further limit the risk of releases of hazardous materials.
GOVERNMENTAL AND ENVIRONMENTAL REGULATION
Governmental Regulation – Our operations are subject to a variety of federal, state, and local
regulations, generally applicable to all businesses. (See also the discussion of certain regulatory
proceedings in Legal Proceedings, Item 3.)
The operations of the Railroad are also subject to the regulatory jurisdiction of the STB. The STB has
jurisdiction over rates charged on certain regulated rail traffic; common carrier service of regulated traffic;
freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of
rail common carriers. The STB launched wide-ranging proceedings to explore whether to expand rail
regulation, and we actively participated. The STB has not yet taken further action and denied a petition
seeking one form of “access” regulation. Additionally, several bills were introduced in the U.S. Senate in
early 2011 that would expand the regulatory authority of the STB and could include new antitrust
provisions. We continue to monitor these proposed bills.
The operations of the Railroad also are subject to the regulations of the FRA and other federal and state
agencies. On January 12, 2010, the FRA issued final rules governing installation of Positive Train Control
(PTC) by the end of 2015. Although still under development, PTC is a collision avoidance technology
intended to override locomotive controls and stop a train before an accident. The FRA acknowledged that
projected costs will exceed projected benefits by a ratio of about 22 to one, and we estimate that our
costs will be higher than the FRA assumed. Congress has directed the FRA to provide an early report by
March 1, 2012, on the status of PTC implementation, which is in advance of a detailed report due by the
end of 2012. Through 2011, we have invested nearly $400 million in the development of PTC.
DOT, the Occupational Safety and Health Administration, and DHS, along with other federal agencies,
have jurisdiction over certain aspects of safety, movement of hazardous materials and hazardous waste,
emissions requirements, and equipment standards. The Rail Safety Improvement Act of 2008, among
other things, revised hours of service rules for train and certain other railroad employees, mandated
implementation of PTC, imposed passenger service requirements, addressed safety at rail crossings,
increased the number of safety related employees of the FRA, and increased fines that may be levied
against railroads for safety violations. Additionally, various state and local agencies have jurisdiction over
disposal of hazardous waste and seek to regulate movement of hazardous materials in ways not
preempted by federal law.
Environmental Regulation – We are subject to extensive federal and state environmental statutes and
regulations pertaining to public health and the environment. The statutes and regulations are
administered and monitored by the Environmental Protection Agency (EPA) and by various state
environmental agencies. The primary laws affecting our operations are the Resource Conservation and
Recovery Act, regulating the management and disposal of solid and hazardous wastes; the
Comprehensive Environmental Response, Compensation, and Liability Act, regulating the cleanup of
contaminated properties; the Clean Air Act, regulating air emissions; and the Clean Water Act, regulating
waste water discharges.
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 –
Critical Accounting Policies – Environmental, Item 7 and Note 17 to the Consolidated Financial
Statements in Item 8, Financial Statements and Supplementary Data.