Railroad to pay $102 million after Calif. wildfire

Railroad to pay $102 million after Calif. wildfire

22 July 2008

published by www.sfgate.com

USA — Union Pacific Railroad Co. has agreed to pay $102 million for a huge California wildfire sparked by its workers in what federal officials described Tuesday as a precedent-setting case.

U.S. Attorney McGregor Scott said the settlement marks the U.S. Forest Service’s largest damage recovery for a wildfire.

The Omaha, Neb.-based company agreed to settle after a federal judge in Sacramento ruled against it in February, Union Pacific spokeswoman Zoe Richmond said.

U.S. District Judge Frank C. Damrell Jr. had said the federal government could seek damages far beyond the previous legal benchmarks — lost market value of burned trees and the cost of fighting the fire.

He ruled that a jury also could consider the loss of public recreation, scenery and wildlife, as well as wilderness areas with old-growth trees that never would have been logged for sale.

That would allow the government to seek significantly higher damages. In this case, the government estimated that could be as high as $190 million, a figure the railroad was disputing, according to court records.

“A precedent has been set here … that will let us assess the true, inherent value of forest land,” U.S. Associate Attorney General Kevin O’Connor said during a news conference in Sacramento.

He said the case would serve as a national model for the Forest Service and Justice Department.

Federal officials also announced that U.S. attorneys in Sacramento, Los Angeles and Utah have dedicated teams to recover damages from people and entities deemed to have started costly wildland blazes.

“It’s sending a message that their negligence in setting a fire has consequences,” O’Connor said.

An estimated $600 million in such damages could be recovered nationwide from fires set on Forest Service land, said Mark Rey, undersecretary of the U.S. Department of Agriculture and the head of the Forest Service.

The Union Pacific settlement is the result of a lawsuit filed after a fire about 100 miles northeast of Sacramento that started in August 2000 and burned more than 52,000 acres in the Plumas and Lassen national forests. It was contained after three weeks at a cost of $22 million.

It later was determined that sparks from welders repairing tracks set it off.

Richmond, the company spokeswoman, said railroad employees thought they had extinguished the sparks that were burning alongside the tracks. Union Pacific said a passing train probably blew them back to life.

“We feel our employees handled the situation as best they could. It was a rare and unfortunate set of circumstances that this fire became bigger than it should have,” Richmond said. “We are very fortunate that we didn’t have any injuries or any major damage (to homes). It could have been a lot worse.”

In a statement filed Tuesday with the Securities and Exchange Commission, Union Pacific said the settlement will be paid from insurance and will not affect earnings or cash flow.

The judge said the government could seek more than $13 million for “damage to wildlife habitat and public enjoyment of the forest,” as much as $33 million to plant trees and $122 million in lost timber.

“The forests’ use for recreation and scenic enjoyment was also sorely impacted,” Damrell wrote, summarizing the government’s claim. “Much of the devastated areas involved old growth forests, designated wilderness and trees that were hundreds of years old. The damage to the soil, according to plaintiff, may take hundreds of years to rebuild, if ever.”

Scott, the U.S. attorney in Sacramento, said his office has two dozen similar cases pending. The next is against an individual who started a fire on his property. If successful in cases against individuals, the U.S. attorney’s office said it likely would go after the limit of the homeowner’s insurance policy.

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