(Reuters circulated the following article on November 28.)
NEW YORK — Union Pacific Corp., the largest U.S. railroad, has lifted the “force majeure” — under which it did not have to honor delivery contracts — for the track it jointly runs out of the vast Powder River Basin coal fields of Montana and Wyoming.
But the track, which was severely damaged by torrential rain and derailments in May, still requires extensive repair work before it can return to full capacity hauling coal headed for America’s power stations, it said.
In a posting on its Web site (www.up.com), the railroad company said the force majeure which it declared on May 11 ended on Nov. 23. Force majeure clauses in a contract excuse a company from liability because of unseen events such as a natural disaster or “act of God” beyond its control.
A Union Pacific spokesman referred Reuters on Monday to the Web posting, which said that in September, the company operated 986 loaded coal trains out of the Southern Powder River Basin, for an average of 32.9 per day — below the demand target of 38.7 trains per day.
It said Union Pacific and Burlington Northern Santa Fe Corp.
A spokesman for Burlington Northern, which did not declare force majeure, told Reuters that in the last four to five weeks, the railroad was close to its pre-May capacity. It was currently, on average, one or two trains short per day.
Coal-fired power utilities have cut back their inventories in the past year as coal prices have soared. But the coal producers have constantly cited rail disruptions as hurting profits at a time when they are benefiting from high prices.