III. Position of Union Pacific

In early 1994, SP abandoned the pipeline that brought water down the railroad's right of way from Tehachapi to Keene. Union Pacific alleges this occurred in order to lower tunnels on the rail line to allow for double stack containers carried on rail cars. The water line from Tehachapi was destroyed.

In 1994, following the removal of the water line, SP drilled new water supply wells in Keene, which were tied into the existing water storage and distribution system. In 1997, Union Pacific (which had merged with SP in 1996) performed substantial repairs to the system. At that time, Union Pacific was not using the water for its own needs. Union Pacific asserts it spent $609,226 to replace the original water distribution lines in order to bring the water system into compliance with the requirements imposed by DHS.

The record discloses several agreements under which SP or Union Pacific has provided water from the Keene Water System. A summary of these agreements is contained in Appendix A. Union Pacific argues that these agreements demonstrate that Union Pacific never intended to dedicate its water system to public use. Rather, Union Pacific contends that these agreements show an explicit intent to provide water only as an "accommodation" under Section 2704.