I just received this response from Union Pacific from the letter I sent earlier today:
Thank you for sharing your concerns about Union Pacific’s licensing program. Union Pacific announced a formal licensing program in 2002. The program for the model railroad industry was developed in consultation with the Model Railroad Industry Association. Rates for model railroad manufacturers are extremely low and small businesses are generally exempt from royalty payments. Media reports and internet chatter have inaccurately portrayed the royalty fees. On a $10 model, royalty rates are pennies. You can find additional information about our licensing program on our Web site at http://www.uprr.com/newsinfo/modelrail.shtml.