Union Pacific settles drug fines, invests $50M in border security

Published 25 August 2011

Railroad giant Union Pacific Corp. agreed last week to invest $50 million to help protect the U.S.-Mexico border and to improve supply chain security; the announcement comes as the settlement of an ongoing dispute between the railroad company and U.S. border officials over nearly $500 million in fines

Railroad giant Union Pacific Corp. agreed last week to invest $50 million to help protect the U.S.-Mexico border and to improve supply chain security.

The announcement comes as the settlement of an ongoing dispute between the railroad company and U.S. border officials over nearly $500 million in fines.

Under U.S. law, all shipping companies are subject to fines of $500 per ounce of marijuana and $1,000 per ounce of heroin or cocaine if U.S. Customs and Border Protection (CBP) agents find drugs hidden in their cargo. With the recent installation of x-ray machines at border crossings, Union Pacific has seen its annual fines increase from $37.5 million three years ago to more than $388 million.

Union Pacific argued that they were being punished for the actions of drug smugglers which they cannot control.

Last Friday, border officials agreed to waive the fines and Union Pacific signed an agreement with CBP to formalize their collaborative efforts. Under the agreement, a fusion center will be created where CBP, Union Pacific, and other law enforcement agencies will share information, intelligence analysis, and coordinate actions.

The $50 million that the company has pledged will go towards technology, infrastructure, and personnel enhancements including intelligent video scanning and GPS and RFID trackers for rail cargo.

As part of the agreement, Union Pacific and CBP also established a new process and standards for which future drug discoveries will be evaluated for the next five years.

Union Pacific’s lawsuit challenging nearly $38 million in fines remains active and pending a decision in the U.S. District Court in Nebraska. The two entities both acknowledged that the lawsuit should move forward to clarify whether U.S. laws regarding the penalties are authorized for the long term.