CBP to mitigate UP drug smuggling fines

CBP to mitigate UP drug smuggling fines    U.S. Customs and Border Protection has agreed to waive $500 million in penalties accumulated in recent years by the Union Pacific Railroad following the discovery of illegal drugs on trains originating in Mexico.
   In exchange, UP will invest $50 million in security systems to prevent criminals from using its network to smuggle people and contraband across the Southwest border, the agency and the railroad announced Friday.
   The settlement resolves a long-running dispute over whether CBP is authorized by law to issue such civil penalties and quickly puts money to use enhancing supply chain security on the rail system. The UP argues that it is a victim of smuggling and should not be penalized because Mexican railroads bring trains to the border and drugs are planted in the cars before the Omaha, Neb., rail carrier takes control of them. In fact, Customs takes initial control of railcars entering the country from Mexico.

Bersin

   'It is in the best interest of all stakeholders that all appropriate steps are taken to secure the U.S. border against the smuggling of contraband and to ensure supply chain security now rather than years from now,' CBP Commissioner Alan Bersin said in a statement.
   Under the agreement, UP will invest in infrastructure, personnel and technologies such as intelligent video scanning, global positioning systems and radio frequency identification tracking of rail movements, over the next five years. The two parties will determine what specific upgrades to make in the coming months.
   For every dollar UP spends the outstanding balance of fines will be reduced at a rate of 10-to-1 until it is mitigated to zero, UP spokesman Donna Kush said. During the five-year period, CBP is not allowed to assess any further penalties against the railroad for security reasons, she added.
   Unaffected by the penalty mitigation is UP's lawsuit challenging $38 million in CBP penalties that is awaiting a decision in U.S. District Court in Nebraska. The UP said in its 2008 suit that Customs has unlawfully applied the Tariff Act of 1930 to the drug smuggling cases. The law allows CBP to assess penalties on a party that owns or operates 'a vessel' or 'vehicle' coming into the United States, but UP's position is that Mexican railroads control and own the trains entering the United States. It complained at the time that Customs has even seized railcars and penalized UP after UP found drugs that CBP officers had missed. And, it claims, UP doesn't have authority to enter Mexico to check trains for contraband ahead of the border.
   The Union Pacific and CBP agreed the lawsuit should continue in order to clarify whether penalties are authorized by federal law, according to a UP statement.
   'Rather than fighting over the penalties not in the litigation, the parties concluded it is more constructive to cooperate in improving supply chain security,' UP said.
   UP, one of two major freight railroads that operates between the U.S. West Coast and the Midwest, has already spent $78 million to support CBP inspection operations, including constructing buildings to house CBP personnel; adding fencing, lighting and inspection towers; and training border officers, Kush said.
   The railroad works closely with CBP on security for inbound and outbound trains. Last summer, for example, CBP started a pilot program at UP's rail crossing in Eagle Pass under which Customs officers were kept on duty 24 hours per day to conduct non-intrusive X-ray inspections of the railcars and keep freight traffic flowing. Eagle Pass is a fast growing gateway for the UP, which invested $800,000 in a new inspection building there in July 2009.
   The railroad also crosses the border at Brownsville, Laredo, and El Paso, Texas; Nogales, Ariz.; and Calexico, Calif. UP deploys its own security forces and K-9 teams at rail crossings to assist CBP with inspections and maintain a watchful eye for criminal activity. UP police are not allowed to approach or inspect trains except under CBP direction.
   CBP's decision also requires UP to help form a Rail Fusion Center for identifying high-risk shipments. The agency already participates in a government fusion center on the Southwest border and will now embed a rail component, Kush said.
   Fusion centers are offices where multiple agencies, state and local officials, and other experts work together to enhance intelligence-sharing, analysis, communication and coordination of inspections and other law enforcement activity.
   The agreement also calls for the formation of a working group comprised of members from U.S. Customs, Mexican Customs, railroads that serve Mexico and shippers to study ways to improve cargo security in the rail mode. Private sector participants will include UP, BNSF Railway, Kansas City Southern, KCS Mexico, Mexican railroad Ferromex, automobile manufacturers and other shippers, Kush said.
   UP has a minority investment in Ferromex, but has no operational control of the railroad. It said in 2008 that it has urged Ferromex to take steps to ensure the integrity of its rail shipments, but that it considers the Mexican military as having primary responsibility for drug interdiction in Mexico. ' Eric Kulisch