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Published Sunday August 3, 2008
U.P. fights $38 million in border drug fines
BY VIRGIL LARSON
© 2008 OMAHA WORLD-HERALD
Five years ago, federal Customs and Border Protection agents found a false wall in a railcar that had rolled into Brownsville, Texas, from Mexico.
They cut a hole in the side of the empty car and found 99 packages of cocaine totaling more than 250 pounds.
It was the second of 42 instances — the most recent of them June 7 this year in Nogales, Ariz. — in which the federal government cited Union Pacific Railroad for drugs found aboard railcars handed off to the Omaha-based railroad at the Mexican border.
The cocaine found in Brownsville on June 16, 2003, brought a $4.1 million penalty down on Union Pacific. Penalties in the other 41 cases, all involving marijuana, raised the ante to $37.8 million.
Union Pacific hasn't paid the fines and last week sued the Department of Homeland Security in U.S. District Court in Omaha, asking for an order blocking the penalties.
The railroad argues that it has no control over what might be hidden in railcars in Mexico. The government said in a letter in April that there are patterns to the way the drugs are hidden and that U.P. should recognize them and inspect the cars in Mexico.
The Department of Homeland Security, under which Customs and Border Protection operates, has not filed a response. A spokeswoman said Friday that Customs and Border Protection would not comment.
The case plays out against a backdrop of Mexican drug cartel violence.
U.P. said in its court documents that it is unsafe to send its people into Mexico.
A security operation in Mexico, whether by U.P. employees or a third-party contractor, would expose those people to the risks of murder and mayhem at the hands of Mexican drug cartels, the railroad maintains.
To make its point, the railroad noted the May 8 assassination of Mexico's national police chief, Édgar Eusebio Millán Gómez. U.P. also submitted reports of Mexican police chiefs seeking asylum in the United States because they feared for their lives.
Any inspection program U.P. might operate in Mexico would be futile, the railroad says in its lawsuit, because its police officers would have no authority there, could not carry guns in Mexico and can't take their drug-sniffing dogs there.
They might risk arrest for possession of drugs they found, according to the lawsuit, or at least would have to turn over the drugs to Mexican police, who may be involved in the drug trade.
The railroad said it takes possession of the railcars only after they cross the border and have undergone inspection by Customs and Border Patrol agents.
While those handoffs — which may include a switching of locomotives — are happening, a train may stretch two miles back into Mexico and is exposed and unsecured against tampering, U.P. says.
Customs and Border Protection told Union Pacific in a letter in April that if the railroad cannot by itself provide inspections in Mexico, it should work with its business partner, the Mexican railroad Ferrocarril Mexicano (Ferromex), or hire an outside security company.
"In today's environment, this effort is paramount not only to drug interdiction, but also to our national interest in the fight against terrorism and the smuggling of weapons of mass destruction," the Customs and Border Protection letter said.
Hiring an outside security contractor is what air and ocean carriers do when operating in high-risk areas, the agency said.
In all but one of the 42 cases, the hidden drugs were found in railcars brought to the border by Ferromex.
U.P. owns 26 percent of Ferromex but says that doesn't give it any authority over the Mexican railroad's operations.
U.P. is unable to compel Ferromex to take additional steps to prevent the use of equipment in its custody and control to smuggle drugs into the United States, Union Pacific said in the court documents.
Jim Young, U.P. chairman and chief executive officer, has raised the issue with Ferromex's board of directors, the Omaha-based railroad said. The railroad declined Friday to make Young available for an interview.
The April letter to U.P. also said several hidden-drug cases were similar enough to raise the question: How many more drug-seizure incidents of these types will occur until the railroad effectively addresses the problem?
The letter said U.P. had been negligent in the 2003 Brownsville case. The agency found mitigating factors and offered to reduce the penalty to $412,800 — 10 percent of the original amount. It often reduces penalties due to mitigating factors.
In return, it said, it expected U.P. to deal with the recurring problem of drug smuggling on its railcars entering the United States at Calexico, Calif. Of the 42 smuggling cases, 37 were discovered at Calexico. The others were at Nogales, Ariz., and Brownsville.
The railroad turned down the offer, saying to accept mitigation offers requires giving up its right to appeal a case in court.
"We have no further recourse," William Lamson, an attorney for the railroad, said Friday. "It would be, in effect, a bar to any further action by us."
U.P. fights $38 million in border drug fines
BY VIRGIL LARSON
© 2008 OMAHA WORLD-HERALD
Five years ago, federal Customs and Border Protection agents found a false wall in a railcar that had rolled into Brownsville, Texas, from Mexico.
They cut a hole in the side of the empty car and found 99 packages of cocaine totaling more than 250 pounds.
It was the second of 42 instances — the most recent of them June 7 this year in Nogales, Ariz. — in which the federal government cited Union Pacific Railroad for drugs found aboard railcars handed off to the Omaha-based railroad at the Mexican border.
The cocaine found in Brownsville on June 16, 2003, brought a $4.1 million penalty down on Union Pacific. Penalties in the other 41 cases, all involving marijuana, raised the ante to $37.8 million.
Union Pacific hasn't paid the fines and last week sued the Department of Homeland Security in U.S. District Court in Omaha, asking for an order blocking the penalties.
The railroad argues that it has no control over what might be hidden in railcars in Mexico. The government said in a letter in April that there are patterns to the way the drugs are hidden and that U.P. should recognize them and inspect the cars in Mexico.
The Department of Homeland Security, under which Customs and Border Protection operates, has not filed a response. A spokeswoman said Friday that Customs and Border Protection would not comment.
The case plays out against a backdrop of Mexican drug cartel violence.
U.P. said in its court documents that it is unsafe to send its people into Mexico.
A security operation in Mexico, whether by U.P. employees or a third-party contractor, would expose those people to the risks of murder and mayhem at the hands of Mexican drug cartels, the railroad maintains.
To make its point, the railroad noted the May 8 assassination of Mexico's national police chief, Édgar Eusebio Millán Gómez. U.P. also submitted reports of Mexican police chiefs seeking asylum in the United States because they feared for their lives.
Any inspection program U.P. might operate in Mexico would be futile, the railroad says in its lawsuit, because its police officers would have no authority there, could not carry guns in Mexico and can't take their drug-sniffing dogs there.
They might risk arrest for possession of drugs they found, according to the lawsuit, or at least would have to turn over the drugs to Mexican police, who may be involved in the drug trade.
The railroad said it takes possession of the railcars only after they cross the border and have undergone inspection by Customs and Border Patrol agents.
While those handoffs — which may include a switching of locomotives — are happening, a train may stretch two miles back into Mexico and is exposed and unsecured against tampering, U.P. says.
Customs and Border Protection told Union Pacific in a letter in April that if the railroad cannot by itself provide inspections in Mexico, it should work with its business partner, the Mexican railroad Ferrocarril Mexicano (Ferromex), or hire an outside security company.
"In today's environment, this effort is paramount not only to drug interdiction, but also to our national interest in the fight against terrorism and the smuggling of weapons of mass destruction," the Customs and Border Protection letter said.
Hiring an outside security contractor is what air and ocean carriers do when operating in high-risk areas, the agency said.
In all but one of the 42 cases, the hidden drugs were found in railcars brought to the border by Ferromex.
U.P. owns 26 percent of Ferromex but says that doesn't give it any authority over the Mexican railroad's operations.
U.P. is unable to compel Ferromex to take additional steps to prevent the use of equipment in its custody and control to smuggle drugs into the United States, Union Pacific said in the court documents.
Jim Young, U.P. chairman and chief executive officer, has raised the issue with Ferromex's board of directors, the Omaha-based railroad said. The railroad declined Friday to make Young available for an interview.
The April letter to U.P. also said several hidden-drug cases were similar enough to raise the question: How many more drug-seizure incidents of these types will occur until the railroad effectively addresses the problem?
The letter said U.P. had been negligent in the 2003 Brownsville case. The agency found mitigating factors and offered to reduce the penalty to $412,800 — 10 percent of the original amount. It often reduces penalties due to mitigating factors.
In return, it said, it expected U.P. to deal with the recurring problem of drug smuggling on its railcars entering the United States at Calexico, Calif. Of the 42 smuggling cases, 37 were discovered at Calexico. The others were at Nogales, Ariz., and Brownsville.
The railroad turned down the offer, saying to accept mitigation offers requires giving up its right to appeal a case in court.
"We have no further recourse," William Lamson, an attorney for the railroad, said Friday. "It would be, in effect, a bar to any further action by us."
>>>>> 
Yeah, all in all, it was good. 
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