DOJ Sues Union Pacific Over Drug Stashes on Trains

Largest U.S. Rail Carrier and DHS Clash on Trade Issue

By JASON RYAN

WASHINGTON, March 19, 2009

The Justice Department has filed a pair of lawsuits against Union Pacific railroad, claiming it owes the government more than $37 million for allowing shipments of drugs into the United States on rail cars the company had manifested as being empty.

The two lawsuits filed Wednesday in Texas and in California allege that narcotics came into the United States and were found by Customs and Border Protection inspectors on trains at rail yards in Calexico, Calif., and Brownsville, Texas, on more than 37 occasions.

The suits pose a difficult aspect of cross border trade along the U.S.-Mexican border as scrutiny over increasing violence among the drug cartels gains more attention.

Last year, Union Pacific sued the Department of Homeland Security over whether the company should be held responsible to pay fines on trains that were not in its control until they arrived at the U.S. side of the border.

The suits filed Wednesday against the largest rail transport company in North America allege that on numerous occasions between 2001 and October 2006, drugs, including cocaine and marijuana were trafficked into the United States on Union Pacific railcars.

According to the lawsuit filed by the Justice Department in Texas, Union Pacific had noted on train manifests that rail cars were empty; yet, upon inspection by Customs and Border Protection agents, significant quantities of cocaine were discovered.

"Contrary to Union Pacific's representations within the manifest that the rail cars were empty, during routine inspection CBP found a total of 99 packages containing 117 kilograms of cocaine within a false wall on the bottom side of the rail car," the suit said.

In the California case, the suit alleges that in 37 instances, Customs inspectors found a total of more than two tons of marijuana.

"During the course of these 37 routine inspections, CBP found unmanifested marijuana in excess of 4,200 pounds on Union Pacific rail cars north-bound from Mexico for travel throughout the United States," the suit said.

The suits don't allege any criminal behavior by the company or its Mexican rail partner Ferromex, but seek the $37 million in penalties from the corporation.

Ongoing Dispute Between US, UP

Since 2001, the company has been fined $38 million by Customs and Border Protection for instances of drugs being found on Union Pacific trains.

Last year, Union Pacific filed a lawsuit against DHS stating that the company is not responsible for the drugs or the contents of the trains before they enter the United States.

"[Union Pacific] did not and does not have custody or possession of the trains until after their inspection and release by CBP," the suit filed by Union Pacific in July 2008 at the U.S. District Court in Omaha, Neb., said.

In December 2008 and in January 2009, Customs officials and Union Pacific held meetings to try and resolve the dispute.

Donna Kush, spokesperson at Union Pacific told ABC News on Wednesday, "As Union Pacific explained in it's Nebraska lawsuit it is the government not Union Pacific that takes initial control over rail cars entering the US from Mexico. Union Pacific believes that it has exceeded its legal obligations and will defend these duplicative lawsuits."

In the past, the company has had good relations with DHS over its cross-border trade and it was the first rail company to join the Customs-Trade Partnership Against Terrorism (C-TPAT) program to ensure prescreening of trade into the United States.

"It is imperative for transportation providers to be vigilant in determining the nature of cargo they bring into the United States from other countries," Acting Assistant Attorney General for the Justice Department's Civil Division Michael Hertz said in a statement Wednesday.

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