Railroad will spend millions to secure supply chain under CBP agreement

Union Pacific railroad

The largest rail carrier in the U.S. has agreed to spend $50 million to improve the security of its supply chain between the U.S. and Mexico, and establish a joint security fusion center with U.S. Customs and Border Protection (CBP).

The CBP agreement with Omaha, NE-based Union Pacific railroad requires the expenditures to soften $500 million in U.S. Government penalties against it for drugs discovered on its rail cars, said the agency and the railroad on Aug. 19. Union Pacific is the largest the largest transporter of goods by rail to and from the U.S. – Mexico border.

The government had filed lawsuits in 2009 against the rail carrier for allegedly failing to prevent the use of its rail cars by smugglers to bring marijuana and cocaine into U.S. In complaints filed in San Diego and Houston, CBP sought more than $37 million in penalties from the company. The government alleged the rail cars were brought across the border at the ports of entry at Calexico, CA, and Brownsville, TX, carrying the illicit cargo.

According to the railroad, although the agreement means it wouldn’t pay $500 million in fines or penalties, the agreement leaves in place a Union Pacific lawsuit challenging nearly $38 million in penalties asserted by CBP that is awaiting decision in the U.S. District Court in Nebraska.

The mitigation decision defines the steps that Union Pacific will take to infuse $50 million to further secure our border, including investing in security enhancements at critical junctures of the Mexico and United States supply chain, and partnering with CBP to form a Rail Fusion Center to identify high-risk shipments, said the CBP. The decision also provides that CBP will ease penalties assessed against Union Pacific if it fulfills its obligations, said the agency. “In recent years these penalties have grown to be significant as illegal controlled substances were discovered on trains originating in Mexico and arriving at U.S. -Mexican border crossings,” it said.

The agreement, said a statement on the railroad’s Web site initiates the “21st Century Bi-National Secure Border Corridor” – a comprehensive program to expand cooperative partnerships among the U.S. and Mexican governments, railroads reaching the border, and other stakeholders that have an interest in rail transportation of goods between the U.S. and Mexico.

The company will invest in enhanced technologies like intelligent video scanning and developing technologies such as global positioning systems (GPS) and radio frequency identification (RFID) tracking of rail movements, according to the railroad.

A working team will form a “Fusion Center” where CBP, Union Pacific, and other stakeholders will interact for communication, sharing of intelligence, analysis, and coordination, it said. Other initiatives will harden inspection and detection processes at the U.S. border and encourage investments in Mexican rail corridors. Rail shippers will be encouraged to participate as well, it added.

“The facilitation of trade and security of the international supply chain is vital to both the health of our economy and protecting the country,” said U.S. Customs and Border Protection Commissioner, Alan 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.”

“We are pleased that we have reached a resolution that allows Union Pacific to expand our long-standing relationship with CBP, in which Union Pacific has already invested tens of millions of dollars in technology, infrastructure, training, and workforce resources to promote safer and more secure rail transportation across the border,” said Jim Young, Union Pacific chairman and chief executive officer. “CBP and Union Pacific teams along the border have worked exceptionally well together for many years, and this formal agreement solidifies our commitment to enhance that relationship and involve others who should be part of this critical work.”