UP to pay $50M to settle part of drug fine dispute

August 19, 2011 - 1:15 PM

OMAHA, Neb. (AP) — Union Pacific has resolved part of its long-running dispute with the federal government about fines imposed on the railroad over drug smuggling on trains crossing from Mexico with a $50 million agreement, but the company's lawsuit challenging the fines remains in place.

The railroad and the U.S. Customs and Border Protection agency announced the agreement Friday covering about $500 million in fines the government had tried to impose and providing a five-year amnesty for Union Pacific. In exchange, the Omaha-based railroad agreed to invest $50 million in efforts to strengthen security at the Mexican border.

But the government agreed to let proceed Union Pacific's lawsuit challenging about $60 million in fines imposed between 2002 and 2008 when more than 4,000 pounds of drugs — mostly marijuana — was seized.