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Union Pac. R.R. v. United States Dep't of Homeland Sec. - 738 F.3d 885 (8th Cir. 2013)


It is a bedrock principle of statutory interpretation that where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, the courts' duty is to adopt the latter. Courts adhere to this principle of constitutional avoidance out of respect for Congress, which courts assume legislates in the light of constitutional limitations.


On 38 occasions between 2001 and 2006, the United States Customs and Border Protection (CBP), a component of plaintiff United States Department of Homeland Security (DHS), found illegal drugs secreted on trains brought to the U.S. border by two Mexican railroads. Although defendant Union Pacific Railroad Company (UP) did not control the trains before their arrival at the U.S. border or even during the time CBP inspected the trains at the border, CBP imposed almost $38 million in penalties against UP under the Tariff Act of 1930, as amended, 19 U.S.C.S. § 1584(a)(2). After exhausting its administrative remedies, UP challenged the penalties in federal district court, invoking the Fifth and Eighth Amendments to the Constitution. among other things. The Government separately filed enforcement actions, which were consolidated with UP's suit. UP filed motion for summary judgment; the Government moved for judgment on the administrative record. Finding CBP lacked statutory authority to penalize UP and the penalties were arbitrary and capricious, the district court ruled in UP's favor and enjoined the Government from penalizing UP for smuggled drugs until CBP "properly promulgated" regulations authorizing such penalties. The Government appealed.


Was UP liable for penalties imposed for the illegal drugs found on railcars owned or controlled by Mexican railroads?




The appellate court affirmed the district court’s judgment in part, vacated the injunction, and remanded the case to the district court with instructions to issue a corrected injunction. The court rejected DHS' constitutionally suspect contention that the Tariff Act authorized the heavy fines assessed against UP because UP: (1) owned some of the individual railcars in which CBP found illegal drugs, and; (2) forwarded electronic manifest information for the railcars to CBP. The Act did not authorize penalties against UP for drugs found on railcars it neither owned nor controlled. And the statute certainly did not authorize DHS to require UP, as a common carrier, to do more than reasonably possible to prevent Mexican drug cartels from hiding drugs on trains it did not control in a country in which it had no operations. UP was not the "person in charge" of the trains where illicit drugs were found as it did not control the trains until after CBP completed its inspection. However, the court ruled, the district court erred by issuing an injunction designed to force CBP to enact formal rules. The court directed the district court to enjoin CBP only from penalizing UP for illegal drugs found on railcars that UP neither controlled nor owned.

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