Union Pacific Railroad v. United States Department of Homeland Security
738 F.3d 885
| 8th Cir. | 2013Background
- Union Pacific (UP), a U.S. common carrier with no operations or control in Mexico, accepted Mexican trains after U.S. Customs and Border Protection (CBP) inspected them at the border. CBP refuses to allow UP to search trains prior to CBP inspection.
- Between 2001–2006 CBP found illegal drugs on 38 Mexican-origin train incidents and assessed nearly $38 million in penalties against UP under 19 U.S.C. § 1584(a)(2). UP owned at most 11 of the implicated railcars.
- CBP’s stated bases for liability included UP’s ownership of some railcars and UP’s role in forwarding electronic manifest data to CBP (CBP would not accept manifests directly from the Mexican carriers). CBP conceded UP lacked knowledge of the drugs.
- Congress in 1988 directed the agency to promulgate regulations defining “the highest degree of care and diligence,” but the agency never completed that rulemaking. CBP nonetheless applied an expansive standard without formal regulations.
- UP exhausted administrative remedies, sued in district court challenging statutory authority and APA/arbitrary-and-capricious action; the district court vacated the penalties and enjoined CBP from penalizing UP until proper regulations were promulgated. The government appealed.
Issues
| Issue | Plaintiff's Argument (UP) | Defendant's Argument (Government/CBP) | Held |
|---|---|---|---|
| Whether UP was the “person in charge” under § 1584(a)(2) | UP lacked control or custody of trains before or during CBP inspections, so it was not the person in charge | UP forwarded manifests and therefore acted as the person in charge | Held: UP was not the person in charge; manifest-forwarding does not make UP the person in charge when it had no control or custody |
| Whether UP was the “owner” of vehicles with unmanifested drugs | UP owned at most some railcars; CBP cannot impose penalties for drugs in railcars UP did not own | CBP treated UP as liable regardless of ownership for some incidents | Held: CBP exceeded statutory authority by penalizing UP for drugs found in railcars UP did not own |
| Meaning of “highest degree of care and diligence” and whether CBP’s interpretation is permissible | The phrase should be given its common-law meaning (reasonable, carrier-specific standard); CBP cannot require impossible measures in Mexico | CBP reads the phrase to require extraordinarily exhaustive measures ("leave no stone unturned"), and relies on prior agency practice/cases | Held: CBP’s interpretation is unreasonable and constitutionally suspect; the phrase must be read in line with common-law standard of care for carriers |
| Appropriate remedy (vacatur, remand, injunction scope) | UP sought vacatur of penalties and injunction barring future enforcement absent valid regulations | Government sought remand and objected to district court’s injunction tying enforcement to rulemaking | Held: Vacatur of unlawful penalties affirmed; remand to agency unnecessary; district court injunction vacated and narrowed — court must enjoin CBP only from penalizing UP for drugs in railcars UP neither owned nor controlled |
Key Cases Cited
- Peisch v. Ware, 8 U.S. 347 (1808) (innocent owner should not be punished for strangers’ misuse of property)
- Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974) (forfeiture doctrine limited where owner proves lack of privity or reasonable prevention efforts)
- Bennis v. Michigan, 516 U.S. 442 (1996) (discussion of limits on forfeiture and treatment of innocent co-owners)
- Solid Waste Agency of N. Cook Cnty. v. U.S. Army Corps of Eng'rs, 531 U.S. 159 (2001) (agency interpretations that push constitutional limits require clear congressional intent)
- Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) (deference framework for agency statutory interpretation)
- NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979) (principle of constitutional avoidance in statutory construction)
- Zadvydas v. Davis, 533 U.S. 678 (2001) (limits on interpretations that raise constitutional questions; clear congressional intent required)
- Indianapolis & St. Louis R.R. Co. v. Horst, 93 U.S. 291 (1876) (common-law formulation of the “highest degree of care and diligence” for carriers)
- Lamie v. U.S. Trustee, 540 U.S. 526 (2004) (statutory text is the starting point for discerning congressional intent)
- United States v. Enochs, 857 F.2d 491 (8th Cir. 1988) (imposition of severe penalties for morally innocent acts may raise due process concerns)