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Last week, U.S. Customs and Border Protection (CPB) and Union Pacific Railroad signed an agreement to resolve disputed penalties assessed because of contraband found on trains originating in Mexico and launch a program designed to improve rail transportation security between the United States and Mexico.

In recent years, CBP has assessed penalties against UP totaling hundreds of millions of dollars after illegal narcotics were discovered on trains originating in Mexico and delivered by Mexican railroads to UP at Mexican border crossings. CBP and the Class I disagreed about whether federal law authorizes the federal agency to issue such penalties. The agreement addresses past and future penalties, other than those involved in an ongoing Nebraska lawsuit, according to UP.

The pact leaves in place UP’s lawsuit challenging nearly $38 million in penalties assessed by CBP that is awaiting a decision in the U.S. District Court in Nebraska. CPB and UP officials agreed the lawsuit should continue to clarify whether the penalties are authorized by federal laws for the long term.

The parties also agreed to launch the program, called “21st Century Bi-National Secure Border Corridor,” to expand cooperative partnerships among the U.S. and Mexican governments, railroads that operate at and cross the border, and other stakeholders that have an interest in rail transported goods between the United States and Mexico, UP officials said in a prepared statement.

In addition, the Class I agreed to invest $50 million to enhance border security efforts and improve supply-chain security. To be defined by CBP and UP in the coming months, the investments will include enhanced technologies — such as intelligent video scanning, global positioning systems and radio frequency identification tracking of rail movements — infrastructure and personnel enhancements.

Under the pact, more than $500 million in civil penalties that CBP has assessed or might assert against UP for previous drug discoveries will be mitigated, and the railroad will not pay fines or penalties for those drug discoveries, according to the Class I. The parties also agreed on a new process and new standards under which future drug discoveries will be evaluated for the next five years.

“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 UP Chairman, President and Chief Executive Officer Jim Young.

UP serves all rail gateways to Mexico and is the largest transporter of goods by rail to and from the U.S.-Mexico border, according to the Class I. The railroad’s Mexican gateways are located in Brownsville, Laredo, Eagle Pass and El Paso, Texas; Nogales, Ariz.; and Calexico, Calif.