OMAHA, Neb. (AP) — A federal appeals court has upheld a lower court decision that said U.S. border officials exceeded their authority by imposing multimillion-dollar fines against Union Pacific Corp. for failing to discover illegal drugs in railcars that crossed into the country from Mexico.

A three-judge panel of the 8th U.S. Circuit Court of Appeals said Tuesday that U.S. Customs and Border Protection officials were wrong to impose nearly $38 million in fines and to seize railroad equipment.

The government had argued that the Tariff Act of 1930 allowed the fines. But the appeals court said the act does not authorize penalties for drugs found on railcars Union Pacific “neither owns nor controls.”