In The Matter Of Arbitration Between:

Norfolk and Western
Railway Company Interstate Railroad Company, and Southern Railway Company

and

Trainmen and Conductors
Represented by the United
Transportation Union

Arbitration Panel:

Appearing For The Carriers:

Arbitration Pursuant to Action By the National Mediation Board and Notice of the Interstate Commerce Commission in Finance Docket Number 30582 (Sub-No. t)

Robert J. Ables, Neutral Referee, Washington, D. C.

David N. Ray, Carrier Member, Director, Labor Relations, Southern Railway Company

L. W. Swert, Employee Member, United Transportation Union, Vice President

Jeffrey 5. Berlin, Esq., Washington, D. C.
Rusell E. Pommer, Esq., Washington, D. C.
William P. Stalismith, Jr., Esq.,
Norfolk, Virginia
Also Present or Testifying for The Carriers:

Appearing For The Union:

Also Present or Testifying for The Union:

Proceedings:

Date of Decision:

T. E. Gurley, General Manager,
Eastern Region, N 8 W
Robert S. Spenski, Assistant
Vice President, Labor
Relations, Southern
E. M. Martin, Regional Director,
Labor Relations, N E W
J. R. Binau, Assistant Director,
Labor Relations, Southern
K. J. O'Brien, Assistant Director,
Labor Relations, Southern
M. C. Kirchner, Director, Labor
Relations, Norfolk Southern

Clinton J. Miller, III, Esq.,
United Transportation Union,
Assistant General Counsel,
Cleveland, Ohio

A. Smith, UTU General
Chairman, Southern
R. F. Spivey, UTU General
Chairman

Neutral referee appointed by
the National Mediation Board:
June 13, 1985. Pre-hearing briefs
received: August 26, 1985.
Arbitration hearing: Atlanta,
Georgia; August 28, 1985.
Transcript received: September 3,
1985. Post-hearing briefs
received: September 9, 1985.

September 25, 1985.
ARBITRATION AWARD

Norfolk and Western Railway Company

Interstate Railroad Company

Southern Railway Company


and

Trainmen and Conductors Represented By

The United Transportation Union


OPINION

I. JURISDICTION

This dispute between railroads and their employees is another round of an old fight fought on the same battlefield. Each side has had enough victories to encourage It to persist In the contest. Neither side seems to want to change either its strategy or tactics, and neutrals, like arbitrators and judges, have not seemed to be able to make a decision to put the issue to rest. The decision here is not likely to do more.
At issue Is the right of railroad employees represented by their labor organization, the United Transportation Union (Union) in this case, to say to their employer railroad(s), the Norfolk and Western Railway Company (N 8 W), Interstate Railroad Company (Interstate) and Southern Railroad Company (Southern) (Carrier or Carriers), after consolidation authorized by the Interstate Commerce Commission (ICC or Commission), with labor protective conditions that, if pay, rules, working conditions, etc., in an existing collective bargaining agreement would be changed as a result of changes made by the Carrier authorized by the consolidation, such pay, rules, working conditions, etc., can be changed only by further collective bargaining under the provisions of the Railway Labor Act (RLA), and not under the arbitration provisions of the labor protective conditions specified by the ICC in the event the parties are not able to make an agreement to implement the consolidation.

There Is respectable judicial and arbitrai authority to support the Union's position that the RLA controls.

There Is respectable judicial and arbitral authority to support the Carriers' position that the arbitration provisions control.

7. ICC Conditions

The dispute on this point seems to flow not from any challenge
of the right of the ICC to specify labor protective conditions upon authorizing a railroad consolidation (or exempting it from regulation), but. from the kind of such conditions specified.

Despite a record of proceedings approaching those In hotly contested cases appealed to a U. S. Court of Appeals, V it is not clear why the ICC persists in specifying labor protective conditions that perpetuate the problem.

a. Section 2 Conditions

On the one hand, the Commission regularly specifies the following condition in labor protective conditions:

The rates of pay., rules, working conditions and all collective bargaining and other rights, privileges and benefits (including continuation of pension rights and benefits) of railroads' employees under applicable laws and/or existing collective bargaining agreements or otherwise shall be preserved unless changed by future collective bargaining agreements or applicable statutes.

Including pre-hearing briefs, transcript, post-hearing briefs, countless references to court and arbitrators' decisions and many other exhibits.
Typically, the ICC specifies, this condition In Article i, Section 2 (Section 2) of its protective conditions, like the Mendocino Coast conditions applicable here.J

The clear implication of this condition is that the essence of an existing collective bargaining agreement (pay, rules, working conditions, pension rights, etc.), if not the agreement itself, continues after consolidation ("shall be preserved") unless changed by "future collective bargaining agreements". This latter phrase has two Important implications: any new agreement must be different from the existing agreement and it has to be bargained for -which by definition means agreement or resort to authorized statutory actions to break the deadlock.

Labor (or employee) protective conditions now authorized in the Interstate Commerce Act, resulting from railroad merger, consolidation, acquisition (including trackage rights), etc. ("consolidations"), date back, at least, to The Washington Job Protection Agreement of 1936. In the present dispute, the ICC adopted the "Mendocino" conditions (Mendocino Coast R y. -- Lease and.Operate -- Callfornia-Western .R.,
54 732 978 ,. modified, 653, (1980), a
sub nom. Railway Executives' Assn. v. United States,
675 rEd 248.( .. c. 1982 ,.an . Norfolk .an Western

R . -- Tracka a RI hts 354 -Burlin.ton ort ern nc. e605 (1978 ,: mo su nom. Mendocino Cons;
R . -- Lease and O orate. --. MM1tMa Western . , _ 360
653. 1980 , a . Sub nom. Railway Labor xecutivea'
Ass'n v. United States, b75-Fan 48 Ur. 82 ).
New York oc c con lions are also specified by the ICC for similar authorized changes. They are virtually the same as the Mendocino conditions.- There have been - and there presently are -- a number of differently named conditions all having the same purpose of specifying protection of railroad employees adversely affected by consolidations. The kind or adequacy of labor protective conditions in the present dispute are not in Issue.
Thus, Section 2 applicable here in the Mendocino conditions provides substantial leverage for the Union arguing that certain changes desired by the Carriers under its ICC authorization (exemption) cannot be- made unless both parties agree to the changes.*/

b. Section 4 Conditions

As the Union draws comfort in this dispute from Section 2, the Carriers emphasize that Article 1, Section 4 (Section 4), of the Mendocino conditions controls.

The parties have agreed on all provisions except one. The 27 trainmen on the interstate Railroad who are being consolidated into the N b W and Southern coal rail operations at coal sources in Southwest Virginia object to working under the N t W schedule of agreements (collective bargaining agreement or contract) and prefer to continue working under their own contract. In the alternative, the Interstate employees are willing to work under the Southern contract. According to the Interstate employees, working under the N 8 W contract would -- or probably would -- require a change in home base with associated problems of moving families from Andover, Virginia to Norton, Virginia, about a 4S-minute drive in these mountainous, narrow, coal traffic roads. That this Is a relatively small railroad has no bearing on the intensity with which each party has argued Its case. The Issue being the same as. (n much larger consolidations,' each side has brought out. its heavy legal artillery to argue the case.

Carriers contemplate an authorized transaction which

will result in a dismissal or displacement of employees or rearrangement of forces

negotiations for the purpose of reaching an implementing agreement are required. If, at the end of a 20-day period the parties fail to agree, negotiations are to terminate and either party to the dispute may submit the dispute for adjustment, in accordance with designated procedures, including designation of a neutral referee whose decision "shall be final, binding, and conclusive".J

The clear implication of this Section 4 condition Is that a "transaction", such as here contemplated, of at least rearranging forces,!-*Jwas envisaged by the ICC when it granted the Carriers

The Carriers, here, Invoked this authority by petition to the National Mediation Board. The Union opposed the petition. Such Board appointed this arbitrator to help resolve the dispute. At the arbitration hearing, the Union agreed with the Carriers to proceed on the basis of a Tri-Partite Arbitration Panel but. held to its position that this panel had no authority to decide the question of applicability of contract.

The Carriers contemplate consolidating Interstate employees into the N 6 W Pocahontas Division. Although Interstate employees will have certain priority rights to work they performed before the consolidation and certain "equity" when the work Is performed by N b W employees, seniority rosters will be Integrated and assignments can vary off the property before the consolidation.
the authority ,(exemption) to consolidate and it anticipated inability of the parties to negotiate an agreement to implement such transaction or changes from past operationsV by prescribing an arbitration procedure to resolve the dispute.

Under the logic of this condition, it is almost inconceivable the Commission would not have known that pay, rules, working conditions, etc., under an existing contract, would not be affected by the transaction. Thus, the Commission intended to give priority to its statutory base for authorizing the consolidation with protective conditions, namely, the Interstate Commerce Act, over anything in conflict under the Railway Labor Act.



Such long-time apparent, sharp inconsistency existing in its labor protective condition between Section 2 and Section 4, it would seem the Commission would have cleared up the matter one way or the other. It has not.

Whether the Commission Is skittish about taking a firm position on a question which Involves administration of a statute (RLA),

Considering, among other things, that the purpose of the request to consolidate was to take advantage of the best'grades of the respective railroads and to otherwise make the operation less costly and more efficient.
over which it has no responsibility, may only be speculated. It may even be that the Commission has been Inattentive to the discrepancy.'

The Commission may even have decided to defer to the courts the question of the applicability of the RLA, upon consolidation, In view of the substantial litigation and conflicting decisions on this and related points.

A summary of the development of labor protective conditions
by arbitrator Zumas -- drawing on analyses by other .
arbitrators - is a basis .for this speculation. In The Matter
of Arbitration Between Norfolk. and .Western Rail wa . om n and
Illinois Terminal rcail roa om n . v.. ro er o mot Iva
Engineers an United Transportation non, ec d ruary 1,
1982. Also, see, decision y arbitrator Seidenberg In The Matter
of Arbitration Between Baltimore and Ohio R.R. Com n
Newbu an re R.W. . Coal an Brother ood of
Maintenance o a Employees and-United tee or ers o
mer ca , decided August 31, 1983.

In the Seidenberg award, the arbitrator reports that Section 2 of the New York Dock Conditions was newly added to the varied set of such conditions developed by the Commission since the Washington Job Protection Agreement of 1936. The New York Dock Conditions were prescribed by the Secretary of Labor (not the ICC) for those agreements whereby carriers discontinue their inter-city rail passenger service which was assumed by AMTRAK. The dissimilarity Is apparent between such change In railroad operations and the Instant case involving like operations' In the same area and affecting only 27 employees.
Whatever the reason the Commission has not reconciled Sections 2 and 4, the question has come around again in this proceeding: Does this arbitration panel have jurisdiction to consider the content of an implementing agreement where an existing contract would be changed and, if so, what shall be the contents of that implementing agreement?

3. Arguments

The Carriers are the moving party. They argue that:




(c) The Carriers were not precluded from going
forward with preferred changes under Section
4 of Mendocino because of the Commission's
finding on April 3, 1985 in the underlying
case in this proceeding that "(n]o evidence
has been presented to demonstrate that
involved railroads intend to abrogate the
contractual or statutory rights of employees".
According to the Carriers, ail this finding
suggests is that allegations of a conflict
between employees' RLA rights and a carriers'
plans to effectuate an ICC authorized trans
action are not to be resolved In an administrative
proceeding In which the ICC passes upon the
applicability or Inapplicability of a blanket
Section 10505 exemption.

The Union argues that:




4. Arbitration and Court Decisions

Arbitrators' decisions have not been dispositive of the Section 2, Section 4 impasse.J

Decisions by experienced and respectable arbitrators Zumas and Seidenberg, supra, do not settle the matter. Each arbitrator decided against jurisdiction based on Section 2 but proceeded to require changes such as merging seniority rosters as part of an implementing agreement. Seniority rights being arguably the most important contract right for an employee, it Is difficult to see a basis for deciding a Section 4 question in view of the arbitrator's decision on Section 2.

A more recent decision by arbitrator (judge) Brown on which the Carriers rely also cannot be accepted as new reasoning on the Section 2, Section 4 controversy. That arbitrator accepted jurisdiction on the strength of Section 4, adopting the argument that the ICC had plenary and exclusive authority In the field. In The Matter of Arbitration Between Union Pacific Railroad Company and
rUnited Transportation Union , decided January 1985. The difficulty with that decision is that, subsequently, the Court of Appeals for the District of Columbia Circuit, with respect to the same underlying

The parties cited a number of arbitration awards on point. The majority of awards cited favor the Union's position -but not overwhelmingly: The arbitration decisions reported are typical of the findings.
consolidation, decided, in a split panel, that the Commission had completely failed to justify the necessity for waiving the Railway Labor Act respecting crew selection, following certain trackage rights granted to other railroads affected by such consolidation, and the court remanded the dispute to the Commission to consider whether it was necessary to waive the RLA to effectuate the transactions at issue in that consolidation. Brotherhood of Locomotive Engineers v. ICC, 761 F.2d 714 (D. C. Cir. 1985), modified -- F.2d -(July 12, 1985), referred to hereinafter as "BLE".*1

The Carriers here urge adopting the .decision of the Court of Appeals in the case of .Brotherhood of. Locomotive En ineers v. S Er
Chica o and North Western Railway Company, 3 4 .2 424
8t r.) Cart. denied 375 U 819 1963) . in that case,
the action was yrailroad against the union for a judgment
declaring rights of the parties with respect to procedures to
be followed in adjusting seniority rights of employees affected
by consolidation of railroad yards. The Court of Appeals
affirmed the District Court (202. F.Supp.277) that statutory
authority conferred upon the Interstate Commerce Commission
to approve and facilitate merger of carriers includes power
to authorize changes in working conditions necessary to
effectuate such mergers and the Commission acted within its
jurisdiction in providing for adjustment of labor disputes
arising out of the approved merger. The Court of Appeals
noted that, under the Railway Labor Act in a major dispute,
employees cannot be compelled to accept or arbitrate as
to new working rules or conditions, 45 U.S.C.A. 5151 et
., but. that, as a result of the authorized merger In ~t case, the railroads and unions were relieved from requirements of the RLA by the Commission's authority under the Interstate Commerce Act concerning merger of carriers. Interstate Commerce Act 55 (2)(b), (c)(4).
As modified, the Court vacated the Commission's 1983 orders and remanded the case to the Commission. Supporting such decision, the Court said:

The Commission is not empowered to rely mechanically on Its approval of the underlying transaction as justification for the denial of a statutory right. On remand, to exercise its exemption authority, the Commission must explain why termination of the asserted right to participate in crew selection is necessary to effectuate the procompetitive purpose of the grant of trackage rights or some other purpose sufficiently related to the transaction. Until such a finding of necessity is made, the provisions of the Railway Labor Act and the Interstate Commerce Act remain in force.

5. Arbitration Panel Has Jurisdiction
To Order implementrn-q--Kg-reement

Whatever arguments remain on the merits of the split decision in the BLE case, it can no longer be argued sensibly that, simply because the ICC has authority to Impose protective conditions in railroad consolidations, RLA rights may be disregarded. But that is not to argue that the BLE decision puts the RLA back In the stream of things in consolidations of the kind in issue. The majority of the BLE court - with a very strong dissent -- remanded the case to the ICC to make findings It had not previously made with respect to RLA rights. The majority decision, therefore - as well as the minority decision - may be taken for the conclusion
that the ICC can take all necessary action to authorize a consolidation, including labor protective conditions and procedures to resolve disputes on implementing agreements, including arbitration without deference to RLA collective bargaining rights. The only imperative is that the ICC make required findings, not that it is not authorized to make them.

As it can be accepted that the ICC has authority, i.e., jurisdiction, to effectively make a package deal on consolidations, labor protective conditions and procedures to resolve disputes on implementing agreements - based on both the Eighth Circuit and D. C. Circuit opinions -- there is no logical reason not to accept that an arbitration panel, authorized under the ICC consolidation action, would not have jurisdiction to order changes to meet the purposes and objectives of the consolidation.

On such reasoning, this panel has jurisdiction to take Section 4 action in this case.

Carriers.

Such conclusion does not close the door in favor of the

The Union argues, with some persuasion, that, by not presenting their RLA arguments to the Commission, the Carriers did not argue their case at the time and place to have accomplished their objectives.


Executives' Association (RLEA), on behalf of employees in this
dispute, argued RLA rights to the ICC, the Commission not only commented that "[n]o.evidence has been presented to demonstrate that the involved railroads Intend to abrogate the contractual or statutory rights of employee" (ICC Notice, Finance Docket No. 30587 (Sub No. 1), April 3, 1985), but added in the same notice that, although exemptions under 49 U.S.C. 10505, do not operate to relieve carriers of applicable laws and agreements relative to labor relations



If the Commission meant that the appropriate forum was an arbitration panel, as here, the Commission was ducking .its clear responsibility to complete the package to satisfy its statutory responsibilities.

If the Commission meant that the appropriate forum was the courts, it was ducking the same responsibilities.

If the Commission meant to leave the parties to their RLA rights, it was ducking the same responsibilities.

Actually, It seems that the Commission was just ducking.

There Is no need or reason for this arbitration panel to duck.
The ICC had jurisdiction to complete the action; thus, the panel has jurisdiction to complete the action.

An implementing agreement will be ordered.

II. IMPLEMENTING AGREEMENT

No responsible court would ultimately refuse to order an implementing agreement under the disputes settling provisions of Section 4. Only the 27 trainmen off the Interstate Railroad who did not ratify the tentative agreement of April 17, 1985, are holding out on working under the N b W contract. All the other unions in this case have accepted the same or similar agreement, including organizations representing firemen, engineers, clerks and maintenance of way employees.

Labor protective conditions are in place.

There Is no legal, public policy, or common sense reason not to decide at this level of proceedings what will eventually be decided, Le., an implementing agreement to accomplish the purposes of an authorized consolidation.

The proposed joint operation of the Interstate Railroad properties, which are located in the coal fields of Southwestern
Virginia, following a consolidation in 1982 of N 6 W, Southern and their respective subsidiaries, including Interstate, under the control of Norfolk Southern Corporation, is intended to take advantage of better grades and operating routes for traffic moving from Interstate origins to points on the N b W and Southern and to achieve certain economies and efficiencies in interstate operations.

Among changes proposed by the Carriers to realize the advantages of such joint operation are consolidating the seniority rosters of Interstate train and engine service employees with those of N b W Pocahontas Division train and engine service employees. At present, Interstate crews do not work on N 6 W lines or vice versa. Upon consolidation, interstate crews will operate off the Interstate territory. They would work shifters in the area that can work both interstate and N 6 W mines.

According to T. E. Gurley, General Manager, Eastern Region, N 6 W Railroad, who testified at the arbitration hearing, in future operations, it is not contemplated that Interstate crews will be operated separately from the crews of the N 6 W. Rather, It Is contemplated that the crews will be combined on shifters in the Norton and Andover, Virginia area, based on their seniority on both N 8 W and Interstate. If the Interstate trainmen did not operate under the N 6 W contract but, rather, operated under their present Interstate contract, important contract problems would develop, including observance of the Hours of Service law; different reporting locations for crews operating the same
territory; differences of total hours worked each week (referred to as "gouging"); differences on opportunities to bid for and displace a junior employee on a job preferred by a senior employee; and different operation of extra boards. If, however, the N 8 W contract were applicable (for the 27 Interstate trainmen and the existing 816 N E W trainmen), employees, including present Interstate employees, would be able to draw assignments throughout the territory (which Is considerably larger than the territory presently operated by Interstate employees). Differences between the N 6 W and Interstate contracts, such as deadheading, filling vacancies, meal times, selection of vacation times and arbitraries, which would create friction as between N 8 W and Interstate crews working the same territory if the employees worked under different contracts, would be eliminated. Also, Interstate employees would enjoy the higher basic rate of pay presently applicable In the N 6 W contract.

According to A. Smith, General Chairman for the trainmen and conductors on both the Interstate and Southern railroads, the Union offered to work under the Southern agreement, which would accomplish exactly what the Carriers intend under the proposed implementing agreement, including the N b W contract. According to this official, there would not be, for instance, a provision for gouging or a provision that a senior brakeman could displace a junior brakeman. There would be a deadhead rule and extra boards would not be different. And there would be no difference in meal allowances or in bidding for vacant positions. Moreover, the Interstate employees would get a raise under either the Southern or N 6 W agreement.
Further, to the question asked by counsel for the Union: "With the Southern Agreement being applicable, could the employees of the Interstate be required to report to Norton?" The answer was: "Yes, sir." (Transcript, page 100).

On close questioning why the trainmen on the Interstate resisted accepting the tentative implementing agreement reached by the parties on April 17, 1985, the Union representative testified that the Interstate employees had worked previously with the Southern agreement and were more comfortable with it, but that their major concern was the possibility of having to move from their home area in Andover, Virginia to another point on the consolidated operation, with all of the adverse implications for families involved in such move.

In negotiations leading to the tentative Implementing agreement, upon the insistence of Union negotiators, a seniority provision was agreed to in order to keep a fair balance between bidding rights of the relatively small number of trainmen off the Interstate as compared to those rights of about 816 trainmen off the N 5 \W.

If, as the Union now accepts, Interstate trainmen might be required to move their home base under the Southern contract (which Is acceptable to the union), and there is no substantial reason not to accept the N 8 W contract on the other differences between the two contracts, there is no reasonable basis to reject the tentative implementing agreement of April 17, 1985. Recognizing, again, that labor protective conditions are in place and that,
zo

on its face, provisions in the N b W contract may actually be favorable to the interstate employees, the tentative implementing agreement of April 17, 1985 is fair, equitable and reasonable and will effectuate the purposes and objectives of the transaction exempted by the Interstate Commerce Commission when it authorized the consolidation underlying the proposed joint operation of Interstate properties.

AWARD







Dated:

The Carriers are authorized to put into effect the tentative implementing agreement of the parties, dated April 17, 1985.

oaerc ~. r,o
Neutral ef ee


.. h.ll~ J IM




specific order concerning Railway Labor Act rights cited at page 15, and after finding the ICC "ducked" the issue, decided it nonetheless had authority to change the contract on the property. This Board has no more authority than the ICC; and where the ICC has "ducked" this issue specifically, this Board may not resurrect it without acting outside the scope of its jurisdiction. BLE v. ICC, supra.

L. W. Swert, Vice President
United Transportation Union
Employee Member