The MEW also asks that the implementing agreement ensure that in the event the Carrier has underestimated the amount of work to be performed at the new facility, work that cannot be done at the Center be performed on the property rather than contracted to outside vendors. If the Carrier has more work for the facility than the number of jobs it initially creates can do, the MEW desires the Carrier to be obliged to either create additional positions in the same ratio as the original positions, or have the work revert to the locations where it formerly would have been done by the positions to which it formerly would have been assigned. It argues that work should in no event be contracted out, absent agreement of the union representing the affected employees at that former location.

The TCU, at the hearing, raised objections to certain parts of Carrier's March 26, 1996, proposed implementing agreement. Specifically, it asserted Section 6(b) should determine ranking

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of employees who have the same employment date in the Communications Department based upon date of birth, including year of birth. The TCU also objects to the requirement in Paragraph 5 of Side Letter No. 2 that the monthly dismissal allowance be reduced by $500 for each month needed by the employee to reach age 61.

At the hearing, the Carrier addressed three other objections raised by the TCU and reached a settlement with both Organizations. Specifically, Carrier agreed to delete the phrase "however no such claim for protective benefits shall be honored beyond ninety (90) days from the time specified in Sub-section (c) of this Section" from Section 7(e) in return for the TCU's waiver of its objection to Section 7(d). Additionally, Carrier and the Organizations agreed to delete the parenthetical phrase "except promotion to a non-contract position" from Section 9.

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Accordingly, the Referee finds that the consolidation of radio repair work at Louisville constitutes a transaction pursuant to the various orders of the Interstate Commerce Commission within the meaning of Article I, Section 1(a) of the New York Dock Conditions. Carrier has complied with the notice requirements of Article 1, Section 4, and has properly invoked arbitration. The Referee thus finds he has jurisdiction over the matter before him.

The issue dividing the MEW and the Carrier is whether the Carrier's proposal to place all employees at the consolidated facility under the scope of the L&N/TCU Agreement is necessary to effectuate the transaction. The IBEW fiuther suggests Section 2 of New York Dock places limitations upon the Referee, namely that he must preserve the rights, privileges and benefits existing under the collective bargaining agreements. This second point requires the Referee to consider what is meant by the Section 2 requirement.

It is the Referee's conclusion the Commission's intent in Section 2 has now been clarified. In Railway Labor Executives' Assn v. U.S., the Court of Appeals wrote:

The statute clearly mandates that "rights, privileges, and benefits" afforded employees under existing CBAs be preserved. Unless, however, every word of every CBA were thought to establish a right, privilege, or benefit for labor - an obviously absurd proposition - § 565 (and hence § 11347) does seem to contemplate that the ICC may modify a CBA.

At that level of generality, at least, the ICUs interpretation seems eminently reasonable, indeed indisputable. The Commission has not, however, addressed the meaning, and thus the scope, of those "rights, privileges, and benefits," that must be preserved, nor has it determined specifically whether the CBA provisions at issue here are entitled to statutory protection under that rubric. We thus remand for the ICC to make that determination in the first instance.

Regardless of how the ICC may read the above provision, however, it is clear that the Commission may not modify a CBA willy-nilly: § 11347 requires that the Commission

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provide a "fair arrangement." The Commission itself has stated that it may modify a collective bargaining agreement under § 11347 only as "necessary to effectuate a covered transaction. CSX, 6 I.C.C.2d 715 (1990) ("We assume that any changes in CBAs will be limited to those necessary to permit the approved consolidation and will not undermine labor's rights to rely primarily on the RLA for those subjects traditionally covered by that statute"). We agree that whatever else a "fair arrangement" entails, the modification of a CBA must at a nwumum be necessary to effectuate a transaction. [ footnotes omitted]"

In that case, Referee Kasher awarded an implementing agreement that required the Springfield Terminal Railway Company, in operating leased lines, to apply the rates of pay, rules and working conditions contained in the lessor carriers' collective bargaining agreements. The Commission, finding that the preservation of the lessor carriers' rates of pay and work rules would effectively foreclose the transaction, stayed the Kasher Award and remanded that issue to the parties. Unable to reach agreement, the parties submitted the dispute to Referee Harris, whose Award modified the lessor carriers' agreements.

The Comrnission discussed the definitions of "rights, privileges and benefits" in its review of the Award of Referee O'Brien in the dispute involving this Carrier, the United Transportation Union and the Brotherhood of Locomotive Engineers. Because the Commission had not yet rendered a ruling on the remand in Executives, Referee O'Brien declined to rule on the issue of whether the Carrier's proposed changes would be contrary to existing "rights, privileges and benefits." The Commission then wrote:

The history of the phrase "rights, privileges, and benefits" indicates that it has traditionally meant what it implies - the incidents of employment, ancillary emoluments or fringe benefits - as opposed to the more central aspects of the work itself - pay, rules and

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working conditions. The genesis of section 405 of the Amtrak Act was the Urban Mass Transit Act of 1962 (UMTA), which authorized federal financial assistance to state and local governments for the improvement of urban mass transit systems. Section 13(c) of that Act (now codified as 49 U.S.C. 5333(b)) required the Secretary of Labor to certify as "fair and equitable" arrangements to protect affected employees. The first requirement of section 13(c) for a "fair and equitable" arrangement was "the preservation of rights, privileges, and benefits under existing collective bargaining agreements or otherwise."

Since no IUMTA financing could be completed without the Secretary of Labor's section 13(c) certification, a model protective agreement was developed to permit rapid and dependable processing of applications. The current regulations of the Department of Labor provide that the Secretary will certify pursuant to section 13(c) if the parties adopt the Model Agreement. 29 CFR 215.6. Paragraph 10 of the Model Agreement sets forth the type of rights, privileges, and benefits that are "preserved" (emphasis added):

(10) No employee receiving a dismissal or displacement allowance shall be deprived during his protection period, of any rights, privileges, or benefits attaching to his employment, including without limitation, group life insurance hospitalization and medical care free transtbrtation for himself and his familysick leave continued status and participation under any disability or retirement program- and such other employee benefits as Railroad Retirement. Social Security. Workmen's Compensation. and ulovment canrr on, as well as any other benefits to which he may be entitled under the same conditions so long as such benefits continue to be accorded to other employees of the bargaining unit, inactive [sic] service or furloughed as the case may be.

We believe that this is compelling evidence that the term "rights, privileges, and benefits" means the "so-called incidents of employment or fringe benefits," Southern Rv. Co. - Control -- Central of Georgia Rv. Co.. 317 I.C.C. 557, 566 (1962), and does not include scope or seniority provisions.

In any event, the particular provisions at issue here do not come within "rights, privileges, or benefits" because they have consistently been modified in the past in connection within consohdatiaa4. Mus may well be due to the fact that almost all consolidations require scope and seniority changes in order to effectuate the purpose of the transaction. Railway Labor Act bargaining over these aspects of a consolidation would frustrate the transactions. The ATDA court looked to past conduct in consolidations when it ruled that scope rules were not among those provisions protected as "rights, privileges and benefits." 26 F.3d at 1163. The court relied, in part, on CSX Corporation Control - Chessie System. Inc. and Seaboard Coast Line Industries. Inc., 6 I.C.C.2d 715, 736, 742 (1990) (Camren II), and is recitation

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of the power of arbitrators under the Washington Job Protection Agreement of 1936 and pre1976 labor conditions.

Seniority provisions have also been historically modified with regularity by arbitrators in connection with consolidations. See Carmen II, 6 I.C.C.2d at 721, 736-737, 742, 742, and 746 n.22. Thus, both scope rules and seniority provisions have historically been changed without RLA bargaining and, accordingly, are not eligible for protection as "rights, privileges, and benefits."

The unions argue that section 2 of New York Dock gives employees a right to retain their existing union representation. The coordination will require WM engineers, currently represented by UTU, to work under the agreement that BLE negotiated with the B&O rather than their current agreement. The effect of our transactions on selection of union membership is under the jurisdiction of the National Mediation Board acting under the Railway Labor Act. Fox Valley & Western Ltd - Exemtrttan Aaluisition and fration - Certain Lines of Green Bay and Western Railroad Company. Fox River Valley Railroad Corooration. and the AhIapae & Western Railway Comuartv, Finance Docket No. 32035 (Sub-No. 1) (ICC served Dec. 19, 1994), ft gp. at 7. Therefore, we find that the issue of which union is to represent WM engineers or receive them as dues-paying members does not involve a right that must be preserved under section 2 of New York Dock. l'

The Commission's interpretation was found by the Court of Appeals to be reasonable and "exactly what was intended by Congress."" The Referee concludes, therefore, that the Carrier's proposed implementing agreement does not abrogate rights, privileges and benefits that Section 2 of New York Dock requires be preserved. The proposed agreement, in Side Letter 10, permits MEW represented employees to elect to retain their coverage under the Supplemental Sickness Benefit plan during the protective period. The MEW has cited no other "right, privilege or benefit," as those terms are applied, that might be abrogated by the proposed agreement.

"CSX Corp. - Control - Chessie Sys. Inc. and Seaboard Coast Line Indus., Inc., Finance Docket No. 28905 (Sub-No. 27)(November 22, 1995) slip op. at 14-15.

"United Transportation Union v. Surface Transportation Board, D.C. Cir, March 21, 1997, at 10.

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As the MEW notes, the Carrier must demonstrate that its proposed changes are necessary to effectuate the transaction. The standard of "necessity" was defined in Executives as follows:

What, then, does it mean to say that it is necessary to modify a CBA in order to effectuate a proposed transaction? In this case the Commission reasonably interpreted this standard to mean "necessary to effectuate the purpose of the transaction." If the purpose of the lease transaction were merely to abrogate the terms of a CBA, however, then "necessity" would be no limitation at all upon the Commission's authority to set a CBA aside. We look therefore to the purpose for which the ICC has been given this authority. That purpose is presumably to secure to the public some transportation benefit that would not be available if the CBA were left in place, not merely to transfer wealth from employees to their employer. Viewed in that light, we do not see how the agency can be said to have shown the "necessity" for modifying a CBA unless it shows that the modification is necessary in order to secure to the public some transportation benefit flowing fiom the underlying transaction (here a lease).'6 As noted above, the Organizations here have not disputed the necessity of consolidating the work. Obviously, Carrier will realize greater efficiency by centralization, as evidenced by the fact that it will be able to use only 17 employees in the single facility while it requires 44 employees currently. Additionally, economies will be realized by maintaining only one facility and one inventory. Finally, turnaround time will be enhanced by the proximity to the United Parcel Service hub.

What Carrier must also demonstrate is the necessity of operating this facility under a single collective bargaining agreement, rather than multiple agreements as urged by the MEW. The record reflects that there are three IBEW Agreements covering these employees, one of which covers only two of the employees. In this regard, Carrier convincingly cites the LaRocco Award, wherein the Referee wrote:

When the shop signal repair work is commingled at Roanoke, any specific piece of work will not be readily identifiable as NW, SR or CG repair work even though the signal

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devices repaired at the coordinated facilely will originate on either the NW or the SR or their subsidiary railroad. As a result of the transaction, the NW will assume responsibility for accomplishing shop signal repairs for the entire NS system. Although the Organization acknowledges that the work at Roanoke will be commingled, it nonetheless urges us to carry forward some rules in the CG and SR Schedule Agreements and allocate Roanoke positions among the three railroads. However, complete integration of the fungible signal repair work renders it impossible for the employees who transfer from East Point to Roanoke to import any portion of the CG or SR Schedule Agreements with them. Imposing multiple schedule agreements at the Roanoke facility would not just make the coordination unwieldy but would totally thwart the transaction. The Carriers persuasively argued that they could never attain operation efficiencies if the NW had to manage signal shop work and supervise shop workers under multiple and sometimes conflicting collective bargaining agreements.

In this case, as well, Carrier avers there would be no way to distinguish what work belonged to a particular agreement. It also notes there are significant differences in some of the basic rules of the agreements. The Referee concurs that it would hamper the efficiency and economy of the consolidation if Carrier were to be required to manage 17 employees under four (or even two") different collective bargaining agreements. Cattier should be allowed to utilize the employees in the

facility without being restricted by the artificial barriers imposed by different agreements. This is one of the objectives of the consolidation. The Referee finds it significant that the 113EW was unable to cite a single case, other than the Suntrup Award, disarssed below, under New York Dock or any other protective condition where a Referee has imposed more than one collective bargaining agreement upon a consolidated work force. Thus, it is the Referee's conclusion that the adoption of a single collective bargaining agreement at the consolidated facility is necessary to effectuate the transaction.

17-Me IBEW has, in fact, asked that the B&O/IBEW Agreement be applicable to all ten IBEW jobs because it covers the majority of the IBEW jobs affected.

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The remaining question is whether the L&N/TCU Agreement is the appropriate agreement to apply. While the Referee is sensitive to the IBEW's concerns for its membership, the question must be addressed objectively. If one single agreement is going to apply, there must be some basis for selecting that agreement. The mere fact that the majority of the employees in the consolidated facility come from the IBEW craft is not persuasive. Because those ten employees are covered by three different agreements, it is evident that no single agreement covers a significant number of the employees relative to any of the others. In fact, the agreement covering the largest number of employees (five) is the L&N/TCU Agreement.

Nor is it appropriate to make qualitative judgments about the different agreements. First of all, that would not be possible in this case as the agreements were not put into evidence. Even if they were, it would be an impossible task to determine which agreement, taken in its entirety, is "the best." Some "better" provisions of one agreement may be outweighed by "better" provisions on different matters in another agreement. Furthermore, what may be beneficial for one employee may be immaterial to another. Even on the issue of sub-contracting, which was of particular concern to the IBEW, it is impossible to determine which agreement affords the greater protection to the employees because of the different factors involved.

It is apparent that the generally accepted practice among referees is to adopt the "controlling carrier" principle. In this case, the L&N is the controlling carrier as the consolidated facility is an expansion of an existing facility already subject to the L&N/TCU Agreement. This is not a new facility, as argued by the IBEW. While Carrier might have to perform substantial work to make it

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