On July 23, 1998 the Surface Transportation Board (hereinafter the ^9TB^) aesued an order authorizing CSX Transportation, Inc. (hereinafter "CSXT^), Norfolk Southern Railway Company (hereinafter "N&R^) and the Consolidated Rail Corporation (hereinafter "ConraiiO or "CRC^), referred to collectively as the "Carriers°, to enter into a Transaction which would result in the allocation of certain Conrail rail lines and facilities to C&XT and NSR; and which would allow Conrail to continuo to operate certain

properties, known as the shared Assets Areas (hereinafter the ^9AAa").

In accordance with that authorization the Carriers served notice on representatives of the labor organizations of the variov^ crafts and classes employed by the Carriers to consummate the Transaction pursuant to Article I, Section 4 of the so-called New York Dock (New York Dock Railway - Control - Brooklyn Eastern District Terminal, 360 I.C.C. 60) employee protective conditions. Included among the Organizations receiving the Article I, Section- 4 notices were the Brotherhood of Railway Carman Division of the. Transportation Caamunications International Union (hereinafter the "13RCw) and the 'transport Workers Union of America (hereinafter the "TWU"). These notices were served on August 31, 1999. The two organizations represented Conrail's Carmen as a result of an historical "split" of representation of the Carman craft or class, which "split" existed as the result of the 7wU's representation of Carmen on the former Penn Central Railroad and the BRC's representation of Carmen on the other component railroads which became part of Conrail in 1976.

The Carriers and the 'I1dU and the BRC engaged in negotiations regarding the development of implementing

agreements which would govern :ertain subject matters, including, inter alia, Conrail C~.rmen's seniority and the rates of pay, rules and working conditions which would apply to scone or all of them subsequent to the effective date the Transaction was consummated.

The parties (hereinafter the "Carriers", the "SRC" and the "TRIl") concluded their negotiations on October 16, 1998 with the signing of an implementing agreement (hereinafter the "Negotiated Agreement"). The T11U advised the Carriers at the signing of this Agreement that the Agreement would have to be ratified by its membership.

When the Negotiated Agreement: failed ratification, an arbitration proceeding pursuant to the New York Dock conditions was initiated. The below-signed Arbitrator was selected to hear the parties' respective positions, to constder relevant"-evidence and to decide the issues in dispute. The parties filed extensive pre-hearing snbmiasions which were received on or about January 15, 1999, and an arbitration hearing was conducted on January 22, 1999 at the Lida Holiday inn in Sarasota, Florida.

Counsel for the parties entered their appearances as follows:

The parties file& rebuttal briefs and summaries of their arguments on or about February 2. 1999.

Most, it not all, of the relevant background facts regarding the nature o! operations to be performed by each of the Carriers, as those operations would impact the Carnwn's craft or class, as well as the history of the parties' negotiations are subsumed in the positions of the

parties which are articulated below. Thus they wi.1 not be repeated in this section of the Opinion and Award.

The Carriers point out that the STSIs Order authorized CSXT, NSR, and Conrail, together with their corporate parents, to undertake certain ST8-regulated transactions that will effect a major restructuring of their existing rail systems. The Carriers further point out that when the Transaction is consummated, CSXT and NSR each will obtain exclusive use and operation of principal parts of Conrail's system, and that Conrail will continue to operate limited

benefit of CSXT and NBR. The Carriers found that the Transaction would

The Carriers state that they seek imposition of the October 16, 1998 Negotiated Agreement, which the 13RC agreed to and continues to support, and which the TttU also agreed

organization's members. The Carriers assort that the Negotiated Agreement will enable the Carriers to carry out the Transaction and realize the public transportation

areas for the joint

submit that the ST8

provide substantial

benefits intended by the STB, while being fair tit employees. The Carriers' rely upon their four part prehearing submission, which they contend demonstrates the changes to collective bargaining agreements which are necessary for the Transaction.

The Carriers submit that an Article I, Section 4 arbitration is conducted before a neutral referee who acts as a delegate of the STS and is bound by that agency's rulings and precedent. The Carriers point out that the conditions direct the referee to "fashion a solution that is 'appropriate for application in the particular case.'.; and cite American Train Dispatchers Assn v. ICC, 26 P.3d 1157 (D.C. Cir. 1994) in support of this contention. The Carriers maintain that a New York Dock referee has no jurisdiction, absent consent of the parties, to modify, enhance or depart from the terms o! the New York Dock conditions.

The Carriers contend that it is well-settled that a New York Dock referee is empowered to modify existing labor agreensants as necessary to implement the STS-authorized transactions, and cite Railway Labor Executives Ass'n v. United States, 987 F.2d 806 (D.C. Cir. 1993) in support of this contention. The Carriers argue that the STS recently

reaffirmed this principle in CSX - Control - Chassis Sysand Seaboard Coastline, Finance Docket No. 28905 (Sub. No. 22) (Sept. 22, 1998), commonly referred to as Carmen III, in which the STS explained that the authority to modify agreements extends to effectuation of operating changes and coordinations that are directly related to, or flow from, the principal transaction, and that modification of a labor agreement is justified if it is necessary to the achievement of the public transportation benefits upon which the STS,a approval was based. The Carriers assert that in the instant Transaction, Referee William Fradenberger, applying these standards, adopted an implementing agreement for maintenance of way work that modified the applicable Conrail agreement in ways that are similar to the terms of the Negotiated Agreement.

The Carriers argue that the Negotiated Agreement contains the necessary features of a New York Dock implementing agreement and reflects the best judgment of the parties# skilled negotiators: and that the Negotiated Agreement was the product of lengthy debate and considerations, regarding what changes to collective bargaining agreements were necessary for the Transaction. The Carriers submit that the Negotiated Agreement also

follows a pattern agreed to by the five other shopcraft unions. The carriers contend that the implementing agreements entered into by these unions are identical to the Negotiated Agreement in their fundamental terms, providing for the permanent allocation of Conrail employees among CBXT, NSR and Conrail/SAA: the realignment of the Conrail property into CSXT and NSR seniority points: and application of a CSXT or NSR shopcraft agreement to the allocated lines.

The Carriers maintain that the Negotiated Agreement itself is the best evidence of the changes that are necessary and appropriate to realization of the benefits of the Transaction. The Carriers point out that New York Dock referees uniformly defer to the judgment of the parties' negotiators, and impose negotiated agreements in instances where- the --agreement--- is not ratified- by the union's leadership or membership.

In any event, the Carriers submit that the Referee should adopt the Negotiated Agreement because, as the Carriers demonstrated in their submission, the changes to collective bargaining agreements effected by the Negotiated Agreement are necessary to realization of the benefits made possible by the Transaction.

The Carriers argue that the threshold issue is the permanent allocation of Conrail's workforce among CSXT, NSR and Conrail, as operator of the SAAs. The Carriers point out that the New York Dock conditions do not prescribe a formula for workforce allocation; and further point out that the Referee is charged with adopting or fashioning a mechanism that is "appropriate" to the transaction, again citing Carman III and ATDA v. ICC. The Carriers submit that the allocation proposal that they have presented is straightforward and meets the Carriers' operational needs, while minimizing the in"ct on employees; as each employee is permanently allocated exclusively to one of the Carriers on the basis of the esployee,s reporting work location as of "Day One^. The Carriers maintain that this approach (1) minimizes operational disruption and employee relocations, (2) represents the allocation methodology the-Carriers, 13RC and TWU agreed to in negotiations and (3) is the same as that adopted by all the other shopcraft Organizations and incorporated in their agreements.

The Carriers contend that the Negotiated Agreement addresses changes to collective bargaining agreements necessary for the consolidation of CSXTI9 operations with the Conrail lines and workforces allocated to it.

CSXT asserts that there are four principal aspects to the Negotiated Agreement as it relates to CSXT. First, Conrail freight cars and locomotives allocated to CSXT will be integrated into CSXT's existing fleets, and managed and operated on a system basis without regard to prior railroad ownership. CSXT submits that such integration will improve service, as well as reduce costs, by permitting the more efficient utilization of cars and locomotives throughout CSXT's expanded systsm. CSXT contends that in order to fully integrate the fleets, it must be able to utilize its workforce and allocated Conrail Carman as a unified workforce. To achieve these benefits, CSXT points out that it will apply the existing CSXT Carmen collective bargaining agreement applicable to the former Baltimore and Ohio Railroad ("BGo Agreement~) to employees working on alloaatedrConrail..lines, except at Toledo, where the former Chesapeake and Ohio Railway ("Cio Agreement) will be applicable.

Second, CSXT submits that it will gain efficiencies by integrating Conrail's existing Carmen workforce with CSXT's Carman workforce, through the application of CSXT agreements to the former Conrail territories. CSXT submits that application of CSXT agreements will enable it to

are being fragmented in the

CSXT from assigning employees

avoidance of train delays is necessary it CSXT is to become

more cxalpstitive with other rail carriers and trucks, one

of the public transportation benefits of the Transaction

aaaociate4l with hiring additional employees. CSXT maintains that this same flexibility also produces coat savings by enabling CSXT to reduce the amount of equipment and facilities it must maintain.

Third, CSXT asserts that it will realize efficiencies of the Transaction by consolidating heavy freight car repair work for the Conrail cars allocated to CSXT at CSXT's existing shop facilities. CSXT points out that Conrail performs such work at its car repair facility at Hollidaysburg, Pennsylvania, which shop is located on lines allocated to NSR: and that CSXT's existing shops have sufficient capacity to meet CSXT's foreseeable needs. CSXT further points out that the consolidated work will be performed pursuant to the CSXT agreements currently

under a single collective bargaining agreement, substantial efficiencies that constitute transportation benefits.

Fourth, CSXT points out that it will consolidate heavy locomotive repair work at CSXT's existing locomotive repair facilities; and that Conrail performs such work at its shops in Juniata, Pennsylvania and Selkirk, New York.

CSXT further poi).ts out that it is not obtaining the Juniata shop becsuse it is on allocated Conrail lines, which will be operated by NSR. CSXT submits that, while the Selkirk shop is allocated to CSXT, it does not have the capability to perform heavy locomotive repair work of the magnitude performed at the Juniata shop. CSXT submits that its Huntington and Waycross shops have sufficient capacity to handle heavy repairs for CSXT's expanded locomotive fleet. As with the consolidation of heavy freight car repair, CSXT submits that the benefits of such consolidation are well-recognized.

CSXT concludes that each of the changes in existing agreements made by the Negotiated Agreement are necessary to realize the efficiencies of the Transaction. CSXT points out that these changes include efficiencies derived from an integrated freight car fleet, consolidation of heavy and programmed shop work and better utilization of

maintenance utilization

described in CSXT's Operating Plan and anticipated as a result of the Transaction.

Finally, CSXT argueu that the Negotiated Agreement contains benefits and features that represent a balancing of interests of the involved parties which exceed what is required under New York Dock, and which a New York Dock referee woulcA not otherwise have the authority to impose, but which the Carriers are willing to accept if the Negotiated Agreement is adopted in its entirety. CSXT contends that the Negotiated Agreement also preserves "rights, privileges and benefits" as required by the Now York Dock conditions.

NSR points out that it also plans to maintain its existing and allocated cars and locomotives as part of an integrated fleet. NSR asserts that to gain the efficiencies resulting from this arrangement, NSR must operate the integrated fleet under NSR's existing management structure and consistent with its existing equipment maintenance and repair operations.

NSR submits that it will achieve operating efficiencies by consolidating and realigning the former Conrail property into seniority points under NSR's existing agreements, consistent with the point seniority system in

effect throughout NSR's system. NSR points out that it will operate the bulk of its allocated lines under the terms of a Norfolk t Western shopcraft Agreement. NSR also points out that it will operate certain common point locations under the terms of the Nickel Plate Shopcraft Agreement, and one common point location under the terms of the former Southern Railway Shopcraft Agreement. NSR asserts that these agreements will support an integrated car and locomotive fleet through the application of scope and work rules that are consistent with NSR's proposed operations, and with the terms of New York Dock implementing agreements reached with the other five shopcraft labor organizations.

NSR submits that it also will achieve efficiencies in its Mechanical Department operations by consolidating work

&tive facili~t'~es. _.__ NSR points out that its existing and allocated lines adjoin at numerous

NSR and Conrail currently maintain for performing light and running NSR submits that it will establish

locations, where both forces and facilities repairs of rail cars.

the use of employees and repair equipmert and eliminating duplicate costs associated with redundant Facilities.

NSR points out that it intends, among other things, to change its heavy car repair operations to make the best use of its existing and allocated facilities. To maximize efficiency in the performance of heavy car repair after Day one, NSR points out that it will (1) consolidate most program car repair work for the integrated NSR car fleet at Conrail's Hollidaysburg heavy freight car repair shop, (2) consolidate freight car reclamation work at its car shop in Roanoke, and (3) perform most rebodying, new car construction and component fabrication work for the expanded system at Roanoke. NSR submits that its proposed consolidation is consistent with, and dictated by, the capabilities of these shops.

ASR -.-states- . it- also plans to,-y=Xsase efficiencies through functional spe=alization of its heavy locomotive repair work. NSR states that it intends to use the Juniata Locomotive Works at Altoona to perform locomotive overhaul and component rebuild work for locomotives manufactured by General Motors, and to use the Roanoke Shops to perform such work for loccmotives manufactured by General Electric.

Given the structure of the Transaction, NSR maintains that it would be inefficient and counterproductive for- NSR to attempt to operate its allocated properties by adopting Conrail's existing labor agreement with TWU; and that the Conrail collective bargaining agreement segments Conrail's properties along lines that bear no relationship to NSR's restructured operations and workforcee, and its imposition on NSR'e expanded operations would frustrate NSR's ability to achieve needed efficiencies.

NSR points out that, for example, Conrail has. 18 seniority districts for its Carmen, defined by mileposts, many of which will be fragmented by the Transaction. NSR argues that the fragmented seniority districts on the Conrail lines allocated to NSR are incompatible with the organization of Carmen work on NSR generally and NSR's point seniority system specifically. NSR submits that if the Conrail Agreement and fragmented seniority district systas were applied to NSR's allocated properties, NSR would not be able to make efficient use of its available workforce and equipment to respond when and where operating equipment repairs are needed and would be forced to keep redundant operations and equipment.

The Carriers point out that Conrail will operate t'ja SAAB for the benefit of CSXT and NOR: and that Conra:.l will no longer own revenue-service freight cars and will no longer perform the heavy repair work it currently performs. The Carriers further points out that Carmen on Conrail will only perform routine, day-to-day Carmen work, such as light running repairs and mechanical inspections of freight cars; and that Conrail will operate the SAM under the terms of its existing agreement with TWU and SRC, with modifications necessary to reflect the narrower scope of Conrail's operations and properties. The Carriers points out that each SAA will became a separate seniority district under the Conrail Agreement, by realigning or combining certain Conrail seniority districts so that each corresponds to the boundaries of a SAA; and that a single roster will exist in each 3AA, with-seniority dovetsiled where the now district results from the combination of portions of more than one Conrail seniority district. To the extent Conrail has a need to perform any work beyond the routine day-today work it is equipped to perform, the Carriers points out that Conrail will contract with CSXT or NOR to perform that work.

Carriers state that TiiU represented at the its revisions addressed the Carriers'

concerns, and that the only issue remaining was whether the Conrail Agreement should continue to apply at non-common point areas on line allocated to CSXT or NSR.

The Carriers argue that TtoU's proposal was hastily conceived and revised, contains ambiguities and conflicts and is inconsistent with TWU's representations at the hearing; and that the proposal, among other shortcomings, (1) fails' to eaau~'~)ie permanent-division of Conrail maployaes among NSR, C8XT, and Conrail/8AA, (2) fails to ensure that CSXT and NSR can each integrate their existing and allocated equipment fleets, (3) fails to eliminate all the restrictions on coordinating work arising from the -Conrail scope rule and (4) fails to provide necessary flexibility in the performance of line-of-road repairs. In light of these !sets, the carriers argue that 'I'ce's

is designed to permit the

among the Carriers in

described in the October

as Carman will be divided

the -effective date of the

agreement and for the Conrail/SAA territories; and also agrees to the application of the designated CSXT and NSR collective bargaining agreements at the Common points and to application of the TNU/BRC-Conrail agreement for Conrail/SAA with the modifications described in the Negotiated Agreement.

Thirdly, TRU states that its proposal recognizes that the Carriers will consolidate heavy freight car and locomotive repair and overhaul work at the large centralized facilities as indicated in the August 31, 1998 New York Dock notice, and states that it agrees that work will ba done at those facilities under the agreements applicable at those facilities without regard for the pretransaction ownership of the freight cars /locomotives.

Fourthly, TRU states that it recognizes that the Carriers plan to integrate their locomotives and freight cars into single fleets and to perform locomotive and freight car maintenance and repairs at the CSXT and NSR facilities that are most convenient and appropriate; and further states that 1t agrees that work on those locomotives/cars will be performed under the agreements in

, non SAA facilities/territories.

Agreement provisions,

continuation of the

non-9AA areas. TiiU

rules ouch as scope,

which rules would

and locomotive fleets

ownership. Additionally, TWU points out that it has proposed- to. waive block truck/road -t>auek rules including prior rights rules as to block trucks that would require assignment of Carman to block truck/road truck work based on agreement seniority district or local shop block truck territories. TWU points out that it has indicated that it would agree to the training of NSR new hires at NSR's

Turning to the issue of the "legal framework" applicable to a New York Dock proceeding regarding employee protective conditions, TWU contends that the state of the law, established in decisions by the United States Court of Appeals for the District of Columbia Circuit, provides that "rights, privileges and benefits are immutable" and "preserved absolutely . TWU argues that such rights, privileges and benefits are properly viewed as including fringe benefits and ancillary emoluments, such as vested and accrued benefits including life insurance, hospitalization, medical care, sick leave and similar benefits. (UTU v. 8T1, 108 F. 3`° at 1430). TWU asserts that the content of rates of pay, rules and working conditions has not been determined, and the degree to which they may be affected has also not yet been determined.

-----T~IU argues that-collective bargaining agreement terms, other than "rights, privileges and benefits", are presumptively or qyalifiedly preserved, and citing RLEA v.

Therefore, TNU contends that the public transportation benefit must derive from the transaction itself, a change in operations that intrinsically benefits the carrier Ln

terms of more direct routes, reduced terminal delay, more single? line service, consolidated facilities; and when application of a collective bargaining agreement provision would prevent the transaction, it might be necessary to override the agreement to allow implementation of the operational change that would benefit the public. TWU maintains that there may be no override where alleged benefits do not flow from an actual transaction and/or rearrangement of forces; or when the override is merely to increase flexibility, to reduce administrative costs, to lower labor costs or to eliminate inconvenient work rules based upon the notion that there is an indirect benefit to the public by "trickle down of lower rates as the result of lower labor costs.

TWU next discusses the import of the decision of the 8TH ifs the case known=as^-"Careen IIIIE. -- TWU points out that this decision is significant in the instant case insofar as there is a dispute regarding matters where there is no actual consolidation of facilities or coordination of work. TWU points out that the STE! noted that in Carmen II the Interstate Commerce Commission (hereinafter the "ICC") stated that Article I, section 2 of the New York Dock conditions could not realistically be interpreted as

qualification whatsoever, but that 11 be respected and not overridden permit an approved transaction to

proceed"; and that while collective bargaining agreements may have to "yield to allow implementation of an approved transaction", under Section 11347 of the Interstate Commerce Act and the employee protective conditions, collective bargaining agreements and the Railway Labor Act were only required "to yield to permit modification of the typo traditionally made by arbitrators under the wJFA [Washington ,Job Protection Agreement] and the ICUs conditions from 19d0-1980." TRU points out that the STH stated that "[t]ho implementing agreements imposed in arbitration under labor conditions that antedated New York Dock --gono-ially -d" on- selection of forces and assignment of work"; and that "(I]f the 19d0-1980 arbitrators felt themselves bound by these terms (selection of forces and assignment of employees], they must have defined thorn broadly enough to include contract changes involving the movement of work (and probably employees) as well as adjustments in seniority".

Secondly, TWU submits that the STH found that an

necessary to carry out the detertninationso are to be arbitrators, who should

operational needs of the preserve pre-Transaction

with the need to

and who "should

not assume that all pre-Transaction labor arrangements, no matter how remotely they are connected with operational efficiency or other public benefits of the transaction must be modified to carry out the purposes of the transaction". Thirdly, TWIT iterates that the STH has held that "rights, privileges and benefits must be preserved^.

In summary, TWU submits that under Carmen III contract rights may have to yield to allow implementation of an approved transaction, but they must be respected and retained unless an override is necessary to permit the approved transaction to proceed, and they may be required to yield only to permit overrides of the type engaged in by Washington Job Protection Agreement (hereinafter %%WJPAN) arbitrators.

TWU contends, contrary to the assertions of the Carriers, that a chan~W to make the railroad more efficient is not itself a Transaction or a transaction to implement a principal Transaction. TWU argues that a consolidation of tyro facilities or a coordination of work of previously

-separate territories .may be a transaction to implement a merger and allow unified operations, but a change in the way work is performed or a change in rules and working conditions in itself is not a transaction. TWU maintains

that a collective bargaining agreement modification is necessary when it is required to obtain a transportation benefit growing from the transaction that is unrelated to the agreement modification itself.

Turning to an analysis of Article I, Section 2 of the New York Dock conditions, TWU maintains that this provision, by its express terms, preserves both rates of pay, rules and working conditions as well as rights, privileges and benefits. TWU submits that under D.C. Circuit Court case law, rights, privileges and benefits are preserved absolutely, whereas rates of pay, rules and working conditions are presumptively preserved; and, while collective bargaining agreement provisions are generally preserved, they may be overridden only for a transaction

with

and

to

.STS held that it was not explicitly Or implicitly approving

the carriers, operating plans or any collective bargaining

agreement overrider that the Carriers claimed ware

necessary to their operating plans: and that arbitrators were to make their own determinations regarding such matters.

TWU further points that in Decision No. 101 the STB defined necessity for override of contractual rights in an analogous situation, a claimed Section 11321 override of a Rail Reorganization Court order granting certain contractual rights to the Providence and Worcester R.R.

the a:tent necessary to permit the CSX/NS/Conrail transaction to go forward. In other words, our preemption was only to the extent that the Special Court order could be read to block this transfer [Conrail to CSX]." TWU maintains that similarly, in the instant case, there may be no override unlois tlri -contract provisions would block the Transaction or a follow-on transaction.

TWU contends that its proposal should be adopted because it accomplishes what ie required of an implementing arrangement, and it accommodates the Carriers' proposed operational changes by providing for .collective bargaining agreement overrides to permit those changes, but preserves the agreement rights of employees to the greatest extent

possible. TWU submits that its proposal accomplishes the selection of forces and assignment: of all employees required as a result of the principal Transaction by allocating Conrail employees among the Carriers in accordance with the eeployeea, pre-split assignments; and that it does so in the manner agreed to by all parties previously in the Negotiated Agreement. TRU submits that its proposal adopts the Negotiated Agreement "as ism for the consolidations and coordinationo of work and related agreement changes for "common points"' and BAAs.

continues Agreement

responsibility, block-trucks, use o! the McDonough Training Center), TRU has waived agreement rights even in circumstances it was not required to do no.

Accordingly, TWU maintains that its proposal provides a fair and appropriate method for selection of forces and assignment of employees required for the principal Transaction and follow-on transactions, and permits the agr®ament changes nea:essary to effect the selection of forces and assignment of employees.

By contrast, T1R7 submits that the Carriers' proposal far exceeds what is needed for the selection of forces and assignment of employs required for the Transaction or transactions. TWIJ points out that the Carriers would modify collective bargaining agreement coverage for noncommon points, non-BAi6 employees even though substitution of the NSR and CSXT collective bargaining agreements for the Conrail collective bargaining agreement is (1) unrelated to the method by which such employees are allocated among tlfi .harriers and' (2)---unrelated to any coordination of work or combination of employees.

Based upon the foregoing facts and arguments, TtrU

The BRC also tiled a submission in this case and assumed a non-adversarial, "neutral° position insofar as the dispute between the Carriers and the TWU is concerned regarding the retention of the TRU/SRC-Conrail collective bargaining agreement.

The BRC's position is found in a single paragraph on page 2 of its submission, which paragraph reads as follows:

While the BRC reserved the right to attend the arbitration hearing and did so, and reserved the right to "COSmtent" upon the Carriers' and THU'S proposed implementing agreements, the t3RC remained neutral and did not favor one proposal or the other.

The Transaction in this case, to this Arbitrator s knowledge, is reasonably unique. Two profitable railroads were given the right to acquire the majority of another profitable railroad, for the stated purpose of increasing competition in a geographic region of the country. Conrail, the railroad being acquired, retained certain limited geographic locations known as the SAAB, and at those points the Conrail collective bargaining agrewnents are to remain in fort! and effect.

The evidence in the record establishes that the

regarding

As noted in the above sections of ~this opinion, the Carriers and the BRC and TwU entered into a comprehensive

that would apply to

classes who would be

would remain employees

This Negotiated Aq_relmont_ is contained in. a fifteen page

Implementing Agreement, with Attachment A, the NSR

Seniority Points with Active Rosters, and Attachment B, the

CSXT Seniority Points with Active Rosters. The parties

These Side Letters of Agreement preserved for Conrail

Conrail employees represented by the TwU and and CSXT's "current 401 (k) Plans" (Side Latter

Conrail employees "currently employed on any agency or former Monongahela Railroad" to "seniority is the same manner they could have,

acquisition of Conrail by NSR and CSXT not occurred" (Side Letter No. 10). In tact, there is no issue before this Arbitrator as to whether any rights, privileges and benefits ...:ol: Conrail amployeas hew not been preserved "absolutely" through the medium o! the October 16, 1998 Negotiated Agreement.

During the course of the parties' oral arguments questions were raised regarding the relative value of the CSXT and N$R collective bargaining agreements via-a-vie the HRC/TNU-Conrail collective bargaining agreement. r ,

The TNU has urqed this Arbitrator to consider the declaration of Mr. John Czuczman, TlnUFa vice President and Director of its Railroad Division, and a chart which is captioned "Impact on Conrail Maintenance of Equipment Employees (TWU/BRC-Carmln) with imposition of N4W Agreement on N& Operated Formraw Conrail Property and Imposition of CSXT (BGO) Agreement on CSXT Operated Former Conrail Property" (TIRJ Exhibit Nos. 20 and 21) in support of its assertion that applying the NSR and CSXT collective bargaining agreements to Conrail employees at non-common points, non-sAA areas would result in an adverse impact upon said employees.

While Mr. Czuczman has proffered a well-developed and thoughtful analysis, this Arbitrator is not prepared, in the context of the record evidence, to make value judgments, even if' iuC~i- axercise-%raa proper; regarding the relative value of similar or reasonably similar provision in the "competing" collective bargaining agreements. Such comparisons would be difficult at best: and reaching subjective decisions as to which provision is more valuable to one employee as opposed to another could not, in this Arbitrators opinion, be assessed in quantitative or qualitative terms.

A foundation principle which has been uniformly applied by arbitrators/referees in cases involving the integration of union-represented employees when corporate entities are involved in consolidations, mergers and/or acquisitions is to ensure, in light of all of the factual circumstances, that the selection and allocation of workforces and the integration of employees' seniority is "fair and equitable". The preponderant evidence of record in this case satisfies this Arbitrator that the Carriers' proposal, imposition of the Negotiated Agreement, is a fair and equitable manner for such selection and allocation of srorkforces. This Arbitrator's view is buttressed by the fact that all of the shopcraft labor organizations as well as the other labor organizations on the properties have agreed to virtually identical implementing agreements.

~fho only isue-TI-9whether the'Carriers have presented sufficient evidence to persuade the Arbitrator that the application of the NSR and CSXT collective bargaining agreements at the non-common points and non-SAA areas constitute an operational necessity, consistent with the underlying purposes of the Transaction authorized and ordered by the STE in Finance Docket No. 33388.

combined systems. The primary concern of CSXT and the potential inability to assign German to perform

place where the repairs are needed, which inability would potentially result in the delay of trains. The Carriers haw also relied upon a decision by Arbitrator William Fredenberger issued on January 14, 1999 in a New York Dock Article 1, Suction 4 arbitration involving the Carriers and the Brotherhood of Maintenance of-7lay-Fmployes-and arising out o! the same STB Finance Docket as here under

for maintenance of way employes met the tests set forth by the ST8 in Carmen III and that a jurisdictional position taken by the International Association of Machinists and Aerospace Workers (hereinafter the "IM&JW") regarding the representation of thirty-eight IAM&AW-represented Conrail employees was not sustainable, this Arbitrator is not prepared to consider the F'redenberger Award controlling in view of the TWU's assertion in its rebuttal submission that the Fredenberger Award is "to be appealed m, and is allegedly `inconsistent with D.C. Circuit and STS precedent».

In responding to the CSXT's and NBR's concerns regarding their ability to efficiently assign Carmen at non-conmon points, non-&AA areas, the TWU has revised its initial proposal and asserted that these revisions would meet tlii--Carriers~-aileged operational needs.- However, this Arbitrator is not sufficiently persuaded that the evidence of the necessity or lack thereof to override the 8RC/TWU-Conrail collective bargaining agreement at the noncommon points, non-SAA areas is anything more than evenly balanced: Much of the arguments and "evidence" submitted by the Carriers and the TWU fall into the realm of conjecture and speculation, particularly insofar as the

and CSXT's operations would be purposes _ of -the M's order in There is no reason to believe

that these negotiators would have accepted the CSXT's and N8R's collective bargaining agreements if they did not believe that the now arrangements benefited the employees they represented in the context of the principal Transaction. In exchange for their agreement, TwU/6RC representatives and the representatives of the other

shopcraft organizations received substantial and generous quid pro quo$ reflected in the implementing agreements and

evidence as Carrier Exhibit No. A-1 (the Negotiated Agreement) and Carrier Exhibit Nov. E-1, E-2, E-7, E-9 and E-13, the implementing agreements entered into between the Carriers and the National Conference of Firemen and Oilers, the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, the International Brotherhood of Electrical Workers, the Sheet Metal Workers International Association and the International Association of Machinists and Aerospace Workers.

After full consideration of the record evidence and the parties' pre-hearing submissions, their oral arguments and post-hearing rebuttal submissions, this Arbitrator concludes that pursuant to the provisions of the New York Dock conditions that he has jurisdiction to impose and will impose the Negotiated Agreement as the full and complete agreemsmt, governing the manner by which Conrail employees represented by the TRO-BRc will be integrated into and covered for purposes of collective bargaining when they assume employment with the CSXT and NBR.

-- CONTROL AND OPERATING LEASES/AGREEMENTS--

CONRAIL, INC. AND CONSOLIDATED RAIL CORPORATION

SERVICE DATE - APRIL 29, 1999

SURFACE TRANSPORTATION BOARD

Vernon A. Williams

Secretary