[Federal Register Volume 64, Number 240 (Wednesday, December 15, 1999)]
[Notices]
[Pages 70116-70118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32475]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board
[STB Finance Docket No. 29430 (Sub-No. 21)]


Norfolk Southern Corporation--Control--Norfolk and Western 
Railway Company and Southern Railway Company (Arbitration Review)

ACTION: Request for comments.

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SUMMARY: The Transportation  Communications International Union 
(TCU) has filed with the Board an appeal of an arbitration panel's 
decision holding that the Norfolk Southern Railway Company (NSR) is not 
required to pay displacement allowances to claimant employees after (1) 
their work was transferred to a new location as a result of the 
railroad consolidation that created NSR and (2) they exercised their 
seniority rights to take lower paying jobs at their current locations 
rather than follow their jobs to the new location. We are requesting 
comments from the public to develop a more complete record on the 
fundamental issue raised here concerning displacement allowances under 
our labor protective conditions imposed in rail consolidation 
approvals.

DATES: Comments are due by February 14, 2000. By March 14, 2000, TCU, 
NSR, and intervener, Brotherhood of Maintenance of Way Employes, may 
file replies to the comments.

ADDRESSES: Send an original and 10 copies of comments referring to STB 
Finance Docket No. 29430 (Sub-No. 21) to: Surface Transportation Board, 
Office of the Secretary, Case Control Unit, 1925 K Street, N.W., 
Washington, DC 20423-0001. In addition, send one copy of comments to 
the representatives of TCU and NSR and to intervener, Brotherhood of 
Maintenance of Way Employes:
Mitchell M. Kraus, Christopher Tully, Transportation  
Communications International Union, 3 Research Place, Rockville, 
Maryland 20850
Jeffrey S. Berlin, Krista L. Edwards, Sidley & Austin, 1722 Eye Street, 
N.W., Washington, DC 20006
Donald F. Griffin, Brotherhood of Maintenance of Way Employes, Suite 
460, 10 G Street, N.E., Washington, DC 20002

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600. 
[TDD for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION:
    By this notice, we are requesting public comments on issues 
presented by the record on the appeal of an arbitration award issued by 
a panel chaired by neutral member William E. Fredenberger, Jr. (the 
Award).

Background

    In Finance Docket No. 29430 (Sub-No. 1), Norfolk Southern Corp.--
Control--Norfolk & W. Ry. Co., 366 I.C.C. 173 (1982), our predecessor 
agency, the Interstate Commerce Commission (ICC), approved the railroad 
consolidation that resulted in the creation of NSR. This consolidation 
was approved subject to the standard labor protective conditions 
established in New York Dock Ry.--Control--Brooklyn Eastern Dist., 366 
I.C.C. 60, 84-90 (1979) (New York Dock), aff'd, New York Dock Ry. v. 
United States, 609 F.2d 83 (2d Cir. 1979). Under New York Dock, labor 
changes related to approved transactions are implemented by agreements 
negotiated before the changes occur. If the parties cannot agree on the 
nature or extent of the changes, the issues are resolved by 
arbitration, subject to appeal to the Board under our deferential Lace 
Curtain standard of review.\1\ Once the scope of the necessary changes 
is determined by negotiation or arbitration, employees adversely 
affected by them are entitled to receive comprehensive displacement and 
dismissal benefits for up to 6 years.
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    \1\ Under 49 CFR 1115.8, the standard of review is provided in 
Chicago & North Western Tptn. Co.--Abandonment, 3 I.C.C.2d 729 
(1987), aff'd sub nom. IBEW v. ICC, 826 F.2d 330 (D.C. Cir. 1988) 
(Lace Curtain).
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    As a recent initiative in continuing to carry out that 
consolidation, NSR developed a plan to coordinate and to centralize 
certain crew calling functions performed at various locations 
throughout the merged system into a Crew Management Center located in 
Atlanta, GA. On July 3, 1996, the carrier and TCU reached an agreement 
to implement this plan (the Implementing Agreement).\2\ On May 13, 
1997, NSR notified TCU of its intention to transfer work in accordance 
with the Implementing Agreement. Specifically, the carrier announced 
that crew calling work performed on the Tennessee Division at 
Knoxville, TN, would be transferred to the Atlanta Crew Management 
Center. Positions would be abolished at Knoxville and similar positions 
would be established in Atlanta. On July 21, 1997, the carrier 
announced a similar transfer of work from the Kentucky Division to the 
Atlanta Crew Management Center.
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    \2\ TCU submitted the Implementing Agreement in pages 8-15 of 
Exh. 9 of its submission to the arbitration panel.
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    Claimants worked on the Tennessee and Kentucky Divisions before 
their positions on those divisions were abolished. Claimants were 
offered similar positions in Atlanta, carrying the same rate of pay. 
Acceptance would have required claimants to change their residences to 
Atlanta. Rather than move to Atlanta, the claimants exercised seniority 
under their collective bargaining agreement to obtain positions on the 
Tennessee and Kentucky Divisions that carried rates of pay that were 
less than the rates in Atlanta, but that did not require them to move.
    Claimants subsequently requested displacement allowances under New 
York Dock in order to recoup the difference between (1) the salaries 
they received on those divisions for the year before their positions 
were abolished and (2) their reduced salaries on the

[[Page 70117]]

Tennessee and Kentucky Divisions. The carrier denied claimants' 
requests, arguing that employees who accept lower paying jobs in their 
current locations rather than following their work to a new location, 
which would have paid them at the same level as they were previously 
compensated, are ineligible for displacement allowances under New York 
Dock. TCU then took the issue to arbitration under Article I, Section 
11 of New York Dock.
    The arbitration panel ruled that claimants were not entitled to 
benefits under New York Dock. The panel based its decision on two 
grounds: (1) that benefits were precluded by a footnote in a prior 
Board decision; 3 and (2) that claimants were not 
``displaced'' employees under New York Dock because their displacement 
resulted from their refusal to follow their work rather than from the 
transaction that created NSR. 4 The employee member of the 
panel dissented from this ruling but did not issue a separate opinion.
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    \3\ The panel referred to the first sentence of note 10 of our 
decision in CSX Corporation--Control--Chessie System, Inc., and 
Seaboard Coast Line Industries, Inc. (Arbitration Review), STB 
Finance Docket No. 28905 (Sub-No. 28) (STB served Sept. 3, 1997), 
where we stated: ``The ICC has in the past referred to the 
fundamental bargain underlying the Washington Job Protection 
Agreement of May 1936 (WJPA), upon which the New York Dock 
Conditions are based, as being that an employee must accept any 
comparable position for which he or she is qualified regardless of 
location in order to be entitled to a displacement allowance.''
    \4\ In particular, Article I, Section 1(b) of New York Dock 
provides the following definition: ``(b) `Displaced employee' means 
an employee of the railroad who, as a result of a transaction is 
placed in a worse position with respect to his compensation and 
rules governing his working conditions.''
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    TCU filed an appeal of the panel's Award. The Brotherhood of 
Maintenance of Way Employes (BMWE) filed a petition to intervene and 
tendered a separately filed brief in support of TCU's 
appeal.5 NSR replied in opposition to TCU's appeal and 
BMWE's petition.
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    \5\ BMWE argued that we must vacate the Award for the reason 
that neutral member William E. Fredenberger, Jr., was convicted of 
tax evasion in federal court in April 1999. BMWE also argues that 
the TCU claimants are lawfully entitled to benefits under New York 
Dock as displaced employees and should receive them as a matter of 
sound policy.
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    In a separate decision served contemporaneously with the 
publication of this notice, we granted BMWE's petition to intervene, 
denied a motion by NSR to reject part of BMWE's evidentiary submission, 
and denied BMWE's motion to disqualify Arbitrator Fredenberger.

Comments and Information Requested

Overview

    Under our Lace Curtain standard of review, we do not review issues 
of causation, the calculation of benefits, or the resolution of other 
factual questions in the absence of egregious error. As opposed to 
those types of issues, TCU presents a fundamental question of 
interpretation of our New York Dock labor protective conditions. 
Specifically, TCU argues that the Award fails to draw its essence from 
the New York Dock labor protection conditions by denying claimants a 
displacement allowance for exercising their seniority to take lower 
paying jobs in their current locations to avoid having to move. This 
question goes to the heart of the New York Dock bargain of allowing 
railroads to implement approved consolidation transactions while 
providing a level of protection to adversely affected employees. 
Accordingly, we will hear the appeal brought by TCU.
    This appeal raises a major issue concerning the interpretation of 
our New York Dock conditions, that is, whether employees whose 
positions are abolished as a result of a New York Dock-conditioned 
transaction may receive a displacement allowance when they exercise 
their seniority to take lower paying positions at their current 
locations rather than following their work to new locations established 
as a result of the transaction. The record currently before us 
indicates that some in the rail industry have interpreted this issue 
one way while others have interpreted it the other way. The resolution 
of this issue appears to have an impact reaching beyond the original 
parties to this proceeding. Thus, we are seeking additional comments to 
supplement the record.
    To keep the delay caused by our procedure from unduly harming 
employees if they are ultimately found eligible for displacement 
allowances, we propose to award interest on any sums owed, calculated 
from the date that any compensation should have been paid. See 
Burlington Nor., Inc.--Cont. and Mer.--St. L.-San Fran. Ry. Co., 6 
I.C.C.2d 351, 355-56 (1990). The rates of interest would be determined 
and compounded as provided in 49 CFR part 1141.6
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    \6\ See Procedures to Calculate Interest Rates, 9 I.C.C.2d 528 
(1993).
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    We are also aware that rail labor and rail management have been 
engaged in private discussions regarding labor issues related to Board 
approval of railroad consolidations. If any agreements that are reached 
pursuant to those discussions, or the discussions themselves, have 
relevance to what we are doing here, the parties are invited to advise 
us of the effect, if any, of those agreements or discussions on the 
case before us.

Issues Raised by the Parties

    Appearing below is a summary of what we believe to be the most 
important issues raised by the parties and the questions or sub-issues 
arising out of these issues. This list is not intended to be exclusive. 
Commenters are invited to discuss any other issues and to submit 
evidence bearing on them.

Article I, Section 1(b)

    Article I, Section 1(b) of New York Dock, 360 I.C.C. at 84, 
provides the following definition of a ``displaced employee':
    (b) ``Displaced employee'' means an employee of the railroad who, 
as a result of a transaction is placed in a worse position with respect 
to his compensation and rules governing his working conditions.
    NSR argues that claimants are ineligible for displacement 
allowances because they are not displaced employees under this 
provision, and that any displacement was voluntary in that they could 
have followed their work to its new location in Atlanta. TCU argues 
that claimants are displaced employees because their pre-transaction 
jobs were abolished and they were unable to exercise their seniority to 
obtain jobs with the same pay at their current locations. We seek 
comments on the proper interpretation of this provision.

Article I, Section 5(a)

    TCU and NSR seem to agree that an employee may not receive a 
dismissal allowance if the employee refuses both to follow his or her 
work and to exercise any of his or her prior seniority rights at 
all.7 TCU's position, however, is that New York Dock 
provides different rules for dismissed employees and displaced 
employees and that preserving seniority is an important consideration 
in the granting of displacement allowances. TCU relies on the following 
language in Article I, Section 5(a) of New York Dock, which provides in 
pertinent part as follows:
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    \7\ See TCU's Petition, at 3 and 10 n.4.
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    5. Displacement allowances.--(a) So long after a displaced 
employee's displacement as he is unable, in the normal exercise of his 
seniority rights under existing agreements, rules and practices, to 
obtain a position producing

[[Page 70118]]

compensation equal to or exceeding the compensation he received in the 
position from which he was displaced, he shall, during his protected 
period, be paid a monthly displacement allowance. * * * [Emphasis 
added.]
    Relying on the language emphasized above, TCU argues that an 
affected employee has a right to the ``normal exercise of his seniority 
rights'' and that the definition provision of Section 1(b) does not 
void this right.
    TCU's approach raises various subsidiary issues. Is this provision, 
with its reference to the exercise of seniority rights, intended to 
trump the general definition of ``displaced employee'' in Section 1(b) 
in determining when displacement allowances may be awarded? What is 
meant by the ``normal exercise'' of seniority rights under ``existing 
agreements, rules and practices''? Does this require observance of pre-
transaction agreements, rules and practices? Or does the language refer 
to post-transaction arrangements that are negotiated or arbitrated to 
carry out the transaction at issue?
    In its submission to the panel at 15-16, NSR responds by citing the 
ICC's refusal to modify Article I, Section 5(a) of New York Dock so as 
to insert the following phrase between the words ``position'' and 
``producing': '', which does not require a change in his place of 
residence,'' (see note below).8 We ask for comments on the 
import of this item. Does it support the proposition that there is a 
duty to relocate in every situation, or does it establish merely that 
an employee must relocate only if it is necessary for the employee to 
find a new job ``in the normal exercise of his seniority rights under 
existing agreements''?
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    \8\ If this change had been adopted, Section 5(a) would have 
read as follows (proposed addition underscored): ``5. Displacement 
allowances.--(a) So long after a displaced employee's displacement 
as he is unable, in the normal exercise of his seniority rights 
under existing agreements, rules and practices, to obtain a 
position, which does not require a change in his place of residence, 
producing compensation equal to or exceeding the compensation he 
received in the position from which he was displaced, he shall, 
during his protected period, be paid a monthly displacement 
allowance. * * *'' [Emphasis added.]
    The language was rejected by the ICC in the 1978 decision in New 
York Dock, 354 I.C.C. 399 (1978).
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Article I, Section 5(b)

    TCU also cites Article I, Section 5(b) of New York Dock, which 
provides a special restriction on the award of displacement allowances. 
Under this provision, an affected employee does not receive an 
allowance if he or she refuses to take another position that pays more 
and that does not require a change of residence.9 This 
provision raises the question of why the drafters of New York Dock and 
its predecessors would have carved out such a narrow class of employees 
who would be ineligible for displacement allowances, specifically 
mandating that the promotion not require the employee to relocate, if 
they had intended to deny allowances to everyone who refuses to follow 
his or her work for whatever reason.
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    \9\ The language of this provision does not ``deny'' a 
displacement allowance but provides that the employee will be 
treated as ``occupying the position he elects to decline.'' The 
effect on the employee appears to be the same (no payments).
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The Implementing Agreement

    During the arbitration, TCU alleged that the Implementing Agreement 
ensures that employees assigned to the Atlanta Crew Management Center 
may exercise their pre-transaction seniority rights to avoid moving to 
Atlanta. TCU cited Article III of the Implementing Agreement. Also, 
Article II, Section 5 of the Implementing Agreement allows affected 
employees to bid for positions under ``former seniority roster(s).'' 
These provisions are silent, however, as to whether this means that 
employees may always exercise their seniority rights as they choose 
without risking loss of compensation under New York Dock. What is the 
effect of these provisions?

Merger Efficiencies and Effects on Employees Under New York Dock

    NSR argues that TCU's approach would effectively negate many 
operating efficiencies of railroad consolidations. The carrier asserts 
that TCU's approach would create unprecedented chains of bumpings and 
displacements, with each employee in the chain receiving a displacement 
allowance.
    We seek comments on NSR's position on this issue. Would TCU's 
approach actually create unusual chains of bumpings and displacements 
or a need for carriers to hire extra employees when affected employees 
displaced junior employees without relocating? Have such results been 
avoided in practice for various reasons? 10 Evidence 
pertaining to actual practice on NSR and throughout the rail industry 
would be helpful in answering these questions. Even if NSR's position 
is valid in other contexts, can NSR claim that the economies of the 
merger would be destroyed here in view of its apparent agreement in the 
Implementing Agreement that affected crew calling employees may 
exercise prior seniority rights?
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    \10\ Has the effect on carriers typically been mitigated through 
practices such as the dismissal or relocation of junior employees 
who were unable to displace anyone, carrier elimination of the 
positions into which the employees chose to displace rather than 
move, or the creation of new positions to stop chains of bumpings?
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Industry Practice Under New York Dock

    TCU and BMWE submit statements from union officers alleging that 
common rail industry practice has been for carriers to grant 
displacement allowances to employees seeking to exercise their 
seniority to take lower paying positions in their pre-merger seniority 
districts. NSR does not dispute these statements insofar as they apply 
to practices of other railroads, but responds that its own practice has 
been to deny displacement allowances in this situation.
    We seek more definitive information as to the extent to which 
carriers have granted displacement allowances to employees who have 
exercised their seniority to take lower paying positions rather than 
following their work to locations that would require them to move. 
Especially useful would be examples of implementing agreements, 
testimony about specific situations where displacement allowances may 
have been granted in this situation with or without the need for 
arbitration, and testimony from knowledgeable industry and labor 
officials about general practice.

Arbitration Precedent

    In the case before us, employees affected by a transaction 
exercised their pre-transaction seniority rights to take lower paying 
jobs at their pre-transaction location rather than follow their work to 
a new location where they had no seniority rights before the 
transaction. Are precedents cited by the parties involving situations 
where the employees affected by a transaction declined the opportunity 
to move to accept jobs for which they did have seniority rights before 
the transaction useful with respect to our consideration of the present 
case?

    Decided: December 8, 1999.

    By the Board, Chairman Morgan, Vice Chairman Clyburn and 
Commissioner Burkes.
Vernon A. Williams,
Secretary.
[FR Doc. 99-32475 Filed 12-14-99; 8:45 am]
BILLING CODE 4915-00-P