Petition for Writ of Certiorari — Missouri-Kansas-Texas Railroad Co. Co. v. Brotherhood of Locomotive Engineers (Nos. 85-793, 85-792)
Supreme Court brief1985
Ask Donna
What actually matters in this document.
Text
:
85-793 ~
Supreme Court, U.S.
FiLED
NOV 7 1995
JOSE?:1 F. SPANIOL, JRL
CLERK
No. 85-
IN THE
Supreme Court of the United States
October Term, 1985
MISSOURI-KANSAS-TEXAS RAILROAD COMPANY,
Petitioner,
V.
BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND
UNITED TRANSPORTATION UNION,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
DISTRICT OF COLUMBIA CIRCUIT
Joseph L. Manson, III
(Counsel of Record)
Ronald B. Natalie
Verner, Liipfert, Bernhard
McPherson & Hand, Chartered
Suite 1000
1660 L Street, N.W.
Washington, D.C. 20036
(202) 775-1088
Michael E. Roper
701 Commerce Street
Dallas, Texas 75202
(214) 651-6741
Date: November 7, 1985
QUESTION PRESENTED
Whether the Interstate Commerce Commission, when approv-
ing a transaction pursuant to 49 U.S.C. §§11343 and 11344, is required
to make specific findings of necessity pursuant to 49 U.S.C §1134l(a)
in order to exempt the carriers participating in the approved transac-
tion from the requirements of the Railway Labor Act (45 U.S.C.
§§151-160 (1982))?
LIST OF PARTIES
Brotherhood of Locomotive Engineers and United Traasporta-
tion Union were petitioners in the case below in the District of Colum-
bia Circuit Court of Appeals.
Interstate Commerce Commission and United States of Ameri-
Ca Were respendents.
Missouri-Kansas-Texas Railroad C ompany. Denver & Rio Grande
Western Railroad Company. Missouri Pacific Railroad Company. and
Union Pacific Railroad Company were intervenors in support of the
Interstate Commerce Commission.
TABLE OF CONTENTS
Page
ck wanes ueccesease es <a
dis cu cnc s cues eeousccehscecet st ii
Ne occ dd diac vice ces tesex a ee
ee i cw ucsbecssaceunde: V
es on edb ddcceecvesea |
EE <i. oe
ee ED MPUOUMEIOEEED ss cece sce nccen: a 2
lV. STATEMENT OF THE CASE............. eases 2
Vv. REASONS FOR GRANTING THE WRIT ....... 10
A. The Court of Appeals’ Interpretation
of 49 U.S.C. §$11341(a) Is At Odds With
The Legislative History And
Unambiguous Language Of The Statute
And Is Irreconcilable With The
Decision Of This Court in
Schwabacher v. United States ...... 2... ... _
B. The Judgment Below Conflicts With
Decisions Of The Sixth And Eighth
Circuit Courts of Appeal And Creates
A Split Of Authority That Calls For
An Exercise Of This Court's Power
EE ES OORT TEE 13
C. The Judgment Below Overrules
Without Justification A Longstanding
Interpretation Of The Interstate
Commerce Act By The Interstate
Commerce Commission .................. 15
VI. CONCLUSION 17
TABLE OF APPENDICES.... Al
A. Opinion of the United States Court of
Appeals for the District of Columbia
Circuit. May 3. 1984. as amended July i2.
1985 | Al-A35
B Decision of the Interstate Commerce
Commission, May 18, 1983... .. oo. ee ABO-A39
C. Decision of the Interstate Commerce
Commission. October 25, 1983........--. A40-A5SO
D. Order of the United States Court of
Appeals for the District of Columbia
Circuit. Granting Stay of Mandate.
September 18, 1985. ... ere re vin ASI
E. Order of the United States Court of
Appeals for the District of Columbia
Circuit. Granting Stay of Mandate.
November 8. 1985... .....--- 505555 ot oe ae
F. Order of the United States Court of
Appeals for the District of Columbia
Circuit Denying Rehearing. August 9. 1985 . ., AS3
G. Order of the United States Court of
Appeals for the District of Columbia
Circuit Denying Rehearing en banc.
August 9, 1985... 0.6.66 eee iaians ee . AS4
H. 45 U.S.C. §156 (1982)........-- eae . AD
1 49 U.SC. $1134) (1982) ........---+-55 a i. Stn
J. 49 U.S.C. §11343 (1982) ..... 6.6 eee eee eee A57-A5S9
K. 49 U.S.C. §11344 (1982) ... 2... 6. eee eee Ab’ A62
tL .@ ‘JSC. SII947 (19B2) ... 16. c eee eee eet eeeces A63
‘
TABLE OF AUTHORITIES
CASES: Page
Brotherhood of Locomotive Eng'rs v. Chicago
and N. W. Ry. 314 F.2d 424 (8th Cir), cert.
dented. 375 U.S. GID (IBGS) 2... ccc ccsscccces 8.13, 14.15.16
Callaway v. Benton, 336 U.S. 132 (1949) ......-..--55> 8.11
Chevron. U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 104 S.Ct. 2778 (1984) ......... 15.16
Chicago, St. P,, M. & O. Ry. Lease,
295 L.C.C. 696 (1958) ............ geeeeseeceeees .
City of Palestine, Tex. v. United States,
§59 F.2d 408 (Sth Cir. 1977), vert. denied,
BO OE din occa ec ste esesecicsecoveds 1S
County of Marin v. United States, 356 U.S.
SN. ccd bin waetathakea Cane Ke Raver t~wee cede ll
Ex Parte No. 260. Revised Regulations Governing
Officers, 336 LC.C. 679 (1970) .... 6... +>. saa 0’
Mendocino Coast Ry., Inc. — Lease and
Operate — California W. R.R., 360 LCC. 653
(1980), affd sub nom., Railway Labor
Executives’ Ass'n v. United States, 675 F.2d
1248 (DC. Cie. W562)... 2. cc eee eens: re 4.7
Missouri Pacific R.R. Co. v. United Transp.
Union, 580 F. Supp. 1490 (E.D. Mo.). appeal
docketed, No. 84-1465 (8th Cir. 1984)........ | | 5
Nemitz v. Norfolk and W. Ry., 436 F.2d 841 (6th Cir.).
affd on other grounds, 404 U.S. 37 (I97I) ....--. 14.15
Norfolk & W. Ry. Co. — Trackage Rights — BN,
_ 5). 2 | rn rere et 4
Railway Express Agency, Inc., Notes, 348 LCC.
OF GED wens nccccestsdenesses sn Wa walla oe ek 16
vi
TABLE OF AUTHORITIES—( Continued)
CASES:
Schwabacher vy. United States, 334 U.S. 182
ee ee Aces kee ee bee es Set eececuen
Seaboard Air Line R.R. Co. v. Daniel,
333 U.S. 1B (IDSB) .. wee eee wees
Southern Pacific Transp. Co. v. LCC,
736 F.2d 708. (DC. Cir. 1984) (per curiam).
cert. denied. OS S.Ct. W72 (1985)... .-- eee eee
St. Joe Paper Co. v. Atlantic Coast Line
R.R. Co.. 347 U.S. 298 (1954) ... 6.6.6 ee eee eee
Texas & N. O. R.R. Co. v. Brotherhood of R.R.
Trainmen, 307 F.2d 151 (Sth Cir. 1962) cert.
denied. 371 U.S. 952 (1963) ......-- 66 ese e eee
Texas Turnpike Auth. Abandonment by St. Louis
S.W. Ry. Co. of Tex., 328 LCC. 42 re
Texas v. United States, 292 U.S. 522 W934) ...-- +--+
Union Pacific Corp., Pacific Rail System, Inc. and
Union Pacific R.R. — Control, Missouri
Pacific Corp. and Missouri Pacific R.R.,
366 LCC. 459 (1982) ... 1... eee eee eee teens
Page
8.9.11.12
8.11.12
Vii —_
TABLE OF AUTHORITIES—(Continued)
STATUTES: Page
28 U.S.C. $1254(1) (1982) ... 6. ee eee eee ee eee 2
28 U.S.C. $2344 (1982)... 2... eee ee ree teens 8
45 U.SC. B1S6 (19G2) .. wc cece eee wens: 7
49 U.S.C. $11341(a) (1982) .. 2... eee eee passim
49 U.S.C. §11343 (1982) .........- 6. eee. se eae 2.7
49 U.S.C. $11344 (1982) ........... 0. eee eee es 234 7IO 2
49 U.S.C. $11347 (1982)... 6... eee ee eee 2.34.7.13
Bankruptcy Act of 1898, §205, 30 Stat. 544,
repealed by Bankruptcy Reform Act of 1978.
ch. 1-15. §101-411, 92 Stat. 2549 ...........---+5-. aan
, Transportation Act of 1940, ch. 722. §7.
54 Stat. 908 (1940) (current version at ,
49 U.S.C. $1341, §11344, (1982)) .. 6... 66s. 10.11.13.14
BD USL. BS (IDOD) . ww wc cece cece cece ene ccees ll
49 U.S.C. $5(2) (1940)... «6.6 eee eee 11.13
49 U.S.C. §S5(1l) (1940) .... 2. ee ee eee Se
peeemeteneememas
IN THE
Supreme Court of the United States
) October Term, 1985
MISSOURI-KANSAS-TEXAS RAILROAD COMPANY, “
. Petitioner,
v.
BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND
UNITED TRANSPORTATION UNION,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO -HE
UNITED STATES COURT OF APPEALS rOR THE
DISTRICT OF COLUMBIA CIRCUIT
Missouri-Kansas-Texas Railroad Company (“MKT™) petitions for
a writ of certiorari to review an opinion and judgment of the United
States Court of Appeals for the District of Columbia Circuit, entered
May 3, 1985, as amended July 12, 1985. The court of appeals’ judg-
ment vacated two orders of the Interstate Commerce Commission
“ICC” or “Commission”) which held that the Commission's approval
in Finance Docket No. 30,000 of MKT’s trackage rights application
rendered the provisions of the Railway Labor Act inapplicable to
MKT’s decision to operate the trackage rights with its own crews.
I.
OPINION BELOW
The decision of the United States Court of Appeals for the Dis-
trict of Columbia Circuit is reported at 761 F.2d 714 (1985). It ap-
pears in the Appendix at Al. The Commission's orders appear in the
Appendix at A36 and Ad40.
Il.
JURISDICTION
The judgment of the court of appeals was entered on May 3, 1985.
and amended on July 12, 1985. On August 9, 1985, the court of ap-
peals entered orders denying petitions for rehearing and suggestions
for rehearing en banc. Jurisdiction of this Court is invoked under 28
U.S.C. §1254(1) (1982).
IIl.
STATUTES INVOLVED
The statutes involved in this proceeding are ihe Interstate Com-
merce Act (49 U.S.C. §§1'341(a), 11343, 11344 and 11347) and the Rail-
way Labor Act. (45 U.S.C. §§151-160). The pertinent provisions of
these statutes are set forth in the Appendix at A55-A63.
IV.
STATEMENT OF THE CASE
This case presents a critical question of the Interstate Commerce
Commission's authority under 49 U.S.C. §11341(a) to exempt carriers
participating in transactions approved by it under 49 U.S.C. §§11343
and 11344 from other laws, and, as pertinent here, the Railway Labor
Act (45 U.S.C. §156). Although it is undisputed that ICC has authority
to grant exemptions “as necessary” to let carriers implement approved
transactions, a split panel of the District of Columbia Circuit Court
of Appeuls in this case has ruled that the exemption may be granted
only if the law in question poses an obstacle to implementation of
the transaction, and on/y if ICC makes specific findings of necessity
under 49 U.S.C. §11341 justifying the exemption. The court of ap-
peals’ decision misapplies decisions of this Court, is inconsistent with
ICC's longstanding interpretation of the Interstate Commerce Act, and
directly conflicts with decisions of the Sixth and Eighth Circuit Courts
of Appeal. The importance of this question of statutory interpreta-
tion in this case cannot be overstated. Thousands of shippers face a
potential disruption of rail service unless this Court reviews the court
of appeals’ decision.
On September 15, 1980, Union Pacific Corporation filed an ap-
plication before the ICC in Finance Docket No. 30,000 seeking ICC
approval, inter alia, of the consolidation of Union Pacific Railroad
Company (““UP"’) ard Missouri Pacific Railroad Company (**MP”’)
pursuant to 49 U.S.C. §§11343 and 11344. On the same date, Union
Pacific Corporation and Western Pacific Railroad Company (*“WP"’)
filed a similar application. Petitioner Missouri-Kansas-Texas Rail-
road Company, a railroad operating principally in the states of Kan-
sas, Missouri, Oklahoma, and Texas, opposed the consolidation,
alleging that it would suffer revenue diversions of approximately $23.8
million if the UP-MP-WP merger were approved. It contended that
this loss of revenue would impair its ability to provide essential rail
service on shipments moving between the Midwest and the Gulf Coast
via Kansas City. 366 LCC. at 469.' P
As part of its opposition case, and in an effort to minimize the
anticompetitive effects of the UP-MP-WP merger in this market, MKT
in January, 1981 filed an application seeking trackage rights over certain
MP and UP lines, including the Kansas City-Omaha trackage rights
here in issue. MKT proposed to conduct this trackage rights opera-
tion with its own employees. Propose? Agreement, Sec. 5, MKT Track-
age Rights Application, F.D. 30,000 (Sub-No. 25). MKT filed evidence
in support of its trackage rights application on February 20, 1981, and
ICC held hearings on the application. Both Brotherhood of Locomo-
tive Engineers (“BLE”) and United Transportation Union (“UTU”)
were parties to the UP-MP-WP merger proceeding. Both BLE and
UTU submitted evidence relating to MKT’s trackage rights proposal.
At no time during the evidentiary proceeding did BLE or UTU
challenge MKT’s right to use its own crews in its proposed trackage
rights application or contend that the use of MKT’s own crews would
violate the Railway Labor Act.
On October 20, 1982, ICC served its decision in the UP-MP-WP
merger case. In that order, the Commission observed that its review
of the proposed consolidation was governed by 49 U.S.C. §11344, and
noted that it was required to approve the transaction if it found the
transaction to be “consistent with the public interest.” 366 I.C.C. at
483. The interest of carrier employees affected by the proposed trans-
action was one of the mandatory factors that the Commission was
required to consider in making its “public interest’ determination.
49 U.S.C. §11344(b)(1)(D). In addition, under 49 U.S.C. §11347, the
Commission was required to provide protective conditions for em-
ployees affected by the transacuun. 366 L.C.C. at 618-619.
In its decision, ICC found that unconditional approval of the UP-
MP-WP consolidation would not be in the public interest because,
'The procedural history of these consolidated proceedings is set forth
in Union Pacific Corp., Pacific Rail System, Inc. and Union Pacific R.R.—
Control—Missouri Pacific Corp. and Missouri Pacific R.R. , 366 UC.C. 459,
471-72. 479, 482 (1982).
inter alia, MKT would suffer an impairment of its ability to provide
essential rail service on grain shipments moving from Omaha and
other grain gathering points in the Midwest via Kansas City to Gulf
Coast points. 366 L.C.C. at 530-531, 547. ICC concluded that those
anticompetitive consequences could be “ameliorated” (366 1.C.C. at
531) and in some respects “fully off-set” (366 1.C.C. at 547) by con-
ditioning its approval of the transaction upon the grant of certain of
MKT’s trackage rights requests.? In defining the nature of these con-
ditions, the Commission specifically addressed the crew manning issue
in analyzing MKT’s trackage rights application. ICC commented on
MP’s challenge to MKT’s estimate of the number of MKT employees
required to provide the proposed service. 366 I1.C.C. at 566-572. It
agreed that MKT most likely had underestimated its crew require-
ments, but still found that MKT’s proposed operation would be en-
tirely feasible with an increased MKT crew complement. 366 1.C.C.
at 569. It then approved MKT’s trackage rights application as filed
and imposed protective conditions for the benefit of employees af-
fected by MKT’s trackage rights operation. 366 I1.C.C. at 6212
UTU (and a number of other labor unions) appealed the Com-
mission's decision approving the UP-MP-WP consolidation, arguing
that the level of employee protection imposed on the primary trans-
action was insufficient to satisfy the provisions of 49 U.S.C.
§§11344(b)(1)(D) and 11347. BLE did not appeal the ICC’s October
20, 1982 decision. Neither UTU nor any other union claimed on ap-
peal that approval of MKT’s trackage rights application allowing MKT
to use its own crews violated the Railway Labor Act (or any other
statute). The District of Columbia Circuit Court of Appeals rejected
the unions’ arguments assailing the level of employee protection im-
posed by the ICC and affirmed this aspect of the Commission's deci-
sion. Southern Pacific Transp. Co. v. ICC, 736 F.2d 708, 725 (DC.
Cir. 1984) (per curiam), cert. denied, 105 S.Ct. 1172 (1985).
"ICC also granted certain trackage rights requested by Denver & Rio
Grande Western Railroad Company. 366 L.C.C. at 572-578.
‘Those conditions for employees affected by MKT’s trackage rights ap-
plication were as specified in Norfolk and W. Ry. Co.—Trackage Rights—
BN, 354 1.C-C. 605 (1978), as modified in Mendocino Coast Ry. Inc.—Lease
and Operate, 360 L.C.C. 653, 664 (1980). See Union Pacific Corp. , Pacific
Rail System, Inc. and Union Pacific R.R.—Control—Missouri Pacific Corp.
and Missouri Pacific R.R., supra, at 621.
Both prior to and subsequent to the Commission's October 20,
1982 order, MKT held discussions with BLE and UTU concerning
the necessity to commence the trackage rights operations as soon as
possible after approval was granted. In November, 1982, MKT ex-
changed proposals with BLE and UTU concerning the manning of
the trackage rights operations. (J.A. at 27). MKT negotiated amend-
ments to its collective bargaining agreements with BLE on January
5, 1983 to govern the trackage rights operation. On January 6, 1983,
MKT commenced operations as a trackage rights tenant over the in-
volved MP and UP lines using its own crews. (/d.). On February 3,
1982, several weeks after the time for seeking judicial review had run,
the International President of UTU expressly confirmed that Com-
mission approval of MKT’s trackage rights application gave MKT full
authority to utilize its own crews. (MKT Motion to Dismiss, dated
February 28, 1984, App. A and B). On March 10, 1983, MKT and
MP filed a formal trackage righis agreement with ICC. (J.A. at x,
No. 15). MKT reached formal agreements with UTU concerning the
trackage rights operation on April Ii and April 13, 1983. (J.A. at 27).
Soon after MKT commenced its trackage rights operations, UTU,
on behalf of MP employees, demanded of MP that MKT use MP crews
to conduct MKT’s trackage rights operations. MP did not accede to
this demand, because ICC had specifically authorized MKT to use
its own crews. As stated in UTU’s brief to the court below, “petition-
er UTU responded to MoPac’s refusal to negotiate by declaring a strike
of MoPac for April 4, 1983." (UTU Brief, p. 13). On March 30, 1983,
MP filed a complaint in the Eastern District of Missouri seeking
declaratory and injunctive relief against the strike. On that same date,
the district court entered a temporary restraining order prohibiting,
inter alia, implementation of UTU’s strike threat. The district court
preliminarily enjoined the strike on February 7, 1984, and issued a
permanent injunction soon thereafter. Missouri Pacific R.R. vy. Unit-
ed Transp. Union, 580 F. Supp. 1490 (E.D. Mo.), appeal docketed,
No. 84-1465 (8th Cir. 1984).
On April 4, 1983, shortly after the district court issued a tem-
porary restraining order prohibiting UTU’s threatened strike, BLE
filed with ICC a “Petition For Clarification” of the Commission's
October 20, 1982 order, issued almost six months earlier. BLE cited
“[rJecent communications” from MP to the effect that MKT (and
DRGW) were relying on the Commission's order in Sub-No. 25 (and
Sub-No. 18) as authority for the use of its own crews in performing
the trackage rights operating in question. BLE argued that the Com-
mission's October, 1982 order did not address the crew issue (J.A.
at 2).
The Commission denied BLE’s petition in an order served on
May 18, 1983. In that decision, the Commission concluded as follows:
The consolidation decision does not require clarification.
We approved the responsive trackage rights applications
of DRGW and MKT in Sub-No. 18 and Sub-No. 25 sub-
ject only to applicable employee protective conditions and
the requirement that the parties negotiate compensation for
use of the MP lines (or request us to set compensation in
the event of an impasse). Inasmuch as DRGW and MKT
proposed in their applications that the operations would
be performed with their own crews, our approval of the
applications authorizes such operations. . .
BLE has presented no arguments or evidence setting forth
any issue in need of clarification. Rather, BLE is attempt-
ing io re-argue an issue that has already been decided.
(A38).
Thereafter, on May 31, 1983, BLE filed with ICC a “Petition
for Reconsideration” of the May 18 order. BLE contended that the
Commission exceeded its jurisdiction in its October 20, 1982 order
when it authorized MKT to use its own crews. BLE’s conclusion and
prayer for reiief provided:
In sum, the Brotherhood of Locomotive Engineers sub-
mits that the Commission does not have jurisdiction over
these labor disputes since such matters are within the pur-
view of the Railway Labor Act, and respectfully requests
that the Commission grant this petition for reconsidera-
tion and issue an order holding that crew assignments and
manning of positions are matters not within the jurisdic-
tion of the Commission but are labor disputes to be resolved
under the procedures of the Railway Labor Act.
(J.A. at 54).
On June 7, 1983, UTU also petitioned ICC for reconsideration
of its May 18, 1983 order. UTU allegedly had presumed that the
Mendocino conditions* would provide MP employees with an oppor-
tunity to participate in MKT’s decision to assign crews for the track-
age rights operation. (UTU Reply to MKT Motion to Dismiss at I4).
UTU argued that:
This Commission does not have the authority under 49
U.S.C. §11341 to grant an exemption from the unilateral
change prescriptions of the Railway Labor Act, and even
if it did, it has not done so in this case.
(J.A. at 77).
The Commission entered an order on October 25, 1983, denying
BLE’s and UTU’s petitions for reconsideration (A40). In that deci-
sion, ICC held that it had jurisdiction under 49 U.S.C. §11341(a) to
exempt a transaction approved under 49 U.S.C. §§11343 and 11344
from the provisions of the Railway Labor Act (A45 U.S.C. §156). In
addition, it rejected UTU’s argument that specific supporting find-
ings of necessity were required to exempt the crewing issue from any
other laws, since it had made detailed findings of the public interest
requirements in approving MKT’s trackage rights application, and since
the identity of the crews was a material term of the approved transac-
tion. In tight of these facts, the Commission found that Section 11341
immunity was self-executing on the crew issue (A44-48).
In December, 1983, BLE and UTU filed with the District of
Columbia Circuit petitions for review of the ICC's May 18, 1983 and
October 25, 1983 orders. The unions claimed in the case below that,
inter alia, \CC exceeded its authority by exempting MKT’s decision
to use its own crews in the trackage rights operation from the require-
ments of the Railway Labor Act.
*See supra note 3.
‘The unions also argued that this action violated the Mendicino condi-
tions imposed pursuant to 49 U.S.C. $11347, (see supra note 3), but the majori-
ty found it unnecessary to reach this issue in light of its view that the
Commission failed to justify an exemption from the requirements of the Rail-
way Labor Act (A]13).
In a 2-1 decision, the District of Columbia Circuit vacated the
ICC's May 18, 1985 and October 25, 1985 decisions. Judges Wright
and Mikva found that ICC did not show a necessity for waiving the
Railway Labor Act in the exercise of its Interstate Commerce Act
authority® (Al3). The majority held that “the Commission must supp, /
some basis for a necessity determination before the exemption authority
applies.” and relied upon a line of Supreme Court cases that suppos-
edly hold that “ICC may waive... laws only if these... laws pose
an obstacle to the transaction.” (Al4). The majority rejected ICC's
holding in the October 25, 1983 order thet “the terms of Section 11341
immunizing an approved transaction from any other laws are self-
executing.” and stated that “to the extent that [the Eighth Circuit's deci-
sion in Brotherhood of Locomotive Eng’rs. v. Chicago & N.W. Ry. Co.*|
may be read to say that ICC need supply no basis for the necessity
determination, we find the interpretation ill-conceived and reject it”
(Al6.n.6). The majority then remanded the case to the Commission
with instructions that “the Commission must explain why termina-
tion of the asserted right to participate in crew selection is necessary
to effectuate the pro-competitive purpose of the grant of trackage rights
or some other purpose sufficiently related to the transaction” (A17).
Judge MacKinnon filed a vigorous dissent to the majority opin-
ion. He correctly noted that “the whole basis for granting the track- -
age rights, which included the crew selection provisions, was the
implicit conclusion that the granting of such rights was necessary to
the approval of the merger” (A24). He observed that 49 U.S.C.
§$11341(a) grants ICC very broad exemption powers and cited Brother-
hood of Locomotive Eng'rs. v. Chicago & N.W. Ry., 314 F. 2d 424
(8th Cir.), cert. denied, 375 U.S. 819 (1963), to support his and the
*The majority also rejected the arguments of respondents and intervenors
that BLE and UTU’s appeals were untimely since they were aggrieved by
the October 20. 1982 decision of the ICC and failed to file their petitions
for review within the statutorily prescribed 60-day period. as required by
28 U.S.C. §2344 (1982) (A9-12).
7See Callaway v. Benton, 336 U.S. 132 (1949), Seaboard Air Line R.R.
Co. v. Daniel, 333 U.S. 118 (1948), Texas v. United States, 292 U.S. 522
(1934), and Schwabacher v. United States, 334 U.S. 182 (1948).
*Brotherhood of Locomotive Eng'rs. v. Chicago & N.W. R.R. Co., 314
F.2d 424 (8th Cir.), cert. denied, 375 U.S. 819 (1963).
Commision’s view that the terms of that paragraph are “self-executing™
(A25-26). Judge MacKinnon discussed all of the Supreme Court cases
relied upon by the majority to support its “‘obstacle’’ standard of
not only did the Supreme Court nor adopt the rigorous ‘ob-
stacle’ standard which the majority today requires, the
Court envisioned that the legislative purpose was to grant
the Commission greater authority than the majority sug-
gests to override state laws where needed to approve trans-
actions ‘consistent with the public interest’ and to ensure
that they are ‘just and reasonable. Schwabacher, 334 U.S.
at 94-95.
(A32).
Judge MacKinnon agreed with the majoriiy’s obvious assertion
that “the ICC cannot bootstrap any exemption to its approval of trans-
actions without justification,” but he correctly pointed out that “this
is far from such a case, since the necessity for waiver is clear”(/d.!
He then stated,
The whole point of granting the trackage rights applica-
tions was to reduce the anti-competitive effects of the con-
solidation (J.A. 169). Under the ICC's decision the Katy
and the Rio Grande will be handling traffic for their own
accounts, not for the consolidated UP-Missouri Pacific-
Weste™ Pacific (/d.). Thus, the trackage rights operations
were meant to be conducted in competition with the merged
UP-Missouri Pacific-Western Pacific operations, id. , and
to offset to some extent the monopolistic effects of that enor-
mous cons ‘idation. The majority opinion gives short shrift
to these essential reasons for the ICC's decision. To be
sure, the Commission's goal of preservation of competi-
tion through the grant of trackage rights might well be frus-
trated by the prospect of requiring the railroads granted
those rights to negotiate with the union representing the
employees of its competitors. It is no surprise the Com-
mission did not feel compelled to spell out specifically such
a proposition.
(A32-33).
10
Both ICC and MKT filed petitions for rehearing and suggestions
for rehearing en banc. Those petitions were denied by the District
of Columbia Circuit in orders dated August 9, 1985
Vv.
REASONS FOR GRANTING THE WRIT
A. THE COURT OF APPEALS’ INTERPRE-
TATION OF 49 U.S.C. §1134l(a) IS AT
ODDS WITH THE LEGISLATIVE HISTO-
RY AND UNAMBIGUOUS LANGUAGE
OF THE STATUTE AND IS IRRECONCIL-
ABLE WITH THE DECISION OF THIS
COURT IN SCHWAB‘CHER V. UNITED
STATES.
Section 11341(a) contains unmistakable language conferring broad
authority upon ICC. It provides that the Commission's authority to
upprove transactions such as rail mergers is “exclusive” and exempts
carriers, Corporations, Or persons participating in approved transac-
tions “from the antitrust laws and from all other law, including state
and municipal law as necessary to let that person carry out the trans-
action [and] holc, maintain or operate property. . . °° 49 U.S.C. §11341(a)
(1982). By requiring ICC to make express findings to justify the neces-
sity of every waiver before invoking its exemption authority under
Section 11341(a), in addition to the findings mandated by 49 U.S.C.
§11344, the majority, in Judge MacKinnon’s words, “has made the
ICC's Section 11341(a) exemption authority completely disappear.”
and has created a new step in the consolidation procedures required
by the Act which will hinder rather than facilitate Congressional trans-
portation policy.
Section 11341 was formerly Section 5(11) of the Interstate Com-
merce Act.'° and was enacted into law as part of the Transportation
*Circuit Judge MacKinnon voted to grant the petition for rehearing, and
Circuit Judge Starr voted to grant the suggestion for rehearing en banc
(A53-54).
The Interstate Commerce Act was recodified in 1978 without substan-
tive change. Interstate Commerce Act, Pub. L. No. 95-473, 1978 U.S. Code
Cong. & Ad. News (92 Stat. 1337).
il
Act of 1940, 54 Stat. 908. On several occasions, this Court has exa-
mined the legislative history of that statute (see, e.g., St. Joe Paper
Co. v. Atlantic Coast Line R.R. Co., 347 U.S. 298, 315 (1954)), and
has found that the congressional purpose in the sweeping revision in
Section 5 of the Interstate Commerce Act in 1940 was “to facilitate
merger and consolidation in the national transportation system” [em-
phasis supplied]. County of Marin v. United States, 356 U.S. 412
(1958). This Court also has observed that the enactment of Section
5(11) of the Transportation Act of 1940 constitutes “additional proof”
of Congress’ purpose to grant adequate power to the Commission to
override laws which may interfere with efficient and economical rail-
road operation. Seaboard Air Line R.R. Co. v. Daniel, 333 U.S. 118
(1948).
The interrelationship of the exemption provisions of Section 511)
and the merger approval provisions of Section 5(2) of the Interstate
Commerce Act was addressed by the Court in Schwabacher v. Unit-
ed States, 344 U.S. 182 (1948). In that case, the Court held that
approval of a voluntary railroad merger is dependent upon
three, and upon on/y three, considerations: First, a find-
ing that “it will be consistent with the public interest”
(§5(2)(b)). Second, a finding that, subject to any modifi-
cation made by the Commission, it is “just and reason-
able” (§5(2)(b)). Third, assent of a “majority, unless a
different vote is required under applicable State law, in
which case the number so required shall assent, of the votes
of the holders of the shares entitled to vote™ (§5(11)). [Em-
phasis added].
(Id. at 194).
The Court then stated that,
When these conditions have been compiled with, the
Commission-approved transaction goes into effect without
need for invoking any approval under state authority, and
the parties are relieved of restraints, limitations, and pro-
hibitions of law, Federal, State or municipal, insofar as may
be necessary to enable them to carry into effect the trans-
actions.
(Id.).
Thus, Schwabacher stands for the proposition that if the Com-
mission makes the findings required by 49 U.S. §11344, as it undeniably
did in this case, the exemption provisions of §11341(a) automatically
apply to enable the carriers to effect the transaction.
The majority virtually ignored Schwabacher in its analysis of this
Court's decisions. Instead, it relied on three decisions of this Court
—Callaway v. Benton, Seaboard Air Line R.R. Co. v. Daniel, and
Texas v. United States which assertedly supported its view that ICC
only may waive laws that pose “obstacles” to transactions before it.
Judge MacKinnon ably highlighted the majority's erroneous
reasoning. He noted that Callaway arose under Section 77 of the
Bankruptcy Act (formerly Il U.S.C. §205) rather than under the merger
provisions of the Irterstate Commerce Act, and “ in its only com-
ment relevant to thi: case.” the Court indicated merely that nothing
in its opinion should be read to derogate its prior opinions upholding
the ICC’s power to override state laws interposing obstacles in the
path of otherwise lawful plans of reorganization. (A28). Similarly.
Seaboard failed to support ihe majority's opinion. As stated above.
the Court in that case acknowledged ICC's power to override laws
that may interfere with approved transactions. That language alone
vitiates the “obstacle” standard created by the majority in the case
below.
Finally. Texas v. United States is also misinterpreted by the majori-
ty. As Judge MacKinnon correctly observed, the Court in that case
emphasized that one purpose of the immunity provision was to pro-
mote economy and efficiency by removing burdens created by state
laws. (A30). This reasoning is far removed from the majority's hold-
ing that a statute must create an obstacle to a transaction before an
exemption may be granted.
By holding that ICC may exempt carriers only from laws that
pose obstacles to a successful implementation of approved transac-
tions, and holding that separate findings of “necessity” are required
under 49 U.S.C. §11341 before an exemption may be granted, the court
of appeals has ignored the clear meaning of the language of 49 U.S.C.
§11341 and has rendered a decision that is irreconcilable with the
Schwabacher decision of the Court.
13
B. THE JUDGMENT BELOW CONFLICTS
WITH DECISIONS OF THE SIXTH AND
EIGHTH CIRCUIT COURTS OF APPEAL
AND CREATES A SPLIT OF AUTHORI-
TY THAT CALLS FOR AN EXERCISE OF
THIS COURT’S POWER OF SUPER-
VISION
In its October 25, 1983 decision, the Commission relied on the
decision of the Eighth Circuit in Brotherhood of Locomotive Eng’rs.
v. Chicago and N.W. Ry., 314 F.2d 424 (8th Cir.), cert. denied 375
U.S. 819 (1963) to support its view that, once it made appropriate
findings on the public interest aspects of a transaction under 49 U.S.C.
§$11344, the exemption provisions of §1134I(a) are “self-executing.”
(A44). The District of Columbia Circuit's interpretation of the Com-
mission's authority under 49 U.S.C. §11341(a) to exempt carriers from
the requirements of the Railway Labor Act directly conflicts with BLE
and decisions of other circuits as well.
In BLE, the Eighth Circuit characterized the basic issue present-
ed as “whether the statutory authority conferred upon the ICC by
the Interstate Commerce Act to approve and facilitate mergers of car-
riers includes the power to authorize changes in working conditions
necessary to effectuate such mergers.”'' It examined the legislative
history of former Section 5(2)(f) of the Interstate Commerce Act. (now
49 U.S.C. §11347) and it noted that Congress rejected an amend-
ment to the Transportation Act of 1940 proposed by Representative
Harrington which, if adopted, would have frozen existing empioyees
in their job rights. The Eighth Circuit reasoned that
the ICC|‘s] power to authorize mergers would be complete-
ly ineffective if authority to adjust work realignments
through fair compensation did not exist... [U]nder the
Railway Labor Act provisions, it is possible for either party
''Significantly, the majority in the case below suggest that MKT's track-
age rights operation would create a unilateral change in the working condi-
tions of MP employees. which would violate the Railway Labor Act [45
U.S.C. $156 (1982)]. (A7-16). As both the dissent and the Commission en-
phasized. no factual support whatsoever existed for that assertion, since the
unions failed to introduce any evidence to establish the existing collective
bargaining rights and actual working conditions of MP employees. (A24.
Ad).
l4
to completely block any change in working conditions by
refusing to agree to a change and by refusing to arbitrate.
Like the Harrington amendment, the Railway Labor Act.
if it applied. would threaten to prevent many consolidations.
(id. at 430-431).
As in this case. the Eighth Circuit was faced in BLE with an ar-
gument by the unions that the Commission made no “express find-
ing” that the Railway Labor Act necessarily conflicted with the
Commission's approval under the Interstate Commerce Act. /d. at 432.
It then agreed with the Commission's interpretation of §5(11), as set
forth in Chicago St. P- M. & O. Ry. Lease, 295 LCC. 696 (1958):
We find nothing in that paragraph | §5(11)] or in other por-
tions of Section 5, which authorizes us to determine and
declare the particular laws within the scope of paragraph
(11) from which a carrier shall be relieved. The terms of
this paragraph are self- executing, and there is no need for
this Commission expressly to order or declare that a car-
rier be relieved from certain restraints. / is sufficient if
we make clear what the carrier is authorized to do. |Em-
phasis added. |
(/d. at 432).
The Eighth Circuit then noted that
the Commission did actually approve the proposed merg-
er and the included agreement for the protection of rail-
road employees as it was authorized to do. Such approval,
in absence of language manifesting a contrary intent, car-
ried with it any exemption from the restraints of other laws
as contemplated by §5(11) to the extent necessary to carry
out the merger.
(/d.).
The Eighth Circuit's interpretation of §5(11) was followed by the
Sixth Circuit in Nemitz v. Norfolk and W. Ry. , 436 F.2d 841 (6th Cir.),
affd on other grounds, 404 U.S. 37 (1971). In that case, arising our
of another rail merger, the court of appeals was faced with a claim
that the procedures of the Railway Labor ‘Act rather than the employee
1S
protective conditions imposed by the Commission were applicable
to resolve a labor dispute. The Sixth Circuit rejected the Railway Labor
Act argument. holding that
there must be exclusive and plenary authority in the LCC.
to achieve the purposes of the Act. The authority vested
in the L.C.C. to effectuate proposed mergers would be ren-
dered ineffective if authority to adjust work alignments
through fair compensation did not exist. Since, under the
Railway Labor Act, employees cannot be compelled to ac-
cept or arbitrate new working rules or conditions, the ap-
plication of the Railway Labor Act to situations such as
that presented here, like the Harrington Amendment, would
threaten to prevent many consolidations, and, therefore,
should not be applied.
(Id.at 845).
The judgment below directly conflicts with the decisions of Sixth
Circuit in Nemitz and the Eighth Circuit in BLE. This Court should
resolve the conflict by adopting the Eighth Circuit's interpretation of
the statute.'*
C. THE JUDGMENT BELOW OVERRULES
WITHOUT JUSTIFICATION A LONG-
STANDING INTERPRETATION OF THE
INTERSTATE COMMERCE ACT BY THE
INTERSTATE COMMERCE COM-
MISSION
This Court in Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, Inc. 104 S.Ct. 2778 (1984), summarized the proper standard
The majority also relies on two decisions of the Fifth Circuit Court
of Appeals to support its interpretation of 49 U.S.C. $11341. See Ciry of Pales-
tine, Tex. v. United States, 559 F.2d 408 (Sth Cir. 1977). cert. denied, 435
U.S. 905 (1978). and Texas & N. O. RR. Co. ». Brotherhood R.R. Train-
men, 307, §.2d 151 (Sth Cir. 1962). cert. denied, 371 U.S. 1952 (1963). (AIS).
However. unlike the present case. the Fifth Circuit in those two cases was
not faced with a determination by ICC that the requested exemption related
to a material term of the approved transaction. (See ASO). Those cases merely
stood for the obvious proposition that ICC may not exempt carriers from
requirements of other laws unless the exemptions are necessary to enable
the carriers to carry out the approved transactions.
of review of an agency's interpretation of its governing statute:
When a court reviews an agency's construction of the Sta-
tute which it administers, it is confronted with two ques-
tions. First, always, is the question whether Congress has
directly spoken to the precise question at issue. If the in-
tent of Congress is clear, that is the end of the matter; for
the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress. If, however,
the court determines Congress has not directly addressed
the precise question at issue, the court does not simply im-
pose its own construction on the statute, as would be neces-
sary in the absence of an administrative interpretation.
Rather, if th. statute is silent or ambiguous with respect
to the specific issue, the question for the court is whether
the agency's answer is based on a permissible construc-
tion of the statute. [Emphasis added. }
(/d. at 2781-2782 footnote omitted).
The Court also emphasized in Chevron that considerable weight should
be accorded to the agency's construction of the statutory scheme it
is entrusted to administer. (/d.at 2782).
The Court below simply ignored the guidance provided by
Chevron. It erroneously reinterpreted Section 11341(a) without find-
ing that the statutory language involved was ambiguous. It also failed
to accord ICC its deserved deference in interpreting its governing sta-
tute. As Judge MacKinnon correctly put it, ‘‘in doing so, the panel
has usurped the statutory authority of the ICC and has substituted
its own judgment for that of the ICC.” (A35).
The Commission's interpretation of 49 U.S.C. §11341(a), (as set
forth in the BLE decision at page 14, supra), consistently has been
followed for over twenty-five years. See, e.g. Texas Turnpike Auth.-
Abandonment-St. L. S.W. Ry. Co. of Tex., 328 LCC. 42, 46 (1965)
Ex Parte No. 260, Revised Regulations Governing Officers, 336 1.CC.
679, 682 (1970): Railway Express Agency, Inc., Notes, 348 1.C.C. 157,
215 (1975). That interpretation is consistent with the interpretation of
the statute rendered by this Court and with the legislative history. It
is inconceivable that the majority's interpretation rather than ICC's
interpretation is correct, where the result of the majority’s decision
o™~
17
could require MKT to bargain with MP’s employees and face poten-
tial disruptions of service in its efforts to perform rail service required
by the public interest. (A34).
VI.
CONCLUSION
Fu. the foregoing reasons, Missouri-Kansas-Texas Railroad Com-
pany respectfully requests the Court to grant this petition for writ
of certiorari.
Respectfully submitted,
Joseph L. Manson, III
(Counsel of Record)
Ronald B. Natalie
Verner, Liipfert, Bernhard,
McPherson & Hand, Chartered
Suite 1000
1660 L Street, N.W.
Washington, D.C. 20036
(202) 775-1088
Michael E. Roper ©
701 Commerce Street -
Dallas, Texas 75202
(214) 651-6741
Ai
TABLE OF APPENDICES
A. Opinion of the United States Court of Appeals
for the District of Columbia Circuit, May 3, 1985,
Brotherhood of Locomotive Engineers v. Interstate
Commerce Commission and United States, United
Transportation Union v. United States and
Interstate Commerce Commission, Petitions for
Review of an order of the Interstate Commerce
Commission, Nos. 83-2290, 83-2317.
EE ME dd bedebesersecosccece
B. Order of the Interstate Commerce Commission
Denying Brotherhood of Locomotive Engineers
Petition Requesting Clarification of ICC
Decision Approving the Consolidation of Union
Pacific Railroad and Missouri Pacific
Railroad. Served May 18, 1983 ................
C. Order of the Interstate Commerce Commission
Denying Brotherhood of Locomotive Engineers and
United Transportation Union Petition Seeking
Reconsideration of ICC decision to Deny
the Petition for Clarification. Served
SG EE Le a
D. Order of the United States Court of Appeals for
the District of Columbia Circuit. Granting
Stay of Mandate. September 18. 1985.
Brotherhood of Locomotive Engineers v.
Interstate Commerce Commission and the
United States and Consolidated Case No.
83-2317. No. 83-2290. September
REGS £62 CeO E Vad a'o 6 HEN wos 000 0-0 vee
Page
A36-A39
ASI
Ail
TABLE OF APPENDICES—(Continued)
Page
. Order of the United States Court of Appeals
for the District of Columbia Circuit.
Granting Further Stay of Mandate. October
21. 1985. Brotherhood of Locomotive
Engineers v. Interstate Commerce Commission
and the United S.ates and Consolidated
Case No. 83-2317. No. 83-2290. September
Ferme TS ow ccs ceeeeen ce eee ae A52
Order of the United States Court of Appeals
for the District of Columbia Circuit
Denying Rehearing, August 9. 1985.
Brotherhood of Locomotive Engineers v.
Interstate Commerce Commission and the
United States and Consolidated Case No.
83-2317. No. 83-2290. September Term 1984 ..... A53
. Order of the United States Court of Appeals
for the District of Columbia Circuit Denying
Rehearing. en banc, August 9, 1985,
Brotherhood of Locomotive Engineers and
United Transportation Union v. Interstate
Commerce Commission and the United States
and Consolidated Case No. 83-2317.
No. 83-2290, September Term 1984 ............ A54
- BD USL. Ge Gee + 6c cccscivivasaeee ASS
USK. GRR GOR). 0s pve dvecesceanenee AS6
49 U.S. GSES GaSe) os soccer ewan apeneen AS7- A59
- FB USL. Gases GaP occ ccvccwsssseeaeeee A60- A62
- 4 USL. GS GRR). cs ec ancwscnbaceeeeeee A63
— .
rs Po
Al
APPENDIX A
BROTHERHOOD OF LOCOMOTIVE
ENGINEERS, Petitioner,
Vv.
INTERSTATE COMMERCE COMMISSION
AND UNITED STATES OF AMERICA,
Respondents,
Missouri-Kansas-Texas Railroad Company, Denver & Rio Grande
Western Railroad Company, Union Pacific Railroad Company, et al.,
Intervenors.
UNITED TRANSPORTATION
UNION, Petitioner,
Vv.
UNITED STATES OF AMERICA AND
INTERSTATE COMMERCE COMMISSION.
Respondents.
Missouri-Kansas-Texas Railroad Company. Denver & Rio Grande
Western Railroad Company. Union Pacific Railroad Company, et al..,
Intervenors.
Nos. 83-2290, 83-2317.
United States Court of Appeals.
District of Columbia Circuit.
Argued Dec. 4, 1984.
Decided May 3. 1985.
As Amended July 12. 1985.
Vacated and remanded.
MacKinnon. Senior Circuit Judge. filed a dissenting opinion.
Petitions for Review of Orders of the Interstate Commerce
Commission.
Harold A. Ross. Washington. D.C.. with whom Gordon P. Mac-
Dougall. Washington. D.C.. was on the brief. for petitioner in No.
83-2290.
John O'B. Clarke. Jr.. Washington. D.C.. for petitioner in No.
83-2317. .
Sidney L. Strickland. Jr.. Atty.. 1.C.C.. Washington. DC.. with
whom Robert S. Burk. Acting Gen. Counsel. and Henri F. Rush. As-
sociate Gen. Counsel, 1.C.C.. J. Paul McGrath, Asst. Atty. Gen.. and
John J. Powers, III and Frederic Freilicher. Attys.. Dept. of Justice.
Washington. D.C.. were on the brief. for respondents.
John H. Caldwell and Denise M. O'Brien. Washington. DC..
and Kendall T. Sanford. Denver. Colo.. were on the brief for inter-
venor Denver & Rio Grande Western R. Co.
James M. Verner, Ronald B. Natalie and Joseph L. Manson, III,
Washington, D.C.. and Michael E. Roper. Dallas. Tex.. were on the
brief for intervenor Missouri-Kansas-Texas R. Co. William C. Evans.
Washington, D.C.. entered an appearance for that intervenor.
James V. Dolan, Charles A. Miller, and Gregg H. Levy, Washing-
ton. D.C., and Nina K. WuestJing, St. Louis, Mo., were on the brief
for intervenors Union Pacific R. Co. and Missouri Pacific R. Co.
Before WRIGHT and MIK\VA, Circuit Judges, and MacKIN-
NON. Senior Circuit Judge.
Opinion for the court filed by Circuit Judge WRIGHT.
Dissenting opinion filed by Senior Circuit Judge MacKINNON.
J. SKELLY* WRIGHT, Circuit Judge:
Two unions—the Brotherhood or; Locomotive Engineers (BLE)
and the United Transportation Union (UTU)—object to the Interstate
Commerce Commission’s interpretation of labor issues arising from
ICC's approval of a railroad consolidation.
The unions claim that, when the dust settled from the consoli-
dation, certain raitroads had effectively squeezed them out of their
previous role in determining the crews used on particular routes. At
the time, in early 1983, the unions objected and argued that the rail-
fr
:
|
;
:
:
it
if
'
A3
roads’ actions violated statutory labor protections. Since the railroads
responded that ICC had given the full crew selection rights in the
consolidation approval, the unions appealed to ICC for an order
clarifying that its general consolidation approval did not affect previ-
ous labor arrangements, including crew selection rights.
In two decisions ICC rejected the unions’ arguments. It main-
tained that the railroads’ intentions on crew selection had been clear
in the consolidation as approved and that ICC’s authority to exempt
transactions from legal obstacles, 49 U.S.C. §11341(a) (1982), im-
munized these crew selection prerogatives from later attack.
The unions now petition this court to vacate those ICC decisions.
Four railroads—the Denver & Rio Grande Western (D&RGW), the
Missouri-Kansas-Texas (MKT), the Missouri Pacific (MP), and the
Union Pacific (UP)—are intervening in support of the Commission.
Because we find that ICC made no semblance of a showing that
the exemption was necessary, as required by the exemption authority
section, we vacate the ICC decisions and remand the case to the Com-
mission for proceedings consistent with this opinion.
I. BACKGROUND
A. Legal Framework
This case presents the intersection of two statutory mandates—
ICC’s exclusive authority to approve rail consolidations under the In-
terstate Commerce Act and the statutory protection for rail labor em-
ployees under both the Railway Labor Act and the Interstate Commerce
Act. The unions argue that (1) ICC did not show a necessity for waiving
the Railway Labor Act in the exercise of its Interstate Commerce Act
approval authority, and (2) ICC cannot waive the Interstate Commerce
Act’s labor protection conditions in the exercise of that approval
authority. Ultimately, we find the Railway Labor Act argument dis-
positive, and we vacate the ICC decisions on that basis. To fully un-
derstand the texture of this dispute, however, it is necessary to examine
the Interstate Commerce Act labor protection conditions as well.
|. CC's approval authority. Undez the Interstate Commerce Act.
ICC has exclusive authority to approve certain consolidations and
mergers. 49 U.S.C. 11341 er seq. (1982). The Act enumerates the types
of transactions to which ICC’s approval authority applies. id. §11343.
and the considerations that must guide ICC, id. 11344. Most signifi-
cantly for this appeai. “|a] carrier. corporation, or person participating
in that approved or exempted transaction is exempt from the antitrust
laws and from all other law, including State and municipal law. as
necessary to let that person carry out the transaction. hold. main-
tain. and operate property. and exercise control or franchises acquired
through the transaction.” /d. §11341(a). Thus ICC has the power to
approve a transaction and exempt its participants from legal obsta-
cles that would impede its fruition.
In the exercise of this authority to exempt consolidations from
the constraints of applicable statutes. ICC has certain ultimate con-
straints On its broad authority. First. there is a necessity component
to the plenary authority: the statute specifies that ICC may exempt
transactions from applicable laws “as necessary” for completion of
the transaction. Second, as with any agency action. ICC's exercise
of its authority must comport with the requirements of reasoned deci-
sionmaking. See generally United States v. ICC, 396 U.S. 491. 90
S.Ct. 708, 24 L.Ed.2d 700 (1970).
2. Labor protection requirements. Statutory protections for rail:
road employees have received considerable congressional attention.
Two important statutory vehicles for the current labor protection re-
quirements are the Railway Labor Act, 45 U.S.C. §151 et seq. (1982).
and the Interstate Commerce Act’s labor protection section, 49 U.S.C.
§11347.
The Railway Labor Act creates a highly structured system for
administering and resolving labor disputes. In passing the Railway
Labor Act Congress sought. in part, “*[t]o avoid any interruption to
commerce * * * to forbid any limitation upon freedom of associa-
tion among employees * * *, [and] to provide for the prompt and ord-
erly settlement of all disputes concerning rates of pay, rules, or working
conditions[.] 45 U.S.C. §15la. The statute specifies eleven general
duties of rail carriers, id. §152. It also creates a variety of mechan-
isms to settle rail labor disputes—a National Railroad Adjustment
Board, id. §152, a National Mediation Board, id. §§154-155, and a
system of arbitration, id. §§157-159. The statute gives special atten-
tion to changes in rates of pay, rules, and working conditions. It pro-
vides that employers give employees the opportunity for negotiation
and mediation before implementing such changes. Jd. §156; see also
»
ae
AS
id. §152, Seventh duty. The Railway Labor Act thus stands as an im-
portant structure for maintaining labor peace and fairness.
The Interstate Commerce Act labor protection section, 49 U.S.C.
§11347, affords employees substantial protection from the effects of
mergers and consolidations. Such labor protection conditions have
a long history. See New York Dock Railway v. ICC, 609 F.2d 83,86-90
(2d Cir. 1979). In its current version the section provides that, in the
exercise of its approval authority, “the Interstate Commerce Com-
mission shall require the carrier to provide a fair arrangement at i_ast
as protective of the interests of employees who are affected by the
transaction as the terms imposed under this section before February
5, 1976 * * * 49 U.S.C. §11347 (emphasis added).
ICC has specified the particular conditions that must be observed
for this Section 11347 requirement. The conditions for protecting labor
in a merger are known as New York Dock conditions, see New York
Dock Railway, 360 ICC 60 (1979), affd sub nom. New York Dock Rail-
way v. ICC, supra. The conditions for protecting labor in transfers
of trackage rights are known as Norfolk & Western conditions, see
Norfolk & Western Railway Co., 354 ICC 605 (1978), modified by
Mendocino Coast Railway, Inc. , 360 ICC 653, 664 (1980). affd sub
nom. Railway Labor Executives’ Ass'n v. United States, 675 F.2d 1248
(D.C. Cir.1982). These conditions include negotiation and mediation
for dismissal and displacement of employees, 354 ICC at 610-611, 360
ICC at 85; dismissal and displacement compensation, 354 ICC at
611-612. 360 ICC at 86; and a system of arbitration, 354 ICC at 613.
360 ICC at 87-88. Generally. the conditions provide that “(t]he rates
of pay, rules, working conditions and all collective bargaining aad
other rights, privileges and benefits * * * of railroads’ employees un-
der applicable laws and/or existing collective bargaining agreements
or otherwise shall be preserved unless changed by future collective
bargaining agreements or otherwise shall be preserved unless changed
by future collective bargaining agreements or applicable statues.” 354
ICC at 610, 360 ICC at 84. ICC has thus established conditions for
discharging its statutory responsibility to protect labor benefits in the
midst of consolidations.
In short, [CC has authority to approve certain transactions, even
to the extent of exempting the transactions from other laws. At the
same time. the Railway Labof Act structures rail labor relations. and
the Interstate Commerce Act's labor protection section gives rail em-
ployees a measure of protection from the effects of rail transactions.
B. The Current Dispute
This dispute has three important stages: (1) ICC's consolidation
approval in 1982: (2) the post-approval conflict over crew selection:
and (3) the two ICC decisions in 1983.
1. JCC approval for the consolidation. In 1982 UP and MP ap-
plied to ICC for approval of a consolidation under ICC's exclusive
authority.' Several railroads and severab unions (including the peti-
tioners) objected to the proposed consolidation. On October 20, 1982
ICC approved the consolidation, but it also approved the applicaticn
of two railroads for “trackage righis’"? over specified MP routes to
ameliorate possible anticompetitive effects. D&RGW received trackage
rights for one route (Pueblo. Colorado to Kansas City. Missouri)» and
MKT received trackage rights for several other routes. See Union
Pacific-Control-Missouri Pacific, 366 \CC 459 (1982), affirmed in
part and remanded in part sub nom. Southern Pacific Transporta-
tion Co. v. ICC, 736 F.2d 708 (D.C. Cir.1984) (per curiam), cert. de-
nied, — U.S. —, 105 S.Ct. 1172. 84 L.Ed.2d 322 (1985). These are
the four railroads who are intervening in support of the ICC
decisions—the two who received ICC approval of their consolidation
(UP and MP) and the two who received trackage rights for MP routes
as conditions of that approval (D&RGW and MKT).
In their applications for trackage rights D&RGW and MKT both
commented on crew selection. D&RGW specified that it could,
at its Option, use its own crews when it used the newly granted track-
age rights, Finance Docket No. 30,000 (Sub-No. 18) (DRGW-8) (cit-
ed in ICC Decision of October 25, 1983, Joint Appendix (JA) 164):
MKT specified that it would use its own crews, Finance Docket No.
'Western Pacific Railroad Company was also involved in the consoli-
dation, but its role is not relevant to these petitions.
*“Trackage rights” give one railroad the right to run its trains over
another railroad’s tracks. Indisputably, trackage rights are “subject to **
specific negotiations,” dissent at 734. They are also subject to governing
Statutes and to the conditions of the Commission's approval, including the
imposition of general labor protection conditions.
= ~—— eee eee
A7
30,000 (Sub-No. 25) (MKT-25) (cited in ICC Decision of October
25, 1983, JA 164).
In granting the trackage rights ICC did not mention crew selec-
tion. The Commission primarily addressed the need for the trackage
rights to prevent possible anticompetitive effects from the consolida-
tion. 366 ICC at 566-568, 572-578. Indeed, the Commission denied
part of MKT’s application for trackage rights because it did not agree
that these trackage rights were needed to promote competition. /d.
at 570-572. Notably, ICC emphasized that its general trackage rights
approval was subject to the Norfolk & Western conditions that pro-
tect workers’ rights in trackage rights situations. 366 ICC at 654; id.
at 621-622. This statement was ICC's only reference to labor arrange-
ments in the use of trackage rights.
2. The crew assignment controversy. After the consolidation be-
came effective, the railroads began performing their approved track-
age rights operations. D&RGW temporarily used MP crews on the
MP routes, but claimed that it would soon use its own crews. Exhibit
A to BLE’s Petition for Clarification of ICC's October 20, 1982 de-
cision, JA 6. MKT, meanwhile, began using its own crews. UTU’s
Petition for Reconsideration of ICC's denial of BLE’s Petition for
Clarification at 3, JA 74. The unions objected. They claimed that the
unions representing MP employees had an established right to a rolé
in crew assignment and that the railroads were changing that condi-
tion without consulting them. Both D&RGW and MKT, however.
claimed that the ICC approval of their applications gave them a right
to use their own crews and that ICC's exemption authority immunized
this right from later legal challenge. MP's Reply to BLE’s Petition
for Clarification at Il, JA 24: UTU’s Petition for Reconsideration at
3-4. JA 74-75.
D&RGW also made an additional argument. The Atchison, Tope-
ka, & Santa Fe Railway Company had challenged D&RGW's tem-
porary use of MP crews in the trackage rights as anticompetitive and
impermissible. On November 24. 1982 and January 18, 1983, ICC
issued decisions rejecting the challenge and upholding D&RGW's
plans. including the preliminary decision to use existing MP crews.
The Commission noted that D&RGW had .4e choice of using its own
crews: the Commission did not mention any lurking labor relations
issues. ICC Decision. November 24. 1982. at 3 (D&RGW brief. Ap-
AS
pendix B): ICC Decision. January 18. 1983. at 3 (id.. Appendix C).
In response to the unions’ challenge. D&RGW claimed that these ICC
decisions settled the validity of its crew selection plans. Reply of
D&RGW to BLE’s Petition for Clarification. JA 9-10.
Initially. the two unions responded to the railroads’ position on
crew selection in different ways. The United Transportation Union
threatened to strike over the crew assignment issue. MP sought an
injunction preventing the threatened strike. On March |, 1984 the Dis-
trict Court for the Eastern District of Missouri issued such an in-
junction. Missouri Pacific R. Co. v. United Transportation Union,
580 F.Supp. 1490 (E.D.Mo.1984). An appeal from that injunction is
pending.
The Brotherhood of Locomotive Engineers took a different tack.
On April 4. 1983 it filed a petition with the Commission and requested
clarification that the consolidation approval did not alter previous labor
arrangements, particularly with respect to crew selection. BLE claimed
that the normal Railway Labor Act and Interstate Commerce Act labor
protection conditions (§11347) should app'y. BLE’s Petition for Clarifi-
cation. JA 2-4. After ICC rejected BLE’s interpretation in a May 18.
1983 decision, UTU joined BLE in a May 31 petition requesting recon-
sideration. On October 25, 1983 the Commission elaborated on its
earlier decision and continued to reject the unions’ contentions.
3. The ICC decisions. In its May 18 decision refusing BLE’s re-
quest, ICC maintained that it had already decided the issue of crew
selection. The Commission claimed that it had exempted the crew
selection provisions, which it had not mentioned in its decision, from
all legal obstacles because those provisions were in the trackage rights
applications. “Inasmuch as DRGW and MKT proposed in their ap-
plications that the operations would be performed with their own crews,
our approval of the applications authorizes such operations. * * We
have broad authority to impose conditions on consolidation and our
jurisdiction in plenary. Therefore, we properly authorized performance
of trackage rights tenants using their own crews.” ICC Decision of
May 18, 1983 at 4-5, JA 36-37. ICC did not specifically address the
Railway Labor Act and Section 11347 arguments. Thus in its May de-
cision ICC implied that it had immunized the crew selection preroga-
tives from legal obstacles by dint of having approved the trackage
applications.
A9
In its October decision the Commission again denied the unions’
request. It rejected the notion that it had to provide some basis for
concluding that waiver of the Railway Labor Act was necessary to
the transaction. ‘The terms of section 11341 immunizing an approved
transaction from any other laws are self-executing and there is no need
for us expressly to order or to declare that a carrier is spec’ ‘ically
relieved from certain restraints.” ICC Decision of October 25, 1983
at 7, JA 163. The Commission similarly rejected the claim that Sec-
tion 11347 rights were being violated. ‘To the extent that existing work-
ing conditions and collective bargaining agreements conflict with a
transaction which we have approved, those conditions and agreements
must give way to the implementation of the transaction. The labor
conditions imposed under section 11347 preserve conditions and agree-
ments in the context of the authorized transactions.’ /d. at 6, JA 162.
The Commission thus continued to maintain that it had immunized
the crew selection from all subsequent legal obstacles, and it con-
tinued to offer no analysis of the necessity of this immunity for com-
pletion of the transaction.
The unions filed petitions to this court. They claim that ICC ex-
ceeded its authority by unjustifiably waiving the Railway Labor Act
and the Interstate Commerce Act labor protection conditions.
Il. THRESHOLD ISSUES
Before reaching the statutory issues, we must consider two
threshold issues: timeliness and issue preclusion.
A. Timeliness
ICC and the four intervening railroads argue that the unions are
barred because their appeal is not timely. We disagree.
The timeliness dispute turns on the interpretation to be given var-
ious Commission actions. The jurisdictional statute permits judicial
review if an appeal of a final order is filed within 60 days. 28 U.S.C.
$2344 (1982). The railroads and ICC contend that ICC’s final order
on crew selection prerogatives issued on October 20, 1982 (the deci-
sion giving general approval for the UP/MP consolidation, subject
to the grant of trackage rights to D&RGW and MKT). They argue
that the unions’ appeals for clarification in April 1983 (resulting in
the Mav 1983 decision) and May 1983 (resulting in the October 1983
AlO
decision) are entitled to no weight because those ICC decisions were
merely procedural refusals to reopen a matter decided in the October
1982 order.
The railroads and ICC rely heavily on Nat? Bank of Davis \-
Office of Comptroller of Currency, 725 F.2d 1390 (D.C. Cir.1984) (per
curiam). In that case the court ruled that a petition for review was
not timely when petitioner took no action during the statutory time
period of 30 days. asked the agency to reconsider two months after
the decision, and sought to invoke the court's jurisdiction by filing
a petition for judicial review within 30 days after the agency denied
the petition for reconsideration. The railroads and ICC argue that.
similarly, in the case on appeal. the unions seek to make their peti-
tion timely by dating the time period for judicial review only from
the procedural refusal to reopen a previous proceeding.
[1] Their reliance on Davis is misplaced. As this court observed
some time ago in /nvestment Company Institute v. Board of Gov. of
FRS, 551 F.2d 1270. 1281-1282 (D.C.Cir.1977), and very recently in
Eagle-Picher Industries, Inc. v. EPA, 759 F.2d 905, 912. 915
(D.C-Cir.1985) time limits on review may, in exceptional circumstances,
be “excused” when an issue is not ripe for review during the statuto-
ry period. As we emphasized in Eagle-Picher, petitioners generally
are obliged to seek judicial determination of the ripeness of their claims
during the statutory period. “In general, we will refuse to hypothe-
size whether, in retrospect, a claim would have been deemed ripe
for review had it been brought during the statutory period, in order
to save an untimely claim.” 759 F.2d at 909. However, we specifical-
ly noted that “*[e]xceptions occasionally may be justified in the light
of changed circumstances giving rise to a new cause of action be-
yond the statutory period for review; compelling case precedent that
makes it clear beyond doubt that the claim was not ripe during the
statutory period; or clear evidence that a failure to consider a peti-
tioner’s claims would work a manifest injustice.” /d.
[2] The instant case clearly presents a situation ir. which the neti-
tioners’ claim ripened after the expiration of the statutory period due
to changed circumstances resulting from a misleading statement of
position by ICC. The petitioners had no notice of their present claim
until after ICC denied their petition for clarification and reconsider-
ation thereof. In its iritial decision, the ICC specifically said that the
All
Statutory labor protection conditions would apply and, thus, it would
have been premature for the unions to have claimed that the condi-
tions were being violated. The Commission and the railroads argue
that the trackage applications specifically noted that D&RGW might,
and MKT would, use their own crews, and thus there was no ripe-
ness problem. However, those applications were bounded by ICC’s
general pronouncement that the labor protection conditions would not
be violated. As soon as it became apparent that MKT intended to
use its own crews, the unions petitioned ICC for clarification of the
application of the labo’ protection conditions. The issue did not be-
come ripe for judicial review until the Commission had specified that
crew selection was exempt from all otherwi-e at, -icable legal re-
quirements.’
[3.4]Nor can it be claimed that the petition should be barred be-
cause it was not filed within 60 days after the May decision. For the
Commission then undertook extensive review and issued a lengthy
opinion in October. If the motion for reconsideration is filed within
the statutorily prescribed review period, the time limitation tolls un-
til the agency issues its final decision on the motion for reconsidera-
tion, see Outland v. CAB, 284 F.2d 224 (D.C-Cir.1960); Davis, supra,
725 F.2d at 1391 n. 5, and it is tolled while the agency is giving full
consideration to the issues presented for judicial review, see Nar 7 In-
sulation Transportation Committee y. ICC, 683 F.2d 533, 543 n. 17
(D.C.Cir. 1982).
[5] The ra*icoads and the Commission also claim that the peti-
tion should be barred as untimely because ICC clarified its policy
on crew assignment in decisions issued on November 24. 1982 and
January 18, 1983. At that time D&RGW had rot exercised its option
‘The dissent’s extended timeliness objection rests on a single. mistaken
assumption: “Though these labor protections were held to be applicable in
general, * * * they were to be inapplicable to the crew se'ection Issue since
the crew selection provisions constituted part of the trackage rights applica-
tions approved by the final order of the commission.” Dissent at 727. Un-
fortunately. not one word of ICC's October 1982 decision suggested that its
unequivocal commitment to labor protection conditions was somehow “in-
upplicable to the crew selection issue.” From all appearances. ICC's impo-
sition of labor protection gonditions qualified its approval of the crew selection
upplications. rather than the reverse. Therein lies the nub of this case and
the reason why petitioners’ claim was in fact. not ripe until [CC modified
that curlier commitment in the proceedings . sue.
Al2
to use its own crews: the Atchison. Topeka & Sania Fe Railway was
protesting its use of MP crews as anticompetitive. In its decisions
ICC noted that D&RGW had the option of using its own crews. The
argument that this statement should have put the unions on notice
is unconvincing: nothing suggested that ICC had changed,its view
that the general labor protection conditions would apply in full force.
The dispute is not over whether the railroads could use their own
crews: it is whether they could use their own crews subject to the
requirements of the labor protection conditions. Before May 1983 the
Commission never suggested that D&RGW and MKT could use their
own crews without observing the basic labor protection conditions.
And before the railroads refused to negotiate in early 1983. the un-
ions had no reason to appeal to the Commission for clarification. Thus
the November 1982 and January 1983 decisions should not stand as
a bar: although those decisions suggested that the railroads could use
their own crews, ICC did not suggest that they could do so without
observing the basic labor protection conditions.
Finally. pointing to the principle that parties should raise their
objections in administrative proceedings. United States v. L.A. Tuck-
er Truck Lines, 344 U.S. 33, 73 S.Ct. 67, 97 L.Ed. 54 (1952). the
railroads and ICC claim that the unions should have raised their ob-
jection in the Octeber 1982 proceeding. However, in the administra-
tive proceedings the unions did argue for vigorous labor protections.
366 ICC at 621-622. As discussed. it was not until the May decision
that the unions should have realized that the labor protection condi-
tions would not be fully applicable to crew selection.
B. /ssue Preclusion
[6] MKT raises an additional threshold objection. It claims that
the crew selection issues were decided in the opinion accompanying
the Missouri District Court's injunction prohibiting UTU from strik-
ing, see Missouri Pacific R. Co. v. United Transportation Union, supra,
580 F. Supp. 1490, appeal pending. and that issue preclusion pre-
vents this court from reaching the issues. This argument is frivolous.
Despite broad dicta, the District Court recognized that it had no power
to consider the validity of ICC orders. See id. at 1502 (“‘The United
States Courts of Appeals are vested with exclusive jurisdiction to de-
termine the validity of orders of the ICC.”’). Thus there can be no
preclusive effects on this court’s review of the validity of + ICC
Al3
order. See 18 C: WRIGHT, A. MILLER & E. COOPER, FEDERAL
PRACTICE AND PROCEDURE $4420 (1981) (“The fundamental
rationale of issue preclusion dictates the clearly settled requirement
that it be limited to matters that have been actually decided.”’).
We thus reject the threshold objections and turn to the merits
of the unions’ contentions.
Ili. STATUTORY ISSUES
The unions raise two statutory arguments: (1) ICC offered no in-
kling of a justification for the view that waiving the Railway Labor
Act with respect to crew assignment was necessary to effectuate the
transaction, and (2) the Interstate Commerce Act labor protection con-
ditions (49 U.S.C. §11347) may not be waived because the labor pro-
tection section specifically qualifies ICC's consolidation approval
authority (49 U.S.C. §11341). We find the first argument decisive.
The unions claim that ICC has wholly failed to justify the neces-
sity for waiving the Railway Labor Act’s applicability to the crew selec-
tion issue. The Commission claims that no such justification is
necessary.
[7] Although an agency receives deference in interpreting its or-
ganic statute. tie agency's authority is not unbounded. Bureau of Al-
coho!, Tobacco & Firearms v. FLRA, 464 U.S. 89, —- & n. 8, 104
S.Ct. 439, 444 & n. 8, 78 L.Ed.2d 195 (1983). In reviewing an agen-
cy’s interpretation we must consider whether it is within the delega-
tion to the agency envisioned by Congress. State of Montana vy. Clark,
749 F.2d 740, 744-747 (D.C.Cir.1984). Our analysis must begin with
the language of Congress. “If the intent of Congress is clear. that
is the end of the matter: for the court. as well as the agency. must
give effect to the unambiguously expressed intent of Congress.”
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
— U.S. —. —. 104 S.Ct. 2778, 2782. 81 L.Ed.2d 694 (1984). [8] The
statutory language dictates that the Commission's exemption authority
upplies only “as necessary” to allow transactions to occur. 49 U.S.C.
$11341(a). Congress has given ICC broad powers to immunize trans-
actions from later legai obstacles, but this ¢elegation by Congress
is explicitly qualified by a necessity component. The statute thus re-
quires that the exemption authority operate according to necessity.
not according to whim ur caprice.
Al4
This statutory limit on the Commission's authority creates cer-
tain responsibilities for ICC. In exercising its waiver authority ICC
must do more than shake a wand to make a law go away. It must sup-
ply a reasoned basis for that exercise of its statutory authority?
This necessity component of ICC's waiver authority has not fre-
quently arisen in the case law. In part this is because. in many of
the ICC waiver authority cases. the necessity for the waiver ts clear:
the battle is fought over whether the waiver and transaction are in
the public interest. Sec, e.g., United States v. ICC, supra, 396 U.S.
491. 90 S.Ct. 708. 24 L.Ed.2d 700. However. ample precedent sup-
ports the view that the Commission must supply some basis for a
necessity determination before the exemption authority applies. In
one line of cases the Supreme Court has assumed that ICC may waive
State laws only if those state laws pose an obstacle to the transaction.
See Callaway v. Benton, 336 U.S. 132. 140-141. 69 S.Ct. 435, 440-41.
93 L.Ed. 553 (1949) (waiver authcrity applies to “state laws inter-
posing obstacles in the path oi otherwise lawful plans of reorganiza-
tion”): Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 126, 68
S.Ct. 426, 430, 92 L.Ed. 580 (1948): Texas v. United States, 292 U.S.
522. 534-535. 54 S.Ct. 819, 825, 78 L.Ed. 1402 (1934).° Furthermore.
the Supreme Court has stressed that the words of ICC's approval
authority section must be carefully scrutinized to ensure that ICC does
not exceed its statutory powers, County of Marin v. United States,
356 U.S. 412, 78 S.Ct. 880, 2 L.Ed.2d 879 (1958). and that ICC's
approval authority, though broad, is ultimately reviewable as an ex-
ercise of reasoned decisionmaking. See United States v. ICC, supra;
Seaboard Air Line R. Co. v. United States, 382 U.S. 154, 86 S.Ct.
*This is not to say that the ICC must enumerate every legal obstacle
that is waived in its approval. Such a requirement might undermine the ap-
proval authority's purpose of “facilitat|ing}] merger and consolidation in the
national transportation system. “Country of Marin v. United States, 356 U.S.
412. 416. 78 S.Ct. 880, 883. 2 L.Ed.2d 879 (1958). because some legal ob-
stacles to fruition of the transaction may not be entirely foreseeable at the
time of approval. But ICC's decisionmaking process, either in the approval
or in a later proceeding. must reveal evidence supporting a conclusion that
waiver of particular legal obstacle is necessary to effectuate the transaction.
‘Schwabacher v. United States, 334 U.S. 182. 68 S.Ct. 958. 92 L.Ed.
1305 (1948). also supports this analysis. As the Fifth Circuit has explained.
“In Schwabacher * * * the insistence on further compensation by preferred
stockholders of a merging company exceeded the compensation found just
Al5
277, 15 L.Ed.2d 223 (1965); Minneapolis & St. Louis R. Co. v. Unit-
ed States, 361 U.S. 173, 80 S.Ct. 229, 4 L.Ed.2d 223 (1959); McLean
Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed.
544 (1944).
Other courts have also emphasized that there must be a basis in
the record for the conclusion that the statutory waiver is necessary
to the transaction. In City of Palestine, Texas v. United States, 559
F.2d 408 (Sth Cir.1977), cert. denied, 435 U.S. 950, 98 S.Ct. 1576,
55 L.Ed.2d 800 (1978), the Fifth Circuit provided an extensive anal-
ysis of this necessity problem. In vacating ICC’s determination that
it had waived certain contractual obligations the court stressed: “The
ICC exceeds the scope of its authority when it voids contracts that
are not germane to the success of the approved * * * transaction.
In its grant of approval authority, Congress did not issue the ICC a
hunting license for state laws and contracts that limit a railroad’s et-
ficiency unless those laws or contracts interfered with carrying out
an approved merger.” Id. at 414 (emphasis added). Similarly, in an
earlier case the Fifth Circuit noted that ICC approval of a carrier's
plans did not automatically remove the requirements of the Railway
Labor Act and the Norris-LaGuardia Act. Texas & New Orleans R.
Co. v. Bhd of Railroad Trainmen, 307 F.2d 151 (Sth Cir.1962). cert.
denied, 371 U.S. 952. 83 S.Ct. 508, 9 L.Ed.2d 500 (1963). See also
Interstate Investors, Inc. v. Transcontinental Bus System, Inc., 310
F.Supp. 1053. 1068 (S.D.N.Y.1970) (court must determine whether
waiver of antitrust laws is “necessary™ to completion of transaction).°
[9] With these principles in mind, the current dispute comes clear-
ly into focus. ICC claims that the Railway Labor Act was a “law”
appropriately waived in the exercise of its exclusive authority. ICC's
analysis of the necessity for waiving the Railway Labor Act. however.
is virtually non-existent. both in the 1982 decision and in the 1983
decisions. In the 1982 decision ICC never offered a word about waiving
and reasonable in the ICC's approved plan of merger. In cach ot these
{Supreme Court] cases the voided state-related provision impinged upon the
effectuation of the transaction. * * © In a// of the cases approving the ICC's
nullifications of state law. the laws stood in the way of the approved trans-
action.” City of Palestine, Texas v. United States, 559 F.2d 408, 414-415 (Sth
Cir.1977) (emphasis added). cert. denied, 435 U.S. 950, 98 S.Ct. 1576.
SS5L.Ed.2d 800 (1978).
MCC relies on Bhd of Locomotive Engineers vo Chicago & Northwestern
Al6
the Railway Labor Act with respect to the crew assignment in the
trackage rights. much less the necessity for doing so. As noted, it
merely approved the trackage applications and specified that the labor
protection conditions applied in full. In the 1983 decisions ICC con-
tinued to give no necessity justification for the waiver of the Railway
Labor Act. It claimed that “*[t]he terms of section 11341 immunizing
an approved transaction from any other laws are self-executing and
there is no need for us expressly to order or to declare that a carrier
is specifically relieved from certain restraints.” ICC Decision of Oc-
tober 25. 1983. JA 163. In its proceedings, then, the Commission did
not give a shred of reasoning to support its view that completion of
the transactions required shielding crew selection from the Railway
Labor Act.’
_ ICC's complete failure to justify the necessity for waiving the
Railway Labor Act respecting crew selection is especially conspicu-
ous 1n light of evidence suggesting that the issue would nor interfere
with the trackage rights. First, the Commission specifically left the
question of trackage compensation open to later negotiation between
R. Co., 314 F.2d 424 (8th Cir.). cert. denied, 375 U.S. 819, 84 S.Ct. 55.
Il L.Ed.2d 53 (1963). to support its position. In that case the Eighth Circuit
affirmed an ICC order that the Railway Labor Act would not apply. The
government claims that C&NW stands for the proposition that the immunity
is automatic and requires no finding of necessity. However. C&NW fails to
carry the day for several reasons. First. C&NW itself recognized that im-
munity attached only to obstacles that would frustrate fruition of the merg-
er. Id. at 432. Second. C&NW distinguished. but did not disagree with, Texas
& New Orleans. R. Co. v. Bhd of Railroad Trainmen, 307 F.2d 151 (Sth
Cir.1962). cert. denied, 371 U.S. 952, 83 S.Ct.508, 9 L.Ed.2d 500 (1963).
314 F.2d at 433. And third, C&NW was explicitly limited to its facts. Jd.
at 434. C&NW did say that no statement of necessity was required. /d. at
432. To the extent that C&NW may be read to say that ICC need supply
no basis for the necessity determination, we find the interpretation ill-
conceived and reject it.
ICC points to its October decision statement that **[t}he approval con-
fers self-executing immunity on all material terms of the agreement from
all other law to the extent necessary to permit implementation of the agree-
ment.” ICC Decision of Oct. 25, 1983 at 15, JA 171. It then claims that this
reference to “material terms” provides a sufficient basis for immunity be-
cause crew selection was a “material term” of the trackage rights transac-
tion. However. merely stating in totally conclusory terms that something
is a “material term” is inadequate to provide the basis for the conclusion
Al7
the railroads, 366 ICC at 589-590; it never suggested why the ques-
tion of crew selection was somehow so much more necessary to frui-
tion of the transaction that normal Railway Labor Act procedures could
not apply to the issue of crew selection. Second, ICC noted that MKT
might find it necessary to use more crews than it suggested in its ap-
plication, 366 ICC at 569-570; again, the Commission never sug-
gested why the question of crew selection was so much more necessary
to fruition of the transaction. On both of these issues, then, the Com-
mission expressed a willingness to leave subsidiary trackage issues
to later determination. Finally, the Denver & Rio Grande operated
for some months with existing Missouri Pacific crews, and there has
been no suggestion that the trackage rights were somehow frustrated
as a result.’
In short, ICC has given no justification for a view that waiver
of the Railway Labor Act is necessary to effectuate the transactions
at issue. Indeed, the evidence in the record strongly suggests the con-
trary conclusion. The Commission therefore exceeded its authority
when it claimed to have waived the Railway Labor Act regarding crew
selection.
In view of this disposition, it is unnecessary to reach the second
statutory issue—whether ICC may ever waive the labor protection con-
dition section (§11347) through the exercise of the exemption authority
(§$11341(a)). That issue turns on whether Section 11347 is viewed as
a “law” that may be appropriately waived, or as a specific qualifica-
tion on the exemption authority itself. We note only that the Com-
mission has completely failed to show any conflict between these two
that waiver is necessary to fruition of the transaction, as $11341(a) requires.
We do not. as the dissent suggests, “attempt[] to disregard” this statement.
Dissent at 735. Rather. we search in vain for the articulated. rational expla-
nation of this purported finding that elementary principles of reasoned deci-
sionmaking clearly demand. Burlington Truck Lines, Inc. v. United States,
371 U.S. 156. 168. 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962).
‘The dissent’s vehe'nent protestations about the “procompetitive pur-
pose of the trackage rights approval are wide of the mark. For the question
is Whether the issue of crew selection somehow goes to that “pro-competitive
purpose.” ICC has never given the faintest hint of a reasoned explanation
why crew selection is so essential to that purpose that the otherwise ap-
plicable provisions of the Railway Labor Act must be waived. Indeed. as
discussed above. the evidence in the record indicates otherwise.
Als
sections of the Interstate Commerce Act. which we assume were meant
to be read in concert rather than in conflict. and we need not com-
ment on the unlikely event that the two sections may pose a genuine
conflict in some later case.’
We thus vacate the 1983 orders and remand the case to fhe Com-
mission. 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 pro-
competitive purpose of the grant of trackage rights or some other pur-
pose 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.
So ordered.
MacKinnon. Senior Circuit Judge (dissenting):
This case involves the consolidation of the Union Pacific Rail-
road Company (“UP”). the Missouri Pacific Railroad Company (“*Mis-
souri Pacific’), and the Western Pacific Railroad Company (““WP’’).
thus forming one of the nation’s largest railroads. In an October 20.
1982 decision, the ICC granted specified trackage rights, over two
sections of the Missouri-Pacific lines, to two railroads that would be
harmed by the consolidation, the Missouri-Kansas-Texas Railroad
Company (“Katy”) and the Denver and Rio Grande Western Rail-
road Company (“Rio Grande”). The Commission authorized these
two railroads to use their own crews to operate their own trains while
exercising such trackage rights. My colleagues rule that the Com-
mission has failed to find that it was “necessary” to the approval of
the trackage rights applications and the underlying Union Pacific-
Missouri Pacific-Western Pacific consolidation to waive any applica-
ble protective labor conditions. In my view, the majority has ignored
*The unions have argued that the Railway Labor Act and § 11347 rights
are largely coextensive in this case. and we thus view the Railway Labor
Act argument as dispositive. To the extent that there is a meaningful differ-
ence between the Railway Labor Act and § 11347 protections, the unions
have not argued it. and we need not address the issue. In any event, we note
that our decision vacates the ICC decisions in their entirety.
Al9
the clear import of the record and, in a decision that pays lip service
to our prescribed standard of review, substituted its judgment for that
of the ICC. I therefore respectfully dissent.
The majority holds first that the claims of the petitioning unions
are not barred for being untimely because the October 20, 1982 ICC
decision was not final and thus did not make the issue of crew selec-
tion ripe for review. I cannot agree with the majority's analysis.
This case began on September 15, 1980, when the UP, the Mis-
souri Pacific, and the WP filed jointly for approval to consolidate.
After the application was made public, 45 Fed.Reg. 68484 (1980).
various parties entered the fray either to support or oppose the appli-
cation. On January 13, 1981, the Katy and the Rio Grande opposed
the consolidation and filed separate applications seeking protective
trackage rights and other compensatory rights they alleged were neces-
sary in order both to ameliorate the anticompetitive harms of the pro-
posed consolidations and to protect them from revenue losses necessary
to continue essential services.
The Katy sought trackage rights to operate over Missouri Pacif-
ic’s tracks between Kansas City, Kansas, and Omaha, Nebraska, a
distance of approximately 200 miles. The proposed operating agree-
ment, as submitted to the ICC for approval. specified the operating
conditions for the joint trackage rights and specifically stated:
MKT [Katy]. with its own emplovees, and at its sole cost
and expense, shall operate its engines, cars and trains on
and along Joint Track.
Finance Doc. No. 30,000 (Sub-No. 25) 1, Exh. No. 2 at 5 (emphasis
added). The Rio Grande was harmed by the merger both at the Utah
und the Pueblo, Colorado gateways. It sought joint trackage rights
to Operate over Missouri Pacific's tracks between Pueblo, Colorado.
und Kansas City, Missouri, a distance of 619 miles. Its trackage rights
application submitted for ICC approval stated:
Rio Grande may, at its option, elect to employ its own crews
for the movement of its trains. locomotives and cars to
points on or over the Joint Track.
A20
Id. (Sub-No. 18). Rio Grande Proposed Agreement §6(c)(3) (emphasis
added). Thus. both railroads express/v requested ICC authority to use
their own crews while operating their own “trains. locomotives and
cars” over joint trackage with the Missouri Pacific.
On February 20. 1981. the Katy and the Rio Grande filed veri-
fied statements with the ICC in support of their applications for joint
trackage rights. These statements indicated further that if the track-
age rights were granted. the railroads would use their own crews. Veri-
fied Statements of Adolf Nance and Harold Hacker. quoted in J.A.
at 165. In ruling on the applications. the implicit issue for the ICC
was the degree of anticompetitive harm to which the Katy and Rio
Grande would be subjected and accordingly what amount of com-
pensatory rights would be necessary to protect the Liability of the ap-
plicant railroads and to guarantee that they would furnish the necessary
competition to the merged railroads. The petitioning unions. the
Brotherhood of Locomotive Engineers (““Engineers” or “union™) and
the United Transportation Union (*“UTU” or “union”). participated
in the ICC proceeding and submitted evidence in opposition to the
joint trackage rights applications. Hearings proceeded for eleven
months, ending in January, 1982. There is no indication, however.
that petitioners ever contended that UP or Missouri Pacific employees
had a right to participate in the crew selection decision.
On October 20, 1982. the ICC approved the consolidation of the
UP. the Missouri Pacific, and the Western Pacific and made the con-
solidation subject to the usual labor protective conditions set forth
in New Yerk Dock Ry. — Control — Brooklyn, Eastern Dist. Termi-
nal, 360 1.C.C. 60 (1979). As part of the consolidation, while disap-
proving other requested compensatory conditions, the LCC specifically
approved the applications of the Katy and the Rio Grande for the track-
age rights described above, subject to the labor protection conditions
specified in Norfolk & Western Ry. Co. — Trackage Rights — Burling-
ton Northern, Inc. , 354 1.C.C. 605 (1978), as modified by Mendocino
Coast Ry., Inc. — Lease and Operate, 360 1.C.C. 653, 665 (1980).
Union Pacific Corp., Pacific Rail System, Inc., and Union Pacific
R.R. Co. — Control — Missouri Pacific Corp. and Missouri Pacific
R.R. Co., 366 L.C.C. 459, 654 (1982). Though these labor protec-
tions were held to be applicable in general, I think it is clear that
they were to be inapplicable to the crew selection issue since the crew
selection provisions constituted part of the trackage rights applica-
A2l
tions approved by the final order of the Commission. Moreover, un-
like other trackage rights-related requests by the Katy and Rio Grande
which the Commission denied, see Majority Opinion at 724-725, there
was no express denial of the crew selection requests. Therefore, the
labor unions were on notice that the ICC had authorized the Katy
and the Rio Grande to use their own crews in the operation of their
own trains in the exercise of their joint trackage rights.
It was not until April 4, 1983, approximately five and one-half
months after the ICC’s decision approving the consolidation, that the
Engineers filed a petition with the ICC seeking clarification of the
October 20, 1982 decision. The ICC denied the Engineer's petition
on the procedural grounds that crew selection had been an issue in
the consolidation proceedings, that petitioners introduced no new evi-
dence or arguments setting forth any issue in need of clarification,
and that the issues involved had been decided in the Commission's
October 20, 1982 decision. Following this denial, the UTU joined
the Engineers in moving for reconsideration of the denial of the mo-
tion for clarification.
Time deadlines for requesting review of agency decisions are juris-
dictional and cannot be enlarged by a reviewing court. National
Resources Defense Council v. NRC, 666 F.2d 595, 602 (DC. Cir. 1981):
Microwave Communications, Inc. v. FCC, 515 F.2d 385, 388-389 (DC.
Cir. 1974). The Hobbs Act prescribes that judicial review must be
sought within 60 days of a final order. 28 U.S.C. §2344 (1982). An
action of the Commission is final on the date on which it is served,
and exhaustion of further administrative remedies is not required. 49
U.S.C. $10327(i) (Supp. V 1981). The Commission's decision here was
served on October 20, 1982. In this case. then, the statutory time period
expired December 20, 1982. No judicial review was sought before
that date.
We have also recognized that a party who had the opportunity
to participate in the underlying proceedings is a party “aggrieved”
under 28 U.S.C. §2344. See Simmons v. ICC, 716 F.2d 40, 42 (DC.
Cir. 1983). Yet I find no indication in the record or briefs that the
Engineers or the UTU ever objected to the proposed crew provisions
on the grounds that labor protections would be violated by granting
them. Whatever caused petitioners not to seek timely review, it was
not any ambiguity in the ICC decision of October 20. 1982. Petition-
Azz
es Dlainly slept on whatever rights thai they contend they possessed.
Determined to reach the contentions raised by this petition.
however. my colleagues accept the labor union’s argument that the
crew selection issue was not ripe for review when the ICC served
its decision. Petitioners contend that the issue was not ripe because
the ICC’s general pronouncement that the New York Dock and Nor-
folk labor protection provisions would apply somehow nullified the
express statements in the applications regarding crew selection. The
unions claim that they petitioned for clarification of the October 1982
decision as soon as it became apparent that the railroads intended
to use their own crews, i.c., when the railroads began to file their
trackage rights agreements with the ICC. Brief of BLE at 719.' This
claim should not be accepted as extending the time to appeal. The
railroads at that time were doing nothing more than exercising the
rights clearly granted them by the October 20, 1982 decision. The
unions had been on notice since the day the applications for trackage
rights were filed on January 13. 1981, that the railroads intended to
use their own crews to operate their own trains if their applications
for trackage rights were approved. The ICC's October 1982 decision
approved those applications and authorized the use of the applicant's
own crews in the operation of their own trains.
Moreover, I find the majority's analysis particularly difficult to
swallow in light of Eagle-Pitcher Industries, Inc. v. EPA, 759 F.2d
905 (D.C. Cir. 1985) (Opinion by Edwards, J.). In Eagle-Pitcher this
court emphasized that “[a]s a general propositior . . . if there is any
doubt about the ripeness of a claim, petitioners must bring their
challenge in a timely fashion or risk being barred.” /d. at 914. **[P]eti-
tioners who delay filing requests for review on their own assessment
of when an issue is ripe for review do so at the i.sk of finding their
claims time-barred.” Jd. at 909. “Consequently,” this court concluded,
except where events occur or information becomes
available after the statutory review veriod expires that
essentially creates a challenge thar did not previous-
'This contention imposes on the credulity of the court. The unions, if
they ever looked at the applications of the Katy or the Rio Grande, and with
their interest and the competency of their lawyers they must be presumed
to have done so, must have known perfectly well that if trackage rights were
granted the applicants intended to use their own < “ews.
A23
ly exist [emphasis added], or where a petitioner's
claim is, under our precedents, indisputably not ripe
until the agency takes furthe ~ ation, we will be very
reluctant, in order to save a later petitioner from the
strictures of a timeliness requirement, to engage in
a retrospective “etermination of whether we would
have held the claim ripe had it been brought on time.
“Id. at 914. Under the Eagle-Pitcher analysis, at best petitioners must
be said to have entertained “some” doubt about the ripeness of their
claims. At worst, later occurrences did not create a challenge “that
did not previously exist,” nor were petitione.s’ claims “indisputably
not ripe.”
By this appeal petitioners plainly attempt to convert a petition
to reconsider the denial of a motion for clarification into a challenge
of a final decision by the ICC that granted the Katy and the Rio Grande
the right to crew their own trains over joint trackage with the Mis-
souri Pacific. Because the motion to clarify was denied on procedural
grounds, the proper inquiry is whether the Commission's decision
on the motion to reconsider the denial of the motion to clarify is a
decision on the merits. A decision on the merits of the motion for
reconsideration could extend the time period for seeking appellate
review. Bowman vy. Loperena, 3\l U.S. 262, 61 3.Ct. 201, 85 L.Ed.
177 (1940). The majority, however, never reaches this question.
1 thus disagree with the conclusion that the October 20, 1982 de-
Cision Was not ripe for review. I am also disturbed by the o»tensible
ease by which the panel finds jurisdiction. Apparently. this court is
not “fastidious about the impropriety of reaching merits issues without
first establishing jurisdiction.” Beattie v. United States, 756 F.2d 91.
126 (DC. Cir. 1984) (Scalia, J., dissenting. opinion filed Feb. 26,
1985). Compare Eagie-Pitcher, supra, at 911 (*|p|roftered excuses
for late filing are carefully scrutit.ized™). In my view, the very sub-
stantial delay of petitioners should not be so rewarded. My only solace
lies in the hope that the majority's retrospective ripeness analysis is
motivated by the fact that the present proceedings were conducted
without the benefit of Eug/le-Pitcher.
Even ussunnng a finding of jurisdiction in this case is correct.
> J
A24
the majority has clearly erred in its dec:sion on ihe merits. It decides
that because the ICC did not make an express finding that the waiver
of any labor protections applicable to the crew selection provisions
in the trackage rights applications was “necessary” to approval of the
transaction. it exceeded its authority under the Interstate Commerce
Act. 49 U.S.C. §11341(a) (Supp. IV 1981). in excepting those provi-
sions from any labor protections.
Why the lack of an express “necessity” finding in and of itself
require © the court to vacate the ICC’s approval regarding crew selec-
tion on this record is puzzling. The whole basis for granting the track-
age rights, which included the crew selection provisions, was the
implicit conclusion that the granting of such rights was necessary to
the approval of the merger. Presumably. the majority senses a con-
flict between the approved crew selection provision and the unions
asserted rights. The majority. however, if it knows, does not indicate
what the parameters of the unions’ claimed rights might be and simi-
larly fails to state where. if anywhere. these rights and applicable labor
protections intersect. For all the majority indicates, they may not con-
flict at all. Indeed, this was the conclusion reached by the IC” (J.A.
163-104). Obviously. if there is no conflict, there is no need to vacatc
the Commission's decision on crew selection. Yet. in the absence of
any evidence supporting the uniens’ claims, and in the face of justifi-
cations for the ICC's decision, the majority, without further inquiry,
leap frogs the Commission's findings and completely nullifies the
authority of the ICC to provide for crew selection in trac\age rights
agreements imposed to ensure that consolidations are :n the public
interest. The majority's reasons for doing so are inexplicable.
The arguments of the Engineers and the UTU, and the majority
decision itself, are based on the fundamental assertion by the unions
that they enjoy by custom and by collectively-bargained agreements
a right to crew all irains passing over the Missouri Pacific’s tracks.
This is tantamourit to a declaration that the unions, in effect, have
a proprietary interest in the tracks of their employer — an astonish-
ing contention. Also implicit in the unions’ assertion is the claim that
the unionized employees of the consolidated railroads (the Missouri
Pacific, UP, and WP) have coiorable right to bargain with the Katy
and the Rio Grande over who will cre. the trains of the latter rai!-
roads. There is no basis in law or fact for such an absurd conclusion.
It is basic contract law that one cannot be bc und by agreements be-
A25
tween third parties. Even assuming such rights might exist, the ICC
found that “the record contains no evidence to support the conten-
tion of UTU and BLE that UP-MP employees have rights under col-
lective bargaining agreements to participate in the crew selection
process’ of foreign railroads operatings under trackage rights (J.A.
168).
In my opinion the court errs partly because it confuses the issue
in this case. It states that “‘[t]he dispute is not over whether the rail-
roads could use their own crews; [the dispute] ... is whether they
could use their own crev 5 subject to the requirements of the [statuto-
ry] labor protection con. ition.”” Maj. Op. at 722. The ICC’s October
20, 1982 decision stated chat the labor protections would apply to the
transaction. As previously explained, the ICC saw no apparent con-
flict between the protective labor conditions and its decision to per-
mit crew selection by the railroads who operate the trains. But in its
1983 decisions, in an effort to meet the unicns’ scattered arguments,
the Commission ruled in the aiternative that the crew selection process
was exempt from any labor protection conditions that might apply.
in my view the issue in this case, assuming that the applicable labor
provisions in the Act conflict with the proposed ICC action, is mere-
ly whether the ICC had the authority to so exempt the crew selection
process from applicable labor protection conditions, and if so, whether
it properly exercised that authority. In all other respects. the statuto-
ry labor protections still apply,
The Interstate Commerce Act in Section 11341(a) provides:
The authority of the Interstate Commerce Commis-
“won under this subchapter is exclusive... A carri-
er. corporation, or person participating in that
transaction is exempt from the antitrust lays and from
all other law, including State and municipal law. as
necessary to let that person carry out the transac-
*See Brotherhood of Maintenance of Way Employees v. ICC. 698 F.2d
31S. 317 n. 6 (7th Cir. 1983) ("The adoption of standard conditions, routine-
ly imposed, ofte results in incorporation of superfluous provisions having
no application to the particular case under consideration.”). Because the
majority digi not reach the tissue of whether the labor protections under 49
U.S.C. $11347 can be exempted through $11341(a)’s exempuon power, | too
express no view on that issue. However. it seems to me that in thr case
A26
tion, hold. maintain, and operate property, and ex-
ercise control or franchises acquired through the
transaction... .
49 U.S.C. §11341(a) (emphasis added). The authority granted the ICC
under this statute is very broad. To the extent necessary fo approve
a transaction — the merger in this case — the ICC may exempt the
carrier involved from “al/ other law.” This is plain language. and there
is nothing on which to base any contention that it does not mean ex-
actly what it says. or that the Railway Labor Act. 45 U.S.C. §$I5]
et seq. (1982)? is not a “law” subject to the exemption authority un-
der §11341(@).
In Brotherhood of Locomotive Engineers v. Chicago & North
Western Ry. (“North Western”), 3)4 F.2¢ 424 (8th Cir.), cert. denied,
375 U.S. 819, 84 S.Ct. 55, Il L.Ed.2d 53 (1963), the court held that
§5(11) of the Interstate Commerce Act (now §11341(a)) conferred ex-
clusive and plenary jurisdiction upon the ICC to approve mergers and
exempt the carrier from all other restraints of federa! law, including
the Railway Labor Act (“RLA”)}. /d. at 429, 431-432. In that pre-
Staggers Act case, the court affirmed the order of the ICC that ap-
proved a stipulation by the carriers that overrode the RLA. The court
rejected the union’s c’aim, which is similar to that made here, that
the ICC lacked jurisdiction because it failed to find express/y that
the provisions of the Railway Labor Act were rendered inoperative.
Id. at 432. Rather. the court agreed with the Commission’s finding,
as expressed in another proceeding, that “*[t}he terms of this para-
graph are self-executing, and there is no need for this Commission
expressly to order or declare that a carrier be relieved from certain
restraints.” Jd. (quoting Chicago, St. Paul, Minneapolis & Omaha
Ry. Lease, 295 1.C.C. 696 (1958)).
In the present case the Commission similarly noted that the pro-
visiens of §11341(a) provide “se/f-executing immunity on all material
where the trackage rights applicutions were approved specifically to offset
the anticompetitive harms of the consoiidation, the unions’ rights under N&W
Art. I §4 exist vis-a-vis the consolidating railroads and not against either
the Katy or the Rio Grande.
45 U.S.C. §152, Seventh, for example. forbids generally a carrier's
change in pay, rules, or working conditions contrary to labor agreements,
without resort to negotiation.
A27
terms of the agreement. . . to the extent necessary to. .. implement[ ]
the agreement” (J.A. 171) (emphasis added). Granted, North Western,
supra, involved a stipulation by the carriers which required arbitra-
tion in a manner similar to that provided by the RLA. The majority,
however, refuses to recognize the clear breadth of the ICC’s authori-
ty expressed in North Western. Rathe-. it attempts to distinguish the
case by noting how similar it is to the present case, see Maj. Op.
at 724. n.. a novel technique that substantially broadens the ability
to reach the result desired by the majority“
The apparent ease by which the majority arrives at its conclu-
sion is attributable in large part to its mischaracterization of Supreme
Court precedent. Through the majority’s misreading of these cases,
it has manufactured a wholly new and more difficult ICC waiver stan-
dard. The majority claims support from “one line of cases” that as-
sertedly permits ICC waiver “only if those state laws pose an obstacle
to the transaction.” Maj. Op. at 723 (emphasis added). No such “line”
exists.
The principal case the majority cites for its cuntention, Calla
way v. Benton, 336 U.S. 132, 140-141, 69 S.Ct. 435, 440441, 93 L.Ed.
553 (1949), set forth the majority's quote in dicta. Callaway involved
a railroad reorganization under §77 of the Bankruptcy Act, Il U.S.C.
$205, and under the “narrow facts” there present (336 U.S. at 150,
*Citv of Palestine, Texas v. United States, 559 F.2d 408 (Sth Cir. 1977),
cert. denied, 435 U.S. 950, 98 S.Ct. 1576, 55 L.Ed.2d 800 (1978). relied
on »y the majority, does not support its position. In that case. the ICC was
found to have exceeded its authority when it voided an agreement with the
city of Palestine to maintain a certain number of emplovees there. which
was “not germane to the success of the approved . . . transaction.” /d. at
414 (emphasis added). In the present case. not only does the record support
the fact that the crew selection provision was important to ameliorate the
anticompetitive aspects of the proposed consolidation, the Commission it-
self tound the provision “material” to and “related to the transportation ef-
fects” of the transaction (J.A. 170. 171). Similarly. Texas & New Orleans
R.R. v. Board of Railroad Trainmen, 307 F.2d 151 (Sth Cir. 1962). cert. de-
nied, 371 U.S. 952, 83 S.Ct. 508, 9 L.Ed.2d 500 (1963). is not relevant to
this case. That case involved the union’s power to strike under the Norris-
La-Guardia Act. 29 U.S.C. §§101 ef seg.. and the court in fact stated that
“Section [SUL]. now $1134l(a).] relieves the carriers of the restraints and
limitations of other /awy, but i* does not. on its face. relieve them from the
auctions of other parties. Le.. the union’s economic threat of a strike.” /d.
at 156 (emphasis added).
A28
69 S.Ct. at 445). raised the question whether a bankruptcy court could
enjoin a state court suit leading to a determination of the requirements
of state law with respect to the sale of the entire assets of the lessor
railroad. In its limited two paragraph discussion of §5(11) of the In-
terstate Commerce Act (now §11341(a)). the Court expressly rejected
an’, reliance on that section of the Act and. furthermore, distinguished
the Bankruptcy Act from the Interstate Commerce Act. /d. at 139-140.
69 S.Ct. at 440 (“[T]hat Section [| §5(11)] relates to voluntary merg-
ers. not to the purchase of a leased line as part of a plan of reorgani-
zation.”’) (“That power [under §77] flows from a different source than
the power over consolidations under the Interstate Commerce Act.”).
In its only comment relevant to this case. the Court merely reiterated
that nothing in its opinion should be read to derogate its prior opin-
ions upholding the ICC's power “to override state laws interposing
obstacles in the nath of otherwise lawful plans of reorganization.”
Id. at 140-141, 69 S.Ct. at 441 (emphasis added) (footnote omitted).
The remaining cases cited by the majority similarly fail to sup-
port the proposition for which they are cited. In Seaboard Air Line
R. Co. v. Daniel, 333 U.S. 118, 68 S.Ct. 426, 92 L.Ed 580 (1948).
a South Czrolina statute forbade the operation of foreign railroads
in that state. The ICC approved a transaction and exempted the rail-
road from the strictures of the state law. The South Carolina Supreme
Court held that the ICC lacked power under §5 to relieve the carrier
from the state law requirements. The Court reversed, explaining:
_.. Furthermore. since that case [Texas v. United
States, 292 U.S. 522. 54 S.Ct. 819, 78 L.Ed. 1402
(1934)] was decided Congress has given additional
proof of its purpose to grant adequate power to the
Commission to override state laws which may inter-
fere with efficient and economical railroad operation.
By §5(11) of the Interstate Commerce Act, as amended
by the Transportation Act of 1940, 54 Stat. 908, 49
U.S.C. §5(11), Congress granted the Commission “ex-
clusive and plenary” authority in refusing or approv-
ing railroad consolidations, mergers, acquisitions, etc.
The breadth of this grant of power can be understood
only by reference to § 5(2)(b) which authorizes the
Commission to condition its approval upon “such
terms and conditions and such modifications as it
A29
shall find to be just and reasonable.” All of this power
can be exercised in accordance with what the Com-
mission may find to be “consistent with the public
interest.” The purchaser of railroad property with
Commission approval is authorized by §5(I1) “to own
and operate any properties. . . acquired through said
transaction without invoking any approval under State
authority,” and such an approved owner, according
to that paragraph, is “relieved from the operation of
the antitrust laws and of all other restraints, limita-
tions, and prohibitions of law, Federal, State, or
municipal, insofar as may be necessary to enable
them to carry into effect the transaction so ap-
proved... and to hold, maintain, and operate any
properties... acquired through such transaction.”
This language very clearly reposes power in the
Commission to exempt railroads under a §5 proceed
ing from state laws which bar them from operating
in the state or impose conditions upon such operation.
fd. at 125-126, 68 S.Ct. at 430 (emphasis added). Thus, the Court
did not adopt an “obstacle” standard: rather it articulated the stan-
dard as being the “public interest” goal of the statute.
The third case cited by the majority, Texas v. United States, 292
U.S. 522. 54 S.Ct. 819, 78 L.Ed. 1402 (1934). concerned the ICC's
upproval of a transaction that had exempted a railroad from the
prescriptions of a Texas statute which required a railroad operating
in the state to maintain offices there. The Commission had found that
requiring the railroad in question to maintain such offices would en-
tail “unnecessary” and “burdensome” expenditures and waived com-
pliance therewith. /d. at 533, 54 S.Ct. at 825. In upholding the ICC
the Supreme Court noted:
Title I of the Emergency Railroad Transportation Act,
1933, in amending §5 of the Interstate Commerce Act.
curries its own provision as to immunity trom state
requirements which would stand in the way of the
execution of the policy of the Congress through the
Commission's orders.
A30
.... The scope of the immunity must be measured
by the purpose which Congress had in view and had
constitutional power to accomplish. As that purpose
involved the promotion of economy and efficiency in
interstate transportation by the removal of the bur-
dens of excessive expenditures. the removal of such
burdens when imposed by state requirements was an
essential part of the plan... .
Id. at 534. 54 S.Ct. at 825. The granting of full trackage rights here
is also an essential part of the plan to permit the merger and to com-
pensate — in the public interest — for some of its anticompetitive
effects.
Finally. in what can charitably be attributed to oversight. the
majority fails to mention in its line of precedent and relegates to a
footnote Schwabacher v. United States, 334 U.S. 182. 68 S.Ct. 958.
92 L.Ed. 1305 (1948). which contradicts the majority's position by
stating that the “public interest” is the controlling consideration * In
Schwabacher, the ICC approved, again under §5(11), the voluntary
merger of three railroads. Intervening dissenting shareholders of one
of the merging railroads alleged that the terms of the merger would
deprive them of charter rights granted by their company’s state of in-
corporation. The Commission, however, disclaimed jurisdiction to
pass on the claims of the shareholders and stated that the railroads
were free to settle such controversies “through negotiation and liti-
gation in the courts.” /d. at 188, 68 S.Ct. at 962. The Supreme Court
reversed. It held that the Commission erred in renouncing its authority
to determine finally the rights of the dissenting shareholders, and spe-
cifically held that
... no rights alleged to have been granted to dissent-
ing stockholders by state law provision concerning
liquidation survive the merger agreement approved
by the requisite number of stockholders and approved
by the Commission as just and reasonable.
5Compare Callaway v. Benton, 336 U.S. 132, 141 n. 10, 69 S.Ct. 435,
441. n. 10, 93 L.Ed. 553 (1949) (“Seaboard Air Line R. Co. v. Daniel, 333
U.S. 118, 68 S.Ct. 426, 92 L.Ed. 580: Schwabacher v. United States, 334
U.S. 182 [68 S.Ct. 958, 92 L.Ed. 1305]; Texas v. United States, 292 U.S.
§22 [54 S.Ct. 819, 78 L.Ed. 1402].”) (emphasis added), with maj. Op. at 723.
A3l
Id. at 201, 68 S.Ct. at 968 (emphasis added). The Court reasoned
that it would be “inconsistent to allow state law to apply a liquida-
tion basis . . . for continued public service.” /d. at 200, 68 S.Ct. at
968. Regarding the waiver authority, the Court reaffirmed that **Con-
gress has long made the maintenance and development of an eco-
nomical and efficient railroad system a matter of primary national
concern. Its legislation must be read with this purpose in mind. ™
Id. at 193-194, 68 S.Ct. at 964 (quoting Seaboard Air Line R. Co. v.
Daniel, 333 U.S. 118, 124-125, 68 S.Ct. 426, 430, 92 L.Ed. 580 (1948)).
The Court noted that “*[t}he tenor of all. . . [its prior decisions under
the Transportation Act of 1920, 41 Stat. 456] was to confirm the power
and duty of the Interstate Commerce Commission, regardless of the
state law, to control rate and capital structures, physical make-up and
relations between carriers, in the light of the public interest in an ef-
ficient national transportation system.” /d. at 192, 68 S.Ct. at 963
(emphasis added). Similarly, “*[t]he Transportation Act of 1940 [54
Stat. 908, 49 U.S.C. §5(11)]. . . authorized approval by the Commis-
sion of carrier-initiated, voluntary plans of merger or consolidation
if, subject to such terms, conditions and modifications as the Com-
mission might prescribe, the proposed transactions met with certain
tests of public interest, justice and reasonableness, in which case they
should become effective regardless of state authority.” Id. at 193, 68
S.Ct. at 964 (emphasis added) (footnote omitted).
In sum, not only did the Supreme Court nor adopt the rigorous
“obstacle” standard which the majority today requires, the Court en- ©
visioned that the legislative purpose was to grant the Commission
greater authority than the majority suggests to override state laws where
needed to approve transactions “consistent with the public interest”
and to ensure that they are “just and reasonable.” Schnwabacher, 334
U.S. at 194-195. 68 S.Ct. at 965.
The majority would admonish us that the ICC’s exemption
authority under section 11341(a) must operate “according to necessi-
ty. not according tc whim or caprice” and that in exercising this
*The majority's citation to County of Marin v. United States. 356 U.S.
412. 78 S.Ct. 880. 2 L.Ed.2d 879 (1958) in this discussion is misleading.
That case held only that the transaction involved was not within § 5(2)(a)
because one party in the acquisition was not a ‘carrier.’ The case had noth-
ing to do with the scope of the Commission to approve transactions that
are within the Commission's jurisdiction or with its waiver “uthority.
A32
authority. “ICC must do more than shake a wand to make a law go
away.” Maj. Op. at 723. However. in this case it is not the ICC but
the majority of the panel which relies on occult powers. For it is the
majority who has made the ICC’s Section 11341(a) exemption authority
completely disappear and who has used its opinion to obscure the
basis for the ICC’s decision to exempt the crew selection process from
any protective labor conditions.
There is no dispute here that the approval of the Katy and Rio
Grande trackage rights was “necessary” to the approval of the UP-
Missouri Pacific-Western Pacific consolidation. The ICC specifical-
ly found that the trackage rights were needed to offset the anticom-
petitive harms created by the consolidation. 366 1.C.C. 459, 566-579.
This court has affirmed this aspect of the ICC's decision. Southern
Pacific Transportation v. ICC, 736 F.2d 708 (DC. Cir. 1984) (per curi-
am). cert. denied, ____ U.S. ___.. 105 S.Ct. 1172. 84 L.Ed.2d 322
(1985). But the ICC did not approve the trackage rights in the ab-
stract: rather. it approved. pursuant to this “necessity” finding. the
trackage rights as applied for by the Katy and the Rio Grande.
The ICC cannot bootstrap any exemption to its approval of trans-
actions without justification. But this is far from such a case, since
the necessity for the waiver is clear. The whole point of granting the
trackage rights applications was to reduce the anticompetitive effects
of the consolidation (J.A. 169). Under the ICC’s decision the Katy
and the Rio Grande will be handling traffic for their own accounts,
not for the consolidated UP-Missouri Pacific-Western Pacific (/d. ).
Thus, the trackage rights operations were meant to be conducted in
competition with the merged UP-Missouri Pacific-Western Pacific oper-
ations, /d., and to offset to some extent the monopolistic effects of
that enormous consolidation.’ The majority opinion gives short shrift
to these essential reasons for the ICC’s decision. To be sure, the Com-
mission's goal of preservation of competition through the grant of track-
age rights might well be frustrated by the prospect of requiring the
railroads granted those rights to negotiate with the union represent-
ing the employees of its competitors. It is no surprise the Commis-
sion did not feel compelled to spell out specifically such a proposition.
Moreover, the majority's self-styled definition of “trackage rights.”
upon which the opinion depends, reduces that term to nothing more
than a railroad’s right only to have its traffic run over another's tracks.
A33
See Maj. Op. at 718 n. 2. The majority assumes, with no justifica-
tion whatsoever, that this cannot include a railroad’s right to use its
own Crews in operating its own trains. This bespeaks an ignorance
of what trackage rights might involve and ignores the crew selection
provisions that are an integral part of the applications in this case.
The majority, in fact, has pulled its definition out of its magic hat.
Indeed, even UTU counsel at oral argument conceded that whether
a railroad’s “trackage rights” include a railroad’s right to use its own
crews “is really a very generic term subject to subsequent specific
negotiations.” The sole evidence of the meaning of the trackage rights
that are here involved is found in the trackage rights applications and
the decisions granting them.’ Those applications stated in express terms
that the Katy and Rio Grande would exercise their trackage rights
by operating their own trains with their own employees and crews.
But the majority decides in the teeth of the specific crew provisions
themselves that trackage rights in this case do not include a railroad’s
right to use its own crews, even though such method of operating its
trains was specifically applied for and authorized by the ICC.
That the ICC specifically left open for later negotiation between
the railroads such terms as trackage compensation is no reason to
infer that crew selection. which was specifically covered in the trackage
rights applications, was not decided. Approval of crew selection had
’For example. the [CC found that the UP-Missouri Pacific-WP consoli-
dation itself, within the areas where the merged lines overlap. will reduce
Missouri Pacific traffic on the Pueblo-Kansas City line by 18.7% in the years
following the consummation of the merger. Granting the Rio Grande track-
age rights will, as the ICC found. contribute substantially to the economic
viability of the Pueblo-Kansas City line. 366 L.C.C. at 572. Moreover, the
ICC found that gran:ng the Rio Grande “independent access” to Kansas
City through trackage nghts would enable it to provide new competitive routes
to compensate for the loss of traffic at the Utah gateway which the Rio Grande
previously derived from its relations with the WP. /d. at 576. Thus. the ICC
found a substantial public benefit realized by enhancing the stimulating com-
petition in the central corridor. /d. Both the merged lines and the Rio Grande
would benefit.
‘Other cases have attempted to define “trackage rights.” See. ¢.g., Chica-
go. Rock Island & Pacific R.R. v. Chicago. Burlington & Quincy R.R.. 437
F.2d 6. 10 (7th Cir.) (*Trackage rights” are continuing or permanent ease-
ments or licenses granted by one railroad to another railroad). cert. denied,
402 U.S. 996. 91 S.Ct. 2177. 29 L.Ed.2d 161 (1971).
A34
been expressly requested in the railroad’s application for trackage
rights. and both applications had been approved. The ICC similarly
considered it a “material term” of the trackage rights transaction (J.A.
171). a finding that the majority attempts to disregard. Whether a rail-
road uses its Own crews to Operate ifs own trains was not the type
of “subsidiary” trackage issue the ICC left open for later negotia-
tion. See Maj. Op. at 724-725. To requir: chat the Katy and the Rio
Grande submit the issue of crew selection to arbitration could frus-
trate the trackage rights agreement itself and could destroy one of the
essential conditions upon which the ICC approved the merger.
Finally. petitioners cannot now complain that the Commission
failed to make a specific finding about the necessity for the crew selec-
tion process when no party, including the petitioners, comended during
the hearings that granting the pending applications of the Katy and
Rio Grande would improperly override existing collective bargain-
ing agreements (J.A. 164. 167).
The majority has thus found itself with the rather absurd result
that the Katy and the Rio Grande may not, in the exercise of their
trackage rights, use their own employees to operate their own trains
carrying their own traffic, for their own account, until the railroads
have engaged in collective bargaining under the Rai!way Labor Act
with their employees and possibly those of competitor railroads. As
one trial judge has already noted in a related proceeding involving
many of the same issues as we have here, “Congress did not intend
that affected employees have such power to block consolidations which
are in the public interest.” Missouri Pacific R.R. v. United Transpor-
tation Union, 580 F. Supp. 1490, 1505 (E.D. Mo. 1984), appeal pend-
ing (8th Cir.).
In my view, the majority has vacated the ICC’s crew provision
based on assumptions not supported by the record. It has closed its
eyes to the specific pro-competitive purpose that the ICC found would
be served by the approval of the trackage rights applications in this
case. In doing so, the panel has usurped the statutory authority of
the ICC and has substituted its judgment for that of the ICC. I cannot
join in such a curtailment of the authority that Congress has granted
to the ICC under 49 U.S.C. §11341(a), and which the ICC exercised
to ensure that the consolidation it approved would serve the “pubiic
interest.” 366 LCC. at 572, 644. Since this is one of the largest mergers
A35
in the history of American railroads, the majority's failure to cor-
rectly apply the law here could lead to tremendous nationwide harm.
Accordingly, I dissent.
A36
APPENDIX B
INTERSTATE COMMERCE COMMISS'ON DECISION
Finance Docket No. 30,000 (Sub-No. 18)
DENVER AND RIO GRANDE WESTERN RAILROAD
COMPAN Y—TRACKAGE RIGHTS—MISSOURI PACIFIC
RAILROAD COMPANY—BETWEEN PUEBLO. CO AND
KANSAS CITY. MO
Finance Docket No. 30.000 (Sub-No. 25)
MISSOURI-KANSAS-TEXAS RAILROAD COMPANY
—TRACKAGE RIGHTS-MISSOURI PACIFIC RAILROAD
COMPANY—BETWEEN KANSAS CITY. KS AND
OMAHA. NE
PETITION FOR CLARIFICATION
Decided: May 12. 1983
By petition filed April 4. 1983. the Bretherhood of Locomotive
Engineers (BLE) seeks clarification of our decision’ approving the
consolidation of the Union Pacific Railroad Company (UP) and Mis-
souri Pacific Railroad Comrany (MP) (collectively referred to here-
in as applicants). The Missouri-Kansas-Texas Railroad Company
(MKT). the Denver and Rio Grande ‘Yestern Railroad Company
(DRGW). and applicants have filed replies.
BACKGROUND
Pursuant to 49 U.S.C. §11343-4, applicants sought a‘tthority to
consolidate their railroad systems under the common control of Un-
ion Pacific Cor »oration and Pacific Rail System, Jnc., a new railroad
holding company? The consolidation decision, served October 20.
‘Union Pacific—Control—Missouri Pacific; Western Pacific, 366 LCC.
459 (1982). embracing Finance Docket No. 30,COO (Sub-No. 18). Denver
and Rio Grande Western Railroad Company—Trackage Rights—Missouri Pa-
cific Railroad Company- Between Pueblo, CO and Kansas City, MO, and
Finance Docket No. 30. 90 (Sub-No. 25). Missouri-Kansas-Texas Railroad
Company—Trackage Rights— Missouri Pacific Railroad Comnany—Between
Kansas City, KS and Omana, NE.
*In another application. handled on a consolidated basis. UP sought
authority to acquire control of Western Pacific Railroad Company.
A37
1982, which BLE seeks to have clarified, approved the proposed
transaction? subject to various conditions. These conditions included
approval of DRGW and MKT responsive trackage rights applications
in the embraced Sub-No. 18 and Sub-No. 25 proceedings, respec-
tively. The approved trackage rights authorize DRGW to operate over
MP’s line between Pueblo, CO, and Kansas City, WO, and authorize
MKT to operate over MP’s line between Kansas City, KS and Oma-
ha, NE. Approval of the consolidation was conditioned upon the grant
of these trackage rights in order to protect the public interest from
potential anticompetitive harms.
POSITIONS OF THE PARF.TIES
BLE: BLE seeks to have the consolidation decision clarified with
respect to whether MKT and DRGW may use their own operating
crews in performing trackage rights operations over MP lines. It as-
serts that this Commission has no jurisdiction over crew assignment
matters and that our decision should not be construed as authorizing
MKT or DRGW to use their own crews in the performance of the
approved operations. It indicates that these matters are subject to set-
tlement in accordance with the Railway Labor Act and are not withia
the scope of our decision approving the responsive trackage rights
applications.
MKT: MKT asserts that the consolidation decision clearly and cor-
rectly authorizes it to conduct trackage rights operations using its own
crews. MKT’s operating plan submitted as part of its trackage rights
upplicaticn specified that the operations would be conducted using
MKT crews. The application was approved withovt restrictions on
the proposed operating plan. MKT notes that we have very broad con-
ditioning powers under 49 U.S.C. §11343 in consolidation proceed-
ings and that our jurisdiction over consolidations, and the terms and
conditions thereof. is plenary under 49 U.S.C. §11341.
DRGW: DRGW contends that our laier dec.sions in these »roceed-
ings. served November 24, 1982. and January 18. 1983, regarding
DRGW trackage rights operations clearly and unambiguously state
that DRGW has been authorized to conduct operations over MP lines
using its own crews. Theretore. DRGW considers this issue to be moot
with respect to its operations.
‘The consolidation was subsequently consummated on December 22.
IYS2.
A3X8
Applicants: Applicants argue that the consolidation clearly authorized
MKT and DRGW to operate using their own crews. The trackage rights
applications specified that the trackage rights tenants would use their
own crews and no party opposed that aspect of the plans during the
course of these proceedings. Approval of the applications. including
the operating plans. they state. is within our jurisdiction.
DISCUSSION AND CONCLUSIONS
The consolidation Cecision does not require clarification. We ap-
proved the responsive trackage rights applications of DRGW and MKT
in Sub-No. 18 and Sub-No. 25 subject only to applicable employee
protective conditions and the requirement that the parties negotiate
compensation for use of the MP lines (or request us to set compen-
sation in the event of an impasse). Inasmuch as DRGW and MKT
proposed in their applications that the operation would be performed
with their own crews, our approval of the applications authorizes such
operations. Our decisions of November 24, 1982. and January 18.
1983, unambiguously specified that trackage rights tenants may per-
form operations using their own crews
BLE has presented no arguments or evic'ence setting forth any
issue in need of clarification. Rather. BLE is attempting to reargue
an issue that has already been decided. Its petition does not present
any facts, however. that warrant reopening these proceedings for recon-
sideration. We have broad authority to impose conditions on consoli-
dations and our jurisdiction is plenary. Therefore. we properly
authorized performance of trackage rights tenants using their own
crews. The petition will be denied.
‘This includes current employees of MKT and DRGW as well as any
new empiovee they may hire of ‘heir own free will (including MP employees).
A39
This action will not significantly 2ffect the quality of the human
environment or energy conservation.
It is ordered:
|. The petition of BLE for clarification is denied.
2. This decision shall be effective on the date it is served.
By the Commission, Chairman Tay‘or, Vice Chairman Sterrett.
Commissioners Andre and Gradison.
(SEAL) Agatha L. Mergenovich
Secretary
A40
APPENDIX C
INTERSTATE COMMERCE COMMISSION DECISION
Finance Docket No. 30.000 (Sub-No. 18)
DENVER AND RIO GRANDE WESTERN RAILROAD
COMPANY-TRACKAGE RIGHTS-MISSOURI PACIFIC
f AILROAD COMPANY-BETWEEN PUEBLO. CO AND
KANSAS CITY. MO
Finance Docket No. 30.000 (Sub-No. 25)
MISSOUR'-KANSAS-TEXAS RAILROAD COMPANY-
TRACKAGE RIGHTS-MISSOURI PACIFIC RAILROAD
COMPANY BETWEEN KANSAS CITY. KS AND
OMAHA. NE
PETITION FOR CLARiFICATION
Decided: October 19, 1983
By petition filed May 31. 1983. the Brotherhood of Locomotive
Engineers (BLE) and United Transporiation Union (UTU) seek recon-
sideration of our decision served May 18, 1983, denying BLE’s peti-
tion for clarification in these proceedings. Replies have been filed
by Missour'-Kansas-Texas Railroad Company (MKT). Denver and Rio
Grande Western Railroad Company (DRGW), and jointly by Union
Pacific Railroad Company (UP) and Missouri Pacific Railraod Com-
pany (MP). UTU has petitioned for leave to file a reply to tue replies.
PROCEDURAL MATTER
Our Rules of Practice do not permit a reply to a reply, 49 C.F.R.
§1104.13(c). UTU, however, contends that its tendered reply is neces-
sary for a clear presentation of the issues. As the reply does not broaden
the scope of UTU’s petition, we will accept the reply for filing so
that we may fully address the issues.
BACKGROUND
By decision served October 2, 1982, the Commission approved
the consolidation of UP and MP under the common control of Un-
ion Pacific Corporation and Pacific Rail System, Inc. Union Pacific-
Control-Missouri Pacific; Western Pacific, 366 1.C.C. 459 (1982).
Adl
Several railroads, including DRGW and MKT. opposed the consoli-
dation and filed responsive applications for the imposition of track-
age rights conditions. BLE, UTU, and various other railway labor
organizations opposed the consolidation and actively participated in
the consolidation and responsive trackage rights applications
proceedings.
As conditions to approval of the consolidation we approved
DRGW’s application for trackage rights over MP’s line between Pueblo,
CO and Kansas City, MO, and MKT’s applications for trackage rights
over UP and MP lines extending between Kansas City. KS. Topeka.
KS, Omaha, NE, and Lincoln, NE. Pursuant to 49 U.S.C. §11343-4,
we approved the proposed trackage rights agreements submitted by
DRGW and MKT in their responsive applications. subject to deter-
mination of fair compensation for use of the trackage rights and fur-
ther subject to our usual employee protective conditions.' DRGW’s
proposed agreement specified that DRGW could, at its option. per-
form trackage rights operations using its own crews. MKT, pursuant
to its proposed agreement, would use its own crews in performing
its Operations.
After consummation of the consolidation, DRGW and MKT be-
gan performing the approved trackage rights operations. A dispute
then arose between the involved railroad and BLE over whether the
trackage rights tenants could perform operations over MP’s lines us-
ing their own crews without the consent of the unions representing
MP’s employees. BLE’s petition for clarification sought a decision
stating that his Commission has no jurisdiction over these crew as-
signment disputes and that the consolidation decision and approval
of trackage rights did mot authorize DRGW and MKT to operate over
MP lines using their own crews. BLE and UTU now seeks recon-
sideration of our decision denying that request for relief.
its petition for reconsideration, BLE contends that this Com-
mission has no jurisdiction over crew assignment disputes and that
they must be settled under the procedures of the Railway Labor Act
(RLA) 45 U.S.C. $I51. et seg. BLE further asserts that trackage rights
operations by DRGW and MKT using their own crews constitute a
‘Newtolk and Western Rv. Co.—Trackawe Rigits-BN. 354. LCC. 605 978.
as modified by Mendocine Coast Ry. Inc. -Lease and Operate. 360 LCC
653. 664. (IY80) (NEEBN Conditions)
Ad2
unilateral change in working conditions by MP in violation of the
labor protective conditions imposed on the consolidation,
UTU argues that the Commission's plenary jurisdiction over rail-
road consolidations does not authorize us to immunize a transaction
from the requirements of the RLA or to approve unilateral’ changes
of collective bargaining agreements. UTU states in the alternative that
if the Commission has jurisdiction it failed to make necessary find-
ings supporting overriding the RLA or showing how the policies of
the RLA were accommodated with those of the Interstate Commerce
Act.
In their replies. DRGW. MKT. and UP-MP assert that the ar-
guments of BLE and UTU are legally incorrect. that petitioners have
failed to satisfy the procedural requirements for reopening a proceed-
ing. and that the allegations of violations of the RLA and collective
bargaining agreements were not raised during the course of the
proceedings on the consolidation and the responsive trackage rights
application.
UTU, in its response to the railroads’ pleadings. make further
arguments regarding purported violations of the RLA. collective bar-
gaining agreements, and the New York Dock conditions. It asserts that
the trackage rights operations involve work which, by custom, is to
be performed by MP employees. Thus, operations using the tenant's
crews are unauthorized transfers of the work in violation of the RLA.
It further states that only the Federal Courts have jurisdiction to de-
termine whether an agreement violates the RLA. UTU also argues
that we did not. and could not, determine that MP employees have
no right to participate in the trackage rights crew selection process.
It contends that such a determination would deprive MP employees
of property rights without due process and would violate the require-
ments of 49 U.S.C. 11347 and of the NW-BN and New York Dock con-
ditions.
DISCUSSION AND CONCLUSIONS
The various arguments of BLE and UTU are all based essential-
ly on the assertior that the proposed trackage rights operations which
?The consolidation is subject to the usual labor protective conditions
as set forth in New York Dock Ry.-Control-Brooklyn Eastern Dist. , 360 LCC.
60 (1979) (New York Dock conditions).
A43
we have approved involve UP-MP unilaterally changing the working
conditions of their employees by transferring work which, by custom
and under collective bargaining agreements, is to be performed by
UP-MP emr» yees. This purported change, petitioners argue, vio-
lates the RLA and the New York Dock and NW-BN conditions. Peti-
tioners contend that UP-MP employees, through their bargaining
agents, have the right to participate in the trackage rights crew selec-
tion process and have the right to have any related disputes resolved
pursuant to the RLA and the applicable labor protective conditions.
We find these arguments to be unpersuasive and unsupported by the
record in these proceedings.
Jurisdiction. Although we conclude that the trackage rights agree-
ments do not involve a change in UP-MP employees’ working condi-
tions in a manner contrary to RLA requirements, we will address
UTU’s argument that we lack jurisdiction under 49 U.S.C. 11341 to
exempt a trans..tion from the requirements of the RLA.
The Commission’s jurisdiction over railroad consolidations and
trackage rights transactions, within the scope of 49 U.S.C. 11343. is
exclusive. Our approval exempts such a transaction from the require-
ments of all laws as necessary to permit the transaction to be carried
out, and includes an exemption from the requirements of the RLA.
See Brotherhood of Loc. Eng. v. Chicago & North Western Ry. Co.,
314 F.2d 424, 432. (8th Cir. 1963). cert. denied 375 U.S. 819 (1963).
Contrary to UTU’s arguments, the 4-R Act? did not limit our
authority to exempt a transaction from the RLA. Rather. the 4-R
Act specified standards for the minimum level of employee protec-
tion to be imposed as conditions to the approval of certain transac-
tions. Those standards, however, do not require preserving rights under
the RLA. Affected carrier employees have rights to the extent speci-
fied in the protective conditions imposed pursuant to 49 U.S.C. 11347.
As UTU notes, standard labor protection conditions generally
preserve working conditions and coilective bargaining agreements.
The terms of those conditions. however, must be read in conjunction
with our decision authorizing the involved transaction and the un-
derlying statutory scheme. To the extent that existing working condi-
‘Ravroad Revitalization and Regulatory Reform Act ot 1976, Pub. L.
No. 94-210, 90 Siat, 31 1976)
tions and collective bargaining agreements conflict with a transaction
which we have approved. those conditions and agreements must give
way to the implementation of the transaction. The labor conditions
imposed under section 11347 preserve conditions and agreements in
the context of the authorized transaction.
Employees adversely affected by the transaction may receive
benefits under the protective conditions and under pre-existing agree-
ments to the extent those benefits are not pyramided. If our approval
of a transaction did not include authority for the railroads to make
necessary changes in working conditions. subject to payment of speci-
fied benefits. our jurisdiction to approve transactions requiring changes
of the working conditions of any employees would be substantially
nullified. Such a result would be clearly contrary to congressional
intent. The discussion of this point in Brotherhood of Loc. Eng. , supra,
at 430-1, is persuasive and we conclude that this reasoning is unaffected
by the enactment of the 4-R Act.
Supporting Findings. Petitioners argue that even if the Commis-
sion has jurisdiction to exempt the transactions from the RLA, we
failed to do so in this proceeding. Further, they argue that we have
not attempted to reconcile the decision with the policies of the RLA
nor made any findings supporting an exemption from the RLA.
The terms of section 1134] immunizing an approved transaction
from any other laws are self-executing and there is no need for us
expressly to order or to declare that a carrier is specifically relieved
from certain restraints. See Brotherhood of Loc. Eng., supra, citing
Chicago, St. P., M. & O. Ry. Lease, 295 1.C.C. 696, at 432 (1958).
In evaluating a transaction under the criteria of 49 U.S.C. 11344,
we must consider the policies of statutes other than the Interstate Com-
merce Act to the extent that those policies are relevant to the deter-
mination of whether a proposal is consistent with the public interest.
For example. the public interest evaluation must include considera-
tion of the policies of the antitrust laws. See McLean Trucking Co.
v. United States, 321 U.S. 67, 87 (1944).
While the RLA, like the antitrust laws, embodies certain public
policy considerations, the Interstate Commerce Act also specifies that
the interests of affected employees must be considered. In these
proceedings we gave ful! consideration to the impact of the consoli-
A45
dation on railroad employees in accordance with our established poli-
cies. 366 LC.C. 618-22.
The record in these proceedings is devoid of any suggestion by
BLE, UTU, or any other party that the approval of the responsive
trackage rights applications, subjec ‘to the usual labor protective con-
ditions, would be in any way incon tent with the policies of the RLA.
In these circumstances, we can find no merit in UTU’s argument that
we improperly failed to reconcile the policies of the RLA with our
decision.
Labor Conditions. Petitioners contend that operations by the track-
age rights tenants, using their own crews, over UP-MP lines would
constitute a unilateral change in working conditions for UP-MP em-
ployees in violation of the NW-BN and New York Dock conditions.
They further contend that these crew assignment disputes are labor
issues in which the Commission should not be involved. As previ-
ously discussed, the standard labor conditions do not freeze working
conditons which must be altered to implement an approved transac-
tion. The record in these proceedings strongly supports the conclu-
sion that the approved trackage rights operations are not inconsistent
with the terms of any collective bargaining agreements or of the im-
posed labor conditions.
BLE, UTU, and various other railway labor organizations par-
ticipated in these proceedings, and none made any argument or present-
ed any evidence that the responsive trackage rights proposals would
violate any applicable labor agreements. Rather, the record supports
the conclusion that the trackage rights operations, using the tenants’
crews, could be implemented as approved without raising any dis-
pute over crew assignments between the employees of different
railroads.
The responsive trackage rights applications in these proceedings
were filed in January 1981. and in accordance with regulations, in-
cluded proposed trackage rights agreements which specified the oper-
ating conditions for the trackage rights. The agreement in MKT’s
application specitied: “MKT. with its own employees. and its sole
cost and expense. shall operate its engines. cars and trains on and
along Joint Track.” Proposed agreement Section 5. MKT trackage
rights appliction, Finance Docket No. 30,000 (Sub-No. 25) (MKT-25).
DRGW’s application provided: “Rio Grande may. af its option. elect
A4+6
to employ its own crews for the movement of its trains. locomotives
and cars to points on or over the Joint Track...“ Proposed agree-
ment Section 6(c)(3). DRGW trackage rights application. Finance
Docket No. 30,000 (Sub-No. 18) (DRGW-8). Therefore. in January
1981. over a month before the commencement of hearings. all parties
had notice that the responsive trackage rights applicants sought authori-
ty to perform operations using their own crews.
On February 20. 1981. DRGW and MKT filed their verified state-
ments in support of their responsive applications. These statements
further make clear the position of those carriers that. if their appli-
cations were approved. they would have the right to conduct track-
age rights operations using their own crews. For example. DRGW's
evidence stated: “If our trackage rights applications are granted. both
over WP4 and MP. we anticipate that a fewer number of employees
will be displaced. or a reduction of 176 jobs as opposed to 350 jobs
if these applications are not granted.” Verified Statement of A.E.
Nance. at 15. MKT’s evidence stated: “The projected position im-
pacts shown on Exhibit 4 [to the trackage rights applications] reflect
our determination of the number of positions that would be created.
eliminated or transferred. or the other affects of such actions due to
the acquisition of trackage rights. Our determinations were based
primarily on the essential provisions of the applicable labor ag**e-
ments and consultation with other carrier officers.” Verified State-
ment of Harold M. Hacker, at 2. These verified statements clearly
demonstrate the intent of MKT and DRGW to operate using their own
crews. The assessments of labor impacts make no mention of any pos-
sibility of UP-MP employees having any right to perform the pro-
posed operations.
During the course of hearings in these proceedings, DRGW and
MKT witnesses Nance and Hacker were cross-examined on the tes-
timony in their verified statements. No labor party cross-examined
Mr. Hacker. See Transcript. Finance Docket No. 30.000, Bifurcated
Hearing. June 23, 1981, at 3398-3417. Thus. Mr. Hacker's testimony
regarding labor impact on MKT employees as a result of approval
of the proposed trackage rights operations stands in the record without
qualification.
‘The application for trackage rights over the Western Pacific Railroad
Company was subsequently withdrawn.
Ad7
Mr. Nance was cross-examined by various parties. including UTU.
Under cross-examination by counsel for UP-MP. Mr. Nance testified
that DRGW was willing to negotiate with UP-MP regarding whose
crews would perform operations. Transcript, Finance Docket No.
30,000, June 23, 1981, at 8432-3. He testified that “as these trackage
rights are granted to us we are willing to sit down and work out any
kind of arrangement you [UP-MP] want.” at 8433, also see at 8449-50.
Mr. Nance’s testimony clearly states that the decision whether to use
UP-MP or DRGW crews would be a matter solely within the discre-
tion of the management of the railroads. At no point does he indicate
that UP-MP employees would have any right to participate in the
decision-making process.
Following cross-examination by applicants, the labor parties had
the opportunity to cross-examine Mr. Nance. BLF did not question
him. Counsel for UTU’s cross-examination dealt exclusively with Mr.
Nance’s projection of the impact of the primary transactions on
DRGW’s employees. No questions were asked icgarding DRGW’s as-
sessment of the labor impacts of its sought responsive trackage rights.
Transcript at 8555-8.
BLE and UTU submitted evidence and presented witnesses in
Opposition to the responsive trackage rights applications. Nowhere
in these evidentiary presentations did the labor parties indicate that
UP-MP employees would have a right to participate in the selection
of which railroad’s crews would perform trackage rigiats operations.
On July 3. 1981, BLE submitted the verified statement of Ed-
mund G. Becker in opposition to trackage rights over UP lines. Pre-
pared Statement BLE-|. entered into evidence as BLE-H (VS)-2. Mr.
Becker noted thai the trackage rights applicants intended to perform
operations using their own crews. He testified that granting the respon-
sive applications “would have an adverse effect on the engineers cur-
rently handling the traffic received from and delivered to the
Missouri-Kansas-Texas Railroad at Kansas City [and]. . . it would be
safe to say that no less than two hundred-sixty (260) engineers would
be affected due to the ripple effect... “~” BLE-H(VS) 2. at 4. The veri-
tied statement does not suggest that UP engineers would have any
protection from these adverse consequences under any collective bar-
gaining agreements or the RLA. Further. on cross-examination. Mr.
Becker did not indicate that UP engineers would have any right to
Ads
participate in trackage rights work force selection. Rather. he testi-
fied that UP engineers would be adversely affected by approval of
the responsive applications. Transcript. at 12. 974-81. September 16.
1981.
On August 31. 1981. the parties identified as Various Labor Or-
ganizations. including UTU. submitted verified statements (VLO-
H(VS)-2). Representatives of UTU provided verified statements in-
cluded in VLO-H(VS)-2. None of those statements. however. con-
lain testimony supporting the assertion that UP-MP employees would
have any right to participate in the trackage rights crew selection
process.
Finally. in their post-hearing briefs neither UTU nor BLE made
any arguments or cite any evidence in support of the positions they
now advocate. The brief for Various Labor Organizations, in its state-
ment of facts. cites Mr. Nance’s testimony regarding labor impact of
the consolidation, with and without approval of DRGW’s trackage
rights application. Thus, the brief filed on behalf of UTU accepts
labor impact evidence which assumes that trackage rights operations
would be performed by the tenant using its own crews. BLE’s brief
does not discuss the labor impacts of the responsive trackage rights.
Rather, it merely made reference to BLE-H (VS)-2 on that point. Thus.
the record contains no evidence to support the contention of UTU
and BLE that UP-MP employees have rights under collective bar-
gaining agreements to participate in the trackage rights crew selec-
tion process.
Further. petitioners’ argument : garding the alleged unilateral
change of working conditions mischaracterizes the nature of the track-
age rights operations. BLE and UTU have cited decisions such as
St. Louis Southwestern Ry. Co. v. Broth. of Railroad Signalmen, 665
F.2d 987 (10th Cir. 1981) for the proposition that railroads cannot trans-
fer or contract out work which, under collective bargaining agree-
ments and by custom, is to be done by their own employees. These
decisions are not relevant with respect to the trackage rights crew as-
signments in issue here. We approved the MKT and DRGW trackage
rights applications to ameliorate certain anticompetive impacts of the
UP-MP consolidation. Those trackage rights operations will be con-
ducted in competition with UP-MP operations. MKT and DRGW will
be handling traffic for their own accounts not for UP-MP. UP-MP
A49
has not transferred or contracted out any work by agreeing to the track-
age rights as a condition to the consolidation.
BLE and UTU both contend that our decision denying BLE’s
petition for clarification is inconsistent with our general policy of not
injecting the Commission into labor disputes. In support, petitioners
cite Finance Docket No. 28046, //linois Central Gulf R. Co.-Trackage
Rights-Over Chicago & I.M. RY. Co. (not printed), served February
22, 1977 and Finance Docket No. 30138, Cairo Terminal Railroad
Co.-Trackage Rights Exemption-lllinois CG. R. Co. (not printed),
served May 17, 1983.
In Illinois Central Gulf, the Commission approved a trackage
rights agreement which included a provision that the trackage rights
tenant would perform operations using its own crews. UTU filed a
petition for reconsideration asserting that the Commission had no
authority to impose a crew assignment condition and requesting that
the condition be removed. The Commission, Division 3, dismissed
the petition for reconsideration finding that the crew assignment pro-
vision of the agreement was not a condition imposed by the Com-
mission pursuant to the section of the Interstate Commerce Act now
codified as 49 U.S.C. 11347. Rather, the p ovision was a negotiated
agreement between the railroads. The provision was approved (and
thus immunized it from all other laws) because it would have no ad-
verse transportation effects. The Division noted that the Review Board,
in approving the trackage rights, declined jurisdication over all other
subject matters and the Division concluded that the Commission has
no jurisdiction to impose or to remove crew assignment provisions.
UTU and BLE ask us for the same relief the Commission de-
nied in //linois Central Gulf. The Commission has the power to ap-
prove (and to immunize trom other laws) crew assignment provisions
in trackage rights agreements. These provisions are not labor condi-
tions and cannot be removed or modified in the manner applicable
to labor conditions.
In Cairo Jerminal, the involved railroads sought an exemption
for a proposed trachage rights agreement. The agreement contained
a provision regarding which carrier's employees would perform the
trackage rights operations. UTU orotested the exemption requ t and
requested that the Commission expressly disclaim jurisdiction over
the crew assignment provision. UTU’s argument was not considered
_
ASO
because the Commission's action in that proceeding was based on
49 U.S.C. 10505. not on 49 U.S.C. 11344 relating to approval of trackage
rights agreements. The decision noted. however, that “Crew assign-
ment provisions in trackage rights agreements are within this Com-
mission's subject matter jurisdiction to the extent they relate to the
transportation effects of the proposed transaction.” Slip op.. at 8.
Trackage rights agreements are considered under the criteria of
49 U.S.C. 11344 and if those criteria are met. the agreemeni Is ap-
proved. The approval confers self-executing immunity on all materi-
al terms of the agreement from all other law to the extent necessary
to permit implementation of the agreement. To the extent employees
are adversely affected by the transaction they are entitled to benefits
_under the conditions imposed pursuant to 49 U.S.C. 11347.
Provisions of trackage rights agreements designating which car-
riers employees will perform trackage rights operations are material
terms of
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.