Respondents Brief — CSX Transportation, Inc. v. Brotherhood of Railway Carmen (Nos. 89-1028, 89-1027)

Supreme Court brief1989

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DISPATCHERS ASSOCIATION, ET AL.

Boreiianoon oF RAILWAY CARMEN, ET AL.

ee ——

| SQN WRITS OF CERTIORARI

By 9 The ynITED ATES COURT OF APPEALS

OF COLUMBIA CIRCUIT

QUESTION PRESENTED

Whether, under 49 U.S.C. 11341(a), a party that has

entered into a merger approved by the Interstate Com-

merce Commission is exempt from the legal obligations

imposed by a collective bargaining agreement, to the ex-

tent such an exemption is necessary in order to implement

the merger.

— i— =

Statement ..

TABLE OF CONTENTS

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Argument:

Under 49 U.S.C. 11341(a), a party that has entered

into a merger approved by the Commission is ex-

empt from any legal obligation imposed by a collec-

tive bargaining agreement, to the extent such an ex-

emption is necessary to implement the merger .... .

The text of Section 11341(a) makes clear

that participants in an ICC-approved

merger are exempt from all legal

obstacles, including obligations under

collective bargaining agreements, that

may jeopardize the implementation of the

The legislative history of Section 11341(a)

confirms that 1CC-approved mergers are

exempt from all legal obstacles, including

collective bargaining agreements, that

may jeopardize the implementation of the

EEE SENSES OTT OTTTEe

1. The Transportation Act of 1920 ....

2. The Emergency Railroad Transporta-

(111)

Page

3. The Transportation Act of 1940.... 35

C. The court of appeals’ decision cannot be

squared with the purpose of the ICA con-

’ solidation provisions ..............5+. 39

D. The court of appeals erroneously declined

to defer to the Commission’s construction

of Gestinm BEDSEED oc tacccteccccccce. 42

Cities, . ..g cic cdnensessesdedsndedscbedeoocecs 44

TABLE OF AUTHORITIES

Cases:

Aaron v. SEC, 446 U.S. 680 (1980) ...........55. 23

Brotherhood of Locomotive Eng’rs v. Boston &

Maine Corp., 788 F.2d 794 (ist Cir.), cert.

denied, 479 U.S. 829 (1986) .... 0... eee ee 25

Brotherhood of Locomotive Eng’rs v. Chicago &

N.W. Ry., 314 F.2d 424 (8th Cir.), cert. denied,

375 U.S. 819 (1963) ..........65565- 19, 20, 25, 26, 41

Brotherhood of Maintenance of Way Employes v.

United States, 366 U.S. 169 (1961) ............ 38

Brotherhood of R.R. Trainmen v. Jacksonville

Terminal Co., 394 U.S. 369 (1969) ............ 6, 41

Bundy v. Penn Cent. Co., 455 F.2d 277 (6th Cir.

"EIRENE DAP Oe, 26

Burlington Northern Inc. v. American Ry. Super-

visors Ass'n, 503 F.2d 58 (7th Cir. 1974), cert.

denied, 421 U.S. 975 (1975) .. 0... ee eee. 26

Burlington Northern R.R. v. Brotherhood of

Maintenance of Way Employes, 481 U.S. 429

GREED cvcocecccescescescesesneseecesoscces 20, 41

CSX Corp. — Control —Chessie Sys., Inc., & Sea-

board Coast Line Indus., Inc., Finance No.

28905:

(Sub-No. 1), 363 1.C.C. 521 (1980) .......... 11, 12

(Sub-No. 22) (Aug. 31, 1989) ............... 17

Cases — Continued: Page

California ¥. Taylor, 353 U.S. 553 (1957) ........ 25

Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984) ............ 14-15,

21, 42, 43

Consolidated Rail Corp. v. Railway Labor Execu-

tives’ Ass’n, 109 S. Ct. 2477 (1989) ............ 20, 41

Consumer Prod. Safety Comm'n v. GTE Sylvania,

EE ee 23

Detroit & Toledo Shore Line’ R.R. vy. United

Transp. Union, 396 U.S. 142 (1969) ........... 20, 41

Elgin, J. & E. Ry. v. Burley, 325 U.S. 711 (1945),

BE e 6, 41

Erie R.R. v. Tompkins, 304 U.S. 64 (1938) ....... 27

Farmers & Mechants Bank v. Federal Reserve

Bank, 262 U.S. 649 (1923) ................... 24

Fedorenko v. United States, 449 U.S. 490 (1981)... 34

Fox v. Standard Oil Co., 294 U.S. 87 (1935) ...... 38

Greyhound Corp. v. Mt. Hood Stages, Inc., 437

SS 23

Hendrickson v. Apperson, 245 U.S. 105 (1917) ... 24

ICC v. Brotherhood of Locomotive Eng’rs, 482

RN, Coes cn ose ccdbcséuces 35

INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) ..23, 33, 38

Kissinger v. Reporters Comm. for Freedom of the

FREE, SED UB, CRB CIGD 6 occ ccccccccccccecs 33

Lawrence County v. Lead-Deadwood School Dist.

No. 40-1, 469 U.S. 256 (1985) ............"... 34

Lehman v. Nakshian, 453 U.S. 156 (1981) ........ 34

Local 24, Int'l Brotherhood of Teamsters v. Oliver,

aC Ea a a 24

Louisiana v. New Orleans, 102 U.S. 203 (1880) ... 24

McLean Trucking Co. v. United States, 321 U.S.

CASE tind ncn dsdudidinementbcides 27, 39

Missouri Pac. R.R. v. United Transp. Union, 782

F.2d 107 (8th Cir. 1986), cert. denied, 482 U.S.

idee wece ene TETT TTT eee 26

Cases — Continued:

Nemitz v. Norfolk & W. Ry., 436 F.2d 841 (6th

Cir.), aff'd, 404 U.S. 37 (1971) .. 2. eee

New York Dock Ry. —Control— Brooklyn Eastern

Dist. Terminal, 360 1.C.C. 60, aff'd sub nom.

New York Dock Ry. v. United States, 609 F.2d

|] [- 3S Pe, ce Cee

Norfolk Southern Corp.—Control—Norfolk &

W. Ry., and Southern Ry., Finance No. 29430

(Sub-No. 1), 366 1.C.C. 173 (1982) ............

Ogden v. Saunders, 25 U.S. (12 Wheat.) 212

CREED io cbcccudddedevéedebecdeddbede duces

Pittsburgh & Lake Erie R.R. v. Railway Labor

Executives’ Ass'n, 109 S. Ct. 2584 (1989) .....,.

Pittston Coal Group v. Sebben, 109 S. Ct. 414

ED cnduteenccesectusdsnGsbedeee es 60 ccces

Railway Employes’ Dep't v. Hanson, 351 U.S. 225

Dh <acuiicchacanddibessdddedéeoteneess:

Railway Labor Executives’ Ass'n v. United States,

i, PT on nconcuncapseucevececeee

Regan v. Wald, 468 U.S. 222 (1984) .............

Russello v. United States, 464 U.S. 16 (1983) .....

Schwabacher v. United States, 334 U.S. 182

eer ey Tee 19,

Slocum v. Delaware, L. & W. R.R., 339 U.S. 239

GED ccncdecseesduvedevaesebctoscsacesce:

St. Joe Paper Co. v. Atlantic Coast Line R.R.,

SF Es dhdddeboocoeconseccoccee

Texas v. United States, 292 U.S. $22 (1934) .......

Texas & N.O. R.R. v. Brotherhood of R.R. Train-

men, 307 F.2d 151 (Sth Cir. 1962), cert. denied,

TTT PITT TTT 26,

Trailer Marine Transp. Corp. v. FMC, 602 F.2d

MS ee ere

Transamerica Mortgage Advisors, Inc. v. Lewis,

Se PEED CeCe bbebecccesceEsecoucee:

Page

22, 28

28, 29

Vil

Cases — Continued: Page

United States v. Erika, Inc., 456 U.S. 201 (1982)... 34

United States v. Lowden, 308 U.S. 225 (1939) . . . 30, 39-40

United States v. Riverside Bayview Homes, Inc.,

EE 20-21, 42

Volkswagenwerk Aktienge'lschaft v. Federal Mari-

time Comm'n, 390 U.S. 261 (1968) ............ 27

Von Hoffman v. City of Quincy, 71 U.S. (4 Wall.)

ee ee ee oe ewes 24

Walker v. Whitehead, 83 U.S. (16 Wall.) 314

SO i i Se Sp cli 24

Statutes and regulation:

Act of Oct. 17, 1978, Pub. L. No. 95-473, § Ha),

IE. Wea dic nncdudascedssedes< 35

Emergency Railroad Transportation Act of 1933,

ee ois 6 Di cnc wccbeeeues 31

Tit. I:

IND ccc cccccccccccccs 32

i ee 31, 32

ER 34

Tit. I, § 202(15), 48 Stat. 219 .............. 33

Hobbs Administrative Orders Review Act, 28

A 2

Interstate Commerce Act of 1887, ch. 104, § 5,

EE A ee ne 29

Interstate Commerce Act, 49 U.S.C. 11301 ef seq.

EEE 4

in. ene caus 17, 18, 19

49 U.S.C. 11341-11351 (1982 & Supp. V

ee a ow cw os pan uneces 4

SS eee passim

Oe TT Baatbedcsccceccccecccedy a ae

49 U.S.C. 1134¢Maw1)............ | 4

49 U.S.C. 11344(1982 & Supp. V 1987) 23

49 U.S.C. 11344(b) .. 23

vill

Statutes and regulation — Continued: Page

49 U.S.C. 11344(0OMT) . ©. © oe cen 4

49 U.S.C. 11344(oM IMD) ...........-. 4, 23, 4

GD UBL. BERGE on ccccccccccccscces 4, 5, 23, 39

49 U.S.C. 11347 (1982 & Supp. V 19387) ..... 5, 6,

11, 17, 22, 40

49 U.S.C. 11347 (Supp. V 1987) .......... 6, 36, 40

Norris-LaGuardia Act, 29 U.S.C. 101 ef seg. ..... 26

Railway Labor Act, 45 U.S.C. 151 ef seg. ........ 3, 19

Ge OE BD cccccccccccsccccccees 25

4$ U.S.C. 182 Second ........ 6... secnues 20, 41

45 U.S.C. 182 Seventh ............655- 20, 25, 41

4S U.S.C. 19S Fired .... 2... cncccccccccs: 20, 41

4S U.S.C. 186 «2.2... cc ccc n wenn 6, 20, 25, 41

Oe BR, Ee cccccccecececcessesceseed 6, 20, 41

OO POS, OED ccccccccceccncesecccccesss 20, 41

Transportation Act of 1920, ch. 91, 41 Stat. 456 ... 29

§ 407, 41 Stat. 480 . 2... ccc cece nnn 29

Yb & | b errs art

41 Stat. 482 (§ S(B)) ... . . .. . . «666s. 15, 19, 30,

31-32, 33, 35

y @ fe Ree 29

Transportation Act of 1940, ch. 722, 54 Stat. 899:

$4 Stat. 906-907 (§ SC2MN) ©... 66s 35-36

$4 Stat. 908-909 (§ SCLT)) .. ©... 66 ne 28, 35

SORE RE cd ccckocséscodccesecoccecossce 2

SE Ee cnc cccackososvocecvcececeseses 23

I ook. oc cvacnde + 060cbsececescocs 2

Proclamation No. 2081, 48 Stat. 1740 (1934) ..... 31

77 Cong. Rec. 4899 (1933)... ... 66.0 Rieke 1

79 Cong. Rec. 9346 (1935) .... iis | 1

84 Cong. Rec. 9882 (1939) ca

Miscellaneous: Page

86 Cong. Rec. (1940):

CC 38

CE EE 38

EE 38

EEE 38

EEE SS ee ee 38

H.R. Conf. Rep. No. 2016, 76h Cong.. 3d Sess.

RR i ce enceudnacestesccens 38

H.R. Rep. No. 193, 73d Cong., Ist Sess. (1933) . 3

H.R. Rep. No. 1395, 95th Cong., 2d Sess. (1978) a 35

L. Lecht, Experience Under Railway Labor Legis-

CC EE ~

S.J. Res. 112, 74th Cong., Ist Sess. (1935)... ... 31

S. Rep. No. 87, 73d Cong., Ist Sess. (1933)... 31, 32-33

Staff of House Legislative Comm. on Interstate

Commerce Commission, 76th Cong., 3d Sess.,

Omnibus Transportation Legislation (House

i cue cae acctes x”

— hl al « ™~ « = al ™ - i “—

Jn the Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-1027

NORFOLK AND WESTERN RAILWAY COMPANY, ET AL.,

PETITIONERS

AMERICAN TRAIN DISPATCHERS ASSOCiATION, ET AL.

No. 89-1028

CSX TRANSPORTATION, INC., PETITIONER

Vv.

BROTHERHOOD OF RAILWAY CARMEN, ET AL.

ON WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

SUPPORTING PETITIONERS

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-26a)

is reported at 880 F.2d 562.' The court of appeals’ order of

September 29, 1989 (Pet. App. 27a-28a), amending its

prior Opinion, is unreported. The opinion of the Inter-

state Commerce Commission in No. 89-1027 (Pet. App.

29a-46a) is unreported; the Commission’s opinion in

' References to “Pet. App.” are to the appendix to the petition in

No. 89-1027.

(1)

No. 89-1028 (89-1028 Pet. App. 33a-52a) is reported at 4

1.C.C.2d 641.

JURISDICTION

The judgment of the court of appeals was entered on

July 25, 1989. Petitions for rehearing in both cases were

denied on September 29, 1989 (Pet. App. 49a-50a). The

petitions for a writ of certiorari in both cases were filed on

December 28, 1989, and were granted on March 26, 1990.

The jurisdiction of this Court rests on 28 U.S.C. 1254(1).?

STATUTORY PROVISION INVOLVED

49 U.S.C. 11341(a) provides in pertinent part:

Scope of authority

The authority of the Interstate Commerce Commis-

sion under this subchapter is exclusive. A carrier or

corporation participating in or resulting from a trans-

action approved by or exempted by the Commission

under this subchapter may carry out the transaction,

own and operate property, and exercise control or

franchises acquired through the transaction without

the approval of a State authority. A carrier, corpora-

tion, or person participating in that approved or ex-

2 Under the Hobbs Administrative Orders Review Act, 28 U.S.C.

2341 et seq., this Court is authorized to review, on a writ of certiorari

as provided by 28 U.S.C. 1254(1), “a final judgment of the court of

appeals.” 28 U.S.C. 2350. Although the court of appeals remanded

this case to the Commission for further proceedings, we believe its

decision is nonetheless “final” for purposes of Section 2350, and is

therefore reviewable by this Court. We have explained our views on

this point at greater length in our opening brief (at 29-30) and reply

brief (at 13 & n.10) in Sullivan v. Finkelstein, No. 89-504, copies of

which have been furnished to all counsel.

empted 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 * * *.

STATEMENT

The Interstate Commerce Commission has broad

authority to examine, condition, and approve proposed

rail carrier consolidations. In the two cases presented, the

Commission approved the merger of rail systenis and, as a

condition of its approval, imposed certain labor protective

requirements, intended to soften the impact of the merger

on affected employees. Some years later, the merged car-

riers sought to carry out the approved consolidation by

integrating into a single facility services then being per-

formed at separate outlets. Because the proposed integra-

tion entailed adverse impacts for employees, however, the

respondent unions invoked their rights under existing col-

lective bargaining agreements and requested negotiations

under the Railway Labor Act (RLA), 45 U.S.C. 151 ef seq.

Reviewing the decision of arbitration committees, the

Commission sustained the proposed integrations — thereby

precluding enforcement of the conflicting terms of the col-

lective bargaining agreements. The agency relied, in part,

on Section 11341(a) of the Interstate Commerce Act,

under which parties to an ICC-approved consolidation are

exempt “from all other law, including State and municipal

law, as necessary to let that person carry out the transac-

tion.” 49 U.S.C. 11341(a). The court of appeals reversed

the Commission’s decision, holding that Section 11341(a)

applies only to “positive enactments, not common law

tules of liability, as on a contract.” Pet. App. 18a. Accord-

ingly, the court ruled, Section 11341(a) does not exempt

carriers from their legal obligations under collective

bargaining agreements — including those obligations that

may jeopardize implementation of an ICC-approved con-

solidation.

A. Statutor; Framework

Chapter 113 of the Interstate Commerce Act (ICA, or

Act), 49 U.S.C. 11031 ef seq., vests the Interstate Com-

merce Commission with exclusive and plenary jurisdiction

to examine, condition, and approve rail carrier combina-

tions, including the consolidation of two or more carriers.

49 U.S.C. 11343(a)(1). The statutory provisions grant the

Commission broad authority to evaluate the effects of

these transactions on interested persons and the public.

See 49 U.S.C. 11341-11351 (1982 & Supp. V 1987).

Section 11344(c) provides that upon application of the

parties, the Commission may conduct a proceeding and

“shall approve and authorize a transaction under this sec-

tion when it finds the transaction is consistent with the

public interest.” 49 U.S.C. 11344(c). That Section iden-

tifies specific criteria to guide the Commission’s considera-

tion, including “the interest of carrier employees affected

by the proposed transaction.” 49 U.S.C. 11344(b)(1)(D).’

} Section 11344(b)(1) instructs that in situations, as here, involving

the merger or control of at least two class I railroads, the Commission

shall consider “at least” the following factors (49 U.S.C. 11344(b)(1)):

(A) the effect of the proposed transaction on the adequacy of

transportation to the public.

(B) the effect on the public interest of including, or failing to in-

clude, other rail carriers in the area involved in the proposed

transaction.

action.

(D) the interest of carrier employees affected by the proposed

transaction.

Section 11344(c) also provides that the Commission “may

impose conditions governing the transaction.” 49 U.S.C.

11344(c).

Section 11347 provides that the Commission shall im-

pose conditions to protect the interests of railroad

employees who are adversely affected by an approved

transaction. 49 U.S.C. 11347 (1982 & Supp. V 1987).4

Pursuant to that authority, the Commission has for-

mulated standard labor-protective conditions, derived

from the Commission’s decision in New York Dock

Ry. —Control— Brooklyn Eastern Dist. Terminal, 360

1.C.C. 60, 84-90, aff'd sub nom. New York Dock Ry. v.

United States, 609 F.2d 83 (2d Cir. 1979). The New York

Dock conditions establish, among other things, pro-

cedures to resolve — by negotiation and, failing that, bind-

ing arbitration—any labor dispute arising from an ICC-

approved railroad consolidation. Accordingly, Section 4

of the New York Dock conditions, 360 1.C.C. at 85, re-

quires a “railroad contemplating a transaction which. . .

may cause the dismissal or displacement of any employees,

or rearrangement of forces [to] give at least ninety .. .

days written notice ...” Pet. App. 3a. Section 2, 360

1.C.C. at 84, provides that “[t}he rates of pay, rules, work-

ing conditions and all collective bargaining and other

rights, privileges and benefits . . . under applicable laws

(E) whether the proposed transaction would have an adverse ef-

fect on competition among rail carriers in the affected region.

* Among other things, Section 11347 states that “[t}he arrangement

and the order approving the transaction must require that the

employees of the affected rail carrier will not be in a worse position

related to their employment as a result of the transaction during the 4

years following the effective date of the final action of the Commis-

sion (or if an employee was employed for a lesser period of time by the

carrier before the action became effective, for that lesser period).” 49

U.S.C. 11347 (1982 & Supp. V 1987).

and/or existing collective bargaining agreements or other-

wise shall be preserved unless changed by future collective

bargaining agreements.” Pet. App. 3a-4a. These condi-

tions ensure that transactions found to be in the public in-

terest can be consummated without labor strife by pro-

viding a “fair arrangement” (49 U.S.C. 11347 (Supp. V

1987)) for displaced employees.°*

When the Commission has approved a iransaction, the

statute exempts the participants from legal obstacles that

would otherwise bar or impede its implementation. Sec-

tion 11341(a), the so-called immunity provision, provides

that upon ICC approval of a Section 11343 transaction:

A carrier * * * participating in that approved * * *

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 transac-

tion, hold, maintain, and operate property, and exer-

cise control or franchises acquired through the trans-

action * * *.

’ The conditions devised by the Commission under Section 11347

for approved transactions stand in sharp contrast to the RLA’s

cumbersome procedures for changing the provisions of a collective

agreement. Under the RLA, an attempt to change a collective agree-

ment results in a “major dispute.” Elgin, J. & E. Ry. v. Burley, 325

U.S. 711, 723 (1945), aff'd on reh’g, 327 U.S. 661 (1946). The parties

must engage in a protracted procedure to resolve their differences,

which includes negotiation, mediation, and conciliation, and must

consider voluntary arbitration. See 45 U.S.C. 156, 157. If the parties

are unable to reach an agreement, either party may resort to economic

self-help such as a lock-out or strike. See generally Brotherhood of

R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 378-380

(1969).

B. Proceedings Below

1. No. 89-1027

a. In March 1982, the ICC approved the application

of NWS Enterprises, Inc. (now Norfolk Southern, or NS),

a holding company, to acquire control of two rail carriers,

petitioners Norfolk and Western Railway Company (N &

W) and Southern Railway Company (Southern). See Nor-

folk Southern Corp. —Control—Norfolk & W. Ry. and

Southern Ry., Finance No. 29430 (Sub-No. 1), 366 I.C.C.

173 (1982). In its order approving control, the ICC im-

posed the standard New York Dock labor-protective con-

ditions. Pet. App. 6a. Although the Commission recog-

nized that it was “possible that further displacement [of

employees] may arise as additional coordinations occur,”

it concluded that “the minimum statutory protection of

New York Dock is appropriate for the protection of ap-

plicants’ employees affected by this proceeding.” 366

1.C.C. at 230-231.

Respondent American Train Dispatchers’ Association

(the Association) was the bargaining representative of cer-

tain N & W employees responsible for “power distribu-

tion” —the process by which locomotives are assigned to

particular trains and facilities. On September 12, 1986,

petitioners informed the Association that they intended to

consolidate all power distribution for the combined Nor-

folk Southern operation by transfering the work per-

formed at the N & W power distribution center in

Roanoke, Virginia, to the Southern center in Atlanta,

Georgia.* The carriers proposed that affected N & W

* Petitioners asserted that as a result of the proposed consolidation,

“power distribution functions would be aligned along * * * [a] more

efficient east-west division of the combined system,” thus permitting

“substantial cost savings because fewer locomotives will be needed and

employees would be “given consideration” for employ-

ment in new positions as superintendents in Atlanta.

Superintendents in Atlanta were considered management,

however, and were therefore not covered by any collective

bargaining agreement. Pet. App. 6a-7a, 30a-3la.

The Association thereafter sought to negotiate the terms

under which the proposed transfer would be implemented.

The negotiations foundered, however, over the Associa-

tion’s contentions that (1) the carriers’ proposal involved a

change in an existing collective agreement and was subject

to mandatory bargaining under the RLA; (2) the carriers

were required to preserve the right of the transferred

employees to representation under the RLA; and (3) the

affected employees were entitled to retain their rights, in-

cluding their seniority rights, under the collective bargain-

ing agreement with N & W. The carriers then asked the

National Mediation Board to appoint an arbitrator pur-

suant to Section 4 of the New York Dock conditions. Pet.

App. 7a.

The dispute thereafter came before a three-member ar-

bitration committee, which ruled in favor of the carriers

on each of the disputed issues. See J.A. 8-32. The commit-

tee first found that the proposed consolidation was part of

the control transaction approved by the ICC. J.A. 15-16.

It noted that when the Commission approved the underly-

ing merger, the agency had expressly anticipated the

possibility of “additional coordinations” that would fur-

ther “the goal of greater efficiencies” J A. 15. The com-

mittee concluded that the proposed transfer of work to

Atlanta met that criterion. J.A. 15-16.’ Relying on prior

the remaining locomotives can be used more efficiently.” Pet. App.

3la-32a.

’ In particular, tne committee observed that during the hearing it

had received testimony indicating “that i* cre will be substantial saving

ICC decisions (J.A. 17-19), the committee also held that it

had the authority to override—to bar enforcement of —

any provision of a collective bargaining agreement or of

the Railway Labor Act that impeded implementation of

the ICC-approved merger between N & W and Southern.

Finally, the committee concluded that the transferred

employees could not retain their rights under the collective

bargaining agreement. Pet. App. 7a. |

The carriers thereafter effected the coordination of

work and offered superintendent positions to all nine ac-

tive and three furloughed N & W employees. Nine of the

twelve accepted, two declined, and one retired. There were

no displacements of other employees. Pet. App. 33a.

b. The Commission affirmed by a divided vote. Pet.

App. 29a-46a. It explained that “[iJt has long been the

Commission’s view that private collective bargaining

agreemenis and RLA provisions must give way to the

Commission-mandated procedures of section 4 [of the

New York Dock conditions] when parties are unable to

agree on changes in working conditions required to imple-

ment a transaction authorized by the Commission.” /d. at

33a. Accordingly, the Commission stated, “the panel cor-

rectly found * * * that * * * the compulsory, binding ar-

bitrat:on required by Article I, section 4 of New York

Deck, took precedence over RLA procedures whether

asserted independently or based on existing collective

bargaining agreements.” /d. at 35a.

to the combined carrier through the planned coordination, both in

capital costs since fewer locomotives will be needed and also since

operating costs of the remaining locomotives may be reduced through

their more efficient utilization throughout the entire system.” J.A. 16.

See also J.A. 10 (testimony of J.R. Martin, Senior Vice President,

Transportation Planning, Southern Railway Company).

The ICC also held that, because the proposed transfer

was incident to the merger approved by the Commission,

it was “immunized from conflicting laws by section

11341(a).” Pet. App. 35a. The Commission explained

that “[t]o the extent that existing working conditions and

collective bargaining agreements conflict with a transac-

tion which [the ICC] ha[s] approved, those conditions and

agreements must give way to the implementation of the

transaction.” Jd. at 36a. “Such a result is essential,” the

ICC noted, “if transactions approved by [the agency] are

not to be subjected to the risk of non-consummation as a

result of the inability of the parties to agree on new collec-

tive bargaining agreemens effecting changes in working

conditions necessary to implement those transactions.” /d.

at 34a. Were the law otherwise, the Commission added,

there would be “no assurance that the approved transac-

tion will ever be effected.” Ibid.

Finally, the Commission upheld as appropriate the deci-

sion to override the collective bargaining agreement and

the RLA provisions. Reviewing the record, the Commis-

sion noted that “[{iJmposition of the collective bargaining

agreement would jeopardize the transaction because the

work rules it mandates are inconsistent with the carriers’

‘ The Commission noted that although “(t}he proposed transfer”

was “not specifically mentioned in Norfolk Southern Control,” it was

nonetheless “one of the future coordinations and public benefits ex-

pected to flow from, and is therefore part of, the control transaction

that [the Commission] approved. Indeed, the arbitration panel found

that coordination of locomotive power is precisely the type of action

that might reasonably be expected to flow from the control transac-

tion.” Pet. App. 35a.

underlying purpose of integrating the power distribution

function.” ° Pet. App. 37a.'°

2. No. 89-1028

a. On September 23, 1980, the ICC approved a pro-

posal under which CSX Corporation would acquire con-

trol of two other holding companies: (1) the Chessie Sys-

tem, Inc., whose principal railroad subsidiaries were the

Chesapeake and Ohio Railway Company and the Balti-

more and Ohio Railroad Company; and (2) Seaboard

Coast Line Industries, Inc., the parent of the Seaboard

Coast Line Railroad (later to become petitioner, CSX

Transportation, Inc.). See CSX Corp. — Control —Chessie

Sys., Inc., & Seaboard Coast Line Indust., Inc., Finance

No. 28905 (Sub-No. 1), 363 1.C.C. 521 (1980). As required

by Section 11347 of the Act, the Commission imposed a

standard set of labor protective conditions, derived from

New York Dock. Pet. App. 3a-4a; 89-1028 Pet. App. 54a.

The Commission recognized that “as the two systems mesh

their operations, additional coordinations may occur that

could lead to further employee displacements.” 363 I.C.C.

at 589. Nevertheless, refusing to accede to the unions’

request for more favorable protections, the Commission

determined that “the standard conditions will adequately

protect those employees now identified as affected by the

* In denying the Association’s earlier application to stay the Com-

mittee’s arbitration award, the Commission had also noted that “the

record shows that N & W and Southern will realize a $26 million

capital investment saving and an annual $2 million operating expense

_— exclusive of labor cost savings, from the coordination.” J.A.

‘© Commissioner Lamboley dissented. Pet. App. 42a-46a. In his

view, the case should have been remanded to the arbitration panel for

a determination of whether, and to what extent, the provisions of the

collective bargaining agreement could have been accommodated, con-

sistent with the goal of completing the approved transfer.

consolidation as well as those who may be affected in the

future, but are not now identified specifically.” /bid.

At the time of the consolidation, Chessie operated a

heavy freight car repair shop in Raceland, Kentucky, and

Seaboard operated a similar shop in Waycross, Georgia.

On August 29, 1986, CSX, invoking Section 4 of the New

York Dock conditions, notified the respondent labor

organizations that it intended to close the Waycross shop

and to transfer the employees and the work from that shop

to the Raceland shop. The transfer was to result in a net

decrease in available jobs at the two shops. Pet. App. 4a;

89-1028 Pet. App. 55a.

Relations between CSX and the unions representing its

employees were governed at the time by a collective

bargaining agreement known as the “Orange Book,”

negotiated to implement a previously authorized merger.

See 89-1028 Pet. App. 54a-55a. The Orange Book pro-

vided, among other things, that the carrier would employ

each covered employee for the remainder of his working

life, and that no covered employee “shall be deprived of

employment or placed in a worse position with respect to

compensation, rules, working conditions, fringe benefits

or rights and privileges pertaining thereto at any time dur-

ing such employment.” Pet. App. 4a. In return for that

job protection, the Orange Book gave the carrier the right

“to transfer the work of the employees protected

[t}hereunder throughout the merged or consolidated [i.e.,

Seaboard] system * * *.” /bid.

Once notified of the proposed transfer of work and

employees, respondent Brotherhood of Railway Carmen

(the Brotherhood) attempted to negotiate an implementa-

tion agreement on behalf of the affected employees.

Negotiations foundered, however, due to disagreements

about (1) whether the displaced Waycross employees

would retain their Orange Book rights; and (2) whether the

proposed transfer would result in a change of working

conditions and, if so, whether CSX would be required t>

comply with the Railway Labor Act before effecting such

a change. CSX invoked arbitration under the New York

Dock conditions, and the matter came before a three-

member arbitration panel. Pet. App. 4a-Sa.

The arbitration panel concluded that the Orange Book

prohibited the proposed transfer of work and employees.

89-1028 Pet. App. 82a-83a. The panel stated, however,

that as a “quasi-judicial extension of the ICC” (id. at 80a),

it had the authority to override any Orange Book or RLA

provision that impeded the transfer decision. The panel

then held that (1) it would override the Orange Book pro-

hibition on the transfer of work, but not on the transfer of

employees, and (2) it would exempt CSX from the RLA

insofar as the statute might require the carrier to bargain

before unilaterally changing the Orange Book with respect

to the transfer. Pet. App. Sa-6a.''

b. By a divided vote, the Commission affirmed in part

and reversed in part. 89-1028 Pet. App. 33a-52a. The

Commission agreed that the arbitrators were “empowered

to override collective bargaining rights, such as those in

the Orange Book, and RLA rights in formulating the im-

plementing agreement ” /d. at 43a. But it rejected the

panel’s refusal to permit the transfer of employees to

Raceland. The Commission reasoned that if, as the panel

had found, the Orange Book prohibits such a transfer of

employees, then to enforce the Orange Book in this setting

'! The arbitrators also found that although the proposed consolida-

tion of freight car repair facilities “was not expressly and specifically

presented to the Commission during administrative proceedings

culminating in approval of the control application,” the transaction

was nevertheless an “action taken pursuant to authorizations of th{e]

Commission,” within the meaning of New York Dock. 89-1028 Pet.

App. 78a.

would “serve[ ] as an impediment to implementation of a

transaction authorized by the Commission.” /d. at 44a.

The Commission also found that, in light of the positions

available at Raceland and the number of Waycross

employees eligible for those positions, “[iJmposition of an

Orange Book employee exception would effectively pre-

vent implementation of the proposed transaction.” /d. at

45a.'2, The Commission accordingly reversed the ar-

bitrators’ decision “to the extent it holds that CSX may not

require transfer of [Seaboard] employees as well as work

from Waycross to Raceland.” Jd. at 44a.'?

3. The Court of Appeals’ Decision

The court of appeals considered the two cases together

and reversed and remanded. Pet. App. la-26a. The court

held that Section 11341(a) of the Act does not authorize

the Commission to relieve a party to a Section 11343 trans-

action of contractual obligations that impede implementa-

tion of <he transaction.'* The court explained that the

'2 In particular, the Commission noted that CSX “propose[d] to

establish a total of 107 positions at Raceland, including 86 carmen

positions. ©f the 86 Waycross carmen who are eligible for those posi-

tions, 57 are entitled to Orange Book protection.” If the arbitrators’

decision prevailed, the Commission ovserved, “those 57 Waycross

employees (over 55 percent of the proposed Raceland work force)

[could] refuse to accept positions at Raceland.” 89-1028 Pet. App.

44a-4Sa.

13 Commissioner } amboley dissented. 89-1028 Pet. App. 46a-52a.

He expressed “substantial doubt” that the proposed transfer of work

and employees was a transaction authorized by the Commission’s

prior approval of the control by CSX of Chessie and Seaboard. /d. at

46a. He also rejected the proposition that “any conflict, regardless of

origin or degree, is an impediment pre-empted by [Interstate Com-

merce Act} provisions.” /d. at 49a.

'4 The court of appeals acknowledged that the rule of deference ar-

ticulated in Chevron U.S.A. Inc. v. Natural Resources Defense Coun-

Statute does not expressly state that the ICC may override

contracts, “nor has it ever, in any of the various iterations

since its initial enactment in 1920, included even a general

reference to ‘contracts,’ much less any specific reference to

[collective bargaining agreements].” Pet. App. 12a. The

court stated that the Commission’s contrary view found

“no support in the language of the statute,” explaining that

the phrase “all other law” in Section 11341(a) cannot be

read to include “all legal obstacles.” Pet. App. 12a.

~The court also found no evidence in the legislative

history to support the Commission’s construction of Sec-

tion 11341(a). Pet. App. 13a-19a. Looking solely to the

Transportation Act of 1920, ch. 91, § 407, 41 Stat. 482,

the court stated that Congress had “focused nearly ex-

clusively *** on specific types of laws it intended to

eliminate—all of which were positive enactments, not

common law rules of liability, as on a contract.” Pet. App.

18a. The court also discerned in the legislative history “a

healthy respect for privately negotiated contracts.” /bid.

“And never, on the several occasions when Congress has

revisited the immunity provision, has it either broadened

that provision so as to reach ‘all legal obstacles’ to an ICC-

approved transaction, or acted more specifically to bring

‘contracts’ or ‘collective bargaining agreements’ within the

reach of the statute.” Jd. at 18a-19a.

The court next “decline[d] to address the question” (Pet.

App. 19a) whether Section 11341(a) may operate to over-

ride provisions of the RLA. Observing that the Commis-

sion’s present position with respect to the RLA “depart[s]}

cil, Inc., 467 U.S. 837 (1984), “applies to the 1CC’s reading of the

statute that it is charged with implementing.” Pet. App. Ila. The

court stated, however, that deference may be afforded only where a

court determines, “based upon the language of the statute and the

‘traditional tools of statutory construction,’ * * * that Congress has

not ‘directly spoken to the precise question at issue.’ ” /bid.

from its earlier precedent” (Pet. App. 23a), the court

directed the agency on remand either to “provide an ex-

planation for its new position on that issue, or adhere to

its prior position.” Jd. at 25a. The court also explained

that, “fiJn light of [its] holding that § 11341(a) does not

empower the ICC to override a [collective bargaining

agreement], it is unclear what are the consequences, if any,

of its rulings that the carriers need not comply with the

RLA.” Jd. at 23a. Because of the “uncertainty as to the ef-

fects of [the] ruling on the continued vitality of the

disputes,” the court devided to remand the RLA issue to

the Commission “to determine whether there is any live

RLA issue remaining.” Jd. at 25a.

Finally, the court “decline[d] to address either the ICC’s

theory that the labor protective conditions required by

§ 11347 of the Act are exclusive, or its related assertion

* * * that § 4 of the New York Dock conditions gives the

arbitration committee the ‘absolute right’ to effectuate the

transfer of employees, and to override any contrary provi-

sions of a [collective bargaining agreement].” Pet. App.

25a. Inthe eourt’s view, the Commission had not raised

those claims in its court of appeals’ brief. “In any event,”

the court concluded (id. at 26a), it is “best for the ICC, if it

has not abandoned its § 11347 and §4 rationales

altogether, to reconsider them in the first instance in light

of” this Court’s intervening decision in Pittsburgh & Lake

Erie R.R. v. Railway Labor Executives’ Ass’n, 109 S. Ct.

2584 (1989).

4. Petitioners filed petitions for rehearing in the court

of appeals. The Commission also filed a “limited” petition

for rehearing. In it, the agency advised the court of its “in-

tention to reopen these proceedings and to promptly issue

a comprehensive decision on remand addressing issues [the

agency] believe[s] the court directed [it] to reconsider and

those left open for resolution in further proceedings.” The

Commission accordingly “requested that the court refrain

from ruling on [the agency’s} petition for rehearing until

{the agency has] issued [its] decision on remand.” CSX

Corp. —Control—Chessie Sys., Inc. & Seaboard Coast

Line Indus., Inc., 1CC Finance No. 28905 (Sub-No. 22)

(Aug. 31, 1989) (hereafter, ICC Finance No. 28905].

By order served September 20, 1989, the Commission

“reopen(ed] the[ ] proceedings so that [it] could address

and explain in detail [its] views on the issue specifically

remanded; i.e., whether the provisions of 49 U.S.C.

11341(a) operate to override the provisions of the Railway

Labor Act (RLA), as well as on the general issues raised in

these proceedings, particularly the impact of our approval

of a transaction under 49 U.S.C. 11343 et seg. and imposi-

tion of our standard labor conditions upon the parties’

rights and remedies under the RLA and with respect to ex-

isting collective bargaining agreements.” ICC Finance No.

28905. The Commission added that “{i]n light of the im-

portance of the legal issues involved and [its] intention to

conduct a comprehensive examination of [its] authority

under 49 U.S.C. 11341, 11343, and 11347, etc., and the

labor conditions [it] ha[s] customarily imposed in approv-

ing railroad consolidations,” the agency was therefore

“seeking further comment by che parties to these pro-

ceedings as well as any other interested parties.” bid.

On September 29, 1989, the court of appeals denied

petitioners’ petitions for rehearing (Pet. App. 50a) and

issued an order stating that the Commission’s petition

would be “deferred pending release of the ICC’s decision

on remand.” Pet. App. 53a-54a. Moreover, the court

amended its decision to remand only the “records,” thus

retaining jurisdiction over the case. Briefs by interested

parties have now been filed with the Commission, and the

agency entertained oral argument on January 4, 1990.

SUMMARY OF ARGUMENT

The Interstate Commerce Act gives the Interstate Com-

merce Commission broad authority to approve proposed

railroad consolidations that the Commission finds, after

appropriate proceedings, to be consistent with the public

interest. When such a transaction has been approved, the

ICA exempts each participating carrier from “all other

law, including State and municipal law, as necessary to let

that person carry out the transaction.” 49 U.S.C.

11341(a). Construing Section 11341(a) in the present case,

the Commission determined that petitioners could proceed

with their proposed transactions, notwithstanding any

conflicting obligations under collective bargaining agree-

ments executed with the private respondents.

The court of appeals reversed, holding that the phrase

“all other law” in Section 11341(a) refers only to “positive

enactments, not common law rules of liability, as on a

contract.” Pet. App. 18a. It is that ruling, and only that

ruling, that is before the Court at this point, since all other

questions remain for consideration by the Commission

and any later judicial review.

With respect to that ruling —involving the applic~ bility

of Section 11341 to legal obligations under a collective

bargaining agreement —the text, history, and purpose of

Section 11341(a) confirm the broader construction

adopted by the Commission. Since the Commission is the

agency charged with the enforcement of the ICA, its

reasonable interpretation of the statute should have been

upheld.

A. The text is dispositive. Section 11341(a) exempts a

covered carrier from “all other law * * * as necessary to let

that person carry out the transaction.” The exemption

from “all other law” is easily sufficient to embrace those

laws governing the obligations of parties to contracts in

general, and to collective bargaining agreements in par-

ticular. Contracts are creatures of law, and they are

rendered enforceable through a regime of state and federal

common and statute law. Indeed, this Court in

Schwabacher v. United States, 334 U.S. 182 (1948),

recognized that the “law” referred to in Section 11341 in-

cludes the law under which contractual obligations are en-

forced.

The contracts involved in this case —collective bargain-

ing agreements in the railroad industry —are enforceable

under the Railway Labor Act, 45 U.S.C. 151 ef seq.,

which “[{u}nquestionably * * * is a federal law” within the

meaning of Section 11341(a) (Brotherhood of Locomotive

Eng’rs v. Chicago & N.W. Ry., 314 F.2d 424, 432 (8th

Cir.), cert. denied 375 U.S. 819 (1963)). Thus the long-

Standing and widespread recognition by the lower courts

that Section 11341(a) immunizes ICC-approved transac-

tions from the operation of the RLA where necessary to

implement the transaction is both correct and dispositive

of the question presented here.

B. The legislative history of Section 11341(a), and of

the consolidation provisions generally, confirms the mean-

ing of the text. Section 11341(a) derives from a provision

contained in the Transportation Act of 1920, which was

intended to foster railroad mergers generally, and which

therefore broadly exempted carriers from “all other

restraints or prohibitions by law.” § 407, 41 Stat. 482.

What is more, on two occasions—in 1933, and again in

1940 -- Congress expressly refused to narrow the scope of

the ICC’s consolidation authority by carving out a special

exception for obligaticns arising from labor agreements.

C. The court of appeals’ conclusion—according to

which collective bargaining agreements are fully en-

forceable under the RLA, even When they are in conflict

with the terms of an ICC-approved consolidation — cannot

be squared with the evident purpose of the consolidation

provisions: to foster the merger process while accom-

modating, to the fullest extent possible, the competing

claims of affected employees. If, as the court of appeals

supposed, employees may enforce conflicting contractual

rights under the RLA, ICC-approved transactions would

“be subjected to the risk of non-consummation.” Pet.

App. 34a. By proposing a change in the existing collective

bargaining agreement, the transaction would thereby pro-

voke a “major” dispute under the RLA. See Consolidated

Rail Corp. v. Railway Labor Executives’ Ass'n, 109 S. Ct.

2477, 2480 (1989). Where such a dispute is involved, the

parties must maintain the status quo while engaging in a

lengthy process of negotiation, mediation, and possibly

review by a Presidential Emergency Board. Detroit &

Toledo Shore Line R.R. v. United Transp. Union, 396

U.S. 142 (1969). If that process fails to produce an agree-

ment, each side is free to resort to strikes, lock-outs, or

other forms of economic self-help calculated to achieve

the desired objectives. See 45 U.S.C. 152 Second and

Seventh, 155 First, 156, 157, 160; Burlington Northern

R.R. v. Brotherhood of Maintenance of Way Employes,

481 U.S. 429, 444-445 n.10 (1987). And “[s]ince there is no

mechanism * * * for insuring that the parties will arrive at

agreement, there can be no assurance that the approved

transaction will ever be effected.” Pet. App. 34a. If ap-

plicable, the procedures for modifying collective

agreements under the RLA would therefore “threaten to

prevent many consolidations.” Brotherhood of

Locomotive Eng’rs v. Chicago & N.W. Ry., 314 F.2d at

431.

D. “An agency’s construction of a statute it is charged

with enforcing is entitled to deference if it is reasonable

and not in conflict with the expressed intent of Congress.”

United States v. Riverside Bayview Homes, Inc., 474 U.S.

eee! RS Ot es em OE

- ge eee ” a , “=isSa =o < sal _—_ = ©) oe - tia e -? i ee

121, 131 (1985). In light of the iext, history, and purpose

of Section 11341(a), the Commission’s conclusion —that

“all other law” includes the law governing the enforcement

of collective bargaining agreements—is entitled to

deference and should be upheld.

The court of appeals acknowledged those principies

(Pet. App. 11a), but declined to defer to the Commission’s

construction of the statute. Yet even accepting the court’s

view (as we do not)—that Congress did not directly ad-

dress the precise question at issue—the court should have

asked only whether the Commission’s construction of the

statute was “a reasonable one.” Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837,

843-845 (1984). In our view, the Commission’s judgment is

plainly reasonable, and the court of appeals erred in

“substitut[ing] its own construction of a statutory provi-

sion for a reasonable interpretation * * * of an agency”

(id. at 844).

ARGUMENT

UNDER 49 U.S.C. 11341(a), A PARTY THAT HAS ENTERED

INTO A MERGER APPROVED BY THE COMMISSION IS

EXEMPT FROM ANY LEGAL OBLIGATION IMPOSED BY

A COLLECTIVE BARGAINING AGREEMENT, TO THE EX-

TENT SUCH AN EXEMPTION IS NECESSARY TO IMPLE-

_ MENT THE MERGER

The broad ruling of the court of appeals —that the ex-

emptions provided by Section 11341(a) do not apply to

those laws governing the enforcement of contractual

obligations —raises only one importani but limited ques-

tion for review. If this Court determines, as we believe it

should, that this broad ruling was in error, the judgment

below should be reversed and the case remanded for con-

sideration of any remaining questions, including those

that are now pending before the Commission and that may

be raised in subsequent proceedings for judicial review.'*

In reaching its conclusion, the court of appeals, in our

view, attempted to separate the inseparable — holding that

contracts are not included among the laws referred to in

Section 11341(a), but at the same time “declin[ing] to ad-

dress” the question whether Section 11341(a) may operate

to override provisions of the RLA. Pet. App. 19a. Con-

-tracts derive their effectiveness and enforceability from a

regime of state and federal common and statute law, and

the collective bargaining agreements at issue here depend

for their effectiveness 2nd enforceability on the RLA. Just

as this Court held in Schwabacher v. United States, 334

U.S. 182 (1948), that contractual obligations enforceable

under state law are subject to the exemption conferred by

Section 11341(a), so the Court should hold in this case that

contractual obligations enforceable under the RLA are

subject to the same exemption. This result, we submit, is

compelled by the text and history of Section 11341(a) and

of related provisions.

A. The Text of Section 11341(q4) Makes Clear That Participants In

An ICC-approved Merger Are Exempt From All Legal

Obstacles, Including Obligations Under Collective Bargaining

Agreements, That May Jeopardize The Implementation of The

Merger

1. As this Court has explained many times, “the start-

ing point for interpreting a statute is the language of the

statute itself. Absent a clearly expressed legislative inten-

tion to the contrary, that language must ordinarily be

'S These questions may include whether the overriding of contrac-

tual obligations was “necessary” to the implementation of the transac-

tion within the meaning of Section 11341(a), and whether and to what

extent the Commission’s decision was authorized by the labor protec-

tive conditions associated with Section 11347.

OE ee

regarded as conclusive.” Consumer Prod. Safety Comm’n

v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). Accord

INS v. Cardoza-Fonseca, 480 U.S. 421, 432 n.12 (1987);

Aaron v. SEC., 446 U.S. 680 (1980); Greyhound Corp. v.

Mt. Hood Stages, Inc., 437 U.S. 322, 330 (1978). The text

of the ICA consolidation provisions, and of Section

11341(a) in particular, leaves no doubt that participants in

an ICC-approved merger are exempt from obligations

under a collective bargaining agreement that may jeopar-

dize the implementation of the merger.

The statutory language is both clear and straightfor-

ward. Section 11344(c) provides that “[t}he Commission

shall approve and authorize a transaction under this sec-

tion when it finds the transaction is consistent with the

public interest.” 49 U.S.C. 11344(c). Section 11341(a) pro-

vides (49 U.S.C. 11341(a)):

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, maintain, and operate

property, and exercise*control or franchises acquired

through the transaction.

As the statutory language indicates, the Commission must

determine whether a proposed consolidation is consistent

with the public interest. That determination is made on the

record, after hearing the views of interested persons. See

49 U.S.C. 11344 (1982 & Supp. V 1987). It is guided by

specific statutory criteria (49 U.S.C. 11344(b))—including

criteria requiring specific labor protections (49 U.S.C.

11344(b)(1)(D))—and is, of course, subject to judicial

review (28 U.S.C. 2342). But once the proposed transac-

tion is approved, Section 11341(a) confers an exemption

from “all other law” —an exemption of sufficient breadth

to permit the exempted party to “carry out the

transaction,” notwithstanding any legal obstacle.

The exemption from “all other law” is easily sufficient

to embrace those laws governing the enforceability of con-

tracts in general, and of collective bargaining agreements

in particular. Contracts are voluntarily entered into, but

depend for their effectiveness and enforcement on a

regime of state and federal common and statute law. “The

obligation of a contract,” this Court has explained, “is the

law which binds the parties to perform their agreement.”

Hendrickson v. Apperson, 245 U.S. 105, 112 (1917).'®

And the “[l]Jaws which subsist at the time and place of the

making of a contract, and where it is to be performed,

enter into and form part of it, as fully as if they had been

expressly referred to or incorporated in its terms” —a prin-

ciple which “embraces alike those laws which affect its

construction and those which affect its enforcement and

discharge.” Farmers & Merchants Bank v. Federal Reserve

Bank, 262 U.S. 649, 660 (1923).'’

Those principles apply with special force to collective

bargaining agreements. “Federal law * * * create[s] the

duty upon the parties to bargain collectively; Congress has

provided for a system of federal law applicable to the

agreement the parties ma[k]Je in response to that duty

* * *. and federal law sets some outside limits * * * on

what their agreement may provide.” Local 24, Int'l

Brotherhood of Teamsters v. Oliver, 358 U.S. 283, 296

(1959). And collective bargaining agreements in the

'6 Accord Louisiana v. New Orleans, 102 U.S. 203, 206 (1880);

Walker v. Whitehead, 83 U.S. (16 Wall.) 314, 318 (1873); Von Hoff-

man v. City of Quincy, 71 U.S. (4 Wall.) 535, 552 (1867).

'? Accord Hendrickson, 245 U.S. at 112; Walker, 83 U.S. (16

Wall.) at 317; Von Hoffman, 71 U.S. (4 Wall.) at 550; Ogden v.

Saunders, 25 U.S. (12 Wheat.) 212, 231 (1827).

tee RT Oo ES Se

railroad industry are uniquely “legal” instruments: their

formation, construction, and enforcement are regulated

by a detailed statutory framework —the Railway Labor

Act.

For example, the Railway Labor Act requires the parties

to “make and maintain agreements” (45 U.S.C. 152 First)

and to refrain from making changes in existing agree-

ments, except according to the procedures established by

the Act (45 U.S.C. 152 Seventh, 156). The Act “extends

both to disputes concerning the making of collective

agreements and to grievances arising under existing

agreements.” Slocum v. Delaware, L. & W. R.R., 339

U.S. 239, 242 (1950). The Act also “sets up machinery for

conciliation, mediation, arbitration and adjustment of

disputes, to be invoked if negotiations fail.” /bid. “[T]he

federal statute is the source of the power and authority” of

collective bargaining agreements, and “[a] union agree-

ment made pursuant to the Railway Labor Act has, there-

fore, the imprimatur of the federal law upon it.” Rai/wev

Employes’ Dep’t v. Hanson, 351 U.S. 225, 232 (1956). Ac-

cord California v. Taylor, 353 U.S. 553, 561 (1957).

Thus, the law that renders collective bargaining agree-

ments in the railroad industry binding and enforceable,

and that specifies the procedures for changing such

agreements, is, in essence, the RLA, an Act that

“(uJnquestionably * * * is a federal law” within the mean-

ing of Section 11341(a) (Brotherhood of Locomotive

Eneg’rs v. Chicago & N.W. Ry., 314 F.2d 424, 432 (8th

Cir.), cert. denied, 375 U.S. 819 (1963)). As the First Cir-

cuit recently noted, Section 11341(a) “extends to any of the

Statutory provisions regulating railroads, including the

RLA.” Brotherhood of Locomotive Eng’rs v. Boston &

Maine Corp., 788 F.2d 794, 800, cert. denied, 479 U.S.

829 (1986). “[T]o hold otherwise would be to disregard the

plain language of [the statute] conferring exclusive and

plenary jurisdiction upon the ICC to approve mergers and

relieving the carrier from all other restraints of federal

law.” Brotherhood of Locomotive Eng’rs v. Chicago &

N.W. Ry., 314 F.2d at 431-432. Accord Missouri Pac.

R.R. v. United Transp. Union, 782 F.2d 107, 111-112 (8th

Cir. 1986), cert. denied, 482 U.S. 927 (1987); Bundy v.

Penn Cent. Co., 455 F.2d 277, 279 (6th Cir. 1972); Nemitz

v. Norfolk & W. Ry., 436 F.2d 841, 845 (6th Cir.), aff'd

without reaching the issue, 404 U.S. 37 (1971).'®

In short, a contractual provision has legal force only by

virtue of law—in this case, the RLA. And the RLA, like

any other law, is within the scope of Section 11341(a).

2. The court of appeals attempted to read Section

11341(a) more narrowly. “[Djeclin{ing] to address” the

question whether Section 11341(a) applies to the RLA

(Pet. App. 19a), the court sought to abstract collective

agreements from their federal statutory context, and pro-

ceeded to exclude contracts generally from the scope of the

Section. In the court’s view, “all other law” refers only to

“positive enactments, not common law rules of liability”

(Pet. App. 18a). As a general proposition, that is surely

mistaken; “law” is conventionally understood to include

'8 See also Texas & N. O. R.R. v. Brotherhood of R.R. Trainmen,

307 F.2d 151, 158-162 (Sth Cir. 1962) (holding that the predecessor to

Section 11341(a) does not preempt the Norris-LaGuardia Act, 29

U.S.C. 101 ef seq., or a prior collective bargaining agreement, but

recognizing that under the predecessor provision the Commission has

jurisdiction “to find whether certain of the union [contractual]

demands are contrary to the public interest in the effectuation of the

transaction” and “thereafter to prevent the enforcement” of those

demands), cert. denied, 371 U.S. 952 (1963). Cf. Burlington North-

ern, Inc. v. American Ry. Supervisors Ass'n, 503 F.2d 58, 62-63 (7th

Cir. 1974) (labor-protective conditions imposed as part of ICC ap-

proval of a consclidation override conflicting provisions of the RLA),

“cert. denied, 421 U.S. 975 (1975).

common law, as well as statutes. See Erie R.R. v.

Tompkins, 304 U.S. 64, 79 (1938). Relying on scattered

portions of legislative history, however, the court below

concluded that Congress had “focused nearly exclusively”

on “specific types of laws it intended to eliminate” —all of

which were statutes, not common law. Pet. App. 18a. As

we have already shown, that inference could not sustain

the result reached below, since the “iaw” in point here is a

federal statute (the RLA). And as we show below, the

court of appeals misread the legislative history. But in any

event, as this Court has recently explained, “[iJt is not the

law that a statute can have no effects which are not ex-

plicitly mentioned in its legislative hic’ory.” Pittston Coal

Group v. Sebben, 109 S. Ct. 414, 420-421 (1988). See

also Regan v. Wald, 468 U.S. 222, 236-237 (1984);

Volkswagenwerk Aktiengesellschaft v. Federal Maritime

Comm’n, 390 U.S. 261, 275 (1968). Like the statute at

issue in Pittston Coal, Section 11341(a), with its reference

to “all other law,” “plainly embraces criteria of more

general application.” 109 S. Ct at 421. Cf. McLean Truck-

ing Co. v. United States, 321 U.S. 67, 79 (1944) (broad

language of predecessor of Section 11341(a) does “not ad-

mit of nullification by reference to the varying conditions

under which different types of carriers were brought

within the statute’s operation”).

The court of appeals also surmised that to accept the

Commission’s construction of Section 11341(a) “would

lead to most bizarre results.” Pet. App. 13a. In particular,

the court stated, “[uJnder the ICC’s reading, it could set to

naught, in order to facilitate a merger, a carrier’s solemn

undertaking, in a bond indenture or a bank loan, to

refrain from entering into any such transaction without

the consent of its creditors.” /bid. But there is nothing

“bizarre” about the Commission’s reading of the statute.

Indeed, that is precisely the reading this Court gave the

Act in Schwabacher v. United States, 334 U.S. 182 (1948).

In that case, the ICC had approved a merger of two

railroad companies, over the objection of certain pre-

ferred stockholders of one of the companies. Those stock-

holders claimed that the terms of the merger deprived

them of the full measure of their rights to compensation

under the corporate charter—rights that were theirs as

owners of the preferred stock and that were recognized

under state law. In reaching its determination, the Com-

mission disclaimed jurisdiction to resolve the shareholders’

complaint, ruling that after the merger was finally ap-

proved the dissenting claimants could file an action in

state court to assert their rights as stockholders. This

Court rejected the Commission’s approach. Relying on the

consolidation provisions of the ICA (41 Stat. 482)—

including Section 5(11) (Transportation Act of 1940, ch.

722, § 7, 54 Stat. 905, 908-909), the immediate precursor

of Section 11341(a) (see p. 35, infra)—the Court held that

the Commission “was given complete control of the capital

structure to result from a merger.” 334 U.S. at 195. Ac-

cordingly, the Court explained, before approving the

merger the Commission was required to consider the

claims of the minority shareholders. Jd. at 197-198. But

once the Commission had done so, and had approved the

final transaction as “just and reasonable” (id. at 194), the

dissenting shareholders were not entitled to attack that

decision collaterally, regardless of their rights under state

law as owners of the shares. Jd. at 201.'°

'* There is, of course, no question that the state law rights of the

dissenting shareholders — rights superseded by Section 11341(a)— were

contractual! in nature, since they arose out of the corporate charter

and the terms under which the preferred stock was offered for sale.

In Texas & N.O. R.R. v. Brotherhood of R.R. Trainmen, supra, the

Fifth Circuit, relying on Schwabacher, recognized the Commission's

jurisdiction to “prevent the enforcement” of union contractual

ed ae

ee RS ly EN Be i, IR

B. The Legislative History Of Section 11341(a) Confirms That

ICC-approved Mergers Are Exempt From All Legal Obstacles,

Including Collective Bargaining Agreements, That May

Jeopardize The Implemen‘ation Of The Merger

The legislative history of Section 11341(a), and of the

consolidation provisions generally, confirms the meaning

of the text: once approved by the ICC after a plenary

public interest proceeding, a merger is immunized from all

legal obstacles—including those posed by obligations

under collective bargaining agreements —that threaten the

implementation of the approved transaction. Indeed,

Congress on two occasions—in 1933, and again in

1940 — expressly refused to narrow the scope of the ICC’s

consolidation authority by carving out a special exception

for obligations arising from labor agreements.

1. The Transportation Act of 1920

The language of the present Section 11341(a) finds its

origin in the Transportation Act of 1920, ch. 91, 41 Stat.

456. See generally St. Joe Paper Co. v. Atlantic Coast

Line R.R., 347 U.S. 298, 315-321 (1954) (appendix to

opinion of the Court). Sections 407 and 408 of the 1920

Act, 41 Stat. 480, 482, amended Section 5 of the Interstate

Commerce Act of 1887, ch. 104, 24 Stat. 380, specifically

to encourage railroad consolidation. See St. Joe Paper Co.

v. Atlantic Coast Line R.R., 347 U.S. at 315-316. Follow-

ing a period of governmental ownership during World

War I, “many of the railroads were in very weak condition

and their continued survival was in jeopardy.” /d. at 315.

The 1920 Act therefore directed the Commission, “as soon

as practicable,” to “prepare and adopt a plan for the con-

solidation of the railway properties of the continental

demands found to jeopardize effectuation of an approved transac-

tion. 307 F.2d at 161-162.

United States into a limited number of systems.” § 407, 41

Stat. 481 (§ 5(4)). “As a result of the enactment of the

Transportation Act of 1920, consolidation of the railroads

of the country, in the interest of economy and efficiency,

became an established national policy * * * so intimately

related to the maintenance of an adequate and efficient

rail transportation system that the ‘public interest’ in the

one cannot be dissociated from that in the other.” United

States v. Lowden, 308 U.S. 225, 232 (1939).

To facilitate the consolidation process, the 1920 Act

added Section 5(8), exempting participants in

Commission-approved consolidations from federal and

state legal obstacles. 41 Stat. 482. Section 5(8) stated (41

Stat. 482 (emphasis added)):

The carriers affected by any order made under the

foregoing provisions of this section * * * shall be, and

they are hereby, relieved from the operation of the

“antitrust laws,” * * * and of all other restraints or

prohibitions by law, State or Federal, in so far as may

be necessary to enable them to do anything author-

ized or required by any order made under and pur-

suant to the foregoing provisions of this section.

Consistent with the overall purpose to effectuate con-

solidation, this broad statutory language targeted all legal

“restraints or prohibitions” that might otherwise impede

the covered carrier from accomplishing “anything

authorized” by the Commission pursuant to the consolida-

tion provisions.

2. The Emergency Railroad Transportation Act of 1933

In the years following the enactment of the 1920 Act,

there was a continuing decline in railway revenues and

traffic. L. Lecht, Experience Under Railway Labor

Legislation 105 (1955). Many railroads went bankrupt,

while others borrowed large sums of money from the

Reconstruction Finance Corporation to fund continuing

operations. S. Rep. No. 87, 73d Cong., Ist Sess. 1 (1933).

To meet the resulting interest charges, many railroads

deferred maintenance. H.R. Rep. No. 193, 73d Cong., Ist

Sess. 9 (1933). Railroad employment dropped from

1,750,000 to 1,000,000. /bid. Responding to the crisis,

Congress enacted the Emergency Railroad Transportation

Act of 1933 (ERTA), ch. 91, 48 Stat. 211.

Title | of ERTA was temporary legislation — ultimately

of three years duration ?°—that was intended to help the

railroads become financially stable. See S. Rep. No. 87,

supra, at 1. It established “emergency powers to be exer-

cised through a railroad coordinator,” whose task was “to

compel the elimination of unnecessary expenses and the

duplication of services and other economy measures” in

order “to stabilize the value of railroad securities and

make unnecessary a continued drain on Reconstruction

Finance Corporation funds.” /d. at 1-2. The coordinator

did not, however, have explicit authority to compel con-

solidations. See 77 Cong. Rec. 4859 (1933) (Rep. Rayburn)

(“The coordinator has nothing whatever to do with con-

solidations. * * * [T]he question of consolidation * * * is

left where it has been since 1920, with the Interstate Com-

merce Commission and not with any coordinator”). See

also St. Joe Paper Co v. Atlantic Coast Line R.R., 347

U.S. 298, 317 (1954).

Section 10(a) of Title | of ERTA (48 Stat. 215) con-

tained an immunity provision with language that generally

paralleled Section 5(8) of the Transportation Act of 1920

tional year by Presidential proclamation, Proclamation No. 2081, 48

Stat. 1740 (1934), and then for a third year, until June 17, 1936, by

Congress. S.J. Res. 112, 74th Cong., Ist Sess.; 79 Cong. Rec. 9346

(1935).

(41 Stat. 482), the earliest precursor of Section 11341(a).

Significantly, however, in response to concerns raised by

labor representatives, Congress added an explicit excep-

tion from Section 10(a) for the requiremenis of the RLA

and for duties and obligations under collective bargaining

agreements entered into pursuant to that Act. Section

10(a) therefore provided in pertinent part (48 Stat. 215):

The carriers or subsidiaries subject to the Interstate

Commerce Act, as amended, affected by any order of

the Coordinator or Commission made pursuant to

this title shall, so long as such order is in effect, be,

and they are hereby, relieved from the operation of

the antitrust laws, * * * and of all other restraints or

prohibitions by law, State or Federal, other than such

as are for the protection of the public health or safety,

in so far as may be necesssary to enable them to do

anything authorized or required by such order made

pursuant to this title: Provided, however, That

nothing herein shall be construed to repeal, amend,

suspend, or modify any of the requirements of the

Railway Labor Act or the duties and obligations im-

posed thereunder or through contracts entered into in

accordance with the provisions of said Act.[?']

At the same time, in Title Il of ERTA—which, unlike

Title 1, was permanent legislation, see S. Rep. No. 87,

2! Title | also contained an additional labor protection, ensuring

that, allowing for normal attrition, no action taken by the Coor-

dinator could reduce the number of railroad employees below the

number in service during May 1933, and providing further that no

employee then in service shall “be deprived of employment such as he

had during said month of May or be in a worse position with respect

to his compensation for such employment, by reason of any action

taken pursuant to the authority conferred by this title.” § 7(b), 48

Stat. 214.

supra, at 1—Congress amended the consolidation provi-

sions of the Interstate Commerce Act, principally to “give

the Commission control over holding companies that ac-

quire stocks of railroads, and thereby effect consolida-

tions without approval of the commission.” /bid. In Sec-

tion 202(15) of Title Il, Congress reenacted the immunity

provision—Section 5(8) of the 1920 Act—adding

somewhat broader language in the process. See 48 Stat.

219. Congress did not, however, carve out an exception

for the Railway Labor Act or for obligations under

agreements made pursuant to that statute. Section 202(15)

provided in pertinent part (48 Stat. 219):

The carriers and any corporations affected by any

order made under the foregoing provisions of this sec-

tion shall be, and they are hereby, velieved from the

operation of the antitrust laws * * * and of all other

restraints or prohibitions by or imposed under

authority of law, State or Federal, insofar as may be

necessary to enable them to do anything authorized or

required by such order.

The striking difference between Title | of ERTA (tem-

porary legislation, containing an explicit exception for col-

lective bargaining agreements) and Title II of the statute (a

precursor of Section 11341(a), containing no exception for

collective bargaining agreements) cannot be considered ac-

cidental. “[W)here Congress includes particular language

in one section of a statute but omits it in another section of

the same Act, it is generally presumed that Congress acts

intentionally and purposely in the disparate inclusion or

exclusion.” Russello v. United States, 464 U.S. 16, 23

(1983).?? Indeed, this Court made that very point in con-

22 Accord INS v. Cardoza-Fonseca, 480 U.S. 421, 432 (1987). See

also Aissinger v. Reporters Comm. for Freedom of the Press, 445 U.S.

136, 148-149 (1980); Transamerica Mortgage Advisors, Inc |

444 U.S. 11, 19-20 (1979). » Inc. v. Lewis,

nection with a related provision of ERTA. In Texas v.

United States, 292 U.S. $22 (1934), the ICC had approved

a control transaction, over a State’s objection that the

terms of the transaction would improperly permit the par-

ties to relinquish certain offices within the State. In this

Court, the State contended that the transaction violated

Section 11 of Title | of ERTA, which withheld from car-

riers the authority to abandon offices and shops. 48 Stat.

215. The Court rejected that contention. Section 11, the

Court explained, was contained in Title I, which dealt only

with the “ ‘emergency powers’ * * * of the Federal Coor-

dinator of Transportation and kindred matters.” 292 U.S.

at $33. As such, the Court added, Section 11 did “not by

its terms apply to the provisions of Title II of the Act, in

which are found the amendments of § 5 of the Interstate

Commerce Act with respect to the approval and authoriza-

tion by the Interstate Commerce Commission of con-

solidations, purchases and leases.” 292 U.S. at 533. “The

insertion of the provision in Title I, * * * and the omission

of a similar provision from Title II, indicate an intentional

distinction.” Jd. at 534.

So, too, with respect to the exception for collective

bargaining agreements: in structuring Titles I and Il as it

did, Congress “demonstrated that it knew how to provide

[for an exception for collective bargaining agreements}

when it wished to do so elsewhere in the very ‘legislation

cited.’ ” Lehman v. Nakshian, 453 U.S. 156, 162 (1981).

“Under traditional principles of statutory construction,”

the difference between the two sections must therefore be

seen as intentional. Fedorenko v. United States, 449 U.S.

490, $12 (1981). See Lawrence County v. Lead-Deadwood

School Dist. No. 40-1, 469 U.S. 256, 267 (1985); United

States v. Erika, Inc., 456 U.S. 201, 208 (1982).

3. The Transportation Act of 1940

Section 7 of the Transportation Act of 1940, ch. 722, 54

Stat. 905, amended and recodified Section 5 of the ICA

but left the provisions relevant here substantially intact. In

particular, Section 5(8) of the 1920 Act, as amended, was

subsumed within revised Section 5(11) (54 Stat. 908-909),

and remained essentially unchanged. Section 5(11) pro-

vided in pertinent part (54 Stat. 908-909):

any carriers or other corporations, and their officers

and employees and any other persons, participating in

a transaction approved or authorized under the provi-

sions of this section shall be and they are hereby

relieved from the operation of the antitrust laws and

of all other restraints, limitations, and prohibitions of

law, Federal, State, or municipal, insofar as may be

necessary to enable them to carry into effect the tran-

saction so approved or provided for in accordance

with the terms and conditions, if any, imposed by the

Commission * * *,

When Congress recodified this language in the present

Section 11341(a) of the ICA, it effected no substantive

change. Act of Oct. 17, 1978, Pub. L. No. 95-473, § 3(a),

92 Stat. 1466; Trailer Marine Transp. Corp v. FMC, 602

F.2d 379, 383 n.18 (D.C. Cir. 1979). See H.R. Rep. No.

1395, ysth Cong., 2d Sess. 158-160 (1978). See also JCC v.

Brotherhood of Locomotive Eng’rs, 482 U.S. 270, 299

n.12 (1987) (Stevens, J., concurring in the judgment).

During the legislative process culminating in the 1940

Act, there was “a widespread awareness in the railroad in-

dustry that many of the economies to be gained from con-

solidations or abandonments could be realized only at the

expense of displaced railroad labor.” Railway Labor Ex-

ecutives’ Ass'n v. United States, 339 U.S. 142, 147 (1950).

Reflecting that concern, Congress enacted, in Section

§(2)(f) of the Act, 54 Stat. 906-907, a labor protective pro-

vision for employees affected by ICC-approved consolida-

tions.??

Prior to the enactment of Section 5(2)(f), however,

Representative Harrington offered an amendment to the

provision, designed to protect affected employees against

any displacement or other interference with contractual

rights:

Provided, however, That no such transaction shall be

approved by the Commission if such transaction will

result in unemployment or displacement of employees

Section 5(2)(f) provided as follows (54 Stat. 906-907):

As a condition of its approval, under this paragraph (2), of any

transaction involving a carrier or carriers by railroad subject to

the provisions of this part, the Commission shall require a fair

and equitable arrangement to protect the interests of the railroad

employees affected. In its order of approval the Commission

shall include terms and conditions providing that during the

period of four years from the effective date of such order such

transaction will not result in employees of the carrier or carriers

by railroad affected by such order being in a worse position with

respect to their employment, except that the protection afforded

to any employee pursuant to this sentence shall not be required to

continue for a longer period, following the effective date of such

order, than the period during which such employee was in the

employ of such carrier or carriers prior to the effective date of

such order. Notwithstanding any other provision of this Act, an

agreement pertaining to the protection of the interests of said

employees may hereafter be entered into by any carrier or carriers

by railroad and the duly authorized representative or represen-

tatives of its or their employees.

Transportation Act of 1940, ch. 722, § 7, 54 Stat. 906-907 (§ 5(2)(f)).

The current version of this provision is 49 U.S.C. 11347 (Supp. V

1987). See p. 40, infra.

of the carrier or carriers, or in the impairment of ex-

isting employment rights of said employees.

84 Cong. Rec. 9882 (1939). The proposed amendment

posed a significant obstacle to the prospects of future con-

solidations. As this Court observed in Railway Labor Ex-

ecutives’ Ass'n v. United States, 339 U.S. at 151, until the

Harrington Amendment was offered, “there had been

substantial agreement on the need for consolidations,

together with a recognition that employees could and

should be fairly and equitably protected. This amend-

ment, however, threatened to prevent all consolidations to

which it related.”

Not surprisingly, therefore, the Harrington Amendment

encountered intense opposition. In a January 29, 1940 let-

ter to the Chairman of the Senate and House Committees

on Interstate Commerce, the Interstate Commerce Com-

mission stated:

As for the [Harrington Amendment], the object of

unifications is to save expense, usually by the saving

of labor. * * * The proviso, by prohibiting any dis-

placement of employees, goes much too far, and in

the long run will do more harm than good to the

employees. In these days of intense competition from

other forms of transportation, the railroads must, if

they are to thrive and grow, conduct their operations

with the utmost possible economy and efficiency. If

they are prevented from doing this, further shrinkage

of operations and continuing loss of employment are

inevitable.

Staff of House Legislative Comm. On Interstate Com-

merce Commission, 76th Cong., 3d Sess., Omnibus

Transportation Legislation 67 (House Comm. Print 1940).

After a lengthy conference, on April 26, 1940, the con-

ferees agreed on a bill that followed the form of the House

Amendment but did not contain the Harrington Amend-

ment. See H.R. Conf. Rep. No. 2016, 76th Cong., 3d

Sess. 16 (1940); 86 Cong. Rec. 5879-5880 (1940). The

House voted to recommit the bill with instructions to its

conferees to insist on a modified version of the Harrington

Amendment. 86 Cong. Rec. 5886 (1940). After further

consideration, the conferees then reported out the bill a

second time without the Harrington Amendment. That

bill became the Transportation Act of 1940.74

The defeat of the Harrington Amendment confirms

Congress’s intent to allow carriers to implement ICC-

approved consolidations — notwithstanding the “impair-

ment of existing employment rights of ***

employees” — as long as those employees are compensated

and otherwise fairly protected under the Commission's

labor protective conditions. Accord Brotherhood of

Maintenance of Way Employes v. United States, 366 U.S.

169 (1961). The court of appeals’ decision in the present

case overlooks the point, construing Section | 1341 (a) as if

the Harrington Amendment had become law and indeed

had been rewritten to extend to all contractual obligations.

But the amendment was rejected; and “[f]ew principles of

- statutory construction are more compelling than the prop-

osition that Congress does not intend sub silentio to enact

statutory language that it has earlier discarded in favor of

other language.” JNS v. Cardoza-Fonseca, 480 U.S. 421,

442-443 (1987). See generally Fox v. Standard Oil Co.,

294 U.S. 87, 96 (1935).

24 The bill was passed by the House on August 12, 1940, 86 Cong.

Rec. 10,194, and by the Senate on September 9, 1940, 86 Cong. Rec.

11,766. It was signed by the President on September 18, 1940, 86

Cong. Rec. 12,290.

C . The Court of Appeals’ Decision Cannot Be Squared With The

Purpose Of The ICA Consolidation Provisions

The scope of Section 11341(a) must also be “measured

by the purpose which Congress had in view” —in this case,

“the promotion of economy and efficiency in interstate

transportation by the removal of the burdens of excessive

expenditure” (Texas v. United States, 292 U.S. 522,

534-535 (1934)). The court of appeals’ conclusion —ac-

cording to which collective bargaining agreements are

fully enforceable even when they are in conflict with the

terms of an ICC-approved consolidation—cannot be

squared with that evident purpose.

The consolidation provisions foster the merger process,

while at the same time accommodating, to the fullest ex-

tent possible, the competing claims of employees and

other persons who may be adversely affected by the pro-

posed transaction. The statute accomplishes that goal by

providing interested parties — including labor unions —ex-

tensive Opportunities to participate in the Commission’s

consolidation review proceedings and to voice their objec-

tions during the “public interest” inquiry. Parties may ob-

ject, in whole or in part, to approval of a transaction, on

the ground that such approval will undermine the policies

expressed in other federal statutes. The Commission must

take account of these objections, in determining whether

the merger is “consistent with the public interest.” 49

U.S.C. 11344(c). See, e.g., McLean Trucking Co. v.

United States, 321 U.S. 67, 79-80 (1944) (antitrust objec-

tions to motor carrier consolidation).

The consolidation provisions are particularly solicitous

of employees who may be adversely affected by a transac-

tion. Recognizing that consolidations necessarily “result in

wholesale dismissals and extensive transfers, involving ex-

pense to transferred employees,” as well as “the loss of

seniority rights” (United States v. Lowden, 308 U.S. 225,

233 (1939)), the statute imposes a variety of labor protec-

tive requirements. Before it may give its approval, the

Commission must consider “the interest of carrier

employees affected by the proposed transaction.” 49

U.S.C. 11344(b)(1)(D). Moreover, as part of any ap-

proved transaction, the Commission must impose certain

“employee protective arrangements,” including a

guarantee generally ensuring that “the employees of the af-

fected rail carrier will not be in a worse position related to

their employment as a result of the transaction during the

4 years following the effective date of the final action of

the Commission.” 49 U.S.C. 11347 (Supp V 1987). And

pursuant to Section 11347, the Commission has tradi-

tionally imposed the so-called New York Dock conditions,

which generally entitle an affected employee to receive, for

a period of years, the equivalent of the wages he received

prior to displacement. See New York Dock Ry. —Con-

trol—Brooklyn Eastern Dist. Terminal, 360 1.C.C. 60,

84-90, aff'd sub nom. New York Dock Ry. v. United

States, 609 F.2d 83 (2d Cir. 1979).

In this manner, the consolidation provisions ensure that

all affected parties have a voice in the approval process,

and are accommodated as fully as possible in the approved

transaction. At the same time, Section 11341(a) ensures

that once the approval has been granted, an exemption

from “all other law” takes immediate effect. The statute

does not permit employees, who have already received the

protections afforded by Section 11347, to impede im-

plementation of the merger by insisting on conflicting col-

lective. bargaining rights under the RLA.

Were resort to the RLA necessary, approved transac-

tions would “be subjected to the risk of non-

consummation” (Pet. App. 34a). By proposing a change in

the existing collective bargaining agreement, the transac-

tion would thereby provoke a “major” dispute under the

RLA. See Consolidated Rail Corp. v. Railway Labor Ex-

ecutives’ Ass'n, 109 S. Ct. 2477, 2480 (1989); Elgin, J. & E

Ry v. Burley, 325 U.S. 711, 723 (1945), aff'd on reh’g, 327

U.S. 661 (1946). In any such dispute, the parties must

maintain the status quo while engaging in a lengthy proc-

ess of negotiation, mediation, and possibly review by a

Presidential Emergency Board. Detroit & Toledo Shore

Line R.R. v. United Transp. Union, 396 U.S. 142 (1969).

If that process fails to produce an agreement, each side is

free to Tesort to strikes, lock-outs, or other forms of

economic self-help calculated to achieve the desired objec-

tives. See 45 U.S.C. 152 Second and Seventh, 155 First

156, 157, 160; Burlington Northern R.R. v. Brotherhood

of Maintenance of Way Employes, 481 U.S. 429, 444-445

n.10 (1987); Brotherhood of R.R. Trainmen v. Jackson-

ville Terminal Co., 394 U.S. 369, 378 (1969).

Although that “virtually endless” process may well be

suited to prevent the kind of “labor unrest” that gave rise

to the RLA (Burlington Northern R.R. v. Brotherhood of

Maintenance of Way Employes, 481 U.S. at 444), it poses

severe difficulties for approved consolidations. “[U}nder

the Railway Labor Act provisions, it is possible for either

party to completely block any change in working condi-

tions by refusing to agree to a change and by refusing to

arbitrate.” Brotherhood of Locomotive Eng’rs v. Chicago

& N.W. Ry., 314 F.2d at 431. As the Commission has

noted, “[s]ince there is no mechanism * * * for insuring

that the parties will arrive at agreement, there can be no

assurance that the approved transaction will ever be ef-

fected.” Pet. App. 34a. If applicable, the RLA would

therefore “threaten to prevent many consolidations.”

Brotherhood of Locomotive Eng’rs v. Chicago & N.W.

Ry., 314 F.2d at 431. Such an outcome cannot be squared

with the evident purpose of the consolidation provisions

and Section 11341(a) in particular: to provide an exemp-

tion “as necessary to let [the participant] carry out the

transaction” (49 U.S.C. 11341(a)).

D. The Court Of Appeals Erroneously Declined To Defer To The

Commission's Construction Of Section 11341(a)

This Court has “long recognized that considerable

weight should be accorded to an executive department's

construction of a statutory scheme it is entrusted to ad-

minister.” Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 844 (1984). “An

agency’s construction of a statute it is charged with enforc-

ing is entitled to deference if it is reasonable and not in

conflict with the expressed intent of Congress.” United

States v. Riverside Bayview Homes, Inc., 474 U.S. 121,

131 (1985). In light of the text, history, and purpose of

Section 11341(a), the Commission’s conclusion —that the

Section applies to legal obligations under collective

bargaining agreements—is entitled to deference and

should be upheld.

The court of appeals acknowledged those principles

(Pet. App. 11a), but declined to defer to the Commission’s

construction of the statute. The court observed that

deference is appropriate only when a court determines,

“based upon the language of the statute and the ‘tradi-

tional tools of statutory construction,’ * * * that Congress

has not ‘directly spoken to the precise question at issue’ ”

(ibid.). The court therefore elected to “strike out * * * in

search of Congress’s inient in enacting the immunity pro-

vision of the Act.” /d. at 1la-12a.

The results of the court’s “search” did not justify the

panel’s refusal to defer to the Commission. After canvass-

ing the text and history of the statute, all the court could

determine —on its view of the case — was (1) that Section

11341(a) does not express/y refer to “contracts” (Pet. App.

12a): (2) that Section 11341(a) was intended principaily to

protect against “unfriendly state commissions and

legislatures” (Pet. App. 15a) and “recently invigorated an-

titrust laws of the federal Government” (id. at 16a); (3)

that in enacting Section 11341(a) Congress had “focused

nearly exclusively” on “positive enactments, not common

law rules of liability” (Pet. App. 18a); and (4) that in the

eer. —— on the 1920 Act, Congress had “ex-

ibit a thy res for iv

contracts” (ibid.). ype ee

Even under the court of appeals’ view (which we vigor-

ously dispute), that evidence does not justify a refusal to

defer to the Commission. Assuming that Congress did not

directly address the precise question at issue, the question

before the court was whether the Commission’s construc-

tion of the statute “in the context of this particular pro-

gram is a reasonable one.” Chevron U.S.A. Inc., 467 U.S.

at 843-845. Here, the Commission’s judgment is plainly

reasonable. Thus, even were the case a close one on the

merits — and we do not think it is—the court of appeals er-

red in “substitut[ing] its Own construction of a statutory

provision for a reasonable interpretation * * * of an agen-

cy” (Chevron U.S.A. Inc. 467 U.S. at 844).

CONCLUSION

The judgment of the court of appeals should be re-

versed.

Respectfully submitted.

JOHN G. ROBERTS, JR.

Acting Solicitor General*

DAVID L. SHAPIRO

Deputy Solicitor General

LAWRENCE S. ROBBINS

Assisteru to the Solicitor General

ROBERT S. BURK

General Counsel

HENRI F. RUSH

Deputy General Counsel

JOHN J. MCCARTHY, JR.

Deputy Associate General Counsel

Interstate Commerce Commission

May 1990

* The Solicitor General is disqualified in this case.

US GOVERNMENT PRINTING OFFICE 1990—262.203/00902

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.