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

Supreme Court, U.S

FILED

NOV 23 1990

In The

Supreme Court of the United States

October Cerm, 1990

CSX TRANSPORTATION, INC.,

Petitioner,

v. '

BROTHERHOOD OF RAILWAY CARMEN, DIVISION

OF TRANSPORTATION-COMMUNICATIONS

INTERNATIONAL UNION, INTERSTATE

COMMERCE COMMISSION, AND UNITED STATES

OF AMERICA,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

REPLY BRIEF FOR THE PETITIONER

James S. WHITEHEAD

(Counsel of Record)

Siptey & AusTIN

One First Nationa! Plaza

Chicago, Illinois 606U3

(312) 853-7703

NicuHo.as 8. YOVANOVIC

James D. ToMoLa

CSX TRANSPORTATION, INC.

500 Water Street

Jacksonville, Florida 32202

Attorneys for Petitioner

CSX Transportation, Inc.

November 23, 1990

ie

TABLE OF CONTENTS

Introduction

Argument 8

I. The Court of Appeals’ Deamsion Is Contrary to Prior

Decisions of this Court —

Il. The Plain Terms of § 11341(a) Immunize Rail Carriers

Ill. The Legislative History of the ICA’s Immunity Pro-

visions Establishes that Congress Intended to Encom-

Se

ing Agreements .. . .. 10

IV. ICC’s Interpretation of the Scope of the ICA Immunity

Provisions Does Not Result in a Fifth Amendment

i]

TABLE OF AUTHORITIES

CASES Page

Brotherhood of Loc. Eng’rs v. Boston & Maine Corp., 788

F.2d 794 (ist Cir.), cert. denied, 479 U.S. 829 (1986) ............... 14

Brotherhood of Loc. Eng’rs v. ICC, 761 F.2d 714 (D.C. Cir.

1985), rev'd, 482 U.S. 270 (1987)................. =

Brotherhood of Maint. of Way Employees v. United States,

366 U.S. 169 (1961)... 3,13

Burlington N. R.R. v. United Transp. Union, 848 F 2d

856 (8th Cir.), cert. denied, 109 S. Ct. 499 (1988) . 14

Central New England Ry. v. Boston & Albany R.R., 279

es Ga ees 19

Chang v. United States, 859 F 2d 893 (Fed. Cir. 1988) .............. 18

Colorado v. United States, 271 US. 153 (1926)... on Oe

Connolly v. Pension Benefit Guar. Corp., 475 US. 211

ee =

County of Marin v. United States, 356 US. 412 (1958)............... 3

CSX Corp.—Control—Chessie Sys. & Seaboard Coast Line

Indus., 363 LC.C. 521 (1980)......... 9, 10

CSX Corp.—Control—Chessie Sys. & Seaboard Coast Line

Indus., 4 LC.C. 2d 641 (1988). ..... 6

CSX Corp.—Control—Chessie Sys. & Seaboard Coast Line

Indus., 6 LC.C. 2d 715 (1990) ..... 4

CSX Corp.—Control—Chessie Sys. & Seaboard Coast Line

Indus., Finance Docket No. 28905 (Sub-No. 22) (served

CSX Corp.—Control—Chessie Sys. & Seaboard Coast Line

Indus., Finance Docket No. 28905 (Sub-No. 23) (served

Gal, S Se eee 9

CASES Page

Delaware & Hudson Ry.—Lease and Trackage Rights

Exemption, 1989 ICC LEXIS 9 (1989) ............cccccccceecseeeeeeeeees 15

Denver & R. G. W. R.R.—Trackage Rights— Missouri Pac.

R.R.—Between Pueblo, Co. and Kansas City, Mo.,

Finance Docket No. 30,000 (Sub-No. 18) (served Oct. 25,

1983), vacated and remanded sub nom. Brotherhood

of Loc. Eng’rs v. ICC, 761 F.2d 714 (D.C. Cir. 1985), rev’d,

EE 14

Florida E. C. Ry. v. United States, 259 F. Supp. 993 (M.D.

Fla. 1966), appeal of RLEA dism’d as moot, 386 U.S.

Be iceerinseninienenicunsensssssensenssssessussvssnassesecesesesessecssesscocscocscoceocs 17

Gulf, M. & O. R.R.—Abandonment, 282 I.C.C. 311 (1952) ........ 16

ICC v. Brotherhood of Loc. Eng’rs, 482 U.S. 270

St sieiestiihitdiniininiescnednnnanennsnsscesesseseusssenesvenssessscsssesecesoccccecoee 2, 6, 14

Louisville & N. R.R. v. Mottley, 219 U.S. 467 (1911).........-...00+ 18

Missouri Pac. R.R.—Merger, 348 L.C.C. 414 (1976), rev'd

sub nom. City of Palestine v. United States, 559 F.2d 408

(5th Cir. 1977), cert. denied, 435 U.S. 950 (1978) .............00000- 16

New York Dock Ry. v. United States, 609 F.2d 83

EE 13

New York v. United States, 257 U.S. 591 (1922) ...............cccc0000 19

Norfolk & W. Ry.—Merger, 347 LC.C. 506 (1974) ...........:ccccc0008 15

Norman v. Baltimore & O. R.R., 294 U.S. 240 (1935) ................ 18

Peoria & E. Ry. Stockholders v. New York Cent. R.R., 334

EEE )

Pittsburgh & Lake Erie R.R. v. Railway Labor Exec’s’

ee 13

Railway Labor Exec’s’ Ass’n v. United States, 339 US.

alll irtitirencannansassqncsnnsnecssensezenscssescesevesessesssscsessceneessosecs 12, 14

iv

CASES Page

Railway Labor Exec’s’ Ass’n v. United States, 575 F. Supp.

1554 (Sp. Ct. RRRA 1983), cert. denied, 465 US.

Ee Ge evitscntdccnccrressienientmmteinssteariitinaiinininnmmen 18

Railway Labor Exec’s’ Ass’n v. United States, 675 F.2d

A 13

Rarus Ry.—Exemption, 1989 ICC LEXIS 97 (1989).................... 6

Regents of the Univ. Sys. of Ga. v. Carroll, 338 U.S. 586

CTI ccnssusrronsntnenssiicnsinaraiienasdsniiainnnataideisansaihieiainbaepemaseipemeepmmuanieten 19

Schwabacher v. United States, 334 U.S. 182 (1948)......... 1, 2, 4,5

Seaboard Coast Line R.R.—Investigation of Control &

Modification of Traffic Conditions, 360 1.C.C. 582 (1979) ....... nS)

St. Louis Southwestern Ry.—Trackage Rights, 1 1.C.C. 2d

RIE cconiesnnissenennaienunentinsediemeiiteniiitimeantenmantnenen 14

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

| SERIES SERRE REE steven a 12

Texas v. United States, 292 U.S. 522 (1934) ..........ccccccscceeeseeeeeees 12

United States v. Lowden, 308 U.S. 225 (19339) .............. 2, 3, 5, 6,8

United Transp. Union v. Consolidated Rail Corp., 535 F.

Supp. 697 (Sp. Ct. RRRA), cert. denied, 457 U.S. 1133

GE ecnsensnenneeerenmannestnsintnetmnnmmnimeninneennemmenmnens 18

Wileons v. Nea, 343 US. SEB (1917). ....ccccccccccceccccssssccessscescccccsesess 18

STATUTES, RULES, and

CONSTITUTIONAL PROVISIONS

49 C.P-.R. § 1180.GlaZKv) (19BB) .........00ccccccerccercsescescccsscsescesssseeees 9

Gr a Oo Be Ge crernsnsctesenesnssnesrszsmenmenemnemsesssnencenmeennevens 9

a ae OB i crccenecenccnszesszcsnezsecnsenssemesnseaneemanmmsssseeses 9

oe 9

v

Page

Emergency Railroad Transportation Act of 1933 (“ERTA”),

is i crrteinstrinisrictressemnineiininaninnsnnncinaiatintarnantaiata 3

TT 10, 12

es ee BO cerccccesccsccenscsnsesesinnnsnscsenenennantinnting 11

SII TIE irticechtncsesnsstinnersennneiintianianiinenismmesiiaadimmaaniaias 12

SII TT esstteiiicncrnprscecntnemnnianenengamisnesuasiinasiinteiiiiiittanataes 11

Sy a TITITTtsitrrcaresencmeppesenaininsnmianntnatsipiinniiiainilitbinadieciaaenl 12

STITT icerisssstprisencinerertannsncnniianiainnenininaimsaiiasiiabidialaaiacil 12

TE TET crnrcnndsitaiernianusesisaiinsienaneiaahniniidapeiitiiiitaliiiaas aiid 12

CE eteentrreseseseesenisncsesssenscosesnscenencncsnenenntesumntcssniiniimnteanstamianien 6, 10

SEITE risccrcnteninnestentcpetnnennasensecsiasinditiitsinisiatainaied 12

EAE LST passim

SP abeiiiebehcarinipssicinsiirnseensnnecintemnentnssepscsnsttiiniiiintisiibliniiame 12, 13

isi ctictitericerenistarrnienentninmnsinsaentaitienciniiiiaiiitiini 11

ITE ccrrinsssisnestensmnensniinseneenininiannicieinabiiaiientinngzanaias 5,13

§ 5(15), 48 Stat. 217-19 penesnptenancnnsensenaseneeasommmesmemmmnannnnsssingassii 12

§ 11341(a), 49 U.S.C. § 11341 (a) (1988) ..0.......cccccceeeeeeeees passim

§ 11343, 49 U.S.C. § 11343 (1988)..............ccccceseeseeceseeeees 2, 7, 8,9

§ 11343(a)(1), 49 U.S.C. § 11343(a)(1) (1988) ........ccccceceeeeeeeeee 8

§ 11343(b), 49 U.S.C. § 11343(b) (1988) ...........ccccceseceeeeseeeeeeneenes 8

§ 11344(b)(1), 49 U.S.C. § 11344(b)(1) (1988) ............cccccceseseeeesees 8

§ 11344(b)(1)(A), 49 U.S.C. § 11344(b)(1)(A) (1988) ..........cccceeees 8

§ 11344(b)(1)(D), 49 U.S.C. § 11344(b)(1)(D) (1988) ............0cc000- 8

§ 11344(b)(1)(E), 49 U.S.C. § 11344(b)(1)(E) (1988) ............ccecee 8

§ 11347, 49 U.S.C. § 11347 (1988) ............ccccecccsesececeseerensenees 4,13

vi

Page

Railroad Revitalization and Regulatory Reform Act of

1976 (“4R Act”), Pub. L. No. 94-210, 90 Stat. 31.......... 13, 14, 15

Railway Labor Act, 45 U.S.C. §§ 151-188 (1988) ................ passim

Regional Rail Reorganization Act of 1974 (“3R Act”),

Pub. L. No. 93-236, 87 Stat. 986 ............cccccccceeeeresserreeeeeeneeees 16

| 17

Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat.

Ee 13, 14

Transportation Act of 1920, ch. 91, 41 Stat. 456............. 1, 2,3, 11

11

| TTT ENE 11

Transportation Act of 1940, ch. 722, 54 Stat. 898 ............000 3,6

CRG, Chem. GUGIIE, © cccccncccccsccccsescssscessssscssnssssrssscescesensssnesessess 4,18

MISCELLANEOUS

Conf. Rep. No. 93-744, reprinted in 1973 U.S. Code Cong. &

pS SS ee 17

96 Cosma, Tit. (GBI ..ccccccecceccseccecescssscrscsecessnsscesscesossnsessescssssensocses 12

Hearings on S. 2188 and H.R. 9142 Before the Surface

Transportation Subcomm. of the Senate Comm. on

Commerce, 93d Cong., Ist Sess. (1973)..........cceeceeeereeees 16,17

S. Rep. No. 499, 94th Cong., Ist Sess. (1975) ...........ccceeeeeeeeenees 13

1973 U.S. Code Cong. & Admin. News .............::ccceceeeeeeeeeeeenees 16

No. 89-1028

Gn The

Supreme Court of the United States

@ctober Term, 1990

CSX TRANSPORTATION, INC.,

Petisioner,

v.

BROTHERHOOD OF RAILWAY CARMEN, DIVISION

OF TRANSPORTATION-COMMUNICATIONS

INTERNATIONAL UNION, INTERSTATE

COMMERCE COMMISSION, AND UNITED STATES

OF AMERICA,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

REPLY BRIEF FOR THE PETITIONER

INTRODUCTION

In its initial brief, Petitioner CSX Transportation, Inc.

(“CSXT”) demonstrated that the holding of the Court of Appeals

is in error. The court’s ruling that the immunity conferred by

ICA § 11341(a) does not reach labor contract obligations is

contrary to the express language of the statute, its legislative

history, and the public policies underlying our national rail

transportation legislation since the Transportation Act of 1920.

The decision below is inconsistent with decisions of this Court,

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

and numerous lower federal court decisions. See CSXT Brief at

26-27 and n.31.

2

The brief submitted by the Union Respondents is noteworthy

in several respects:

First, the Union Respondents, like the Court of Appeals

relegated to a single footnote. Union Resp. Brief at 43 n.57. They

fail to acknowledge this Court’s recognition in United States v.

Lowden, 308 U.S. 225 (1939), that contractual seniority rights

will inevitably be lost in the implementation of an ICC-approved

rail consolidation. They do not even cite, much less discuss, the

four-justice concurring opinion in JCC v. Brotherhood of Loc.

Eng’rs, 482 U.S. 270, 287 (1987) (“BLE”).

Second, while the Union Respondents agree that the lan-

guage employed by Congress is the most important indicator

of Congress’ purpose (Union Resp. Brief at 24), they then ignore

the breadth of the immunity language that Congress has

repeatedly used since the Transportation Act of 1920. They do

not support the Court of Appeals’ view that the absence of the

word “contracts” in the ICA immunity section is significant. Pet.

App. 12a.?

Instead, the Unions suggest, contrary to the explicit findings

of the ICC in the instant cases and prior ICC decisions defining

the scope of the authority conferred on consolidating rail carriers

under ICA § 11343, 49 U.S.C. § 11343 (1988), that the Waycross/

mission and, hence, did not qualify for the immunity from “all

... law” provided by the ICA. There is no merit to the Unions’

contention that the immunity conferred on consolidating

railroads removes only legal obstacles to the formal corporate

and financial reorganization. There is no merit in the Unions’

of state and federal legal restraints that would prevent the very

yy + $4 patent ne ny ih

even immunity

eee Act collective bargaining

cqpeumante or ether quatiaseal hiieutiens tapeiing Go tnglanen

tation of an approved consolidation.

2 Nor do Union Respondents attempt to defend the Court of Appeals’

sstiiitah Ghetanation Wabueen Gs HAA and ealiectbve baneeiaing

agreements arising thereunder.

3

operational changes that result in the economies and efficiencies

found by the ICC to make the consolidation consistent with the

public interest. See infra at pp. 6-10.

Third, the Union Respondents virtually ignore the compre-

hensive legislative history of the ICA immunity provisions set

forth in CSXT’s brief. In particular, Union Respondents ignore

the instructive history of the Emergency Railroad Transportation

Act of 1933 (““ERTA”), where Congress failed to except legal

obstacles flowing from the Railway Labor Act and collective

bargaining agreements frcm the permanent ICA immunity grant.

The Unions also denigrate the significance of the Transportation

Act of 1940, where Congress defeated the Harrington Amend-

ment, which would have prevented the ICC from approving any

consolidations that would have affected employee contract nights.

See infrc at pp. 10-14.

Finally, the Union Respondents do not dispute that it has

been Congress’ consistent purpose since the Transportation Act

of 1920 to foster and encourage rail consolidations. Brotherhood

of Maint. of Way Employees v. United States, 366 U.S. 169, 173

(1961); County of Marin v. United States, 356 U.S. 412, 416 (1958);

United States v. Lowden, 308 U.S. 225, 232 (1939). Nor do they

dispute that subjecting rail carriers to the “interminable”

bargaining provisions of the Railway Labor Act (“RLA”) in order

to remove contractual obstacles to consolidation would give rail

unions a virtual veto over transactions found by the ICC to be

in the public interest.

Instead, the Union Responde™ : rely on a classic “strawman”

argument in an attempt to divert attention from the issue before

the Court. They assert that Congress has not chosen to give

the ICC “complete control” over day-to-day rail labor relations

and that the Commission lacks “expertise” in such matters. These

consolidated cases do not present any such issue. The sole issue

before the Court is whether the immunity conferred by Congress

in ICA § 11341(a) enables rail carriers to carry out approved

consolidations notwithstanding legal obstacles flowing

4

from RLA collective bargaining agreements.’

Congress indeed has provided that the on-going, day-to-day

relations between rail carriers and rail unions are to be governed

the policies of the ICA must prevail. Congress has chosen that,

in such instances, it is the ICA that is to be “the supreme law

of the land”. Schwabacher, 334 U.S. at 198. Union Respondents

would have this Court ignore Congress’ stated intent and elevate

RLA obligations to a position of primacy. Their arguments, like

the decision of the court below, are in error.‘

Nor is the ICC’s decision on remand from the D.C. Circuit (CSX Corp.—

Control—Chessie Sys. & Seaboard Coast Line Indus., 6 LC.C. 2d 715

(1990)) before the Court, notwithstanding the Unions’ extensive

discussion

5

ARGUMENT

I. The Court of Appeals’ Decision Is Contrary to

Prior Decisions of this Court.

Over 40 years ago in Schwabaocher, this Court declared in

sweeping terms that Congress intended the ICA, as a result of

its immunity provisions, to be “the supreme law of the land”.

334 U.S. at 198. Accordingly, this Court ruled that the Commis-

sion, in determining the rights of a shareholder affected by a

rail merger, was to look solely to the ICA itself, “not the promise

that a charter made to him.” Jd. at 199. The Union Respondents

seek to distinguish Schwabacher in a single footnote near the

end of their brief. They argue that, because Congress granted

the ICC “complete control” over rail carrier capital structures

and not over rail labor relations, the immunity conferred from

legal obstacles in contracts defining shareholder rights is

somehow broader than the corresponding immunity from

obligations in collective bargaining agreements. Union Resp.

Brief at 43 n.57.

The immunity provisions in § 11341(a) permit no such

distinction. That section broadly exempts consolidating carriers

“from the antitrust laws and from all other law, including State

and municipal law”. Emphasis added. Congress did not limit

the scope of the immunity to matters concerning carrier capital

structures. Instead, Congress has broadly declared in § 11341(a)

that “{t}he authority of the Interstate Commerce Commission

under this subchapter [dealing with rail consolidations] is

exclusive.” Emphasis added. This Court’s declaration in

in the implementation of an approved merger. The four justices

who joined the concurring opinion in BLE similarly recognized

the scope of the immunity conferred by the ICA. The Court

of Appeals’ failure to follow these precedents led to its erroneous

interpretation of § 11341(a).

Il. The Plain Terms of § 11341(a) Immunize Rail

Carriers from Obligations in Collective Bargain-

ing Agreements that Impede an ICC-Approved

Rail Consolidation.

The Union Respondents acknowledge that the language used

by Congress is the clearest indication of its purpose. Union Resp.

Brief at 24. CongféSs Cannot have spoken more clearly when

it drafted the ICA immunity provisions in 1920, when it reenacted

those provisions in Title I] of ERTA and in the Transportation

Act of 1940, and when it recodified the ICA in 1978: consolidating

language; they offer no alternative interpretation. They merely

may be displaced in transactions subject to § 11341 (a). See R-—

Exemption, 1989 ICC LEXIS 97, *32 n.20 (1989) (Lamboley, dissenting).

7

Petitioners were not entitled to the immunity conferred by

§ 11341(a) because they are outside the Commission’s “jurisdic-

tion”. The Unions argue that, once consolidating rail carriers

have completed their formal corporate reorganizations (when

they have “become one corporation or become the subsidiaries

of a parent corporation”), they have exhausted the authority

conferred on them by the ICC and are no longer entitled to

immunity with respect to subsequent operational changes that

are the “results” of such consolidations. Union Resp. Brief at

25-26.8 As the Unions see it, the authority corferred on consol-

idating carriers by the ICC is “limited to the financial transac-

tions specified in Section 11343(a).” Jd. at 37-38.° This narrow

interpretation of the scope of the “transaction” approved in a

consolidation, merger, or control proceeding under ICA § 11343

is contrary to the language and purpose of the Act itself and

is also contrary to consistent ICC precedent.

The Union Respondents’ interpretation of the “transaction”

subject to the immunity prescribed in § 11341(a) would have far-

reaching implications that would be in inherent conflict with

Section 11343 itself establishes that Commission approval

of a consolidation “transaction” authorizes the carriers to engage

in more than a mere “financial” reorganization. Section

11343(a\1) requires Commission approval of the “consolidation

or merger of the properties or franchises of at least 2 carriers

into one corporation for the ownership, management, and

operation of the previously separately owned properties.”

Similarly, § 11343(b) refers to the acquisition of “control” as

including “the power to exercise control or management” of a

carrier “regardless of how that result is reached.” Emphasis

Gided.

Under § 11344(b\(1) the Commission must consider several

factors in ascertaining whether the proposed consolidation is

consistent with the public interest. Such analyses would be totally

irrelevant if the “transaction” proposed by the carriers consisted

solely of a change in corporate form. The Commission must

consider the consolidation’s effects on ‘the adequacy of trans-

portation to the public” and on “competition among rail carriers

in the region”. § 11344(b)(1)(A), (E). A transfer of securities by

itself will not have any effect on transportation services or carrier

competitiveness.

Finally, and of greatest relevance here, the Commission must

consider “the interest of carrier employees affected by the

proposed transaction.” § 11344(b\1\(D). A mere reorganization

of ownership will have no impact on employees. Employee

interests are affected only by the consolidation of carrier facilities

and the coordination of carrier operations that flow from the

creation of a unified rail system, as this Court recognized over

50 years ago in Lowden, 308 U.S. at 233, when it upheld the

Commission's authority to impose conditions protecting the

income of affected employees:

It is thus apparent that the steps involved in carrying out

the Congressional policy of railroad consolidation in such

manner as to secure the desired economy and efficiency

will unavoidably subject railroad labor relations to serious

stress and its harsh consequences may so seriously affect

employee morale as to require their mitigation both in the

interest of the successful prosecution of the Congressional

policy of consolidation and of the efficient operation of the

Peoria & E. Ry. Stockholders v. New York Cent. R.R., 334 LC.C.

131, 151 (1968). As the Commission explained most recently in

CSX Corp.—Control—Chessie Sys. & Seaboard Coast Line

Indus., Finance Docket No. 28905 (Sub-No. 23) (served Oct. 3,

1989), slip op. at 4 (emphasis added):

We [have] rejected the argument that the immunity

from the operation of other laws under section 1 1341(a)

expected to flow from the control transaction that we

approved, and our approval of the principal transaction

extends also to these directly related actions.''

“transaction” that the Commission must scrutinize in a § 11343

consolidation _ While apphcant carners are required to provide

information the aspects of their arrangement.

see 49 C.F_R. § 1180.9 (1989), they must also detailed analyses

Seamed cuties toy in entes teenumdion te aiken

coy hw at —b-4 +

regions (49 C.F_R. § 1180.7) and operational data including a summary

of proposed operating plan changes. 49 C.F.R § 1180.8 In addition,

carners are required to submit supporting informaton concerning the

effect of the proposed “transaction ee OCF Giiseann hie

initial three-year pernod after consolidation. 49 C_F —— (v

None of these matenals would have any relevance if the “transaction”

under scrutiny consisted only of the carners’ finanaa) arrangements.

" The Union Respondents note at pp. 3 of their brief that, at the time

it filed its control apphcation with the Commission, CSX

:

|

H

il

because the contro! only

consoldation of the carners. the ICA

obtain additional express ICC approval to engage

of tracks and

‘t

|

10

Thus, the “transaction” before the Commission in CSX—

Control involved far more than the mere conversion of Chessie

and Seaboard common stock into CSX Corporation common

stock. The Commission authorized the operational coordination

of two rail systems (363 LC.C. at 535), ome that would have an

overall beneficial impact upon transportation services-id. at 552)

because of the “many projects intended to coordinate the Chessie

and Family Lines systems to achieve the goal of overall

profitability.” Jd. at 553. The Commission recognized that the

applcant carners “have the potential to generate significant cost

reduchons and improved utilization of physical assets” through

Id. at 556. In granting its approval, the Commission authorized

the creation of a single rail “system.” Jd. at 533, 535.

CSXT’s Waycross’ Raceland shop consolidation clearly fell

within the authority conferred in CSX—Control, as the Com-

mission held below. The consolidation of these mechanical!

department shops 1s precisely the sort of operational change one

would expect to flow from a carner unification, as the carriers

seek to elumunate redundant faclites and nd themselves of excess

Indeed, elumination of excess capacity at Raceland was presented

by the carners to the Commission as one of the benefits to be

achieved by the consolidation in CSX—Control See 363 LC.C.

at 561. Accordingly, this shop consolidation plainly fel] within

the § 11341(a) mmmunity conferred in CSX—Control.

Ill. The Legislative History of the ICA's Immunity

Provisions Establishes that Congress Intended

to Encompass Obligations Arising from Rail

Collective Bargaining Agreements.

Congress’ intent to immunize rail consolidations from

obhgations in collective bargaining agreements is further

demonstrated by the ICA's legislative history. In particular,

Congress did not adopt language that would have excluded such

agreements and RLA bargaining obhgatons from the reach of

the permanent ICA immunity provisions in Title [I of ERTA.

Congress did, however, at the same time expressly except such

obligations from the immunity conferred in the temporary

provisions of ERTA Title | Congress’ rejection of the Harrington

Amendment in 1940 further shows its intent that obhgations

flowing from collective bargaining agreements not stand in the

11

way of the achievement of consolidations found to be in the public

interest. Instead, Congress determined that rail employees

affected by consolidations and mergers be provided with

The Union Respondents do not dispute the breadth of the

language used by Congress in enacting the ICA immunity

provisions in the Transportation Act of 1920.!2 Nor, contrary

to the court below, do they purport to find support for a limited

construction of § 11341(a) in the enactment of the RLA in 1926.

Instead, the Unions argue that the distinctions drawn by

Congress in 1933 between the temporary and permanent pro-

visions of ERTA should be disregarded because Congress had

granted “broader jurisdiction” to the Federal Coordinator than

it had the ICC with respect to rail consolidations. “The Coor-

dinator’s jurisdiction . . . ran to all matters which could permit

railroads to operate more economically and he had explicit

authority to require carriers to take certain actions.” Union Resp.

Brief at 38; emphasis added. In fact, however, the distinction

they suggest is an erroneous one.

While Congress did vest greater authority in the Coordinator

than the Commission to compel certain railroad actions, it did

not grant the Coordinator any greater authority than the

Commission over rail consolidations. In § 5 of ERTA, 48 Stat.

|

|

charges therefor,” and to “avoid other wastes and preventable expense.”

ERTA §§ 4(1) (a)4c), 5; 48 Stat. 212-13.

12

It did not grant similar authority to the Coordinator to order

the “reorganization of carriers”, the purpose set forth in ERTA

§ 4(2). See also St. Joe Paper Co. v. Atlantic Coast Line R.R.,

347 U.S. 298, 317 (1954) (temporary provisions of ERTA, like

the permanent ICA, contained no provision for “compulsory

consolidation”).!4 Accordingly, Congress’ express exclusion of

collective bargaining agreements and RLA obligations from the

temporary immunity conferred on carriers complying with orders

of the Coordinator in ERTA Title I, § 10(a), 48 Stat. 215 (Pet.

App. 118a), stands in marked contrast to the absence of such

an exclusion in the revised permanent immunity provisions of

ICA § 5(15) governing rail consolidations, adopted in ERTA Title

II, § 202, 48 Stat. 217-19 (Pet. App. 119a)."5 Had Congress intended

the general ICA immunity accorded consolidating carriers to be

so limited, it clearly knew how to make such an intention clear.

Union Respondents would similarly have this Court ignore

Congress’ rejection of the Harrington Amendment in 1940,'6

which, had it been adopted, would have prevented the ICC from

approving any consolidation that would result in “the impairment

of existing employment rights.” 84 Cong. Rec. 9882 (1939). They

argue that the amendment was not “rejected” but was merely

“modified” and “incorporated as the second sentence of section

5(2\(f).” Union Resp. Brief at 39 n.55. This Court has already

remarked on the significance of Congress’ refusal to adopt the

Harrington Amendment in Railway Labor Exec’s’ Ass’n v.

United States, 339 U.S. 142, 151 (1950): “This amend-

14 Although Congress enacted special protections for employees affected

by Coordinator activities in Title I, § 7 (48 Stat. 213-14), it did not grant

the Coerdinator any broader jurisdiction than the Commission with

respect to “labor relations matters”, contrary to Union Respondents’

unsupported assertion at page 38 of their brief.

‘4S This Court similarly observed in Texas v. United States, 292 U.S.

522, 534 (1934), that the express protection given carrier contractual

obligations with respect to the location of offices, shops, and round-

houses, located in ERTA Title I, § 11 (48 Stat. 215), stood in marked

contrast to the absence of such a provision in the permanent ICA

enactments in ERTA Title [] and “indicate{s] an intentional distinction.”

‘6 The Union Respondents completely ignore the fact that Congress in

1940 did not adopt another proposal modelled after ERTA Title I that

would have amended the ICA immunity provisions to except collective

agreements and RLA obligations. See CSXT Brief at 43

44 & n.44.

13

ment... threatened to prevent all consolidations to which it

related.” If the RLA and collective bargaining agreements

already prevented an impairment of employee rights, as the

Union Respondents assert here, the Harrington Amendment

would have been unnecessary. Congress rejected the proposal

to preserve all “employment rights” of affected employees and

instead granted them unparalleled statutory compensation

protections. Brotherhood of Maint. of Way Employees v. United

States, 366 U.S. 169, 177-78 (1961). At the same time Congress

reenacted the broad immunity provisions of the ICA, then located

in ICA § 5(11) (Pet. App. 119a-120a), without any exception for

collective bargaining agreements or other RLA obligations so

that rail consolidations found to be in the public interest could

proceed.

Finally, the Unions purport to find support for their position

in the amendments to the ICA contained in the 4R Act!’ and

in the passage of the Staggers Rail Act of 1980.'* Union Resp.

Brief at 45-47. Neither act modified the ICA immunity provisions,

and there is no legislative history to suggest that Congress

intended any such result.!9 Indeed, both statutes had as their

fundamental goal the fostering and encouragement of rail

consolidations and related transactions. See S. Rep. No. 499, 94th

Cong., lst Sess. 20 (1975); Pittsburgh & Lake Erie R.R. v. Railway

Labor Exec’s’ Ass’n, 109 S. Ct. 2584, 2596-97 (1989). The amend-

ments to the labor protection provisions of the ICA (then § 5(2)(f),

now § 11347) contained in the 4R Act increased the income

protections afforded affected employees (raising the period of

income protection from four years to six) and codified the

obligation of consolidating carriers to reach implementing

agreements with the unions representing such employees in

carrying out ICC-approved transactions. See Union Resp. Brief

at 45-46. But nothing contained in those amendments limited

the scope of the immunity provisions of the ICA.

17 Railroad Revitalization and Regulatory Reform Act of 1976, Pub.

L. No. 94-210, 90 Stat. 31.

8 Pub. L. No. 96-448, 94 Stat. 1895.

19 The amendments to ICA § 5(2)f) were last-minute additions to the

4R Act, without any legislative history. Railway Labor Exec’s’ Ass'n

v. United States, 675 F.2d 1248, 1254-55 (D.C. Cir. 1982): New York Dock

Ry. v. United States, 609 F.2d 83, 93 (2d Cir. 1979).

14

RLEA’s claim that Congress intended in the 4R Act to

provide that ICC-approved rail consolidations may be imple

ing procedures is completely unsupported by either precedent or

logic. No court has accepted such an argument, and federal courts

have continued to uphold the primacy of the ICA over the RLA

in decisions since the 4R Act’s passage. Burlington N. R.R. v.

United Transp. Union, 848 F.2d 856, 863 (8th Cir.), cert. denied,

109 S. Ct. 499 (1988); Brotherhood of Loc. Eng’rs v. Boston &

Maine Corp., 788 F.2d 794, 800 (1st Cir.), cert. denied, 479 U.S.

829 (1986); see also ICC v. Brotherhood of Loc. Eng’rs, 482 U.S.

270, 287 (1987) (Stevens, J., joined by Brennan, Marshall, and

Blackmun, J.J., concurring). The Commission has also consist-

ently rejected the notion that Congress intended any such result

in the 4R Act. See Denver & R. G. W. R.R.— Trackage Rights—

Missouri Pac. R.R.—Between Pueblo, Co. and Kansas City, Mo.,

Finance Docket No. 30,000 (Sub-No. 18) (served Oct. 25, 1983),

slip op. at 5 (“{TJhe 4-R Act did not limit our authority to exempt

a transaction from the RLA.”); St. Louis Southwestern Ry.—

Trackage Rights, 1 1.C.C. 2d 776, 781 (1984) (“The 4R Act did

not limit our authority to preempt other laws in authorizing a

transaction; it simply specified standards for the minimum level

of employee protection ... .” ).

In sum, the Unions’ contention that Congress in the 4R Act

intended sub silentio to elevate-RLA rights to the primacy they

claim is inherently incredible in view of Congress’ expressed

intent in 1976 to foster and encourage rail mergers. This

argument, if true, would mean that Congress adopted without

any discussion a provision virtually identical in effect to the

Harrington Amendment that it had expressly rejected 36 years

earlier - a provision, if it had been enacted, that would have

“prevent[ed] all consolidations to which it related”. Railway

Labor Exec’s’ Ass'n v. United States, 339 U.S. 142, 151 (1950).

Lacking any legislative history supporting their interpreta-

tion of the immunity provisions, the Union Respondents argue

20 Vacated and remanded sub nom. Brotherhood of Loc. Eng’rs v. ICC,

761 F.2d 714 (D.C. Cir. 1985), rev'd, 482 U.S. 270 (1987).

21 Like the 4R Act, nothing in the Staggers Rail Act of 1980 even

purported to effect the ICA immunity provisions.

15

that the ICC has not always consistently interpreted the reach

of § 11341(a) and its predecessors and adopted its current

interpretation only in 1983. Even if that argument were true,

the language, legislative history, and policies underlying the ICA

establish the correctness of the Commission’s contemporary

understanding.

In Norfolk & W. Ry.—Merger, 347 LC.C. 506, 511-12 (1974),

the Commission squarely articulated its authority to set aside

agreements negotiated under the RLA. The Railway Labor

Executives’ Association (“RLEA”) (represented by counsel for

the Union Respondents here) argued that an RLA agreement

could only be changed in accordance with the RLA’s bargaining

procedures and that the ICC lacked the authority to suspend

its provisions. The Commission disagreed:

... RLEA’s assertion that the agreement and the

wage, rules, and working conditions governed by the

Railway Labor Act may not be changed except in

accordance with the procedures prescribed by that act

is squarely refuted by the language of section 5(11)

of the Interstate Commerce Act which confers exclusive

and plenary jurisdiction upon this Commission to

approve mergers and relieves carriers from all other

restraints of Federal law. The Railway Labor Act is

a Federal act and is thereby preempted by section 5(11).

the requirements of that act insofar as is necessary

to carry into effect the transaction approved pursuant

to section 5(2).

More recent ICC decisions, following the passage of the 4R

Act, have confirmed the Commission’s interpretation of the reach

of the ICA immunity language as it relates to the RLA and

rail collective bargaining agreements. See p. 14, supra; see also

Delaware & Hudson Ry.—Lease and Trackage Rights Exemption,

16

1989 ICC LEXIS 9, *8 (1989).

Finally, Union Respondents argue at pages 27-28 of their

17

Congress’ intent to include collective bargaining agreement

on rail properties conveyed to it from a railroad in

reorganization to any location, facility, or position on its

system. .

5 pmb ay wy ey pe, SL,

income protections in the Orange agreement. The Book

was entered into by the carriers in order to settle rail labor’s

in lengthy litigation the Commission's approval of the

consolidation of the Atlantic Line and Seaboard Air Line

Railroads. See Florida E. C. Ry. v. United States, 259 F. Supp. 993 (M_D.

Fla. 1966), appeal of RLEA dism’'d as moot, 386 U.S. 544 (1967). Thus,

rail labor was able to obtain the Orange Book not because

the carners had any doubts concerning the 's power to

succeeded in delaying the consolidation through post-ICC court

proceedings. In addition, the carriers, like Conrail, also obtained in the

Orange Book the valuable nght to move work and employees not only

across previous corporate boundarnes but also anywhere within each

of the formerly separate ACL and SAL rail systems. It should be noted

that the Waycross Raceland coordination does not threaten or seek to

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:

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18

IV. ICC’s Interpretation of the Scope of the ICA

Immunity Provisions Does Not Result in a Fifth

Amendment Violation.

Union Respondents suggestion at pp. 47-50 of their brief that

Petitioner’s interpretation of § 11341(a) would result in a violation

of the Fifth Amendmeni also has no merit.” It is not disputed

that contract rights may in certain instances be entitled to Fifth

Amendment protections. But this Court has long ruled that

private contracts that deal with a subject matter appropriately

regulated by the federal government under the commerce power

may be nullified without violating the Fifth Amendment. See,

e.g., Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 222-

28 (1986); Norman v. Baltimore & O. R.R., 294 U.S. 240, 307-

11 (1935); Louisville & N. RR. v. Mottley, 219 U.S. 467, 482 (1911).

Congress plainly may nullify a contractual provision by ddjusting

the benefits and burdens of economic life to promote the common

good without requiring government compensation. Connolly, 475

US. at 224-25.2

The federal courts have routinely rejected Fifth Amendment

claims by rail labor and employers alike based on the alleged

umpact of federal legislation on collective bargaining agreements

and labor protection agreements. See Wilson v. New, 243 US.

332, 353 (1917); Railway Labor Exec’s’ Ass'n v. United States,

575 F. Supp. 1554, 1558-59 (Sp. Ct. RRRA 1983), cert. denied,

465 U.S. 1101 (1984); United Transp. Union v. Consolidated Rail

Corp., 535 F. Supp. 697, 706-08 (Sp. Ct. RRRA) (Friendly, J.),

cert. denied, 457 U.S. 1133 (1982). Cf. Chang v. United States,

859 F.2d 893, 894-98 (Fed. Cir. 1988) (invalidation of private

19

employment contracts by executive orders did not constitute a

taking).” The alleged infringement of BRC’s members’ contract

rights by the ICC, in furtherance of a rail consolidation found

to be in the public interest, is similarly not of constitutional

magnitude.

A

20

CONCLUSION

The judgment of the Court of Appeals should be reversed.

Respectfully submitted,

James 8S. WHITEHEAD

(Counsel of Record)

Stotzey & AusTIN

One First National Plaza

(312) 853-7703

Nicuo.as 8. YOvANOVIC

James D. ToMmoLa

CSX Transportation, Inc

500 Water Street

Jacksonville, Florida 32202

Attorneys for Petitwoner

CSX Transportation, INc

November 23, 1990