Although the Transportation Act of 1920 provided that the ICC could condition its approval of railroad mergers upon terms and conditions that were “just and reasonable, ” the Emergency Railroad Transportation Act of 1933 (ERTA), which was enacted to encourage railroads to take actions that would consolidate operations, avoid unnecessary duplication of services and facilities, and to promote financial reorganization, was the first piece of legislation to impose protective conditions by effectively imposing a job freeze.
In 1935, the ICC concluded it had authority to condition its approval of a railroad consolidation on the provision of certain protections for adversely affected employees. In 1936, one month before the expiration of the ERTA, the railroads and their unions negotiated the “Agreement of May, 1936, Washington, D.C., also known as the Washington Job Protection Agreement (WJPA). This agreement provided financial compensation to railroad employees who lost their jobs or suffered losses in earnings as a result of a coordination by two or more railroads of facilities, operations, or service. Also, this agreement provided procedures for protecting seniority rights, place of work and for compensation for moving expenses and/or los from sale of home. The WJTA became a blue print upon which subsequent ICC conditions.
The Transportation Act of 1940, added mandatory labor protection for employees adversely affected by mergers in its section 5(2)(f) that was subsequently recodified as Section 11347, mandating that approval of any rail merger or consolidation or other transaction subject to Section 5(2)(f) shall require “fair and equitable arrangement to protect the interests of the railroad employees affected.”Following the adoption of section 5(2)(f), the ICC developed standards of labor protection based upon types of transactions:
- Oklahoma Conditions (Abandonments), May 17, 1944.
- Burlington Conditions (Abandonments), November 1, 1944.
- New Orleans Conditions (Merger), January 16, 1952.
The ICC established the actual level of such protections at a maximum of 4 years' pay (one year for each year of prior service).
In 1964, with the enactment of the Urban Mass Transit Act (now the Federal Transit Act), employees of transit systems affected by the reorganizations and consolidations resulting from receipt of Federal transit grants were required to be protected at the same level as ICC merger and abandonment protection--4 years. (This level was established by the regulations of the implementing agency, the Department of Labor.) Receipt of Federal transit assistance is conditioned upon such protective arrangements being in place. This is known, from its original statute, as `Section 13(c)' labor protection, now recodified as 49 U.S.C. 5333(b). Transit labor protection arrangements must `provide benefits at least equal to benefits established under section 11326 [the ICC merger and abandonment protection standard].' 49 U.S.C. 5333(b)(3) (emphasis added).
When Amtrak was established by the Rail Passenger Service Act, Congress required in Section 405(a)-(c) that `fair and equitable arrangements' be made for employees adversely affected by service discontinuances. When Appendix C-2 was certified by the Secretary of Labor, the maximum level of protection was set at 6 years' pay, a 50 percent increase over the existing freight rail and transit protection.
In 1976, the Railroad Revitalization and Regulatory Reform (`4R') Act explicitly linked freight (and derivatively transit) labor protection to the level required to be paid by Amtrak. The amended Interstate Commerce Act provision, now recodified as 49 U.S.C. 11326, requires the ICC to provide `a fair arrangement at least as protective * * * as the terms imposed under this section [before enactment of the 4R Act] and the terms imposed under * * * section 24706(c) [the Amtrak labor protection mandate, Section 405 of the RPSA] (emphasis added)'. As a result of this 1976 change, the ICC was required to increase maximum merger and abandonment labor protection levels from 4 years to 6 years pay; this was accomplished by the Commission in New York Dock Railway--Control--Brooklyn Eastern District, 360 I.C.C. 60 (1979). (The ICC Termination Act of 1995 abolished the ICC and assigned the remaining economic regulation of railroads to the new decisionally independent Surface Transportation Board, affiliated with the Department of Transportation., and confined the New York Dock protection requirements to transactions involving only larger freight railroads.) Because the ICC standard increased from 4 to 6 years, the cross-reference in the transit laws also required the Department of Labor to mandate a correlative increase in `section 13(c)' transit protection. See 29 C.F.R. Part 215, 43 Fed. Reg. 13558 (March 31, 1978).
It is clear from this legislative and regulatory history of the related provisions that the Amtrak labor protection mandate was used to force both freight railroad and transit labor protection maximums up by 50 per cent through the applicable statutory cross-references.
The new ICC post C-1 and C-2 conditions were:
See Comparison of WJPA and ICC Conditions.
Essentially, the following C-1/C-2 favorable provisions were added to the prior conditions:
- six-year income protection,
- allocation of burden of proof to the employer to show employee not displaced by ICC approved-transaction, and
- "indexing" of benefits to wage increases negotiated during benefit period.
Not all that flowed from these new conditions were positive for labor. In Denver & Rio Grande Western Ry. -- Trackage Rights -- Missouri Pacific R.R., Finance Docket No. 30000 (Sub-No. 18), the ICC held, for the first time, that collective bargaining agreement provisions could be preempted, and substitute provisions "crammed down." Subsequently, New York Dock arbitrators relied upon this decision to "cram down" collective bargaining agreement changes in creating merger implementing agreements. The ICC affirmed the arbitration decisions. When the labor organizations appealed the ICC determination, the U.S. Court of Appeals for the D.C. Circuit reversed the ICC. However, on appeal to the United States Supreme Court, the Court in 1991 ruled that the application of "cram down" to collective bargaining agreement was legal. Norfolk & Western Ry. v. American Train Dispatchers Ass'n., 499 U.S. 117.
After a contentious period and several attempts at negotiating a resolution, labor organizations and freight carriers resolved the “cram down” issue, first by the UTU in February 2000 and then by the BLE, BMWE, BRS, IAM, TCU, TWU, and Sheetmetal Workers in March 2001 - on the very day rail management and labor gave their support to a congressional effort to enact the newly revived Railroad Retirement Act. The carrier group includes BNSF, CSX, KCS, NS and UP.
The Staggers Act of 1980 affected the both the Labor Protection for Consolidated Rail Corporation (Conrail) under the Regional Rail Reorganization Act of 1973 (see Special Legislation and the RLA) and the ICC labor protections. The amended Section 10505 provided that the ICC could exempt rail transactions from regulation under particular ICA provisions to the extent such regulation was “not necessary to carry out” the transportations policies of the Staggers Act and was used to exempt a transaction involving a line sale from a carrier to a noncarrier from the requirement of prior regulatory approval. In 1983, the ICC determined it had no authority to impose labor protections on line sales governed under Section 10905, where a financially responsible party offered to purchase a rail line for which the ICC had or would have authorized an abandonment.
Section 10901 of the ICA covers most transactions that involve only one carrier; this section is seen as a vehicle for the creation of new carriers. Section 10901 contained no provision for mandatory labor protections. In 1985, the ICC in Ex parte No. 392 had developed a policy against imposing labor protections in noncarrier acquisitions under Section 10901 unless such would e required by “exceptional” circumstances. This policy was seen as encouraging continued operations. However, if an acquisition by a noncarrier is governed by Section 11343 rather than Section 10901, it is subject to the mandatory imposition of labor protection provisions under Section 11347 of the ICA.
The ICC Termination Act of 1995 changed Labor Protection - See Current Rail Labor Protective Condition, above.
Sections 141 and 142 of the Amtrak Reform and Accountability Act of 1997, “extinguished” the previously agreed upon labor protection provisions, including C-2 protections under the RPSA(Section 142 - SERVICE DISCONTINUANCE)and set forth a dispute resolution process for reaching agreement, including negotiations, voluntary arbitration, and a specifically devised process resembling a fact-finding and recommendations panel to set forth their recommendation; the process did exclude the application of the Presidential Emergency Board provision of the RLA (Section 141- RAILWAY LABOR ACT PROCEDURES).
Amtrak and its labor organizations failed to reach an agreement on the new levels of labor protection. They agreed to submit the issue to arbitration. On October 29, 1999, the Board of Arbitration issued its decision. Some of the basic provisions were:
- Displacement or dismissal allowances were on a sliding scale based on years of service with a maximum of 5 years for over 25 years of service, and no benefits for less than 2 years of service.
- Medical and dental benefits continued for the length of the protection period.
- Separation pay maximim of 12 months.
- Dismissed emploees required to change their point od employment and move their residence will be entitled to moving and travel expenses.
- The “triggers” for the imposition of employee protective benefits remained the same: (1) closure of a route or reduction in frequency below three round trips per week; or, as affects shop employees, (2) closure of a maintenance shop facility or transfer of work from the facility to another facility more than 30 miles away.
