UTU News Digest - Monday, September 21, 1998

UTU Daily News Digest

Information of interest to operating railroad and transportation employees
For
Monday, September 21, 1998

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U.S. DOT may force Union Pacific to sell some lines

WASHINGTON -- The federal government Friday raised the possibility of forcing the Union Pacific Railroad to divest some of its rail lines if service did not improve by the end of the year.

In a submission to the Surface Transportation Board (STB), the Department of Transportation (DOT) said it did not support allowing the railroad an indefinite amount of time to restore service to the levels seen prior to its 1996 merger with Southern Pacific. DOT noted some improvement in service, but expressed concern that Union Pacific's performance would deteriorate in the coming months as grain and other shipments increased.

"The STB should make clear that repeated service failures or a reversal in the trend of improving service may warrant corrective actions," DOT said in its submission.

An STB emergency order last year against Union Pacific that allowed other railroads to compete for customers on UP tracks, expired Thursday. DOT said the lifting of that order, announced in July, was possibly premature as many customers were still denied the level of service to which they were entitled.

"DOT believes that the STB should consider divestiture, as well as any other measures that may be appropriate, if pre-merger levels of service and competition in the Houston area cannot otherwise be restored in the near future," the submission said.

Federal judge upholds Carey's ouster from Teamsters

WASHINGTON -- A federal judge has upheld a ruling that expelled former Teamsters President Ron Carey from the union. Carey, who took a leave of absence from the union when charges were filed against him before the Independent Review Board late last year, has maintained that he was unaware of an illegal scheme that swapped more than $800,000 in Teamsters treasury funds for donations to his re-election.

U.S. District Judge David Edelstein upheld the review board's decision. Mark Hulkower, an attorney for Mr. Carey, said Mr. Edelstein's decision would be appealed.

STB announces decision on train dispatchers

WASHINGTON -- Surface Transportation Board Chairman Linda J. Morgan announced Friday that, applying the limited standard for review of arbitrators' decisions, and in accordance with the Board's policy of promoting negotiation and arbitration in labor matters, the Board has declined to review an arbitrator's October 1997 and May 1998 decisions to approve the transfer by the Canadian Pacific Railway Company (CP) of five Delaware & Hudson Railway Company (D&H) train dispatch positions from Milwaukee, Wisconsin, to Montreal, Quebec, Canada, and to impose an implementing agreement to bring about the transfer.

At issue in this matter was CP’s proposal to transfer the dispatch positions as part of its plan to integrate D&H and CP into a single system. The transfer was one of a series of transactions begun in 1990 with the former Interstate Commerce Commission's (ICC) approval of CP's acquisition of the rail operating assets of formerly bankrupt D&H, subject to standard New York Dock labor protective conditions.

The matter was decided by an arbitrator according to those conditions. The American Train Dispatchers Department of the International Brotherhood of Locomotive Engineers (Dispatchers) sought Board review of the arbitrator's decisions, arguing that the arbitrator lacked jurisdiction over the transfer and had failed to give adequate consideration to safety concerns. In June 1998, Chairman Morgan stayed the effectiveness of the arbitral awards pending Board consideration of the petitions for review.

The Dispatchers sought review based on the argument that the arbitrator had erroneously concluded that the dispatch position transfers fell within the scope and authority of the ICC's 1990 decision, and that removal of train dispatching from the authority of United States federal regulatory agencies, including the Federal Railroad Administration (FRA), raised safety questions.

Board review of an arbitrator's decision is limited to "recurring or otherwise significant issues of general importance regarding the interpretation of its labor protective conditions." In this case, the Board found that the Dispatchers had not established the existence of such issues and, consistent with Board policy in those instances, declined to review the arbitrator's decisions.

The Board stated that, though it could set aside an arbitrator's egregiously erroneous decision on factual issues, it found that the Dispatchers had not shown that the arbitrator's factual determination regarding the relationship between the proposed changes in dispatching and the transaction approved by the ICC constitutes egregious error.

Further, based on established court precedent, the Board found no merit in the Dispatchers argument that an event -- the transfer of dispatching positions -- could not be considered "reasonably related" to an approved transaction unless it specifically was mentioned in the decision by the agency (here, the ICC) granting authority.

Southwest Airlines' pilots happy with pact

NEW YORK -- Southwest Airlines' pilots have agreed by an overwhelming majority to keep a 10-year salary agreement that originally became effective in 1994.

The 10-year agreement, which froze the pilots' pay scale for the first five years of the contract in exchange for a substantial number of stock options, contained a unilateral provision that allowed pilots to reopen contract negotiations at the midpoint of the agreement in 1999.

In a vote by members of the Southwest Airlines Pilots' Association tabulated by the association late last week, more than 78% of the voting pilots agreed to continue the contract. The agreement now becomes amendable on Sept. 1, 2004.

"This highly cohesive and unified group of pilots voted to stay the course," said John Kramer, president of the Southwest Airlines Pilots' Association, which represents the airline's nearly 2,800 pilots.

"To date, by participating in the growth of the market value of Southwest Airlines, pilots have been compensated to a greater degree than would have been possible through pay raises," he said.

Report: Clinton names Monin to Amtrak Reform Council

WASHINGTON – According to a report on U.S. Newswire, President Clinton last week announced his intent to appoint Clarence V. Monin to serve as a Member of the Amtrak Reform Council.

Monin, of Cleveland, Ohio, is currently the International President Brotherhood of Locomotive Engineers (BLE) and also serves on the Executive Committee of the Transportation Trades Department, AFL-CIO.

The Amtrak Reform Council (ARC) will operate separately from the Amtrak Reform Board. The ARC's purpose is to evaluate the Board's performance and make recommendations to Amtrak for achieving further cost containment and productivity improvements and financial reforms.

Merger creates rail products giant

NEW YORK -- ABC Rail Products Corp. has agreed to a merger of equals with privately-held NACO Inc. to create a railroad products giant with annual revenues of around $637 million.

The combined company, to be known as ABC-NACO Inc., will be the largest U.S. maker of specialty trackwork and supplier of high performance freight car suspension systems, the companies said in a joint statement. With ABC's assets, it will also be the second largest producer of railcar wheels.

Under the deal, ABC stockholders will continue to hold their ABC shares and NACO stockholders will receive newly issued ABC shares, representing a 50 percent interest in the combined company on a fully diluted basis.

Pathnet to upgrade BNSF’s communications

WASHINGTON -- Dick Jalkut, President and CEO of Pathnet, Inc., announced last week that his company has entered into an agreement with The Burlington Northern and

Santa Fe Railway Company (BNSF) to participate in the upgrade of the railroad's existing internal communications network.

Under the terms of the agreement, Pathnet will begin construction of approximately 500 route miles of digital backbone capacity from Chicago, Illinois to St. Paul, Minnesota."