Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-01201/USCOURTS-caDC-96-01201-0/pdf.json

Parties Involved:
CSX Transportation, Inc.
Intervenor
Surface Transportation Board
Respondent
United States of America
Respondent
United Transportation Union
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 11, 1997 Decided June 13, 1997 

No. 96-1201

UNITED TRANSPORTATION UNION,

PETITIONER

v.

SURFACE TRANSPORTATION BOARD AND 

UNITED STATES OF AMERICA,

RESPONDENTS

CSX TRANSPORTATION, INC.,

INTERVENOR

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No. 96-1202

RAILWAY LABOR EXECUTIVES' ASSOCIATION, ET AL.,

PETITIONERS

v.

SURFACE TRANSPORTATION BOARD AND 

UNITED STATES OF AMERICA,

RESPONDENTS

On Petitions for Review of an Order of the 

Surface Transportation Board

Norton N. Newborn, for United Transportation Union, and 

John O'B. Clarke, Jr., for Railway Labor Executives' Association, et al., argued the cause for the petitioners. William G. 

Mahoney and Richard S. Edelman were on brief.

Louis Mackall, V, Attorney, Surface Transportation Board, 

argued the cause for the respondents. Henri F. Rush,

General Counsel, Surface Transportation Board, was on brief. 

John J. Powers, III, and Robert J. Wiggers, Attorneys, 

United States Department of Justice, entered appearances.

Ronald M. Johnson argued the cause for intervenor CSX 

Transportation, Inc.

Before: SILBERMAN, WILLIAMS and HENDERSON, Circuit 

Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: The United 

Transportation Union (UTU) and the Railway Labor Executives' Association (RLEA) (together the Unions) petition for 

review of an order of the Surface Transportation Board (STB 

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1 The ICC Termination Act of 1995 (ICCTA), Pub. L. No. 104-88, 

109 Stat. 803, abolished the Interstate Commerce Commission 

(ICC) and established the STB in its stead. Because this case 

involves events both before and after the enactment of ICCTA, we 

refer to the ICC or the STB as appropriate. 

2 Section 204 of the ICCTA provides that matters arising before 

January 1, 1996 are governed by the pre-ICCTA version of the 

ICA. The ICA provision applicable here, therefore, is former 49 

U.S.C. § 11347, identical in all material respects to current 49 

U.S.C. § 11326. 

or Board)1concluding that a coordination of railway service 

sought by CSX Transportation, Inc. (CSXT) was to be carried 

out pursuant to the labor protective conditions imposed by 

the STB's New York Dock rules rather than pursuant to the 

Railway Labor Act (RLA), 45 U.S.C. §§ 151 et seq. The 

Unions contend that the STB lacked jurisdiction to enter its 

order and that even if the STB had jurisdiction its decision 

was arbitrary and capricious. We deny the petition for 

review.

I.

In 1980 the Interstate Commerce Commission (ICC) authorized the CSX Corporation (CSX) to merge with the Chessie 

System Inc. (Chessie) and Seaboard Coast Line Industries, 

Inc. (SCLI) and thereby acquire control of the railroads that 

had been Chessie and SCLI subsidiaries. See CSX Corp.

ControlChessie Sys., Inc. & Seaboard Coast Line Indus., 

Inc., 363 I.C.C. 521 (1980), aff'd sub nom. Brotherhood of 

Maintenance of Way Employees v. ICC, 698 F.2d 315 (7th 

Cir. 1983), (CSX Control). As required by the Interstate 

Commerce Act (ICA or Act), 49 U.S.C. §§ 10101 et seq.,2the 

ICC conditioned its common control approval on CSX's compliance with conditions known as the New York Dock conditions, see New York Dock Ry.ControlBrooklyn E. Dist.,

360 I.C.C. 60, aff'd, 609 F.2d 83 (2d Cir. 1979), designed to 

protect employees from any adverse effects of the merger. 

See CSX Control, 363 I.C.C. at 588. 

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3 The C&O was formerly controlled by Chessie. The L&N and 

the Clinchfield were formerly controlled by SCLI. CSXT also came 

to control five other former subsidiaries of Chessie and eight other 

former subsidiaries of SCLI. The Board's decision below sets out 

the history of the emergence of CSXT in greater detail. CSX 

Corp.ControlChessie Sys., Inc. & Seaboard Coast Line Indus., 

Inc., Finance Docket No. 28905 (Sub-No. 26), 1996 WL 203539, at 

*2 (S.T.B. Apr. 15, 1996). 

Following CSX Control, additional mergers occurred 

whence CSXT, a subsidiary of CSX, ultimately emerged in 

1987 as a single entity controlling the operations of, among 

others, the former Chesapeake & Ohio Railway Company 

(C&O), the Louisville & Nashville Railroad Company (L&N) 

and the Clinchfield Railroad Company (Clinchfield).3 Notwithstanding the consolidations, work continued to be allocated as if the original entities retained their separate identities. 

For example, former C&O employees worked only sections of 

track formerly operated by C&O. Under CSX Control, the 

work allocation could be changed only by implementing a 

service coordination pursuant to the New York Dock rules. 

One such service coordination, implemented by negotiated 

agreement in 1981 (1981 Agreement), provided for coordinated operations over approximately 230 miles of track in southeastern Kentucky and western Virginia (Coordinated Territory) that had previously been separately operated by the 

C&O, the L&N and the Clinchfield.

In 1993 CSXT decided to implement a new coordination of 

train operations (1993 Proposed Coordination) involving the 

Coordinated Territory covered by the 1981 Agreement as well 

as additional track not subject to the 1981 Agreement. Pursuant to article 1, section 4 of the New York Dock conditions, 

CSXT notified UTU that it wished to negotiate a New York 

Dock implementing agreement to effect the expansion of the 

Coordinated Territory. UTU refused to negotiate on the 

ground that any modifications to the 1981 Agreement had to 

be negotiated pursuant to the RLA procedures rather than 

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4 Dispute resolution procedures under the RLA are less expeditious than those under New York Dock. In the words of the 

Supreme Court, "The RLA subjects all railway disputes to virtually 

endless 'negotiation, mediation, voluntary arbitration, and conciliation.' " Burlington N. R.R. v. Brotherhood of Maintenance of Way 

Employes, 481 U.S. 429, 444 (1987) (quoting Detroit & Toledo Shore 

Line R.R. v. United Transp. Union, 396 U.S. 142, 148-49 (1969)). 

New York Dock by contrast calls for a limited period of negotiation 

followed by binding arbitration if necessary. See 360 I.C.C. at 71 

("We note here that article I, section 4, embodies a highly structured plan with specified time limits for notice, negotiation, arbitration, and decision."). 

the New York Dock procedures.4 Specifically, UTU relied on 

the following language of Article XVIII of the 1981 Agreement:

This Agreement shall remain in full force and effect until 

revised or modified in accordance with the Railway Labor Act, as amended.

JA 61. When the parties could not agree on the applicable 

procedures, they submitted the issue to arbitration. The 

arbitration panel concluded that, according to the terms of 

the 1981 Agreement, the RLA provided the applicable procedures for the 1993 Proposed Coordination. CSXT petitioned 

for review to the ICC. The STB, which by then had replaced 

the ICC, see supra n.1, vacated the arbitration panel's decision and ordered the parties to negotiateor arbitrate if 

necessaryan agreement implementing the 1993 Proposed 

Coordination using New York Dock procedures. CSX 

Corp.ControlChessie Sys., Inc. & Seaboard Coast Line 

Industries, Inc., Finance Docket No. 28905 (Sub-No. 26), 

1996 WL 203539 (S.T.B. Apr. 15, 1996). The Unions then 

petitioned for review to this court.

II.

A. Jurisdiction

The Unions first argue that the STB lacked jurisdiction to 

enter its order vacating the arbitration panel's decision. 

They have, however, waived any jurisdictional argument. 

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5 RLEA, an intervenor in the proceedings before the Board, filed 

its own opposition to CSXT's petition for review. Although RLEA 

did not expressly acknowledge the Board's jurisdiction as UTU did, 

neither did it challenge the Board's jurisdiction. JA 213-19. 

First, in its opposition to CSXT's petition to review the 

arbitration decision, UTU stated "it is appropriate for ICC to 

review the award." JA 228.5 Moreover, the Unions concede 

they did not make a jurisdictional argument until this appeal. 

Pet'rs Joint Reply Br. at 3 ("[I]t is correct that Petitioners 

did not argue below that the STB did not have jurisdiction."). 

The Unions are therefore precluded from raising their jurisdictional argument now because "claims not presented to the 

agency may not be made for the first time to a reviewing 

court." United Transp. Union v. ICC, 43 F.3d 697, 701 (D.C. 

Cir. 1995) (quoting Washington Ass'n for Television &

Children v. FCC, 712 F.2d 677, 680 (D.C. Cir. 1983)). They 

attempt to avoid this result by arguing that, although the 

STB's jurisdiction over the specific issue raised by CSXT's 

petition for review was conceded, the STB in fact exceeded its 

authority and decided a different issue. The Unions claim 

that because the STB's unauthorized assertion of authority 

was not manifest until it rendered its decision, the Unions 

were free to petition this court for review and to challenge 

the Board's jurisdiction for the first time. Specifically, the 

Unions contend that, while the STB had jurisdiction to decide 

whether the parties had the power to agree that future 

implementation agreements would be governed by procedures 

other than the New York Dock rules, it was without jurisdiction to interpret Article XVIII of the 1981 Agreement. The 

latter question, the Unions contend, involves the interpretation of a collective bargaining agreement (i.e., the 1981 Agreement) and is therefore to be decided by the adjustment 

boards established under the RLA. 45 U.S.C. § 153.

The Unions' argument does not excuse their waiver because the question of the interpretation of Article XVIII was

presented to the STB. CSXT's petition for review to the 

STB manifests that CSXT sought review of the arbitrators' 

conclusion that the 1981 Agreement "preclude[d] further 

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coordinations unless the procedures of the Railway Labor Act 

... were followed." JA 8. Thus CSXT presented not only 

the issue of whether the parties were authorized to substitute 

RLA procedures for New York Dock procedures but also 

whether the 1981 Agreement did in fact work such a substitution.

The Unions also suggest that because their claim involves 

"subject matter jurisdiction," Pet'rs Joint Reply Br. at 3, it 

can be raised at any time, just as a district court's subject 

matter jurisdiction can be raised at any time under Federal 

Rule of Civil Procedure 12(h)(3). Arguments as to agency 

jurisdiction, however, cannot be raised for the first time on 

appeal except in the very limited case, not presented here, 

where the challenge is to "the very composition or 'constitution' of an agency." Mitchell v. Christopher, 996 F.2d 375, 

378 (D.C. Cir. 1993).

B. The Merits

The Unions argue that the STB's vacatur of the arbitration 

panel's decision was arbitrary and capricious. The scope of 

the STB's review of arbitration proceedings is set forth in the 

Board's Lace Curtain decision. See Chicago & N.W. Transp. 

Co.Abandonment, 3 I.C.C.2d 729 (1987), aff'd sub nom. 

International Bhd. of Elec. Workers v. ICC, 862 F.2d 330 

(D.C. Cir. 1988). Under Lace Curtain, the STB reviews an 

arbitration if it involves "recurring or otherwise significant 

issues of general importance regarding the interpretation of 

... labor protective provisions," id. at 736, and will vacate an 

arbitral award only if "there is egregious error, the award 

fails to draw its essence from the collective bargaining agreement, or the arbitrator exceeds the specific contract limits on 

his authority," id. at 735. The Unions' primary argument is 

that, because the plain language of Article XVIII of the 1981 

Agreement makes RLA procedures applicable to the 1993 

Proposed Coordination, the arbitrators could not have committed "egregious error" in finding those procedures applicable.

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We disagree that the language of Article XVIII requires 

the application of RLA procedures to implement the 1993 

Proposed Coordination. Article XVIII states:

This Agreement shall remain in full force and effect until 

revised or modified in accordance with the Railway Labor Act, as amended.

JA 61. Like the STB, we believe that the language is 

susceptible to alternative interpretations. It can be read, as 

the Unions contend, to mean that any revision or modification 

affecting the territory or the employees covered by the 1981 

Agreement must be carried out in accordance with the RLA. 

But the language can also mean, as the STB contends, that 

the phrase "this Agreement" evidences the parties' intent to 

limit the scope of Article XVIII to the subject matter of the 

1981 Agreementthe implementation of an ICC-approved 

transaction involving the coordination of a particular geographic area. A coordination involving a different geographic 

area, whether or not it overlaps with the Coordinated Territory, would not be subject to Article XVIII's mandate. Thus, 

for example, a change in pay rates for employees working in 

the Coordinated Territory would be subject to RLA procedures; a coordination of territories approved by the Board 

pursuant to former 49 U.S.C. § 11347 (now 49 U.S.C. 

§ 11326), however, would remain subject to New York Dock

rules notwithstanding that the coordination might alter pay 

rates established by the earlier implementation agreement. 

See 1996 WL 203539, at *7.

In view of the ambiguity, we think that the STB's interpretation of Article XVIII as inapplicable to transactions such as 

the 1993 Proposed Coordination is neither arbitrary nor 

capricious. While the ICA protects employee interests 

through the New York Dock rules, the Act also serves the 

public interest in ensuring that efficiency-promoting consolidations occur in a timely manner. For example, former 49 

U.S.C. § 11341(a) (now 49 U.S.C. § 14303(f)) provided that 

once the ICC had approved a transaction, the parties participating in the approved transaction were "exempt from the 

antitrust laws and from all other law" to the extent necessary 

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6A coordination of services, such as the 1993 Proposed Coordination, is an example of a transaction necessary to carry out a 

consolidation. Indeed, Dispatchers involved, inter alia, a coordination of services implemented by CSX to carry out the consolidation 

authorized in CSX Control. See 499 U.S. at 123-24. 

7This case does not present a genuine Dispatchers issue. That 

is, because we affirm the STB's determination that Article XVIII by 

its terms does not require the use of RLA procedures, we need not 

address whether it would be appropriate under Dispatchers, assuming the parties intended to make the RLA applicable, to override 

to carry out the transaction. In Norfolk & Western Railway 

Co. v. American Train Dispatchers' Ass'n, 499 U.S. 117 

(1991), the Supreme Court interpreted the "all other law" 

phrase in former section 11341(a) to include obligations imposed by a collective bargaining agreement. In balancing 

both the employees' interests and the public interest under 

the ICA, the Supreme Court emphasized that RLA procedures can be so time consuming that to require their use in 

transactions necessary to carry out ICC-approved consolidations6

could very well defeat the efficiencies the consolidation 

is meant to achieve. Id. at 133 ("If § 11341(a) did not apply 

to bargaining agreements enforceable under the RLA, .... 

[t]he resolution process for major disputes under the RLA 

would so delay the proposed transfer of operations that any 

efficiencies the carriers sought would be defeated."). Accordingly, the Court concluded that once a consolidation is approved and the labor protective conditions of the Act are 

satisfied, the public interest requires that collective bargaining terms and RLA procedures be superseded if necessary to 

achieve consolidation. Id. While it remains unresolved 

whether the 1993 Proposed Coordination complies with the 

labor protective conditions of the ICAat least until the 

parties sit down to negotiate pursuant to New York Dock

nevertheless, given the emphasis the Dispatchers decision 

places on expeditious consolidation, we think that the STB 

acted within its discretion in concluding that contracting 

parties wanting to replace New York Dock procedures with 

the more complex RLA procedures must make their intent 

plain.7 Article XVIII of the 1981 Agreement fails to do so.

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their intention because "necessary" to complete the transaction. 

See Dispatchers, 499 U.S. at 133. Another unresolved Dispatchers

issue is whether the public interest in consolidation is so great that 

parties may never replace New York Dock procedures with RLA 

procedures. The STB assumed without deciding that the parties 

retain the power. We express no opinion on the issue. 

8 We recently affirmed the STB. United Transp. Union v. STB,

108 F.3d 1425 (D.C. Cir. 1997). The Unions also claim that the STB 

arbitrarily and capriciously gave inconsistent interpretations to the 

"rights, privileges and benefits" language of section 2 of New York 

Dock here and in the earlier case. As the STB points out, however, 

it has yet to interpret substantively the New York Dock conditions 

in this case. The case has not yet reached that point because of the 

arbitration decision declaring New York Dock inapplicable to the 

1993 Proposed Coordination. 

Finally, we note that in determining whether an arbitration 

decision constitutes "egregious error," the STB may properly 

consider the adverse impact the decision can have in light of 

other arbitration decisions. We take the STB to mean that 

the arbitrators' error is egregious not necessarily because of 

the quality of their reasoning but because of the impact of 

their decision on the STB's administration of the Act. For 

example, a different arbitration panel (in a case involving 

consolidation of seniority lists) construed collective bargaining 

agreement language nearly identical to that of Article XVIII 

and decided the language did not supersede New York Dock

procedures; the STB subsequently affirmed that panel's decision.8 At the time the STB reviewed this case, it had already 

decided the seniority consolidation case. It would not make 

sense to conclude that the STB's attempt to reconcile conflicting arbitration decisions and to interpret nearly identical 

contract language consistently constitutes an arbitrary and 

capricious decision.

For the foregoing reasons, the petition for review is denied.

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