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. e du/thir dc ir c uit_2001/38Filed March 1, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-3680

UNION RAILROAD COMPANY

v.

UNITED STEELWORKERS OF AMERICA; UNITED STEELWORKERS OF AMERICA - DISTRICT 10; UNITED STEELWORKERS OF AMERICA - LOCAL 3263, Appellants

Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil Action Nos. 96-cv-02095) District Judge: Honorable Donetta W. Ambr ose

No. 98-6511

UNITED STEELWORKERS OF AMERICA, AFL-CIO-CLC,

Petitioner

v.

UNITED STATES OF AMERICA;

and
SURFACE TRANSPORTATION BOARD,

RespondentsUnion Railroad Company ("URR") and

Bessemer and Lake Erie Railroad Company ("B&LE"),

Intervenors* *(See Clerk Order of 2/16/99)

On Petition for Review of an Order of the Surface Transportation Board enter ed in STB Finance Docket No. 31363 (Sub-No. 3)

Argued January 25, 2000

Before: GREENBERG,** NYGAARD and ROTH, Circuit Judges

(Opinion filed: March 1, 2001)

Jeffrey S. Berlin, Esquire (Ar gued) Mark E. Martin, Esquire Sidley & Austin 1722 Eye Street, N.W.
Suite 300 Washington, DC 20006

Attorneys for Appellee/Intervenors

David R. Jury (Argued)
Assistant General Counsel
United Steelworkers of America 5 Gateway Center Pittsburgh, PA 15222

Attorney for Appellants/Petitioner

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** After this case was argued, but prior to the iss uance of this opinion, Judge Greenberg took senior status on June 30, 2000

.

2Robert J. Wiggers, Esquire

John J. Powers, III, Esquire United States Department of Justice Antitrust Division, Room 10535 601 D Street, N.W. Patrick Henry Building Washington, DC 20530

Attorneys for Respondent

Henri F. Rush

General Counsel Theodore K. Kalick, Esquire (Argued) Surface Transportation Board
Office of General Counsel 1925 K Street, N.W.
Suite 600 Washington, DC 20423

Attorneys for Surface Transportation Board Respondent

OPINION OF THE COURT

ROTH, Circuit Judge:

These consolidated cases present the question wheth er a federal district court has subject matter jurisdict ion to adjudicate challenges to changes to a collective ba r gaining agreement, made in connection with a rail mer ger authorized by the Surface Transportation Board (STB ). The
District Court and the STB concluded that the latte r has exclusive authority to resolve labor disputes arisi ng out of STB-approved rail consolidations. For the r easons set out below, we will affirm the decision of the District Court and deny the petition for review of the decision of the STB.

I. Factual and Procedural History

In 1988, Transtar, Inc., a transportation holding company located in Monroeville, Pennsylvania, acqui red control of the Union Railroad Company and the Besse mer and Lake Erie Railroad Company, along withfive othe r rail

3carriers and one water carrier. This consolidation was

achieved pursuant to an Interstate Commerce Commiss ion (ICC) authorization (Control Order), which, under 4 9 U.S.C. S 10505, exempted the transaction from the prior ap proval requirements of 49 U.S.C. SS 10746, 11321, and 1134 3.1 Blackstone Capital Partners, L.P., and USX Corporat ion -- Exemption from 49 U.S.C. 10746, 11321 and 11343, Finance Docket No. 31363, served Dec. 23, 1988. The ICC found that exempting the transaction would "minimiz [e] administrative expense" and "foster sound economic conditions and encourage efficient management." Id. slip op. at 2. When the ICC authorized a merger , it was required by 49 U.S.C. S 11326 to impose labor pr otections f or affected employees. Here, the ICC complied with S 1 1326 by applying the New York Dock employee protective cond itions.

The New York Dock conditions ar e those adopted in New York Dock Ry. - Control - Br ooklyn Eastern Distric t Terminal, 360 I.C.C. 60, 84 (1979), aff 'd. sub. no m. New York Dock Ry. v. United States, 609 F .2d 83 (2d Ci r. 1979). Under New York Dock, changes r elated to authorized transactions are accomplished through implementing agreements negotiated between the rail carrier and representatives of the employees. If the parties ca nnot agree to the terms and conditions of the implementing agr eement, either party may unilaterally invoke an arbitration proceeding to resolve the dispute.2

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1. The ICC Termination Act of 1995, Pub. L. No. 104 -88, 109 Stat. 803, abolished the ICC (S 101, 109 Stat. at 804) and tra nsferred its remaining functions to the Surface Transportation Board (STB) effective January 1, 1996. The Act also resulted in the renumbering of v arious provisions of the ICA. Following are the former section numbers t hat are relevant here with the new numbers in brackets: S 10505[S 10502]; S 11341 [S 11321]; S 11347 [S 11326]. The new pr ovisions were re-enac ted without substantive change. In referring to the statute in this opinion, we will employ the current section numbering.

2. More specifically, the New York Dock conditions provide compensatory benefits to employees who are adversely af fected b y a railroad merger or control transaction, including protecting affected employees' wages for up to six years. The New York Dock conditions also fix procedures for making adjustments in workforces and labor agr eeme nts that will permit carriers to implement an authorized transaction. Ar ticle I, S 4 requires a

4Prior to the 1988 consolidation, the Union Railr oa d

Company and the Bessemer and Lake Erie Railr oad Company (collectively, the Railroad) had maintained separate accounting departments. The workers in eac h of these departments worked solely for their respectiv e carriers and under separate collective bargaining agreements. The clerical workers employed by Union
Railroad were members of the United Steelworkers of America (USWA); the clerical workers of Bessemer an d Lake Erie were members of the Transportation Communicati ons International Union.

As part of the implementation of the 1988 Contr ol Order, the Railroad sought to coordinate certain clerical work by moving Union Railroad's accounting department to Bessemer and Lake Erie Railroad. As requir ed by Ar ticle 1, S 4, of the New York Dock conditions, the Railroad notified the unions of its proposed coordination in a letter dated September 3, 1996. The notice stated that nine new positions would be established at Bessemer and Lake Erie Railroad to perform the consolidated work; nine pos itions at Union Railroad would thereby be eliminated. The notice also explained that the nine former Union Railroad employees would be incorporated into the existing Bessemer and Lake Erie Railroad clerical seniority roster according to their Union Railroad seniority rank.

The USWA, the Union Railroad clerical union, claime d that the proposed coordination of work would violat e a scope rule contained in the United Railroad/USW A's collective bargaining agreement, which forbade non- Union Railroad employees from perfor ming its accounting work.3

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carrier to give affected employees ninety days' adv ance notice of a proposed transaction. The parties must begin negoti ation of an implementing agreement within ten days of the notic e; after thirty days, either party may submit the dispute to arbitration before an arbitrator acting pursuant to STB authority. If the parties ar e unable to select an arbitrator within five days, they may ask the Natio nal Mediation Board to appoint one. The arbitration hearing must begin within twenty days of the arbitrator's designation and the decision is to be rendered within thirty days of the hearing. 360 I.C.C. at 84, 85.

3. The scope rule provided: "[If][a]ny person outsi de the bargaining unit or any person not covered by the bargaining unit pe rforms work in

5The USWA maintained that changes to the scope rule must

be made pursuant to the Railway Labor Act (RLA), 45 U.S.C. SS 151 et seq. The USW A also argued that it was not a party to any other agreement, such as the W ashin gton Job Protection Agreement of 1936,4 that would autho rize the contemplated changes. Accordingly, the USW A as serted that it considered the Railroad's letter of Septemb er 3, 1996, detailing the planned coordination, as a noti ce of proposed changes in the collective bargaining agree ment
under S 6 of the RLA.

On October 26, 1996, the Railroad responded by providing formal notice that it was invoking arbitr ation under Article I, S 4, of New York Dock. The USWA co untered in a letter dated November 1, 1996, that it could n ot be compelled to arbitrate because the RLA allows chang es to existing collective bargaining agreements only if t he changes are arbitrated with the mutual consent of b oth parties. 45 U.S.C. S 157. It would ther efore consi der the
Railroad's invocation of arbitration under New York Dock as a termination of voluntary negotiations underS 6 of the
RLA. The USWA further asserted that it would not ai d in
the selection of a New York Dock arbitrator. The Ra ilroad subsequently requested the National Mediation Board (NMB) to appoint a neutral referee to arbitrate the dispute. The NMB appointed Arbitrator Witt.

On October 29, 1996, the USWA served the Railroad w ith an RLA S 6 bargaining proposal, asking for numerous

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violation of this section and the employee who othe rwise would have performed this work can reasonably be identified, t he Company shall pay such employee the applicable standard hourly ra te for the time involved or for four (4) hours, whichever is gr eat er." This rule was
first adopted in 1978 and subsequently revised in 1981.

4. The Washington Job Protection Agr eement was sig ned by many of the nation's rail carriers and unions in 1936. It r equ ired carriers to compensate employees dismissed or displaced as a r esult of railroad mergers and to pay relocating costs. It also provid ed that carriers give notice of consolidation to employees and to negotia te implementing agreements for coordinating workfor ces. Disputes c oncerning the interpretation of agreements were submitted to bind ing arbitration. See New York Dock, 609 F. at 87.

6changes to the collective bargaining agr eement. Th e

Railroad responded by filing this action, seeking d eclaratory and injunctive relief under the Declaratory Judgeme nt Act, 28 U.S.C. S 2001, and the RLA, 45 U.S.C. S 151. The Railroad sought a declaration that the USW A's Octo ber 29, 1996, S 6 notice was premature because of a morator ium clause in the existing collective bargaining agreem ent and that self-help was not available.

The USWA filed its counterclaim on December 9, 1996
, seeking declaratory and injunctive relief pr eventi ng the Railroad from carrying out its proposed coordinatio n of clerical workers through the New York Dock arbitrat ion procedure. Compelled arbitration of the dispute und er this procedure, the USWA claimed, would violate its righ ts
under the RLA. The USWA next filed a motion for sum mary judgment, with respect to both the Railr oad's clai m and its counterclaim. The Railroad, in tur n, filed a motio n to dismiss the counterclaim for lack of subject matter jurisdiction.

On November 24, 1997, the District Court found, int er alia, that it lacked subject matter jurisdiction ov er the
USWA's counterclaim: "A review of the relevant case law persuades me that the propriety of the Railr oad's invocation of the New York Dock process must be resolved by th e STB, and by the Court of Appeals. I do not have jurisdic tion over these matters." Union Railroad Company v. United Steelworkers of America, No. 96-2095, slip op. at 8 (WDPA, Nov. 1997). The USWA timely appealed the District C ourt's November 23, 1997, dismissal.5

While the action was pending in the District Court, the New York Dock arbitration proceeded, with the USWA preserving its objections to the arbitrator's juris diction. On October 21, 1997, Arbitrator Witt issued her award (Witt Award), which imposed, with a few modifications, th e implementing agreement that the Railroad had propos ed. On November 10, 1997, the USWA petitioned the STB f or an administrative review of the Witt A ward, pursua nt to 49

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5. The District Court has also granted USW A's moti on for summary judgment on the complaint, making the order appeale d from a final

order.

7C.F.R. S 1115.8. By a decision dated December 16, 1 998,

the STB declined review of the Witt A ward. Union R ailroadCompany and Bessemer and Lake Erie RailroadArbitration Review - United Steel Workers of Americ a, STB Finance Docket No. 31363 (Sub-No. 3), served Dec, 1 6, 1998. The USWA filed a timely petition for review o f the
STB decision.

II. Jurisdiction

The District Court dismissed the USWA's counterclai m for lack of subject matter jurisdiction. We have ju risdiction under 28 U.S.C. S 1291 to review thefinal judgment of the
District Court.

The STB had jurisdiction over the USWA's petition t o review the arbitral decision under 49 U.S.C.SS 1050 2, 11323, and 11326. Our jurisdiction over the USW A's petition to review the STB's decision is based on 2 8 U.S.C. SS 2321(a), 2342(5), and 2344.

III. Standard of Review

We exercise plenary review over the District Court' s dismissal of the USWA's counterclaim for lack of su bject matter jurisdiction. See Erienet, Inc. v. V elocity Net, Inc., 156 F.3d 513, 514 (3d Cir. 1998).

We may not upset the decision of the STB unless we find that it is arbitrary, capricious, or in excess of i ts statutory authority. See National Small Shipments T raffic Co nference, Inc., v. United States, 887 F.2d 443, 445 (3d Cir. 1989).

IV. Discussion

A. The District Court Decision

The jurisdictional question at issue here--whether the District Court had subject matter jurisdiction to a djudicate the USWA's challenge to the Railroad's implementati on of its 1988 ICC-authorized consolidation--requir es us to examine the relationship between the Railr oad Labo r Act and the Interstate Commerce Act. The USW A argues t hat the RLA and the ICA are "co-equal" and complementar y

8statutory schemes and that, therefore, the District Court

had general federal subject matter jurisdiction pur suant to 28 U.S.C. S 1331 to hear its counterclaim seeking enforcement of its rights under the RLA. The Railro ad contends that the ICA is the exclusive statutory sc heme for dealing with railroad consolidations and that accor dingly the STB has exclusive jurisdiction to consider disp utes concerning changes to labor agreements which are necessary to implement an STB-authorized consolidat ion. We agree with the Railroad.

The RLA was passed in 1926 to encourage collective bargaining between railroads and their employees, t hereby preventing strikes and interruptions to interstate
commerce. See Detroit and Toledo Shore Line Railroa d Co. v. United Transportation Union, 396 U.S. 142, 148 (196 9). To this end, the RLA establishes elaborate procedures for the negotiation, enforcement, and modification of colle ctive bargaining agreements between railr oad carriers an d railroad labor unions. The RLA also imposes upon pa rties the obligation to engage in good-faith negotiations and to maintain status quo without resorting to self-help while the RLA's remedies are being exhausted. The exhaustion of the RLA's remedies is, however, "an almost interminable process." Id. at 149. "[T]he procedures of the Act are purposely long and drawn out, based on the hope tha t reason and practical considerations will pr ovide i n time an agreement that resolves the dispute." Brotherhood o f Ry. & Steamship Clerks, etc. v. Florida East Coast Ry. Co . , 384 U.S. 238, 246 (1966).

The ICA, on the other hand, gives substance to what has been, since the adoption of the Transportation Act of 1920, the nation's policy of pursuing railroad carrier co nsolidation as a means of promoting the health and efficiency o f the railroad industry: "[C]onsolidation of the railroad s of the country, in the interest of economy and efficiency, became an established national policy . . . so intimately r elated to the maintenance of an adequate and efficient rail transportation system that the `public inter est' i n the one
cannot be disassociated from that in the other ." U nited States v. Lowden, 308 U.S. 225, 232 (1939); see als o, St. Joe Paper Co. v. Atlantic Coast Line R. Co., 347 U. S. 298,

9315-321 (1954). The ICA grants the STB exclusive au thority

to approve mergers and acquisitions of transportati on carriers within its jurisdiction. 49 U.S.C. S 11323 (a). It also provides that STB-authorized consolidations ar e ex empted from "the antitrust laws and from all other law, in cluding State and municipal law, as necessary to let that r ail carrier . . . carry out the transaction." 49 U.S.C. S 11341(a).6 The authorization may take one of two forms. The ST B may, under 49 U.S.C. SS 11323-11324, affir matively approve a merger, acquisition of control, or other rail consolidation by determining that it is "consistent with the public interest." U.S.C. S 11324(c). Alternatively, 49 U.S.C.
S 10505 allows the STB to authorize a consolidation by granting an exemption for the prior approval r equi rements of SS 11323-11324.7 In either case, the STB is requ ired to impose labor protective measures for af fected empl oyees as a condition of consolidation authorizations. 49 U.S .C.
S 11326.

Our analysis of the relationship between the RLA an d the ICA begins with the most recent Supreme Court decis ion on the subject, Norfolk and Wester n Ry. Co. v. Americ an Train Dispatchers' Ass'n., 499 U.S. 117, 132 (1991). Ther e, labor unions in two separate cases challenged ICC or ders that relieved the railroad carriers from collective barg aining

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6. 49 U.S.C. S 11321(a) provides:

The authority of the Board under this subch apter is exclusive. A rail carrier or corporation participating in or r esulting from a transaction approved by or exempted by the B oar d under this subchapter may carry out the transaction, ow n and operate property, and exercise control or franchises acquired through the transaction without the approval of a State authority. A rail carrier, corporation, or person participating in that appr oved or exempted transaction is exempt from the antitrust law s and from all other law, including State and municipal law, as n ecessary to let that
rail carrier, corporation, or person carry out th e transaction, hold, maintain, and operate property, and exer cis e control or franchises acquired through the transaction.

7. Exemption from the full approval pr ocess is app ropriate when "the transaction or service is of limited scope" or when "the application in whole or in part of the provision is not needed to protect shippers from the abuse of market power." 49 U.S.C.S 10505.

10agreement obligations. The unions argued that S 113 21(a),

which confers to transactions necessary for the implementation of ICC-authorized consolidations imm unity from "all other law," does not abr ogate existing c ollective bargaining agreements. Modification of such agreeme nts, the unions insisted, must be made pursuant to the R LA.

The Supreme Court disagreed: "RLA is a law that, un der [S 11321(a)], is superseded when an ICC-approved transaction requires abrogation of collective-barga ining obligations." Id. at 132 (citations omitted). This conclusion, the Supreme Court explained, is consistent with the ICA's overall statutory scheme. The ICA was designed to p r omote "economy and efficiency in interstate transportatio n by the removal of the burdens of excessive expenditure." T exas v. United States, 292 U.S. 522, 534-35 (1934). Recogni zing that consolidations of carriers would result in emp loyee dismissals, transfers and other changes detrimental to employees, the ICA mandated that the ICC impose safeguards, like the New York Dock employee protec tive conditions, to ensure that employee inter ests of t he affected parties are protected. Section 11321(a), in turn, g uaranteed that, once these interests are accounted for, the I CC would be free from requirements, such as provisions of th e RLA, that might impede the consolidation. If the RLA wer e not superseded by the ICA, the Court observed, "rail ca rrier consolidations would be difficult, if not impossibl e, to achieve," because "[t]he resolution process for maj or disputes under the RLA would so delay the pr oposed transfer of operations that any efficiencies the ca rriers sought would be defeated." Dispatchers, 499 U.S. at 133 (citations omitted).8

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8. The Union argues, based in part on our decision in Railway Labor Executives' Ass'n. v. Pennsylvania & Lake Erie Rail r oad Co., 845 F.2d 420 (3d. Cir. 1988), that the RLA and the ICA are c o-equal and complementary sources of legal rights. In that case , we focused on the differing policy goals animating the RLA and the IC A. The former, we stated, advances the policy of avoiding "disruption s in the railroad industry by promoting collective bargaining and pre venting strikes." Id. at 436. The latter promoted the policy goal of"enco urag[ing] the flow of capital into the [rail] industry" and "expedit[ing] the approval process

so that efficient transactions are not derailed by red tape." Id. In light of

11Although Dispatchers did not directly address the

jurisdictional question at issue here, the Ninth an d Fourth Circuit Courts of Appeals have interpreted Dispatch ers, and the relationship between the RLA and the ICA that i t envisions, as compelling the conclusion that the IC C (now the STB), not the district court, has the exclusive authority to resolve labor disputes that arise fr om implemen ting an ICC (or STB)-authorized transaction. Railway Labor Executives' Ass'n. v. Southern Pacific T ransportat ion Co., 7 F.3d 902 (9th Cir. 1993); Nor folk & Western Ry. v. Brotherhood of Railroad Signalmen, 164 F.3d 847 (4t h Cir. 1998).

In Southern Pacific, the ICC appr oved a merger of certain railroads pursuant to 49 U.S.C. S 11321(a) and, in compliance with 49 U.S.C. S 11326, imposed the New York Dock conditions to protect existing and future empl oyees from the adverse effects of the mer ger. When time came for the merged railroad to coordinate work, it claimed, believing that the coordination was incident to the mer ger, that the changes should be implemented through the New York Dock procedures. The union ther e, like the USWA in the present case, countered that changes to the existin g collective bargaining agreement could be made only through RLA procedures. The union br ought suit, cl aiming that a New York Dock arbitration of its dispute wit hout its consent would violate its RLA rights.

The Ninth Circuit affirmed the district court's rul ing that it lacked subject matter jurisdiction over the suit . The court stated that the Supreme Court's Dispatchers decisi on, while not directly on point, was determinative:

First of all, Dispatchers reiterates the pro position that under the ICA, "the Interstate Commerce Comm ission

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these differences, we explained, the judiciary "mus t reconcile the two statutes as much as possible and attempt to r each a result that will produce the minimum possible conflict with Congress ional intent." Id. at 423. But in invoking our decision in P&LE, the Unio n neglects to acknowledge that we were without the benefit of the Supreme Court's decision in Dispatchers. To the extent our observat ions on the relationship between the RLA and the ICA conflict w ith those of the Supreme Court in Dispatchers, ours must give way.

12[has] exclusive authority to examine, condit ion, and

approve proposed mergers and consolidations of transportation carriers within its jurisdict ion." Second, Dispatchers makes clear that under Section [ 11321(a)], the ICC has the effective power of exempting parties to a railroad merger from any pr ovision of the RLA, by approving the merger. It follows from these propositions that where a railroad which has been a party to an ICC approved merger claims that certain proposed actions are incident to that mer ge r and exempt from RLA procedures under section [11 321(a)], the ICC has exclusive authority to resolve a challenge
to these claims.

Southern Pacific, 7 F.3d at 906 (internal citations omitted).
The court went on to state that the conclusion that jurisdiction belongs to the ICC and not the distric t court also comports with the policy objective underlying the ICA-- the promotion of economy and efficiency of intersta te transportation. See Dispatchers, 499 U.S. at 132; T exas v. United States, 292 U.S. at 134. Integral to meeting this objective is the authority vested in the ICC to sub stitute RLA procedures with the expedited dispute resolutio n prescribed by the New York Dock conditions. But, if parties were allowed to litigate in federal district court the propriety of invoking the New York Dock pr ocess, the ICC's a bility to meet this stated objective of facilitating rail con solidations would be hindered: "We would invite a barrage of co llateral challenges to the ICC's authority which would be li kely to frustrate and delay the administration of mer gers in a way that section [11321(a)] was clearly meant to avoid. " Id. at
907.

The Fourth Circuit in Norfolk & W estern Ry. v. Brotherhood of Railroad Signalmen, 164 F.3d 847 (4t h Cir. 1998) reached the same conclusion. As in Southern P acific and the present case, the unions in Signalmen sough t a declaratory judgement in district court that change s to collective bargaining agreements in connection with the implementation of a STB-authorized rail consolidati on must be made pursuant to RLA procedures. The district co urt dismissed the case for lack of subject matter juris diction. The court of appeals found that the dismissal was p r oper.

13Drawing on Dispatchers, the court held that within the

context of an STB-authorized merger,"any effort to challenge changes in the collective bargaining agre ements proposed . . . must be presented in thefirst instan ce to the STB under its exclusive jurisdiction and may not be negotiated under the RLA."9Id. at 855.

The USWA argues that Dispatchers , Southern Pacific , and Signalmen are inapposite because the consolidations in those cases were authorized through the full approv al process of S 11323 while the merger here was achiev ed through the abbreviated process ofS 10502. This distinction is critical, according to the USW A, be cause the

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9. The Eleventh Circuit came to the same conclusion --although by way of a different rationale--in Brotherhood Ry. Carmen , Div. Of Transp. Comm. Int'l Union (TCU) v. CSX Transp., Inc. , 855 F.2d 745 (11th Cir. 1988), a pre-Dispatchers case. Ther e, the ICC appr oved a merger of certain rail carriers and incident to that appr ova l imposed the New York Dock conditions. The consolidated carrier then prop osed to close down a repair shop and transfer the work and employees to another facility. Attempts between the carrier and the union r eprese nting the affected employees to negotiate an implementing agreement on the transfer failed and the carrier sought arbitration of the dispute u nder New York Dock.
The union in turn filed an action in district court arguing, inter alia,

that the implementing agreement was not gover ned by the New York Dock procedures and that compulsory arbitration would vi olate the RLA. While the action in district court was pending, a New Yor k Dock arbitrator considered the dispute and rendered a decision. Bot h parties appealed the arbitrator's decision to the ICC. Before the ap peal was heard by the ICC, the district court granted summary judgment to the carrier.

A panel of the Eleventh Circuit vacated the distric t court's order, finding that the district court lacked subject matt er jurisdiction to adjudicate the dispute. The court based its decisio n on Congress's grant of exclusive jurisdiction to the courts of appeals to review ICC orders.

28 U.S.C. SS 2231(a), 2342(5). The court explained: "T he arbitration opinion and award . . . is authoritative only as an extensi on of the authority of the ICC. . . . [T]he present lawsuit is, in effect, a collateral attack on

the arbitration award; it is an attempt by [the union] to have the district court set aside the arbitration award, rather than going through the normal channels of appeal to the ICC and then to th e Court of Appeals." Id. at 745. By assuming jurisdiction over the dispu te, the court ruled, the district court improperly interfer ed with the normal appeals procedure and encroached on the court of appeals' e xclusive authority to
review ICC decisions. Id.

14S 11321(a) exemption "from all other laws" applies only to

S 11323 transactions. This argument is based on the language of S 11321(a), which provides that "[t]he authority of the Board under this subchapter is exclusive." ( emphasis added). Section 10502 is not in the same subchapter as S 11321. See Railway Labor Executive Ass'n v. Unite d States, 987 F.2d 806, 813 (D.C. Cir . 1993) ("That decision [Dispatchers] is not applicable her e, however, bec ause S [11321(a)] applies to transactions exempted under subchapter III, of which it is a part. The Commissi on exempted the transaction at issue here underS [1050 2], which is in subchapter I"). The USWA ar gues, there fore, that when the STB is not given the power of making exemptions--that is, when its actions are not taken pursuant to S 11321(a)--there is no basis for grant ing exclusive jurisdiction to the STB.

The USWA's argument misses the mark, confusing the STB's scope of exemption under S 11321(a) with its jurisdictional authority over disputes arising out of the implementation of railroad consolidations. Although S 11321(a) expressly can preempt the RLA, the STB's jurisdictional exclusivity does not depend alone on S 11321(a). Rather, the STB also finds jurisdiction al authority in the overall statutory design of the IC A. Congress, in seeking to promote the economy and eff iciency of the rail industry, has given the STB considerabl e authority over railroads, granting to it exclusive jurisdiction to authorize railroad mergers and consolidations. 4 9 U.S.C. S 11321(a). See Dispatchers, 499 U.S. at 119-20.

Among the matters which the ICA puts within the exclusive jurisdiction of the STB is the relationsh ip between the railroad and its employees. Section 11324 manda tes that the STB consider when approving a mer ger "the interest of the rail carrier employees af fected by the transaction." 49 U.S.C. S 11324(b)(4). Mor e import antly, S 11326 grants to the STB both the statutory author ity and the mandate to impose on the rail carrier, as a con dition of consolidation authorization, a "fair arrangement" t hat will protect the employees affected by the consolidation . All this demonstrates, as the Fourth Circuit noted in Signal men, that "to the extent that a transaction subject to t he STB's

15approval impacts collective bargaining agreements o r the

relationship between railroads and their employees, the STB has exclusive jurisdiction in the first instanc e to consider the issues." 164 F.3d at 855. Thus, the ex clusive jurisdiction to resolve labor problems in a merger exists independently of the S 11321(a) exemption of such a merger from other laws.10

The USWA contends, however, that interpreting the I CA as vesting the STB with exclusive jurisdiction to a djudicate all issues concerning railroad-employee r elationsh ips which arise as a result of approved mergers is too sweepi ng. For this argument, it relies on the Seventh Circuit's d ecision in Harris v. Union Pacific Railroad, 141 F.3d 740 (7th Cir. 1998). There the court considered whether the ICA t akes away from the district court jurisdiction to consid er civil rights claims brought by two union members against a railroad carrier. The ICC had appr oved Union Pacif ic's

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10. To the extent that S 10502 mer gers may receive exclusive STB resolution of employee relations issues but not S 1 1321(a) exemption from "other laws," the justification for this resul t may be found in the fact that S 10502 mergers by definition are of "lim ited scope."

That said, we note that the USWA's ef fort to draw a distinction between an approved transaction under S 11321(a) an d an exempted transaction under S 10502 has been rejected by the ICC, which found that S 11321(a) does apply to S 10502 transactions. In Rio Grande Industries, Inc., et al. -- Trackage Rights-- Burli ngton Northern R.R. Lines Between Kansas City, MO and Chicago, IL, ICC Finance Docket No. 31730, 1991 ICC LEXIS 57, served March 12, 1991, at *9-11, the ICC held that immunity under S 11321(a) extends to tran sactions exempted
under S 10502. Accord Brother hood of Locomotive En gineers v. Boston & Maine Corp., 788 F.2d 794, 799-801 (1st Cir. 1986).

The conclusion that S 11321(a) applies to both"appr oved" and "exempted" transactions is consistent with polices behind the Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1895 (1980), which
broadened and liberalized S 10502 in furtherance of the ICA's goal of revitalizing the railroad industry. See Coal Export ers Ass'n v. United States, 745 F.2d 76, 80-82 (D.C. Cir . 1984). By in creasing the ICC's ability to exercise its power under S 10502, Congre ss indicated that the S 10502 procedure was an equal and even preferred w ay of regulating the railroad industry. See H.R. Rep. No. 96-1430, 9 6th Cong., 2d Sess. 105 (1980), reprinted in 1980 U.S.C.C.A.N. 4110, 41 37.

16acquisition of another carrier pursuant to S 11321( a).

Although the ICC imposed the New York Dock conditio ns, it also permitted labor and management to negotiate di fferent conditions "in a labor agreement enter ed into prio r to consolidation, in which case protection shall be at the negotiated level, subject to our review to assure f air and equitable treatment of affected employees." Id. at 741 (quoting ICC order). The parties then r eached an a lternative agreement for separation benefits. To qualify for t he separation allowance, however, an employee on leave had to return to work within twenty days. Neither the unio n nor the management sought the ICC's review of the alter native
agreement.

The two plaintiffs in Harris wer e on maternity lea ve at the time the labor agreement was posted; neither r etur ned within twenty days. Their applications for separati on benefits were denied. They then filed suit for sex
discrimination in district court. The court dismiss ed the action for lack of subject matter jurisdiction. The Seventh Circuit reversed, holding that the civil rights law s did not put any obstacle in the way of the railroad mer ger at issue. None of the relief sought by the plaintif fs would be incompatible with the ICC's approval of the mer ger . It would be pointless, therefore, to deny jurisdiction to the district court in order to refer the civil rights i ssue to the

STB.

The USWA urges us to follow Harris by requiring th at the STB articulate in its approval of a mer ger the law s that are necessary to displace. We do not read this result i nto Harris. We conclude that a case involving civil rig hts issues, arising from the application of a non-STB appr oved agreement to two members of a class, is distinguish able
from the situation here where New York Dock arbitra tion has authorized changes in the labor agreement, whic h changes are necessary to implement the transaction. For that reason, even if we were bound to follow the Se venth Circuit, we would find Harris to be distinguishable .11

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11. In a related argument, the USW A contends that it cannot be made subject to the New York Dock pr ocedures because it was not a signatory to the Washington Job Protection Agr eement of 1936 . On the USWA's

17We conclude that the ICA--in its language and overa ll

statutory design--reflects Congress's commitment to a national transportation policy that favors the cons olidation of railroads. And Congress has decided that such a policy is best pursued by freeing rail consolidations from the burdensome delays and expenditures associated with RLA procedures. Thus, the ICA and the RLA ar e not complementary and co-equal statutory schemes, as th e USWA proposes. The RLA must yield to the ICA when i t impedes the implementation of a STB-approved consolidation. Moreover, the STB has the exclusive jurisdiction to adjudicate challenges to such an implementation. Accordingly, we will affir m the Di strict
Court's dismissal of the USWA's counter claim for l ack of subject matter jurisdiction.

B. The STB Decision

We now turn to the USWA's petition for review of th e STB decision of December 17, 1998. The standard the STB must apply in reviewing arbitration decisions is pr ovid ed in

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theory, only signatories to the Agreement have barg ained away their RLA right to refuse to arbitration under New York Dock procedures. Wefind that this argument is without merit and agr ee with the District Court's conclusion that the ICC's authority S under 11326(a ) to impose labor protections is "statutory in nature, and owe nothin g to the WJPA."

Although the WJPA provisions are, in many respects, duplicated in the New York Dock conditions, the two sets of labor pro tections derive their authority from different sour ces and are not equiv alent in scope. The WJPA is a contract, the provisions of which bind on ly those carriers and unions that consented to the Agreement. The New Yor k Dock conditions, on the other hand, arose as a result of Congression al mandate. As part of the Transportation Act of 1940, Congr ess grante d to the ICC express statutory authority to impose employee protection u pon approval of railroad mergers. Pub. L. No. 76-785, 54 Stat. 898 (1941) (codified as amended at 49 U.S.C. SS 10101-11901 (1998)). It is pursuant to this statutory authority that the ICC developed the stan dard set of labor protections contained in New York Dock. The ICC's a uthority to impose the New York Dock conditions--and to make changes t o labor agreements pursuant to those conditions--derives, t herefore, from the
ICA and reaches those carriers and unions who were not signatories to

the WJPA.

18Chicago & North Western Transportation Company, 3 I .C.C.

2d 729 (1987) ("Lace Curtain"), af f 'd. sub. nom.
International Brotherhood of Electrical Workers v. ICC, 862 F.2d 330 (D.C. Cir. 1988). 49 CFR 1115.8. Under Lac e Curtain, the arbitrator's decision is given deferen ce and the STB will review "issues of causation, calculation o f benefits, or the resolution of factual questions" only if the re is egregious error. Review is thus limited to "recurri ng or otherwise significant issues of general importance regarding the interpretation of our labor conditions." 3 I.C. C. at 735- 36. Based on this, the STB declined to review and v acate
the Witt Award: "We find no reason to disturb the
arbitrator's award under the Lace Curtain standard s. There is no issue of first impression; and any issues tha t are likely to recur have already been thor oughly resol ved by us and the courts. [The USWA] has not shown egregious error or any other grounds requiring review of the arbitr ation award here." Union Railroad Company and Bessemer an d
Lake Erie Railroad -- Arbitration Review-- United S teel Workers of America, STB Finance Docket No. 31363 (S ubNo. 3), served Dec, 16, 1998, slip op. at 7-8.

The USWA presents in this appeal no challenges to t he factual determinations made by the arbitrator , rel ying solely on the argument it made before the District Court t hat the STB does not have exclusive jurisdiction to adjudic ate the USWA's RLA-based challenges to the implementation o f the 1988 ICC-authorized consolidation. In light of our analysis in the previous section, we cannot say that the Boa rd's conclusion that it has exclusive jurisdiction to co nsider whether the ICA preempts the RLA was arbitrary, capricious, or otherwise not in accordance with law . See National Small Shipments Traffic Confer ence, Inc. v. United States, 887 F.2d 443, 445 (1989). W e will, therefo re, deny the petition for review of the STB's decision not t o review
the Witt Award.

V. Conclusion

For the foregoing reasons, we will affir m the judg ment of the District Court and we will deny the petition fo r review of the decision of the Surface Transportation Board

.

19A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

20