The 'cram down' breakdown

How the UTU 'agreement' to end cram down only made things worse

Talks between the AFL-CIO affiliated rail unions and the National Railway Labor Conference (NRLC) to end the practice known as "cram down" collapsed during the last week of March. To understand why the negotiations failed, as well as what the future holds, it is important to know how "cram down" came to be, and how an agreement recently reached by the United Transportation Union (UTU) actually made "cram down" worse.

Early History

The Transportation Act of 1920 introduced the concept of preemption, or overriding, of conflicting laws into Interstate Commerce Commission (ICC) oversight of railroad mergers. Because a variety of state laws and federal anti-trust statutes often were used to derail mergers, and since the federal government adopted a national rail transportation policy of consolidation of America's railroads after World War I, preemption made perfect sense. However, nothing in the legislative history of the Act - or in ICC or court decisions - suggested that preemption was applicable to railroad labor relations, or to the collective bargaining agreements (CBAs) between any rail union and the carriers involved in mergers or other financial transactions.

Labor and management reached a national agreement in 1936, known as the Washington Job Protection Agreement (WJPA). The WJPA set forth protective standards to be applied when railroad workers were adversely affected by mergers or consolidations. WJPA required that changes in CBAs had to be negotiated and, although it did permit ultimate arbitration of disputes, there were no time limits for reaching merger implementing agreements.

In 1940, the Interstate Commerce Act (ICA) was amended again. The national policy embodied in the 1920 Act was abandoned, in favor of ICC promotion of voluntary mergers and consolidations. The preemption provisions were continued and language was added, mandating that ICC impose employee protective conditions as a prerequisite for merger approval; however, nothing was said by Congress about forcing changes in existing CBAs. Neither did the carriers attempt to do so in arbitration, nor did any arbitrator find that the CBAs were abrogated or changed as the result of a merger.

During the latter half of the 1950s, the railroad industry tried - for the first time - to "cram down" changes to a CBA by relying on the preemption provisions of the ICA. The ICC rejected this approach in Chicago, St. Paul, Minneapolis & Omaha Ry. - Lease, 295 I.C.C. 701, 702 (1958), holding that "Congress has not conferred upon us the power to determine the disputes which are subject to the Railway Labor Act or questions regarding the jurisdiction of the National Mediation Board, which, in effect, is what North Western requests us to do."

The ICC again expressly rejected the carrier's contention that the preemption provisions of the ICA relieved them of the obligations under their CBA. The ICC held as follows:

"By its terms, [the "cram down" provision] applies only to antitrust and other restraints of law .... Neither the Washington [Job Protection] Agreement nor the specific collective bargaining agreements between these roads and their employees is such a restraint....

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"The designated 'exclusive and plenary power' of the [ICC] ... cannot be so broadly construed as to brush aside ... voluntary contractual agreements made binding by the force of law."

Southern Ry. - Control - Central of Georgia Ry., 331 I.C.C. at 170 (1967). In a 1979 ruling that has become known simply as New York Dock, the ICC imposed employee protective conditions that continue today to be the standard in mergers involving Class I railroads. However, New York Dock did not expand preemption to the collective bargaining arena. In fact, as recently as early 1983, in Brotherhood of Locomotive Engineers v. Chicago & North Western Transp. Co., 360 I.C.C. 857, 861, the ICC once again acknowledged its lack of "expertise to place ourselves into the field of collective bargaining or labor management relations."

"Cram down" since 1983

However, just months later, 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 CBA provisions could be preempted, and substitute provisions "crammed down." Subsequently, two New York Dock arbitrators relied upon this decision to "cram down" CBA changes in creating merger implementing agreements.

What followed was a series of legal challenges that persisted for years. The ICC affirmed the arbitration decisions. The Unions appealed, and the U.S. Court of Appeals for the D.C. Circuit reversed the ICC. The railroad appealed that decision to the United States Supreme Court, which ruled in 1991 that the application of "cram down" to CBAs was legal. Norfolk & Western Ry. v. American Train Dispatchers Ass'n., 499 U.S. 117.

Although the power to preempt - or "cram down" - has been at the discretion of the ICC (and, since 1995, of the Surface Transportation Board (STB), which is the ICC's successor agency), the lack of a clearly-defined standard has permitted "cram down" to be used in an outrageous manner, including in the following circumstances:

In fact, there is no reported case where the ICC or STB overruled an arbitrator's decision to "cram down" agreement changes. As a result, rail unions have been forced to accept inferior implementing agreements, for fear that a New York Dock arbitrator or the STB will "cram down" even worse conditions.

The battle over Linda Morgan

Linda Morgan, a Democrat, was appointed Chair of the ICC by President Clinton in early 1994. She became Chair of the STB when that agency succeeded the ICC. Morgan became the poster child for "cram down" as agreement after agreement was abrogated during her tenure.

Her first term ended on December 31, 1998, but - under the law - she was permitted to continue in office for one more year. If she was not reconfirmed by the Senate by December 31, 1999, she was out.

On May 5, 1999, the AFL-CIO's Executive Council took an extraordinary step and unanimously passed a resolution opposing Morgan's renomination, because of her role as an agent of destruction of CBAs. The entire rail labor movement fought Morgan's renomination, with one exception (UTU).

That fight was in vain, however, because President Clinton renominated Morgan during the early summer. Initially, the renomination was stalled in the Senate, while leaders of the House and Senate committees having jurisdiction over the railroad industry urged labor and management to try to negotiate an end to "cram down."

On September 15th - while the negotiations were moving as slowly as Morgan's renomination - Senator Mike Crapo (R-ID) introduced a bill that was designated as S. 1590. The Crapo Bill provides that the "[Surface Transportation] Board shall not, under any circumstances, have the authority ... [to] break, modify, alter, override, or abrogate, in whole or in part, any provision of any collective bargaining agreement or implementing agreement made between the rail carrier and an authorized representative of the employees of the rail carrier under the Railway Labor Act ... or ... provide th[is] authority ... to any other person, carrier or corporation." In other words, "cram down" would be illegal.

Negotiations between the unions and the NRLC to end "cram down" collapsed without agreement in October, and rail labor geared up for a fight to push the Crapo Bill. Rail labor also convinced Senator Bob Torricelli (D-NJ) to put a "hold" on the Morgan nomination, which stalled it altogether.

What happened next could have been scripted by Machiavelli. Ed Hamberger, President of the Association of American Railroads (AAR) -- the same Ed Hamberger who also recently refused a compromise proposed by Congressman Jim Oberstar to resolve the dispute over railroad retirement -- contacted AFL-CIO Secretary-Treasurer Rich Trumka and offered a moratorium on New York Dock notices, and "cram down," while labor and management negotiated new terms.

Trumka countered by insisting on a moratorium that would last until either legislative enactment of the agreed-upon changes or the end of the 107th Congress, essentially the end of 2002. Hamberger accepted this offer at a Capitol Hill meeting on November 9th, and confirmed his acceptance of the deal in phone calls to the White House, the DOT's General Counsel and Senator Hollings, who had sponsored Morgan's nomination.

Senator Torricelli, who had been under unrelenting pressure to release his "hold," did so, after confirming that the deal had been made. You can guess what happened next. Brother Trumka faxed Hamberger the written agreement outlining the understanding. Hamberger ducked and stalled until after Morgan was reconfirmed, and then reneged on the deal.

Bargaining without leverage

By the second week of December, the UTU - who had opposed the rest of rail labor and had pushed for Morgan's reconfirmation - began clamoring that we should rush back to the table. In January, Brother Trumka convened a meeting with rail labor representatives and offered to remove himself from the talks, if that was what they wanted. The consensus reached was to stay the course, and unite behind our double-crossed leader.

UTU President Little then launched a personal attack on Brother Trumka, and tried to drive a wedge between Rich and the rail unions. When that failed, he went to the table by himself and cut a deal with the carriers that UTU claims "ended cram down." But, instead of ending "cram down" what Little actually agreed to would have:

The latter two provisions are significant, because they represent a grant of rights and powers to the carriers that they do not now have, even under the present, draconian "cram down" practice.

Although the AFL-CIO rail unions unanimously rejected the UTU agreement, faced with the reality of what UTU had done, they returned to the table with the carriers, to see whether the gaping holes in the UTU agreement could be closed.

After a series of intensive negotiations, things fell apart on March 28, with irreconcilable differences over unrestricted seniority district sizes, the ability to use the new rules to transfer agreement workers into non-agreement facilities to remove them from under their CBAs, and the ridiculously broad powers to "cram down" uniform system-wide "administrative procedures."

Where things go from here

Despite deep divisions over railroad retirement reform, the AFL-CIO rail unions have stood shoulder-to-shoulder on "cram down" remarkably well, in no small measure because the UTU is not at the table to prod anyone to engage in a race to the bottom. We must continue to hang tough and remain united on this issue, because the only ultimate success will be the passage of an abolition of "cram down," such as contained in the Crapo Bill, or similar language contained in two other bills pending in the House, which were sponsored by Congressman Oberstar (D-MN) and Congressman Jerry Nadler (D-NY).

At the March 14th meeting of the Rail Labor Division of AFL-CIO's Transportation Trades Department (TTD), a resolution calling for a TTD legislative mobilization to push S. 1590 - Senator Crapo's bill - was unanimously adopted.

That mobilization is in its earliest stages as you read this, and you will be called upon to carry your share of the burden in the coming weeks and months.

Stay tuned.

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