Union Pacific Challenges Palestine Deal

The victory of David over Goliath took place in Palestine, and officials in Palestine (pronounced pal-ess-teen), Texas, are hoping for a similar result as the small city prepares for a court battle with a modern Goliath, Union Pacific.

When a railroad decides to reduce the workforce at any given location, local officials are generally powerless to do anything about it; not so in Palestine, thanks to a contract that guarantees that the railroad will keep a certain minimum number of jobs there. Not surprisingly, that contract doesn’t sit well with the new UP management team charged with implementing the job-cutting precepts of Precision Scheduled Railroading.

The terms of the 150-year-old contract were raised by city officials last April after 30 car shop jobs were cut by the railroad. The contract requires UP to maintain a shop operation and a small percentage of its total workforce in Palestine. Recent system-wide reductions of roughly ten percent have left UP with roughly 38,000 employees. After the cuts last spring, Palestine was left with about 65 UP employees.

One tenet of PSR is the consolidation of shop work at as few locations as possible, and Union Pacific filed a lawsuit on November 27 asking a federal district court to rule that the contract is no longer binding, an indication that it may want to close the Palestine shop.

The remaining jobs and railroad operations put an estimated $5 million annually into the local economy, so Palestine and Anderson County officials have decided to risk the expense of making a fight of it in a jury trial. The city has precedent on its side in the form of a 1977 Fifth Circuit ruling which upheld the contract. One of its attorneys called the UP suit “frivolous” and urged the railroad to drop it.

The UP lawsuit argues that its contract with the city “interferes with the efficient operation of its interstate railroad,” an apparent allusion to the jurisdictional authority of the Surface Transportation Board under the Interstate Commerce Commission Termination Act, a tactic which railroads have employed with great success in overturning regulatory efforts by state and local governments. The Act conveys nearly all regulatory jurisdiction over interstate railroads to the STB, superseding local governments in most matters.

This case would be different in that it would involve a contract in which the railroad was a willing participant, rather than a statute or ordinance adopted by local authorities. No court dates have yet been set.

—Eric Berger, Railfan & Railroad Magazine


This article was posted on: February 6, 2020