SPECIAL BOARD OF ADJUSTMENT

‐ARBITRATION AWARD‐

IN THE MATTER OF ARBITRATION

Kansas City Southern Railway Company and Texas Mexican Railway Company (“Carrier”)

‐versus‐

Brotherhood of Locomotive Engineers and Trainmen (“Organization”)

Board Members Arbitrator Sidney Moreland, Chairman Maqui Parkerson, Carrier Member J. Alan Holdcraft, Organization Member

I. JURISDICTION

This Board of Arbitration (“Board”) was created by the expressed mutual

consent of the parties to binding arbitration following the Carrier’s notice to the

Organization of the Carrier’s intent to change their interchange operational

procedures for trains operating between the U.S.-Mexico border and the Carrier’s

Laredo Yard in Laredo, Texas.

The parties mutually entered into a written agreement outlining the

procedures for resolution of the disputes at impasse. The parties’ December 11,

2019 Arbitration Agreement so dated and entitled, established this Special Board of

Adjustment in accordance with Section 153, Second of the Railway Labor Act. This

Board has a customary tripartite structure consisting of a Carrier Member (Maqui

Parkerson); an Organization Member (J. Alan Holdcraft) and a Neutral

Member/Chairman (Arbitrator Sidney Moreland, IV) empowered to conduct the

arbitration of this matter, and so identified as the undersigned.

II. PARTIES TO THE DISPUTE

Kansas City Southern Railway Company

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The Kansas City Southern Railway Company (“Carrier” and/or “KCSR”) is a

carrier by rail operating within the United States within the meaning of Section 1,

First, of the Railway Labor Act (45 U.S.C. 151).

The Texas Mexican Railway Company

The Texas Mexican Railway Company (“Carrier” and/or “Tex Mex”) is an

affiliate of the Kansas City Southern Railway Company, which owns and operates the

nine miles of railroad tracks between the International Bridge on the U.S.-Mexico

border and the Carrier’s rail yard (“Laredo Yard”) at Laredo, Texas.

Tex Mex and KCSR are both wholly owned by Kansas City Southern and may

collectively be referred to herein as “Carrier”.

Brotherhood of Locomotive Engineers and Trainmen

The Brotherhood of Locomotive Engineers and Trainmen (“BLET” or

“Organization”) is an employee representative within the meaning of Section 1,

Sixth, of the Railway Labor Act (45 U.S.C. 151) for the Carrier’s Engineers and

Trainmen (“T&E” crews) in positions designated by agreement for purposes of

collective bargaining.

III. BACKGROUND OF DISPUTE

In July 2017, the Organization wrote the Carrier concerning reports that the

Carrier was planning to make changes concerning the manner in which their trains

traveling out of Mexico into the U.S. were going to be operated from the border into

the U.S. and nine miles north to Carrier’s Laredo Yard.

On 8-11-17, the parties met in Laredo, Texas where the Carrier advised the

Organization of Carrier’s intent to end the procedure of switching train crews at the

border, and instead allow Mexican National crews to operate the arriving trains of

Kansas City Southern de Mexico (“KCSM”) across the border and north to the

Carrier’s rail yard (Laredo Yard) 9 miles away for purposes of interchange between

the Carrier and KCSM. The Organization objects to the change, which affectively

replaces the American crews operating the KCSM trains from the border and into

the U.S. with KCSM’s Mexican National crews under the Carrier’s plan put forth. The

Organization asserts the Carrier seeks to abolish jobs of their represented members

(Engineers, Conductors, and Trainmen) who are FRA-certified and have

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traditionally operated KCSM’s trains from the border into the U.S. to the Laredo

Yard for interchange.

Historically, whenever the KCSM’s train(s) operating in Mexico by Mexican

nationals traveled into the U.S., the Mexican crew stopped and de-boarded the train

on the International Bridge connecting the two countries. An American FRA-

certified crew then boarded the freight train and operated it into the United States

to Laredo Yard and beyond. The Carrier has unilaterally changed this process by

now allowing the KCSM Mexican crews to bring their trains into the U.S. all the way

to Laredo Yard; a distance of approximately 9 miles. The Organization asserts the

abolishment of their members’ jobs violates the collective bargaining agreements

recognizing their members as the exclusive Trainmen, Engineers, and Conductors

entitled to operate the Carrier’s trains from the border to Laredo Yard on the

Carrier’s U.S. property. The Carrier asserts the agreements cited allow and/or do

not prohibit Carrier from unilaterally changing the meeting location between

Carrier and KCSM and further alter crew operations on the Carrier’s Tex Mex

property, which the agreements refer to as “interchange”.

The parties held further discussions in November 2017, wherein the Carrier

offered job protection for some of the Organization’s members and other

concessions, but no agreement was reached.

In December 2017, the parties entered into a Memorandum of

Understanding, wherein the Carrier agreed to give the Organization 45-day advance

written notice before implementing any change in the use of foreign crews to staff or operate the KCSM trains into the U.S. and the Organization agreed to refrain from taking self-help measures.

On 5-23-18, the Carrier notified the Organization of their decision, effective

July 9, 2018, to change the operations between the border and Laredo Yard by having the KCSM Mexican crews operate the arriving KCSM trains arriving out of

Mexico into the U.S. all the way to Laredo Yard and from Laredo Yard back into

Mexico.

On 6-1-18, the Carrier sought injunctive relief against the Organization’s planned strike by filing suit in the U. S. District Court.

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On 7-6-18, the U.S. District Court (Judge Diana Saldana) issued an injunction

against the Organization and declared the dispute was based in contract and

therefore required arbitration.

On 9-6-18, the Organization filed the two claims asserted herein against the

Carrier. There is one claim for Engineers and another claim for the Conductors and

Trainmen all represented by the Organization under separate collective bargaining

agreements (“CBA’s”). The claims asserted that the cited CBA provisions reserve

the work of operating the trains between the border and Laredo Yard exclusively to

the Organization-represented employees of the Carrier (Tex Mex) over the entirety of Tex Mex property, unless otherwise negotiated and agreed to by the parties; that

Article IV of the May 13, 1971, BLE National Agreement is inapplicable to the local

CBA provisions governing the property; and that there exists no implied right,

custom or practice to which the Organization acquiesced to, which overcomes the

relevant agreement provisions guaranteeing the work to the Organization members.

On 11-5-18 the Carrier denied the claims asserting management’s right to

designate interchange points; that the cited contract provisions expressly grant the

Carrier the right to control interchange operations and procedures; that the

Organization’s claims lacked specificity; and that the Organization’s claims have not

shown any economic harm to the Organization or to its’ membership.

On 1-2-19, the Organization appealed the Carrier’s denial of the claims.

On 3-1-19, the Carrier denied the appeal of the claims.

On 12-11-19, the parties mutually agreed to arbitration of the outstanding

issues ancillary to the staffing change and executed an Arbitration Agreement

establishing this Board to receive and review written and oral submissions by both

parties; and to render a binding and final decision of all matters pertinent thereto.

The parties further agreed to a hearing venue and date of 7-10-20 in Kansas City,

Missouri. Due to Covid-19 travel restrictions and health concerns, the parties

mutually agreed to a virtual hearing instead.

On 6-12-20, the parties exchanged and submitted their written submissions,

argument, and exhibits between themselves and to the Arbitrator.

On 7-7-20, the Arbitrator sent the parties a Draft Award reflecting the

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submitted issues and respective arguments for use by the Board Members in

session.

On 7-10-20, the Board convened by videoconference wherein competent and

capable advocates effectively represented both parties. The parties stipulated that

this matter is proper for arbitration and that Arbitrator Sidney Moreland is the

mutually selected Neutral Arbitrator empowered to conduct the hearing and render

a final and binding decision for Board approval.

Michael S. Wolly, Attorney represented the Organization in this matter.

Donald J. Munro and Aaron S. Markel, Attorneys from the Jones Day law firm

represented the Carrier in this matter.

Both parties chose not to file post-hearing briefs and agreed at the hearing to

conduct further negotiations in good faith in order to arrive at terms and conditions

governing the Carrier’s proposed new service.

IV. ISSUES/STATEMENT OF CLAIMS

The Carrier proposed the following issues:

Does the Parties’ agreement prohibit the Carriers from moving their physical interchange with Kansas City Southern de México from the International Bridge in Laredo, Texas to the Laredo Rail Yard?

The Organization proposed the following two issues:

1. Engineers: Did the Carrier violate the Collective Bargaining Agreement (“CBA”), including but not limited to Articles 6, 24, 32, 47, 63 and 70 thereof, by replacing locomotive engineers employed by the Carrier and covered by the CBA, with locomotive engineers employed or contracted by Kansas City Southern de México (“KCSM”), who are Mexican nationals and are not covered by the CBA, in the operation of trains between Laredo Yard and the International Bridge.

2. Conductors/Trainmen: Did the Carrier violate the Collective Bargaining Agreement (“CBA”), including but not limited to Articles 7.D, 12, 13, 16, 41, 44, 46, 52–70, 62, 74 and 76 thereof, by replacing conductors/trainmen employed by the Carrier and covered by the CBA, with conductors/trainmen employed or contracted by Kansas City Southern de México (“KCSM”), who are Mexican nationals and are not covered by the CBA, in the operation of trains between Laredo Yard and the International Bridge.

V. ORGANIZATION POSITION

The Brotherhood of Locomotive Engineers and Trainmen (“BLET” or “the

Organization”) is the exclusive bargaining representative for locomotive engineers

and conductors employed by the Texas Mexican Railway Company (“Tex Mex”), a

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wholly owned subsidiary of the Kansas City Southern Railway Company (“KCSR”).

The Organization is party to separate collective bargaining agreements covering

each of these two Carriers, both of whom are involved in this dispute. The

Organization represents Engineers, Conductors, and Trainmen under separate agreements some of which were negotiated by the former United Transportation

Union.

For approximately 100 years, cross-border rail freight traffic between the

U.S. and Mexico has been interchanged on the International Bridge on the border.

When the International Bridge was opened in approximately 1920, and for decades thereafter, only freight cars were interchanged at the border. The U.S. crews shoved cars destined for Mexico southward onto the Bridge for pickup by Mexican crews, who coupled their locomotives to those cars and pulled them into Mexico. The

Mexican crews shoved cars destined for the U.S. northward onto the Bridge for

pickup by U.S. crews, who coupled their locomotives to those cars and pulled them

into the U.S. In more recent decades, locomotives were operated internationally,

and the above “shove and pickup” type of interchange was replaced by an exchange

of crews at the border demarcation on the Bridge.

Numerous provisions of each craft’s CBA, individually and collectively

exclusively reserve the work of moving trains between Laredo Yard and the

International Bridge on the U.S./Mexico border to the Carrier’s employees

represented by the Organization. Unless otherwise provided, the work identified in

a CBA belongs exclusively to the craft governed thereby. Indeed, interpretation of

the CBA proceeds from the “pre-existing strong presumption that bargaining unit

members must perform the subsequently enumerated work.” See PLB 6510, Award

1 (Arbitrator Goldstein, 2005).

Locomotive Engineers Collective Bargaining Agreement The CBAs governing the work of locomotive Engineers contain numerous provisions establishing how the craft’s work on the Carriers’ property is to be exclusively allocated among BLET-represented Engineers. The cornerstone is

Article 70–E (Scope), which states:

“(a) The term “Enginemen” and/or “Employee” as herein referred to shall include all Engineers, Firemen and Hostlers, except as specifically provided herein. (b) The term “Union and/or Organization” as herein referred to shall mean the [BLET].

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(c) The term “Carrier, Company and/or Railroad” as herein referred to shall mean The Texas Mexican Railway Company.”

Article 69–E (Representation of Employees) similarly states:

“[a]ll matters concerning rates of pay, rules, and working conditions of enginemen covered by this Agreement, will be handled by the officers of the company with the authorized committee and/or officers of the [Organization].”

That the CBA reserves the work of Engineers to those employed within its scope

is further underscored by Article 6–E (Assignment of Men), which states:

“[t]here shall be only enough enginemen assigned to regular and irregular runs to handle the Company’s business.”

This provision requires the Carriers to maintain an engineer workforce no

greater than, nor less than, that required to handle all of the Carriers’ traffic on the entirety of the property.

Article 32–E (Engineers Rights to Runs) specifies:

“Enginemen’[s] rights to runs and branches of service, including switch engines, shall be governed by seniority.”

Related thereto is Article 71–E (Seniority Rosters), which states:

[Carrier] “shall post at all ‘on’ and ‘off’ duty points during January of each calendar year, a seniority list indicating the employment [sic] date, craft, and promotion date of all enginemen.”

Taken together, these contract provisions ensure (a) that no individual has

any right to any work accruing to a locomotive Engineer, unless that individual

holds seniority in the craft, and (b) that all assignments made by the Carrier must be

made consistent with seniority.

Within the above parameters, Article 30–E (Bulletins, Promoted Firemen,

Relief Engines, Engineers Extra Board, Extra Running Assignment) addresses eight

specific methods to be used in filling assignments, including:

*by bulletin for a 5-day period and awarded to the senior applicant, with the senior extra engineer force-assigned when there are no bids; *promoted firemen on regular assignments may not be held off or lay off to protect engineers’ extra work when other promoted firemen are available; *in case a relief engineer is required at outside point, the senior promoted fireman available after the departure of the mixed train will be used; *when business conditions warrant an engineers’ extra board may be established, and when there is no extra board, any engineer may request to be assigned extra if there is no senior engineer working as a fireman; *should an extra running assignment be called for the same time that the senior promoted fireman’s firing assignment begins its tour of duty, the senior fireman shall be entitled to said running assignment; *an engineer returning to Laredo from an outside point will report on arrival at Laredo, but not later than 16 hours after release from last duty at the outside point, and will be marked up in turn for service at the expiration of the 16 hours; *an engineer has the right to pass up a position and exercise his seniority to take another junior engineer’s position after having held the position he was on for a

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period of at least sixty (60) days; and *a fireman has the right to pass up a position and exercise his seniority to take another junior fireman’s position after having held the position he was on for a period of at least sixty (60) days.

The Carrier has not followed these provisions when filling the assignments

with the Mexican crews that are now performing the work in question.

Article 24-E (Run Around) ensures that Engineers will maintain their relative

work standing in the event his/her train leaves the terminal after the train of a later

called Engineer, stating:

“Enginemen run around through no fault of their own, at any terminal shall be paid for all time lost.”

Conductors/Trainmen (“C&T”) Collective Bargaining Agreement As with locomotive Engineers, the CBA governing the work of Conductors and

Trainmen establishes that the work of those crafts on the Carriers’ property belongs exclusively to BLET-represented Conductors and Trainmen.

Article 76(a) – C&T (Representation–Interpretation) states:

[Organization] “will represent all conductors, brakemen, and yardmen in making agreements governing rates of pay, rules and working conditions.”

Article 16–C&T (Seniority Rights, Seniority District, Seniority Lists and

Promotions) describes how promotion within the train service ranks will occur and

how seniority will be ordered.

Article 63–C&T does the same regarding promotion for Yardmen in Laredo

Yard.

Article 46–C&T (Seniority District and Seniority Rights) further provides the

manner in which road and yard seniority districts in Corpus Christi are to be

assimilated, and limits the seniority of road Trainmen and Yardmen in Laredo Yard.

Article 74–C&T (Mergers) expressly preserves the employees’ seniority in

the event another railroad absorbs, leases or operates Tex Mex.

Article 41–C&T (Crew Consist) specifies in Paragraph A:

“minimum crew for a yard engine assignment, regular or extra, will consist of not less than one foreman and two helpers.”

Within these seniority parameters, Article 17–C&T (New Runs and Vacancies

Bulletined and Filled, Brakemen Displaced, and Giving Up Runs) specifies seven methods to be used in filling assignments, including:

*by bulletin for all new runs or vacancies existing for five (5) days, assigned to the oldest man;

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*upon being displaced, a conductor or brakeman may displace to any assignment their seniority entitles them to within five (5) days of being displaced; *a brakeman giving up a run shall not have the right to bid same back in; *assigned runs must be re-bulletined when (A) the mileage is decreased or increased three hundred (300) miles or more per month, (B) the time changed from day to night or night to day, (C) the time of layover is changed two (2) hours or more, or (D) if turning point is changed; *conductors and brakemen not having access to bulletins will be given seniority rights; *when regular conductors or brakemen are to be used on runs other than their own, they shall be notified of such change as early as possible; and *yard conductors and brakemen in Corpus Christi will lay off for a minimum specified time and in sufficient time, when possible, for an extra man to be deadheaded from Laredo, except that when there is insufficient time to deadhead a man, an emergency man at Corpus Christi will be used for one shift without penalty to the extra men at Laredo.

Article12–C&T (Extra Board and Laying Off) governs how extra assignments are to be filled.

Article 13–C&T (First In, First Out; Runarounds and Time Lost) provides the same runaround protections for conductors and trainmen that Article 24–E provides for locomotive engineers.

Articles 52–70–C&T (Agreement Governing Rates of Pay, Rules, and Working

Conditions for Yardmen, Laredo Yard) represent the codification into the CBA of specific terms applicable to Laredo yardmen, in recognition of their separate seniority roster.

Unless otherwise provided, work identified in a CBA belongs exclusively to the craft governed by the agreement. Interpretation of the CBA proceeds from the

“pre-existing strong presumption that bargaining unit members must perform the subsequently enumerated work.” See PLB No. 6510, Award No. 1 (BMWE vs. CSX)

(Goldstein 2005), quoting PLB No. 6508, Award No. 1 (BMWE vs. CSX) (Douglas

2003) See also NRAB First Division Award No. 1895 (SUNA vs. CRI&P) (Douglass

1937) “Under the agreement, yard piloting as complained of herein is work belonging to switchmen, and to require its performance by others than switchmen is a violation of such agreement.” Holding seniority for agreement-identified work is the sine qua non for entitlement to the work. See Award 15492 (NRAB Third, 1967) where Arbitrator Zumas held: “The question to be determined is whether, under the terms of the Agreement and its interpretations, Carrier had a right, under the circumstances, to utilize a new employee to perform work prior to the establishment of a seniority date in preference to regular employees ... we must

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answer the question in the negative and find that the Carrier violated the

Agreement.”

By further example, it is also a violation of a CBA for a carrier official to

perform work identified with a particular craft. See Award 1726 (NRAB First, 1937)

which stated: “The facts of record show that an officer (Yardmaster) was, on the

dates cited, used to displace a Yardman in the performance described, and which the

First Division holds to have been improper.” In other cases, the precedent bars the

violation of seniority protected craft jobs is clear. See Award 7284 (NRAB First,

1942) where Arbitrator Carter held: “This was yard work which the Yardmen are entitled to perform. Its performance by a road crew is necessarily an infringement of the rights of the Yardmen.” See Award 7287 (NRAB First, 1942) stating: “The work done by claimants in switching the cars for another train was yard work and an infringement upon the right of Yardmen to do the work under their contract.”

This principle equally holds even when an employee in the craft from another seniority district is assigned the work. See (NRAB Third, 1977) where Arbitrator

Eischen held: “In the absence of proven emergency or specific rules to the contrary we have ordinarily found violations of general Seniority Rules where Carrier turns over work of employees holding seniority on one District and/or Group Seniority

Roster to those holding seniority on another, even though the employees are covered by the same Agreement.” See PLB No. 1837, Award 119 (BMWE vs. N&W,

Meyers 2000) “... the Carrier violated the agreement when it assigned a Wabash

employee who held no seniority under the controlling agreement to perform work

on the Nickel Plate Seniority District.”

Because “CBAs negotiated pursuant to the Railway Labor Act, unlike contracts under the National Labor Relations Act, are perpetual in duration and are subject to modification only after predetermined moratorium periods” ARASA v.

Soo, 891 F.2d 678; subsequent modifications to a particular rule may not completely

eliminate all aspects of the predecessor rule. See PLB 2206, Award 41 (BMWE v. BN,

1981) where Arbitrator Eischen held: “As we held in Awards No. 8 and 20, Rules

1(c) and 69(c) have the intent and effect of preserving pre-existing Scope Rule rights of Maintenance of Way Employees on the merged BN, as they existed on the

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respective pre-merged carriers. In other words, such rights are ‘frozen’ in time as

they existed on the effective date of May 1, 1971.”; and in PLB No. 2206, Award No.

65 (BMWE vs. BN) “... in the absence of some such special arrangement between the

parties to deviate from the language of Rule 6-C(5) it remained part of their

Schedule Agreement and fully effective in 1976 when the District 20 crew was

established and this claim was filed. Given the plain language of Rule 6-C(5) in effect

in 1976, we conclude that the claim must be sustained.”

The interchange of traffic between railroads dates back to the first physical

connections between two railroads. The prevailing practice for over a century was

for a crew of one railroad to either (1) deliver cars to the interchange point with a

different railroad and return via a light engine movement or deadheading, or (2)

take a light engine or deadhead to the interchange point and pick-up cars destined

for their own railroad. It took the industry more than 17 years of collective

bargaining to obtain a national work rule that provided for greater efficiency in the

interchange process.

The interchange of rail traffic between the United States and Mexico in

Laredo began with the completion of construction of the International Bridge in

1920. Similar to the industry wide interchange practice, cars containing

southbound cross-border traffic were shoved onto the International Bridge by U.S. crews, where they were picked up by Mexican crews, and cars containing

northbound cross-border traffic were shoved onto the International Bridge by

Mexican crews, where they were picked up by U.S. crews.

In 1950, specific Agreements were entered into that governed the

interchange of traffic at the border, and later were codified into the CBAs, where

they remain today, except as modified in 1971. These Agreements governed

operations between Laredo Yard and the International Bridge until July 2018, at

which time they were abrogated by the Carriers’ unilateral action replacing Tex Mex

crews comprised of U.S. nationals represented by the Organization working under

the CBAs, with unrepresented Mexican nationals employed by KCSM subcontractor

KCSM Servicios, another subsidiary of KCSR, and who are not working under the

CBAs.

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On December 8, 1950, Tex Mex and I–GN/Mo Pac (two carriers that were both handling cross-border traffic) entered into agreements with the Organizations representing the craft employees having rights to the cross-border work. That

Agreement unambiguously divided access to the American side of the International

Bridge. It gave Tex Mex crews access to the north end of the Bridge for 58.3% of each day (i.e., from 12:00 Midnight until 2:00 p.m.) in order to pick up cars destined for and deliver cars coming from Tex Mex, and it gave I-GN/Mo Pac crews access for

41.7% of each day (i.e., from 2:00 p.m. until 12:00 Midnight) in order to pick up cars destined for, and deliver cars coming from, their railroad. There was no share or equity in the work for Mexican crews, because they never performed any work north of the border. For locomotive Engineers, the December 8, 1950,

Memorandum of Agreement—as modified by a December 1, 1971, Memorandum of

Agreement is codified in the CBA as Article 47–E (Interchange – National Railways of Mexico) and reads as follows:

“1. The carriers contemplate entering into an agreement with respect to the delivery or receipt of export and import traffic of the carriers to and from the National Railways of Mexico at Laredo, Texas. 2. Designation of tracks of the Tex Mex and the I-GN, which will be used to accommodate said carriers in affecting the delivery or receipt of export and import traffic of the carriers with the National Railways of Mexico, are described as follows: (a) Four certain Tex Mex tracks, Num. 1 to 4, and certain crossover tracks and connecting tracks appurtenant thereto and required to be used in connection with service to be performed to this Agreement, said tracks being intermediate, on the south, a point on and near the middle of the International Bridge which is the U.S.- Mexican boundary line and, on the north, the south line of Farragut Street. Also, the so-called Mexico House Track, Leon Sand Spur —Tracks 1 and 2—and Zachry Spur, leading from the Mexico House Track. (MEMORANDUM OF AGREEMENT, effective December 1, 1971) (b) That section of Missouri Pacific Railroad’s so-called Depot Tracks Nos. 1 (to include East House Track), 2, 3, and the Old House Track, which is adjacent to and parallel to Depot Track No. 3 will hereinafter be referred to as Missouri Pacific Railroad’s freight forwarding tracks. (MEMORANDUM OF AGREEMENT, effective December 1, 1971) (c) That section of Missouri Pacific Railroad’s lower yard tracks Nos. 3, 4, 5, and 6 will hereinafter be referred to as the Missouri Pacific Railroad’s receiving tracks. It is understood that in delivering cars to these tracks, Track No. 6 will first be filled to capacity as near as practicable, then Tracks 5, 4, and 3 in that order. NOTE: It is agreed that hold, bonded, and bad order cars may be placed on the south lead and Track No. 6 and subsequently removed by The Texas Mexican Railway during their hours of making interchange. (d) Deleted by MEMORANDUM OF AGREEMENT, effective December 1, 1971.

IT IS AGREED: SECTION 1. Tex Mex Yard crews will perform the service as hereinafter described between the hours of 12:00 midnight and 2:00 p.m.; I-GN yard crews will perform the service as hereinafter described between the hours of 2:00 p.m. and 12:00 mid- night.

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(a) The transportation over the Tex Mex Tracks, described in 2(a) of recitals, to tracks of the National Railways of Mexico, located on the International Bridge at and south of the U.S. Mexican Boundary Line of all cars brought to and placed on Tex Mex Tracks, described in 2(a) of Recitals, for interchange from Tex Mex Company to said National Railways of Mexico.

(b) The transportation from I-GN Freight Forwarding Tracks and thence over the Tex Mex Tracks, described in 2(a) of Recitals, of freight cars to National Railways Track for interchange from I-GN to National Railways.

(c) The transportation from National Railways Tracks onto the Tex Mex Tracks, described in 2(a) of Recitals, of freight train cars for interchange from National Railways (1) to Tex Mex Company and (2) to I-GN, and the switching and separation of said cars on Tex Mex tracks, described in 2(a) of Recitals, into the following separate groups or cuts; namely: (1) Cars for delivery to I-GN on Freight Receiving Tracks. (2) Cars for delivery to Tex Mex Company at some suitable location on Tex Mex Tracks, described in 2(a) of Recitals. (3) Cars of both I-GN Company and Tex Mex Company for delivery to South Section of I-GN Fumigation Tracks, and (4) Cars where the party to whom delivery is to be made is unknown, which shall be placed at a suitable location on Tex Mex Tracks, described in 2(a) of Recitals, until party to whom delivery is to be made is determined.

(d) The transportation of the cars referred to in (c) next above, following their separation as in said (c) provided shall be as follows: (1) Cars for delivery to I-GN shall be placed on I-GN Freight Receiving Tracks. (2) Cars for delivery to Tex Mex Company shall be placed on Tex Mex Tracks, described in 2(a) of Recitals. (3) Cars for delivery to U.S. Fumigation Plant shall be placed on South Section of I-GN Fumigation Tracks, and when fumigation is completed and cars released shall be transported to the tracks, referred to in (1) or (2) of this (d), of the party to whose line the car or cars is or are destined at Laredo, Texas. In the event southern access to the South Section of I-GN Fumigation Tracks is obstructed, yard crews shall have the right temporarily to operate to and from the South Section of I-GN Fumigation Plant via I-GN Lower Yard Track No. 5 (comprising part of I-GN Freight Receiving Tracks) and via the North Section of I-GN Fumigation Tracks until such obstruction is removed. (4) When it shall have been determined to what party any car or cars referred to in (d) or (c) of this Section is or are to be delivered, said car or cars shall be transported to the tracks, referred to in (1) or (2) of this (d), of the party to whose line the car or cars is or are destined at Laredo, Texas.

(e) The transportation of passenger train cars from and to National Railways Tracks over Tex Mex Tracks described in 2(a) of Recitals and/or any tracks in International-Great Northern Railroad Company covered by this agreement.

SECTION 2. Yard and engine men of the respective carriers deprived of service in violation of this agreement will be paid for time lost.

SECTION 3. It is agreed that the Tex Mex and the I-GN will each maintain three yard crews in each 24-hour period, six days per week, for a period of four years from the effective date of this agreement.

SECTION 4. The employees of the Tex Mex covered by this agreement will be afforded the protection as set forth in conditions 4 to 9, inclusive, in Oklahoma Railway Company, Trustees Abandonment, 257 I.C.C. 177, (197-201). This is without prejudice to the position of either party as to the proper application of the conditions set forth in Oklahoma Railway Company, Trustees Abandonment, 257 I.C.C. 177, (197-201).

SECTION 5. This agreement is without prejudice to the position of either party as to

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the proper application of the rules governing starting time on The Texas Mexican Railway Company.

SECTION 6. This agreement shall become effective on the date the joint operations as referred to in the opening section of this agreement are commenced and will remain in effect until changed or cancelled in accordance with the provisions of the Railway Labor Act, as amended. (MEMORANDUM OF AGREEMENT, dated December 8, 1950)”

The Conductors & Trainmen CBA was likewise amended to include

interchange agreement provisions and became Article 61(C) of the Conductors &

Trainman CBA, stating:

“Paragraphs (A) and (B) are modified to the extent of the following joint agreements between the International-Great Northern Railway (which is now the Missouri Pacific Railroad), The Texas Mexican Railway Company, and the Organizations, dated December 8, 1950, providing for the delivery and/or receipt of traffic of the two railroads from the National Railways of Mexico at Laredo, Texas:”

The referenced Paragraphs (A) and (B) state as follows:

“(A) The Company will designate a track or tracks for the purpose of receiving and delivering cars to the Missouri Pacific Railroad and to the National Lines of Mexico; such design[at]ed tracks will not be changed without twenty-four (24) hours notice.

(B) Yardmen will not be required to enter the Missouri Pacific yards on any tracks except those designated in Section (A) of this article for the purpose of switching cars except in case of emergency, and when required to [do] so they will be paid on the minute basis with a minimum of one hour at the regular overtime rates, independent of all other time earned on that day.”

These respective working conditions governed all interchange service for

cross-border traffic for decades prior to the adoption of the 1971 BLE National

Agreement Article IV and the 1972 UTU National Agreement Article VII.

Furthermore, these CBA provisions were in full force and effect throughout the

above-documented period when the Carriers were attempting to bargain a national

interchange service rule. The provisions of the subsequent National Agreements

addressing interchange followed three different Presidential Emergency Boards

concerning the issue, none of which resulted in agreements. The final PEB 178

stated it was “convinced that the Carriers should be afforded some relief from these

practices because they put undue restrictions on the Carriers without particularly

advantaging the employees”. The PEB further concluded and recommended:

“…recommend that the parties negotiate a rule which would allow road crews conveying a train of pre-blocked cars to deliver these pre-blocked cars to the connecting Carrier without being required to turn them over to a yard crew. ... We also urge the parties to negotiate a rule, which would not confine the Carriers to a specified interchange track or tracks, but rather would permit them to use reasonable adjacent tracks when yard conditions so warrant. The Board also sees no merit in the requirement that an interchange track

14

must be completely filled before an overflow track may be utilized, and therefore urges the parties to negotiate for the removal of this unduly restrictive practice. The Board also believes that when it is consistent with existing arrangements, interchange crews should be allowed to bring back cars to their yard, rather than be compelled to return “light.” This practice makes for the underutilization of the existing work force and appears to be clearly nonproductive and inefficient.”

Following PEB 178’s recommendations, the 1971 BLE National Agreement,

Article IV became the first national interchange rule. For purposes of the instant

case, the relevant provisions of Article IV are in summary:

Section 1, stating that crews may be required to handle interchange movements to

and from a connecting carrier without being required to run light in either direction;

Section 2, which maintained prior work equities “with the understanding that such

equity arrangements will not prevent carriers from requiring crews to handle cars

in both directions when making interchange movements”;

Section 3, granting Carriers not already possessing the right to designate additional

interchange tracks the ability to “designate such additional track or tracks as the

carrier deems necessary providing such additional track or tracks are in close proximity.” The BLE National Agreement did not define “close proximity”. The

Carriers in the UTU National Agreement defined it the following year as “being next to or very near the existing interchange track or tracks”.

The BLE National Agreement Article IV and its counterpart the UTU National

Agreement Article VII did nothing more than introduce new, or amend existing CBA

interchange provisions for those locations where carriers were restricted to one-

way interchange operations. The Carriers in this case are improperly trying to

expand their rights to designate “additional [interchange] track or tracks as the

carrier deems necessary” because the tracks are not “in close proximity” to the

International Bridge and the tracks associated therewith. Since the Carriers were

the party that introduced the term “close proximity” into the National Agreements,

any ambiguity in this term must be resolved against them. Laredo Yard is

approximately 9½ miles from the International Bridge and is not “next to or very

near the existing interchange track or tracks.” Further discussed, infra.

The Carriers’ reliance on BLE National Agreement Article IV and UTU

National Agreement Article VII is erroneous for several reasons. First, they ignore

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the principle that specific contract provisions prevail over general ones. Here,

Articles 47–E and 61(C) of the Conductors & Trainmen Agreement specifically

govern cross-border operations at the International Bridge, whereas all other

provisions, whether originating elsewhere in the CBA or from the two National

Agreements, are general in nature. Consistent with arbitral precedent, Articles 47–E

and 61(C) from the Conductors & Trainmen Agreement are controlling because of

their specificity.

The parties’ conduct shortly after BLE National Agreement Article IV was

adopted shows that they both understood the National Agreement provision to be

subordinate to Article 47–E. Approximately six months after the May 13, 1971, BLE

National Agreement was reached and three months after the effective date of Article

IV; the parties amended Section 2 (Recitals of the December 8, 1950, Memorandum

of Agreement) by revising Sections 2(a)–2(c), and deleting Section 2(d).

Parenthetical annotations in the Article 47–E codification establish that these

agreement changes were made pursuant to a “Memorandum of Agreement, effective

December 1, 1971.” These annotations strictly contrast with those provided when

rules were codified pursuant to National Agreement provisions, in which case the

relevant National Agreement was cited. This is compelling evidence that the parties

understood that Article 47–E, as the more specific rule, would apply over BLE

National Agreement Article IV, the more general one. Nonetheless, the Carriers now

argue that “National Railways of Mexico no longer exists” so Article 47–E’s

“discussion of interchange with the National Railways of Mexico is thus inapplicable

to the matter at hand...” This argument is fallacious. The truth is that KCSM is the

successor to National Railways of Mexico (a/k/a National Lines of Mexico) and

bound by its obligations. The Carriers’ position is predicated on a specious

extraterritorial application of Mexican law (i.e., the privatization of the Mexican railroad industry) to override RLA-based CBAs in the United States, for which there is no precedent whatsoever. If the Carriers wanted to repudiate the December 8,

1950, Agreement, they should have done so when they assumed control over KCSM

in 1996, not 23 years later when the Carriers found their obligations no longer

convenient. Furthermore, both BLE National Agreement Article IV and the UTU

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National Agreement Article VII were intended to eliminate restrictions and allow

the Carriers to require that crews could handle interchange traffic in both directions

without being required to run light in either direction. The December 8, 1950,

Memorandum of Agreement, however, imposes no such restriction. Therefore,

neither National Agreement rule overrides the 1950 Agreement. The Carrier’s

assertion that the 1950 Agreement is defunct since the National Railways of Mexico

and the identified tracks no longer exists is of no consequence since NRM was not a

party to the CBAs in effect in this matter. The National Railways of Mexico was

merely an identifier of the railroad bringing rail freight north to the border and now

KCSM has stood in those shoes without altering the interchange operations for

several years. Clearly, the essence of the CBA remained in place as only Tex Mex

crews operated interchange on the U.S. side of the border.

Assuming, arguendo, that Articles 47–E and 61(C)–C&T are superseded by

the National Agreements as the Carrier asserts; the Carriers’ replacement of Tex

Mex crews still violates clear and unambiguous work equity requirements of the

National Agreement rules at Section 2 of BLE, Article IV and the second paragraph of

Section 5 of UTU, Article VII, which both state:

“Work equities between carriers previously established by agreement, decision or practice, will be maintained with the understanding that such equity arrangements will not prevent carriers from requiring crews to handle cars in both directions when making interchange movements. Where carriers not now using yard and transfer crews to transfer cars in both directions desire to do so, they may commence such service and notify the General Committees of the railroad involved thereof to provide an opportunity to the General Committees to resolve any work equities between the employees of the carriers involved. Resolution of work equities shall not interfere with the operations of the carriers or create additional expense to the carriers. It is agreed, however, that the carriers will cooperate in providing the committees involved with data and other information that will assist in resolution of work equities.”

The first sentence of this provision is a declarative mandate: work equities

will be maintained. This memorializes the National Agreement’s quid pro quo that

the Organizations received for granting Carriers the right to require interchange crews to operate trains in both directions. However, this proviso does not apply on the Tex Mex property because the Carrier crews already operated in both directions

between Laredo Yard and the International Bridge ever since the December 8, 1950,

Memorandum of Agreement, if not earlier. Prior to the Carrier’s July 7, 2018 change,

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the work equity involving the crews in question was that the Tex-Mex American

crews worked exclusively north of the border and the KCSM Mexican crews worked exclusively south of the border.

The Carriers’ May 23, 2018, letter to the Organization stated that the Carriers

“are willing to discuss any issues regarding work equities between the employees of

the carriers involved” and invited the Organization “to meet to discuss ... any work

equities concerns...” The Carriers knew full well that Mexican law prohibited any

resolution of work equities because it requires that all railway crewmembers operating in Mexico must be Mexican nationals. The Carriers had admitted this at the August 11, 2017 meeting in Laredo. The Carriers argue that an inability to provide Tex Mex employees with their share of the work equity doesn’t matter, citing the National Agreements language at BLE Article IV, Section 2 and UTU Article

VII, Section 5 which states, in pertinent part: “Resolution of work equities shall not

interfere with the operations of the carriers…” The essence of the Carrier’s argument is since there are no work equities that can be provided to the

Organization, there is no barrier to the Carrier doing whatever they want. To the contrary, this clause merely means that the pendency of a dispute over the resolution of work equities among affected employees, cannot act to deny the

Carrier its right to require interchange crews to operate in both directions. The

following sentence obligates the Carrier to “cooperate in providing the committees

involved with data and other information that will assist in resolution of work

equities.” The Carriers’ argument would render the work equity quid pro quo and

their duty to provide data to resolve equity disputes meaningless and contrary to

longstanding contract construction doctrine and arbitral precedent holding that

contracts must be construed in a manner that gives effect to all its parts. Thus, even

if the two National Agreement articles (BLE Article IV and UTU Article VII) were

applicable, NAFTA forecloses their application to cross border operations between

the U.S. and Mexico. The Carriers cannot properly claim a right and simultaneously

evade the obligation that was intended to temper the exercise of that right. The

Board should reject this management claim for a windfall.

The Carriers are improperly trying to expand their rights to designate

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“additional [interchange] track or tracks as the carrier deems necessary” because the tracks are not “in close proximity” to the International Bridge and the tracks associated therewith. As previously established, because the Carriers were the party that introduced the term “close proximity” into the National Agreement(s) any ambiguity in this term must be resolved against them, as drafters. Laredo Yard is approximately 9½ miles from the International Bridge. That is not “next to or very near the existing interchange track or tracks.” If “in close proximity” “simply means

‘the closest one’, as the Carrier asserts, then there is nothing to stop a carrier from taking an interchange yard out of service, tearing it up entirely, and moving the interchange to the next “closest” yard, regardless of how far away it is and/or from doing that again later on, which is the logical extension of the Carrier’s close proximity position. Under the Carrier’s definition, the term “in close proximity” is rendered meaningless and is contrary to the contract construction principle that all parts of the agreement must be given effect.

Awards cited by the Carrier concerning close proximity are deceiving. In PLB

3818 Award No. 12 (BLE vs. BN) the dispute involved “solid over-the-road trains with a connecting carrier under the conditions set forth in Article V, Section 2, of the

[May 13, 1971 BLE National] Agreement.” This award is distinguishable because

Article V does not contain the same terms that apply to the employees involved in this matter, who are governed by Article IV. In PLB 894 Award No. 75 (UTU v. SL-

SF) the term “in close proximity” is not addressed. Neither word appears anywhere in the award. The portion of the interchange rule quoted in the award does not include the term, and the award does not indicate that the term was even considered. In PLB 6489 Award No. 4 (UTU vs. CSX) the Carrier argues that even though the award neither defines nor addresses “close proximity” but because it allowed CSX to designate the disputed interchange point, it necessarily accepted that it was in close proximity to the prior interchange point. The Carrier concedes the issue wasn’t raised in the dispute. The notion that an arbitrator who interprets one agreement provision in a carrier’s favor necessarily agrees with the carrier’s interpretation of a different provision in the same rule that was not litigated is not credible.

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The current dispute arose against a background of Mexican law, confirmed

by international treaty (North American Free Trade Agreement or “NAFTA”) that

American citizens are barred from operating trains in Mexico. The Carriers’

insinuation that the Union’s response is simply xenophobic is baseless and

outrageous. There is no law against Mexican nationals operating trains in this

country, however restrictions on such work by non-U.S. Nationals are created by the

collective bargaining agreements that preserves the work for the employees those

agreements cover. Such restrictions are generally embodied in “scope” rules

describing the work that is exclusively reserved for the covered workers, such as

those covering the Carriers’ Engineers, Conductors, and Trainmen in this matter.

The Carriers’ reference to statutory and/or regulatory considerations regarding

cross- border rail freight traffic movements are immaterial to the question before

this Board, which is whether the Carriers’ replacement of its crews with crews

employed by a KCSM contractor violates the CBAs. The same is true regarding the

impacts of such movements to the residents of the cities of Laredo, Texas and Nuevo

Laredo, Mexico. The fact that the Organization has demanded reciprocal labor

conditions in trade agreements and strict compliance with federal safety and

regulatory standards regarding interchange operations should not affect the Board’s

consideration of the merits of this contract dispute.

Disputes over train movements and work assignments involving cross-

border traffic with Mexico have not previously been arbitrated. There is however,

convincing arbitral authority relating to train movements and work assignments between the United States and Canada involving similar scope rules and CBA provisions that addresses how exclusivity is established and maintained. The evolution of CBAs in the United States was mirrored in Canada, involving the very same operating craft unions, and under very similar labor law regimes. In Canadian

Railway Office of Arbitration Award AH609 (2010), Arbitrator Picher recognized geographical lines, which limits and defines the scope of separate CBAs governing the territorial lines of two different Carriers (Eastern Canada and Western Canada).

Arbitrator Picher reasoned: ““the history and evolution of these collective agreements has effectively been based on an understanding that work within the

20

Eastern and Western Lines, as defined within the collective agreements, is to be

performed exclusively by employees who work under those agreements…” and

“…the material change provisions of the four collective agreements do not extend to permitting the Company to assign employees who hold seniority and work under one territorial collective agreement to perform work over lines which fall under another territorial collective agreement.”

In a cross-border dispute, Arbitrator Stout ordered the Canadian Pacific

Railroad (“CP”) to cease violating the CBAs by assigning bargaining unit work

described therein to American crews employed by CP’s subsidiary, stating:

“The decision of Arbitrator Picher is informative and I agree with the Union that the reasoning is equally applicable to the grievance before me. In particular, the Union has been certified to represent “all running trades employees ... working on the Canadian lines of Canadian Pacific Limited and its subsidiaries and leased lines.” The Collective Agreements also confirm the Union’s exclusive representational rights. The employees covered by the Collective Agreements also have seniority rights based on geographical districts… The Company cannot ignore the rights and the commitments found in the Collective Agreements and just assign work in Canada that has been previously exclusively performed by Canadian crews represented by the Union, to American crews working for their subsidiary Soo Line… In this situation, the Company has not contracted out the work in question. Contracting out involves an employer entering into an arrangement with an independent arms length third-party to perform work on its behalf. The Soo Line is not an independent arms length third-party. The Soo Line is a wholly owned subsidiary of the Company… The Company has also not “gotten out of the business” of running trains between Winnipeg and Thief River Falls. Rather, the Company is utilizing a parallel workforce of American crews (with separate seniority rights) employed by their subsidiary in the United States of America to operate Company assets (trains) on its Canadian lines… This situation is somewhat similar to a “contracting in” situation where an employer brings in non-bargaining unit personnel to work along side bargaining unit employees. The use of non-bargaining unit American crews is inherently destructive of the bargaining relationship and is contrary to the obligations under- taken by the Company in the Collective Agreements. The Company has agreed that Locomotive Engineers (LE) and Conductors (CTY) operating Company trains on their Canadian lines will be covered by the Collective Agreements and enjoy the benefits negotiated by the Union, including seniority rights… In my opinion, the Company is violating the Union’s exclusive bargaining rights and has improperly assigned work to employees who are not members of the bargaining unit represented by the Union… I acknowledge the four examples, referenced in the Company’s Brief, of other railroads who operate utilizing the Company’s Canadian lines. However, those situations are much different from the situation before me. Three of the situations involve independent third-party railroads operating on the Company’s Canadian lines with their own assets (trains)… The situation before me is much different as it involves the Company reassigning work that has been exclusively performed by the Union’s members for decades. I agree with the Union that in the matter before me, the Company is in effect using non-bargaining unit employees operating Company trains on the Company’s Canadian lines. Such conduct violates the Union’s exclusive bargaining rights as well as the terms of the Collective Agreement.”

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A year later, Arbitrator Stout revisited this issue after an arbitrated contract settlement revised the “material change” procedure in the Canadian CBAs, and the

Canadian Pacific Railroad issued another notice seeking to impose cross-border, single-crew service between Winnipeg and Thief River Falls. In this second case,

Arbitrator Stout addressed the flipside of the coin; namely whether or not the

Carrier was permitted to utilize the Material Change provisions in the CBAs to operate an Extended Service Run between Winnipeg, MB and Thief River Falls, MN, without the need to change crews in Emerson, MB or Noyes, MN. Arbitrator Stout again found for the Union, explaining:

“In my December 9, 2015 Award I found that the material change provisions do not permit the Company to use the material change provisions to re-assign employees to routes that are outside the geographic and seniority districts of the applicable Collective Agreements. I based my decision on an award of Arbitrator M. Picher in Canadian National Railway and Teamsters Canada Rail Conference (2010), 196 L.A.C. (4th) 207...This same rationale equally applies to the current matter. The Collective Agreements cover work in Canada, which is to be performed exclusively by Canadian crews represented by the Union. The use of American crews represented by a different trade union is not permitted beyond the established practice of crossing the border to a transfer terminal.” In reaching this conclusion, Arbitrator Stout also distinguished the central award CPR had cited in support of its argument: “In my opinion, the matter before Arbitrator Picher in Ad Hoc 354 is distinguishable from the matter before me. Ad Hoc 354 involved two seniority districts under one collective agreement. The work in question was still being performed exclusively by employees under the one collective agreement. In those circumstances, mileage equalization was clearly an appropriate way to address any inequities caused by the material change among seniority districts under the one collective agreement. This matter is much different as it involves a material change affecting seniority districts under different collective agreements, which arise under different legislation in two different countries with vastly different laws applicable to employees who operate on the rails.”

Cross-border operations between the U.S. and Canada can be summarized as

follows: two of the operations involve a single seniority district and a single CBA

with a single U.S. carrier, making them factually distinguishable from this dispute.

The other nine involve adjacent yards that were no more than 1 ½ miles from the

border, except Detroit–Windsor, where the yards were within approximately 5

miles inside Canada. The Carrier’s attempt to “spin” the Stout awards into

supporting their position fails. Lifting a reference to the location of “transfer

terminals” used by CP, the Carrier takes an expansive view that this term means

using foreign operating crews anywhere ten miles or less across a border is

acceptable, even though that question was never presented to Arbitrator Stout. In

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point of fact, the border crossing location involved in that dispute was covered by a

very specific Agreement. The Organization’s position regarding the relevance of the

Stout Awards, and the Picher Award that preceded them, has been affirmed by recent Canadian Railway Office of Arbitration Award No. 4574, which resolved yet another dispute between Teamsters Canada Rail Conference (“TCRC”) and Canadian

Pacific Railway (“CPR”). This case involved a grievance that “non-bargaining unit crews from the United States were performing bargaining unit work ... on the

Lacolle Subdivision” in violation of the exclusivity of its CBAs. The Lacolle

Subdivision is approximately 33 miles of track “extend[ing] from the Montreal terminal south to Rouses Point, NY, a change-off location less than a mile south of the US border.” U.S. crews ran trains on that route for over twenty years. TCRC’s grievance sought to ensure that only Canadian crews would operate within Canada on the line. It “presented the issue as a jurisdictional one, emphasizing the scope of the collective agreement and the Union’s exclusive bargaining rights.” “The

Company invoked its contractual right and/or the 26-year past practice legitimizing the use of U.S. crews to operate or work on the Lacolle Subdivision.” In this case,

Arbitrator Flynn summarized the Union’s position, stating: “The Union maintains that any work assigned to parties outside the TCRC Collective Agreements, via contracting in or otherwise, is violation of those agreements and the Canada Labour

Code. It is the position of the Union that such rights cannot be unilaterally changed by the Company. The Company is not permitted to unilaterally expand or relax the existing territorial jurisdiction as defined within the collective agreement. There is no legal mechanism by which the Company is entitled to relax the boundaries of the

“four corners” of the Collective agreements…the reasoning of Arbitrators Picher and

Stout is equally applicable to the grievances before me…as of October 29, 2013, the

Company could no longer assign employees who hold seniority and operate and/or work under one territorial collective bargaining agreement to perform operations or work over the lines which fall under another territorial collective agreement.”

Arbitrator Flynn concurred that the Carrier could not assign employees of one territorial CBA to perform work over lines which fall under another territorial agreement and that using non-bargaining unit employees to operate trains on the

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Carrier’s Canadian lines violates the Union’s exclusive bargaining rights as well as

their CBA provisions. The Organization submits that to the extent the Board finds

“industry practice” of cross- border interchange service between the U.S. and

Canada to be relevant, that practice is to perform interchange at yards located at the border, unless there is an agreement that provides otherwise. Further, the

convincing Picher, Stout and Flynn awards hold that any such practice cannot

nullify, modify, or even infringe upon the territorial jurisdiction of the CBAs

providing the covered employees with the exclusive right to perform the work

within that territory.

The similarities between the Canadian situation and this case are telling. Just

as the Canadian CBAs foreclosed Canadian National and Canadian Pacific Railroad

from using foreign crews to perform the Union-represented employees’ work, so too

do the CBAs here preclude KCSR from assigning the disputed work to Mexican crews

employed by their subsidiary KCSM and their subsidiary contractor KCSM Servicios.

The Carrier’s assertion of inherent management rights is unpersuasive. The

Carrier cited cases involving interchange are inapplicable. In PLB 4028 Award No.

29 (C&NW v. UTU) the case involved a Carrier’s failure to issue a proper notice of

interchange relocation and not the Carrier’s right to do so. In PLB 2583 Award No.

6 (UTU v. GTW) the case involved whether or not a Lessor or Lessee of the

interchange tracks had the right to designate. The Carrier has not presented

persuasive precedent or agreement language to establish any inherent management

right to relocate the interchange point in question, which is governed by agreement.

The Supreme Court held the Railway Labor Act, Section 6 “speaks plainly of

rates of pay, rules, or working conditions without any limitation to those obligations

already embodied in collective agreements.” Detroit & Toledo Shore Line Railroad

Co. v. United Transportation Union, (“Shore Line”), 396 U.S. 142, 148 (1969). When

a party has a Section 6 obligation to maintain the status quo, that duty extends

beyond the mere four corners of a collective bargaining agreement and requires the

party “to preserve and maintain unchanged those actual, objective working

conditions and practices, broadly conceived, which were in effect prior to the time

the pending dispute arose and which are involved in or related to that dispute.”

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This is because it is virtually impossible to include all working conditions in a collective bargaining agreement. Where a condition is satisfactorily tolerable to both sides, it is often omitted from the agreement, and it has been suggested that this practice is more frequent in the railroad industry than in other industries.

On or about July 9, 2018, the Carriers replaced Tex Mex crews comprised of

U.S. nationals, represented by the Organization with Mexican nationals employed by

a KCSM subcontractor that is a subsidiary of KCSR, who are neither represented by

the Organization nor working under the CBAs, in train operations between the

Laredo Yard and the International Bridge.

The Carrier’s unilateral change of crews operating the Carrier’s trains out of

Mexico into the U.S. upon the Carrier’s property; violated the December 8, 1950,

Memorandum of Agreement, as amended by the December 1, 1971, Memorandum of

Agreement, and as codified as CBA Articles 47–E and 61(C)–C&T. The Carriers also

contravened the June 13, 1971, BLE National Agreement (Article IV) and the January

27, 1972, UTU National Agreement (Article VII), to the extent they are found to

apply. The Carrier had no retained or implied management right to do so and there

was no such past practice between the parties on this property or in Laredo Yard to

which the Organization ever acquiesced. During the on-property handling of the

Organization’s claims the Carrier produced no evidence whatsoever of an

established past practice at Laredo, acquiesced to by the Organization, which would

satisfy its burden of proof for this affirmative defense.

The core of the Carriers’ position is that they did nothing more than move the

interchange point from the border on the International Bridge to Laredo Yard. This

contention is an attempt to camouflage the contracting out of the affected work.

When compared to standard form interchange agreements, the so-called

“Interchange Agreement” between Tex Mex and Kansas City Southern de Mexico

proves this to be so. There are three central components to a standard form

interchange agreement. The first defines the point of interchange as the place

where the delivering railroad uncouples from the car after delivering it to the

designated interchange track(s), provided it is accompanied by the data necessary

for forwarding and delivery. The second component identifies the rules governing

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the interchange, car service and car hire; usually those promulgated by the

Association of American Railroads (“AAR”). The third describes the cross-billing

procedures between the railroads, which billing includes charges for direct labor,

including contractors, sub-contractors, material costs, surcharges, overhead

percentages, and equipment rentals, as applicable. The Interchange Car Service and

Car Hire Rules in standard form interchange agreements are published in AAR

Circular No. OT-10.30. This Circular establishes a complex system of determining

compensation between two railroads engaging in interchange service. KCSR, KCSM

and Tex Mex all are subscribers to the Car Service and Car Hire Agreement

underlying the AAR Circular. Among the pertinent factors in allocating interchange costs between two railroads are:

*the Rule 2 calculation of hours and mileage; *car hire rates consistent with the requirements of 49 C.F.R. § 1033.1, as set forth in Appendix E; *applicable hourly and mileage car hire rates, which vary upon the type of car, as set forth in Appendix R; and *appurtenance rates used in the calculation of hourly time charges in certain circumstances, consistent with the table contained in Appendix S.

The self-serving Interchange Agreement between Tex Mex and Kansas City

Southern de Mexico contains numerous provisions, which individually and

collectively make clear its purpose is to subcontract the operation of trains between

Laredo Yard and the International Bridge to the Mexican subcontractor KCSM

Servicios, such as:

*right conveyed upon KCSM in Section 2 to “the limited operation, for interchange purposes only, of Equipment in KCSRC’s account over the Subject Trackage”; *Section 3(a) provides “the point of interchange between KCSRC and KCSM” is “at the U.S.-Mexico international border”; *Section 3(a) further provides “all northbound trains handled under this Agreement shall be considered as interchanged into the account of KCSRC when the train moving such car crosses the international border.” *Section 3(c) states “cars, together with containers and/or trailers loaded thereon, shall be considered as interchanged out of the account of KCSR on southbound moves when the car crosses the international border and on northbound moves, cars shall be considered as interchanged into the account of KCSR when the train moving such car crosses the international border.” *Section 3(d) states that “for purposes of car hire, mileage (as it applies to car rental), locomotive horsepower hours and EOT rental, cars and locomotives shall be considered interchanged at Milepost 0.0 of KCSR, at the U.S.-Mexico international border on the Laredo International Rail Bridge, subject to inspection and acceptance by the receiving railroad.” *Section 3(c) suggests that AAR’s Car Service and Car Hire Rules are applicable, Section 6(a) states, in pertinent part: “in lieu of reciprocal handling of interchange in order to equitably share the costs and other burdens of interchange between KCSM and KCSR; KCSR shall pay KCSM the equivalent of eight thousand six hundred sixteen and NO/100 Mexican Pesos ($8,616.00 MXP) for each train physically

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interchanged to or from KCSR on the Interchange Trackage by KCSM through June 30, 2020.”

Whether or not KCSM is delivering northbound cross-border traffic to the

Carriers, or is picking up southbound cross-border traffic from the Carriers, KCSM is being paid $8,616.00 MXP by the Carriers for the operation of each train that now is crewed by Mexican nationals employed by KCSM subcontractor Servicios, instead of by the Claimants and others on their respective seniority rosters, despite that

(1) the rights conveyed upon KCSM involve the operation of equipment in KCSR’s account;

(2) the identified point of interchange is at the U.S.-Mexico international border;

(3) all cars in all trains, irrespective of direction, are considered as interchanged when the train crosses the international border; and

(4) for purposes of car hire, mileage (as it applies to car rental), locomotive horsepower hours and end-of-train device rental, cars and locomotives are considered as interchanged at KCSR Milepost 0.0, which is at the U.S.-Mexico international border on the Laredo International Rail Bridge. Under the patina of

“redesignation of an interchange point,” the so-called “Interchange Agreement” is

simply an ill-disguised contracting out of work that is reserved to employees

represented by the Organization. The Carrier’s position in this regard is no

different from the position rejected by Arbitrator Picher a decade ago: “If ... the

submission of the Company is correct that there can be no claim of exclusive work

ownership in these geographic areas, what would prevent the Company from hiring

an entirely separate cadre of employees to perform work in the same territories, in disregard of the terms of the collective agreements?”

The Organization has requested a remedy consisting of three elements:

(1) that the Board order the Carriers to cease and desist from their use of foreign national, KCSM replacement crews employed by KCSR subcontractor Servicios over the territory between Laredo Yard and the International Bridge;

(2) that each crewmember assigned to jobs RLR-105, RLR-205, RLR-305, RLR- 401, and RLR-405 be paid a penalty of one day’s pay at the rate of their assignment for each train crewed by a replacement KCSM crew while they were on duty; and

(3) that the locomotive Engineer and Conductor/Trainman standing first out on

27

their respective extra board each time a train was crewed by a replacement, be paid

a penalty of one day’s pay at the appropriate rate for the service. Each element is

appropriate given the circumstances in this case.

The Carriers have argued that even if they violated the agreements, no pay

should be awarded because “the employees that previously operated trains between

the International Bridge and the Laredo Yard have not suffered economic harm and

are still performing duties appropriate for their craft or class.” However, significant

economic losses have been suffered. Five daily assignments were devoted to Laredo

Yard operations and handling cross-border cars. Two of these assignments work

strictly in Laredo Yard, and the other three shuttle trains between Laredo Yard and

the International Bridge prior to the Carrier’s change. Each shuttle crew consisted of a locomotive Engineer and a Conductor; thus, four regular 5-day assignments and one weekly extra assignment in each craft covered the service for a week. The two

Laredo Yard assignments were crewed by a locomotive Engineer and two

Conductors, one of whom is a Yard Foreman. Prior to the change, all assignments were advertised as 8-hour jobs, but all jobs worked twelve hours on a daily basis as a matter of practice for more than a decade. That is no longer the case, because of the replacement of the Tex Mex shuttle crews by KCSM Mexican crews. The

Organization has estimated the losses for the workforce shown below on a quarterly basis from July 10, 2018 through March 31, 2020 to be as follows:

Quarter Lost OT Hours Lost Pay Hrs. 2018 Q3 583.5000 875.2500 2018 Q4 938.2500 1,407.3750 2019 Q1 2,260.5000 3,390.7500 2019 Q2 1.557.0833 2,335.6250 2019 Q3 3,192.2500 4,788.3750 2019 Q4 4,134.0667 6,201.1000 2020 Q1 4,387.3333 6,581.0000 Total 17,052.9833 25,579.4750

Even if these substantial losses had not occurred, an economic award for such an egregious contractual violation is appropriate. A compensatory award also is an appropriate remedy in order to preserve the integrity of the Agreement, as is necessary here. In this case, a penalty of one day’s pay has been claimed. This is the standard railroad industry penalty for a CBA violation when no penalty is specified.

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The specific claim is for a penalty day for each shuttle crewmember and for the first-

out extra Engineer and Conductor/Trainman each time a train was operated by a non-Tex Mex crew.

Resolution of this dispute turns on specific CBA provisions and the actual, objective working conditions in Laredo, broadly conceived, from which they arose.

It does not require examination of any purported implied management right because the agreements and prior practice are explicit. Nor does it turn on industry-wide interchange practices or interchange practices that may exist elsewhere on the Carriers’ multi-national system under other agreements. Nor can the Carrier argue that claimed practices and purported instances of acquiescence with respect to the National Agreements’ interchange rules that allegedly occurred on other KCSR subsidiaries be held against the Organization. Although nationally negotiated, the two national agreements are by their very terms deemed to be

individual agreements between each participating carrier and each General

Committee on such carrier. Each states that it “shall be construed as a separate

agreement by and on behalf of each of said carriers and their employees

represented by the organization signatory hereto”. The Texas Mexican Railway

Company was one of those carriers. The Agreements governing the interchange in

question do not extend beyond the Tex Mex property. For all of the above reasons,

the December 8, 1950, Memorandum of Agreement—as modified by the December

1, 1971, Memorandum of Agreement, and subsequently codified in the CBAs,

ultimately controls the outcome of the instant dispute. That MOA reserves all

handling of all of the Carriers’ cross-border traffic between Laredo Yard and the

International Bridge exclusively to employees holding seniority under the CBA

provisions applicable to this territory.

The Carrier cites Article 63 (a) of the Engineer’s Agreement and Article 44 of

the Conductor’s & Trainmen Agreement to assert the Carrier’s right to designate

interchange points.

“ARTICLE 63 INTERCHANGE (a) The carrier shall designate by bulletin points and tracks for the receipt and delivery of interchange from connecting line carriers. Each General Chairman shall be furnished a copy of all bulletins and such bulletins shall be posted on bulletin board at all designated on and off duty points.”

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“Article 44 Interchange The Company will designate a track or trucks for the purpose of interchanging cars. In the event interchange movements are made in foreign yards, parties to this agreement will confer and negotiate an agreement to cover such interchange.”

Article 63 reflects three different historical sources, with paragraph (a) cited

by the Carrier reflecting merely the “legacy” provision that preceded the adoption of

national interchange rules. The same is true with respect to Article 44, which is a

bare bones two sentence provision. The Carrier seeks to apply these provisions in a

vacuum without regard to other interchange provisions in those agreements, such

as Engineer’s Agreement Articles 47 (governing the cross-border interchange in

question), Article 52 (governing interchange at Corpus Christi), and 63(g) (codifying

a 1981 MOA; and the Conductors & Trainmen Agreement Articles 7(D) (codifying of

National Agreement Article VII), 61(C) (incorporating the December 8, 1950 MOA),

7(A) (Conductors not required to perform switching except in certain instances),

7(E) (limiting work done at Robstown, Texas), 87 as amended by June 29, 1990

Agreement (codifying various agreements governing interchange at Corpus Christi

Yard), and a June 29, 1981 Letter of Understanding and Agreement (designating a

new interchange track at Robstown, Texas).

It is apparent from these other more specific interchange provisions that

resolution of this dispute does not turn on the general language of Article 63(a) and

Article 44 alone, as the Carrier contends. The Board must weigh these competing

and sometimes conflicting provisions to cross-border operations at Laredo in a way

that appropriately accords specific rule precedence over general rule, and that gives effect to all parts of the agreement.

The examples of other interchange agreements cited by the Carrier do not establish a practice between the parties to this proceeding. This is because all of the interchange agreements pre-dated 2004 when Tex Mex became a KCSC subsidiary, and/or none of the locations where they apply are on a Tex Mex line. The 2000

Blacklands Railroad Co. Interchange Agreement applies at Greenville, Texas, which is located northeast of Dallas on the KCS Proper lines. The 2001 West Tennessee

Railroad Interchange Agreement applies in Corinth, Mississippi. The 1991 Gateway

Western Railway Company-CSX Interchange Agreement applies on the Gateway

Western subsidiary, and not on Tex-Mex. The 1996 Arkansas–Oklahoma Railroad

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Interchange Agreement also applies on the KCS Proper lines. The 2017 Letter regarding Compensation for Interchange Services applies in New Orleans. The interchange provisions cited in Beaumont, Texas are beyond the Tex Mex line of road, which ends in Corpus Christi/Robstown and the Organization’s GCA has no agreement jurisdiction over any operations at Beaumont.

As for the Interchange Agreement in question now between the Carrier and

KCSM, the Organization emphasizes the language of that document, wherein KCSM is granted the right to “operate equipment in KCSRC’s account over Tex Mex tracks between the International Bridge and Laredo Yard…the point of interchange between KCSRC and KCSM” is “at the U.S.-Mexico international border” that “all northbound trains handled under this Agreement shall be considered as

interchanged into the account of KCSRC when the train moving such car crosses the

international border” and that “cars, together with container and/or trailers loaded

thereon, shall be considered as interchanged out of the account of KCSR on

southbound moves when the car crosses the international border and, on

northbound moves, cars shall be considered as interchanged into the account of

KCSR when the train moving such car crosses the international border.” According

to these terms, KCSM is operating Tex Mex trains for free; the Carrier doesn’t have

to use their own employees; they don’t have to pay KCSM for the service; and they

don’t have to share any revenue with KCSM. This is analogous to Arbitrator Stout’s

observation in the TCRC case, supra: “The Company has not gotten out of the business of running trains between Winnipeg and Thief River Falls. Rather, the

Company is utilizing a parallel workforce of American crews (with separate seniority rights) employed by their subsidiary in the United States of America to operate Company assets (trains) on its Canadian lines.” This mirrors what the

Carrier is doing with KCSM.

The Carrier incorrectly disavows the Organization’s exclusivity claim by citing two 1998 Memorandums of Agreement creating “Road Switcher” assignments

on the Carrier’s property. Referenced as Section 8 in the Engineers Agreement and

Section 9 in the Conductor’s Agreement, which states:

“Employees assigned to Road Switcher assignments do not establish or obtain the

exclusive right to perform road switcher service within their assigned territories by

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reason of this Agreement. Nothing herein shall be interpreted as establishing “road

switcher” as a different class of service within the meaning of the applicable more

than one class of service rule.“

The “non-exclusivity” sentence of the clause in the Road Switcher

Agreements must be read in conjunction with the “not a different class of service’” proscription in the second sentence. It allows the Carrier, except as otherwise prohibited or limited, to assign road work either to road crews or to road switchers, and to assign yard work either to yard crews or to road switchers. The first sentence prevents claims by road switcher crews for road work done in their territory by road crews, and claims by road switcher crews for yard work done in their territory by yard crews. The second sentence works in the reverse. The “non- exclusivity” sentence has nothing at all to do with the performance of CBA-covered work by non-employees; it pertains only to different classes of service within the craft.

The Carrier assertion that industry practice supports their right to designate interchange points is not bolstered by the arbitration awards they cite. In Spirit

Airlines v. ALPA the Arbitrator cited the language of the pay rule provisions the

Carrier changed, and is therefore not exemplary of an industry practice. In Third

Div. Award No. 42976, the Carrier cited industry practice of not paying employees for attending disciplinary investigations, however the Referee rejected that argument.

The Carrier cites the testimony of former Organization officer Rodriguez who stated the Union had never questioned the Carrier’s right to modify interchange points. However, Rodriguez also stated that in 2010 when the Carrier approached him concerning this interchange, he expressed safety and work equity concerns, after which the Carrier abandoned the discussion.

The Carrier relies upon two awards to support their right to designate points of interchange also confers the right to relocate an interchange. PLB 6489 (UTU vs.

CSXT), Award No. 4 “that the parties’ agreements ‘gave CSX the right to designate the interchange point’ with other railroads, and did not prohibit CSX from ‘changing the designated interchange point with a connecting carrier.’” This case is distinguishable because the 1950 Agreements codified in Articles 47–E and 61(C)–

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C&T reserve all work in the United States to employees of the Carriers and the UPRR on their respective tracks, and is a more specific rule that supersedes the

1971/1972 National Agreements. Even if this were not so, the Award also recognized a carrier obligation to ensure existing work equities are maintained when an interchange point is changed and trackage rights are granted, thereby supporting the Organization’s position. It ruled against the UTU on the ground of waiver only because the union had failed to maintain work equities when the interchange point was moved six years earlier. In PLB 5053 (UTU vs. N&W) Award

No. 30, the dispute involved the question of whether the other railroad involved in the interchange could classify cars it had already received in interchange in the

Carrier’s yard, rather than its own yard. Neutral Member Criswell found there to be no agreement violation, rendering the case inapposite and the language quoted by the Carriers nothing more than dicta.

The Organization has proven that the Carriers’ replacement of Tex-Mex crews with KCSM crews violates the territorial integrity of the CBAs, which reserve all work on the Carriers’ property to the covered employees unless explicitly excepted. Thus when that integrity is breached, each and all of the cited Articles are implicated. The Organization has shown that the Carriers have violated the 1950

Agreements, codified at Articles 47–E and 61(C)–C&T of the CBAs, as well as the

1971 BLE and 1972 UTU National Agreement interchange rules. And, finally, we have demonstrated that the Carriers’ action is in reality a subcontracting of work that is exclusively reserved to the Claimants and all Tex-Mex employees represented by this General Committee and that significant economic losses have occurred as a direct result of the Carriers’ action.

The Carriers have not satisfied their burden of proof as to any affirmative defense whether express contract language, implied contract terms, practice, or any form of claimed managerial rights that could legitimize their actions. Moreover, their attacks on the Organization’s evidence and argument fall far short of what is required in order for them to prevail. For the reasons stated in the Organization’s submissions and arguments, the Organization contends that the claims be sustained.

VI. CARRIER(S) POSITION

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The Texas Mexican Railway Company (Tex Mex) and Kansas City Southern

Railway Company (KCSR) operate as a single coordinated carrier and are collectively referred to as Carrier.

Kansas City Southern de Mexico (KCSM) is another wholly owned subsidiary of the Carrier that operates in Mexico pursuant to a special concession from the

Mexican government. KCSM is not a party to this matter.

Class I railroads move freight between two points. In some cases, a single

carrier can transport a carload from origin to destination entirely on its own track.

However, sometimes the delivery requires transferring the freight car from one

carrier to another. This process of transferring train cars from one carrier to another is known as “interchange.” As carriers inevitably interact with one another, they are legally required to provide “reasonable, proper, and equal” interchange facilities (49 U.S.C. 10742).

The interchange of freight cars process typically requires a rail yard or a

large siding with multiple sidetracks where cars can be stored and sorted without

blocking the other trains operating on the main tracks. While carriers could in some

instances interchange at the boundary between their properties, more commonly it

needs to be done at a designated yard or similar location on a railroad’s property

with adequate facilities, inaccessible to the public and motor vehicle traffic. When

interchange occurs on one carrier’s property, the crew operating the train for the

other carrier must logically enter the other railroad’s property to reach the

interchange point. In this matter, the Mexican crew of KCSM must enter the Tex Mex

property in order to cross the border and reach the Laredo Yard nine miles north

where the interchange occurs.

In order to accommodate the KCSM crews (Mexican crews) entering and

operating on the Tex Mex tracks in the U.S.; a typical “Interchange Agreement” was

reached in 2018 between the three carriers (Kansas City Southern Railway, Kansas

City Southern de Mexico, and Texas Mexican Railway) that establishes the

interchange point at Laredo Yard and allows the KCSM Mexican crews to operate on

the Tex Mex tracks in the U.S. and no longer change crews at the border. The

Organization is not a party to this Interchange Agreement. Carriers do not bargain

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with their employees concerning interchange agreements with other carriers. The

Carrier deems this a matter of operational discretion and management right.

The Interchange Agreement at work in this matter is not unprecedented. At

numerous points across the U.S. border with Canada, crews from Canadian carriers

interchange at rail yards in the United States, requiring the crew from Canada to

cross the border and operate over the American carrier’s property to a nearby rail

yard for the purpose of interchange. Interchange of this type is widely accepted.

Federal regulations contain specific rules that address how foreign crews may

operate trains in the United States. See 49 C.F.R. § 240.227 (exempting Canadian

locomotive engineers from requirements to obtain a U.S. operating certification);

See also 49 C.F.R. § 219.7 (exempting Mexican and Canadian train crews from

random drug testing requirements when operating no more than 10 miles into the

United States).

This case is not about the wholesale replacement of American workers. Nor

is it about whether a railroad can use foreign crews to generally perform the work

of Union members. Rather, this case is just about interchange – the specific scenario

in which a foreign crew enters a railroad’s property solely for the limited purpose of

transferring rail cars between two carriers. Interchange does not “replace” existing

employees, and all of the Carrier’s employees have kept their jobs since the new

Laredo interchange began two years ago.

Prior to the Carrier’s change of procedure, the KCSM trains coming out of

Mexico were interchanged on the International Bridge on the border where the

KCSM Mexican crews were replaced with the Tex Mex American crews who then

operated the train to the Laredo Yard nine miles away. For southbound trains headed to Mexico, the process worked in reverse, whereby Tex Mex American crews would operate the train from the Laredo Yard to the International Bridge where they were replaced by a KCSM Mexican crew, who then operated the train into

Mexico.

This prior procedure caused delays on the International Bridge for up to 2-3 hours per train, subjecting the trains to vandalism, theft, and criminal activity. The delays also blocked other rail and motor vehicle traffic, leading the FRA to observe:

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“crew changes along the U.S. and Mexican border are a challenge to moving goods in

an efficient and safe manner.” In 2012 the U.S. Customs & Border Protection

(“CBP”), the Federal Railroad Administration (“FRA”), and other government officials investigated ways to reduce the time trains were stopped on the

International Bridge. This resulted in a plan to increase border safety and fluidity called the “Secure Corridor” initiative. In addition to new cargo screening procedures, the Carrier and KCSM worked with the FRA and CBP to obtain visas for

KCSM’s Mexican crews so that they could operate in the United States.

On July 9, 2018, the Carrier designated the Laredo Yard as the Carrier’s point of interchange with KCSM. The new procedures began July 10, 2018, and have

continued since. KCSM Mexican crews have operated more than 3,000 trains from

the International Bridge at the border, into the U.S. to the Laredo Rail Yard. There

have been no accidents involving KCSM’s crews. No KCSM crew has been cited for

FRA safety-rules violations. Since fewer trains must now stop at the border for

interchange purposes, the new procedures have also improved rail fluidity. KCSM is

now able to interchange as many as 800 trains per month across the border, an

improvement of roughly 100 trains each month. Moreover, no American road

switcher crews represented by the Organization have been furloughed or have

experienced a reduction in pay due to these new operations. To the contrary, the

Carrier has added more than 30 new Organization-represented employees on the

Tex Mex property. These facts are inconsistent with the Organization’s contention

of lost work.

The Organization’s former General Chairman on the Carrier’s Tex Mex

property (Rodriguez) testified in federal court that the collective bargaining

provisions at issue in this case give the Carrier the unilateral right to establish and

modify points of interchange with other railroads, including KCSM. In particular, he

explained that the 1984 Engineers Agreement and the 1985 Conductors Agreement

state, in varying terms, that “the carrier will designate a track for the purpose of

interchange,” and that it was his understanding as a Union official that these CBA provisions mean “the carrier has the right to pick the point where it will be interchanged with other carriers.” Rodriguez further explained that even after a

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point of interchange has been designated, the Carrier has the right to move it, and noted that Tex Mex conducts interchange with other railroads at numerous locations where the “foreign crews” have operated trains in the U.S. over Tex Mex’s track in some of these instances. Rodriguez testified that in his three terms as the

Union’s General Chairman, the Carrier never sought Union permission or negotiated with the Union over changing the point of interchange or allowing foreign crews to

operate on Tex Mex’s property, stating: “The carrier maintains that right. That’s

why they never came to me to request permission.” Rodriguez explained that the

CBA provisions concerning the National Railways of Mexico do not apply to

interchange with KCSM because National Railways of Mexico was a separate entity;

that National Railways of Mexico was no longer an operating railroad; that the procedures described in those CBA’s referencing National Railways of Mexico had been abandoned; and the tracks specified in those CBA provisions had been removed.

The Organization has the burden of proof to show the Carrier violated

specific language in the parties’ agreements. In addition to those provisions

directly governing the choice of interchange location, the Organization cites multiple provisions of the local agreements covering various matters such as scope, representation, assignments, rosters, and seniority. The Organization incorrectly asserts that these provisions, either individually or collectively, give its’ members and “exclusive” right to operate trains over the Carrier’s property. The Organization does not assert that any of the agreement terms expressly confer exclusive rights to such work. Instead, it claims that, when read together, all of these various provisions cast a penumbra from which an exclusive right can be inferred. In support, the Organization cites a series of arbitration awards that, it says, stand for the proposition that “the work identified in a CBA belongs exclusively to the craft governed thereby.” Regardless of whether there is any general presumption of exclusivity – a debatable issue that there is no need to resolve here – there is certainly no such exclusive right when it comes to the specific context of interchange. It is well settled that crews from other railroads can operate trains on another railroad’s property for the purpose of interchange, notwithstanding any

37 general scope rights that may otherwise exist for the railroad’s operating craft employees.

The Organization cites various arbitration awards in support of their exclusive right to the work claim, none of which involve interchange or even implies any exclusive rights to the work of interchange even when done by foreign crews.

Beginning with Canadian National Railway v. Teamsters Canada Rail Conference

(Arb. Pritcher, 2010) which involved a carrier’s attempt to use road crews from one of its divisions to perform service in a different division. Arbitrator Pricher found this conduct violated the parties’ agreements, noting that even in the absence of express terms reserving work in each division, “the history and evolution” of the parties’ agreements confirms that work in each division “is to be performed exclusively by employees who work under those agreements.” However, the work at issue in that case was tantamount to a wholesale invasion of a seniority district with runs hundreds of miles long. It was not anything remotely akin to interchange.

Next, the Organization cites awards of Arbitrator Stout in the Soo Line cases, which addressed an effort by a carrier to allow American crews to travel almost 70 miles across the border in what were, for all intents and purposes, through-freight runs.

(Canada Rail Conf. – Thief River Falls Arbitration (Dec. 9, 2015 Arb. Stout, 2015) In short, the operation in those two cases could not plausibly be called an interchange, especially given the distances traveled across the border. Had the issue been just interchange, there would have been no dispute; the parties agreed that the

American crews could cross the border and take trains to the nearest rail yard on the Canadian side. In sum, none of the agreement terms or arbitration awards cited by the Organization regarding “exclusive rights” provide a plausible foundation for its claim because they do not pertain to interchange. Whether or not Tex Mex crews have “exclusive rights” in contexts other than interchange work is beside the point.

The relevant provisions of the parties’ agreements clearly allow the Carrier to “designate” points of interchange on its own property. Arbitration awards interpreting similar language support this reading. Alternatively, under other agreement provisions, the Carrier is entitled to specify additional track where the interchange may occur. Longstanding past practice between the parties and

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throughout the industry, gives rise to implied contract terms that also allow the

Carrier to designate new interchange points, including in border crossing

operations. Even if the Carrier did not have these rights under the express and

implied terms of the parties’ agreements, the Carrier still retains the inherent

managerial right to designate and modify points of interchange. Because this is the

case, the Union must show that the Carrier has bargained away this right through

clear and unmistakable contract language. None of the provisions cited by the

Union meet this high standard.

In this case, the plain language of the parties’ agreements grants the Carrier

an affirmative right to determine where it will interchange with other railroads.

Both Article 63(a) of the 1984 Engineers Agreement and Article 44 of the 1985

Conductors Agreement provide that KCSR shall have the right to “designate” the

location of any interchange on its property, without obligating it to negotiate with

the Union prior to doing so.

“Article 44 Interchange The Company will designate a track or trucks for the purpose of interchanging cars. In the event interchange movements are made in foreign yards, parties to this agreement will confer and negotiate an agreement to cover such interchange.”

Had the parties wished to require the Carrier to negotiate interchange

locations, they could have said so. Article 44 says that when KCSR seeks to require

“interchange movements made in foreign yards, parties to this agreement will

confer and negotiate an agreement to cover such interchange.” The absence of any

similar language with respect to designation of interchange on Tex Mex’s property

confirms the Carrier’s right.

The only qualification upon the Carrier’s right to “designate” the location of

interchange on Tex Mex property, as distinguished from a “foreign yard” is found

under the 1984 Engineers Agreement; requiring that the Carrier must do so in

writing.

“ARTICLE 63 INTERCHANGE (a) The carrier shall designate by bulletin points and tracks for the receipt and delivery of interchange from connecting line carriers. Each General Chairman shall be furnished a copy of all bulletins and such bulletins shall be posted on bulletin board at all designated on and off duty points.”

Article 63(a) states that Tex Mex must designate interchange points and

tracks “by bulletin” and that such bulletins shall be furnished to the Union’s General

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Chairmen and posted on the bulletin boards at all designated on and off duty points.

The Carrier provided written notice “by bulletin” of the designation of Laredo Yard as the new point of interchange between Kansas City Southern de Mexico and

Kansas City Southern Railway.

The Carrier’s right to “designate” an interchange point on its own property applies regardless of whether the Carrier is (1) making an initial designation or (2) moving an existing interchange point to a new location. Again, the text of the agreements state that the Carrier “shall” (or “will”) designate a location, without qualifying that right based on whether an interchange point already exists or not.

To lock in an existing interchange point would require specific contract language obligating the Carrier to maintain the interchange at a fixed location. The parties have done exactly that for other interchanges, such as the interchange in

Corpus Christi, Texas between the Tex Mex and several other railroads. These provisions further exemplify the parties knew how to contract for limitations on the

Carrier’s right to relocate an interchange point and chose not to do so in this instance; confirming the Carrier retains its right to “designate” an interchange point anywhere on its property.

The Carrier’s interpretation of Articles 44 and 63(a) are supported by

arbitral authority. At least two Arbitrators have held a carrier’s right to “designate” points of interchange confers the right to relocate an interchange. In UTU v. CSX

Transportation, Inc., PLB No. 6489, Award No. 4 (2003), Arbitrator O’Brien observed

that the parties’ agreements “gave CSX the right to designate the interchange point”

with other railroads, and did not prohibit CSX from “changing the designated

interchange point with a connecting carrier.” In UTU v. Norfolk & Western Railway

Company, PLB No. 5053, Award No. 30 (1998), Arbitrator Criswell held the carrier’s

decision to alter the point of interchange that had been in use for nearly 10 years

“was not violative of any labor agreements.”

While the language of Articles 44 and 63(a) sufficiently resolves this dispute,

the text of the 1971 and 1972 National Agreements further supports the Carrier’s

position. The National Agreements were subsequently incorporated into the local

Tex Mex agreements and provide as follows:

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“At designated interchange points, if a carrier does not now have the right to specify additional interchange tracks it may specify such additional track or tracks as the carrier deems necessary providing such additional track or tracks are in close proximity. Bulletins specifying additional tracks will be furnished [to] each General Chairman.”

This language expands the Carrier’s right to determine where interchange will occur by allowing it to add interchange tracks instead of “designating” an

entirely new interchange point. Accordingly, even if a carrier bargained away its

right to move an interchange point, it could still modify where the interchange

occurs by “specifying” new tracks in the same area (so long as any such additional

tracks are in “close proximity” to the existing interchange point). As applied here,

the 1971/1972 National Agreement would allow the Carrier to “specify” Laredo

Yard as “additional tracks” for interchange. Even if the Organization were correct

that the Carrier must maintain an interchange point with KCSM on the International

Bridge, the 1971/1972 National Agreement (s) still allows the Carrier to also

conduct the interchange with KCSM at Laredo Yard by specifying additional tracks.

Whether Laredo Yard is deemed a new interchange point or not; the Carrier’s new

crew change operation is permitted by the parties’ agreements.

The Organization argues that the 1971/1972 National Agreement(s)’

language is inapplicable in this case because the Laredo Yard is nine miles from the

International Bridge, and should not be considered “in close proximity” to the

previously designated interchange point. The Organization argues that “in close

proximity” means “adjacent” or “next to or very near.” However, “next to” simply

means “the closest one,” and “adjacent” means “immediately preceding or following”

i.e., there is no relevant thing or alternative in-between. See, e.g., Webster’s II New

College Dictionary, at 754 (3d ed. 2005). Laredo Yard is the closest and next available track from the International Bridge on the Tex Mex system that can be used for interchange, and is therefore adjacent. Given these geographic circumstances, Laredo Yard is “in close proximity” to the previously designated track within the meaning of the agreements. The decision in UTU v. Union Pacific

PLB No. 3301, Award No. 30, confirms this interpretation. There, the Board noted that the term “adjacent tracks” must be viewed “under the circumstances thus prevailing.” That is, whether the additional tracks are “adjacent” depends not just

41 on distance but on the particular geographical and operational circumstances present in each particular case. Here, the Laredo Yard, which is the closest Tex- Mex yard to the Bridge, is the “next” or “adjacent” tracks suitable for interchange and is therefore within “close proximity.” The Organization also cites UTU v. Atchison,

Topeka & Santa Fe Railway Company, PLB No. 5407, Award No. 6 (Arb. Lieberman,

1994), which, it says, shows that tracks cannot be within “close proximity” if they are more than 21⁄2 miles apart. However, that award contains no information about the “prevailing circumstances” involved, such as whether there were closer suitable tracks that could have been used. In any event, several other arbitrators have held that the “close proximity” proviso permits carriers to designate additional tracks that are miles away from the existing interchange location. E.g., BLE v.

Burlington N. R.R. Co., PLB No. 3818, Award No. 12 (Arb. O’Brien, 1989) (5 miles);

UTU v. St. Louis-San Francisco Ry. Co., PLB No. 894, Award No. 75 (Arb. Brown) (8 miles).

Arbitrators have concluded that the provisions of the 1971/1972 National

Agreement(s) allow a railroad to “specify” track that is miles away from a previously designated interchange point. In BLE v. Burlington N. R.R. Co., PLB No. 3818, Award

No. 12 (1989) Arbitrator O’Brien found 5 miles was permissible. In UTU v. St. Louis-

San Francisco Ry. Co., PLB No. 894, Award No. 75, Arbitrator Brown found 8 miles permissible. One notable example is UTU v. CSX Transportation, PLB 6489, Award

No. 4 (2003) where Arbitrator O’Brien concluded that Article VII of the 1972

Agreement “gave CSX the right to designate the interchange point with the [other railroad].” The Organization argued that the designated interchange point was

Jamesville, New York, which was 25 miles from the location where CSX was interchanging with another railroad. Arbitrator O’Brien’s award does not define

“close proximity”, but because Article VII contains the “close proximity” proviso,

Arbitrator O’Brien could not have reached that result without finding that the new track was sufficiently in “close proximity” to the previous interchange point.

The Organization argues the right to specify additional interchange track under the 1971/1972 National Agreement(s) only applies if a carrier was prohibited from interchanging in two directions, citing only a portion of the parties’

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arguments before several presidential emergency boards (“PEBs”), as well as

various subsequent bargaining proposals. This history, the Organization says, proves that the purpose of Article IV and Article VII was to “eliminate light engine

movements involved in interchange operations,” i.e., to ensure that crews could

make interchange movements both to and from the connecting carrier. “Because

[Tex Mex’s] 1950 Agreements already permitted crews to handle cars in both

directions when making interchange movements at the International Bridge,” the

Organization argues, these provisions “simply do not apply.” To the contrary, the

bargaining history, including proceedings before various PEBs reveals the carriers were pursuing multiple goals with respect to interchange. For example, before PEB

No. 110, the railroads asked for a rule allowing them to perform interchange in both directions, but also sought other rules authorizing interchange “anywhere within the switching limits” requiring crews participating in interchange to perform incidental tasks, and eliminating any pre-existing restrictions on their right to enter

“reciprocal arrangements with other carriers” or to designate locations for interchange. See PEB No. 110, 51-52 (Ex. 33); and PEB No. 178, at 29. The structure of the National Agreement(s) mirrors this history. While there is a section in each

Article about “running light,” there are separate sections that deal with other

aspects of interchange, including the provisions that allow carriers to specify new

interchange track. The 1971/1972 National Agreements are not simply limited to

situations where carriers lacked the right to run interchange in two directions, as

the Organization asserts.

The Carrier further contends that implied contract provisions arise from the past practice of the parties. The Carrier’s past practices concerning the designated interchange location further support the Carrier’s right to do so. For decades on the

Tex Mex and on other parts of the Carrier’s system; the Carrier has unilaterally decided where, when, and how it interchanges with other railroads. The Carrier does not consult or bargain with the Organization when doing so. The Carrier notifies the Organization of a new interchange once the operational details are settled with the interchanging railroad. This past practice is evidenced by dozens of interchange agreements between the Carrier and other railroads. The Carrier

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typically enters into a written agreement with another railroad whenever it needs to

create a new interchange or modify an existing one, such as in response to new

customer demands, construction or abandonment of track, or systemic changes in

traffic mix. When the Carrier enters into an interchange agreement it permits the

other railroad’s crews to operate over its property in order to reach the interchange point. In many cases, the right of foreign crews to operate over the Carrier’s property is expressly addressed in the agreement. In other cases, the right is implied.

Dozens of arbitration awards support the proposition that a railroad retains its inherent managerial discretion unless bound by specific agreement terms, including with regard to interchange. The ability of a carrier to establish and modify procedures for interchange is critical to efficient and reliable train service. As noted above, an interchange may need to be altered for any number of reasons, including accidents, natural disasters, track or facility reconstruction, or changes in customer demands. Without the right to respond to changing circumstances that affect how and where it needs to interchange, a carrier’s operations could cease.

Kansas City Southern de Mexico (KCSM) is not a successor to the National

Railways of Mexico and the 1950 agreements cited by the Organization clearly specify interchange procedures at the border with the National Railways of Mexico only. The incorporation of those provisions into the 1984 Engineers Agreement

(Article 47) and the 1985 Conductors Agreement (Article 61) were exclusively in

reference to interchange with National Railways of Mexico. The provisions of

Article 47 and similar language in Article 61 are by their plain terms limited to

interchange with “the National Railways of Mexico” and no successors. The

Organization challenges the Carrier’s argument on this point, asserting that it is a

“specious extraterritorial application of Mexican law” to “override RLA-based CBAs.”

The Carrier’s position that KCSM is not the successor of the National Railways for

purposes of Articles 47 and 61 is based on well-settled principles of American law, as well as the physical and operational changes that have happened at and around the Bridge since 1950 – changes that make it impossible to apply the terms of those agreement provisions to KCSM in any rational manner. (See Charles Schwab & Co. v.

44

WS Wealth Mgmt., LLC, 2016 WL 7033699, at *5 (E.D. Va. Dec. 2, 2016)). The fact

that the Mexican government ensured that the liabilities and agreements left from

the National Railways would not burden any of the private railroads that secured concessions is further confirmation that there is no successor relationship. The

National Railways of Mexico was created by a Mexican federal statute and is owned, operated, and controlled by the Mexican government. It exists today only in order to address legacy liabilities. It is no longer an operating railroad. There is no indication in either Article 47 or Article 61 that the parties intended for these

provisions to also apply to “successors” of the National Railways of Mexico. Even if

KCSM was bound by the interchange language governing the National Railways of

Mexico; first, Article 61 states that the tracks designated for interchange with the

National Railways of Mexico “will not be changed without twenty-four (24) hours

notice” implying that the Carrier may have changed the designated point of

interchange, so long as it gave notice. Furthermore, the tracks referenced therein no

longer exists. Secondly, Article 47 contains no such “designation” reference at all,

which shows that its terms were never intended to fix the interchange at a specific

point or limit the Carrier’s right to alter the interchange. Furthermore, the latter

1971/1972 National Agreements give the Carrier the right to “specify” additional

track for interchange and therefore modified the pre-existing language of Articles 47

and 61.

The Carrier owes no duty of work equities to the Organization pursuant to

Section 2 of the 1971 National Agreement and Section 5 of the 1972 National

Agreement for at least four demonstrated reasons: (1) the “work equities” clause

appears in a section of the Agreements that everyone agrees is not relevant here, (2)

the Carrier offered to provide the data referenced in the “work equities” clause, (3)

despite the Union’s unwillingness to discuss the matter, the Carrier has tried to

provide work equities by ensuring that the Laredo Yard employees remain fully

employed, and (4) the “work equities” clause expressly states that it cannot be used

to bar new interchange operations. The doctrine of work equities only applies in

one instance regarding “running light” for purposes of operating interchange in both

directions. The National Agreements do not require the Carrier to provide

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reciprocal work or that employees be placed in a fully equivalent position; only that the Carrier provide notice and relevant data to the Organization. The Carrier has done so and further stated to the Organization that the Carrier is “willing to discuss any issues regarding work equities between the employees of the carriers involved.”

The Organization has demonstrated an unwillingness to bargain over this issue to date citing Mexican law’s prohibition against Americans operating trains in Mexico.

However the Carrier continues to be open to using the RLA Section 6 bargaining process to do so. Furthermore, none of the Carrier’s operating craft employees have experienced any reduction in work opportunities or pay as a result of the new interchange in this matter, therefore an equitable arrangement would require very little.

The Organization contends that the Carrier’s altering the interchange is tantamount to the Carrier subcontracting out their exclusive work. The

Organization contends the interchange is still occurring at the border on the

International Bridge simply because the interchange agreement addresses

“revenue” interchange only wherein trains are considered as interchanged into the account of KCSR at the border for purposes of all matters under jurisdiction of the

U.S. Customs & Border Protection (“CBP”). The KCSM crews are bringing the KCSM trains into the U.S. to the new interchange point at Laredo Yard and returning them to Mexico for the limited purpose of interchange. The Mexican crews are not doing any work within the exclusive scope of the Organization’s members.

The provisions whereby the Carrier pays KCSM a fee for each of Carrier’s trains KCSM operates; does not demonstrate a subcontracting out of the

Organization’s work because it does not prescribe to the Association of American

Railroads (“AAR”) circular’s standard form. Contrary to the Union’s assertion, AAR

Circular No. OT-10 does not establish the “rules governing interchange.” It specifically states “Rules contained herein do not foreclose subscribers from entering into other agreements which may differ from these rules.” Thus, whether the KCSR-KCSM Interchange Agreement mirrors all of the AAR’s recommended provisions is not meaningful. The fee provision in question is a payment “for each train physically interchanged to or from KCSR on the Interchange Trackage by

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KCSM…in order to equitably share the costs and other burdens of interchange

between KCSM and KCSR…in lieu of reciprocal handling…due to existing Mexican

law,” under which “only Mexican citizens may operate trains in Mexico.” Only

because the Carrier cannot legally operate into Mexico, it agreed to pay KCSM to

account for the administrative burdens associated with handling all of the

interchange in both directions. Whether or not KCSM is using contractors to

operate the trains across the border and not their own employees is of no

consequence to this matter. The contractor in question, KCSM Servicios, is another

subsidiary of the Carrier. The fact that the people operating the trains are

employed by KCSM Servicios instead of KCSM, does not suggest some nefarious

attempt to circumvent subcontracting or scope rules.

In 1998, the parties entered into agreements that defined the terms for the

road switcher jobs at issue in this arbitration. The parties’ agreements specifically

state that the Organization’s members do not have the exclusive right to perform

this work. These agreements state that “[e]mployees assigned to Road Switcher

assignments do not establish or obtain the exclusive right to perform road switcher

service within their assigned territories.” See 1998 Tex Mex–UTU MOA (Engineers);

and 1998 Tex Mex–UTU MOA (Conductors). The Organization’s contention that the

Carrier’s new interchange procedures violate its members’ exclusive right to move

trains over Tex Mex’s track simply cannot withstand the parties’ express agreement

that no such right exist.

The Organization argues that the “past practice” of the interchange on the

International Bridge binds the Carrier to maintain “actual objective working

conditions, broadly conceived”, citing Detroit & Toledo Shore Line Railroad v. UTU,

396 U.S. 142 (1969). First, there is no citation by the Organization that abrogates

the Carrier’s expressed contractual right to move points of interchange no matter how long Tex Mex has interchanged with another railroad at a certain point. In furtherance of the discussion concerning “past practice” it is noted the Carrier and

other carriers throughout the industry have a long history of moving interchange

points without union consent. Since the relocation of interchange points has not

occurred at this location in the past, it becomes necessary to examine other

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locations where it has occurred including on the Tex Mex property. Despite the

Organization’s assertion that there are no past unilateral changes in interchange

points by the Carrier, there are in fact multiple examples in evidence, which clearly

demonstrate the Tex Mex General Committees of the Organization have acquiesced

to the Carrier’s practice of unilaterally relocating interchange points.

Finally, the Organization advocates for a three part remedy: 1) Carrier cease and desist for interchanging at Laredo Yard; 2) penalty payments equaling a day’s pay for each train crewed by KCSM crews and payable to all of the operating craft employees of Tex Mex (road switcher crews + 2 yard crews); and 3) additional penalty pay for employees standing first out on the Extra Boards each time a train was crewed by KCSM crews. The Carrier contends the remedy proposal is meaningless, since the Carrier has not violated any agreement language by its’ interchange procedure implementation. Notwithstanding, the Carrier argues that no monetary compensation is appropriate whereby, as in this case, no employee has suffered any economic loss. The perceived fluctuation in overtime hours is a result of less switching time in Laredo Yard due to how KCSM is building their trains in

Mexico before arriving at Laredo Yard. There is no causal relationship between any reduced yard crew overtime and the new interchange procedure, and therefore no economic loss established relating thereto. The evidence further demonstrates that as a result of greater train volume between the U.S. and Mexico as a consequence of the improved interchange efficiency, the Organization’s members experience expanded work opportunities, including the hiring of 30 new BLET-represented members on the Tex Mex property since the new interchange took affect. Since there has been no change in Extra Board work attributable to the interchange, the

Organization’s demand for extending any remedy to these employees is also unfounded. The Organization’s claim for penalty pay lacks any agreement provided basis, including the Organization’s assertion of Articles 47 and 61 of the 1950

Agreements, which states that yard and engine men “deprived of service” will be paid for time lost. The Organization cannot show that any particular Organization- represented employees have been deprived of service as a result of the interchange procedure at issue, because it has not occurred.

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For the reasons stated in the Carrier’s submission and arguments, the Carrier did not violate the parties’ collective bargaining agreements by adjusting the interchange point between KCSM and Tex Mex.

VII. OPINION/FINDINGS, Arbitrator Moreland The parties herein, represented by competent and capable advocates, presented comprehensive pre-hearing submissions supplemented by oral arguments before this Board.

The Organization objects to the re-location of the interchange location which now allows the KCSM Mexican crews to bring the Mexican arriving trains 9 miles inland to Laredo Yard, instead of the prior arrangement where American crews boarded those trains at the border and operated them to Laredo Yard. The Carrier

(Tex Mex) unilaterally changed the physical location whereby they now interchange with the Mexican railroad KCSM.

Interchange is a term used in the railroad industry describing the transfer of the custody of freight being handled by two or more carriers. Interchange involves the ministerial functions associated with the interchange of freight and rail cars between two carriers, such as the necessitous documentation involved; and sometimes interchange may be understood to include the physical act of exchanging rail cars, loaded or unloaded, between two carriers whose properties adjoin one another. The interchange transfer typically precedes the incoming rail cars being re-organized, assigned, and coupled to the other carrier’s train to resume the delivery of the freight to an end point of delivery. The agreed upon interchange point between two adjoining carriers is an important designation since it most likely involves employees and equipment from one carrier entering and operating upon the property of another carrier. Logically, interchange may also involve reversing the delivery process for the return of empty cars.

The Tex Mex railroad property has adjoined the Kansas City Southern de

Mexico operated property at the U.S.-Mexico border for approximately 23 years and historically their freight cars interchanged at the border on the 396’ International

Bridge adjoining the two countries over the Rio Grande River. Tex Mex’s nearest rail yard (Laredo Yard) is approximately 9 miles from the border on the American side and consists of 19 tracks where the KCSM trains can be disassembled, sorted,

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and re-assembled in yard switching operations typical of interchanging rail freight

and re-directing it towards multiple destinations.1 The evidence shows that

although Tex Mex and KCSM designated the International Bridge on the border as

the interchange point for many years; the switching operations of those trains

arriving from Mexico principally occurred at the Laredo Yard.2

The KCSM and Tex Mex entered into a new interchange agreement whereby the Laredo Yard was designated as the official point of interchange. A review of the

Interchange Agreement reflects that the use of Tex Mex track by KCSM crews is for the limited purposes of interchange only. The agreement also states that interchange for purposes of accounting procedures and the jurisdiction and enforcement by the U.S. Customs & Border Protection shall continue to be the

International Bridge at the border for obvious accounting and legal reasons. These provisions when read within their proper context, do not indicate that the Carrier surreptitiously continues to undertake the actual interchange of freight at the border, as the Organization suggests.

Contract Provisions Addressing Interchange The Carrier cites national collective bargaining agreements (“National

Agreement”) and longstanding practice by these carriers and others as authority for re-locating their interchange location without bargaining, and further granting the

Carrier the unilateral right to designate additional interchange tracks in close proximity when needed. The two national agreements relevant and cited by both

parties, state in pertinent part:

“(BLET) NATIONAL AGREEMENT DATED MAY 13, 1971 …ARTICLE IV ‐ INTERCHANGE SERVICE ‐ YARD, BELT LINE AND TRANSFER CREWS 1. Where a carrier has the right to make interchange movements with yard, belt line or transfer engine crews, such crews may be required to handle interchange movements to and from a connecting carrier without being required to run light in either direction. (underline emphasis added) Note: This provision does not preclude the carrier from making interchange movements on tracks over which it may acquire rights to operate in the future, nor does it preclude the employees from opposing the granting of such rights.

2. Work equities between carriers previously established by agreement, decision or practice, will be maintained with the understanding that such equity arrangements will not prevent carriers from requiring crews to handle cars in both directions when making interchange movements. Where carriers not now using yard and transfer crews to transfer cars in both directions desire to do so, they may commence such service and notify the General Committees of the railroad involved thereof to provide an opportunity to the General

1 A diagram of Laredo Yard is included in the 7-7-18 Interchange Agreement at Carrier Ex. 14 and Organization Ex. 8 and 47. 2 The evidence also demonstrates that prior to this interchange relocation, KCSM operated into the U.S. during interchange on the U.S. side of the bridge without objection from the Organization. See Carrier Exhibit #15, the Federal Court testimony of Supt. Rodriguez, page 28.

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Committees to resolve any work equities between the employees of the carriers involved. Resolution of work equities shall not interfere with the operations of the carriers or create additional expense to the carriers. It is agreed, however, that the carriers will cooperate in providing the committees involved with data and other information that will assist in resolution of work equities.

3. Where a carrier does not now have the right to designate additional interchange tracks it may designate such additional track or tracks as the carrier deems necessary providing such additional track or tracks are in close proximity. Bulletins designating additional interchange tracks hereunder will be furnished the General Chairman or General Chairmen involved prior to the effective date. (underline emphasis added)

4. If the number of cars being delivered to or received from interchange tracks of a connecting carrier exceeds the capacity of the first track used, it will not be necessary that any one interchange track be filled to capacity before use is made of an additional track or tracks provided, however, the minimum number of tracks necessary to hold the interchange will be used.

5. The foregoing provisions are not intended to impose restrictions with respect to interchange operations where restrictions did not exist prior to the date of this Agreement.

6. Every employee deprived of employment as the direct or indirect application of the foregoing provisions shall be entitled to the schedule of allowances set forth in Section 7(a) of the Washington Agreement of May 21, 1936, except that the 60% of the average monthly compensation will be changed to 100% (less earnings in outside employment) and be extended to provide periods of payment equivalent to length of service not to exceed 5 years, and to provide further that allowances in Section 7(a) be increased by subsequent general wage increases. If any protective benefits greater than those provided in this Article are available under existing agreements, such greater benefits shall apply subject to the terms and obligations of both the carrier and employee under such agreements, in lieu of the benefits provided in this Article.

7. This rule shall become effective September 1, 1971, except on such carriers as may elect to preserve existing rules or practices and so notify the authorized employee representatives on or before August 1, 1971.” (Carrier Exhibit 3, Organization Exhibit 36)

“(UTU) NATIONAL AGREEMENT DATED JANUARY 27, 1972 …ARTICLE VII ‐ INTERCHANGE Section 1. At points where yard crews are employed, road freight crews may be required to receive their over‐the‐road trains from a connecting carrier or deliver their over‐the‐road trains to a connecting carrier provided such trains are solid trains which move from one carrier to another intact with or without motive power and/or caboose.

Section 2. If road crews referred to in Section 1 of this Article VII are not required to return or deliver their motive power and/or their cabooses to or from their on or off duty points an alternate means of transportation will be provided.

Section 3. At designated interchange points, if a carrier does not now have the right to specify additional interchange tracks it may specify such additional track or tracks as the carrier deems necessary providing such additional track or tracks are in close proximity. Bulletins specifying additional tracks will be furnished the General Chairman or General Chairmen involved prior to the effective date. (underline emphasis added)

Section 4. If the number of cars being delivered to or received from inter‐change tracks of a connecting carrier exceeds the capacity of the first track used, it will not be necessary that any one interchange track be filled to capacity before use is made of an additional track or tracks provided, however, the minimum number of tracks necessary to hold the interchange will be used.

Section 5. Crews used in interchange service may be required to handle interchange to and from a foreign carrier without being required to run "light" in either direction. Work equities between carriers previously established by agreement, decision or practice will be maintained with the understanding that such equity arrangements will not prevent carriers from requiring crews to handle cars in both directions when making interchange movements. Where carriers not now using yard and transfer crews to transfer cars in both directions desire to do so, they may commence such service and notify the General Committees of the railroad involved thereof to provide an opportunity to the General Committees to resolve any work equities between the employees of the carriers involved. Resolution of work equities shall not interfere with the operations of the carriers or create additional expense to the carriers. It is agreed, however, that the carriers will cooperate in providing the committees involved with data and other information that will assist in resolution of work equities. (underline emphasis added)

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Section 6. The foregoing provisions are not intended to impose restrictions with respect to interchange operation where restrictions did not exist prior to the date of this Agreement. This rule shall become effective 15 days after the date of this Agreement except on such carriers as may elect to preserve existing rules or practices and so notify the authorized employee representatives on or before such effective date.” (underline emphasis added) (Carrier Exhibit 4, Organization Exhibit 39)

Close Proximity In scrutiny of the National Agreement(s) Articles IV and VII, supra, the

Organization asserts the provisions do not sanction the Carrier’s movement of the interchange location since the new interchange point (Laredo Yard) is located over

9 miles from the prior interchange point (International Bridge) and should not be considered “close proximity” as required in Section 3, supra. Having found the term

“close proximity” undefined in the body of either National Agreement, both parties address the ambiguity with varying definitions to fit their arguments. In the 1972

UTU National Agreement, the second of the two national agreements, the term

“close proximity” is defined in an attachment Question/Answer document as “next to or very near the existing interchange tracks”. The evidence contains arbitration awards determining “close proximity” to be an undefined distance, thus allowing carriers flexibility in determining interchange points on a subjective location-by- location basis. Rather than engage in competing definitions concerning the words

“close” and/or “proximity”, which the Organization contends means “adjacent”; the

Board finds guidance in the reasoning of other Boards that held an adjacent track to be a “reasonably adjacent track under the circumstances then prevailing.”3 On balance, the Organization cites a case wherein the close proximity provision was addressed without consideration of the reasonably adjacent track under the prevailing circumstances test.4

3 See PLB 3301 Award 23 (Neutral Fredenberger) citing PLB 104 Award 4 (Neutral Abernathy); Organization Exhibit #40. In Award 23, the Carrier (Union Pacific) crews conducted interchange operations on tracks of the interchanging/receiving carrier (Santa Fe), which were not designated by bulletin as interchange tracks due to an overflow occurrence. The Santa Fe used multiple tracks that were randomly located throughout a very large switching yard and failed to address the Carrier (Union Pacific) concerning the “close proximity” question. The Board agreed that Article VII’s close proximity applied to permanently designated interchange tracks and not the temporary situation before them. However, the Board sustained the claim of the UP crews since there was no bulletin designation of the tracks used for interchange and because the use of multiple random tracks was not “reasonably adjacent under the circumstance then prevailing”. 4 See PLB 5407 Award 6 (Neutral Lieberman) wherein the Carrier (Santa Fe) redesignated interchange tracks with interchanging carrier (Southern Pacific) to tracks 2 ½ miles away from the existing interchange tracks. The Award found the Carrier failed to give the Organization proper notice and failed to initially address work equity issues. The Award stated the tracks were “hardly in close proximity since they were 2 ½ miles away” but “there was no evidence whatever of loss of earnings by the Claimants”.

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In the matter at hand, the Laredo Yard (new interchange point) is the

Carrier’s closest switching yard in proximity to the International Bridge (former

interchange point). The Board also considers the geographical and logistic

circumstances and the Carrier’s concern for relieving the demonstrated congestion, public safety, and the extended delay of trains at the unique international border crossing, which are mitigated by interchanging at the Laredo Yard instead. The

Carrier has also shown by statistical evidence that increased efficiency has in fact resulted. The Carrier is interchanging 100 more trains per month and created 30

more jobs for employees represented by the Organization as a result of the new

interchange location. After a careful review of the evidence and arguments in light

of the prevailing circumstances involving these two interchanging carriers; there is

no precedent or contractual basis for concluding the Laredo Yard is not the

reasonably adjacent track within close proximity to the International Bridge for

purposes of being the designated interchange tracks between Tex Mex and KCSM as

contemplated by Section 3 of the National Agreements, supra.

Interchanging in Two Directions The Organization also diminishes the applicability of the National

Agreements’ language allowing the Carrier to “specify” or “designate” additional

tracks for interchange operations, asserting that it was only intended for carriers

that did not already have the right to conduct interchange in two directions, which

did not apply to the Carrier in this case. We must hold that not all parts of various

contract provisions bear equal relevancy to the issues being adjudicated. The fact

that a portion of the national agreements’ language concerning interchanging in

both directions was not applicable to the facts in this matter; does not void the

remaining provisions in our scrutiny of Articles IV and VII.

Work Equities The Organization also asserts the National Agreements (Article IV, Section 2

and Article VII, Section 5, supra) requires the Carrier to maintain work equities

previously in existence, i.e. maintaining an economic equivalency commensurate

with when the Tex Mex crews performed all work north of the border and KCSM

crews performed all work south of the border. The Organization argues that the

Carrier has failed to resolve the work equity issue created by relocating the

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interchange location. The Organization further contends work equity assurances

were a quid pro quo for the Carrier’s right to require Tex Mex crews to operate interchanging trains in both directions. The Organization also states that since

Mexican law prohibits Tex Mex crews from operating trains in Mexico; there can be no equitable resolution of the interchange work between the American Tex Mex crews and the Mexican KCSM crews.

The Carrier contends the work equities referenced in Section 5 and Section 2, supra, is entirely about the work equity issue arising when a change is implemented requiring interchanging crews to operate in two directions, as they clearly exist together within the first sentence thereof. It is noted that both parties agree interchanging in both directions is not relevant in this case. The Carrier further points to additional Section 5 language, which states: “Where carriers not now using

yard and transfer crews to transfer cars in both directions desire to do so, they may

commence such service and notify the General Committees of the railroad involved

thereof to provide an opportunity to the General Committees to resolve any work equities between the employees of the carriers involved. Resolution of work equities

shall not interfere with the operations of the carriers or create additional expense to

the carriers. It is agreed, however, that the carriers will cooperate in providing the

committees involved with data and other information that will assist in resolution of work equities.” (underlined emphasis added)

The Carrier accurately points out that the language of Section 5 and 2 makes clear that whether or not the work equity provision applies in this matter; the resolution of said work equities shall not interfere with the Carrier’s interchange operations or create additional expense to the Carrier. The Carrier further states that their notice of the interchange modifications and their offer to provide any relevant information to the Organization has fully satisfied any work equity obligations arising in Sections 5 and 2. More importantly, the Carrier stresses that no Tex Mex employee has lost work as a result of the new interchange location.

The Board is cognizant that the claims asserted for resolution herein do not allege a violation of the National Agreements requiring our judgment. However, both parties admit that no meaningful dialogue concerning work equities has

54 occurred; with the Organization considering it futile and the Carrier doubting the likelihood of financial remuneration since no Tex Mex employee has lost work.

While the Board finds no violation of the cited work equity provisions of the

National Agreements that affect the Organization’s claims; nothing herein shall preclude the parties from pursuing work equity issues through Section 6 of the

Railway Labor Act.

Local Agreement Interchange Provisions Articles 47 and 61 and the National Railways of Mexico

Notwithstanding the National Agreements, the Organization cites the pre- existing and more specific interchange provisions of local agreements from 1950- present (Article 47 of the Engineers’ Agreement and Article 61 of the Conductors &

Trainmen Agreement) as the governing provisions of the interchange operations before and after the National Agreements’ took affect. The Organization argues that the working conditions contained therein have governed the cross border interchange since 1950 with great specificity; reflecting the parties’ past practice and further revealing the intentions of the parties to not disturb those practices when later negotiating the National Agreements. The Organization points out that these earlier local agreement provisions specify daily hours of all interchange work north of the International Bridge between employees of the two applicable Carriers

(I-GN/MoPac and Tex Mex) with no work share for Mexican crews. The

Organization avers the specific local agreement provisions of Article 47 and Article

61 governing interchange should prevail over more general national agreement provisions governing interchange. Articles 47 and 61 state:

“ARTICLE 47 INTERCHANGE‐NATIONAL RAILWAYS OF MEXICO RECITALS: 1. The carriers contemplate entering into an agreement with respect to the delivery or receipt of export and import traffic of the carriers to and from the National Railways of Mexico at Laredo, Texas. 2. Designation of tracks of the Tex Mex and the I‐GN, which will be used to accommodate said carriers in affecting the delivery or receipt of export and import traffic of the carriers with the National Railways of Mexico, are described as follows: (a) Four certain Tex Mex tracks, Num. 1 to 4, and certain crossover tracks and connecting tracks appurtenant thereto and required to be used in connection with service to be performed to this Agreement, said tracks being intermediate, on the south, a point on and near the middle of the International Bridge which is the U.S.‐ Mexican boundary line and, on the north, the south line of Farragut Street. Also, the so‐called Mexico House Track, Leon Sand Spur —Tracks 1 and 2—and Zachry Spur, leading from the Mexico House Track. (MEMORANDUM OF AGREEMENT, effective December 1, 1971) (b) That section of Missouri Pacific Railroad’s so‐called Depot Tracks Nos. 1 (to include East House Track), 2, 3, and the Old House Track, which is adjacent to and parallel to Depot Track No. 3 will hereinafter be referred to as Missouri Pacific Railroad’s freight forwarding tracks. (MEMORANDUM OF AGREEMENT, effective December 1, 1971) (c) That section of Missouri Pacific Railroad’s lower yard tracks Nos. 3, 4, 5, and 6 will hereinafter be referred to as the Missouri Pacific Railroad’s receiving tracks. It is understood

55 that in delivering cars to these tracks, Track No. 6 will first be filled to capacity as near as practicable, then Tracks 5, 4, and 3 in that order. NOTE: It is agreed that hold, bonded, and bad order cars may be placed on the south lead and Track No. 6 and subsequently removed by The Texas Mexican Railway during their hours of making interchange. (d) Deleted by MEMORANDUM OF AGREEMENT, effective December 1, 1971.

IT IS AGREED: SECTION 1. Tex Mex Yard crews will perform the service as hereinafter described between the hours of 12:00 midnight and 2:00 p.m.; I‐GN yard crews will perform the service as hereinafter described between the hours of 2:00 p.m. and 12:00 mid‐ night.

(a) The transportation over the Tex Mex Tracks, described in 2(a) of recitals, to tracks of the National Railways of Mexico, located on the International Bridge at and south of the U.S. Mexican Boundary Line of all cars brought to and placed on Tex Mex Tracks, described in 2(a) of Recitals, for interchange from Tex Mex Company to said National Railways of Mexico.

(b) The transportation from I‐GN Freight Forwarding Tracks and thence over the Tex Mex Tracks, described in 2(a) of Recitals, of freight cars to National Railways Track for interchange from I‐GN to National Railways.

(c) The transportation from National Railways Tracks onto the Tex Mex Tracks, described in 2(a) of Recitals, of freight train cars for interchange from National Railways (1) to Tex Mex Company and (2) to I‐GN, and the switching and separation of said cars on Tex Mex tracks, described in 2(a) of Recitals, into the following separate groups or cuts; namely: (1) Cars for delivery to I‐GN on Freight Receiving Tracks. (2) Cars for delivery to Tex Mex Company at some suitable location on Tex Mex Tracks, described in 2(a) of Recitals. (3) Cars of both I‐GN Company and Tex Mex Company for delivery to South Section of I‐GN Fumigation Tracks, and (4) Cars where the party to whom delivery is to be made is unknown, which shall be placed at a suitable location on Tex Mex Tracks, described in 2(a) of Recitals, until party to whom delivery is to be made is determined.

(d) The transportation of the cars referred to in (c) next above, following their separation as in said (c) provided shall be as follows: (1) Cars for delivery to I‐GN shall be placed on I‐GN Freight Receiving Tracks. (2) Cars for delivery to Tex Mex Company shall be placed on Tex Mex Tracks, described in 2(a) of Recitals. (3) Cars for delivery to U.S. Fumigation Plant shall be placed on South Section of I‐GN Fumigation Tracks, and when fumigation is completed and cars released shall be transported to the tracks, referred to in (1) or (2) of this (d), of the party to whose line the car or cars is or are destined at Laredo, Texas. In the event southern access to the South Section of I‐GN Fumigation Tracks is obstructed, yard crews shall have the right temporarily to operate to and from the South Section of I‐GN Fumigation Plant via I‐GN Lower Yard Track No. 5 (comprising part of I‐GN Freight Receiving Tracks) and via the North Section of I‐GN Fumigation Tracks until such obstruction is removed. (4) When it shall have been determined to what party any car or cars referred to in (d) or (c) of this Section is or are to be delivered, said car or cars shall be transported to the tracks, referred to in (1) or (2) of this (d), of the party to whose line the car or cars is or are destined at Laredo, Texas.

(e) The transportation of passenger train cars from and to National Railways Tracks over Tex Mex Tracks described in 2(a) of Recitals and/or any tracks in International‐Great Northern Railroad Company covered by this agreement.

SECTION 2. Yard and engine men of the respective carriers deprived of service in violation of this agreement will be paid for time lost.

SECTION 3. It is agreed that the Tex Mex and the I‐GN will each maintain three yard crews in each 24‐hour period, six days per week, for a period of four years from the effective date of this agreement.

SECTION 4. The employees of the Tex Mex covered by this agreement will be afforded the protection as set forth in conditions 4 to 9, inclusive, in Oklahoma Railway Company, Trustees Abandonment, 257 I.C.C. 177, (197‐201). This is without prejudice to the position of either party as to the proper application of the conditions set forth in Oklahoma Railway Company, Trustees Abandonment, 257 I.C.C. 177, (197‐201).

SECTION 5. This agreement is without prejudice to the position of either party as to the proper application of the rules governing starting time on The Texas Mexican Railway Company.

SECTION 6. This agreement shall become effective on the date the joint operations as referred

56 to in the opening section of this agreement are commenced and will remain in effect until changed or cancelled in accordance with the provisions of the Railway Labor Act, as amended. (MEMORANDUM OF AGREEMENT, dated December 8, 1950)”

“(C&T) ARTICLE 61 INTERCHANGE (A) The Company will designate a track or tracks for the purpose of receiving and delivering cars to the Missouri Pacific Railroad and to the National Lines of Mexico; such design[at]ed tracks will not be changed without twenty‐four (24) hours notice. (B) Yardmen will not be required to enter the Missouri Pacific yards on any tracks except those designated in Section (A) of this article for the purpose of switching cars except in case of emergency, and when required to [do] so they will be paid on the minute basis with a minimum of one hour at the regular overtime rates, independent of all other time earned on that day.” (C) Paragraphs (A) and (B) are modified to the extent of the following joint agreements between the International‐Great Northern Railway (which is now the Missouri Pacific Railroad), The Texas Mexican Railway Company, and the Organizations, dated December 8, 1950, providing for the delivery and/or receipt of traffic of the two railroads from the National Railways of Mexico at Laredo, Texas:” RECITALS: 1. The carriers contemplate entering into an agreement with respect to the delivery or receipt of export and import traffic of the carriers to and from the National Railways of Mexico at Laredo, Texas. 2. Designation of tracks of the Tex Mex and the I‐GN which will be used to accommodate said carriers in affecting the delivery or receipt of export and import traffic of the carriers with the National Railways of Mexico, are described as follows: (a) Four certain Tex Mex tracks, Num. 1 to 4, and certain crossover tracks and connecting tracks appurtenant thereto and required to be used in connection with service to be performed to this Agreement, said tracks being intermediate, on the south, a point on and near the middle of the International Bridge which is the U.S. ‐ Mexican boundary line and, on the north, the south line of Farragut Street. Also, the so‐called Mexico House Track. Leon Sand Spur‐‐Tracks 1 and 2‐‐and Zachry Spur, leading from the Mexico House Track. (MEMORANDUM OF AGREENENT, effective December 1, 1971) (b) That section of Missouri Pacific Railroad's so‐called Depot Tracks Nos. 1 (to include East House Track), 2, 3, and the Old House Track, which is adjacent to and parallel to Depot Track No.3 will hereinafter be referred to as Missouri Pacific Railroad’s freight forwarding tracks. (MEMORANDUM OF AGREEMENT, effective December 1, 1971) . (c) That section of Missouri Pacific Railroads lower yard tracks Nos. 3, 4, 5, and 6 will hereinafter be referred to as the Missouri Pacific Railroad's receiving tracks. It is understood that, in delivering cars to these tracks, Track No.6 will first be filled to capacity as near as practicable, then Tracks 5, 4 and 3 in that order. NOTE: It is agreed that hold, bonded, and bad order cars may be placed on the south lead and Track No.6 and subsequently removed by The Texas Mexican Railway during their hours of making interchange. (MEMORANDUM OF AGREEMENT, effective December 1, 1.971). (d) Deleted by MEMORANDUM OF AGREEMENT, effective December 1, 1971.

IT IS AGREED: SECTION 1: Tex Mex Yard crews will perform the service as hereinafter described between the hours of 12:00 midnight and 2:00 p.m.; I‐GN yard crews will perform the service as hereinafter described between the hours of 2:00 p.m. and 12:00 midnight. (a) The transportation over the Tex Mex Tracks, described in 2(a) of recitals, to tracks of the National Railways of Mexico, located on the International Bridge at and south of the U.S. Mexican Boundary Line of all cars brought to and placed on Tex Mex Tracks, described in 2(a) of Recitals, for interchange from Tex Mex Company to said National Railways of Mexico. (b) The transportation from I‐GN Freight Forwarding Tracks and thence over the Tex Mex Tracks, described in 2(a) of Recitals, of freight cars to National Railways Track for interchange from I‐GN to National Railways. (c) The transportation from National Railways Tracks onto the Tex Mex Tracks, described in 2(a)of Recitals, of freight train cars for interchange from National Railways (1) to Tex Mex Company and (2) to I‐GN, and the switching and separation of said cars on Tex Mex tracks, described in 2(a) of Recitals, into the following separate groups or cuts; namely: (1) Cars for delivery to I‐GN on Freight Receiving Tracks. (2) Cars for delivery to Tex Mex Company at some suitable location on Tex Mex Tracks, described in 2(a) of Recitals. (3) Cars of both I‐GN Company and Tex Mex Company for delivery to South Section of I‐GN Fumigation Tracks, and (4) Cars where the party to whom delivery is to be made is unknown, which shall be placed at a suitable location on Tex Mex Tracks, described in 2(a) of Recitals, until party to whom delivery is to be made is determined.

(d) The transportation of the cars referred to in (c) next above, following their separation as in said (c) provided shall be as follows: (1) Cars for delivery to I‐GN shall be placed on I‐GN Freight Receiving Tracks. (2) Cars for delivery to Tex Mex Company shall be placed on Tex Mex Tracks, described in 2(a) of Recitals.

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(3) Cars for delivery to U.S. Fumigation Plant shall be placed on South Section of I‐GN Fumigation Tracks, and when fumigation is completed and cars released shall be transported to the tracks, referred to in (1) or (2) of this (d), of the party to whose line the car or cars is or are destined at Laredo, Texas. In the event southern access to the South Section of I‐GN Fumigation Tracks is obstructed, yard crews shall have the right temporarily to operate to and from the South Section of I‐G‐N Fumigation Plant via I‐GN Lower Yard Track No.5 (comprising part of I‐GN Freight Receiving Tracks) and via the North Section of I‐GN Fumigation Tracks until such obstruction is removed. (4) When it shall have been determined to what party any car or cars referred to in (d) or (c) of this Section is or are to be delivered, said car or cars shall be transported to the tracks, referred to in (1) or (2) of this (d), of the party to whose line the car or cars is or are destined at Laredo, Texas.

(e) The transportation of passenger train cars from and to National Railways Tracks over Tex Mex Tracks described in 2(a) of Recitals and/or any tracks in International‐Great Northern Railroad Company covered by this agreement.

SECTION 2. Yard and engine men of the respective carriers deprived of service in violation of this agreement will be paid for time lost. SECTION 3. It is agreed that the Tex Mex and the I‐GN will each maintain three yard crews in each 24‐hour period, six days per week, for a period of four years from the effective date of this agreement. SECTION 4. The employees of the Tex Mex covered by this agreement will be afforded the protection as set forth in conditions 4 to g, inclusive, in Oklahoma Railway Company, Trustees Abandonment, 257 I.C.C. 177, (197‐201). This is without prejudice to the position of either party as to the proper application of the conditions set forth in Oklahoma Railway Company, Trustees Abandonment, 257 I.C.C. 177, (197‐201). SECTION 5. This agreement is without prejudice to the position of either party as to the proper application of the rules governing starting time on The Texas Mexican Railway Company. SECTION 6. This agreement shall become effective on the date the joint operations as referred to in the opening section of this agreement are commenced and will remain in effect until changed or cancelled in accordance with the provisions of the Railway Labor Act, as amended. (MEMORANDUN Of AGREEMENT, dated December 8 , 1950)…”

The two major interchange provisions of the two local agreements, supra, have been examined carefully, revealing their clear application to interchange procedures between the Carrier and former interchanging carrier, National

Railways of Mexico (“NRM”) and detailing operational procedures between NRM,

Tex Mex, and I-GN, which have not been applicable since at least 1998. In order for the Carrier (Tex Mex) to be continually bound by said provisions, it must be established that the now interchanging carrier (KCSM) is the lawful successor to the

National Railways of Mexico specified in those provisions. The Organization has not done so.

The evidence shows the National Railways of Mexico is a foreign entity statutorily created, owned, operated, and controlled by the Mexican government.

NRM is a state-owned entity, which owned and operated all railroad tracks in

Mexico per a 1983 constitutional mandate. In 1995, Mexico amended their constitution to allow private carriers to operate the railroads after the Mexican government chose to revamp, reform, and privatize the operations of the NRM by dividing the railroad into identified regions. Those regions were offered for lease to

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private carriers who were then allowed to operate thereupon under lease terms

referred to as governmental concessions. KCS entered into a joint venture with a

Mexican partner and successfully won such a concession to operate the railroad’s

Northeast and Central Region in 1996 for approximately $1.4 billion (U.S.), which

includes the rail from Mexico City to the International Bridge in Laredo, Texas. The

joint venture merged to become KCSM in 2005. It is noted the NRM is still in

existence but no longer operates as a rail Carrier. It is further noted that the NRM

retained their prior legal obligations, including debt, environmental liability, labor

obligations, and other civil liabilities; thereby relieving KCSM of NRM’s prior

obligations.

Under the American standard of business law, a company that purchases or

receives assets of another company generally is not liable for the debts and

liabilities of the company selling those assets. (Kaiser Foundation Health Plan of the

Mid‐Atlantic States v. Clary & Moore, P.C., 123 F.3rd 201, 204 (4th Cir. 1997).

Corporate successorship may also require the elimination of the predecessor entity

following the transaction after considering the identity of ownership remaining; the

nature and scope of the two entities; whether or not two viable and separate entities

actually remain after the transaction; and whether or not adequate consideration

was exchanged, etc. In the matter before us, the preceding entity (National Railways

of Mexico) remains in existence today following the lease of their property to KCSM

and others. The NRM, a Mexican government agency, no longer operates the

Mexican railroads owned by that government and has leased those rights for terms to private entities; KCSM among them. There is no evidence in the record concerning the NRM/KCSM transaction that would reveal expressed language whereby KCSM assumed all obligations of NRM and/or agreed to become legal successor to the NRM. For the Board to conclude KCSM is the successor to NRM for purposes of enforcing a third party contract between Tex Mex and the Organization would be speculative and reaching. The obsolete interchange provisions of Article

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47 and Article 61, offer evidence of historical past practice involving NRM at the prior interchange location; nothing more.5

Articles 63 and 44 and 7

The two local agreements further address limited interchange matters between Tex Mex and adjoining carriers at Article 63 (Engineers) and Articles 44 and 7 (Conductors & Trainmen).6 Articles 63 and 44 and 7 state:

“Engineers’ Agreement dated May 1, 1984 …ARTICLE 63 INTERCHANGE (a) The carrier shall designate by bulletin points and tracks for the receipt and delivery of interchange from connecting line carriers. Each General Chairman shall be furnished a copy of all bulletins and such bulletins shall be posted on bulletin board at all designated on and off duty points. (b) At points where yard crews are employed, road freight crews may be required to receive their over‐the‐road trains from a connecting carrier or deliver their over‐the‐road trains to a connecting carrier provided such trains are solid trains which move from one carrier to another intact with or without motive power and/or caboose. (c) If road crews referred to in paragraph (b) of this rule are not required to return to deliver their motive power and/or their cabooses to or from their on or off duty points, an alternate means of transportation will be provided. (d) At designated interchange points, if a carrier does not now have the right to specify additional interchange tracks it may specify such additional track or tracks as the carrier deems necessary providing such additional track or tracks are in close proximity. Bulletins specifying additional tracks will be furnished each General Chairman. (e) If the number of cars being delivered to or received from interchange tracks of a connecting carrier exceeds the capacity of the first track used, it will not be necessary that any one interchange track be filled to capacity before use is made of an additional track or tracks provided, however, the minimum number of tracks necessary to hold the interchange will be used. (f) Crews used in interchange service may be required to handle interchange to and from a foreign carrier without being required to run "light" in either direction. (underline emphasis added) (NATIONAL AGREEMENT, dated January 27, 1972) (g) The Carrier may designate an additional interchange track at Robstown, Texas, east of Highway 44, identified as New Track No.1 for the receipt and delivery of cars between The Texas Mexican Railway Company and the Missouri Pacific Railroad Company. (h) When New Track No.1 is filled to capacity, the overflow will be delivered to the present interchange tracks identified as Short Wye, Transfer 1 and 2. (i) Enginemen who are required to pull cars from the MOP main line will be allowed a payment of one (1) hour at the pro‐rata rate in addition to all other earnings. (MEMORANDUM OF AGREEMENT, dated August 25, 1981)”

“Conductors & Trainmen Agreement dated October 1, 19857 …Article 7 Switching by Conductors and Brakemen …(D) Interchange (National Agreement, 1972) (l) At points where yard crews are employed, road freight crews may be required to receive their over‐the‐road trains from a connecting carrier or deliver their over‐the‐road trains to a connecting carrier provided such trains are solid trains which move from one carrier to another intact with or without motive power and/or caboose. (2) If road crews referred to in Section (1) of this Article are not required to return or deliver their motive power and/or their cabooses to or from their on or off duty points an alternate means of transportation will be provided. . (3) At designated interchange points, if a carrier does not now have the right to specify additional interchange tracks it may specify such additional track or tracks as the carrier deems necessary providing such additional track or tracks are in close proximity. Bulletins specifying additional tracks will be furnished the General Chairman or General Chairmen involved prior to the effective date.

5 The evidence reveals the Mexico House Track, Leon Sand Spur, and the Zachry Spur referenced in Articles 47 and 61, no longer exist. The tracks on both sides of the border have been reconfigured, replaced, and/or altered by Tex Mex, KCSM, and in some instances prior to KCSM. See Carrier Ex. 51. 6 National Agreement provisions were codified into the local agreements in the 1980’s as Articles 7, 44, and 63. 7 Like the Engineers Agreement, the Organization in this matter (BLET) assumed the agreement covering the crafts of conductor and trainmen when it replaced UTU as the certified representative for the crafts in 2002. Reference to UTU in the local agreements is not indicative of the stipulated fact that BLET is the current representative of the Tex Mex Engineers, Conductors, & Trainmen.

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(4) If the number of cars being delivered to or received from interchange tracks of a connecting carrier exceeds the capacity of the first track used, it will not be necessary that any one interchange track be filled to capacity before use is made of an additional track or tracks provided, however, the minimum number of tracks necessary to hold the interchange will be used. (5) Crews used in interchange service may be required to handle interchange to and from a foreign carrier without being required to run "light" in either direction. Work equities between carriers previously established by agreement, decision or practice will be maintained with the understanding that such equity arrangements will not prevent carriers from requiring crews to handle cars in both directions when making interchange movements. Where carriers not now using yard and transfer crews to transfer cars in both directions desire to do so, they may commence such service and notify the General Committees of the railroad involved thereof to provide an opportunity to the General Committees to resolve any work equities between the employees of the carriers involved. Resolution of work equities shall not interfere with the operations of the carriers or create additional expense to the carriers. It is agreed, however, that the carriers will cooperate in providing the committees involved with data and other information that will assist in resolution of work equities.” (6) The foregoing provisions are not intended to impose restrictions with respect to interchange operation where restrictions did not exist prior to the date of this Agreement.” (underlined emphasis added) “Article 44 Interchange The Company will designate a track or trucks for the purpose of interchanging cars. In the event interchange movements are made in foreign yards, parties to this agreement will confer and negotiate an agreement to cover such interchange.” (underlined emphasis added)

The Carrier contends the plain language of the two Local Agreements, like that of the National Agreements, grants the Carrier an affirmative right to unilaterally determine where and how it will interchange with another carrier. The

Board agrees.

Most pointedly, Article 44 states that the “Company will designate a track or tracks for the purpose of interchanging cars.” The only exception added by the parties states that negotiation of an agreement will occur “in the event interchange movements are made in foreign yards”, which is inapplicable to the new interchange location at hand (Laredo Yard) since Laredo Yard is not foreign to the claimants.

The clear and unambiguous language “the Company will designate” does not distinguish between establishing a new interchange location or relocating an existing one, leading to the interpretive conclusion that the parties chose not to permanently fix interchange locations absent a site specific agreement to do so. The periodic relocation of interchange is reflected in numerous examples in evidence where it has commonly occurred throughout the industry. Likewise, the evidence also contains examples of interchange locations identified and fixed by agreement.

Article 63 not only provides the Carrier with the right to designate tracks for interchange, but also places an affirmative duty upon the Carrier to do so by bulletin notice. The relevant verbiage, “The carrier shall designate by bulletin points and tracks for the receipt and delivery of interchange from connecting line carriers. Each

General Chairman shall be furnished a copy of all bulletins and such bulletins shall be

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posted on bulletin board at all designated on and off duty points”; (underlined emphasis added) inarguably requires the Carrier to a) designate the interchange b) by bulletin c) furnish said bulletin(s) to the Organization, and d) post said bulletin(s) on the bulletin boards at the duty points of the affected employees.

Article 63 and Article 7 further allows interchange crews to operate in both directions and recites National Agreement language on close proximity, which has been previously addressed, supra. The parties added language at Article 7(D)(6) prohibiting any restriction upon interchange operations by the interpretation or the application of its’ provisions.

Other Local Agreement Provisions The Organization asserts that the local agreements combined with the historical fact that their membership has been performing the work of moving the arriving Mexican trains between the border and Laredo Yard required the Carrier to preserve that status quo or in the alternative, file a Railway Labor Act (“RLA”)

Section 6 Notice8 notifying the Organization of their desired intent to change the

provisions of the agreement(s) which serve to give the Organization’s membership

an exclusive right to the work. Though no such express language is found in the

local agreements which specifically describes the work in question, the Organization

contends that it is not necessary to include all working conditions in a railroad

collective bargaining agreement, citing the Supreme Court in Detroit & Toledo Shore

Line Railroad Co. v. United Transportation Union, 396 U.S. 142, 148 (1969) which

held that RLA Section 6 “speaks plainly of rates of pay, rules, or working conditions

without any limitation to those obligations already embodied in collective agreements”.

The Organization further contends the local agreements contain numerous other provisions, which exclusively reserve the work of moving all trains on the

8 Railway Labor Act Section 6 states: “Carriers and representatives of the employees shall give at least thirty days' written notice of an intended change in agreements affecting rates of pay, rules, or working conditions, and the time and place for the beginning of conference between the representatives of the parties interested in such intended changes shall be agreed upon within ten days after the receipt of said notice, and said time shall be within the thirty days provided in the notice. In every case where such notice of intended change has been given, or conferences are being held with reference thereto, or the services of the Mediation Board have been requested by either party, or said Board has proffered its services, rates of pay, rules, or working conditions shall not be altered by the carrier until the controversy has been finally acted upon, as required by section 155 of this title, by the Mediation Board, unless a period of ten days has elapsed after termination of conferences without request for or proffer of the services of the Mediation Board.”

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Carrier’s property between Laredo Yard and the International Bridge to employees represented by the Organization. The Organization argues that unless specifically provided otherwise by written agreement, the work identified in the local CBA(s) belongs exclusively to the craft governed thereby. To be completely thorough with the recognition and deliberation of the Organization’s arguments that the two local agreements create an exclusive right to the specific work in question, a careful examination has been given to each of those cited provisions, infra.

Article 70 “Article 70 SCOPE (Engineer’s Agreement) (a) The term "Enginemen" and/or Employee" as herein referred to shall include all Engineers, Firemen and Hostlers, except as specifically provided herein. (b) The term "Union and/or Organization" as herein referred to shall mean the United Transportation Union. (c) The term "Carrier, Company and/or Railroad" as herein referred to shall mean The Texas Mexican Railway Company.”

Article 70 defines the parties covered by the agreement without mention of the parameters of the work purportedly covered by said agreement. This provision identifies the parties and the terms used throughout the contract referencing them.

The Organization contends that it also guarantees to the employees (Engineers,

Firemen, and Hostlers) all rights afforded by the terms within said contract. This is not without exception to other terms, such as the Carrier’s right to designate or specify interchange location and procedures.

Article 69 “Article 69 REPRESENTATION OF EMPLOYEES (Engineer’s Agreement) (a) All matters concerning rates of pay, rules, and working conditions of enginemen covered by this Agreement, will be handled by the officers of the company with the authorized committee and/or officers of the United Transportation Union. (b) It is the policy of the parties signatory hereto that all provisions of this Agreement be applied to all enginemen without regard to race, creed, color, age, sex or national origin. (c) The use of such words as "he", "his", and "him", as they may appear in this Agreement, are not intended to restrict the application of the Agreement or a particular rule to a particular sex, but are used solely for the purposes of grammatical convenience and clarity.”

Article 69 represents the union’s recognition as the bargaining representative of the employees covered by said agreement entitling the

Organization to handle representational matters between the Carrier and

Organization. This provision is similar in nature to language commonly required for the legal purpose of recognizing the certified representative of the bargaining unit.

Article 69 further prohibits the discrimination of the covered employees on the basis of race, creed, color, age, sex, or national origin and allows for the use of

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pronouns. There is no evidence that the provisions of Article 69 have been violated

by the Carrier’s authorized adjustment of the interchange location with KCSM.

Article 6 “Article 6 ASSIGNMENT OF MEN (Engineer’s Agreement) “There shall be only enough enginemen assigned to regular and irregular runs to handle the Company's business.”

The sentence of Article 6 cited by the Organization, supra, states the Carrier

shall maintain Engineers sufficient to handle the Carrier’s business without

describing or limiting what shall be the Carrier’s business while undertaking

interchange with another carrier. Nor does it distinguish between the business of

the Carrier and that of its’ interchanging carrier, KCSM. In the instant matter, the

Carrier has properly designated the point whereby the adjoining carrier (KCSM)

shall deliver their trains in interchange. KCSM’s delivery and retrieval of trains

to/from the interchange point by KCSM’s employees is not determined to be the

business of the Carrier (Tex Mex) as contemplated in Article 6; nor does the Carrier

have the legal right to assert such control of another carrier’s equipment and crews.

The discussion underscores the necessity for an interchange agreement between

adjoining carriers. The Organization stated that Article 6 guarantees the work of

their member Engineers on “all of the Carrier’s traffic on the entirety of the

property”; an expansion of Article 6 that is simply not reflected therein.

Article 32 “Article 32 ENGINEERS RIGHTS TO RUNS (Engineer’s Agreement) Enginemen rights to runs and branches of service, including switch engines, shall be governed by seniority. No engine shall be considered preferable in any class of service except those that pay the most money for running them.”

Article 32 recognizes seniority of the Carrier’s Engineers as the basis for

assigning work and that engine preference shall be predicated upon the pay allocated for the operation of said engine. A reading of Article 32 does not conclude that the sanctioned interchange operation of trains by another carrier’s crews is to be governed by seniority provisions applicable to the Carrier’s employees only.

Article 71 “Article 71 SENIORITY ROSTERS (Engineer’s Agreement) The Carrier shall post at all “on" and "off" duty points during January of each calendar year, a seniority list indicating the employment date, craft, and promotion date of all enginemen. The General Chairman shall be furnished a copy. Any protest or correction must be presented in writing within ninety (9O) days, after which the seniority roster as posted, will be considered accepted.”

Article 71 is purely an administrative procedure for maintaining the seniority

of the Carrier’s Engineers and making that information available. It does not

64 address whether or not the Carrier’s Engineers have the exclusive right to operate the authorized interchanging trains of another properly engaged carrier during interchange.

Article 30 “Article 30 BULLETINS, PROMOTED FIREMEN, RELIEF ENGINES, ENGINEERS EXTRA BOARD, EXTRA RUNNING ASSIGNMENT (Engineer’s Agreement) (a) All permanent vacant runs or class of service (5 days to be declared vacant) or new class of service, shall be bulletined for a period of five days. In case a run remains bulletined five days and no application therefor, the oldest extra engineer shall be designated to the run. Should oldest extra engineer be assigned to hostler position, he shall not be allowed to do extra running unless enginemen job has been or is known to be open for a period of five days or more, in which case he shall be placed on enginemen' extra list. Enginemen away at the time of run or service bulletined shall have five days after their return to sign bulletin. All permanent vacant runs or new classes of service shall be bulletined for five (5) days, and successful applicant will take position on the sixth (6) day (LETTER OF UNDERSTANDING, dated June 19,1961). (b) A promoted fireman shall not be held off his regular assignment when other promoted firemen are available, nor shall he elect to layoff his regular firing assignment to protect engineer's extra work. A promoted fireman will be permitted to layoff during his layover period if there are no known vacancies for an extra engineer at the time of his request to layoff. If it later becomes necessary to use a junior promoted fireman during this period, the senior promoted fireman will not be penalized nor will he claim time account junior promoted fireman working. (MEMORANDUM OF AGREEMENT, dated December 12, 1950) (c) In case a relief engineer is required at outside point, the senior promoted fireman available after the departure of the mixed train will be used. It is agreed that, in applying this paragraph (c), when an extra board is maintained at Laredo, the extra engineer first out on the extra board will take the status of the senior demoted fireman. It is also understood that the term "available" as used in this paragraph, means off duty at Laredo after the scheduled departure of No.8. (LETTER OF UNDERSTANDING, dated May 6, 1953) (d) When business conditions warrant, an enginemen extra board may be established. When there is no established Engineer's extra board, any engineer may request the Enginemen' General Committee that he be assigned engineer's extra board, if there is no senior engineer working as fireman. But, when an engineer is assigned the extra board, at his request, he must remain so assigned for a period of 30 days or until he can exercise his seniority on an engineer's vacancy. (MEMORANDUM OF AGREEMENT dated June 16, 1952). (e) Should an extra running assignment be called for the same time that the senior promoted fireman's firing assignment begins its tour of duty; the said senior fireman shall be entitled to said running assignment. (f) An engineman returning to the Laredo home terminal from an outside point will report on arrival at Laredo and must report not later than 16 hours after release from last duty at the outside point. In the application of this regulation, he will be marked up in turn for service at the expiration of the 16 hours and will be considered subject to call for whatever service he is entitled to thereafter. (g) It is agreed that any engineer has the right to pass up a position and exercise his seniority to take another junior engineer's position after having held the position he was on for a period of at least sixty (60) days. It is understood that an engineer exercising displacement rights under this agreement may only displace a junior engineer. An engineer must advise in writing of his desire to displace a junior engineer and his position will be bulletined. Engineman vacating position under this agreement must remain on position until assignment is made. (MEMORANDUM OF AGREEMENT, dated November 15, 1951) (h) It is agreed that any fireman has the right to pass up a position and exercise his seniority to take another junior fireman's position after having held the position he was on for a period of at least sixty (60) days. It is understood that a fireman exercising displacement rights under this agreement may only displace a junior fireman. A fireman must advise in writing of his desire to displace a junior fireman and his position will be bulletined. Fireman vacating position under this agreement must remain on position until assignment is made. (MEMORANDUM OF AGREEMENT, dated July 7, 1975.)”

Article 30 governs the manner by which the Carrier fills any vacancies in the

Engineer positions in the employment of the Carrier. The Organization has not demonstrated how these administrative procedures are violated by the work

65 performed by employees of a different carrier (KCSM) while interchanging with the

Carrier in accordance with authorizing language within the same agreement.

Article 24 “Article 24 RUN AROUND (Engineer’s Agreement) Enginemen run around through no fault of their own, at any terminal shall be paid for all time lost. This does not apply to being run around on the road.”

Article 24 provides pay entitlement when a Carrier Engineer, whose turn it is to work, is not called and the work opportunity is lost to another one of the Carrier’s

Engineers. The provision is clearly a policy governing the Carrier’s work force in the course of manning and scheduling the Carrier’s trains. The Organization has not demonstrated that the Carrier’s Engineers represented by the Organization in this matter have been run around by the properly sanctioned operation of trains by

KCSM’s crews while interchanging with the Carrier.

Article 76 “Article 76 REPRESENTATION‐INTERPRETATION (Conductors & Trainmen Agreement) (a) The United Transportation Union (T) will represent all conductors, brakemen, and yardmen in making agreements governing rates of pay, rules and working conditions.”

Article 76 represents the union’s recognition as the bargaining representative of the employees covered by said agreement and is similar in nature to such language commonly required for the legal purpose of recognizing the certified representative of the bargaining unit. (See Article 69 discussion, supra)

There is no evidence that the Organization’s duty of representation or their members’ right to representation has been violated by the Carrier’s sanctioned adjustment of the interchange location with KCSM.

Articles 16 and 63 “Article 16 Seniority Rights, Seniority Districts, Seniority Lists and Promotions (Conductors & Trainmen Agreement) (A) All brakemen will be regarded as in line for promotion, dependent upon the faithful discharge of their duties, term of service with the railroad, and capacity for responsibility. Seniority of conductors will commence with the date they are promoted. (l) Promotion to conductor will be in the relative standing on the trainmen's seniority roster.

EMPLOYEES WITH SENIORITY DATES PRIOR TO JANUARY 1, 1979. (MEMORANDUM OF AGREEMENT dated December 21, 1978). (2) (a) Within a period of six months from the date of this agreement the Carrier will arrange to hold promotion examinations on each seniority district and any employee with two years of service will be given an opportunity to take the examination. (b) All‐other employees will be given an opportunity to take examination for promotion to conductor after completion of two years' service. (c) Employees who fail to pass the first examination will be given an opportunity to take second and third examinations as provided for under (3) below, except should any employee fail to pass the third examination he will forfeit his right to subsequent examination for promotion to conductor but will retain all other seniority rights and continue to perform service restriction. (d) In the event any employee refuses to take the examination, he will forfeit his right to subsequent examination for promotion to conductor but will retain all other seniority rights and will continue to perform service without restriction.

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EMPLOYEES WITH SENIORITY DATES ON OR AFTER JANUARY 1. 1979. (3) (a) Trainmen employed on or after January 1. 1979 will be required to take examination for promotion to conductor after having completed two years of service. The examination will be given prior to the expiration of six months from the date of completion of two years of service and the trainmen will be notified by letter as to the time, date and place of the examination at least 30 days in advance thereof. In the event a trainman fails the first examination, he will be notified in writing with a copy to the Local Chairman and a second examination will be given after 60 days from the date of the first examination and prior to the expiration of 90 days therefrom. (b) Trainmen employed on or after January 1. 1979, who fail the second examination for promotion to conductor will be notified in writing with a copy to the Local Chairman and will not be permitted to perform any additional service until they have passed the examination. Prior to the expiration of 60 days from the date of the second examination an employee covered by this paragraph may request a third examination in writing and such examination will be given within 30 days from the date of request. If the employee does not report for examination as scheduled under paragraph (A) or request and pass the third examination referred to in this paragraph, he will forfeit all seniority.

EMPLOYEES WITH SENIORITY DATES PRIOR OR SUBSEQUENT TO JANUARY 1, 1979 (4) When there is a shortage of conductors on any seniority district and there are no employees with two years' service, employees with less than two years' service may be given examination for conductor and if they pass such examination they will be given a seniority date in line with (1) hereof. In the event the employees with less than two years' service fail the examination, they will not be subject to the penalty provisions of (3) and will be given an opportunity to take the examination, or examinations, again after having completed two years' service in line with the provisions of this agreement. (5) Nothing herein abridges the right of the Organization to progress disputes arising out of the application of this agreement. (6) (a) Within 10 days of receipt of notification of examination for promotion, the employee must deliver a written statement to the Trainmaster of intentions to take or not to take examination for promotion. (b) Non‐reply to the above will constitute waiver of rights to promotion…

QUESTIONS IN REGARD TO (4): Under (4) (a), how will it be determined that a conductor will be "deemed qualified" in such cases where he has had less than two years experience in road service? (A) The Assistant General Manager will make the decision regarding qualifications, but such decision will be subject to the provisions of (5). (B) Rights of brakemen will begin with the date of first trip, and they shall have choice of runs to which their seniority entitles them. (C) The regular constituted committee will settle questions of seniority among men and will be furnished copies of the Railroad's records relating thereto upon request of the committee. This is not to be retroactive. (D) The Texas Mexican Railway Company will comprise one seniority district in road service. (E) Conductors and brakemen will hold seniority rights to all yard engine assignments in the Corpus Christi Yard and while filling any assignment therein will retain their road rights. The positions of yard foreman will be filled on basis of seniority as road conductor and positions of yard helper on basis of seniority as brakeman. (F) In the event no bids are received for Conductors vacancies on new runs and permanent vacancies the junior unassigned conductor will be force assigned and will not be permitted to pass up an assignment (MEMORANDUM OF AGREEMENT, dated November 23, 1982). (G) Seniority lists will be posted in circular books January 1st of each year and a copy furnished to local and General Chairmen, correction or adjustment of seniority lists to be made through the regular constituted committee and will be final when approved by the General Manager and General Chairman. This is not to be retroactive. (1) Effective December 1, 1966, Laredo Yardmen who have established seniority as such prior to that time will have the right to establish seniority as Brakemen on the Laredo District, provided they signify in writing by December 15, 1966, of their desire in this regard; otherwise, the right to do so will be forfeited. Upon such application, the Yardmen's name will be added to the Laredo District Brakemen's Seniority Roster, a seniority date of January 1, 1967, and the names so listed will be in seniority order as a Brakeman. Road Brakemen establishing Laredo Yard seniority will be designated as “Prior Rights Brakemen” and will have prior rights to road service over Laredo Yardmen who have established Brakemen’s seniority under terms of this agreement. (2) Effective December 1, 1966, Laredo Yardmen who have established seniority as such prior to that time will have the right to establish seniority as a Brakemen on the Laredo District, provided they signify in writing by December 15, 1966, of their desire in this regard; otherwise, the right to do so will be forfeited. Upon such application, the Yardmen's name will be added to the Laredo District Brakemen's Seniority Roster with a seniority date of January 1, 1967, and the names so listed will be in seniority order as a yardman. Yardmen establishing Laredo District Brakemen's seniority will be designated as "Prior Rights

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Yardmen" and will have prior rights to yard service in Laredo Yard over Brakemen who have established Yardmen's seniority under terms of this agreement. (3) New employees entering the service of the Company and establishing seniority after January 1, 1967, shall be accorded but one seniority date, and the seniority date thus acquired shall apply as a common seniority date for both road and yard service. Such employees will have no prior rights to either road or yard service and rank below "Prior Rights Brakemen" and "Prior Rights Yardmen" on the rosters. (4) Nothing contained in paragraphs (1) and (2) shall be construed as a forfeiture of any prior seniority rights held by Brakemen or Yardmen because a Brakeman acquires seniority as Yardman or because a Yardman acquires seniority as a Brakeman. (5) A consolidated seniority roster covering Brakemen‐Yardmen shall be prepared, listing first under a caption, "Prior Rights Brakemen", the names of all Brakemen in seniority order, holding a seniority date as Brakemen prior to January 1, 1967, followed by the names of all Yardmen, under a caption, "Prior Rights Yardmen" holding a seniority date as Yardmen prior to January 1, 1967. All "Prior Rights Brakemen" shall be shown with a seniority date of January 1, 1967, as Yardmen, and all "Prior Rights Yardmen" shall be shown with a seniority date of January 1,1967, as Brakemen. Employees entering the service on and after January 1, 1967, shall have their names shown the "Prior Rights Brakemen" and "Prior Rights Yardmen" in the order of their employment and shall have a seniority date in Road and Yard Service and shall be designated as "Non‐Prior Rights Employees". (6) Upon establishment of dual seniority as provided herein, the provisions of the governing Road or Yard Service Agreements will apply; that is, when the employee marks up on the Road Board and works in road service, the provisions of the current Brakemen's Agreement will apply, and the employee marks up on the Yardmen's Agreement will apply, subject to the requirements of this agreement. (MEMORANDUM OF AGREEMENT, dated November 23, 1966) (H) A conductor wishing to relinquish his seniority rights as conductor should make application to the Trainmaster, jointly to the Local Chairman, UTU (C‐T). The Local Chairman will advise the Trainmaster in writing the action desired on the part of the organization. If the Company has no objection to permitting the Conductor to relinquish his seniority as such, if such action is agreed to by the Organization, Trainmaster will notify the conductor that his request is being granted and the effective date, further advising the conductor that he will not again be considered for promotion until after the junior brakeman in service the date he relinquishes his rights has been promoted or offered promotion, this notification to be to the conductor in a form that will require his signature, which will indicate his acceptance of the conditions outlined, and signed copy of which will be returned to the Local Chairman for his file. If the action of the United Transportation Union is not to permit the conductor to relinquish his seniority, the Trainmaster will advise the conductor accordingly. A conductor relinquishing his seniority as described above will not be given displacement rights but will revert to the status of an extra brakeman, exercising seniority rights as the opportunity presents. (I) Conductors will have right to object to brakemen for just cause, and such objections shall be in writing, and when sustained by facts determined by an investigation, when requested, they will be furnished other brakemen.”

“Article 63 Promotion (Conductors & Trainmen Agreement) (A) Promotion will be governed by seniority, and helpers will be promoted to foremen. Promotions prior to July 1, 1957, will not be affected by this ruling. (B) A yardman who has passed up promotion or other yardmen who may pass up or decline promotion to engine foreman and who at a later date desire to establish seniority as engine foreman will, if they qualify for promotion, be placed on engine foremen's seniority roster as the junior engine foreman the date qualified. (C) A yardman failing to qualify for promotion to engine foreman will be given the following ninety (9O) days in which to qualify and if he does qualify he will take the seniority date as engine foreman that he would have been entitled to had he not failed to qualify. In event he again fails to qualify for promotion, he will be handled in same manner as described in Paragraph (3) of this article.”

Articles 16 and 63 address promotion procedures and the applicable seniority parameters governing the Carrier’s Conductors, Yardmen, and Brakemen.

The Organization contends Article 16 and 63 further reflect the exclusivity of all work on Carrier’s property for the identified crafts represented by the Organization.

(See Articles 30, 32, and 71 discussions, supra) The Organization has not demonstrated that the Carrier’s sanctioned re-designation of the interchange

68 location with KCSM results in a violation of Article 16 or Article 63 governing the manner in which the Carrier promotes its’ employees.

Article 62 and the 1998 Memorandum of Agreement “Article 62 Seniority District, Seniority Rights, and Seniority Lists (Conductors & Trainmen Agreement) (A) The Texas Mexican Railway's Laredo Yard will comprise one seniority district in yard service. Yard foremen and yard helpers employed in this yard will hold seniority rights to all runs, assignments and vacancies therein. (B) Rights of yardmen will begin with the date and time of their first day in service. They shall have the choice of assignments to which their seniority entitles them. (C) Road trainmen will not hold seniority rights to service in Laredo Yard. Yardmen in Laredo Yard will not hold seniority rights in road service. NOTE: Article 60, Section C of current agreement between The Texas Mexican Railway Company and the Brotherhood of Railroad Trainmen is amended to not be applicable to employees who have made written request to acquire dual seniority under the provisions of this agreement. The line of demarcation between Road and Yard Service will not be changed by this agreement. (MEMORANDUM OF AGREEMENT, dated November 23, 1966) (D) Foremen will have the right to object to helpers for just cause, and such objections shall be in writing and when sustained by facts determined by an investigation, when requested, they will be furnished other helpers.”

The Organization admits that Article 62 reflects historical differences in working conditions applicable to road crews and yard crews, which has been largely erased in practice. However, the fact remains that seniority for yard crews in

Laredo Yard are different in the CBA language than seniority rules at other Carrier locations where the work rosters have been combined. Despite the obsolete aspects of the provision, the Organization cites Article 62 in further support of their argument that their membership has the exclusive and specified right to the work in question. The Carrier counters that argument with a pair of 1998 Memorandums of

Agreement (“MOA”) between the parties that states in relevant part: “Employees assigned to Road Switcher assignments do not establish or obtain the exclusive right to perform road switcher service within their assigned territories by reason of this

Agreement.” The evidence shows the 1998 MOA(s) re-classified the work in question between the International Bridge and Laredo Yard, by combining the collaborating jobs of yard crews and road crews into the more accurate designation of “road switcher”. More relevantly, it undercuts the Organization’s exclusive right argument.9

Article 12 “Article 12 Extra Board and Laying Off (Conductors & Trainmen Agreement) (A) The senior freight conductor shall have preference to regular or extra passenger work. The senior extra conductor shall have preference to regular or extra freight work.

9 Carrier Exhibits 53 and 54 are the 1998 Memorandums of Agreement. The first covers Conductors & Trainmen, the latter covers Engineers. The MOA’s also states: “This Agreement shall supersede any Agreement Rule of the schedule Agreements between the UTU and the Tex Mex Railway Company with which it may conflict.”

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When there is no Conductors' Extra Board, and conditions warrant, a Voluntary Conductor’s Extra Board may be established at Laredo by any eligible conductor making written request to the Trainmaster, with copy to the Local Chairman that he be assigned to the Conductor’s Extra Board. No conductor will be eligible for assignment to the Conductor’s Extra Board or permitted to remain assigned to the Conductor’s Extra Board when there is a senior promoted man working as a brakeman. When an eligible conductor makes request for assignment to the Conductors' Extra Board, his regular assignment will be bulletined and he will remain on that assignment for the duration of the bulletin, and then be assigned to the Conductors' Extra Board for a period of thirty (30) days, or until he can· exercise his seniority on a conductors' vacancy. Should he be displaced by senior conductor prior to the termination of the thirty (30) day period of assignment to the Conductors' Extra Board, he will exercise his seniority in accordance with the provisions of Article 17, Paragraph (B}. Should he be eligible for assignment and elect to return to the Conductors' Extra Board it will be considered an initial assignment. All assignment on Conductors' Extra Board will be for a period of not less than thirty (30) days. It is further understood and agreed that this does not require the Company to establish a Mandatory Conductors' Extra Board. However, if a Mandatory Conductors' Extra Board is established by the Company it will be considered a regular assignment and the provisions of Article 8, Paragraph (A), will govern. (MEMORANDUM OF AGREEMENT, dated August 1, 1967) (B) A board at Laredo station will be marked daily before 10:00 a.m., showing all regular conductors and brakemen on crews and the extra men to be used to fill known vacancies within the next sixteen (16) hours. (C) It is agreed that extra conductors laying off, declining service, or evading call, will not be available for any service for a period of forty‐eight (48) hours after time laid off or called to leave, and upon reporting for duty, if the vacancy still exists, must protect it. It is understood that the provisions of this paragraph do not apply to regular assigned conductors. (MEMORANDUM OF AGREEMENT, dated August 1,1967). (D) Senior unassigned conductors available at calling time of transportation to deadhead from Laredo will be used to fill conductor and/or engine foreman vacancies in Corpus Christi Yard that their seniority entitles them to, except as provided in Paragraph (C), Article 37, which provides for a guaranteed extra board in Corpus Christi Yard.”

Article 12 governs how extra assignments are to be filled by the establishment of a Conductor’s Extra Board to be operated on a seniority basis for the filling of extra assignments/vacancies that arise. (See Articles 30, 32, 71, 16, 62, and 63 discussions, supra) The Organization has not demonstrated how the

Carrier’s sanctioned interchange with KCSM has violated the contractual obligations under Article 12, nor how the administrative procedures described in Article 12 are applicable to either the employees or the work performed by the employees of a different company interchanging with the Carrier.

Article 13 “Article 13 First In, First Out; Runarounds and Time Lost (Conductors & Trainmen Agreement) (A) Through or irregular freight crews and brakemen assigned extra board will run first in, first out. (B) Conductors and brakemen run around through no fault of their own will be paid four hours and stand first out, or where caused to lose a day the payment will be eight hours and stand last out on extra board, this not to apply where run around occurs on the road. (C) Conductors or brakemen required to lose time no fault of their own or held for service will be paid for time lost, except as provided in General Rule 72.”

Article 13 provides pay entitlement when a Tex Mex Engineer, whose turn it is to work, is not called and the work opportunity is lost to another Tex Mex

Engineer. (See Article 24 discussion, supra) The Organization has not demonstrated that the Carrier’s Engineers represented in this matter have been run

70 around by the sanctioned operation of trains by KCSM’s crews while interchanging with the Carrier.

Articles 41 and 5810 “Article 41 Crew Consist (Conductors & Trainmen Agreement) (A) The minimum crew for a yard engine assignment, regular or extra, will consist of not less than one foreman and two helpers. (MEMORANDUM OF AGREEMENT DATED January 15, 1979). (B) Yard crews will not be required to work shorthanded except in cases of extreme emergency.”

“Article 58 Crew Consist (Conductors & Trainmen Agreement) (A) The minimum crew for a yard engine assignment, regular or extra, will consist of no less than one foreman and two helpers. (MEMORANDUM OF AGREEMENT dated January 15, 1979) (B) Yard crews will not be required to work shorthanded except in cases of extreme emergency.”

Articles 41 and 58 govern the crew size of Carrier operated trains by Carrier employees covered by the Agreement and represented by the Organization. There is no evidence concluding that the Carrier’s sanctioned interchange with KCSM obligates KCSM to crew consist obligations existing between the Carrier and the

Organization; nor that such provisions are violated by KCSM’s properly authorized operation of trains to/from the point of interchange with the Carrier.

Article 46 “Article 46 Seniority District and Seniority Rights (Conductors & Trainmen Agreement) (A) Conductors and brakemen will hold seniority rights to all yard engine assignments in Corpus Christi Yard and while filling any assignment therein will retain their road rights. The position of yard foreman will be filled on basis of seniority as road conductor and positions of yard helpers on basis of seniority as brakemen. Road trainmen will not hold seniority rights to service in Laredo Yard, and yardmen in Laredo Yard will not hold seniority rights other than in Laredo Yard, except as provided in Paragraph G, Article 16. (B) The Corpus Christi Terminal Association agreement created by authority of I.C.C. Finance Docket No. 6440 provides the manner in which the various railroads operating into and out of Corpus Christi will switch the facilities of the Nueces County Navigation District. This agreement and I.C.C. Finance Docket No. 6440 will govern in connection with The Texas Mexican Railway performing the switching service in the Nueces County Navigation District, the employees holding seniority rights as provided in paragraph (A) of this article will be used to perform this switching.”

Article 46 places a limitation upon the seniority of Trainmen and Yardmen working in the Carrier’s Laredo Yard. It merely prohibits Trainmen from holding seniority rights in Laredo Yard and prohibits Yardmen from holding seniority other than in Laredo Yard. Article 46 also contains a provision pertaining to Corpus

Christi not relevant here. Article 46 speaks to seniority practices between Laredo

Yard road trainmen and yardmen, as those obsolete terms existed in 1985 prior to the 1998 Memorandum of Agreement. (See Article 62 and 1998 MOA discussion, supra) There is no evidence concluding that the Carrier’s sanctioned interchange

10 Both articles in the Conductors & Trainmen Agreement are identical.

71 with KCSM, whereby KCSM’s crews operate trains to the designated point of interchange and back; has violated the seniority limitations of the Carrier’s

Trainmen and Yardmen in Laredo Yard as described in Article 46.

Articles 52‐70 “Article 52 Rates of Pay…” (Conductors & Trainmen Agreement) “Article 53 Basic Day and Overtime…” (Conductors & Trainmen Agreement) “Article 54 Assignments…” (Conductors & Trainmen Agreement) “Article 55 Starting Time…” (Conductors & Trainmen Agreement) “Article 56 Point for Beginning and Ending of Day…” (Conductors & Trainmen Agreement) “Article 57 Lunch Period…” (Conductors & Trainmen Agreement) “Article 58 Crew Consist…” (Conductors & Trainmen Agreement) “Article 59 Chain Up, Couple, and Uncouple Air and Steam Hose and Cars, Etc…” (Conductors & Trainmen Agreement) “Article 60 Switch Lists…” (Conductors & Trainmen Agreement) Article 61 already addressed, supra. “Article 62 Seniority District, Seniority Rights, and Seniority Lists…” (Conductors & Trainmen Agreement) “Article 63 Promotion…” (Conductors & Trainmen Agreement) “Article 64 Assignments and Vacancies…” (Conductors & Trainmen Agreement) “Article 65 Attending Court and Inquest…” (Conductors & Trainmen Agreement) “Article 66 Calling Crews, Call and Release…” (Conductors & Trainmen Agreement) “Article 67 Consolidated Extra Board…” (Conductors & Trainmen Agreement) Article 68 not found in Conductors & Trainmen Agreement. “Article 69 Ice Water…” (Conductors & Trainmen Agreement) “Article 70 Loading and Unloading Company Material, Live Stock, Express, Etc.” (Conductors & Trainmen Agreement)

The Organization cites Articles 52-70, en globo, as being “specifically relevant to this dispute” (Organization Submission page 22). The articles have been read carefully. The articles cover rates of pay, daily assignments, shift times, on and off duty points, lunch periods, crew consist, job limitations, vacancies, pay for attending legal proceedings or while on Carrier business, crew calling, extra board rules, ice water, and loading exemptions. The Articles within this contract frame that have been separately argued by the Organization (58, 61, 62, and 63) are addressed individually herein, supra, as are all of the articles cited in the Organization’s claims.

The working conditions addressed in Articles 52-70 are exclusively specific to the

Carrier’s employees and are not infringed upon by the employees of a different carrier during interchange sanctioned by the same agreement.

Article 74 “Article 74 Mergers (Conductors & Trainmen Agreement) Should The Texas Mexican Railway Company be absorbed, leased or, operated by any other system or railroad company, the conductors, brakemen and yardmen holding seniority at the effective date of such action shall hold their seniority rights over conductors, brakemen, and yardmen rights over conductors, brakemen, and yardmen that may be on that system or railway company or any other system of railroad companies that may absorb, lease, or operate The Texas Mexican Railway Company or might be absorbed, leased, or operated by The Texas Mexican Railway Company.”

Article 74 protects the seniority of the Carrier’s employees in the event Tex

Mex is absorbed, leased, or operated by another carrier. There is no evidence in the

72 record that the Carrier (Tex Mex) has been absorbed by, leased to, or operated by another Carrier. Although the two interchanging carriers in this matter (Tex Mex and KCSM) are both subsidiaries of Kansas City Southern Railway Company; the two are recognized as separate legal entities and nothing in the evidence demonstrates that either has acquired ownership or assumed the legal obligations of the other.

The Organization also cites previous Arbitration Awards in support of their exclusivity argument to the interchange work. In Canadian National Railway v.

Teamsters (2010), Arbitrator Picher prohibited the carrier from assigning work in one of their interdivisional service territories to their employees from an adjoining territory, each with separate collective bargaining agreements based on craft and territorial limits and represented by different committees of the union. In Canadian

Pacific Railway v. Teamsters Canada Rail Conference (2015), Arbitrator Stout prohibited the Canadian carrier from allowing American crews to operate their trains across the border and 70 miles into Canada for interchange finding the distance was “not de minimis” and that the agreement’s material change provisions did not allow the carrier to re-assign employees to routes outside of the agreement’s territory, citing Arbitrator Picher. The following year, Arbitrator Stout again addressed the issue in Canadian Pacific Railway v. Teamsters Canada Rail

Conference (2016), wherein he prohibited the carrier from utilizing Canadian crews to operate their trains across the border “beyond the established practice of crossing the border to a transfer terminal”. In the pair of Canadian cases, Arbitrator

Stout examined cross-border interchange at several interchange locations within 10 miles of the border. There was no dispute concerning whether or not foreign crews could cross the border for purposes of interchange, only the great distance involved, which belied the characteristics of interchange and affectively represented the carrier’s attempt to create a new and extensive through freight run, referred to as an

“extended service run”. Arbitrator Stout relied upon the past practice of the parties concerning interchange, stating: “It is true that employees have historically crossed the Canada‐U.S. border. However, the evidence is clear that Canadian crews only crossed over the border to a transfer terminal (located generally within 10 mile of the border). There is no evidence to suggest that any Canadian crews have operated beyond transfer terminals on U. S. rails and subject to U.S. regulation, as the Company

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proposes in this matter. There is also no evidence to suggest that American crews

have ever operated trains beyond the transfer terminals.” The cited cases do not

represent an analogous fact pattern to the case before us where agreement language

clearly sanctions the Carrier’s unilateral right to designate the interchange location

and/or specify additional tracks, notwithstanding the latter resolution of work

equity issues, if any, between the union committees involved.

Conversely, the Carrier has likewise cited a number of cases wherein a

carrier’s right to designate interchange tracks is also sanctioned. In UTU v. Grand

Trunk Western (PLB 2583, Award 6), Arbitrator Speirs stated: “…It is clear, based on

the many Awards of the First Division, that a Carrier may change the designation of

interchange yards, points, or tracks of its own volition unless the agreement contains

restrictions.” In UTU v. Norfolk and Western Railway Company (PLB 5053, Award

30), Arbitrator Criswell found that the carrier’s change of the interchange point

from Elkton to Shenandoah, Virginia whereby Norfolk and Western crews lost interchange switching work to crews of the interchanging carrier (Chesapeake

Western); “…was not violative of any labor agreements. We note the Union’s extensive arguments regarding switching in the yard as well as the interchange principles. However, we fail to see where any rights of the claimants were diminished…”

Interchange Agreement Between the Carrier and KCSM The Organization asserts that the Interchange Agreement between the

Carrier and KCSM demonstrates the Carrier has merely contracted out their membership’s work to the KCSM crews from Mexico; averring that the agreement reveals that interchange is still going on at the border since the cars being handled by KCSM are in the Carrier’s account and are considered interchanged at the border pursuant to the language contained therein. The Organization also cites the provision wherein the Carrier is paying KCSM a flat fee for each train KCSM operates on the interchange trackage and by giving KCSM the option of using their own employees or those of another KCSR subsidiary (KCSM Servicios).

The Interchange Agreement has been examined and the Organization’s scrutiny has been noted. The provisions referencing interchange at the border clearly refer to the exchange of accounting and jurisdictional information necessary

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for tracking purposes required to demonstrate which carrier bears civil

responsibility for the train in question at any given time during interchange for

regulatory and revenue accuracy. It also addresses the requirements of

entering/exiting the authority of the U.S. Customs & Border Protection. The

evidence concludes that the actual and physical interchange of the freight cars in

question, as complained of in this matter and contemplated and authorized by the

collective bargaining agreements at play, is occurring at the Laredo Yard and

involves the restricted act of KCSM crews bringing trains from KCSM property in

Mexico to the Laredo Yard and returning.

The fee arrangement provides KCSM with a flat fee of $8,616. MXP ($380.00

U.S. dollars) for each train KCSM operates in the interchange process. The Carrier

has sufficiently explained the purpose of this minimal fee, which cannot reasonably represent adequate compensation for the operation of a train in the interchange at hand. The fee is for the administrative inconvenience to KCSM in the course of interchanging and to prevent KCSM from generating revenue from operating the train within the U.S., in lieu of reciprocal handling due to existing Mexican law. The

Carrier is prohibited from reciprocally operating in Mexico, thus the minor fee

offsets KCSM’s burden of administrative tasks associated with interchanging in both directions and returning trains into Mexico. The Organization’s characterization of this payment as evidence of contracting out the work of their membership is unpersuasive and ignores the fact that the fee arrangement is exclusive to the interchange procedure between the two carriers, which this Board finds to be contractually sanctioned.11

Whether or not KCSM utilizes the employees of a subcontractor is indirectly

relevant to the issue of whether or not the Carrier has the right to designate the

interchange tracks in question with an interchanging carrier. Whether or not

KCSM’s use of sub-contractors proves the Carrier is contracting out their own

employees’ work is perhaps relevant in the limited examination of that issue.

However, nothing in the evidence requires the Carrier to mandate staffing

11 Carrier Exhibit 53 is a similar flat fee interchange arrangement between the Carrier and the New Orleans Public Belt (“NOPB”), wherein the KCSR pays $550./train handled by NOPB in interchange.

75 restrictions upon another carrier during the contractually authorized interchange of freight.

Conclusion The contract provisions specifically relevant to interchange, both in the

National and Local Agreements expressly grant the Carrier the unilateral right to specify and/or designate the interchange location in question. The Organization cites a multitude of other contract provisions non-germane to interchange to persuade that the Carrier’s interchange modifications have so violated. All cited provisions have been analyzed in the context of the Organization’s argument regarding each. The Organization avers that the numerous cited provisions of the two local agreements when collectively read, exclusively reserve the work of moving any and all trains on the Carrier’s property between the International

Border and Laredo Yard to the Carrier’s employees they represent. The

Organization’s case requires us to disregard the interchange rights granted to the

Carrier within the same agreements for the sanctity of rules governing working conditions without a showing that their membership’s contract rights have actually been violated. To disregard one party’s contract rights in favor of the speculative preservation of the other party’s would result in an unjustifiable conclusion.

The Organization’s case also requires us to disregard the interchange language of the two National Agreements, to which the Organization and the Carrier are also both parties. The Organization’s argument lies in the close proximity language and the allowance for interchange crews to operate in both directions, which the Organization characterizes as the sole purposes for, and the necessary conditions of the National Agreement language that the Carrier has not met. The

Organization also contends the national agreement language is subordinated to the local agreement language regarding interchange due to its’ more specific verbiage.

The evidence presented, including the parties’ intent while pursuing a national rule allowing carriers the right to determine interchange locations, demonstrates otherwise.12 The fact that the national agreement provisions allowing a carrier to

12 Three separate Presidential Emergency Boards (“PEB”) dealt with the parties’ negotiations of interchange rules ultimately found in the two National Agreements. PEB 110, resulted in no rule; PEB 174, resulted in no rule; and PEB 178 resulted in the National Agreement rules allowing the Carrier to “…designate such additional track or tracks as the carrier deems necessary…”

76 designate additional interchange tracks were later included in the parties’ local agreements, removes any assertion of preeminence by the local agreements.

Railroad interchange is a unique circumstance in the industry. It necessarily involves two different carriers with two different work forces meeting and exchanging custody of the freight of their common customers. It logically results in some degree of an overlapping operation of one carrier’s crews on the tracks of the other. Whether or not work opportunity is gained or lost becomes the central issue for labor management and collective bargaining. The case before us is no different.

Two overarching and inescapable truths guide the decision reached herein.

First, it is exceedingly clear that the parties contemplated interchange and all of its’ inevitable consequences and bargained for the language granting the Carrier the right to determine interchange locations. Secondly, the act of KCSM operating trains for 9 miles over the Carrier’s tracks for the limited purpose of achieving interchange between these two carriers does not represent the de facto disenfranchisement of the Carrier’s employees. These paired facts cannot be bifurcated in any fair deliberation of this matter.

In that bargaining, it is also clear that the parties contemplated the question of work gained and work lost by the two interchanging carriers and speak of it in terms of work equities. It is telling that even while promising a work equity dialogue and information exchange, the parties declared that those concerns shall not interfere with or create expense upon the operations of the Carrier. It is also refreshing that the Organization’s claimants herein have not lost work opportunity and 30 additional employees have been hired as a consequence of the interchange in question. If the Organization is correct in their assertion that the work equity provisions apply in all interchange placements, then the work equity language underscores the Carrier’s right to control the interchange procedures and diminishes work equity’s priority. If the Carrier is correct in their assertion that the work equity provisions apply only when a change is implemented requiring crews to operate in two directions, then work equity concerns become irrelevant. This remains an open matter as stipulated by the parties.

77 . ·.

VI. Award/BullDc The Carrier's implementation of new interchange procedures and the

designation of the Interchange location at Laredo Yard do not violate Articles 6, 24,

32, 47, 63, and/or 70 of the 1984 Locomotive Bnslneers Agre~m~t. Accordingly,

the remedies sought by the Organization In SecUon (2) of the-Arbitration Agreement

are hereby denied.

The Carrie~s Implementation of new Interchange procedures and the

designation Qf the lnlerchange location at Laredo Yard do not vfolaie AIUdes 7(D),

12, 13, 16,-41, 44, 46, 52-70, 62, 74, and/or 76 of the 1985 Conductors & Trainmen

Agreement. Accordingly, the remedies so1i1ght by the Organization fn Section (2) of

the Arbitration Agreement are·hereby denied. The parties are not precluded from pursuing work equit¥ issues emanating

as a result of the Carrier's Interchange modiftcatfon In accordance with the·Rallway

Labor Act, Section 6.

The cost.of the arbl~on shall be bom~ equally by both parties pursuant to

Section (20) of the Arbitration Agreement unless mutually qreed otherwise.

This Award Is rendered timely pursuant to Section (18) of ~e Arbitradon

Agreement and shall become the Dual and binding decision of these ls$ues effective

upon the signature of a Partisan member pursuant to Section (21) following the

time bmits set forth ln Section (19).

Once amaJorlw of this· Board executes herein, It shall be the ftnal and binding Award and the flndings of fact In accordance with the contractual covenant of

Section (19) of the parties' Arbitration Agreement.

Thus signed this 41b day ofAugust, ZOZO

78 BLET-KCSR SPECIAL BOARD OF ADJUSTMENT

Parties } Brotherhood of Locomotive Engineers and Trainmen } To the } and } Dispute } The Kansas City Southern Railway Company } The Texas Mexican Railway Company

Chairman and Neutral Member - Sidney Moreland, IV Carrier Member - Maquiling Parkerson Employee Member - J. Alan Holdcraft

EMPLOYEE MEMBER'S DISSENT

Because of significant errors in the majority's Award, I respectfully dissent.

The Organization presented convincing evidence that the July 2018 arrangement between the Carrier1 and Kansas City Southern de Mexico ("KCSM"), a foreign carrier, is nothing more than a transfer of work performed for decades by Tex-Mex engineers and conductors to employees ofKCSM or its subcontractor. The record is replete with proof of the Carrier's previous assignments of the work of operating trains originating in Mexico from the

International Bridge to the Laredo Yard, and vice-versa, to Tex-Mex shuttle crews pursuant to the collective bargaining agreements with the Organization. Nevertheless, the majority accepts the Carrier's proposition that this undisputed history is irrelevant because the Carrier's agreement with KCSM is nothing more than an interchange agreement permitted by the 1971

BLET and the 1972 UTU National Agreements.

1 Like the majority, I refer to Kansas City Southern Railway Company and Texas Mexican Railway Company ("Tex-Mex") by the singular "Carrier."

1 The majority fails to appreciate that what has happened here is unprecedented. No other carrier has ever allowed the crews of a foreign carrier to operate the receiving carrier's trains on the receiving carrier's property. Under acceptable traditional interchange agreements, a foreign carrier obtains trackage rights to deliver freight to the interchange point and retains control of the train until the train reaches that point, where its crews disembark and control is turned over to the receiving carrier. Here, the agreement between the Carrier and KCSM explicitly provides that the trains become the Carrier's trains at the border-crossing, but KCSM crews will continue to operate them until they reach Laredo Yard and that they remain the Carrier's trains when operating in the opposite direction until they reach the border. The Carrier says these provisions are merely for customs compliance or administrative purposes and that the trains do not actually become its trains until their contents are delivered at Laredo; it says the same regarding allowing

KCSM crews to pick up trains in Laredo and bring them to the border. This is little more than sleight-of-hand to disguise the fact that for the entire time these trains are on the Carrier's tracks, they are by contract with KCSM the Carrier's trains, not KCSM' s. There is no dispute that, in every other circumstance, the Carrier is required to use its own employees to operate its own trains pursuant to the rules in the CBA. That should be the case in this instance as well. The majority's failure to pierce this veil is a grievous error.

Even if what the Carrier has done could be considered a legitimate interchange agreement, it has not satisfied the requirement that the new interchange track be "in close proximity" to the already-designated track or tracks. The CBA defines that phrase to mean "next to or very near the existing interchange track or tracks." The Laredo Yard is more than nine miles from the previous interchange point on the International Bridge. The majority's determination that that is a permissible distance under the Agreement is simply wrong.

2 Furthermore, there is no dispute that the obligation that work equities "will be maintained" has not been satisfied. The Tex-Mex crews have lost all rights -- all equity-­ regarding this work. The majority acknowledges this fact, but finds that it doesn't matter and doesn't require that it be resolved. This is an error with which I cannot agree.

The majority also mistakenly accepts the argument that the Organization's members gave up their exclusive right to perform this work in the 1998 Road Switcher agreements. This holding ignores the undisputed proof that the Carrier took these agreements out of context because they were intended to, and by their very terms do, only address the jurisdictional relationships between road and yard service assignments. They have nothing to do with the relationship between the employees of one carrier and another. The Board's failure to recognize this distinction infects that part of the Award.

The Board's discussion titled "Other Local Agreement Provisions" in which it analyzes each particular CBA provision identified in the claim misconstrues the point of the

Organization's position. The Organization simply pointed out that each of these provisions would apply were the work to be performed by Tex-Mex employees, as the Organization maintained it should have been. It did not argue that there was a specific constraint against using non-carrier employees in each rule; rather, it pointed to them collectively as evidence of the parties' understanding of the rules to be applied when assigning the work of operating the

Carrier's trains on the Carrier's property. Had the Board held for the employees, it necessarily would have found that these rules had to be complied with in the assignment of the disputed work.

Finally, the majority is swayed by the Carrier's business rationale for what it did, and its argument that there was no violation because it hasn't yet abolished any jobs and has hired

3 additional employees and reduced dwell time in the process. But that's not the standard for determining compliance with the Agreement. Where a CBA places constraints on an employer's conduct, the fact that the employer might enjoy a benefit by ignoring that constraint doesn't make a violation permissible. Here, just because the Carrier had other work it could assign to the

Organization's members doesn't excuse it from removing this work from the CBA's jurisdiction.

Otherwise, as long as it maintained a specific workforce level, it could limit the work the union- represented workers perform and assign the rest to outsiders.2 The majority's reliance on the effect of the Carrier's conduct to justify its ruling also was wrong.

The record before the Board conclusively establishes that the Carrier did violate the collective bargaining agreements by replacing its own locomotive engineers and conductors with locomotive engineers and conductors employed or contracted by KCSM in the operation of trains between Laredo Yard and the International Bridge. Because the majority holds otherwise,

I respectfully dissent.

Employee Member

2 See, TCRC v. CPR (Stout 2015) (Exhibit No. 43) at 22 ("This situation is somewhat similar to a 'contracting in' situation where an employer brings in non-bargaining unit personnel to work along side bargaining unit employees [which] is inherently destructive of the bargaining relationship and is contrary to the obligations undertaken by the Company in the Collective Agreements.").

4