Union Pacific Railroad to pull out of Palestine

BY PENNYLYNN WEBB for palestineherald.com

Union Pacific Railroad met with Palestine staff Thursday and told them they have 60 days until the Palestine Car Facility closes June 14, according to longtime employee Brad Henry.

Henry said the employees were asked to a meeting with UP management at the Hilton Hotel in Palestine. They were given notice and then told they could take the rest of the day off and report back to work Monday, April 19.

Henry has been employed at the Palestine Car Shop for 15 years as a Carman welder.

UP communications manager Robynn Tysver confirmed the company notified employees Thursday at its Palestine Car Facility that as many as 57 positions will be eliminated in mid-June.

She said the workforce reduction is the result of operational changes across its system and is part of Union Pacific’s continuous effort to provide competitive rail service to its customers.

“While Union Pacific is closing our Main Car Repair Facility in Palestine, limited car repair activities will continue in the Palestine area,” Tysver said. “We did not take today’s step lightly but we are determined to do the right thing for the thousands of customers, employees and communities who rely on us to help build sustainable economic growth across the western two-thirds of the United States. We appreciate the support we have received over the years in the communities of Palestine and Anderson County, as well as the hard work and dedication of our employees. We are working with those impacted to help them with job placement activities.”

In a WARN Act Notice filed with the Texas Workforce Commission and County Judge Robert Johnston, UP stated the following:

“In an effort to provide for Union Pacific’s long-term success, the railroad has been accelerating its continuous improvement plan and implementing Precision Scheduled Railroading principles. As a continuation of our efforts to run an efficient railroad consistent without Unified Plan program, we are undertaking operational changes across our system. The operational changes will require Union Pacific to close its Main Car Repair Facility in Palestine. However, limited car repair activities will continue in the Palestine area. The closure of the Main Car Repair Facility will result in the abolishment of as many as 57 positions. Therefore, Union Pacific is providing you this notices in accordance with the Worker Adjustment and Retraining Notification Act.”

The company said affected employees will have the right to bid and bump for other position within UP, however these are done in accordance with seniority rights. All employees who are unable to obtain a position and who are laid off, will be paid all wages and agreed upon fringe benefits for 60 days after April 15.

“It’s incredibly disappointing that Union Pacific has announced their intention to shut down the Palestine Car Shop after telling us for years how much they care about our community and their employees,” said Rep. Cody Harris (R-Palestine). “Obviously, they never meant it. I will continue to work hard to bring economic opportunity to take the place of this huge loss to our community.“

According to Mayor Steve Presley, it is possible for the city, county or a group of citizens to join together and file for an injunction in state of federal court with regard to this new action by UP.

The city of Palestine and Anderson County are currently embroiled in a lawsuit with Union Pacific.

In November 2019, Union Pacific filed suit in federal court to scrap its 1954 agreement with the city. The city filed docThe federal courts ordered Union Pacific and the City of Palestine to find a mediator by April 2020 to negotiate a compromise between the two sides. United States Federal Judge for the Eastern District of Texas Jeremy Kernodle denied the city of Palestine’s motion to dismiss Feb. 3.

The county had 30 days from March 25 to file an appeal, with the Fifth Circuit Court of Appeal in New Orleans after a federal judge ruled Feb. 3 that Union Pacific Railroad is no longer bound to its its 1954 agreement with the city of Palestine and Anderson County.

Johnston said the county would file a letter of rehearing in response and, if denied, it would then file an appeal to the Fifth Circuit Court of Appeals. They will also ask for an injunction, which the judge may or may not sign, Johnston said.

“This has nothing to do with the property tax the railroad pays us,” Johnston said. “This has everything to do with saving the livelihood of the employees and doing what is right for them. That railroad is still going to be here, but those jobs and their retainment are what matters most.”

Through the original 1872 contract, Union Pacific agreed to establish a railroad hub in Palestine with offices, machine shops and roundhouses. The contract also stipulated that Union Pacific will retain a facility and certain number of employees in Palestine – that fluctuates daily based on the companies total amount of employees. In return, the city agreed to raise $150,000 in bonds for the railroad.

The city filed documents with the court trying to stop Union Pacific from pulling out its car shop and administrative offices from Palestine based on the original agreement that had been modified several times over the years, the last being in 1954.

Union Pacific argued that the agreement was in violation of federal law and could not be enforced. The court has agreed with the railroad and ruled the city does not have the right to stop them.

The city sued Union Pacific in 1977 and the court enforced the 1872 agreement that Union Pacific agreed to locate and establish and forever maintain its general offices, machine shops and roundhouses in Palestine.

It was also based on an agreement between the railroad and Palestine from 1954 Federal Bankruptcy court where the railroad asked for bankruptcy protection and was obligated to agree to keep 4.5% of all its employees in certain job classifications, and no longer required to maintain its general offices, shops and roundhouse in Palestine.

At present, Union Pacific must employ 0.52% of its office and shop employees in Palestine, which according to the 1954 Agreement, includes the following classifications: executives, officials, and staff assistants; professional, clerical, and general; maintenance of equipment and stores; transportation, other than train, engine and yard; and transportation, yardmasters, switch tenders, and hostlers.

In the current lawsuit, the city does not assert that Union Pacific has breached the 1954 Agreement. Instead, Union Pacific alleges that the Interstate Commerce Commission Termination Act of 1995 preempts the 1954 Agreement and asked the court to void its obligations to Palestine.

Under this system, federal law supersedes conflicting state laws. Thus, any state law that conflicts with the Constitution or a federal law is preempted, or without effect.

Based on the plain language of the ICCTA, the Court determined that the 1954 Agreement between the city and the railroad is expressly preempted.

“This provision means that laws having the effect of managing or governing rail transportation will be expressly preempted,” stated the ruling.

The Court stated that state law can be preempted if it has the effect of unreasonably burdening or interfering with rail transportation and determined that Union Pacific presented substantial, undisputed evidence that effect.

“By requiring the railroad perpetually to maintain office and shop employees in Palestine, despite the railroad’s need to adapt in a competitive and rapidly changing market, the agreement substantially interferes with and burdens Union Pacific’s facilities related to the movement of passengers or property,” stated the ruling.

Johnston looks for the appeal process to take approximately two years.

This case has not yet gone to trial.

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