The city of Palestine would likely lose a legal battle with Union Pacific Railroad over a longstanding contract requiring UP to remain in Palestine and employ local workers, legal experts, speaking on background, told the Herald-Press Tuesday.
Among the reasons: The federal Surface Transportation Board, which regulates rail commerce, carries far more clout than local or state governments. If a railroad can prove it is not making a profit – for example, in Palestine – the STB can permit the railroad to abandon any local agreement.
Owing to the STB's massive authority, municipalities seeking to retain local railroad operations and obligations have lost several cases over the last decade.
At stake in Palestine is more than 60 good-paying local jobs, guaranteed under the current UP contract. Those jobs inject an estimated $5 million a year into the local economy.
In a joint statement issued Monday, state Sen. Robert Nichols, R.-Jacksonville, and state Rep. Cody Harris, R.-Palestine, asked Union Pacific officials to reconsider their case against Palestine.
“Breaking the agreement, or persuading a court to nullify the contract, would have a devastating impact on our economy, and the 60 families who have dedicated their lives and careers to Union Pacific,” Harris and Nichols stated.
Palestine Mayor Steve Presley told the Herald-Press Tuesday the city beat the railroad in court before. He's confident it can do so again.
“UP attempted something like this in the 1970's,” Presley said. “We beat them then. Our job is to figure out a way to beat them now.”
In the 1970s, however, Palestine faced the ICC, which regulated railroad commerce with far less authority than does the Surface Transportation Board.
In recent decades, courts have consistently followed STB's recommendations. Moreover, STB's authority has expanded since 9-11.
Formed in 1996 after the feds abolished the Interstate Commerce Commission, STB has broad economic regulatory oversight of railroads, including rates, service, the construction, acquisition and abandonment of rail lines, carrier mergers, and interchange of traffic among carriers.
In UP's Nov. 27 suit against the city, the railroad petitioned the court to consider preemption on multiple issues, including the allegation that its current contract has “the effect of unreasonably burdening or interfering with rail transportation.”
The original 1872 contract, UP lawyers allege, now undermines the public interest and national transportation policy.
Maintaining operations in Palestine, while mandated to employ a percentage of local workers, UP lawyers say, constitutes “unduly burdensome, inefficient, injuriously wasteful, and unnecessary obligations on the railroad.”
Local attorneys said, if the city intends to fight UP in court, it should hire an attorney who understands the STB and the Interstate Commerce Commission Termination Act.
Railroad officials said UP would save nearly $250,000 in freight claims annually by leaving Palestine. Palestine, they say, is not conducive for a major yard or repair facility.
Last year, UP broke ground on a $550-million, 1,875-acre facility in Robertson County, 75 miles southwest of Palestine. UP maintains that location would better serve the company and the public. The Robertson facility will bring an estimated 1,200 jobs to Robertson County.
In their filing, UP attorneys said Palestine's insistence on holding to the 150-year-old contract has forced the company to break with the city.