Union Pacific

The federal court has ordered Union Pacific and the city of Palestine to enter into mediation.

Palestine and Anderson County are continuing their fight to keep Union Pacific in town.

Earlier this year, Federal Court Judge Jeremy Kernodle ruled in favor of Union Pacific, citing 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 to 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," the ruling stated.

The city of Palestine and Anderson County filed a motion for a new trial, which was also denied and from that date of denial, they have 30 days to file an appeal to the Fifth Circuit Court of Federal Appeals with regard to Kernodle.

We’re confident that the 1954 contract will be enforced by the original court of jurisdiction,” said County Judge Robert Johnston.

The county will also file a Show Cause Motion in the Second District Court in Cherokee County, the original court of jurisdiction for the 1954 contract between the city and county with Union Pacific. This motion is to force Union Pacific to say why they should not be held in contempt for violating the contract and not maintaining the specified percentage of employees at the Palestine rail yard.

The city and county’s appeal will be based on the fact that during UP’s federal court case against Palestine, UP failed to disclose the 1954 contract, only sourcing the original 1872 agreement and citing the 1995 Interstate Commerce Commission Termination Act, changing both railroad regulations and the governing board. As a result, when the federal judge ruled on the current case, he did not have all relevant information to base his ruling on.

In 1872, UP entered into a contact with the city of Palestine and Anderson County to run its rail line to and through Palestine forever thereafter, keep and maintain its officers, machine shops and roundhouses in the city. For their part, the city promised to raise $150,000 in bonds for the railroad from the citizens of Anderson County. Today’s value of that bond amount would be $3,283,450.82.

The city council is willing to do what it takes to help not only keep the jobs here, but also the shop and the yard,” said Mayor Steve Presley. “We are working to protect the investment of the citizens of Palestine. Our citizens gave property and money to help Union Pacific build their facility here. UP then used that money as collateral to borrow more money to benefit their company. They signed a contract to keep their yard and car shop in Palestine open, with a specified percentage of employees, and now that that is inconvenient to them, they want to cancel the contract. If a contract ain’t good in this country, then what is?”

The original contract that the 1954 agreement is based upon, with the city and the railroad, dates back to the late 1800s when the city of Palestine, Anderson County and its citizens gave the IG&N Railroad $150,000, plus land grants, for them to use as equity to borrow money. That money was used to bring the railroad into Palestine by laying trackage, building headquarters and constructing freight car/locomotive repair facilities, as well as lodging/homes for its executives.

In return, the people of Palestine had the railroad go into agreement with a contract that said they would employee a certain percentage of certain groups of rail employees in Palestine, for as long as the railroad runs through town.

The contract also went as far to say that any successors of the IG&N would be bound by that same agreement, for as long as their tracks run through Palestine.

This agreement has been taken all the way to the Supreme Court twice since then, first by the IG&N and secondly by the Missouri Pacific, with the city, county and its citizens prevailing both times.

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, Union Pacific alleges that the Interstate Commerce Commission Termination Act of 1995 preempts the 1872 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 1872 Agreement between the city and the railroad is expressly preempted.

Union Pacific Railroad met with Palestine staff April 15 and told them they have 60 days until the Palestine Car Facility closes. Union Pacific said in a statement it has been accelerating its continuous improvement plan and implementing Precision Scheduled Railroading principles undertaking operational changes across its system. One of those operational changes is the closing of its Main Car Repair Facility in Palestine. The closure of the Palestine Car Repair Facility will result in the abolishment of as many as 57 positions.

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.

The Show Cause Motion is designed to put these employees back to work.

The payroll in Palestine totals around $5 million a year and someone found where two of their retired employees are making $5 million a year,” Presley said. “They want to get richer at the expense of their workers.”

County Judge Robert Johnston said the appeal process could take approximately two years.

This case has not yet gone to trial.

We want to get this all settled and move forward,” Presley said.

Presley has urged local residents to join the city and county in their fight. Donations to help with court cost will be accepted by both governing authorities.

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