Arbitrators favor Kansas City Southern in border-related labor dispute

A photograph of a train traveling through a town at night.

An arbitration board has determined that Kansas City Southern (NYSE: KSU) can use Mexican nationals employed by the railroad to work a nine-mile stretch between the Mexican border and a rail yard in Laredo, Texas.

In a majority vote, the Special Board of Adjustment ruled that Kansas City Southern (KCS) didn’t violate the collective bargaining agreement between KCS and the Brotherhood of Locomotive Engineers and Trainmen (BLET) when the railroad chose to use Mexican nationals employed by KCS instead of the U.S.-based workforce there.

Previously, KCS trains switched crews at the International Bridge on the U.S.-Mexico border, with U.S.-based employees taking over the roles of those affiliated with Kansas City Southern de Mexico. 

The decision is found on BLET’s website. The deciding board consisted of chairman and arbitrator Sidney Moreland, Maqui Parkerson, the member representing KCS and J. Alan Holdcraft, the member representing BLET. Holdcraft dissented and was against the board’s final determination, saying that some of its conclusions were erroneous.

The board’s decision is the latest in a series of actions that began in 2017 and included time spent in the courts. 

In 2017, BLET approached KCS over its plans to use Mexican nationals on the nine-mile stretch operated by KCS subsidiary Tex Mex Railway. BLET argued that the change would enable KCS to “abolish” the positions of the BLET members working the nine-mile stretch between the International Bridge at the border and the Laredo rail yard. But KCS said the collective bargaining agreements don’t cover situations where KCS changes the meeting location between its U.S. and Mexican operations. 

The issue was eventually brought to a federal district court, which ruled that the parties must undergo an arbitration process. The arbitration hearing was held on July 10, and the board rendered its decision on August 4.

“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,” the decision said. 

It continued, “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 [KCS] the right to determine interchange locations. Secondly, the act of [Kansas City Southern de Mexico] 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.”

KCS has argued that changing where train crews are replaced has enabled a more efficient network, and the railroad has said it has seen savings of up to 20 minutes per train at an average of six to eight trains per day. The railroad also told FreightWaves last year that it has worked extensively with U.S. Customs and Border Protection (CBP) to ensure that the Mexican crews have met CBP’s travel and work documentation requirements, including a Mexican passport, a current U.S. visa and an account with the CBP’s trusted travel program.

“The arbitration panel’s recent decision ensures that KCS can continue the same safe and efficient operations it has had in place for the last two years. Over 50% of cross border rail freight traffic between the US and Mexico crosses the border over the International Rail Bridge at Laredo, Texas,” KCS told FreightWaves. “KCS’s coordinated operations with its Mexican affiliate – along with other Secure Corridor Initiatives that KCS has implemented within the past few years – have increased security and fluidity of rail traffic at the border, which benefits our employees, customers, and the surrounding communities.”

Meanwhile, BLET said it was disappointed by the outcome. Last year the group also sought to include in the trade agreement between the U.S., Mexico and Canada (USMCA) a provision stating that only U.S. citizens should operate freight trains originating from Mexico.

“The majority missed the mark by a long shot with its decision,” said BLET National President Dennis R. Pierce. “This ruling is an affront to BLET’s Tex-Mex membership, and an attack on the collective bargaining rights of all American workers. The Carrier was wrong in 2017 when it gave the jobs of hard-working Americans to Mexican nationals, it was wrong in 2018, and it’s wrong today.”

Pierce also said BLET would “continue to litigate the refusal by the Trump Administration’s Federal Railroad Administration to comply with its statutory obligations to properly regulate safety between Laredo Yard and the International Bridge. We will also continue to pressure Congress to adopt reciprocal legislation, missing in the Trump-negotiated USMCA (NAFTA 2), to put U.S. locomotive engineers and trainmen on an equal footing with their Mexican counterparts.”

Click here for more FreightWaves articles by Joanna Marsh.

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