Judge allows Union Pacific to break 149-year-old contract with Palestine

The City of Palestine moved on Tuesday to file an initial response to a lawsuit involving Union...
The City of Palestine moved on Tuesday to file an initial response to a lawsuit involving Union Pacific. (Source: Blake Holland, KLTV News)(KLTV News)
Updated: Feb. 5, 2021 at 11:53 AM CST
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TYLER, Texas (KLTV) - A federal judge in Tyler has ruled that Union Pacific Railroad is no longer bound by old contracts with the City of Palestine.

In 1872, Union Pacific entered into a contractual relationship with the City of Palestine and Anderson County, wherein Union Pacific agreed to run its rail line to and through Palestine, while also agreeing to “locate and establish and forever thereafter keep and maintain” its “general offices, machine shops and roundhouses” in Palestine. The City of Palestine for their part promised to raise $150,000 in bonds for the railroad from the citizens of Anderson County.

However, citing the 1995 Interstate Commerce Commission Termination Act, Union Pacific claims it is no longer obligated to maintain those demands as per the 1872 contract and sought a declaration voiding the agreement as well as an injunction which would prohibit the City of Palestine from enforcing any contracts. The City of Palestine responded by requesting that the court dismiss said requests.

On Wednesday, District Judge Jeremy Kernodle sided with Union Pacific and denied the City of Palestine’s Motion to Dismiss.

Palestine Mayor Steve Presley noted he and the city are grateful for the company’s presence.

“We appreciate having them here all these years and we hope to have them here well into the future,” Presley said.

However, he also expressed frustration with the judge’s ruling.

“I feel (the ruling) went too far on behalf of Union Pacific,” he said.

Additionally, Presley also said the future remains uncertain regarding the retention of Union Pacific’s 60 jobs currently held in Palestine.

“At this point, don’t know if Union Pacific will take jobs out of town at all even though the judge has ruled in their favor. They publicly stated they have no plans to remove any of the jobs,” Presley said. “The jobs are very important to Palestine. (Union Pacific) has been a great source of jobs with good benefits.”

As the number of jobs in Palestine was established to be proportional to the overall workforce of Union Pacific (0.5 percent, in this case), the number of jobs available has slowly declined over the years as Union Pacific’s overall workforce has shrunk. Currently, the 60 jobs in Palestine are in the repair shops which perform maintenance and repairs on train cars and work on equipment, as well as a small freight claims division.

Presley said there remains an opportunity to file an appeal, but no decision has been made yet as it requires the consultation of multiple entities such as the county commissioner’s court and city council.

Elizabeth Graham, a spokesperson for Union Pacific, in a provided statement said the decision will prove to be a beneficial one.

“Union Pacific agrees with the decision, which found that the 1954 agreement between Union Pacific, the City of Palestine, and Anderson County cannot be enforced because it prevents us from changing our operation and the way we serve our customers,” Graham said. “This decision will allow us to continue improving efficiencies to meet our customer needs throughout Texas and in this community.”

Previous reporting:

Officials fight Union Pacific lawsuit that threatens East Texas jobs

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