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In a significant setback for unions, a federal appeals court has ruled that a zero tolerance drug policy is not unreasonable for those who work amid dangerous conditions and that an arbitrator was wrong to strike it down. In its 15-page decision in CITGO Asphalt Refining Co. v. Paper, Allied-Industrial, Chemical and Energy Workers International Union Local No. 2-991, a unanimous three-judge panel of the 3rd U.S. Circuit Court of Appeals held that an oil company had the right to switch to a zero tolerance drug policy at its refineries because its collective bargaining agreement said the company had the power “to make and enforce rules for the maintenance of discipline and safety.” The ruling reverses a decision by U.S. District Judge Joseph E. Irenas of the District of New Jersey that rejected CITGO’s challenge to the arbitrator’s decision to strike down the new policy. “We do not understand how the arbitrator could conclude … that it is unreasonable for CITGO to adopt a policy that attempts to pressure impaired employees into stepping forward and seeking help before their impairment results in a catastrophe,” U.S. Circuit Judge Theodore A. McKee wrote. “Rather than concluding that CITGO abused its discretion in adopting a zero tolerance policy, the arbitrator simply substituted his own judgment for CITGO’s, and declared CITGO’s zero tolerance provision unreasonable,” McKee wrote in an opinion joined by 3rd Circuit Judge Jane R. Roth and visiting Senior Judge Richard D. Cudahy of the 7th U.S. Circuit Court of Appeals. McKee found that the arbitrator’s decision cannot stand because “an arbitrator’s opinion and award based on ‘general considerations of fairness and equity’ as opposed to the exact terms of the CBA, fails to derive its essence from the CBA.” According to court papers, CITGO announced in December 1998 that it was going to implement a new uniform national substance abuse policy, which included random drug testing and a zero tolerance policy at all of its petroleum refining facilities. The policy took effect immediately at more than 60 CITGO facilities. The Paper, Allied-Industrial, Chemical and Energy Workers Union, or PACE, first challenged the policy in Savannah, Ga., but an arbitrator upheld the policy as proper, valid and reasonable in all respects. PACE later filed a second challenge on behalf of workers at CITGO’s asphalt plant in Paulsboro, N.J. In the second grievance, PACE lodged four complaints. Challenging the random testing, PACE complained that workers were previously given notice of the tests and ordinarily were tested only in their annual physicals. The random tests were given at any time and with no notice. The union also complained that under the old policy, off-duty conduct could not be a violation, but it is under the new policy. And while the old policy required cause or suspicion for drug testing in the annual physical, the new policy allowed for drug testing without any prerequisites. Finally, the union challenged the “zero tolerance” aspect of the new policy, arguing that the old policy allowed for a “second chance” — an opportunity for rehabilitation — while under the new policy, no employee is given a second-chance opportunity unless he or she comes forward and admits to drug use prior to any positive drug test. When the grievance went to arbitration, PACE argued that CITGO violated the CBA by not bargaining over the new policy. It also argued that the policy was “totally unreasonable.” The arbitrator rejected the union’s first three complaints, but sided with the union in holding that the zero tolerance policy was unreasonable. CITGO’s zero tolerance policy, the arbitrator noted, is “contrary to the policies in place at the Motiva refinery in Delaware City, Del., and at the Sun refinery in Marcus Hook.” Although the arbitrator agreed that CITGO had a legitimate interest in maintaining its safety record, he found that zero tolerance was not necessary, especially since federal regulations allow for second-chance opportunities. “It has not been shown to my satisfaction that permitting an employee to have a ‘second chance’ would be inconsistent with that [safety] goal. … The policy, without giving a second chance for rehabilitation, is unreasonable,” the arbitrator wrote. CITGO filed suit to challenge the ruling, but Irenas upheld the arbitrator’s decision in its entirety. Now the 3rd Circuit has ruled that Irenas erred because the arbitrator exceeded the scope of his authority and improperly declared the zero tolerance policy unreasonable on the basis of faulty evidence. “In finding that the absence of a second chance was unreasonable, the arbitrator ignored the parameters of his inquiry,” McKee wrote, noting that the CBA specifically states that an arbitrator “shall not substitute his judgment for that of the company in the absence of a clear abuse of discretion.” Under the CBA, McKee said, the arbitrator had the power to conclude that the zero tolerance policy was unreasonable only if he found that CITGO clearly abused its discretion in instituting it. “However, the arbitrator found no abuse of discretion, and this record supports none,” McKee wrote. “The arbitrator found that the zero tolerance policy was unreasonable simply because he did not believe that giving an employee a second chance was inconsistent with CITGO’s goal of having the best safety record in the industry,” McKee wrote. McKee also rejected the arbitrator’s rationale that the zero tolerance policy was unreasonable since it was not used by Motiva or Sun Oil. “The fact that two companies with safety records that are inferior to CITGO’s do not have zero tolerance policies does not establish that CITGO acted unreasonably in adopting a zero tolerance policy,” McKee wrote. “In fact, considering the stipulated catastrophic repercussions of a safety lapse at the Paulsboro plant, and CITGO’s superior safety record, one could just as readily conclude that it was unreasonable for Sun Oil and Motiva not to have a zero tolerance policy,” McKee wrote. McKee found that the arbitrator had also “completely ignored” testimony that the three largest companies in the industry — Exxon, Marathon and Tosco — have zero tolerance policies exactly like CITGO’s. “The undisputed fact that the three largest companies in the industry have zero tolerance policies certainly casts doubt upon the arbitrator’s focus on Motiva and Sun Oil, and the arbitrator never explained why he elevated the importance of Motiva and Sun Oil refineries over larger ones with better safety records,” McKee wrote. CITGO was represented in the appeal by attorneys Ronald H. DeMaria and James J. McGovern III of Genova Burns & Vernoia in Livingston, N.J. PACE was represented by attorneys Robert F. Henninger and Warren J. Borish of Spear Wilderman Borish Endy Spear & Runckel in Haddonfield, N.J.

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