Report: White House Eying Rail-Freight Shipping Alternatives (UPDATED)

Written by Marybeth Luczak, Executive Editor
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White House officials are exploring rail-freight shipping alternatives to avoid a potential work stoppage later this week, The Wall Street Journal reports. Update: Railway Age Capitol Hill Contributing Editor Frank N. Wilner has learned that the freight railroads and rail labor are huddling today in an attempt to reach an agreement to extend the status quo (cooling off period) until after election day.

“Senior administration officials are communicating with ocean-shipping, trucking and airfreight companies among others to determine how to keep goods moving in case of a rail shutdown and what commodities are most likely to face severe disruptions,” the newspaper reported on Sept. 13. “Food, energy and public-health-related products are among those the administration wants to maintain in circulation with minimal issues, White House officials said.”

White House Press Secretary Karine Jean-Pierre said during a Sept. 13 briefing that “it’s important to remember that the unions and companies are still at the table, which is incredibly important. They’re negotiating in good faith, as the President and Cabinet Secretaries have pushed for these past several months.

“And we have made crystal clear to the interested parties the harm that American families, businesses and farmers, and communities would experience if they were not to reach a resolution.”

According to The Wall Street Journal, Labor Secretary Marty Walsh is expected to meet with union and railroad representatives on Sept. 14.

The Association of American Railroads (AAR) on Sept. 9 reported that six Class I freight railroads participating in national bargaining were to begin taking steps as early as Sept. 12 to manage and secure shipments of hazardous and security-sensitive materials “in light of the possibility of a rail labor strike.”

Hazmat such as chlorine used to purify drinking water and chemicals used in fertilizer are among the targeted shipments. “Railroads are taking all measures necessary to handle sensitive cargo in accordance with federal regulations to ensure that no such cargo is left on an unattended or unsecured train in the event of a work stoppage due to an impasse in labor negotiations,” according to AAR. “Additionally, other freight customers may also start to experience delayed or suspended service over the course of next week, as the railroads prepare for the possibility that current labor negotiations do not result in a resolution and are required to safely and securely reduce operations.”

AAR cautioned that “[w]hile these preparatory actions are necessary, they do not mean a work stoppage is certain.”

Businesses are working on contingency planning to move products, according to The Wall Street Journal, and “their trade groups have called on lawmakers and the White House to act quickly to resolve the matter. The American Petroleum Institute, in a letter to congressional leaders on Tuesday [Sept. 13], said the restrictions on hazardous materials that began this week ‘could have profound impacts on the ability of our industry to deliver critical energy supplies.’”

All 12* rail labor unions have been negotiating since January 2020 with the National Carriers Conference Committee (NCCC) that represents most Class I railroads and many smaller railroads. “Unlike in most other unionized industries, railroad labor contracts negotiated under provisions of the Railway Labor Act (RLA) never expire,” Railway Age Capitol Hill Contributing Editor Frank N. Wilner explained in a Sept. 11 labor update commentary. “They remain in force until voluntary agreements are reached, or, in the event of a rare work stoppage after RLA provisions run their course, Congress imposes a legislative settlement.”

Sept. 16 is the date on which the RLA has run its course—30 days following non-binding settlement recommendations by a President Joe Biden created and staffed Presidential Emergency Board (PEB)—according to Wilner, who noted in his commentary, “labor may strike or carriers may lockout, but neither is foreordained and neither side has made an actual threat.”

Wilner, author of “Understanding the Railway Labor Act” as well as a former director of public relations for SMART-TD and its United Transportation Union predecessor, an assistant vice president for policy at the Association of American Railroads, and a White House (Bill Clinton) appointed chief of staff at the Surface Transportation Board, wrote on Sept. 11: “If this round goes to Congress to settle—a virtual certainty, given the importance of railroads to the national economy and defense—a pattern on wages and benefits appears fully embroidered through tentative agreements reached (or on the cusp of reaching) with 10 of the 12 unions and in comments from the negotiating teams of SMART-TD and BLET.” (A tentative agreement is defined as one that is sent out to union members for a ratification vote, according to Wilner.)

“Congress need only cut and paste into legislation the non-binding settlement recommendations of Presidential Emergency Board No. 250,” Wilner wrote. “This would satisfy carriers and the union leadership satisfied with the deal but having trepidations of selling it to members for ratification given the well of once relative goodwill these labor leaders fouled in recent years.

“The wicket that neither negotiators nor Congress may be unable to unstick encompass work rules affecting SMART-TD and the BLET. … In a final National Mediation Board-guided bargaining session last week, following release of the PEB recommendations, SMART-TD and BLET held firm in demands beyond what the PEB recommended and regurgitated demands the PEB had rejected. Carriers, meanwhile, declined to compromise and held firm that they will accept nothing other than the PEB recommendations.

“Barring an unlikely successful labor-friendly push in Congress by lawmakers sufficiently incentivized by union political campaign donations, legislation ending a strike or lockout is unlikely to deliver the work rules outcome sought by conductors and engineers. SMART-TD and BLET will be using all of their congressional lobbying power and expertise to gain more than the PEB recommend on work rules—a Hail Mary if there ever was one.”

Remaining at the bargaining table, Wilner told Railway Age on Sept. 13, are the Brotherhood of Railway Signalman (BRS), BLET and SMART-TD.

The Wall Street Journal on Sept. 13 reported that “President Biden, members of his cabinet and senior administration officials were engaged with the labor unions and companies Monday [Sept. 12] in an effort to avert a labor stoppage, according to a White House official. Mr. Biden was updated on developments Tuesday [Sept. 13] and administration officials are continuing to engage on the matter as well, the official said.”

The Wall Street Journal also asked Surface Transportation Board Chairman Martin Oberman to weigh in on the freight railroad-labor negotiations. Oberman “declined to comment on the specifics of the labor negotiations, but pointed to testimony from railroad executives at the STB’s oversight hearings in April, at which several said they were going to great lengths to attract and retain workers,” according to the newspaper. “Even if a strike is averted, Mr. Oberman said he is concerned that the bitter feelings among workers from the current standoff could hurt railroad recruitment in the future. ‘The ramifications are going to carry forward,’ he said.”

Predictions

Frank Wilner on Sept. 14 told Railway Age: “The probabilities are improving for a breakthrough labor-management agreement before Friday [Sept. 16] to extend the so-called cooling off period to avoid a Friday [Sept. 16] strike or lockout that would create a nationwide rail work stoppage. The sides, meeting today, are recognizing that partisan politics, weeks before mid-term congressional elections, are making it extremely difficult, if not impossible, for a bipartisan congressional agreement on ending a work stoppage. The extension, by which the parties agree not to strike or lockout, but continue negotiating, could extend to after the November elections. 

Frank N. Wilner

“Increasingly evident is that the National Mediation Board’s (NMB) 2-1 vote (the lone Republican dissenting) was ill-advised and even partisan in nature, which would be a mocking of the NMB’s neutral role in assuring the Railway Labor Act (RLA) remains a manual of peace rather than a manual of war. There was no valid reason to short-circuit mediation sessions as the NMB Democratic majority did. Collective bargaining and NMB-guided mediation already had been significantly curtailed owing to the COVID-19 pandemic and the parties’ inability to meet face-to-face. As RLA contracts never expire, but remain in force until amended, there was no hard deadline for ending mediation and turning the parties loose in the midst of an already extremely partisan election season.

“Separately, out of concern his joint hearing with the House Agriculture Committee on rail service failures could turn into distracting shipper-witness monologues on the need for congressional action to prevent a work stoppage, House Transportation and Infrastructure Committee Chairperson Peter DeFazio (D-Ore.) cancelled the [Sept. 15] event. 

“In a related event, union efforts led by Brotherhood of Locomotive Engineers and Trainmen Dennis Pierce to elicit from the Surface Transportation Board a Directed Service Order halting rail embargoes ahead of a Friday [Sept. 16] work stoppage apparently failed. If in fact, his pleas to the STB were taken seriously, the agency’s General Counsel likely would have warned Board members that railroads have a due diligence obligation to protect assets and cargo in advance of a threatened work stoppage, and STB action to block such efforts would likely be enjoined by a federal court.”

Wilner in his Sept. 11 commentary provided the following “truths” to remember:

  • “Rail contracts never expire, but remain in force until amendments are voluntarily reached or Congress imposes a third-party settlement. The phrase, ‘no contract, no work’ does not exist in the rail industry.
  • “Already, carriers and 10 unions with (or on the cusp of reaching) tentative pacts have agreed to maintain the status quo while those unions seek member ratification.
  • “Even if SMART-TD and the BLET fail to reach tentative agreements by Sept. 16, neither is under an obligation to authorize a strike. Their members would continue working under existing contracts—even if and as other unions ratify amended agreements. The two unions could continue to negotiate beyond Sept. 16, if carriers are willing.   
  • “Carriers could, on or after Sept. 16, precipitate a lockout on the assumption that subsequent and quick congressional action will favor railroad interests rather than continued negotiations. A management lockout is as great a likelihood as SMART-TD and/or BLET authorizing a strike.
  • “A selective strike is most unlikely. SMART-TD or BLET could selectively strike just one or two railroads, but, as occurred when only CSX was struck in June 1992, all carriers would respond with a lockout as the nation’s rail network is so interconnected that a shutdown of one would create havoc on most others.
  • “While Congress in the past has reacted within days or hours to a nationwide rail shut down with back-to-work legislation—its terms either imposing PEB recommendations, something close or them, or binding arbitration—current congressional dysfunction, especially so close to mid-term elections, could delay legislation and prolong a rail shutdown for an indeterminate time period.
  • “While unions have strike funds to assist members losing paychecks and even carrier-provided healthcare insurance, those resources are limited. SMART-TD, for example, with some 37,000 members, would have to find in its reserves in excess of $3.7 million daily even if members were provided only $100 daily. Those benefits are not paid until after three days. The federally administered Railroad Unemployment Insurance Act—jointly funded by carriers and rail employees and similar to Railroad Retirement—provides for unemployment benefits to striking rail workers, but not until after the seventh day of a strike.
  • “Carriers, meanwhile, have a little known and 100% carrier-financed and administered Service Interruption Plan to indemnify carriers for revenue losses during strikes and lockouts.”

The 12 rail unions bargaining with carriers are: the American Train Dispatchers Association; Brotherhood of Locomotive Engineers and Trainmen; Brotherhood of Maintenance of Way Employes; Brotherhood of Railroad Signalmen; International Association of Machinists; International Brotherhood of Boilermakers; Mechanical Division of International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART); National Conference of Firemen & Oilers; International Brotherhood of Electrical Workers; Transport Workers; Transportation Communications Union (including Brotherhood Railway Carmen); and Transportation Division of SMART (including Railroad Yardmasters of America).

Class I carriers represented at the bargaining table by the National Carriers Conference Committee (NCCC) are BNSF; Canadian National; CSX (although it is negotiating wages and work rules separately with SMART-TD and BLET); Kansas City Southern; Norfolk Southern; and Union Pacific. Canadian Pacific is negotiating separately with all its unions. Many smaller railroads also are represented by NCCC.

FURTHER INSIGHT:

Labor Update: Avoid Misinformation Cesspool

Senators Call for Resolution Adopting PEB Recommendations

Amtrak Suspending Some Service Due to Potential Freight Rail Shutdown

NCFO Reaches Tentative Agreement With NCCC

Baker to Congress: Be Ready to ‘Step In’ and Avert System Shutdown

BMWED, IBB, SMART-MD Reach Tentative Agreements With NCCC

Railroads Prepping for Strike Action: AAR

Labor Secretary Warns Labor, Rails

NMB Orders Labor Back to Washington

PEB 250: Correcting Misinformation in Labor Ranks

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