America is already feeling the consequences of a looming nationwide rail strike

By Chris Isidore, CNN Business

America’s freight railroads have already stopped accepting shipments of hazardous and other security-sensitive materials because of the looming threat of a strike Friday.

Union Pacific, one of the major national railroads whose operations would be halted by a strike, said the move is meant to “protect employees, customers, and the communities we serve.”

A statement from the railroad’s trade group said they needed to take this step in order to follow federal rules to “ensure that no such cargo is left on an unattended or unsecured train.”

But the unions representing the members of the train crew threatening to go on strike say the railroad’s new freight restrictions are designed to put pressure on Congress to block the unions from walking out. They said the move was “completely unnecessary” and “no more than corporate extortion.”

“The railroads are using shippers, consumers, and the supply chain of our nation as pawns in an effort to get our unions to cave into their contract demands,” said the unions’ statement. “Our unions will not cave into these scare tactics, and Congress must not cave into what can only be described as corporate terrorism.”

The statements show the rising stakes in the labor dispute that could lead to the first national railroad strike in 30 years as soon as this Friday. About 60,000 union members who work for the railroad are set to go on strike, including the engineers and conductors who make up the two-person crews on each train. Even though 45,000 other union members belong to unions that have reached tentative deals with the railroads, a strike by engineers and conductors would bring the freight rail system, which carries nearly 30% of the nation’s freight, to a grinding halt.

It’s about the last thing the US economy needs as it struggles to get over several years of supply chain issues. A prolonged strike could mean some empty shelves in stores, temporary closures at factories that don’t have the parts they need to operate, and higher prices due to the limited availability of various consumer goods.

“While these actions are necessary, they do not mean a work stoppage is certain,” said the statement from Union Pacific. “What we want, and continue to push for, is a prompt resolution that provides historic wage increases to employees and allows the railroads to restore service as soon as possible, preventing further disruption to the struggling supply chain.”

Congress could avert strike

Labor law for railroad and airline employees is different from the law that controls labor relations for the vast majority of private sector workers. The Railway Labor Act, the nation’s oldest labor law, allows Congress to take action to keep workers on the job in case of a strike or a lockout of workers by management.

But it’s not clear that Congress could act quickly to find a bipartisan measure needed to win the votes to avert a strike, especially just weeks before crucial midterm elections.

In July, when a strike was first threatened, President Joe Biden used powers he had at that time to block a freight rail strike. That created a 60-day cooling off period during which a panel he appointed, known as a Presidential Emergency Board, or PEB, looked at the dispute and came up with a set of recommendations.

But that 60-day cooling off period ends at 12:01 am ET Friday, allowing the union to go on strike or the railroads to lockout the union members. Biden does not have the power to prevent a strike or lockout once again. Without a labor agreement or congressional action to impose a contract or extend the cooling off period, the national freight railroads will grind to a halt on Friday.

“The railroads show no intentions of reaching an agreement with our unions, but they cannot legally lock out our members until the end of the cooling-off period,” said the union in a statement. “Instead, they are locking out their customers beginning on Monday and further harming the supply chain in an effort to provoke congressional action.”

The US Chamber of Commerce sent a letter to both the Democrat and Republican leadership of both houses asking that Congress be prepared to act if the two sides can’t reach an agreement before Friday.

“We continue to believe that a voluntary agreement by all parties is the best outcome, but it is now clear that Congress may need to intervene,” said the letter. It urged Congress to impose a new contract based on the PEB’s recommendations upon the unions that have yet to reach a tentative agreement with the railroads. It did raise the possibility of extending the cooling off period rather than imposing a contract.

Strike would be about non-wage issues

The PEB’s proposals included an immediate 14% raise for 115,000 union members working for the railroad, including backpay back to 2020, and raises totaling of 24% over the five-year life of the contract from 2020 to 2024. The plan was good enough for eight of the 12 unions, which together represent about 45,000 railroad employees to agree to tentative labor agreement. The most recent agreements came over the weekend.

But four of the groups, including the two most significant unions that represent the engineers and conductors who make up the two-person crews on each train, have refused to accept the PEB’s proposal so far.

Two of the unions -— those representing the train crew members — say their members would never ratify a contract that includes the current staffing levels and scheduling rules. They say the shortage of workers has meant their members need to be on call to report to work on short notice seven days a week, even on the days they’re not scheduled to work. Those rules do not apply to members of the unions who have reached tentative agreements.

The engineers and conductors unions include about half of the union members working for the railroads. And if they strike, even if the other unions all agree to stay on the job, the trains will not operate.

Railroad management says that the PEB considered the union’s demands on scheduling and were “expressly rejected.”

“It is critical that the remaining unions promptly reach agreements that provide pay increases to employees and prevent rail service disruptions,” said management’s statement. It said the deals with the remaining unions should be “based on the PEB’s recommendation.”

But the engineers’ and conductors’ unions are pushing their allies in Congress not to take any action to impose a labor deal on workers who have yet to reach a deal, or to extend the cooling off period. The unions say only a strike can resolve the issue, and if management wants to avoid a strike, it must agree to fix the work rules.

“Rather than gridlock the supply chain by denying shipments …. the railroads should work towards a fair settlement that our members, their employees, would ratify,” said the unions. “For that to happen, we must make improvements to the working conditions that have been on the bargaining table since negotiations began.”

US Labor Secretary Martin Walsh, who met with the two sides during mediated talks last week, again engaged the two sides on Sunday to push them to reach a resolution that averts any shutdown, according to a statement from a Labor Department spokesperson. He has also canceled a trip to Ireland to give a speech there due to the railroad labor talks.

“All parties need to stay at the table, bargain in good faith to resolve outstanding issues, and come to an agreement,” said the statement. “The fact that we are already seeing some impacts of contingency planning by railways again demonstrates that a shutdown of our freight rail system is an unacceptable outcome for our economy and the American people, and all parties must work to avoid that.”

— CNN’s Vanessa Yurkevich and Betsy Klein contributed to this report.

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