Freight trains across the United States could come to a halt this week if six of the seven largest railroads in North America — including BNSF Railway and Union Pacific, which both operate in Montana — cannot secure new labor contracts by 12:01 a.m. Friday, following more than two years of contentious negotiations.
At that hour, either the railroads can lock out employees, or unions representing tens of thousands of railroaders can go on strike. On Monday, a shutdown of the network appeared so likely that some railroads began to secure hazardous material shipments should a strike or lockout occur, though the unions dismissed that action as a ploy to get shippers to complain to Congress to force a solution. The Washington Post reported that White House officials are holding emergency meetings this week in hopes of preventing a strike.
A shutdown of a vast majority of the freight rail network could cost the American economy more than $2 billion a day, according to an economic analysis by the Association of American Railroads, as well as impact agricultural and manufacturing shippers in Montana and elsewhere. A shutdown of the rail network, which moves 1.7 billion tons of goods and products annually, would also have a major impact on a national supply chain still reeling from the impacts of the pandemic and labor shortages.
Railroad-labor relations are complex and are generally governed by a nearly century-old law called the Railway Labor Act of 1926. Under that law, railroads and unions have conducted collective bargaining negotiations on a multi-employer and multi-union basis for more than 90 years. Nearly all the major freight railroads in the United States partake in the national talks. Typically, the national bargaining method has been successful at avoiding strikes or lockouts that could cripple the American economy, and there have been only two days of service disruptions resulting from contract talks in the last 30 years. The last national railroad work stoppage was in 1992.
But the latest round of contract talks has been more contentious than most. In addition to standard issues like compensation and benefits, the talks have also focused on various work rules regarding employee attendance policies and crew sizes. Currently, most freight trains run with two employees on board, but some freight railroads have said it can be done with just one. The unions say that is unsafe, and the federal government is currently considering implementing a rule to make two-person crews the national standard. The unions also want new policies guaranteeing railroaders — who navigate hectic and unpredictable work schedules — a better work-life balance.
In June, after more than two years of talks and help from federal mediators, the National Mediation Board announced that talks between the Coordinated Bargaining Coalition (which represents the unions) and the National Carriers Conference Committee (which represents the railroads) had failed and that third-party arbitrators should step in. However, either side can reject binding arbitration, which the unions did. That set the stage for the Biden administration to establish a Presidential Emergency Board to review the conflict and make recommendations.
On Aug. 17, that board issued its report and recommended that the railroads give their employees a 22% pay increase — less than the 28% the unions wanted, but more than the 16% the railroads had offered. On the more contentious issues like attendance policies and crew size, the emergency board punted and said the railroads and unions should resolve those questions through local negotiations or arbitration. The railroads called the emergency board’s recommendations a “useful basis” to continue talks. But union officials said those recommendations had “fallen short” and did “not go far enough to provide our members with the quality of life that they have earned, and that both they and their families deserve.”
Railroaders were also frustrated with comments made by negotiators stating that they did not believe the railroads’ record profits were the result of contributions by labor. Rather, the railroads said the profits were the result of “capital investment and [financial] risk” by the companies.
The release of the Presidential Emergency Board report set off another round of talks and a 30-day “cooling off” period during which the railroads couldn’t lock employees out and the unions couldn’t strike. During that time, the railroads have forged agreements with eight smaller unions representing maintenance workers, dispatchers and more. However, agreements with the two largest unions — the Brotherhood of Locomotive Engineers & Trainmen and SMART Transportation Division, which together represent tens of thousands of locomotive engineers and conductors — have remained elusive.
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Late last week, a number of railroads announced that they would begin to secure hazardous material shipments ahead of the 12:01 a.m. Sept. 16 deadline in case of a strike. Some even warned customers that trains carrying non-hazardous materials might come to a halt up to 72 hours ahead of the deadline to ensure an orderly shutdown of the network.
In a message to customers, BNSF Executive Vice President and Chief Marketing Officer Steve Bobb urged rail shippers to contact their congressional representatives to intervene and prevent a strike by unilaterally imposing the Presidential Emergency Board recommendations.
“It is critical that Congress hear from freight rail customers as soon as possible,” Bobb wrote. “If there is a labor strike on September 16, Congress can intervene to prevent or quickly resolve the service disruption.”
But the unions have said any move to stop freight before the Sept. 16 deadline is the railroad industry trying to scare customers into action. In a joint statement on Sunday, Jeremy Ferguson, president of SMART Transportation Division, and Dennis Pierce, president of Brotherhood of Locomotive Engineers & Trainmen, called the preemptive freight embargoes an “unnecessary attack” on rail shippers.
“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 knowing that our members would never accept them,” the union bosses wrote. “Our unions will not cave into these scare tactics, and Congress must not cave into what can only be described as corporate terrorism.”
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