September 9, 2022

Rail Strike Could Cause Supply Chain, Commuter Issues

Absent Congressional Intervention or 11th-Hour Deal, Impasse Would Idle 7,000 Trains Daily
Holland & Knight Transportation Blog
Charles W. Shewmake
Transportation Blog

Railroads are covered by the federal Railway Labor Act (RLA), a piece of legislation that historically was the result of compromise between rail labor and rail management. One of the ostensible compromises in the RLA is that there is the preference for unionization (state right-to-work laws are inapplicable to RLA carriers, while union security agreements are lawful). But on the other hand, the RLA makes strikes or work stoppages difficult, and job actions are much more rare under the RLA than in other industries.

As an example, for non-carrier employers covered by the National Labor Relations Act, strikes often commence upon the expiration of a three- or five-year contract term. Under the RLA, contracts never technically "expire" but are changed through a series of statutory processes. These processes are typically called "major disputes," and strikes are permitted only in major disputes at the end of a series of processes that have been described by the U.S. Supreme Court as "almost interminable." For example, the current "round" of bargaining began in November 2019.

However, the "almost interminable" process does eventually end and, at the end of this major dispute process, if the dispute is not otherwise resolved, the President of the United States can appoint a Presidential Emergency Board (PEB) to investigate the dispute and make recommendations to assist in finding a resolution. The National Mediation Board terminated its mediation efforts in June, and the current PEB, 250, was established by President Biden on July 15, 2022. PEB 250 issued its report on Aug. 17, 2022. The PEB's recommendations addressed various issues, and its proposals on wage increases would amount to 24 percent compounded by 2024, with 14 percent of those increases effective immediately, along with certain other bonuses. PEB 250's recommendations have already resulted in tentative agreements (subject to ratification) with five of the 12 rail unions involved in the current round of bargaining. However, the three largest rail unions representing engineers, conductors and maintenance of way employees, have yet to reach any accord.

Weighing Options

The final cooling-off period prescribed by the RLA is set to expire at 12:01 a.m. on Sept. 16, 2022. Thereafter, the parties would then be free to strike or exercise other economic self-help. However, since at least the 1960s, such "major dispute" strikes in the rail industry have typically been resolved quickly by an act of Congress. The federal legislation to end these disputes has typically been based on the PEB's recommendations. While this outcome may seem far-fetched to those not familiar with the process, the PEB process, or even the threat of the PEB process, has resolved many of the recent bargaining rounds going back decades.

The possibility of a congressional intervention to end a dispute is especially likely when, as here, the majority of the nation's railroads are engaged in the process of so-called "national handling" involving all or most of the railroads and all of the remaining rail unions. That is because if virtually all of the nation's railroads are impacted by a strike, it makes the emergency, and the need for Congressional action, that much more pressing.

Judging by the rhetoric, the remaining unions are ready to strike if their demands are not met. According to industry sources, such a job action, if not halted by congressional legislation, could idle more than 7,000 trains daily and could quickly affect supply chains and certain work commuters.

The end of the final cooling-off period is quickly approaching.

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