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Freight Train At Rail Level

New Rail Strike Fears Are Exaggerated

Sept. 30, 2022
New Senate bill would impose more stringent service requirements on railroads.

Fears of a freight railroad strike happening sometime in the future have been revived by union members’ anger over the tentative agreement reached two weeks ago, but those concerns ignore that fact that both sides have agreed to continue negotiating if union members vote to reject the contract proposed.

In another development, new legislation has been introduced in the Senate to address continuing rail service failures by strengthening the federal government’s ability to enforce rail service directives and other obligations, which the railroads have been avoiding in some cases.

Leadership of the 12 railroad workers unions negotiated a new tentative collective bargaining agreement just before a Sept. 15 deadline for those unions to strike. If such a strike had taken place, the estimates of what the resulting work stoppage would cost the U.S. economy started at $2 billion a day and went up from there.

The unions representing conductors and engineers were the last holdouts. Pay was never an issue, which surprised many. Instead workers were insisting that something be done to rectify strict attendance policies in the current chaotic operational environment that made it impossible in many cases for workers to take time off to be with their families.

The negotiations yielded a change designed to soften these attendance penalties. While the proposed contract would control any rise of healthcare premiums, it also limits workers to be able to take time off for only three routine medical visits a year In addition, those days would be limited to only Tuesdays, Wednesdays and Thursdays, and are only allowed when they are scheduled 30 days in advance.

The tentative agreement now needs to be ratified by the rank and file members of the unions before they can go into effect—and before the threat of a strike eventually occurring completely recedes. As of this writing, only three of the negotiating unions’ members have ratified the new contract. Five more unions have various deadline dates for voting scheduled in the month of October, and three more will hold votes in November.

However, even it turns out that the tentative agreements are rejected by a majority of the 115,000 rail union members, it does not mean that there will be an immediate strike. The parties earlier had agreed that if the members fail to approve the agreement, the negotiators will to return to the bargaining table while the rail employees continue working.

For example, members of the International Association of Machinists (IAM) earlier voted to reject a contract their leaders had come to with the railroads. IAM then renegotiated a new tentative contract with additional benefits that included a cap on health insurance expenses and a promise that each railroad will negotiate individually over expense reimbursement.

When it comes to the unions where voting is still pending, there have been scattered recent reports that many of the members are not just disappointed by the provisions for paid and unpaid medical leave, they are downright angry. This is in regard to parts of the proposed contract that cover being able to take days off for doctors’ appointments without facing the attendance disciplinary penalties.

In addition, although it is an authority that is rarely exercised, the top union leaders can individually choose to override their union members’ votes in some circumstances.

New Bill Targets Rails

New railroad reform legislation was introduced by Sen. Tammy Baldwin (D-WI) that is aimed at addressing the current rail service crisis, which has resulted in widespread service failures, including late deliveries that have caused inordinate economic damage across the country and almost all industries, including agriculture producers.

Called the Reliable Rail Service Act, it would more specifically redefine the railroads’ common carrier obligation under national law, which requires them to provide service upon reasonable request. Baldwin and others hold that this legal standard is too vaguely expressed in current law, and that this failed language led to many of the current service problems.

“Failure to define this principle has contributed to insufficient rail services and exorbitant costs for American products to get to market,” Baldwin holds. “Clearly defining this ambiguous principle has taken on greater importance as the railroad industry faces consolidation and has undertaken Wall Street practices that reduce capacity on the rail network.”

The practices she refers to is an operations model called Precision Scheduled Railroading (PSR), which was imposed on most North American railroads by hedge fund managers seeking to boost the value of rail stocks by radically shrinking costs, which included firing employees by the tens of thousands.

This operations model also called for slashing service to customers, and it has steadily gotten worse since PSR was first introduced at CSX five years ago, only to spread to other North American railroads. Part and parcel of the unyielding pursuit of cost-cutting involved the firing of more than 45,000 operating personnel, who were later joined by thousands more who were let go when the COVID-19 pandemic hit.

This later led to rail union members’ outrage over attendance policies intended to wring more work out of the remaining workforce which this year became a sticking point in recent labor contract negotiations. The rail service crisis also caused several prominent Democrat committee leaders in the House of Representatives to introduce their own legislation earlier this year.

Baldwin’s bill, in addition to clarifying the common carrier obligation definition, also would create specific criteria for the Surface Transportation Board (STB) to consider when determining whether a rail carrier has violated its obligation.

Criteria that the board would be required to consider in its assessment include impacts of reductions or other changes in frequency of transportation service; availability and maintenance of reasonable local service schedules and delivery windows; impacts of reductions in employment levels; impacts of reductions in equipment; and whether the service reasonably meets the local operational and service requirements of the shipper.

“American farmers, producers and manufacturers are paying sky-high prices for subpar rail service to get their goods to market, and consumers are seeing the impact on their pocketbooks,” Baldwin said. “In order to build a strong Made in America economy and also lower costs for consumers, we need to ensure our agriculture, energy and manufacturing businesses have reliable rail service.”

Although she cited no co-sponsors for the bill from among the ranks of her colleagues in the Senate, a large number of industry associations representing shippers and labor support the measure. These include the National Industrial Transportation League and the Freight Rail Customer Alliance.

“Manufacturers and consumers can’t keep being subjected to one rail crisis after another—we need Congress to act,” said Chris Jahn, president of the American Chemistry Council. “Senator Baldwin has put together a sensible solution aimed at addressing ongoing freight rail service failures. This is a problem everyone should be interested in solving. We urge Democrats and Republicans to come together to pass legislation that will ensure railroads live up to their obligation to provide reliable service.”

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