US NEWS: President Biden faces deadline over US rail impasse

LOS ANGELES, July 12 – U.S. President Joe Biden is at risk next week of having to intervene in nationwide U.S. railroad labor talks affecting 115,000 workers or open the door to a potential strike or lockout that could endanger an already fragile economy and choke off supplies food and fuel.

The stakes are high for Biden, who wants to tackle inflationary supply chain problems and is already working to reach an agreement in critical labor talks at West Coast seaports.

If the president refuses to intervene in railroad labor negotiations by appointing a Presidential Emergency Board (PEB) by 12:01 a.m. EDT Monday, railroads and unions could opt for work stoppages or strikes. If appointed, the council would issue recommendations that could be used as a framework for a voluntary settlement.

A White House official told the administration was “going through the standard process that has been used in the past when considering PEBs.” The White House declined further comment.

The parties in the current talks expect Biden to appoint a board, as President Barack Obama did, to help resolve the 2011 impasse over wages and health benefits at the major freight railroads.

“People in the executive branch and Congress know how vital our rail freight system is to our economy,” said Greg Regan, president of the AFL-CIO trade union, which represents several railroad unions.

“You’re going to see a similar pressure to reach a deal that you see on the left side,” he added.

U.S. trade groups representing retailers and food and fuel manufacturers warned in letters to Biden that not appointing a PEB would be “disastrous” for a softening economy. Railroads move everything from packages from Amazon to heating oil and soybeans, and a shutdown of any kind could send commodity prices soaring and disrupt battered supply chains.

The rail talks come at a bad time for Biden, whose administration is also dealing with negotiations involving more than 22,000 US West Coast workers at 29 seaports from Washington to California, including the busiest at Los Angeles/Long Beach. The contract expired on July 1, and the two sides are fighting over issues ranging from pay to automation.

Talks between major freight railroads, including BNSF owned by Union Pacific ( UNP.N ) and Berkshire Hathaway ( BRKa.N ), and unions representing their workers have dragged on for more than two years. If appointed, the PEB has 30 days to make non-binding settlement recommendations. During this time and for 30 days after the publication of the report, work breaks are prohibited.

If employers or unions reject the recommendation, Congress can intervene.

The Brotherhood of Locomotive Engineers and Trainmen (BLET), one of the unions involved in the talks, set a Tuesday morning deadline under its constitution for its 23,000 members to vote to authorize a strike if such action is necessary.

The U.S. rail industry is already beset by disruptions stemming from self-inflicted staffing shortages that have limited fertilizer supplies, caused backups at major U.S. seaports, and halted the feeding of Foster Farms chickens in California.

The head of the independent federal agency that regulates the industry lashed out in May that railroads have cut 45,000 jobs, nearly 30% of their workforce, over the past six years.

“They cut to the bone,” Martin Oberman, chairman of the Surface Transportation Board, told a U.S. House committee hearing. “Rail service is unacceptably poor … All stakeholders agree that the problem is primarily a lack of manpower,” Oberman said.

U.S. freight railroads have assured investors that they are making progress with hiring and retention as they negotiate with unions over pay, time off, and health care cost-sharing.

Railroads, unions, and customers hope to avoid a repeat of 1992 when railroads shut down for two days after the International Association of Machinists struck CSX Corp ( CSX.O ), and the nation’s railroads responded by shutting down service and calling a strike against one railroad was a strike against all railroads. At the time, experts warned that the impact of the rail disruption could rise from $50 million a day initially to $1 billion a day for the extended action.

“It remains in the best interest of all parties – and the public – to settle this dispute, secure prompt pay increases for all railroad employees, and prevent disruption to rail service,” the National Railroad Labor Conference (NRLC) said in an update on the negotiations.

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