Bloomberg News

Railroad Strike Threat Blocked as Obama Creates Review Board

October 06, 2011

Oct. 6 (Bloomberg) -- President Barack Obama appointed a board to review a dispute between U.S. freight railroads including Warren Buffett’s Burlington Northern Santa Fe and most of their unions, averting a threatened strike for at least two months.

The move follows an Oct. 3 vote by the Brotherhood of Locomotive Engineers and Trainmen to strike at 12:01 a.m. tomorrow. A national rail strike would cost the U.S. economy as much as $2 billion a day, according to an estimate by the Washington-based Association of American Railroads.

The board will examine the dispute between the freight railroads and labor groups representing 70 percent of their workers, and propose a solution.

 “Freight rail is vital to our economy and our future,” Obama said in a statement released by the White House. “It’s in our national interest to make sure our freight rail system runs smoothly, since a disruption could affect businesses across the country and cause unnecessary damage to our already-fragile economy.”

The president can set up a review board if a strike threatens interstate commerce. By law, the establishment of a board prohibits a strike or lockout during the 30 days the board has to devise its settlement recommendation and the 30 days that workers and railroads have to consider it.

Thirteen unions representing more than 130,000 employees have been in contract talks with the railroads since January. The United Transportation Union and its Yardmasters Division struck a tentative agreement in June that the railroads want the other 11 groups to accept. The unions rejected the deal’s wage and health-care terms.

Cooling Off

The National Mediation Board, a federal agency that helps resolve labor relations for railroads and airlines, released the engineers group and 10 other unions from contract talks with Union Pacific, Burlington Northern and other large freight carriers on Sept. 6. The resulting 30-day “cooling off period” expires at 12:01 a.m. tomorrow, allowing the parties to strike or lock out workers.

Edward Hamberger, the railroad association’s chief executive officer, said he welcomed Obama’s action. “Now is not the time, given so many Americans already are out of work, to undermine freight rail’s vital role in the nation’s economic recovery,” he said in an e-mailed statement.

Ira Jaffe, vice president of the National Academy of Arbitrators and a mediator and arbitrator since 1981, was named chairman of the review board.

--Editors: Bernard Kohn, Donna Alvarado

To contact the reporter on this story: Lisa Caruso in Washington at lcaruso7@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net -0- Oct/06/2011 16:37 GMT


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