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Mediation between freight railroads and unions fails. Is binding arbitration next?

If arbitration option over labor contract falls through, presidentially appointed board or Congress could intervene

The National Mediation Board has ended mediation between U.S. freight railroads and the rail unions. (Photo: Shutterstock/Abramov Maxim)

A new labor agreement between U.S. freight railroads and the railroad unions may not appear anytime soon, both sides hinted late Tuesday following a federal regulator’s decision to halt mediation efforts.

Freight railroads, including the Class I railroads, and the railroad unions have been embroiled in disagreements over a contract since January 2020, with the National Mediation Board (NMB) stepping in earlier this year to mediate. The NMB is an independent federal agency that mediates labor agreements for the railway and airline industries.

According to the railroads and the unions, the NMB has ended mediation and is offering binding arbitration. Both parties are required to respond by Thursday on whether they will accept this option, but that appears unlikely.

The unions have been advocating recently to be released from mediation so that the proceeding can continue to advance, per the Railway Labor Act. They contend that the sides are at an impasse.

“After more than three years of bad faith negotiations by the railroads, it is unfortunate but not surprising that contract agreements were not achieved through voluntary mediation. The railroads’ offer of a net pay cut and demand for health care concessions are wholly unacceptable,” Transportation Trades Department President Greg Regan said in a statement on behalf of 37 affiliated unions.

Regan also said rail labor will reject the offer of binding arbitration because rank-and-file union members would not have the option to vote on labor contracts under binding arbitration.

“We will continue to adhere to the letter of the law in the contract negotiation process, while rail workers — who have not received a pay raise in three years — continue their work as frontline pandemic heroes who are moving cargo and goods through the supply chain,” Regan continued.

Said Arthur Maratea, national president of the Transportation Communications Union/International Association of Machinists: “After three years of needless stalling from rail carriers, the National Mediation Board has found that a voluntary agreement is simply not possible. We look forward to continuing to advocate forcefully for our membership in this new stage of negotiations.”

The National Carriers’ Conference Committee (NCCC), which represents U.S. freight railroads, also expressed disappointment about the impasse. 

“The railroads have worked to address issues raised by both sides in the negotiations and have offered pay increases that are consistent with labor market benchmarks and reward rail employees for their essential work. The railroads’ proposals would continue to place rail employee pay and benefits among the best in the nation,” NCCC said.

“The NCCC remains willing and available to negotiate at any time over mutually acceptable terms. The NCCC will also look forward to demonstrating to the expected Presidential Emergency Board how the railroads’ proposals appropriately reward rail employees’ hard work and skills while best positioning the industry to grow and compete for traffic in the nation’s highly competitive freight marketplace,” NCCC continued.

While NCCC said it would consider accepting NMB’s offer of binding arbitration, the group noted union leadership’s likely rejection of the offer. If both parties don’t accept arbitration, would enter a 30-day cooling off period. 

During that time or shortly after, President Joe Biden could appoint a board to investigate and recommend actions to settle the dispute, per the Railway Labor Act. If this happens — as it has in some previously unresolved rail negotiation disputes — then that board would have 30 days to conduct hearings and issue a report, NCCC said. Work stoppages would not be allowed during this time or for 30 days following the issuance of the board’s report.

The board’s recommendations could serve as the basis for voluntary agreements, but Congress could also intervene, as it has had in the past, according to NCCC.

FreightWaves reached out to NMB, but the agency was not available for comment.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.