Rail unions, carriers reach tentative compromise day of strike deadline

The heads of 13 rail unions and the nation's largest freight rail carriers reached a tentative agreement early Thursday morning, less than 24 hours before workers would have gained the ability to walk off the job.

“Moments ago, following 20 consecutive hours of negotiations at the Department of Labor, rail companies and union negotiators came to a tentative agreement that balances the needs of workers, businesses, and our nation’s economy," a Labor Department spokesperson said in a statement. "Secretary Walsh and the Biden Administration applaud all parties for reaching this hard-fought, mutually beneficial deal."

"Our rail system is integral to our supply chain, and a disruption would have had catastrophic impacts on industries, travelers and families across the country,” the spokesperson said.

Workers from the respective labor organizations will still need to ratify the compromise.

As part of the tentative agreement, both sides agreed to a cooling-off period of several weeks to ensure that if a vote doesn’t succeed for any reason, there isn’t an immediate rail shutdown, a person close to the talks said. But that language is a standard part of the process, they said.

In a 9 p.m. call to Walsh and negotiators at the table, President Joe Biden pushed them to recognize the harm that a strike would bring by hitting families, farmers and businesses if there were a shutdown.

“The economic impacts could have been significant,” a White House official said of the intercession by Biden.

The Association of American Railroads highlighted wage increases in an initial press release Thursday — but made no mention of the time-off that was, among other things, one of the major remaining sticking points.

"These new contracts provide rail employees a 24 percent wage increase during the five-year period from 2020 through 2024, including an immediate payout on average of $11,000 upon ratification, following the recommendations of Presidential Emergency Board," AAR said in a statement.

At the White House, Biden called it "a win for tens of thousands of rail workers who worked tirelessly through the pandemic" and will now "get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned."

"The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come," he added in a statement.

The Labor Department plans to hold a media availability later Thursday.

It's a close call for the nation's economy — and, should workers vote to ratify, a major win for a Biden White House that would have been hard-hit by the likely disastrous fallout.

Already, preemptive impacts from the potential strike had begun to pile up. Amtrak said Wednesday it would cancel all long-distance trains Thursday and said service in several states would follow suit that night, and commuter rail lines in cities like Chicago announced plans to potentially cease service Friday.

Industry groups halted shipments of grain, including corn and soy, and carriers have sidelined hazardous and security-sensitive deliveries. The U.S. Transportation Command, the military's cargo and logistics arm, said it was prioritizing aid to Ukraine and overseas deployments in order to mitigate any impact from the strike.

On Wednesday members of the unions that had yet to reach tentative agreements were already formulating plans to picket first thing Friday in places like Chicago, Tampa and elsewhere. One engineer told POLITICO he was to report to a location chosen by his local union representative and receive a picketing assignment in the event a compromise is not reached.

Any worker stoppage potentially touch on every facet of American life. That includes grocery shortages, starving livestock, coal-less power plants and more, dealing a potentially enormous economic blow just as inflation starts to moderate. With midterm elections next month, any further harm to commerce could have serious political ramifications for Democrats.

"A strike that shuts down our railways will have cascading effects across the country," said Joshua Bolten, Business Roundtable CEO and former White House chief of staff. "We’ve been experiencing a lot of headwinds from supply chain problems since the pandemic started, and those problems would be geometrically magnified by a rail strike."

In a sign of how dire the situation is, policymakers are pulling out all of the stops. Unions and carriers ate lunch and dinner Wednesday at DOL's headquarters in Washington, D.C., as they buckled down alongside Labor Secretary Marty Walsh, who canceled a planned trip to Ireland at the last minute this week in order to remain in the U.S.

"Secretary Walsh continues to lead discussions at the Department of Labor between the rail companies and unions," a DOL spokesperson said. "The parties are negotiating in good faith and have committed to staying at the table today."

Adding urgency to the talks: A division of the International Association of Machinists, District 19, on Wednesday announced that its membership had rejected a compromise and approved a strike no sooner than Sept. 29.

The Transportation Communications Union and the Brotherhood of Railway Carmen, which also fall under the IAM umbrella, said Wednesday afternoon that their members had ratified tentative agreements. Yet both are unlikely to cross picket lines for other unions that may take a different path — upping the pressure on politicians to solve this problem before a federally mandated cooling-off period ends at 12:01 a.m. ET Friday.

Unions still negotiating tentative agreements are holding out for five unpaid sick days, House Transportation Chair Peter DeFazio (D-Ore.) said Wednesday, which he called "not much of an ask."

"We're pushing really hard to get the railroads to accept that," DeFazio said. Unions "wanted originally paid sick leave, they wanted more of this and more of that. They’ll take it if they just get this.”

Republicans and many business interests are leaning on Congress to pass legislation that would mandate a solution.

Freight rail delivers "some of the most basic things any government owes its citizens," Senate Minority Leader Mitch McConnell tweeted Wednesday. "And Democrats can’t deliver them."

Yet Democrats in the House and Senate have signaled that they prefer not to act — not even to extend the cooling-off period — and for the White House to ensure that various parties work things out on their own.

“We’d rather see negotiations prevail so there’s no need for any actions from Congress,” House Speaker Nancy Pelosi said, adding that she's been "engaged in conversations" on how to avert a shutdown.

Sen. Bernie Sanders (I-Vt.) blocked an initial attempt by GOP senators Wednesday evening to impose the recommendations of a Biden-appointed emergency board.

“This is an issue that that can and should be worked out between the rail companies and the unions, not by Congress,” press secretary Karine Jean-Pierre said aboard Air Force One. “All parties need to stay at the table and bargain in good faith to resolve outstanding issues and come to an agreement."

Progressive Rep. Alexandria Ocasio-Cortez (D-N.Y.) said "we want to avert any sort of shutdown, but if we get to that point, it's squarely on" the corporations for forcing that outcome.

The board's "recommendations were completely insufficient for the physical needs of those workers — or of any person, frankly," she added. "If we added those labor protections, then we can get somewhere."

Rep. Salud Carbajal (D-Calif.), who chairs the House Transportation Subcommittee on Coast Guard and Maritime Transportation, on Wednesday said that — like his Senate counterparts — he would prefer both sides to come to an agreement before Friday’s deadline.

Carbajal, whose subcommittee oversees the U.S. ports that rely on freight rail to move goods off the docks, said another extension of a cooling-off period simply allows both sides to dig in. He’s not sure what any congressional action should look like.

“That’s always an option but I think you need to give the process a chance and right now they’re working frantically to try to reach that,” Carbajal said. “Any time Congress gets involved providing a cooling off period and what have you, that’s always an option, but it takes away the pressure for them to come together to solve the issue.”

Most of the unions involved in negotiations have reached tentative agreements that largely parallel the board's recommendations.

Yet workers will need to ratify any compromise before it can be adopted. And train conductors and engineers haven't even gotten to that point. The board's proposal, they say, fails to address workers' concerns over issues like on-call policies, paid leave and more.

Testifying on Capitol Hill Wednesday on an unrelated matter, Donald Marcus, international president of the AFL-CIO’s Masters, Mates & Pilots affiliate, said he thinks the cooling off period will need to be extended beyond Friday.

“I would have to say that I think it's going to have to get pushed further to get some real action, Marcus said. “But I’m optimistic at the end of the day.”

Chris Cadelago, Alex Daugherty, Victoria Guida and Oriana Pawlyk contributed to this report.