October 7, 2011 / 12:28 AM / 6 years ago

Obama intervenes in freight rail dispute

Burlington Northern Santa Fe trains make their way through a rail yard in Chicago, November 3, 2009.John Gress

WASHINGTON (Reuters) - President Barack Obama intervened on Thursday in stalled contract negotiations at the largest freight railroads, heading off a potential strike by locomotive engineers that could have disrupted shipping nationally.

Signing an executive order to create a presidential emergency board to help resolve the dispute, Obama cited the vital economic importance of rail freight amid faltering economic growth.

"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," he said in a statement.

Talks between 11 unions representing more than 80,000 workers and a group overseeing negotiations for CSX Corp, Norfolk Southern, Union Pacific and Burlington Northern Santa Fe -- owned by Warren Buffett's Berkshire Hathaway Inc -- faltered in September.

More than two dozen smaller railroads are also involved in the negotiations and a strike could have begun on Friday if the White House had not acted.

Obama named five individuals he intends to appoint to the emergency board, which the White House said would hear evidence and deliver its recommendations on how to solve the dispute within 30 days.

They are Ira Jaffe, Roberta Golick, Joshua Javits, Gil Vernon and Arnold Zack. All have extensive experience in labor arbitration, the White House said.

Government intervention is permitted under federal law in railroad and airline disputes if an impasse or potential strike is considered damaging to commerce.

Major railroads represented by the Association of American Railroads trade group said they hoped Obama's action would lead to a swift settlement.

HEALTHCARE COSTS AN ISSUE

Another union representing thousands of conductors and other crafts reached a contract agreement in June. But that blueprint has not been adopted in the larger negotiations. Increased healthcare costs are a sticking point.

The National Mediation Board has overseen rail talks for more than a year and had already notified the White House that mediation had failed.

That cleared the way for possible union strikes at 12:01 a.m. EDT on Friday unless the Obama administration acted to head them off.

The Brotherhood of Locomotive Engineers and Trainmen representing nearly 25,000 workers is the only major union to have authorized a walkout.

Officials of that union could not be reached for comment. A spokesman for the Transportation Communications Union/International Association of Machinists said the union would issue a statement later.

Obama had yet to intervene in a transportation contract dispute, something his two immediate predecessors did or threatened to do to facilitate labor agreements or block strikes at big airlines.

Kenneth Gradia, chairman of the railroad industry's bargaining representative -- the National Carriers Conference Committee -- said the group would make "a compelling case to the PEB detailing why this agreement should serve as a pattern for settlement" with the other unions.

The last railroad presidential emergency board involved an Amtrak dispute in 2007 under then-President George W. Bush.

If White House intervention fails to bring about a settlement, Congress can step in and order contract terms.

In some cases, just naming an emergency board leads to an agreement.

Reporting by John Crawley and Alister Bull; Editing by Peter Cooney

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