Special Message to the Congress on Labor Disputes in the Transportation Industry.

To the Congress of the United States:

Early in my Administration I pledged that I would submit a new proposal for dealing with national emergency labor disputes. Since that time, members of my Administration have carefully reviewed the provisions of these laws and the nation's experience under them. We have concluded from that review that the area in which emergency disputes have created the greatest problem is that of transportation.

Our highly interdependent economy is extraordinarily vulnerable to any major interruption in the flow of goods. Work stoppages in the railroad, airline, maritime, longshore, or trucking industries are more likely to imperil the national health or safety than work stoppages in other industries. Yet, it is in this same transportation area that the emergency procedures of present laws--the Railway Labor Act of 1996 and the Taft-Hartley Act of 1947--have most frequently failed.

It is to repair the deficiencies of existing legislation and to better protect the public against the damaging effects of work stoppages in the transportation industry that I am today proposing that Congress enact the Emergency Public Interest Protection Act of 1970.

TWO MAJOR OBJECTIVES

Our past approaches to emergency labor disputes have been shaped by two major objectives.

The first is that health and safety of the nation should be protected against damaging work stoppages.

The second is that collective bargaining should be as free as possible from government interference.

As we deal with the particularly difficult problems of transportation strikes and lockouts, we should continue to work toward these objectives. But we must also recognize that, in their purest form, these two principles are mutually inconsistent. For if bargaining is to be perfectly free, then the government will have no recourse in time of emergency. And almost any government effort to prevent emergency strikes will inevitably have some impact on collective bargaining.

Our task, then, is to balance partial achievement of both objectives. We must work to maximize both values. Ideally, we would provide maximum public protection with minimum federal interference. As we examine the laws which presently cover the transportation industry, however, we find that interference has often been excessive and protection has often been inadequate.

THE RAILWAY LABOR ACT

Work stoppages in both the railroad and airline industries are presently handled under the emergency procedures of the Railway Labor Act. Under this law, the President can delay a strike or lockout for sixty days by appointing an Emergency Board to study the positions of both parties and to recommend a settlement. If the sixty-day period ends without a settlement, then the President has no recourse other than to let the strike occur or to request special legislation from the Congress.

Past events and recent experiences demonstrate the failure of these provisions. Since the passage of the Railway Labor Act 45 years ago, the emergency provisions have been invoked 187 times--an average of four times yearly. Work stoppages at the end of the sixty-day period have occurred at a rate of more than one per year since 1947. Twice the President has had to request special legislation from the Congress to end a railroad dispute, most recently in 1967.

Why does the Railway Labor Act have such a bad record? Most observers agree that the Act actually discourages genuine bargaining. Knowing that the Emergency Board will almost always move in with its own recommendation whenever a strike is threatened, the disputants have come to look upon that recommendation as a basis for their own further bargaining. They have come to regard it as a routine part of the negotiation process.

Over the years, the members of one Emergency Board after another have concluded that little meaningful bargaining takes place before their involvement. Most of what happens in the early bargaining, they report, is merely done to set the stage for the appearance of the Federal representatives. Designed as a last resort, the emergency procedures have become almost a first resort. The very fact that an official recommendation is possible tends to make such a recommendation necessary.

The disputants also know that government participation need not end with the Board's recommendation. They know that the nation will not tolerate a damaging railroad strike--and that even compulsory arbitration is a possible legislative solution if they are unable to compromise their differences. This expectation can also have a significant, discouraging effect on serious bargaining. Aware that arbitrators and public opinion will often take a middle ground between two bargaining positions, each disputant feels a strong incentive to establish a more extreme position which will pull the final settlement in his own direction. Expecting that they might have to split the difference tomorrow, both parties find it to their advantage to widen that difference today. Thus the gap between them broadens; the bargaining process deteriorates; government intervention increases; and work stoppages continue.

Many of the deficiencies in the Railway Labor Act do not appear in the Taft-Hartley Act. Therefore, as the first step in my proposed reform, I recommend that the emergency strike provisions of the Railway Labor Act be discontinued and that railroad and airline strikes and lockouts be subject to a new law--one which draws upon our experience under the Taft-Ha riley Act.

THE TAFT-HARTLEY ACT

Labor disputes in other transportation industries--maritime, longshore, and trucking--are now subject to the emergency provisions of the Taft-Hartley Act, legislation which I helped write in 1947.

Under the Taft-Hartley Act, the President may appoint a Board of Inquiry when he believes that a strike or lockout or the threat thereof imperils the nation's health or safety. After the Board of Inquiry has reported on the issues involved in the dispute, the President may direct the Attorney General to petition a Federal District Court to enjoin the strike for an eighty-day "cooling-off" period. During the eighty-day period, the Board of Inquiry makes a second finding of fact and the employees have an opportunity to vote on the employer's last offer.

There are a number of features in the Taft-Hartley Act which encourage collective bargaining to a far greater extent than does the Railway Labor Act. First, government intervention is more difficult to invoke since the Taft-Hartley Act-unlike the Railway Labor Act--requires a court injunction to stop a strike or lockout. Moreover, the Taft-Hartley Act explicitly prohibits the Board of Inquiry from proposing a settlement. Thus neither party is tempted to delay an agreement in the hope that the Board's recommendation will strengthen its hand. Finally, the standard for judging whether the threatened work stoppage justifies government intervention is stricter under Taft-Hartley than under the older Act--though the use of stricter standards does not imply that a strike or lockout which primarily involves one region of the country could not be enjoined if it threatens the national health or safety.

But even the Taft-Hartley Act gives the President inadequate options if a strike or lockout occurs after the eighty-day cooling-off period has elapsed--something that has happened in eight of the twenty-nine instances in which this machinery has been invoked since 1947. All of these instances of failure have involved transportation industries. As is the case under the Railway Labor Act, the President has no recourse in such a situation other than to submit the dispute to the Congress for special legislation.

Each of the last four Presidents, the President's Labor-Management Advisory Committee, numerous voices in the Congress, and many other students of labor relations have concluded that the President's options at this point in the dispute should be broadened. I share this conclusion--but I believe it advisable to limit its application at present to the transportation field. It is in the area of transportation, after all, that our present procedures have encountered the greatest difficulty. If at some later date, conditions in other industries seem to demand further reform--and if our experience with the new transportation procedures has been encouraging-we may then wish to extend the application of these new procedures.

THREE NEW OPTIONS

The President must have additional procedures which he can follow at the end of the cooling-off period if damaging work stoppages in vital transportation industries are to be avoided. Accordingly, I propose that the Taft-Hartley Act--as it applies to transportation industries--be amended to give the President three additional options if, at the end of the eighty-day in]unction period, the labor dispute in question has not been settled and national health or safety is again endangered.

1. The first option would allow the President to extend the cooling-off period for as long as thirty days. This choice might be most attractive if the President believed the dispute were very close to settlement.

2. The President's second option would be to require partial operation of the troubled industry. Under this provision, the major part of the strike or lockout could continue. But danger to national health or safety could be minimized by keeping essential segments of the industry in operation or by maintaining service for the most critical group of service-users. This procedure could be invoked for a period of up to six months.

It is important, of course, that the precise level of partial operation be correctly determined--it must be large enough to protect the society but small enough so that both parties feel continued economic pressures for early settlement. Responsibility for determining whether partial operation is possible and for establishing the proper level of operations would be assigned to a special board of three impartial members appointed by the President. The panel would be required to conduct an extensive study of the matter and to report its findings within thirty days of its appointment. The strike or lockout could not continue during that period.

3. The President's third option would be to invoke the procedure of "final offer selection." Under this procedure, each of the parties would be given three days to submit either one or two final offers to the Secretary of Labor. The parties would then have an additional five days to meet and bargain over these final proposals for settlement. If no agreement emerged from those meetings, a final offer selector group of three neutral members would be appointed by the disputants or, if they could not agree on its membership, by the President. This group would choose one of the final offers as the final and binding settlement.

The selectors would hold formal hearings to determine which of the final offers was most reasonable--taking into account both the public interest and the interests of the disputants. They would be required to choose one of the final offers in the exact form in which it was presented; in no case could they modify any of its terms nor in any way attempt to mediate the conflict.

The final offer selection procedure would guarantee a conclusive settlement without a dangerous work stoppage. But-unlike arbitration--it would also provide a strong incentive for labor and management to reach their own accommodation at an earlier stage in the bargaining. When arbitration is the ultimate recourse, the disputants will compete to stake out the strongest bargaining position, one which will put them at the greatest advantage when a third party tries to "split the difference." But when final offer selection is the ultimate recourse, the disputants will compete to make the most reasonable and most realistic final offer, one which will have the best chance to win the panel's endorsement.

Rather than pulling apart, the disputants would be encouraged to come together. Neither could afford to remain in an intransigent or extreme position. short, while the present prospect of government arbitration tends to widen the gap between bargaining positions and thus' invite intervention, the possibility of final offer selection would work to narrow that gap and make the need for intervention less likely.

It should be emphasized that the President could exercise any one of these options only if the eighty-day cooling-off period failed to produce a settlement. Whatever option the President might choose, either House of Congress would have the opportunity--within ten days-to reject his recommendation under a procedure similar to that established by the Reorganization Act of 1949.

Either a partial operation plan or a final offer selection could be voided in the courts if it were judged arbitrary and capricious. If the President were to choose none of the three additional options, if the Congress were to reject his choice, or if one of the first two options were chosen and failed to bring a settlement, then the President could refer the entire matter to the Congress as he can do under the present law.

OTHER RECOMMENDATIONS

The effort to broaden Presidential options is at the heart of the reforms I propose. There are a number of additional repairs, however, that would also strengthen our labor disputes legislation.

--I recommend that a National Special Industries Commission be established to make a comprehensive study of labor relations in those industries which are particularly vulnerable to national emergency disputes. Experience has clearly shown that such labor crises occur with much greater frequency in some industries than in others. The Commission, which would have a two-year life span, should tell us why this is so and what we can do about it.

--The Railway Labor Act presently calls for final arbitration by government boards of unresolved disputes over minor grievances. Usually these disputes involve the interpretation of existing contracts in the railroad or airline industries. Again, the availability of government arbitration seems to have created the necessity for it; the National Railroad Adjustment Board, for example, has a backlog of several thousand cases to arbitrate. The growing dependence on government represents a dangerous trend; moreover, the resulting delay in settlement is burdensome and unfair to both labor and management.

I propose there[ore that the National Railroad Adjustment Board be abolished. A two-year transition period should be allowed for completing cases now in process. The parties themselves should be asked to establish full grievance machinery procedures, including no-strike, no lockout clauses and provisions for final binding arbitration. When necessary, the Federal Mediation and Conciliation Service would assist in this process.

--A labor contract in the railroad or airlines industry presently has no effective termination date. This is true because the right of the parties to engage in a strike or lockout depends on a declaration by the National Mediation Board that the dispute cannot be resolved through mediation. Negotiations can thus drag on for an indeterminate period, far beyond the intended expiration date of the contract, with no deadlines to motivate serious bargaining.

I recommend that this unusual procedure be discontinued and that new labor contracts for railroads and airlines be negotiated in the same manner as those for most other industries. The party which desires to change or terminate any contract would be required to provide written notice to that effect sixty days in advance of the date on which the change is to go into effect. The schedule of negotiations would thus depend not on the decision of the National Mediation Board, but on the decisions of the parties; earlier, more earnest, and more independent bargaining would be encouraged.

--The National Mediation Board now handles two very different functions: mediating railway and airlines disputes and regulating the process by which bargaining units are determined and bargaining representatives are chosen. This combination of functions is unique to the railroad and airlines industries, and again, I propose that the discrepancy be eliminated. The mediation [unctions of the National Mediation Board should be trans[erred to the Federal Mediation and Conciliation Service--which presently handles this work for the vast majority of our industries. The regulatory [unctions should remain with the National Mediation Board, but its name should be changed to the Railroad and Airline Representation Board to reflect this new reality.

Whenever possible, the government should stay out of private labor disputes. When the public interest requires that government step in, then it should do so through procedures which bring the current conflict to an equitable conclusion without weakening the self-reliance of future bargainers.

The nation cannot tolerate protracted work stoppages in its transportation industries, but neither should labor contracts be molded by the Federal government. The legislation which the Secretary of Labor is submitting to the Congress would help us to avoid both pitfalls; it would do much to foster both freedom in collective bargaining and industrial peace. The hallmark of this program is fairness; under its procedures we will be able to end national emergency labor disputes in our transportation industries in a manner which is fair to labor, fair to management and fair to the American public.

RICHARD NIXON

The White House

February 27, 1970