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NOTE: Early Thursday morning, the Biden administration announced a “tentative deal” to avert a strike, though it must go to the union membership for final approval.

A pending rail worker strike could shut down passenger rail serving in New Hampshire and hobble businesses that rely on freight for transportation.

The clock is ticking for the freight rail industry and holdout labor unions to reach an agreement on a new contract by Thursday night or face the possibility of an economy-crippling strike just weeks ahead of the midterm elections.

Nine of the 12 unions representing rail employees have bargained an agreement with the industry, based on a framework forged by members of the Presidential Emergency Board (PEB) appointed by the Biden administration. However, two unions—the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART) and the Brotherhood of Locomotive Engineers and Trainmen (BLET)—are the most prominent holdouts as they push their demands.

And on Wednesday came news that the 4,900 members of the International Association of Machinists and Aerospace Workers voted to reject the tentative agreement negotiated by their leadership, adding to the turmoil.

In the Granite State, eight freight railroad companies move goods vital to area businesses, said Michael Skelton, president and CEO of the Business & Industry Association. He said a strike would devastate businesses that rely on rail transportation. He wants to see more done to avoid any work stoppage.

“(We echo) the U.S. Chamber’s call that a voluntary agreement by all parties is the best outcome, which can include extending the ‘cooling off’ period for negotiations that ends at 12:01 a.m. Friday,” Skelton said.

Of greatest concern, rail industry experts say, is the large amount of petroleum products like propane and oil, moved by rail. According to the Association of American Railroads, freight rail delivered more than 172,000 tons of petroleum products to New Hampshire in 2019. With winter approaching and energy prices already rising, a rail shutdown could create serious problems.

New Hampshire’s Department of Transportation has been in contact with the freight operators to assess how much of an impact the spike would pose. It was not clear yet how hard the state economy could be hurt by the strike according to the DOT.

One area where the Granite State economy may dodge a bullet is its forestry industry.

“The vast majority of raw forest products (logs, pulp, chips) in New England are transported via trucks intra-state and to Canada,” said Patrick D. Hackley, Director of the Department of Natural & Cultural Resources.

However, Skelton added the strike could do damage beyond the freight end of the rail business. Passenger service may also be impacted.

“A strike would also shut down Amtrak service, leaving approximately 12.2 million daily riders in 46 states without transportation. This includes New Hampshire, which sees more than 200,000 annual boardings at Granite State stations connected to the Vermonter and Downeaster lines,” Skelton said.

Nationally, the American Petroleum Industry on Tuesday warned of severe consequences to energy supplies in a letter to congressional leadership.

“Last Friday, representatives of the oil and gas industry began receiving notifications from the railroads that they intend to begin curtailing shipments of hazardous materials and other chemicals as of today, to ensure carloads of product are not stranded on the tracks if a work stoppage occurs. This curtailment alone, could have profound impacts on the ability of our industry to deliver critical energy supplies to market,” wrote Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola.

“API requests that Congress prepare to act if negotiations this week fail to produce an agreement to facilitate a workable settlement and prevent catastrophic disruptions to the freight rail network.”

While it is still unclear whether Congress will act, Marc Scribner, senior transportation policy analyst at Reason Foundation said there is increasing pressure for Washington to get involved.

“Members of Congress from both parties are growing increasingly frustrated with union intransigence and are unlikely to tolerate a strike given current supply chain problems and the timing so close to their midterm elections,” Scribner said.

If a strike occurs, Scribner could see Congress acting within 24 hours to “end the strike and impose the PEB recommendations as a final settlement.”

A strike could hurt a national economy still reeling from supply chain problems. And Tuesday’s inflation number, holding close to steady at 8.3 percent annually, included news that grocery prices rose 13.5 percent year over year.

No goods on trains mean no products on trucks and even higher prices in stores due to supply and demand. As a result, organizations including the Beer Institute and Retail Industry Leaders Association (RILA) are, like the American Trucking Association, urging Congress to get involved.

“Reports indicate a strike could impact the economy by up to two billion dollars each day in lost activity,” said RILA’s Michael Hanson. “Absent a voluntary agreement by the Sept. 16 deadline, Congress should take swift action to implement the PEB recommendations.”

Additional reporting by Damien Fisher

Billions of dollars of federal grants for rail projects will be unlocked now that President Joe Biden has signed the bipartisan infrastructure bill that was recently passed by Congress. New transit and intercity rail lines could, in theory, improve mobility and greenhouse gas emissions by luring passengers away from their personal vehicles. But those projects also face risks of cost overruns, long delays, and disappointing ridership numbers that can undermine their potential benefits. A look back at the last time the federal government doubled down on rail grants, after the passage of the American Recovery and Reinvestment Act (ARRA) of 2009, offers some examples of such pitfalls.

ARRA included $8 billion for high-speed rail projects with the biggest grant going to the California High-Speed Rail Authority, which planned to build a line connecting San Francisco with Los Angeles and Anaheim at speeds of up to 220-mph. The $33 billion price tag initially estimated for the project was supposed to be split by federal and state governments. And rail proponents claimed the line would lure investment from the private sector. Service was to begin in 2020.

However, over one decade later the projected cost has escalated to around $100 billion, private funding has not materialized, the line will have a slower average speed, and service is expected to start in 2029. along a 171-mile segment in California’s Central Valley connecting a set of smaller cities with residents who are not used to taking the train. The Authority has suffered from cost overruns and construction delays due to difficulties with land acquisition, staff turnover, and poor contractor oversight. So, despite the expenditure of $3.5 billion federal dollars, we are a long way from high-speed rail starting in California, let alone any major reduction in personal vehicle trips.

Wisconsin, Ohio, and Florida turned down federal high-speed rail subsidies, but the Washington (State) Department of Transportation was awarded $751 million of federal high-speed rail funds to upgrade service between Portland, Seattle, and Vancouver. Despite this funding, train service between Portland and Seattle remains both infrequent and slower than driving on Interstate 5 (service to Vancouver has been disrupted by COVID-19 border controls).

Among the largest federally-funded project components of the Washington DOT initiative is the Point Defiance Bypass, intended to shorten and straighten a segment of the route south of Tacoma. The $89 million project was intended to reduce travel times by ten minutes. But the first passenger train to traverse the new route in 2017 derailed, killing three and injuring 70. The National Transportation Safety Board (NTSB) attributed the accident to insufficient training and a lack of positive train control: the train was traveling 78-mph on a 30-mph curve. Service through the bypass has yet to be restored.

Federal ARRA funding has also yielded disappointing results for transit projects. Perhaps the most egregious case has been that of Honolulu, which has been trying to build a light rail system for years. The Honolulu Authority for Rapid Transit (HART) received $1.8 billion of ARRA funds to help build a 20-mile line connecting the city with its western suburbs. The project was expected to cost $5.1 billion with a completion date of January 2020. 

But the HART project has faced a series of setbacks. Most recently, engineers found the train wheels were incompatible with the track crossings, a problem which is expected to take up to two years to fix. That means service along part of the line could begin next year, assuming there are no further issues. But the entire 20-mile project is not expected to be finished until 2031. Meanwhile, the cost has skyrocketed to over $12 billion.

It should be noted that ARRA funding has helped some transit projects reach the finish line. These include the Second Avenue Subway in New York and Phase 1 of the Washington Metro Silver Line. Although both projects are now serving riders, there have been bumps along the way. 

The Second Avenue Subway’s cost ballooned to almost $4.5 billion, an exorbitant total for two miles of track and three new stations. Meanwhile, the Silver Line extension has not carried as many passengers as originally promised. The Washington Metropolitan Area Transit Authority forecast 24,600 average weekday riders would use the new Silver Line stations when it proposed the project, but ridership reached only 16,000 in 2019 before collapsing in the wake of COVID-19 and problems with the system’s rolling stock.

International experience has shown that cost-effective intercity and local transit is possible, but the U.S. has generally not shared in the successes. Now, with billions more earmarked for rail systems across the country, we can only hope that federal grantors and the agencies competing for these grants will learn lessons from past mistakes.