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Infrastructure Bill Gone Wild
The uses and abuses of infrastructure legislation.


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President Obama just called for a $500 billion infrastructure plan. “Investing in infrastructure is something members of both political parties have always supported,” he said. But insufficient funding isn’t the only thing holding up repairs. Before Obama throws more money at infrastructure — and speaks on behalf of both parties — he should look at the war surrounding the FAA Reauthorization Act of 2009.

The bill, which should be a routine matter, is being delayed (note the year) by a vicious fight between FedEx on one side, and UPS and the Teamsters on the other. The battle — which has come into the public eye thanks to FedEx’s aggressive campaign to “stop the Brown Bailout” — is a perfect example of how congressional regulations, labor unions, and even corporate headquarters can conspire to distort free enterprise.

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The trouble goes back to Calvin Coolidge’s presidency. By 1926, the U.S. had seen decades of bloody labor agitation, and railroads had become crucial to the nation’s infrastructure. These two facts put together created a problem: Striking workers at a single local rail branch could hold the nation hostage by shutting down all thru-traffic. In response, Congress passed the Railway Labor Act (RLA), which forbade rail workers to strike or organize locally (i.e., at individual branches), made unionization difficult, and required that labor disputes be resolved through mediation.

In 1935, Franklin Roosevelt signed the National Labor Relations Act (NLRA), which dramatically limited the actions employers could take against unionization — but Congress and FDR specifically roped rail workers off from the NLRA, preserving the original RLA rules for them. Indeed, the RLA’s strict governance of railroad labor was considered so important that FDR, of all presidents, extended it to the industry that was quickly replacing railways in vitality to the national infrastructure: airlines.

The different standards created by these hoary bills have just now percolated into the nasty “Brown Bailout” conflict. The problem is that FedEx’s labor relations fall mostly under the business-friendly RLA, while UPS’s fall almost entirely under the union-friendly NLRA. The reason is historical. “UPS started out as a trucking company, and FedEx started out as an airline,” explains Jim Berard, spokesman for Rep. Jim Oberstar (D., Minn.), who chairs the House Transportation and Infrastructure Committee.

Even today, 85 percent of FedEx packages travel by air at some point before delivery, while the same percentage of UPS packages travel by truck only. FedEx keeps most of its truckers under the RLA by separating trucks that carry express mail — i.e., ones whose parcels just came off a plane — from pure ground-delivery trucks. This cleverness lets FedEx classify most of its truckers as airline workers (participants in the delivery of air mail), keeping them out of the NLRA’s, and the Teamsters’, grips.

Nonetheless, as Berard says, the two companies are “basically doing the same thing” today and should be treated the same way under the law. Historically, FedEx has agreed: In the 1980s and 1990s, when UPS tried to be reclassified under the RLA, citing its somewhat expanded air operation, FedEx supported the effort, even though it would have made UPS a greater competitive threat.

But the Teamsters and their allies defeated UPS’s effort in Congress. So, some claim, UPS is resorting to a more cynical strategy: If the company can’t restore parity by making itself more competitive, at least it can cripple FedEx — with the Teamsters’ help.

UPS’s weapon is a few paragraphs that Oberstar added to the FAA Reauthorization Act. The legislation is here, and — though it’s hard for anyone not on the Infrastructure Committee to decode — it would essentially place FedEx’s relations with its truckers under the NLRA, giving the Teamsters an entrance and would-be strikers a chance.

Oberstar claims that his provision isn’t for UPS, but for the workers within FedEx’s own ranks. A member of Minnesota’s peculiar Democratic-Farmer-Labor party, he’s a leftist in the old style, some might say a union hack. “He is the son of a labor leader on the Iron Range of Minnesota. He himself worked on the iron-ore mines of Minnesota,” says Berard. “He carries a United Steel Workers card. His father was buried with his union contract in his pocket. You’re damn right he sympathizes with labor.” Berard claims the Oberstar office receives — “on a weekly basis” — calls from FedEx workers who support the legislation.



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