February 17, 2011

House committee approves FAA funding bill without FedEx labor provision

Final version of multiyear funding bill omits controversial language that would change FedEx's labor status.

By Mark B. Solomon

The House Transportation and Infrastructure Committee late Wednesday approved a four-year, $59.7 billion Federal Aviation Administration (FAA) funding bill that excludes a controversial provision that would change the labor law governing FedEx Corp.'s air express unit.

The 34-25 vote would seem to end legislative efforts to reclassify FedEx Express as operating under the National Labor Relations Act (NLRA), the law that covers virtually all U.S. industries, including trucking. Throughout its history, the unit has been governed by the Railway Labor Act (RLA), a labor statute that applies only to the airline and railroad industries.

In 2009, then-Congressman James L. Oberstar (D-Minn.), who chaired the House committee at the time, introduced legislation requiring all FedEx Express employees except for pilots and aircraft mechanics to be covered under the NLRA. The provision was supported by the Teamsters union, which wanted the largely non-union division to be covered under a law considered an easier path to unionization, and by FedEx's chief rival, UPS Inc., which is covered under the NLRA and argued that the FedEx unit's ground service workers, who may never touch an aircraft, should be covered by a statute that governs the trucking industry.

FedEx cited administrative and judicial rulings that its air service and the trucking operations that support it are essentially a single airline unit, and that, unlike the UPS structure, the FedEx Express trucking operations are totally dependent on its air business. FedEx also argued that the NLRA gives labor unions the power to call job actions within a city or a region, thus jeopardizing the reliability of the company's system-wide delivery operations.

FedEx said the change could trigger a $5 billion "hidden package tax" on shippers and consumers by forcing FedEx to implement costly contingency plans to deal with local work stoppages that could have a ripple effect across its network.

Frederick W. Smith, FedEx's chairman and CEO, warned that any change in the law would lead the company to cancel orders for up to 30 Boeing 777 freighters. The company insists that Smith's warning was not an idle threat.

Legislative wrangling over the provision was one of the factors that kept Congress from moving forward on a multiyear FAA funding bill. The agency has been surviving on a series of 17 short-term funding extensions since the last reauthorization law expired in 2007.

Over time, however, whatever congressional backing that had existed for the provision began to evaporate. The Senate Commerce Committee, which oversees transport legislation in the Senate, did not include the language in its version of an FAA funding bill. Meanwhile, House committee members have chafed at the notion that a provision not considered central to air operations was delaying progress toward funding important air safety measures. As one of its final acts before taking a 10-day recess in mid-February, the full Senate passed the committee's version.*

The provision's fate may have been sealed on election night in 2010 when Rep. Oberstar, who had become the language's lone supporter, was defeated in his bid for re-election. His successor as committee chair, Rep. John L. Mica (R-Fla.), showed little interest in the provision and was willing to jettison it in order to pass an FAA funding bill.

The legislation is H.R. 658, the "FAA Reauthorization and Reform Act of 2011." It was introduced by Rep. Mica and by Rep. Tom Petri (R-Wis.), chairman of the House Subcommittee on Aviation.

*The original version of this article, posted on Feb. 17, 2011, did not include this sentence.

More articles by Mark B. Solomon

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