White House Explores Rail-Freight Alternatives as Possible Strike Looms

“We have made crystal clear to the interested parties the harm that American families, businesses and communities would experience if they were not to reach a resolution,” White House press secretary

Karine Jean-Pierre

said on Tuesday.

Labor Secretary

Marty Walsh

is planning to meet with union and rail company representatives on Wednesday in Washington, D.C., the Labor Department said.

The Biden administration’s efforts come after the White House stepped in to help with the recent shortage of baby formula, facilitating flights to deliver formula from overseas and invoking the Defense Production Act to increase production.

Several railroads have already halted transports of hazardous materials and have said they would place embargoes on nonhazardous cargo as well.

Norfolk Southern Corp.

said in a bulletin to customers that it plans to close all gates to intermodal traffic on Wednesday at noon local time. Such shipments, where railroads carry shipping containers and truck trailers, are often used by large retailers and consumer-products companies. The railroads said they are limiting shipments to avoid stranding hazardous or sensitive materials in case of a strike.

Companies are making contingency plans to ship goods, while their trade groups have called on lawmakers and the White House to act quickly to resolve the matter. The American Petroleum Institute, in a letter to congressional leaders on Tuesday, said the restrictions on hazardous materials that began this week ”could have profound impacts on the ability of our industry to deliver critical energy supplies.”

Chlorine used to treat wastewater and drinking water was among the shipments facing restrictions from railroads Tuesday.

Kevin Morley,

federal relations manager at the American Water Works Association, said most water-treatment facilities have several weeks of chlorine on hand, but some have less and could quickly find themselves under pressure if chlorine shipments stop for more than a week or two.

Talks are continuing between the National Carriers’ Conference Committee, a group representing freight railroads in collective bargaining, and two labor unions to reach an agreement. Friday at midnight marks the end of a window for mediation through a White House-appointed panel to help resolve the dispute.

Congress could also intercede under federal law to extend the strike deadline or set contract terms that both sides must accept. Congressional action comes with its own political headaches, especially if legislators vote to impose contract terms on the companies or the unions that neither side wants.

Railroad operators including BNSF Railway Co.,

CSX Corp.

,

Union Pacific Corp.

, and

Norfolk Southern Corp.

have been in contract talks with labor unions since late 2019, after the existing contract came open for renewal. The railroads have reached new labor deals or are completing tentative agreements with 10 unions, which represent about 49,000 workers. The two remaining unions—the Brotherhood of Locomotive Engineers and Trainmen, and the SMART Transportation Division—represent about 66,000 workers.

President Biden, members of his cabinet and senior administration officials were engaged with the labor unions and companies Monday in an effort to avert a labor stoppage, according to a White House official. Mr. Biden was updated on developments Tuesday and administration officials are continuing to engage on the matter as well, the official said.

Any labor stoppage would complicate efforts from the Surface Transportation Board, the five-member federal panel that serves as the industry’s economic regulator, to improve freight service.

The STB has already taken unusually aggressive action this year. The board has held oversight hearings, mandated data reporting from railroads, and in one case issued the first emergency order of its kind in more than a decade to compel a railroad to send more trains to address a shortfall.

STB Chairman

Martin Oberman

has often cited delays in fertilizer shipments this spring as evidence that the railroads are failing their legal obligations to serve shippers, with potential ripple effects throughout the broader economy.

“It’s frustrating, because the service in the networks has been dismal for a long time,” Mr. Oberman said Tuesday. “Now you embargo people who have already been getting bad service. It’s really detrimental to the economy.”

For their part, railroad executives have testified that the primary reason for their service failures this year is a lack of workers, including thousands who they say didn’t return as expected after being furloughed during the Covid-19 pandemic. Critics of the industry say that the railroads were already shedding large portions of their workforces in the years before the pandemic.

Mr. Oberman declined to comment on the specifics of the labor negotiations, but pointed to testimony from railroad executives at the STB’s oversight hearings in April, at which several said they were going to great lengths to attract and retain workers. Even if a strike is averted, Mr. Oberman said he is concerned that the bitter feelings among workers from the current standoff could hurt railroad recruitment in the future.

“The ramifications are going to carry forward,” he said.

Write to Andrew Restuccia at andrew.restuccia@wsj.com, Ted Mann at ted.mann@wsj.com and Esther Fung at esther.fung@wsj.com