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To: BNSF Carload Customers
08/03/2007

Retroactive Discounted Rates Program For Transportation Safety of Hazardous Materials Effective January 1, 2008

In a Marketing News on April 9, 2007, BNSF announced that it will provide discounted rates, beginning January 1, 2008, to shippers who transport toxic inhalation and poison inhalation hazardous commodities (TIH/PIH) in improved tank cars that meet the latest Department of Transportation (DOT) specifications.

Because customers have expressed concerns that they may not be able to put the improved tank cars into service until after January 1, 2008, BNSF will offer retroactive* discount credits for shipments of anhydrous ammonia and chlorine made between January 1, 2008, and December 31, 2009.

The retroactive discounts will apply when customers bring online the most improved and enhanced tank car identified by the Association of American Railroads (AAR) as the DOT specification tank car 112J500W for anhydrous ammonia and 105J600W for chlorine, or any new DOT specification tank car that meets or exceeds this performance standard.

In addition, all other TIH/PIH commodities will be included in the discount program beginning January 1, 2009, and will be eligible for the retroactive discount through December 31, 2010.

The following discounts to the published tariff will apply, beginning January 1, 2008:
TierTank Car DesignDiscount
1New DOT specification or equivalent$1,700
2Normalized steel, jacket, full head shield, constant contact side bearings$1,150
3Normalized steel, jacket, full head shield$1,050
4Non-normalized steel and/or no jacket and/or no full head shield and/or pre-1989 build$0

*A retroactive discount is defined as the applicable forgone tariff discount on a customer shipment during the period 01/01/2008 – 12/31/2009.

Required Fleet Data

TIH/PIH shippers will need to furnish fleet information, which will enable BNSF to rate/audit shipments, as well as to determine applicable retroactive discount credits. Failure to provide equipment details will result in rating at Tier 4 base rates and forfeiture of any retroactive discount credits. Shippers must submit the following information for each fleet car to BNSF by October 31, 2007, for anhydrous ammonia and chlorine commodities. All remaining TIH/PIH commodity fleets must be submitted before October 31, 2008.

1. Equipment Initial
2. Equipment Number
3. Lessor (if applicable)
4. DOT specification (e.g. 112J340W)
5. Build Date (mm/yyyy)
6. Shell Thickness
7. Head Thickness
8. Jacketed (Y/N)
9. Head Shield (F-Full, H-Half, N-None. Must be independent of head to qualify as Head Shield.)
10. Constant Contact Side Bearings, Long Travel (Y/N)

Data should be submitted to IHTankCar@bnsf.com. A template spreadsheet for data submission can be downloaded by clicking here.

Requirements to receive retroactive discount refund credits:

1. Customer must provide the above required fleet data for BNSF accounting purposes, or no retroactive discount credit will apply.
2. Retroactive discount credits will apply only to loaded waybilled cars shipped on BNSF.
3. When a new DOT specification tank car enters a customer’s fleet and replaces (defined as no longer in use on BNSF) an older, existing tank car, BNSF will apply retroactive discount credits for prior months that the replaced car was in service on BNSF.
4. Customer must identify the new car and replaced car for any retroactive discount refund to apply. Retroactive discount refunds will be based on a one-for-one shipment basis, corresponding with actual movements occurring on the replaced car during the applicable retroactive period (see schedule below).
5. BNSF will process retroactive discount refunds for payment within 30 days of receipt of required documentation from the customer.
6. In the event a replaced car is returned to service on BNSF, it will no longer be eligible for retroactive discount credits.


Retroactive Period Schedule

Placed into ServiceActual Months DiscountPrior Months DiscountTotal Months Discount
Jan-08
24
0
24
Feb-08
23
1
24
Mar-08
22
2
24
Apr-08
21
3
24
May-08
20
4
24
Jun-08
19
5
24
Jul-08
18
6
24
Aug-08
17
7
24
Sep-08
16
8
24
Oct-08
15
9
24
Nov-08
14
10
24
Dec-08
13
11
24
Jan-09
12
12
24
Feb-09
11
11
22
Mar-09
10
10
20
Apr-09
9
9
18
May-09
8
8
16
Jun-09
7
7
14
Jul-09
6
6
12
Aug-09
5
5
10
Sep-09
4
4
8
Oct-09
3
3
6
Nov-09
2
2
4
Dec-09
1
1
2

Example 1: A new Tier 1 specification tank car, ABCX 123456 ($1700 discount), is brought online in July 2008 and replaces an older Tier 4 tank car ($0 discount). Discount credits will be available for the six months prior (January – June 2008). Maximum available discount for car ABCX 123456 (assuming 5 round trips) between January 2008 and June 2008 will be a retroactive discount of $8,500 ($1,700 X 5 turns).

Example 2: A new Tier 1 specification tank car, XYZX 123456, is brought online in May 2009, replacing an older Tier 3 tank car ($1050 discount). Discount credits will be available for the 8 months prior (September 2008 – April 2009). Maximum available discount for car XYZX 123456 (assuming 7 round trips) between September 2008 and April 2009 will be a retroactive discount of $4,550 ($650 ($1700 – 1050) X 7 turns).

If a new DOT specification tank car comes online after December 31, 2009, no retroactive discount refund will be paid. When a new DOT specification tank car comes online and is not replacing an existing older car, no retroactive period will apply.

The above procedures for recovering retroactive discount refunds will be published in BNSF Rules Book 6100, effective January 1, 2008.

We are confident that this change serves to align our mutual interest to develop and use an improved tank car, while providing time for the industry to take delivery and begin to utilize the new equipment. We are committed to ensuring the safety of our employees, customers and the communities in which we operate.

For more information, or for questions on fleet specification submissions, please contact Ted Johnson at 817-867-6123. You may also contact your Marketing Representative at 888-428-2673.

Your business is important to us. Thank you again for choosing BNSF as your transportation service provider.

If you have any questions, please send an email to Customer.Notifications@bnsf.com