August 18, 2005 Matthew Rose, President & CEO Kevin Kaufman, Vice President P.O. Box 961051 Ft. Worth, TX 76161-0051 Fax: 817-352-7932 Gentlemen: North Dakota’s farmers and shippers are demanding fairer treatment from the BNSF in their ability to order grain railcars. Recent actions by your company are causing great harm to your grain shipping customers, the farmers they serve, and our state’s economy in general. We call on you to reverse these actions immediately. BNSF has almost completely shut down the ability to order grain railcars for the majority of shippers in our state. This has led to sharply higher costs to obtain what few railcars are available and is limiting North Dakota’s ability to compete for market demand. You’ve cut the tariff lottery from 4860 cars in August 2004, to only 600 in August 2005, and none for September 2005. Where are the 11,000 cars that you moved from the Certificate of Transportation (COT) railcar ordering program to the tariff lottery in May 2004? Now, both COT and tariff ordering are shutdown for the busy harvest period. We call on you to immediately put adequate railcars back into nearby and future COT and tariff ordering programs and then commit sufficient locomotive, personnel and other resources to provide decent reliable service. Bidding for the few cars BNSF is making available for deferred positions has been frantic. On August 4 there were 858 bids for the 75 October single car COTs and 668 bids for 45 November singles. The winning bids have required premiums of $400 or more per car over the tariff rate. In nearby positions, some premiums hit the sky-high level of $800 over tariff in the shipper-to-shipper secondary market! This is more than 25 percent over the normal tariff rate in many instances. This lowers the market return for North Dakota farmers and directly robs our state of revenue. Besides cost, the shutdown of car ordering programs threatens the competitive ability of North Dakota- grown products to meet domestic and international customer demand. In some cases, it may preclude shippers from participating in the market whatsoever. On the other hand, BNSF reaps more and more profit as its desperate shippers bid up and up to get railcars. This is not a market; it is a monopoly. The COTs and tariffs in singles and in 26 or 52 car blocks provide North Dakota farmers and shippers with access to important and often premium markets for our major crops. Most markets can’t use shuttle size shipments. These smaller shipments are the only sizes that can be used by the expanding specialty crops in this state. Shuttle shippers also need the smaller shipment sizes to provide optimum returns to farmers. Shortchanging these customers and markets is more than a disservice, it is a violation of your obligation to provide service upon reasonable request (49 U.S.C. 11101) and the requirement in Section 11121 that railroads "shall furnish safe and adequate car service and establish, observe, and enforce reasonable rules and practices on car service." These restrictions in reasonable car supply to the majority of rail shippers in North Dakota must be corrected. This supply and delivery uncertainty of rail freight has significantly raised costs and is taking a significant bite out of returns for farmers and threatening the competitive future of a number of grain elevators across the state that have linked themselves to BNSF for their economic survival and paid BNSF millions in freight revenue. The railroad should be providing service to meet market demand instead of dictating which markets farmers and shippers can serve. These matters require your immediate attention. Sincerely, Governor John Hoeven
Ag Commissioner Roger Johnson CC: Senator Kent Conrad
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