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A Gift for BNSF aka My Buddy’s Truck

I’m not sure how many of you have taken the time to read the contract between the New Mexico Department of Transportation (NMDOT) and Burlington Northern Santa Fe (BNSF), but it’s a doozie. You can download the 92 page document here. How about we review some of the highlights?

Ok we all know that the state is spending hundreds of millions of dollars of of taxpayer funds to “purchase” the train tracks from BNSF. What you might not know is:

BNSF will retain an exclusive, permanent easement for freight operations on the Subject Line. Freight operations on the line will continue to be conducted by BNSF pursuant to the retained easement. NMDOT will not acquire the right or obligation to conduct any rail freight operations on the Subject Line.

That’s kind of like buying your buddy’s truck and being told he can still drive it to work everyday. Oh, and you can ‘t even think about hauling anything with that truck.

Under the Joint Use Agreement, NMDOT will take over responsibility for track maintenance upon acquisition of each segment of the Subject Line. Prior to each closing phase, NMDOT and BNSF will conduct a joint inspection of the relevant portion of the Subject Line. After closing, NMDOT will have an obligation to maintain the Subject Line to the lesser of the track condition documented during the joint inspection or FRA Class 4.3 With respect to the segment of the Subject Line between Lamy, NM and Trinidad, CO, during the period after NMDOT’s acquisition but before the commencement of commuter rail operations, BNSF and NMDOT have established an alternative maintenance arrangement. Essentially, BNSF will establish the track standard; NMDOT will set up a maintenance plan and budget; and BNSF will review and approve the plan and agree to pay a prescribed portion of the maintenance costs.

Now, that’s kind of interesting. Again back to that truck we bought from our buddy. What the above segment says is that our buddy gets to tell us how to maintain our truck. He is going to tell us how much to spend, and basically, even though he is going to continue using the truck the same as before, he is now only going to pay a minimal amount of the maintenance costs.

So, let’s review. BNSF will receive $393 million. BNSF still has full access to the tracks for free. BNSF only has to pay a fraction of the maintenance costs they had to pay before. But wait, there is more…

Commuter service will have priority over freight service during defined operating window, but only so long as BNSF retains the ability to provide high quality freight service to and Amtrak service is provided in accordance with statutory and contractual standards.

It turns out our buddy will give us priority in driving that truck we just bought, as long as it doesn’t get in the way of his driving the truck for work. If it’s going to make him late for work, then he gets priority on that truck that we just “bought.” Oh yeah, and his Aunt Amtrack gets to use it too.

NMDOT must meet its objective to close the first phase of the transaction on January 17, 2006 in order to avoid substantial project delay costs on this publicly-funded project.

Oh man, it looks like the price of our buddy’s truck is going to go up again. Well, it’s not like he didn’t warn us.

“Retained Freight Easement” means the perpetual, exclusive, assignable easement
along, over and through the Rail Corridor to be retained by BNSF from all conveyances described in the Purchase and Sale Agreements to provide BNSF the perpetual, exclusive right and obligation to provide rail freight services and supporting activities.

Did you catch that? If our buddy decides he no longer needs the truck for work, no problem he can sell his right to use the truck we bought to someone else who might need the truck for their job.

A. No Capital Replacement. The non-maintaining Party shall not be obligated to
compensate the Party then charged with maintenance of a particular segment of the Rail Corridor for capital replacement as a part of ongoing maintenance, even to the extent such capital replacement is attributable to the non-maintaining Party’s operations.

If our buddy wears out the transmission of that truck with some heavy hauling from his job, it will be our responsibility to replace the transmission. Why? Well, we “bought” the truck. So, it only makes sense, right?

Tax Reimbursement. NMDOT shall pay or reimburse BNSF for any Taxes which are attributable to the receipt by BNSF of any amounts under Purchase and Sale Agreement.

Despite the fact that all of our other friends have to pay gross receipts tax on revenue. We really appreciate the deal our buddy has given us. So, what the heck, we’ll go ahead and pay any and all taxes he might owe. Oh and while we’re at it, we’ll just go ahead and pick up his insurance, and promise to take care of any liability he might have as well.

Would someone please have NMDOT give me a call? I have a car I want them “to buy” for use in their motor pool.