GCA and Release From National Handling

Dennis Pierce General Chairman	Pat Williams General Chairman	Austin Morrison General Chairman	Rick Gibbons General Chairman
BNSF/BN Northlines/MRL 817.338.9010	BNSF/ATSF 817.426.9003	BNSF/FWD.JTD.C&S 806.358.9025	C&S BNSF/SLSF.MNA 417.887.5267

This is in reference to our joint contract update letter dated July 23, 2003. As advised in that letter, we had hoped to be released from National Handling by now and moving forward with the ratification process. For that reason, we had asked that you refrain from posting our July 23rd letter until we were sure that we were moving forward as planned. Unfortunately, very little has changed since our last letter. Although we are still working to be released, neither the BNSF or the BNSF/BLE Committees have been released from National Handling as of this writing. We are aware that the membership is keenly interested in our progress and for that reason, you may distribute our July 23, 2003 letter so long as it is accompanied by this letter explaining our current status.

At the beginning of this round, the Carrier gave its power of attorney to the NCCC for the round of bargaining. To withdraw from National Handling now, BNSF must secure the approval of the NCCC and that hasn’t happened yet. Although the NCCC has its own procedures for releasing individual Carriers, we are still hopeful that this will happen. From the BLE side, we must obtain the permission of President Hahs to move forward with the agreement and that hasn’t happened either. Rest assured that we are working diligently to get both the Carrier and the General Committees out of National Handling. We have provided President Hahs with a copy of our tentative proposal and have asked him to approve our proposal and release us to finalize an agreement. At the point that we are fully released with no qualifiers, BNSF must then be released by the NCCC so that this may happen.

In closing, we appreciate your patience in these matters, we are all very frustrated with the delays that have prevented us from moving forward. As our proposal is under scrutiny by many other parties right now, please remember that there is no agreement or deal until the final language is approved. In the event that we are released, that final language may vary from our original description, but we will clearly describe any changes if and when that happens.

cc: Don Hahs, BLE International President
Steve Speagle, BLE Assigned Vice President

Dennis Pierce General Chairman	Pat Williams General Chairman	Austin Morrison General Chairman	Rick Gibbons General Chairman
BNSF/BN Northlines/MRL 817.338.9010	BNSF/ATSF 817.426.9003	BNSF/FWD.JTD.C&S 806.358.9025	C&S BNSF/SLSF.MNA 417.887.5 267

All BNSF/MRL Local Chairmen July 23, 2003
RE Contract Negotiations Sent via email and USPS

This is in reference to our ongoing negotiations with BNSF over our respective Section 6 Notices that were served in the fall of 1999. This "Year 2000" round of bargaining has dragged on for much longer than any of us can appreciate and we know that you and you members are very anxious to see the round completed as well

To bring you from past to present, the BLE Committees on BNSF originally set out pursuing a "dual track" bargaining method similar to that used in the 1995/1996 round. To that end, we met with the Carrier on-property on a regular basis throughout 2000 and 2001 attempting to resolve property specific item, all the while planning to couple that product to a National settlement of wages, rules and health and welfare issues. As you are aware, several things complicated that settlement of the National issues. most obviously the remote control dispute and arbitration, running from the fall of 2001 through 2002.

In an attempt to move the process forward, the four BLE Committees on this property met with the Carrier in late 2001 and suggested that we pursue an on-property settlement of all issues open in the round. To that end, we met regularly throughout 2002 in an attempt to resolve one of the

most complicated issues, health and welfare. As the BMWE model was already in place at the time, our efforts primarily centered on finding a way to avoid additional employee contributions to health and welfare costs. We examined many options, even the option creating a stand alone BNSF/BLE Health and Welfare program to keep costs down and minimize employee contributions. Although we came very close to accomplishing this, our efforts were stymied by the complications of creating such a program.

We then returned to our original dual track process and attempted to finalize our on property issues. During these discussions, TCU settled its issues in this round of bargaining through binding arbitration, adding what many considered to be a second health and welfare pattern settlement in the process. Like the BMWE settlement, TCU arbitrated settlement included some form of employee contributions for increased health and welfare costs. While we were discussing our on-property issues, BNSF appeared to be willing to again attempt to close the round in full with an on-property settlement if BLE was willing to consider the TCU health and welfare settlement. The wage settlement Included in the UTU pattern was included in BNSF's offer to discuss an on-property settlement. With that as a starting point, we began intensive negotiations with the Carrier and we are now very close to finalizing a tentative agreement for consideration by the membership.

Before we explain the details of our efforts, please remember that at this writing both BLE and BNSF are officially in National Handling for all wage, rule and health and welfare notices. Our efforts will only bear fruit if both parties are able to withdraw from National Handling and both parties have their own process necessary to accomplish this. We are hopeful that both parties will have withdrawn from National Handling by weeks end so that we may move forward with our efforts.

As for the elements included in the tentative agreement, we have blended several on-property specific issues with those traditionally included in a National Settlement Perhaps the most important to the membership is the wage package and we will describe that portion first.

As most of you know, all rates were increased by a permanent .56 cent per hour COLA in January of 2000 pursuant to the 1996 Agreement. Between January of 2000 and January of 2002, Harris (1) COLA's totaling .48 cents per hour have been added into your current pay rates. Our tentative agreement retains those COLA's as part of the year 2000 settlement, officially rolling them into all increase-able rates of pay on June 30, 2002. Effective on July I , 2002 the proposal calls for a 4% General Wage Increase (GWI), with retroactive application to that date. This application includes the retroactive elimination of the .11 cent per hour Harris COLA applied on January 1, 2003. To that extent, our settlement follows the pattern of the UTU settlement, but from there forward is where our proposal differs. Bear in mind that the reduced COLA rate and portions of the General Wage Increases were due to offsets for healthcare contributions which has been the case for quite some time. We have found in the field that our general membership has not been educated to fact that we actually have been contributing to our healthcare costs through previous negotiations.

Under the UTU National settlement, a 2.5% increase became effective on July 1 , 3003. Our proposal combines a portion of that GWI with a profit sharing option. Under our tentative proposal, we will receive a 1.5% GWI on July 1, 2003 and access to a maximum in profit sharing totaling 2.5% for the year 2003. As profit sharing is on an annual basis and GWI's currently start mid year, you must annualize the GWI to compare apples to apples. Our proposal waives 1% in GWI effective July 1 , 2003, which has the equivalent value of .5% GWI when annualized for 2003. Instead. we will have access to 2.5% annual profit sharing for the year 2003. The actual percentage that will be paid is to be based on the same "ICP" utilized by the Santa Fe BLE agreement as well as by management. The Carrier has also agreed that we will receive no less than 33% of the maximum profit sharing in 2003, or .833 % of our 2003 wages. Considering that .5% annualized GWI in 2003 was waived to obtain this first installment of profit sharing in the agreement. we found the trade to be equitable.

(NOTE: All former ATSF engineers who qualify under the terms of the 1996 ATSF on-property settlement will continue to receive that 3% profit sharing, in addition to this 2.5% increase. Upon ratification, all former ATSF yard engines, road switchers, locals and work trains will then receive the 2.5% profit sharing beginning July 1, 2003 along with all other engineers on BNSF.)

On July l 2 2004, the UTU National settlement also calls for a 3% GWI. Our proposal waives that 3% GWI and instead calls for an increase in maximum profit sharing potential to 6% in the calendar year 2004 and 8% maximum in the calendar year 2005 (and for subsequent years). Again to compare to the other organization’s model on an annualized basis, the reduction of 1 % of the July 1, 2003 GWI that will be substituted with profit sharing in our proposal would be in effect for the entire year of 2004. The pattern agreement in place for trainmen includes a 3% GWI due on July 1, 2004 which has an annualized value of 1.5% for the year 2004 as well. The compounding effect of multiple GWI’s would have a slight impact, but for straight comparison, we would not realize a total of 2.5% in annualized GWI by the end of 2004 in return for a maximum profit sharing potential of 6% in 2004. In the year 2005 the maximum profit sharing potential increases to 8%, which would be in lieu of the 4% GWI for that year. To briefly elaborate on the BNSF history of profit sharing, we ran a seven year history to investigate the possibilities of embarking on this type of income for our membership. With the exception of two down years, the average payout ran approximately two-thirds of the maximum allowable amount. That coupled with a projected economic upturn and operational increases (i.e., Georgia Electric Coal Fleet, Memphis Intermodal Project, etc.), we feel it a real opportunity to test the waters of profit sharing especially considering this late stage in this round of bargaining.

Along with this profit sharing proposal comes a one time snap back option at BLE’s discretion at the end of 2004. If the BLE membership so desires, we can remove ourselves from profit sharing and return to the GWI’s obtained in any BLE national wage rule settlement This snap back option effectively gives us the right to try profit sharing for two years, 3003 and 2004. and then decide if we stay in it or return to the percentage increases traded in the agreement. This snap back would not have retroactive application, but would be in effect from that point forward. In either event, our tentative proposal then returns to a full COLA (,as opposed to a Harris COLA) on July 1, 2005 with notices to be filed in the next round in the fall of 2004 for discussion in 2005.

Also as part of the wage package, our tentative agreement includes a $1200.00 longevity bonus for those holding seniority in train or engine service prior to 1985 and trip rates as a method of repairing pre/post work rule inequities. We are aware that there are grave concerns surrounding application of trip rates and we are working diligently to include clarification in the trip rate questions and answers to alleviate those concerns. .As only pre-1985 pay scales and pay rules are to be used to create the trip rates, the result is to be an average for pre 1985 employees while bringing post 1985 employees up to the same level.

Also included in the proposal's wage package is a $774.00 one time payment in recognition of the entry rate repair money in the other organization's agreement. BLE has no such entry rates to repair and if the agreement is ultimately accepted, the $774 00 payment will be paid along with retroactive back pay and the $1200.00 longevity bonus where applicable.

All issues surrounding health and welfare are also addressed in our tentative proposal. As most of you know, the Brotherhood of Signalmen recently agreed to a tentative national agreement including a health and welfare settlement patterned after the TCU arbitrated settlement. Our proposal includes a similar resolution to the issue of health and welfare, combining increased employee contributions with some slight modifications to the plan. For specifics, the proposal includes monthly contributions towards the increases in the health and welfare costs as well as retroactive contribution towards the increase going back to July 2001. For the year July 1, 2001 through July 1, 2002, the employee contribution will be $33.39 per month in the plan. For the year July 1 2002 through July 1, 2003, the employee contribution will be $81.18 per month in the plan. Beginning July 1, 2003 the employee contribution will be $79.74 per month in the plan. Beginning July 1 , 2004, the increases can bring the employee contribution to no more than $100.00, with future increases to be based on the lesser of 1/2 of the increase costs or 1/2 the value of the annual COLA's. Although we know that the idea of making contributions to the health and welfare package may not be popular, it has become increasingly apparent that it will be very difficult to avoid some form of increased contribution in this round of bargaining. With the GWI's of the contract front loaded in the agreement, with retroactive application as well, we concentrated on diminishing the impact of retroactive health care contributions. The $774.00 entry rate equity payment originally offered for payment in 2004, has been moved up to signing date to assist as well.

The following example will put numbers to how the wage/rule package and the health and welfare portion interact. On an average base salary of $70,000.00, back pay from July 1,2002 to July 1, 2003 would be approximately $2625.00. Add in the $774.00 entry rate equity payment and the total of the two is $3399.00. The maximum due in retroactive health and welfare for the same period would be $1374, leaving $2025.00 in back pay. For those with seniority pre dating 1985, an additional $1200.00 would be due on signing as well, bringing back pay due to $3225.00. These numbers are an approximate average, again based on a base of $70,000.00 per year: actual numbers would obviously vary. employee by employee. To minimize the impact of future contributions to health and welfare, a 4% GWI (less the January 1 2003 .11 per hour COLA) and a 1.5% GWI (less the July 1, 2003 .11 cent per hour COLA) would be applied effective immediately on all rates in effect today. The effective result would provide an approximate increase of 5.25% GWI to all rates. Again, once trip rates become effective. all employees, pre and post 85 would enjoy the benefits of those rates.

Along with the above mentioned items, the tentative agreement includes improvements to off-track vehicle/accident benefits. In addition, the proposal includes a standardized union shop agreement as well as standardized handling of personal leave days. For those not already under this handling, the agreement allows all engineers, including those on holiday assignments, to take personal leave days. The agreement also allows unlimited banking of the unused days, and also allows the employee to cash out any of the days in his/her account at any time. Also included in the agreement is a new footwear agreement, requiring employees to wear lace up boots with an ANSI approved protective toe as well and a requirement for direct deposit of payroll checks for those not under such an agreement. These items were Carrier requests and in recognition of some of the other items in the agreement, the provisions were included.

Also, included in the proposal will be an addition to our Bereavement Leave Agreement which will now include grandchildren and a shelter for pre tax monies to be used for medical bills and insurance premiums.

One last item in the agreement is a new rate structure for engineer only helper assignments. The agreement creates new pay rates for this type of service and they will be included in the document Engineer only operations are underway currently at Sheridan Wyoming and are expected to expand in the near future

As part of our tentative agreement, BLE will retain a "savings clause" on three items still under discussion at the National level. We will retain the right to adopt any nationally negotiated settlement of these three items, including any increase to the $774.00 entry rate equity payment, modifications to health and welfare that result in a smaller contribution and any National settlement on remote control technology.

As always the details in the final draft will be necessary for you to properly consider the proposed agreement. We are hopeful that both parties will be released from National Handling in the very near future so that we may do that, We do plan to convene all BNSF BLE Local Chairmen to discuss the proposal if our efforts come to fruition, we will advise of possible dates at our earliest convenience.

In closing, we would certainly be remiss, if we did not take a moment to thank our International Vice President, Steve Speagle. He has been tireless in his dedication to this initiative and his input has been invaluable. There is no doubt in any of our minds that this could not have been accomplished without him,

(1) Harris COLA- Generally this COLA amounts to approximately half of the value of a full COLA. This was instituted by Robert Harris, chairman of PEB 219, in 1991

As you read this draft, please keep in mind that there are several things that have already been set in motion by previous settlements and agreements by UTU, BMWE and the resulting board award with TCU regarding health and welfare. TCU lost a board award that requires contributions to their health and welfare plan. UTU and BMWE have agreements that require contributions to health and welfare. This means that even if BLE doesn't settle their health and welfare part, when it goes to a board award, the neutral will require BLE to pattern their health and welfare under the "prevailing agreements" currently in effect. This means, as in 1985 and 1991, we will have it jammed down our throats. This proposal allows BLE to set the requirements for contributions, not a neutral.

Also, please keep in mind that the "profit sharing" aspect of this draft has a built in guarantee. Unlike previous attempts, this one will allow for recovery if profits hit the tank. Also, the allowance of a one time "snap back" allows for getting out of that part of the agreement if it becomes apparent that it is a bad deal.

Please look over this draft with an open mind, while remembering the current economical situation in this country, and who is running this country as we speak.

Above all else, please remember this is only a draft. Nothing is finalized at this time. Currently neither the NCCC nor the BLE International has released either BNSF nor our GCA from national handling. This is only a draft proposal, which, if released, will be presented (with some fine tuning) to the members for discussion, and possible ratification.