Berkshire Hathaway has roughly a week to explain to the federal government how it will divest itself of two railroads, after the company revealed it owns two carriers other than BNSF Railway.
Warren Buffett’s company isn’t allowed “to own or control multiple carriers” without the approval of the Surface Transportation Board, the railroad regulatory agency wrote to Berkshire Hathaway on Sept. 18. BNSF wrote the STB on Sept. 13 that it didn’t think that Berkshire Hathaway’s $43 billion purchase of the railroad in 2010 would be subject to STB oversight because the parent company isn’t a rail carrier and it didn’t “believe it owned or controlled any rail carriers.”
BNSF and Berkshire Hatwhaway “have recently become aware that two of Berkshire’s more than 75 operating business groups with nearly 2,000 subsidiaries do in fact have entities within their organization structure that own or control an interest in a total of two rail common carriers,” Roger Nober, BNSF executive vice president, law and secretary, wrote the STB.
At the time of the purchase of BNSF, Berkshire owned about 90 percent of MidAmerican Energy Holding Company, which owns a majority stake in CBEC Railway, he wrote. The six-mile common carrier in Iowa mainly hauls coal to power plants. Berkshire also had a controlling interest in Marmon Group, which includes RailServe as one of its 150 business. The rail services company holds White City Terminal Union Railway, a short-line railroad in Oregon.
“Berkshire recognizes that not only was its purchase of BNSF subject to STB jurisdiction, but when it purchased its initial 60 percent ownership stake in Marmon in 2008, then by extension its ownership and control over the WCTU was also a transaction that was likely subject to STB jurisdiction,” Nober wrote.
The STB said it would determine whether further action would need after reviewing Berkshire’s plan “to remedy its failure to comply with” the regulation.
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