The Surface Transportation Board plans to look into whether Berkshire Hathaway’s failure to disclose its ownership of two carriers other than BNSF Railway will impact a major shipper petition.
The divesting of the two railroads “is an appropriate remedy” to Berkshire’s admission that it owned the short lines when it acquired BNSF for $43 billion in 2010. The company said it didn’t think the deal was subject to STB oversight because it wasn’t aware that two of its 75 operating business groups, which have some 2,000 subsidiaries, had stakes in two railroads.
It doesn’t appear the STB will sanction the Warren Buffett-owned company, but it’s unclear how Berkshire’s admission will impact shippers’ complaint that the $8.1 billion premium paid to acquire BNSF will result in higher rates. The premium is used to determine the railroad’s cost base for customers transporting bulk commodities that have access to a single rail service. The STB said it would seek public input on whether “Berkshire’s non-compliance” would have on the petition by the Western Coal Traffic League.
The shippers argue the premium will raise rates on grain shippers beholden to one rail service — captive shippers as they refer to themselves — by 40 cents a ton for a 1,200-mile haul, and coal shippers would see their rates rise 50 cents a ton for a 1,000-mile move. BNSF countered that the premium would affect less than 2 percent of the 9 million annual moves the railroad makes and the impact would be negligible.