Senators Ask STB to Back Shippers
A bipartisan group of U.S. senators has asked federal regulators to make sure that an investment giant’s purchase of BNSF Railway Co. does not saddle shippers with unfair costs.
Sen. Al Franken, D-Minn., and six colleagues told the Surface Transportation Board that Berkshire Hathaway violated the board’s multiple carrier rules because it owned two other railroads when it bought BNSF for $43 billion in 2010.
The railroad has since divested itself of the two smaller lines, but it still wants to include an $8 billion premium that it paid for BNSF in the railroad’s asset base.
The senators said that will artificially inflate the railroad’s books and could be passed on to shippers in the form of higher rates. The STB currently is reviewing the case.
“Berkshire Hathaway’s announcement that it skirted federal regulators when it purchased BNSF is troubling not only because it may have hurt competition in the industry, but because it took Berkshire over two years to finally disclose its actions,” Franken said. “Federal regulators need to hold Berkshire Hathaway accountable so rail customers can count on an honest deal when they ship their goods.”
Also signing the March 4 letter were Sens. Mark Pryor, D-Ark.; Tim Johnson, D-S.D.; Amy Klobuchar, D-Minn.; Tammy Baldwin, D-Wis.; and David Vitter, R-La.
The group also wants the STB to reconsider its designation of BNSF as a “revenue inadequate” railroad. That test has an effect on the rates carriers can charge and comes into play when shippers challenge excessive rates.
Berkshire Hathaway has been touting “record operating earnings” for BNSF to its shareholders. Taken with the $8 billion premium—more than 30 percent of BNSF’s stock price at the time—the senators concluded the railroad is on strong financial footing.
“We can only conclude that something is amiss with the formula. We urge the board to carefully examine this information when considering BNSF’s revenue adequacy,” they said.
Separately, Franken has asked President Obama to address the concentration of railroad power in the United States. In a letter, he suggested the president appoint a senior official to coordinate executive branch initiatives related to freight carriers.
“I believe strongly that efforts to grow our national economy and create jobs are hampered by the freight rail monopoly problem,’ Franken wrote.