Berkshire Hathaway recently discovered it owns two short-line railroads that it must sell because of its 2010 acquisition of BNSF Railway.
Warren Buffett's Omaha-based company said in a letter last month to the Transportation Department's Surface Transportation Board that the BNSF deal should have been subjected to the board's scrutiny because two Berkshire subsidiaries own the small railroads. The Surface Transportation Board reviews rail mergers, purchases, construction and rate disputes.
Agency officials appear satisfied with Berkshire's plan to sell the two small railroads by the end of the year, but Director Lucille Marvin said in a letter that the board is still weighing further action.
Buffett's company didn't immediately respond to a message. But in correspondence disclosing the problem to regulators, Berkshire officials suggest the company's size was the reason the short-line railroads were overlooked until now.
“Berkshire and BNSF 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 organizational structure that own or control an interest in a total of two rail common carriers,” wrote Roger Nober, BNSF executive vice president.
Before the BNSF acquisition, Berkshire sold its 9.6 million shares of Union Pacific Corp. and 1.9 million shares of Norfolk Southern Corp. to avoid problems with regulators.
Berkshire said it will work to sell the two railroads quickly.
Berkshire said its MidAmerican Energy utility subsidiary owns the CBEC railroad that brings coal over six miles of track to its power plant south of Council Bluffs.
The White City Terminal Union railroad that serves an industrial park near Medford, Ore., is owned by Railserve Inc. That company is part of the industrial conglomerate Marmon Holdings Inc., in which Berkshire has owned a controlling interest since 2008.
Berkshire said the White City line is only 12 miles long and has two employees and two locomotives. It generates about $250,000 in revenue annually.
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