OMAHA, Neb. — Warren Buffett’s company recently discovered it owns two short-line railroads that it must sell because of its 2010 acquisition of the Burlington Northern Santa Fe railroad.
Berkshire Hathaway Inc. 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 of its subsidiaries own the small railroads. The Surface Transportation Board reviews rail mergers, purchases, construction and rate disputes. It also oversees Amtrak’s on-time performance.
Officials of that agency 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 considering whether further action is warranted.
STB spokesman Dennis Watson said Tuesday he could not comment on the matter because it is pending.
Buffett’s company didn’t immediately respond to a message Tuesday. But in correspondence disclosing the problem to regulators, Berkshire officials suggest the company’s size was the reason why the short-line railroads were overlooked until now.
Berkshire said it will work to sell the two small 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, Iowa.
The White City Terminal Union railroad, which serves an industrial park near Medford, 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.
Andy Kilpatrick, the shareholder-author who wrote “Of Permanent Value: The Story of Warren Buffett," said it sounds like Berkshire officials simply overlooked these short-line railroads.
“I think it’ll blow over the minute they get them sold," Kilpatrick said.