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Berkshire Hathaway sells 2 short-line railroads
Wednesday - 12/26/2012, 5:00pm EST
AP Business Writer
OMAHA, Neb. (AP) - Warren Buffett's company has sold two short-line railroads it recently discovered it owned to satisfy regulators who might have reviewed Berkshire Hathaway's 2010 acquisition of the Burlington Northern Santa Fe railroad.
Berkshire told the Transportation Department's Surface Transportation Board earlier this month that it had completed the sale of both short-line railroads ahead of schedule.
If Berkshire had reported owning those railroads when it bought BNSF, the Surface Transportation Board would have had to scrutinize the deal. Berkshire first disclosed owning the railroads to the Surface Transportation Board in September.
Buffett did not immediately respond to a message about the short-line railroads on Wednesday, but officials at Berkshire's BNSF and MidAmerican subsidiaries confirmed that the railroad sales were completed.
Before Berkshire acquired BNSF, Buffett sold the company's 9.6 million shares of Union Pacific Corp. and 1.9 million shares of Norfolk Southern Corp. to avoid problems with regulators.
A spokesman for the Surface Transportation Board did not immediately respond to a message on Wednesday. But officials at that agency appeared satisfied in October with Berkshire's plan to sell the small railroads by the end of the year.
Berkshire sold the 12-mile-long WCTU railroad that serves an industrial park near Medford, Ore., to RVTR Rail Holdings in December.
The WCTU railroad was owned by Railserve Inc., which is part of the industrial conglomerate Marmon Holdings. Berkshire has owned a controlling interest in Marmon since 2008.
The six-mile-long CBEC railroad that serves a MidAmerican Energy coal plant south of Council Bluffs, Iowa, was sold to its two other co-owners in November.
The Central Iowa Power Cooperative now owns 94 percent of the CBEC railroad, and the Corn Belt Power Cooperative owns the other 6 percent.
None of the entities that bought Berkshire's short lines owns another railroad, which ensured that the sales didn't require Surface Transportation Board approval. The Surface Transportation Board reviews rail mergers, purchases, construction and rate disputes. It also oversees Amtrak's on-time performance.
Roger Nober, a BNSF attorney, suggested to regulators in a September letter that the short-line railroads had been overlooked within Berkshire because of their small size.
Berkshire is an extremely decentralized conglomerate with more than 80 subsidiaries, including insurance, clothing, manufacturing, furniture, jewelry and utility businesses.
Buffett and other top Berkshire officials don't have much input in day-to-day operations of subsidiaries, and officials at the companies Berkshire owns don't necessarily interact with each other a great deal.
Besides the companies Berkshire owns, it also has major investments in companies like Coca-Cola Co., IBM and Wells Fargo & Co.
Follow Josh Funk online at www.twitter.com/funkwrite
Berkshire Hathaway Inc.: www.berkshirehathaway.com
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)