Berkshire Sells Two Railroads It Didn’t Realize It Owned

Berkshire Hathaway, the company owned by Warren Buffett, recently discovered that it owned two short line railroads, which it sold off to satisfy regulators who could have potentially reviewed the 2010 Berkshire Hathaway acquisition of Burlington Northern Santa Fe railroad.

Earlier this month, Berkshire Hathaway let the Transportation Department’s Surface Transportation Board know that it successfully completed its sale of both of the short line railroads ahead of the required schedule.

The surface transportation board would have needed to scrutinize their railroad purchase of Burlington Northern Santa Fe if Berkshire Hathaway reported owning those two railroads at the time of the purchase. Berkshire didn’t disclose owning the two railroads to the Surface Transportation Board until this past September 2012.

Buffett was left a message on Wednesday in regards to this situation, but he didn’t immediately respond to any word about the short line railroads. But, officials at both MidAmerican Energy, and Burlington Northern Santa Fe, to Berkshire Hathaway companies, confirmed that the sale of both railroads have been completed.

Prior to Berkshire Hathaway’s acquisition of Burlington Northern Santa Fe railroad, as a way to avoid problems with regulators, Warren Buffett sold 1.9 million shares of Northfork Southern Corp. and shares of Union Pacific Corp. to the tune of 9.6 million.

A spokesperson for the Surface Transportation Board was also left a message this past Wednesday in regards to this matter, but he or she did not respond to the message. But, in this past October, Berkshire Hathaway put together a plan to sell the railroads by the end of the year, and the Board seemed to be satisfied with that plan.

RVTR Rail Holdings bought WCTU from Berkshire Hathaway this December. It is a 12-mile long railroad in service of an industrial park near the area of Medford, Oregon.

The previous owner of the WCTU Railroad is Railserve Inc., and it’s a part of Marmon Holdings, an industrial conglomerate. Berkshire Hathaway has owned the majority interest in Marmon since the year 2008.

CBEC railroad, which is 6 miles long, is used to transport coal for MidAmerican Energy at a plant south of Council Bluffs, Iowa. It was sold this past November to two of the other co-owners.

The Corn Belt Power Corporation now owns 6% of the railroad, while the Central Iowa Power Corporation owns the other 94% of CBEC.

None of the companies that bought the two of the railroads from Berkshire Hathaway owns any other railroads, which helps ensure that there was not a need for any Surface Transportation Board approval for the deals to be completed.

An attorney of Burlington Northern Santa Fe, Roger Nober, mentioned that Berkshire Hathaway accidentally overlooked the small railroads in a letter sent this past September.

Berkshire Hathaway is an entirely de-centralized major conglomerate with over 80 subsidiaries, including furniture stores, manufacturing plants, clothing outlets, utility businesses, jewelry businesses and insurance companies.

Warren Buffett and some of the other top officials at Berkshire Hathaway do not have major input into the day-to-day operations of its many businesses, and the officials running these companies do not necessarily interact with Buffett and the other officials all that often.

Berkshire Hathaway also owns stock in companies like Wells Fargo, IBM and Coca-Cola.

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