Washington, D.C. – U.S. Senator Amy Klobuchar today said that BNSF Railway Company should not leave their rail customers on the hook for overpayments made during BNSF’s acquisition by Berkshire Hathaway. After Klobuchar called on the Surface Transportation Board (STB) to hold a hearing examining BNSF’s acquisition premium and its impact on rail customers, the STB held a hearing today on whether or not the $8.1 billion in premiums should be passed on to farmers and businesses that rely on the railway to transport their goods. During the hearing, Klobuchar offered testimony highlighting how passing on acquisition premiums would hurt Minnesota farmers, utilities, ethanol producers, and manufactures and damage rural economies.
“Many utilities, farmers and ranchers, ethanol producers, and manufacturers in Minnesota rely on BNSF as the sole railroad they can use to transport their goods, and this acquisition premium could lead to rate increases that could stifle economic growth and jeopardize jobs in rural communities,”Klobuchar said. “I urge the Surface Transportation Board to help protect shippers against this unfair and harmful practice.”
In 2010, Berkshire Hathaway acquired BNSF Railway for $8.1 billion over the company’s book value. Under the Surface Transportation Board’s current policy, these acquisition premiums can be included in the railway rate base. Put simply, Berkshire Hathaway paid an inflated price for BNSF and now can pass that cost onto its customers in the form of higher rates.
In addition to calling on the Surface Transportation Board to hold a hearing on the issue, Klobuchar also wrote a letter to the STB in March, 2011 outlining her concerns with BNSF Railway’s plan to pass on premium costs to customers and asked the STB to reexamine its acquisition premiums policy. Klobuchar is a member of the U.S. Senate Commerce, Science, and Transportation Committee, which oversees the Surface Transportation Board.