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AL FRANKEN S11Tt <br /> MINNESOTA SH-309 <br /> 202-224-5641 <br /> United /Sum s *matt <br /> WASHINGTON,DC 20510-2309 <br /> March 4, 2013 <br /> The Honorable Daniel R. Elliott III <br /> Chairman <br /> Surface Transportation Board <br /> 395 E Street, SW <br /> Washington, DC 20423 <br /> Dear Chairman Elliott: <br /> We write to express our concerns with Berkshire Hathaway, Inc.'s (Berkshire) <br /> announcement that it did not realize that its acquisition of BNSF Railway (BNSF) in February <br /> 2010 was subject to the jurisdiction of the Surface Transportation Board (STB) under 49 U.S.C. <br /> 11323(a)(5). Under existing law, Berkshire is not authorized to own or control multiple rail <br /> carriers without the Board's approval, and this transaction should have only been allowed to <br /> proceed after a determination by the Board that it was in the public interest. The fact that this did <br /> not occur and is just now coming to light—more than two and a half years after Berkshire <br /> acquired BNSF—is very concerning, especially since BNSF is the second largest freight railroad <br /> in North America. <br /> We have written to you previously to express our concern that the $8 billion acquisition <br /> premium that was paid by Berkshire to BNSF could be used to artificially inflate the railroad's <br /> regulatory rate base and could also be passed on to captive shippers in the form of higher rates. <br /> Since Berkshire's acquisition of BNSF, we have heard from a number of shippers that have <br /> complained of elevated rates. As railroads have consolidated over the last several decades, <br /> captive shippers have become more and more vulnerable to excessive rates and unreliable <br /> service. If BNSF is able to include the $8 billion acquisition premium in its capital asset base, <br /> we are concerned that fewer shippers will be eligible to file rate cases with the STB. This is <br /> unacceptable to us. We urge the Board to exclude the acquisition premium for the two years that <br /> the transaction was not approved by the Board, as well as all subsequent years that the railroad is <br /> owned by Berkshire. <br /> Additionally, we think it is very significant that Berkshire was able to pay such a <br /> substantial premium when it acquired BNSF—more than 30 percent above the trading price of <br /> BNSF's shares—and yet, BNSF is still considered to be revenue inadequate by the Board. Over <br /> the last two years, Berkshire Hathaway has sent shareholder letters noting the strength of <br /> BNSF's financial performance and that it"delivered record operating earnings." If Berkshire <br /> Hathaway is able to assure its investors that BNSF will be able to cover its operating costs and <br /> will remain a strong financial investment, and yet the formula used by the Board continues to <br /> indicate that BNSF is "revenue inadequate," then we can only conclude that something is amiss <br /> with the formula. We urge the Board to carefully examine this information when considering <br /> BNSF's revenue adequacy. <br /> R'WWPRA NKEN.SENAiL.COV <br />