Monthly Archives: March 2018

Special Report: Opportunities Abound for Berkshire in the Growing EV Market

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Everyone can see it coming, petrol, gas, diesel, whatever you want to call it, will play a diminishing role in fueling cars of the future. It’s already playing a diminishing role right now.

Let’s look at a few numbers.

In 2016, 750,000 EV cars were sold worldwide, with Norway the highest in market share at 29%, and China the largest in total units sold. And, 2016 marked the first time that EVs passed more than 2 million vehicles on the road worldwide.

While those numbers are still tiny when compared to the 2 billion vehicles in service around the world, they confirm that the EV is not only here to stay, but will play an ever larger role in personal and commercial transportation.

Credit Tesla with making the EV fashionable in the U.S., and drawing in other car makers that are now debuting their own models. In fact, Tesla has made the EV so fashionable among high-end buyers that in Europe Tesla’s Model S outsold both the traditional petrol-fueled BMW 7 series and Mercedes-Benz S class.

It’s easy to go down the list of carmakers that are showing off their EV vehicles at this year’s auto shows. Volkswagen, which was committed to diesel cars before its huge emissions scandal, is now touting its EV retro-styled concept bus, the I.D. Buzz. And Jaguar’s heading to market in late-2018 with its I-Pace SUV.

BMW, Hyundai, Nissan, Porsche, Toyota, and Volvo, to name a few, are all announcing new EV models or EV versions of existing models. Even Bentley has an all-electric four-door coupe in the works for 2019, and a goal to have an electric version of each of its models by 2025.

For drivers in China that purchased 600,000 EVs in 2017 at the lower-end of the market, it’s China’s BYD that led the way, with Chery, SAIC Wuling, Hawtai, and BAIC all moving more than 3,000 units in December 2017 alone.

The new energy company BYD, which Berkshire Hathaway has a roughly $1.9 billion stake in, sold almost 14,000 ev cars in February 2018, and is the global sales leader despite not being in the U.S. market except for its pure-electric buses.

Back in the U.S., Tesla’s Model 3 is aimed at bringing the company’s cars to a whole new set of consumers, and it’s not the only one making inroads at making an EV with true extended driving range affordable.

GM’s more mainstream price point Chevy Bolt, which boasts a 238-mile range, is now heading towards the company’s goal of moving 30,000 units a year.

All this EV progress bring up the question of what’s Berkshire Hathaway’s role in it?

It’s likely not as a manufacturer.

Berkshire’s roughly 8 percent stake in BYD, and its stake in GM, which was actually down 10 million shares (-16.7%) as of its most recent 13-F filing, doesn’t indicate Warren Buffett wants to be anything but a passive investor in making cars.

Berkshire will certainly play a role in new and used EV sales, as its Berkshire Hathaway Automotive Group of 78 independently operated dealerships with over 100 franchises in 10 states, gives the company a slice of that market.

However, fueling EVs is also right up Berkshire’s alley.

Not the Cars, the Fuel

Berkshire’s in a number of interesting spaces when it comes to fueling EVs. As the EV market-share grows, so do the number of consumers that will be charging their vehicles at home.

When it comes to home charging, its utilities, including PacifiCorp, MidAmerican Energy and NV Energy generate and supply power in twelve states. And overseas, Berkshire’s Northern Powergrid delivers electricity to 3.9 million homes and businesses in England.

Berkshire also is a big player in the electricity transmission business. Its BHE U.S. Transmission owns over a thousand miles of transmission lines in the southern U.S. and California. In Canada, Berkshire’s AltaLink is the largest regulated transmission company in Alberta, supplying electricity to more than 85% of the population.

Taking the EV on the Road

Even though much of the EV market will be charging its cars overnight at home, there is still a big need to be able to quickly charge your vehicle while traveling.

Out of necessity, Tesla has made a substantial investment in this space, to-date building 1,191 Supercharger Stations with 9,184 Superchargers.

These superchargers already benefit Berkshire in areas that get their power from Berkshire-owned utilities.

And a recent Berkshire acquisition has the potential to greatly boost their own capability in this space.

The New King of the Travel Center

In October 2017, Berkshire took a 38.6 percent equity stake in Pilot Flying J, the largest operator of travel centers in North America. That stake will grow in 2023 when Berkshire will become the majority shareholder by acquiring an additional 41.4 percent equity.

With 750 locations across the U.S. and Canada, and more than $20 billion in revenues, Pilot Flying J already plays a substantial role in fueling cars and commercial trucks. It’s also a natural fit for EV charging stations. And while EV ranges continue to grow, the need to charge your vehicle away from home is also growing.

That’s Not All

The charging station space is so new that there are likely to be multiple opportunities for Berkshire, as the lack of a need for storage tanks, which kept traditional petrol fueling stations centralized, means that charging stations can fit into public parking lots, mall and office building parking, and other spaces that were inconceivable for a gas station.

For example, in Oregon, PacifiCorp just received the greenlight to build seven charging stations as part of a $4.64 million transportation electrification plan.

PacifiCorp plans to install seven “pods” that would include multiple dual-standard direct current fast chargers, which can provide up to 80 miles of driving range in 20 minutes of charging, and at least one level 2 port, which offers up to 20 miles of range in an hour of charging.

Whether utilities will ultimately be allowed to own large networks of charging stations remains to be seen, as some environmental groups and potential competitors in the space are already objecting to that concept.

However, the future looks bright for Berkshire. It’s got the electric power, it’s got the transmission, and it’s even got the car dealerships and travel centers that clearly will make it a player in the growing EV market.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Lubrizol Awarded Product Development of the Year for Stationary Gas Additive

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Your landfill got indigestion? How about your landfill’s stationary engine? No?

Well, anyways, Fuels & Lubes (F&L) Asia awarded Lubrizol’s SG9L60 stationary gas additive the “Product Development of the Year” award.

The award was presented at a ceremony during F&L Week for innovations in the fuels and lubricants industry that improve processes, efficiency and ecological use.

“We are honored to be recognized for our product development efforts. Bringing Lubrizol® SG9L60 to the stationary gas market provided our customers with a less expensive and more effective lubricant solution to a challenging issue they have experienced for decades,” says Al Haas, Lubrizol global product manager, Stationary Gas.

Lubrizol® SG9L60 additive technology is formulated specifically for controlling silica deposits that develop from high levels of siloxanes in landfill and digester gases. Deposits can lead to high oil consumption, pre-ignition, detonations and excess wear in modern, lean-burn stationary gas engines.

Haas continues, “Lubrizol is committed to working with our OEM and industry contacts in the landfill market to understand their needs and deliver dedicated, application-specific lubricant solutions like Lubrizol® SG9L60, which provides engine durability benefits and overall maintenance cost savings.

Supported by a market knowledgeable team with 90 years of experience in the stationary gas business, Lubrizol continues to be committed to and invest in this growth market to deliver proven performance to our stationary gas partners.”

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway Specialty Insurance Expands Australia Operations

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Berkshire Hathaway Specialty Insurance (BHSI) is expanding its presence in Australia, opening a new office in Perth, Western Australia.

BHSI named Anthony Prindiville to lead its Casualty underwriting and Mark Shepard to lead the Property underwriting there.

“Expanding our footprint into Western Australia will enhance our ability to build lasting relationships with brokers and customers throughout the country,” said Chris Colahan, President, Australasia. “We are pleased to have Anthony and Mark at the helm as we build our local team in Perth. We look forward to developing a full suite of insurance products, risk management and claims services in this region.”

Like the BHSI offices in Sydney, Melbourne and Brisbane, BHSI’s Perth office will underwrite casualty, property, mining, energy, construction, power, marine, transport and logistics, healthcare liability, accident and health, and executive and professional lines for a broad range of business segments.

Anthony comes to BHSI with over 30 years of insurance industry experience, most recently as Global Distribution Manager at Chubb Insurance Australia Limited. He holds a Senior Associate designation from ANZIIF. Anthony joins Mark Shepard, Manager – Property, who commenced in BHSI’s Perth office in January.

Mark has been in the industry for over 16 years, most recently as Underwriting Manager – Property, Technical Lines and Energy at Chubb Insurance Australia Limited.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

NetJets Appoints Mario Pacifico as European CEO

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Berkshire Hathaway’s NetJets has announced the appointment of a new European CEO to coincide with the launch of the company’s brand new Cessna Citation Latitude aircraft.

With more than 25 years of leadership experience across Europe, Asia and the U.S, that Mario Pacifico has joined NetJets as its new European CEO. Pacifico will oversee the company’s operations in Europe out of their London office.

Pacifico joins NetJets at a time of significant growth. In 2017, NetJets flights in Europe grew by 7.2% to a total of around 50,000 flights. And total NetJets flight hours in Europe were more than double the amount of the wider industry.

The appointment coincides with NetJets’ announcement that it has successfully obtained certification to operate its new Cessna Citation Latitude aircraft at London City Airport, allowing business travellers to save a significant amount of time in their journeys to and from London’s financial district.

The Citation Latitude is the newest addition to NetJets European fleet of around 90 aircraft. The aircraft seats up to eight passengers and is easily able to fly to Dubai, Nigeria and Beirut from London.

NetJets is the only company that currently operates the aircraft into London City Airport. Over 53% of NetJets’ European customer base comes from London’s finance sector – with private equity and hedge fund management seeing the most growth over the past 12 months.

Mario Pacifico said: “NetJets now accounts for 6% of the total private jet market in Europe with around 74,000 flight hours. This is an exciting time of growth and I look forward to working with the team here to propel the company forward at this pinnacle moment.

“NetJets is committed to improving the lives of its clients, and I am pleased to launch the Cessna Citation Latitude at London City Airport. The aircraft’s stellar short-field performance will enable us to access many small general aviation airports that offer important time savings for businesses and individuals looking to work more efficiently.”

Robert Sinclair, CEO of London City Airport, added: “London City Airport offers London’s most central private jet facility, just 5 miles from the City, with a 90 second service from car to plane. This speed and efficiency is valued by NetJets and its clients, and we look forward to continued growth of its business here.”

Founded in 1996, NetJets is the only pan-European business aviation company with its own fleet of aircraft.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Is the Time at Hand for Berkshire to Cash Out of USG?

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Gypsum rock and plaster manufacturer United States Gypsum Company soared today as news that Warren Buffett had offered Berkshire Hathaway’s 30% stake in the company to USG’s other major minority stakeholder, Knauf Entities.

Knauf has long been a potential suitor of USG, and was interested in acquiring the company as far back as 2000, when Berkshire first took a 14% stake.

Berkshire reportedly offered its shares to Knauf at $42 per share, which was roughly 19% above the stock’s closing price on Friday, March 23.

USG’s Board of Directors’ weighed in with their own statement, as they moved to squash the deal.

“The board carefully evaluated it and determined that it substantially undervalues the company and is not in the best interests of all of USG’s shareholders.”

Instead, they suggested that its own plans would be the best way to boost shareholder value.

One thing seems clear, after 17 years riding this stock up and down, Buffett is finally ready to move on.

If it does complete the deal with Knauf, not only would Berkshire make money on its investment, but it’s already made a lot of money even though the stock does not pay a dividend.

The Great Recession, USG and Berkshire

Berkshire played a key role in saving USG during the nadir of the Great Recession.

In 2008, with the housing market imploding and lending all but frozen, Berkshire came to USG’s rescue with $300 million of convertible notes that paid Berkshire 10-percent interest.

At the time, the boost in confidence the company received from Warren Buffett’s financing helped the company avoid another bankruptcy. The day of transaction the stock soared 22% to $6.89 a share.

Today, the stock is hovering around $40 per share.

Berkshire has not only profited from the healthy interest payments, but the stock’s appreciation as well.

In December 2013, Berkshire exchanged $243.8 million of the convertible notes for common stock, and with additional purchases its stake in USG now sits at roughly 30.8%.

Back in 2015 and again in 2016, I wrote that perhaps it was time for Berkshire to buy the rest of USG, as the housing market had revived from its Great Recession doldrums.

However, at Berkshire’s 2017 Annual Shareholders’ Meeting, Buffett was less than enthusiastic about USG.

Buffett commented in answer to a shareholder’s question that buying into USG wasn’t one of his “brilliant ideas,” stating:

“On USG we owned a very significant percentage like 30%. USG overall has been disappointing because the gypsum business has been disappointing. I think they went bankrupt twice because they had too much debt. It has not been a brilliant investment. If gypsum went up to what it was some years on the past, we would have done a lot better. Gypsum has taken a real dive several times and there has been too much gypsum capacity, and when it comes back the management have been not only of use but have gotten more optimistic than they should have. It’s a business where the supply has been significantly greater than the demand in a lot of years. You’ve seen housing starts since 2008-9 not come back anywhere near where people anticipated, so gypsum prices have not moved up dramatically. So just put that one down as not one of our brilliant ideas. Not a disaster.”

Perhaps with USG again in play, it just got brilliant again.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Kraft Heinz Wants to Help Launch New Disruptive US Brands

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The Kraft Heinz Company announced the launch of Springboard, a platform dedicated to nurturing, scaling, and accelerating growth of disruptive US brands within the food and beverage space.

The Springboard platform is seeking opportunities to develop brands with authentic propositions and inspired founders within one of four pillars that are shaping the future of the food and beverage space: Natural & Organic, Specialty & Craft, Health & Performance and Experiential brands.

Founders will be encouraged to continue leading their businesses with support and expertise from Kraft Heinz in go-to-market capabilities, research and development and consumer insights.

“We are committed to support and partner with teams that will impact the future of our industry,” said Sergio Eleuterio, General Manager, Springboard Brands. “We are actively searching for emergent, authentic brands that can expand into new categories, and are looking to build a network of founders to help shape the future of foods and beverages.”

Eleuterio has fifteen-years of marketing experience with positions in management, marketing, R&D and retail marketing at Unilever, ABInBev, Grupo Boticário and Kraft Heinz.

Springboard is also launching an incubator program, focused on nurturing food and beverage startups at a pre-valuation stage in a dynamic 16-week sprint in Chicago.

Through April 5, the Springboard will accept applications for first-to-market, disruptive food and beverage startups.

Companies selected to participate in the Springboard Incubator Program will have the opportunity to receive financial support to build brands and guidance to raise additional funding.

The Incubator’s infrastructure will provide program participants with a collaborative work environment and invaluable business resources including dedicated workspace, state-of-the-art pilot plants and commercial kitchens at Kraft Heinz Innovation Center in Glenview, IL. Each participant will have the opportunity to learn from The Kraft Heinz Company’s world-class management practices, global operating scale, and extensive food safety and quality capabilities.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkadia Announces $18.1 Million Sale of Multifamily Portfolio in Los Angeles

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Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced the $18.1 million sale of Artiste Portfolio, three multifamily properties located in Los Angeles, California.

Senior Managing Director Brent Sprenkle of Berkadia’s Los Angeles office led the portfolio sale on behalf of the seller, New York-based Urban Smart Growth. The buyer was Los Angeles-based Prana Investments, and the deals closed on March 7.

“The properties were a unique portfolio of three value-added apartment buildings that were held by the same owner for over 25 years,” said Sprenkle. “The properties were heavily renovated approximately 15 years ago, but the renovations are dated, and the buildings are ready for cosmetic upgrades that will allow the new owner to achieve not only higher lease rates but also improved operations and occupancy.”

Properties sold include:

• 5406 Lexington Ave. sold for $7.6 million at a per-unit price of $180,952, representing $303 per square-foot, a 4.55 percent cap rate and 12.81 GRM.
• 109 S Normandie Ave. sold for $5.75 million at $249 per-square-foot, $159,772 per-unit, a 4.55 percent cap rate and 12.07 GRM.
• 245 N Kenmore Ave. closed at $4.75 million with a 4.76 percent cap rate and 12.11 GRM. The buyer received a per-unit price of $158,333 at $308 per square-foot.
Totaling 108-units, all three properties in the portfolio are conveniently located in northeast Los Angeles. Each offer convenient access to Route 101, Route 10 and Route 110.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BNSF Adding Double Track in Washington & Idaho

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BNSF Railway will expand its northern east-west capacity by adding double track between the Spokane Valley in Washington and Hauser, Idaho.

The planned second 4.4-mile track will run parallel to BNSF’s existing line, and is part of BNSF’s efforts to speed up freight moving from Seattle to the Midwest.

Now in the design phase, the proposed work will see a new railroad bridge built that crosses the Spokane River, modifications of at-grade and overpass crossings, realignment of existing tracks, modifications to existing railroad structures and communication infrastructure.

When built, the double track will have a significant impact on reducing bottlenecks, as roughly 58 trains use the BNSF rail line per day.

By 2035, BNSF is projecting that the number of trains will increase to 114 trains daily.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Does Market Volatility Hurt Berkshire’s Insurance Business?

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Does the return of market volatility hurt Berkshire Hathaway’s insurance business?

Ratings agency A.M. Best thinks so.

In A.M. Best’s report. “Rising Volatility: Negative Implications for Insurers,” they note that equity market volatility historically has had severe negative implications for life insurers whose assets and liabilities correlate strongly with equity prices.

However, they note that de-risking in the form of decreased exposure to annuities, and new products such as managed volatility funds, have dampened the sensitivity.

The rating agency states that equity market volatility has been elevated since the spike in early February 2018, and with the announcement of steel and aluminum tariffs, the stock market will most likely experience more volatility than last year.

The VIX, dubbed the stock market’s “fear gauge,” was low throughout 2017 and touched an all-time low of 9.14 in November. It spiked to 37.32 on February 5, 2018. In comparison, its peak in 2017 was only 15.96.

A.M. Best views prolonged rising stock market volatility as a credit negative for U.S. insurers with significant equity exposure; in particular, stock market leverage for the property/casualty segment has crept up since the most-recent financial crisis and life insurers are still sensitive to equity markets though they have employed mechanisms to de-risk.

For property/casualty and health insurers, the sensitivity to the equity markets is proportional to their equity holdings in general and equity holdings leverage.

Best also notes that although changes in equity values affect the capital and surplus of all sectors, only the life/annuities segment sells products that are tied to the equity markets.

They do say that steps variable annuity writers took to de-risk their products since the late-2000s have proven effective in limiting earnings volatility; however, the de-risking measures, along with the increased investment fees associated with managed volatility funds, have made newer variable annuity products less attractive to consumers and is one reason among many other reasons that have caused a decline in sales.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BNSF Loses Again in Swinomish Oil Train Dispute

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A federal judge’s ruling in favor of the Swinomish Indian Tribal Community gives the tribe another victory against BNSF Railway in their dispute over oil trains crossing tribal land.

The Swinomish Indian Tribal Community initially filed their lawsuit in March 2015. In September 2015, a federal judge ruled affirming the Native American tribe’s right to sue the railroad for violating the terms of a Right-of-Way easement granted to allow the railroad to cross the reservation.

The Easement Agreement enables BNSF to bring Bakken crude oil to the Tesoro refinery by crossing a portion of the Swinomish Indian Reservation located on Fidalgo Island in Skagit County, Washington.

Under the terms of the 1991 Easement Agreement, BNSF can run one 25-car train per day in each direction. The tribe sued contending that BNSF was running as many as six 100-car “unit trains” per week.

This time, BNSF challenged the tribe’s ownership of land on which the railroad runs, but U.S. District Judge Robert S. Lasnik rejected their argument.

The History of the Dispute

Train travel across the tribe’s land has a long contentious history, with the original track having been laid in the late 1800s without consent from the Swinomish or the U.S government. The tracks cross the northern edge of the reservation, and the Swinomish, as the present day political successor-in-interest to certain of the tribes and bands that signed the 1855 Treaty of Point Elliott, first sued the railroad in 1976, alleging a century of trespassing on tribal land. The resulting settlement led to the 1991 Easement Agreement that allowed only the 25-car train limit without the Tribe’s permission.

The Tribe contend in its lawsuit that “BNSF never notified the Tribe that it intended to exceed the limitation of one train of 25 cars or less, nor did it request permission from the Tribe before it began to do so.”

A Deal is a Deal

“A deal is a deal,” said Swinomish Chairman Brian Cladoosby. “Our signatures were on the agreement with BNSF, so were theirs, and so was the United States. But despite all that, BNSF began running its Bakken oil trains across the Reservation without asking, and without even telling us. This was exactly what they did for decades starting in the 1800s.”

“We told BNSF to stop, again and again,” said Cladoosby. “We also told BNSF: convince us why we should allow these oil trains to cross the Reservation. And we listened for two years, even while the trains kept rolling. But experiences across the country have now shown us all the dangers of Bakken Crude. It’s unacceptable for BNSF to put our people and our way of life at risk without regard to the agreement we established in good faith.”

Under the terms of the Easement Agreement, the Tribe agreed not to “arbitrarily withhold permission” for BNSF’s request to increase the number of trains or cars.

Is it Arbitrary?

The Tribe contends that its refusal to grant permission is not arbitrary and is “Based on the demonstrated hazards of shipping Bakken Crude by rail, paired with the proximity of the Right-of-Way to the Tribe’s critical economic and environmental resources and facilities — and the substantial numbers of people who use those resources and facilities on a daily basis — the Tribe is justifiably and gravely concerned with BNSF’s shipment of Bakken Crude across the Right-of-Way in a manner and in quantities at odds with the explicit terms of the Easement Agreement.”

The Swinomish are concerned that trains carrying Bakken crude oil run over bridges spanning the Tribe’s fishing grounds in the Swinomish Channel and Padilla Bay. They also noted that the track runs across the “heart of the Tribe’s economic development enterprises,” which includes the Tribe’s Swinomish Casino and Lodge, a Chevron station and convenience store, and an RV Park, as well as a Tribal waste treatment plant.

The Tribe noted that these enterprises are the “primary financial source for funding of the Tribe’s essential governmental functions and programs.”

The 1991 Easement Agreement granted the Right-of-Way for an initial 40-year term, along with two 20-year option periods. The current agreement will expire no later than 2071.

The tribe is seeking a “permanent injunction prohibiting BNSF from (1) running more than one train of twenty-five cars or less in each direction over the Right-of-Way per day and (2) shipping Bakken Crude across the Reservation.”

The Swinomish are also seeking monetary damages for the prior trespasses and breach of contract in an amount to be determined at trial.

It is likely that the dispute will go to trial during 2018.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.