(BRK.A), (BRK.B)
A decade long dispute between the Missouri Basin Power Project and BNSF Railway over coal transportation rates has finally been settled. The dispute predated Berkshire’s Hathaway’s ownership of BNSF.
The lawsuit was originally filed in 2004 by coal suppliers Basin Electric and Western Fuels Association Inc., complaining that BNSF (at that time still known as Burlington Northern Santa Fe) had doubled the shipping rates for coal transported to the Laramie River Station located near Wheatland, Wyoming.
BNSF hauls 8 million tons of coal each year from mines in Wyoming’s Powder River Basin.
The members of the Missouri Basin Power Project are Basin Electric, Lincoln Electric System, Tri-State Generation & Transmission Association Inc., Western Minnesota Municipal Power Agency, Heartland Consumers Power District, and the Wyoming Municipal Power Agency.
In 2009, the Surface Transportation Board (STB) concluded that BNSF’s coal transportation rates were “unlawfully high” at roughly six times the cost of providing the transportation. The STB ordered $345 million in reparations and rate reductions from the railroad. Under the ruling, BNSF was obligated to reimburse the Utilities for roughly $100 million in overcharges from 2004 through 2008 based on the volume of coal transported from the various PRB mines between 2004 and 2008.
The award was the single largest award to a captive shipper (a shipper with no alternative carrier) ever made by the STB.
The STB noted that “customers have been bearing the burden of these unreasonably high transportation rates in their monthly electric bills, a burden they should no longer be forced to bear.” The award was the single largest award to a captive shipper (a shipper with no alternative carrier) ever made by the STB.
BNSF appealed the ruling, spending the next six years in the appeals process, and the negotiated settlement came as a result of the STB’s order for both parties to “confer and resolve the precise amount of damages due the Utilities.”
The exact terms of the settlement between BNSF and the Missouri Basin Power Project have not been released, but BNSF spokeswoman Roxanne Butler said that “both parties are satisfied with the outcome.”
© 2015 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.