"Railroad mergers or acquisitions by other parties can indirectly affect freight rates on cargoes that fall under STB regulation, shippers say, since purchase premiums are then absorbed into a new valuation base. STB staff takes that valuation into account in a regulatory measure of railroad costs that include depreciation. The WCTL argued that the $7.6 billion premium over book value that Warren Buffett’s Berkshire paid for BNSF increased the railroad’s net investment base by 30 percent and affected the carrier’s annual depreciation figures."

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STB Reviews Berkshire Buyout Impact on BNSF Rates | Railroad Industry News and Information

The more you find out about Buffett’s deals the more you realize how savvy they are. Back in 2010 everyone was so focused on the economy and what rail loads were doing that they never thought about regulatory impacts of pricing in the rail industry.

The fact that his acquisition premium might create a new regulatory price floor in the industry never even occurred to most people (myself included).

What’s equally savvy is the way the opposition to the petition was worded. In essence BNSF is saying if the WCTL wants to change the way regulatory oversight allows price increases, then we need to review the entire process, not just the piece related to depreciation of written up assets and goodwill impacts on the capital base.