BNSF Railway - History

History

BNSF's history dates back to 1849, when the Aurora Branch Railroad in Illinois and the Pacific Railroad of Missouri were formed. The Aurora Branch eventually grew into the Chicago, Burlington and Quincy Railroad, (CB&Q), a major component of predecessor Burlington Northern. A portion of the Pacific Railroad became the St. Louis-San Francisco Railway (Frisco).

The Atchison, Topeka and Santa Fe Railway (ATSF) was chartered in 1859. It built one of the first transcontinental railroads in North America, linking Chicago and Southern California; major branches led to Texas, Denver, and San Francisco. The Interstate Commerce Commission denied a proposed merger with the Southern Pacific Transportation Company in the 1980s.

The Burlington Northern Railroad (BN) was created in 1970 through the consolidation of the Chicago, Burlington and Quincy Railroad, the Great Northern Railway, the Northern Pacific Railway and the Spokane, Portland and Seattle Railway. It absorbed the St. Louis-San Francisco Railway (Frisco) in 1980. Its main lines included Chicago-Seattle with branches to Texas (ex-Burlington) and Montgomery, Alabama (ex-Frisco), and access to the low-sulfur coal of Wyoming's Powder River Basin.

On June 30, 1994, BN and ATSF announced plans to merge; they were the largest and smallest (by mileage) of the "Super Seven," the seven largest of the then-twelve U.S. Class I railroads. The long-rumored announcement was delayed by a disagreement over the disposition of Santa Fe Pacific Gold Corporation, a gold mining subsidiary that ATSF agreed to sell to stockholders. This announcement began the next wave of mergers, as the "Super Seven" were merged down to four in the next five years. The Illinois Central Railroad and Kansas City Southern Railway (KCS), two of the five "small" Class Is, announced on July 19 that the former would buy the latter, but this plan was called off on October 25. The Union Pacific Railroad (UP), another major Western system, started a bidding war with BN for control of the SF on October 5. The UP gave up on January 31, 1995, paving the way for the BN-ATSF merger. Subsequently, the UP acquired the Southern Pacific Transportation Company (SP) in 1996, and Eastern systems CSX Transportation and Norfolk Southern Railway split the Consolidated Rail Corporation (Conrail) in 1998-1999.

On February 7, 1995, BN and ATSF heads Gerald Grinstein and Robert D. Krebs both announced shareholders had approved the plan, which would save overhead costs and combine BN's coal and ATSF's intermodal strengths. Although the two systems complemented each other with little overlap, in contrast to the Santa Fe-Southern Pacific merger, which failed because it would have eliminated competition in many areas of the Southwest, BN and ATSF came to agreements with most other Class Is to keep them from opposing the merger. UP was satisfied with a single segment of trackage rights from Abilene, Kansas to Superior, Nebraska, which BN and ATSF had both served. KCS gained haulage rights to several Midwest locations, including Omaha, East St. Louis, and Memphis, in exchange for BNSF getting similar access to New Orleans. SP, initially requesting far-reaching trackage rights throughout the West, soon agreed on a reduced plan, whereby SP acquired trackage rights on ATSF for intermodal and automotive traffic to Chicago, and other trackage rights on ATSF in Kansas, south to Texas, and between Colorado and Texas. In exchange, SP assigned BNSF trackage rights over the former Chicago, Rock Island and Pacific Railroad between El Paso and Topeka and haulage rights to the Mexican border at Eagle Pass, Texas. Regional Toledo, Peoria and Western Railway also obtained trackage rights over BN from Peoria to Galesburg, Illinois, a BN hub where it could interchange with SP (which had rights on BN dating from 1990). The Interstate Commerce Commission (ICC) approved the BNSF merger on July 20, 1995 (with final approval on August 23), less than a month before UP announced on August 3 that it would acquire SP. Parents Burlington Northern Inc. and Santa Fe Pacific Corporation were acquired on September 22, 1995 by the new Burlington Northern Santa Fe Corporation. The merger of the operating companies was held up by issues with unions; ATSF merged on December 31, 1996 into BN, which was renamed the Burlington Northern and Santa Fe Railway Company. Thus the present BNSF Railway Company (name adopted January 24, 2005) dates back to the January 13, 1961 incorporation in Delaware of BN as "Great Northern Pacific & Burlington Lines, Inc."

The Union Pacific Southern Pacific merger further enlarged the combined BNSF network. Unlike BN and ATSF, UP and SP had significant overlap, where competition between the two would become a monopoly. UP and BNSF announced in late September 1995 that, in exchange for BNSF not opposing the merger, it would obtain ownership of 335 miles (539 km) of line and about 3,500 miles (5,600 km) of trackage rights to reach these "two-to-one" shippers. Significant additions included rights over SP's Central Corridor from Denver via the Moffat Tunnel and Salt Lake City, and over Donner Pass, to the San Francisco Bay Area, with an alternate route through the Feather River Canyon along UP. The ATSF trackage in California's Central Valley was linked to BN's line into Oregon, through trackage rights over UP between Stockton and Keddie and acquisition of UP's section of the "Inside Gateway" to the beginning of BN trackage at Bieber. In Texas, BNSF received rights in several directions from the Houston area: west over UP to San Antonio, with a branch to Waco, and continuing over SP to Eagle Pass (replacing the haulage rights they had just obtained); south over UP to Brownsville; east over SP to New Orleans (including the purchase of this line east of Lake Charles); and northeast over SP to Memphis with a branch on UP to Little Rock. Ownership of a short connection between Waxahachie and Dallas also went from UP to BNSF. UP, in return, got a few short sections of trackage rights over BNSF, mainly connecting the SP at Chemult to the UP at Bend, Oregon, and connecting the SP at Mojave with existing UP rights on ATSF at Barstow, California. On April 18, 1996, UP, BNSF, and the Chemical Manufacturers Association entered into an agreement giving BNSF rights over the UP line between Houston and East St. Louis, paralleling the Houston-Memphis SP line, and allowing BNSF to participate in the UP's plan for directional running, in which each line would serve through trains in only one direction. The Surface Transportation Board, successor to the ICC, approved the UP-SP merger on July 3, and UP control of SP took effect on September 11, 1996. BNSF trackage rights operations began on the Central Corridor on October 10, and soon thereafter on other lines.

BNSF continued projects started by its predecessors, most notably BN's work on reopening Stampede Pass. BN had closed Stampede Pass, the Northern Pacific Railway's main line across Washington, in 1984, in favor of the ex-Great Northern Railway's Stevens Pass. BN never abandoned the line and began rehabilitating it in early 1996, and the route reopened in early December, relieving the crowded Stevens Pass. The ex-ATSF main line, now known as the Southern Transcon, has also seen steady work to add tracks, giving BNSF more capacity on this major intermodal route.

On December 20, 1999, BNSF and the recently privatized Canadian National Railway announced plans to combine as subsidiaries of a new holding company, North American Railways, which would control about 50,000 miles (80,000 km) of railroad. With CN's lines located primarily in Canada and, through subsidiary Illinois Central Railroad, on a north-south corridor near BNSF's eastern edge, the two systems had little overlap. The combination would benefit both companies by expanding available cash for capacity improvements, and allowing for longer single-system movements. Shippers and the Surface Transportation Board expressed concern and surprise about the timing, since the merger that produced BNSF had been the only one in the 1990s that did not cause severe deterioration in service. The STB imposed on March 17, 2000 a 15-month moratorium on mergers involving any two Class I railroads, citing widespread opposition not only to the merger but its effects, likely starting the final round of mergers into two big systems. BNSF and CN immediately turned to the U.S. Court of Appeals, which on July 14 ruled that the STB's right to regulate mergers allowed a moratorium, and the two railroads called off the merger. The STB released its final rules on June 11, 2001, requiring any new application to merge two Class I railroads, with the exception of smaller Kansas City Southern Railway, to demonstrate that competition would be preserved and address effects of defensive moves by other carriers. Since then, no Class I mergers have taken place.

On November 3, 2009, Warren Buffett said Berkshire Hathaway would buy BNSF for $44 billion. The acquisition was approved by the boards of both companies and was approved by BNSF shareholders on February 12, 2010.