Sunday, January 7, 2018

Sheehan: Comptroller’s Letter Helped Move Rail Cars

stored tanker carsAll those who applauded Berkshire Hathaway’s recent decision to remove its derelict oil tank cars from a junkyard along the Boreas River should also applaud NYS Comptroller Tom DiNapoli, whose unheralded Dec. 12 letter to CEO Warren Buffett helped to persuade the company to act.

It turns out that New York has a large stake in Berkshire Hathaway. New York’s Common Retirement Fund (CRF) owns 5.7 million shares of Berkshire Hathaway stock. DiNapoli administers the CRF.

Comptroller DiNapoli’s letter certainly helped to focus Berkshire Hathaway’s attention on this issue. He made it clear to the company that parking oil tank cars on the Adirondack Forest Preserve was getting a lot of negative attention. That’s the kind of attention that can harm a stock price. As a holder of that stock it made sense for New York to point that out. Comptroller DiNapoli is also the former chairman of the state Assembly’s Environmental Conservation Committee. His continuing concern for the Adirondacks is also evident in his letter.

DiNapoli wrote to Buffett on Dec. 12, noting that it made good business sense to remove the cars:

“I am particularly troubled by the reaction from local elected officials, community stakeholders, and environmental and conservational groups who have stated the stored tankers threaten the scenic beauty, ecological integrity, and protected natural quality. I am concerned, as I am hopeful you will be, that the ongoing issue has the potential to negatively impact the reputation of Berkshire Hathaway.

“Based upon the CRF’s experience as a long term investor, we believe that the ability to mitigate reputational risk and establish and maintain constructive relationships with communities in which companies operate is a hallmark of a company with a sound, sustainable and profitable long term strategy. For example, I was encouraged to read that Union Tank Car Company removed tanker cars from a Chicago neighborhood following safety concerns voiced by the business leaders, community stakeholders, and the City of Chicago.”

Ironically, the tank cars Berkshire Hathaway decided to remove from the City of Chicago were dumped there by the same rail road company – Iowa Pacific Holdings LLC – that created the rail car junkyard in the Adirondacks. The oil tank car dumping area is on tracks the company controls alongside the scenic Boreas River, between North Creek and a defunct iron mine in the ghost hamlet of Tahawus, in the Town of Newcomb.

New York has invested tens of millions of dollars in purchasing new wilderness lands in this area over the past 20 years, in an effort to attract ecologically friendly tourism and preserve its unspoiled beauty.

Last month, New York Governor Andrew Cuomo instructed two of his agencies to issue a cease-and-desist letter to Iowa Pacific. He also said they would file a formal complaint with the federal Surface Transportation Board seeking to have the junkyard removed. The state will also ask the board to evict Iowa Pacific from the rail corridor for failure to operate a rail road instead of a junkyard. The Adirondack Council’s attorneys have been working behind the scenes with attorneys for the Governor’s office and the Attorney General’s office. We continue to applaud Governor Cuomo, the DEC, APA, local elected officials, more than 1,000 Adirondack Council citizen advocates who wrote Warren Buffett, and other environmental groups who have spoken up on this issue.

Adirondacks are National Treasure

New York’s Adirondack Park is one of the world’s largest and oldest parks. It protects most of the wilderness and old-growth forest remaining in the Northeast. Its Forest Preserve has been protected as “forever wild” by the state Constitution since 1894. Although it is owned and administered by New York State, the entire 2.7-million- acre Adirondack Forest Preserve is further protected as a National Landmark.

The controversial junkyard is being assembled on a railroad that leads from the ski resort hamlet of North Creek to an early-19th Century iron mine 22 miles into the forest. The railroad terminates between the Hudson and Opalescent rivers at the old Tahawus mine, on the edge of the park’s famous High Peaks Wilderness Area.

Several miles of the railroad cross the Forest Preserve. They also cross the Upper Hudson River, and run along the Boreas River, both of which are protected as “Scenic” under the NYS Wild, Scenic and Recreational Rivers Program.

In general, railroads are governed by federal transportation law. However, the federal Surface Transportation Board has allowed states to enforce environmental regulations that are stricter than federal law as long as the action doesn’t prevent the lawful operation of a railroad or interfere with interstate commerce, Janeway explained.

The Adirondack Council is working with attorneys in Albany and Washington, D.C. to secure legal remedies to the junkyard, which the organization says is illegal under state and federal law. It is also working with state officials to urge IPH to remove the junkyard. Its members began writing letters to Warren Buffett this week.

The Council and local residents had supported IPH’s previous plans to run a scenic passenger railroad and to haul mine tailings from the former mine site. But the company has failed in those businesses. It is instead renting space on the line to companies that pay to park derelict tankers until they can be refitted, repurposed or scrapped.


Photo of stored tanker cars, courtesy Protect the Adirondacks.

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Before John Sheehan joined the Adirondack Council's staff in 1990, he was the managing editor of the Malone Evening Telegram, and previously worked as a journalist for the Troy Record, (Schenectady) Daily Gazette, Watertown Daily Times and Newsday. For the past 20 years, John has been the voice of the Adirondack Council on radio and television, and on the pages of local, regional and national media.

27 Responses

  1. Big Burly says:

    5.7 million shares @ $301,500.00 per share WOW. For certain Mr. DiNapoli as administrator of public employee pension assets has a huge stake. One wonders if NYS is overexposed to this asset? What the Iowa & Pacific is doing with rail car storage on the Sanford Lake segment prompts serious questions about the common sense of the management of the company — it also calls into question the judgment of those involved in negotiations with the company in the first place. Frankly, this was all forseeable.

    • M.P. Heller says:

      BRK.A and BRK.B don’t even have a COMBINED 5.7 million shares outstanding. There is an error here.

      • John Sheehan says:

        Must be an error, although that is what the Comptroller’s letter says. It would equal more than 1.7 trillion dollars. That is much more than the actual size of the state common retirement fund.

        Will seek a clarification.

        • M.P. Heller says:

          Yes. It would also indicate that Berkshire has a market capitalization well north of that 1.7 trillion number, which it doesn’t. Berkshire market cap for its A Series of stock is around 500 billion, which indicates that there are approximately 1.64 million shares available for purchase in the market.

          I’d say that the retirement fund owns about 18 shares with a valuation around 5.7 million dollars. I would be interested to see if DiNapoli offers a correction to the information contained in the report.

        • Bill Ott says:

          If you happen to be near your computer while reading this, click on this link – In the search box enter “Berkshire Hathaway”. That brings up a page headed “Office of the State Comptroller, where I clicked the top link. Here I hit Ctrl/F to open a search box and searched BH again which took me to 8 entries, the first of which listed 5,207,005 class B shares valued at $738,769,869. This would fill only 6.6 rail cars with pennies.

  2. Peter says:

    It sounds like the environmental groups operating in the Adirondacks were hoping Iowa Pacific would fail so they could get credit for having the railroad destroyed. Their ultimate goal is to have the tracks removed and build a hiking trail at a cost to the taxpayer of millions.

    • James says:

      Right on!

    • Bob Meyer says:

      Spending those tax dollars you so lament to create a multi use recreational trail will bring economic benifit to a part of the Adirondacks that needs it more then most. The monetary benifits to the communities [North Creek, N. River, Minerva, Newconb etc] would reap many times the taxpayer cost, increasing the tax base, creating jobs in the one area that can expand in the Park [tourism]. Don’t believe me? Just look at other areas in the nation that have invested in “rail trails” and see the undeniable benificial evidence.

      • Paul says:

        Is this different than the ASR thing? Would a trail be legally allowed where the RR is? This isn’t other areas, this is NYS and its the Adirondack park. Good luck.

      • Paul says:

        Is this different than the ASR thing? Would a trail be legally allowed where the RR is? This isn’t other areas, this is NYS and its the Adirondack park. Good luck.

    • Boreas says:


      IP has already failed in its original freight/tourist propositions. They made a poor decision likely based on an overly-optimistic usage plan. Environmental groups can claim no credit there. There wasn’t much of a ruckus until the oil cars were parked.

      Railcar storage is an attempt to slow the hemorrhaging of cash that owning a rail line involves. It isn’t a good long-term solution to their problems, nor is it good for the Park. I foresee NYS somehow buying back the IP lease – probably at a reasonable price. How reasonable will depend on the upcoming FTC and possibly other legal rulings.

      • Paul says:

        With rising sea levels there will be a need for the kind of tailings that are there at that mine in places like Roosevelt Island and other places along the coast. I would not write this off just yet. Are they biding their time? May not be a bad plan?

    • John Sheehan says:

      The Adirondack Council and other environmental organizations supported the original uses proposed by Iowa Pacific Holdings LLC for this line. Those were a scenic railroad from Saratoga Springs to North Creek and a rock-hauling operation from North Creek to Newcomb.

      The company has now failed at both businesses and abandoned those ideas for the current plan to the North Creek/Newcomb spur as a junkyard for derelict oil tankers. Nobody but Iowa Pacific likes that idea.

      As for the future of the line, we believe it should be the topic of public discussions and hearings to determine what the best uses of the line would be. A trail is only one option.

  3. Paul says:

    “5.7 million shares of Berkshire Hathaway stock”. BH stock is currently at about $301,000 per share. I don’t think NYS has 5.7 million shares? Maybe they have 5.7 million worth of the stock?

    • John Sheehan says:

      The Comptroller’s letter says: “The CRF’s $201.3 billion portfolio includes 5,720,815 shares in Berkshire Hathaway Inc.”

      Full letter here:

      • Paul says:

        Don’t always believe what you read. 5.7 million shares of BH is more than 201 billion. Do a little fact checking before you submit.

      • Paul says:

        3000 to the power of 3 rail cars? Could use a little editing there to. Time for the comptroller to get a new editor along with a new numbers person. I can’t believe we as tax payers are paying for this sort of work product.

        Warren was probably laughing his head off as he looked at this before taking the smart PR move to get those cars out of there.

    • John Sheehan says:


      You are right. There must be an error here. That would equal 1.7 trillion dollars. I will seek a clarification.

      • John Sheehan says:

        Actually, it appears here is plenty of BH “B” stock available and at a lot less than $303,000.

    • Bill Ott says:

      I save my pennies, so I figured the volume of Berkshire Hathaway stock in pennies using 49,152 pennies per cubic foot. Do the math and tell me if I am wrong, but I came up with 15,351 general purpose railroad tank cars to hold those pennies. This would be a cool math problem for maybe the fifth or sixth grade?

      Berkshire Hathaway gained $2,655.00 today to close at $304,180.00 per share. Berkshire is to reap $37Billion from the US tax cut.

  4. Paul says:

    This article refers to “urging” the company to remove the cars. There is another reference to the JY being “assembled”? The title infers that they have been moved already. What is the actual status of the cars?

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