Last December, The Burlington Northern Railroad hired Ronald H. Reimann away from his post as a high-level policy planner for the Federal Railroad Administration, an agency in the Department of Transportation that oversees railroads.
Two weeks ago, Burlington Northern hired Richard J. Schiefelbein, the No. 2 man at the railway agency, for a key planning job with the railroad.
While it is a way of life in Washington for government officials to leave their posts for jobs in industries they have helped to regulate, this case is somewhat unusual:
At the same time that Reimann and Schiefelbein were negotiating their new jobs with Burlington Northern, a major Midwest railroad based in St. Paul, Minn., their agency was drafting recommendations to the Interstate Commerce Commission on a sensitive, 18-month-old railroad merger case with sizable financial implications for Burlington Northern.
The recommendations included a proposal to grant Burlington Northern additional track rights that the railroad says would boost its coal-hauling business by $82 million next year and considerably more in the future.
The federal ethics in government law prohibits a government employe from participating "personally and substantially . . . through decision . . . recommendation, the rendering of advice, investigation or otherwise" in a matter if an organization with which he "is negotiating or has any arrangement concerning prospective employment" has a financial interest in the matter.
Burlington Northern is one of five railroads seeking 3,000 miles of additional track rights as compensation for economic hardships they claim they would suffer if the ICC approved the merger of three other railroads--the Union Pacific, Missouri Pacific and Western Pacific.
The ICC has granted track rights a few times before in resolving merger disputes, according to ICC and Transportation Department lawyers, but rarely, if ever, of the magnitude involved in this case.
In interviews this week, Reimann and Schiefelbein both said that they each played minor roles in developing the recommendations made to the ICC, and that, therefore, they did not consider it improper to seek jobs with Burlington Northern during the time the recommendations were being framed.
They said that Robert W. Blanchette, the administrator of the railroad agency, and John M. Fowler, general counsel of the Transportation Department, led in shaping policy and making final recommendations--a view that was generally confirmed by Blanchette.
"I made no recommendations and was not part of the day-to-day analysis," said Reimann, the FRA's former associate deputy administrator for policy.
Schiefelbein, who served as the agency's deputy administrator, said, "I wouldn't say I played a positive role. . . . I didn't make that policy, and I didn't have an input."
Reimann said he called Alan M. Fitzwater, Burlington Northern's assistant vice president for government relations, last April to inquire about job opportunities.
That was nearly five months before Reimann's agency completed work on the preliminary recommendations on the merger that were filed with the ICC on Aug. 31. He met twice with railroad officials about employment, in August and September. Shortly after the September meeting, he was offered a job overseeing Burlington Northern's state and federal legislative program.
Schiefelbein said he called Richard C. Grayson, president of Burlington Northern, last October to ask about a job. At the same time the railroad agency was preparing its final arguments in the merger matter. The Transportation Department filed those papers with the ICC earlier this week.
In both the preliminary and final briefs, the department supported the merger and urged the ICC to grant the track rights sought by Burlington Northern.
Blanchette, the railroad agency's administrator, told a reporter this week that Schiefelbein sat in on some of his department's discussions of the proposed merger, but said he doubted Schiefelbein had "any impact." However, Blanchette indicated that Reimann played a more substantial role.
Reimann and his staff were responsible for briefing Blanchette on the merger case shortly after Blanchette became administrator in early 1981, according to Blanchette.
Reimann assigned one of his subordinates to a department task force that studied the merger issue, but did not take part in the task force's work. Reimann took part in all of his department's meetings with all the railroads directly or indirectly involved in the merger case, he said.
Reimann, who has a wife and six children, and Schiefelbein, who has a wife and four children, both said they sought jobs with Burlington Northern partly because they have large families and were having trouble getting by on $50,000-a-year government salaries. They said their prospects are good for making more money with Burlington Northern, although they described their initial salary gains as no more than 10 percent.
Burlington Northern executive Fitzwater, a former ICC employe, said that Burlington Northern's hiring of Reimann and Schiefelbein at the same time the FRA was taking a stand on the merger was coincidental.
Fitzwater said Burlington Northern had in no way tried to influence the merger case or obtain insider's information by recruiting from the FRA's ranks.
Burlington Northern has 29,300 miles of track, more than any other railroad in the nation. Since merging with the St. Louis-San Francisco Railway in late 1980, Burlington Northern has operated in 25 states and two Canadian provinces spanning the continent from the Pacific Northwest and Great Lakes to the Gulf Coast.
Following a major corporate reorganization and management shake-up last year, Burlington Northern executives launched an aggressive marketing and lobbying effort to increase the railroad's coal business, which currently generates nearly 30 percent of Burlington Northern's gross revenues.
In addition to Schiefelbein and Reimann, Burlington Northern has recently hired another former FRA official, Steven R. Ditmeyer, who served as associate administrator for policy and program development at the railroad agency. Ditmeyer was not involved in the merger case.
The part of the merger proposal that most affects Burlington Northern is the railroad's request for authority from the ICC to use 360 miles of track necessary to make direct coal shipments from Wyoming's Powder River Basin to five utility power plants in Oklahoma, Arkansas and Kansas. In return, Burlington Northern would reimburse Missouri Pacific for the cost of track maintenance.
At present, Burlington Northern lacks a direct route to those utility plants. It ships most of the coal used by those plants from Wyoming mines as far as Kansas City, Mo., where the cars are turned over to Missouri Pacific to be transported the rest of the way.
Burlington Northern officials say they fear they may lose even that portion of the business if Missouri Pacific merges with Union Pacific. That's because Union Pacific is trying to arrange a complex deal with the Chicago & North Western railroad to gain direct access to Powder River Basin coal--a deal that would end the Missouri Pacific's reliance on Burlington Northern for originating coal shipments.
A favorable ruling by the ICC would put Burlington Northern on equal footing with the merged railroad and increase Burlington Northern's annual gross receipts by $82 million next year, $94 million in 1984 and $107.9 million by 1985, according to O.W. Cobb Jr., Burlington Northern's vice president of coal and taconite pricing.
But Union Pacific contends that the stakes are much higher and that Burlington Northern--already the largest coal hauler in the West--would boost its coal business by $285 million a year by 1985 if it received the track rights. Last year, Burlington Northern grossed $1.18 billion from coal shipments.