SURFACE TRANSPORTATION BOARD DECISION DOCUMENT
    Decision Information

Docket Number:  
EP_706_0

Case Title:  
REPORTING REQUIREMENTS FOR POSITIVE TRAIN CONTROL EXPENSES AND INVESTMENTS

Decision Type:  
Decision

Deciding Body:  
Entire Board

    Decision Summary

Decision Notes:  
DECISION AMENDED THE BOARD'S RULES TO REQUIRE CARRIERS THAT SUBMIT TO THE BOARD R-1 REPORTS THAT IDENTIFY INFORMATION ON CAPITAL AND OPERATING EXPENDITURES FOR POSITIVE TRAIL CONTROL TO SEPARATELY REPORT THOSE EXPENSES SO THAT THEY CAN BE VIEWED BOTH AS COMPONENT PARTS OF, AS WELL AS SEPARATELY FROM, OTHER CAPITAL INVESTMENTS AND EXPENSES.

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    Full Text of Decision

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42759 SERVICE DATE – AUGUST 14, 2013

EB

 

SURFACE TRANSPORTATION BOARD

 

DECISION

 

Docket No. EP 706

 

Reporting Requirements for

Positive Train Control Expenses and investments

 

Digest:[1] The Board is adopting final rules that will require rail carriers that submit to the Board R-1 reports that include but do not break out information on capital and operating expenditures for Positive Train Control to break out those expenses so that they can be viewed both as component parts of and separately from other capital investments and expenses.

 

Decided: August 13, 2013

 

AGENCY: Surface Transportation Board.

 

ACTION: Final Rule.

 

SUMMARY: The Surface Transportation Board (Board) is amending its rules to require rail carriers that submit to the Board R-1 reports that identify information on capital and operating expenditures for Positive Train Control (PTC) to separately report those expenses so that they can be viewed both as component parts of, as well as separately from, other capital investments and expenses. PTC is an automated system designed to prevent train-to-train collisions and other accidents. Rail carriers with traffic routes that carry passengers and/or hazardous toxic-by-inhalation (TIH) or poisonous-by-inhalation (PIH) materials, as so designated under federal law, must implement PTC according to federal legislation. Pursuant to the notice of proposed rulemaking published in the Federal Register on October 13, 2011, we are adopting supplemental schedules to the R-1 to require financial disclosure with respect to PTC to help inform the Board and the public about the specific costs attributable to PTC implementation.

 

DATES: This rule is effective on September 19, 2013.

 

FOR FURTHER INFORMATION CONTACT: Paul Aguiar, (202) 245-0323. Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at (800) 877-8339.

 

SUPPLEMENTARY INFORMATION: Rail carriers must file with the Board an annual report containing “an account, in as much detail as the Board may require, of the affairs of the rail carrier.” 49 U.S.C.  11145(b)(1). As authorized by this provision, the Board requires large (Class I)[2] rail carriers to submit annual reports, known as R-1 reports. 49 C.F.R.  1241.11.[3] The R-1 reports contain information about finances and operating statistics for each railroad. Currently, PTC expenditures are incorporated into the R-1 under the category of “capital investments and expenses;” however, PTC expenditures are not reported separately.

 

PTC is a system designed to prevent train-to-train collisions, over-speed derailments, incursions into established work zone limits, and the movement of a train through a switch left in the wrong position. 49 U.S.C.  20157(i)(3). PTC systems may include digital data link communications networks, positioning systems, on-board computers on locomotives, throttle-brake interfaces on locomotives, wayside interface units at switches and wayside detectors, and control center computers.[4] The Rail Safety Improvement Act of 2008 (RSIA) requires Class I rail carriers to implement PTC by December 31, 2015, on mainlines where intercity rail passenger transportation or commuter rail passenger transportation is regularly scheduled, and/or on mainlines over which TIH or PIH, as designated in 49 C.F.R. pts. 171.8, 173.115, and 173.132, are transported. 49 U.S.C.  20157(a)(1).[5] In complying with the RSIA, rail carriers are expected to make expenditures related to installation, operation, and maintenance of PTC.

 

On October 13, 2010, the Union Pacific Railroad Company (UP), a Class I rail carrier, filed a petition requesting that the Board institute a rulemaking proceeding to adopt supplemental schedules that would require Class I carriers to separately identify PTC expenditures in annual R-1 reports to the Board. Various parties filed comments supporting and opposing UP’s petition. In Reporting Requirements for Positive Train Control Expenses & Investments, EP 706 (STB served Feb. 10, 2011), the Board instituted a rulemaking proceeding in response to UP’s petition, but the Board made no determination about the merits of UP’s specific proposal and stated that it would address the arguments raised by the parties in their filings in a subsequent decision. On October 13, 2011, the Board served a Notice of Proposed Rulemaking (PTC NPRM) announcing proposed changes to its reporting rules to supplement the R-1 with details of the expenditures attributable to the installation, operation, and maintenance of PTC systems. The Board explained that the proposed “PTC Supplement,” which would separately identify PTC-related expenses from the R-1 filings currently required, would provide it with important information that would help identify transportation industry changes that may require attention by the agency and would assist the Board in preparing financial and statistical summaries and abstracts to provide itself, Congress, other government agencies, the transportation industry, and the public with transportation data useful in making regulatory policy and business decisions.

 

The new rule will require a PTC Supplement[6] to be filed along with each carrier’s R-1 annual report.[7] The supplement will provide for PTC versions of schedules 330 (road property and equipment improvements), 332 (depreciation base and rates—road property and equipment), 335 (accumulated depreciation), 352B (investment in railroad property), and 410 (railway operating expenses) containing dollar amounts that reflect only the amounts attributable to PTC for the filing year. The PTC Supplement will also contain PTC versions of schedules 700 (mileage operated at close of year), 710 (inventory of equipment), 710S (unit cost of equipment installed during the year), and 720 (track and traffic conditions). Railroads will also report, by footnote in each supplement schedule, PTC-related expenditures for passenger-only service not otherwise captured in the individual schedules to allow the Board to understand fully the railroads’ PTC expenditures. In addition to separating capital expenses and operating expenses incurred by the railroad for PTC, the respondent entity will include by footnote disclosure the value of funds from non-government and government transfers, including grants, subsidies, and other contributions or reimbursements, used or designated to purchase or create PTC assets or to offset PTC costs.[8]

 

The American Chemistry Council and the Chlorine Institute (collectively, ACC/CI) jointly filed opening comments in response to the rules proposed in the PTC NPRM. UP and the Association of American Railroads (AAR) also filed opening comments. These same parties also filed reply comments.[9] We have considered the parties’ arguments and will adopt final rules, accordingly. We address below the comments received on the PTC NPRM. Appendix A contains the final rules in full.

 

Nature of PTC-related costs. ACC/CI argue that the Board should not adopt the PTC Supplement because the Board has not provided sufficient guidance about which PTC-related costs may be recorded, and how they should be recorded.[10] ACC/CI argue that a lack of guidance on how to separate PTC-related expenses from non-PTC expenses will result in inconsistent reporting, and speculate that, for example, one railroad might report as a PTC-related expense the entire cost of a PTC-equipped locomotive, while another might report as PTC-related only the expense of PTC equipment on the locomotive.[11] ACC/CI also claim that the potential for inconsistencies is shown in PTC implementation plans filed by carriers with the FRA, citing the differences among the carriers’ FRA reports.[12]

 

AAR and UP reply that the rules at 49 C.F.R. pt. 1201 subpart A—Uniform System of Accounts, independent auditing of the R-1, and the Board’s monitoring of that auditing provide sufficient guidance and assurance that PTC-related expenses will be properly reported.[13] ACC/CI state that the comments of AAR and UP show that carrier accounting practices vary, citing AAR’s comment that it will be “difficult to decide” on the appropriate PTC portion of maintenance expenses for wayside devices that also supply power to non-PTC equipment.[14] However, ACC/CI also state on reply that because UP is the only individual carrier that filed comments on the PTC NPRM, the record does not show the full diversity of carrier accounting practices.[15]

 

With respect to ACC/CI’s argument that there is insufficient guidance on recording of PTC-related costs, the Board’s Uniform System of Accounts (USOA) and the auditing process provide sufficient assurance of proper supplement reporting. The Board will address any questions railroads have about application of the USOA to the PTC supplement. If a railroad proposes an accounting treatment that varies from the USOA, Board review and approval is required. The example that ACC/CI give of potential improper reporting related to a PTC-equipped locomotive is not a realistic example of improper reporting because even if a railroad were to report an entire PTC-equipped locomotive as a PTC expense, the auditing process would address such a misallocation. ACC/CI also give an example of how carriers have reported PTC-related expenses differently in their “PTC implementation plans,” which they are required to file with the FRA indicating the sequence and schedule on which each railroad will install PTC equipment.[16] Specifically, ACC/CI note that railroads have chosen to include information on wayside devices in different sections of their reports.[17] ACC/CI do not explain why this or other differences among the carriers’ FRA reports are significant or why the differences indicate potential problems with the PTC Supplement. ACC/CI do not indicate whether the FRA reports were subject to auditing as the PTC Supplement will be. While ACC/CI claim that the filings of AAR and UP show variations in carrier accounting practices, ACC/CI cite only one statement involving wayside devices by AAR to support the claim. However, with its statement about wayside devices, AAR merely argues that allocation of operating costs to the appropriate locations in PTC schedule 410 is a more difficult, and therefore more time-consuming, task than other PTC-related reporting and requests that mandatory filing of PTC schedule 410 be delayed.[18] AAR does not argue that carriers have insufficient guidance to make the allocations, and, as discussed below, mandatory reporting will not begin until the 2013 R-1 filings are due in 2014. Railroads should therefore have sufficient time to address this issue. The Board’s Uniform System of Accounts and the auditing process will provide sufficient assurance of proper reporting, although some reporting tasks may be more time consuming than others.

 

Tracking benefits. ACC/CI argue that the Board should also require carriers to report any benefits of PTC, some of which, they argue, are clear.[19] ACC/CI claim that recording PTC costs but not benefits is a lopsided treatment that ignores the foreseeability of PTC benefits. ACC/CI express concern that carriers will place the burden of paying for PTC on TIH shippers and passenger rail, while, they argue, PTC benefits a wide range of shippers as well as the railroads.[20]

 

ACC/CI offer two approaches to measuring PTC benefits.[21] First, they suggest that currently reported performance measures be split into subsets of segments with and without PTC, and that “[t]he relative changes in performance measures between the two groups could then be used to tease out productivity gains attributable to PTC.”[22] Second, they suggest new measures, such as car miles per locomotive unit mile, carloads per train start, or carloads per crew start, to assess the extent to which PTC and related train management software allow more efficient use of equipment and personnel.[23] In reply, UP states that it would not oppose a separate proceeding to address the benefits from PTC, but UP opposes broadening this proceeding to require the reporting of benefits from PTC because it will add complications and delay.[24] UP argues the railroads are incurring measurable costs to install PTC now, while calculating benefits from PTC, which will occur in the future, would be speculative and complex.[25] UP claims that ACC/CI’s proposals on how to measure PTC benefits are impractical and underdeveloped.[26] AAR makes similar arguments for why ACC/CI’s proposal should not be adopted, and claims that studies show that the benefits to railroads from PTC will be small in relation to costs.[27] On reply, ACC/CI, citing UP’s statement that it “could provide information about TIH traffic in a PTC version of schedule 755” (which collects operating statistics), argue that UP and AAR’s proposals to include a PTC schedule that collects operating statistics shows that the carriers’ objective is to recover PTC costs from TIH shippers.[28]

 

We will not adopt ACC/CI’s proposal. We considered a similar request in PTC NPRM, slip op. at 4-5, and, as the Board concluded there, we also conclude here that ACC/CI have not shown that the request to track benefits is practical or warranted at this time. While carriers state that they are incurring costs now to meet the 2015 implementation deadline, any efficiencies that arise will occur after implementation. Moreover, identifying the costs associated with implementing PTC appears to be relatively straightforward, and the revised rules represent a viable approach to supplement the R-1 and capture this data. By contrast, it is not clear how, at this point, we would identify those productivity gains that may arise as a result of PTC investments.

 

Abuse of reporting rules. ACC/CI propose that the Board not adopt the PTC Supplement because of the potential that the supplement will enable over-recovery of PTC costs from shippers.[29] Citing the Board’s statement that failure to adopt the PTC Supplement will not deprive carriers of the opportunity to recover PTC costs, PTC NPRM, slip op. at 4 n.8, ACC/CI argue that carriers may still seek to recover legitimate costs without the PTC Supplement, and that failure to adopt the rule would therefore not injure carriers.[30] ACC/CI also claim that the benefits of reporting are speculative and slight.[31] They argue that the railroads’ reason for seeking the PTC Supplement is to facilitate cost recovery and to enable double or triple recovery from shippers.[32] ACC/CI cite Rail Fuel Surcharges, EP 661, slip op. at 10-11 (STB served Jan. 26, 2007), where the Board found that certain fuel surcharges were “double dipping” and therefore an unreasonable practice for the proposition that the PTC Supplement may facilitate similar carrier actions in relation to PTC costs.[33]

 

AAR and UP reply that, as noted by the Board in the PTC NPRM, slip op. at 4 n.8, carriers may seek to recover PTC costs regardless of whether the Board adopts the PTC Supplement and that this proceeding will not determine whether or how the Board uses the data in proceedings.[34] AAR notes that the Board can investigate any claims of abuse.[35]

 

We disagree that the PTC Supplement will facilitate abuse by carriers. Because PTC reporting will be audited by the Board using the same processes currently in place for other Board reporting requirements, we have no reason to conclude that adding PTC reporting requirements would result in the railroads’ over-recovery of PTC expenses. Further, as noted in PTC NPRM, slip op. at 4 n.8, carriers may seek to recover PTC costs regardless of the outcome of this rulemaking, and ACC/CI do not adequately explain how the PTC Supplement would enable abuse. Finally, as explained in PTC NPRM, slip op. at 3-4, we believe that the PTC Supplement will provide important information about current expenditures. Therefore, we conclude that the Board should begin collecting information on PTC costs now to identify transportation industry changes as they arise and to be prepared to provide interested parties with data useful in making regulatory policy and business decisions.

 

PTC grants. AAR and UP filed comments on the proposal in the PTC NPRM to collect information about PTC grants.[36] They argue that the footnote schedule should not be adopted because any grants would not be part of a railroad’s net capital expenditures, and that the grants footnote is therefore unnecessary to separate PTC expenditures from total expenditures.[37] UP suggests, in the alternative, that the Board modify the proposal to require a carrier to disclose a transfer if the carrier includes the value of the transfer in its road and equipment property and depreciation schedules.[38] AAR’s alternative suggestion is for the Board to require carriers to file the information in a separate report that, on the request of the carrier and approval by the Board, would remain confidential in order to protect sensitive security-related and commercial information.[39]

 

UP claims that the information sought by the grants footnote is available from public sources, and to the extent that it is not, reporting it in the R-1 would be inappropriate, as the Board stated in the PTC NPRM, slip op. at 4, that confidential filing of the supplemental PTC schedules is unnecessary.[40] Similarly, AAR proposes that if the Board chooses to require the grants footnote, the Board modify that footnote to protect potentially sensitive information by (1) requiring the “location of the project funded” information only at a state or regional level for projects not identified by FRA grant number and (2) allowing carriers to petition on a case-by-case basis for treatment of information as confidential.[41] Finally, AAR requests that the Board clarify what constitutes a “government transfer,” argues that the term should be limited to direct grants from departments or agencies of government, and claims that the term should exclude Amtrak or other quasi-public entities.[42]

 

We will adopt the proposal to require the grants footnote, and incorporate several recommendations offered by commenters, described below. This additional information will help the Board monitor the financing of PTC installation. The Board is aware that funds received by grant are not part of carriers’ capital expenditures.

 

We also conclude that AAR and UP have not shown that the grants footnote will collect sensitive information, and therefore we will not eliminate the footnote on that basis or adopt the proposal to obtain the information through a separate, confidential filing. As UP points out, much of the information is available from public sources. The Board and public will find it informative to have the grant information related to each railroad aggregated on that railroad’s PTC Supplement. However, recognizing that sufficiently detailed geographic information might reveal confidential information, we will adopt AAR’s proposal to require that carriers provide the “location of the project funded” information only at a state or regional level for projects not identified by FRA grant number.[43]

 

We will also modify the language in the grants footnote schedule to address AAR’s request that we clarify what grants must be reported. However, as we wish to receive the full scope of information available to inform the Board and the public, we will not adopt AAR’s proposal to limit the sources of grants that must be reported to government agencies and departments. To clarify this and to make the change regarding project locations, we will modify the footnote language to state:

“In addition to separating capital expenses and operating expenses incurred by the railroad for PTC, the respondent entity shall include by footnote disclosure here the value of funds received from non-government and government transfers to include grants, subsidies, and other contributions or reimbursements that the respondent entity used to purchase or create PTC assets or to offset PTC costs. These amounts represent non-railroad monies that the respondent entity used or designated for PTC and would provide for full disclosure of PTC costs on an annual basis. This disclosure shall identify the nature and location of the project by FRA identification, if applicable. If FRA identification is not applicable, the disclosure shall identify the location at the state or regional level.

 

See App. B, Table Footnote: PTC Grants. The final rule reflects corresponding changes.[44] See App. A.

 

Operating statistics. In the PTC NPRM, slip op. at 5, the Board stated that it did not believe that a PTC schedule 755, which would collect information on PTC-related carloads, car-miles, and train-miles, would aid the Board in tracking expenditures made for PTC implementation at this time. However, the Board invited parties to comment on the issue. Id. at 5-6. AAR and UP argue that the Board should adopt a PTC schedule 755 because such statistics would be useful if the Board decides to modify the Uniform Railroad Costing System (URCS) regarding hazardous materials transportation costs.[45] AAR and UP argue that the operating statistics would inform the Board about the impacts of PTC and be useful in regulatory decision making.[46] They also argue that the burden will be on the carriers to submit the information, and that the carriers are willing to do so.[47]

 

We will not add a PTC schedule 755. As the Board explained in the PTC NPRM, the PTC Supplement’s purpose is to collect information on PTC expenditures. AAR and UP offered no compelling justification for collecting the additional information. If the Board needs the information for changes to URCS or other purposes, it can seek the information at that time.

 

PTC schedule 352B. The Board stated in the PTC NPRM, slip op at 5, that the proposed supplement would include a PTC version of schedule 352B. AAR and UP note that PTC schedule 352B was not included in the PTC NPRM appendix that provided the proposed schedules.[48] PTC schedule 352B was mistakenly omitted from the PTC NPRM appendix and will be included in the final version of the PTC Supplement as shown in Appendix B.

 

PTC schedule 710S. The information reported on PTC schedule 710S, unit cost of equipment installed during the year, is: class of equipment, number of units, total weight, total cost, and method of acquisition. AAR and UP argue that the Board should not require a PTC schedule 710S because it would result in the duplication of information gathered by PTC schedule 330 (annual expenditures on property and equipment) and PTC schedule 710 (inventory of owned and leased equipment).[49] Alternatively, UP requests that the Board clarify what additional information it seeks from a PTC schedule 710S.[50]

 

PTC Schedule 710S is not duplicative, and we will include a PTC schedule 710S to determine PTC locomotive costs on a unit basis. PTC schedule 710S will gather unit cost information on locomotives and passenger train cars, while PTC schedule 710 will capture the number of units, and PTC schedule 330 will capture aggregate costs.

 

Grace period. AAR proposes that the Board allow a 90-day grace period following the filing of the R-1 for railroads to file the PTC Supplement.[51] AAR argues that preparation of the R-1 is time consuming for carriers, and that the grace period may be necessary for carriers to complete the supplement.[52]

 

We will not provide for a 90-day grace period. A grace period is not necessary, as the R-1 and the supplement are both computer generated. Given that much of the supplemental information will already be contained in the R-1 in aggregate form, the railroads’ accounting systems should be able to be modified to capture or separate this information from the current R-1 reporting. AAR has not shown that carriers need additional time to complete the PTC Supplement.

 

Beginning of mandatory reporting. AAR and UP propose to delay mandatory filing of PTC schedule 410, which will collect operating expenses, until the 2014 calendar year.[53] AAR claims, and UP agrees, that because PTC-related operating expenses are unlikely to be incurred before PTC systems are in operation, allowing carriers additional time to develop systems for capturing PTC operating expenses would benefit carriers and the Board.[54] This is because, AAR argues, PTC-related operating expenses are more difficult to capture than PTC-related capital expenditures.[55] AAR gives the example of wayside devices; it claims it will be simple to identify the costs of adding PTC equipment to a wayside device, but more difficult to determine the proper allocation of maintenance activity costs that apply to the entire wayside device.[56] AAR also states that carriers must address more accounts when determining operating expenses.[57] AAR and UP suggest that carriers be allowed to file PTC schedule 410 on a voluntary basis for calendar years before 2014.[58]

 

We will not provide for delayed filing of the PTC schedule 410, and we will require carriers to file the full PTC Supplement with their next R-1 filings (this will be the filings regarding 2013, which will be due in 2014). We recognize that any PTC operating expenses may be minimal until carriers begin to use the PTC systems, but carriers can include PTC schedule 410 showing zero dollars of operating expenses. The minimal nature of current PTC operating statistics should ease the difficulties AAR and UP claim may occur in completing PTC schedule 410. Carriers have had ample notice of the new rule and time to develop compliance methods.

 

Voluntary reporting of calendar years before 2013. AAR and UP request that the Board allow carriers to voluntarily file PTC Supplements for prior calendar years.[59] We will permit carriers to voluntarily file PTC Supplements for the years 2008-2012. This information will be useful to fully inform the Board and the public about PTC expenditures. Because the RSIA was enacted in 2008, that is the earliest year for which carriers may voluntarily report.

 

Review of reporting requirements. AAR proposes that the Board provide for a mandatory reevaluation of the PTC Supplement within one year after the full implementation of PTC.[60] AAR suggests that such a review would be useful to reevaluate the PTC Supplement in light of experience. We will not adopt this proposal. The Board can undertake such a review any time at its discretion should experience demonstrate that it would be helpful.

 

PAPERWORK REDUCTION, REGULATORY FLEXIBILITY, AND ENVIRONMENTAL CERTIFICATIONS

 

In the PTC NPRM, published in the Federal Register at 76 Fed. Reg. 63582 on October 13, 2011, the Board sought comments pursuant to the Paperwork Reduction Act (PRA), 44 U.S.C.  3501-3549, and Office of Management and Budget (OMB) regulations at 5 C.F.R.  1320.11, regarding: (1) whether this collection of information, as modified in the proposed rule, is necessary for the proper performance of the functions of the Board, including whether the collection has practical utility; (2) the accuracy of the Board’s burden estimates; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology, when appropriate. Comments regarding the necessity, utility, and clarity of the information collection were received and are addressed above. No comments concerning the Board’s burden estimates were received.

 

The proposed collection was submitted to OMB for review as required under the PRA, 44 U.S.C.  3507(d), and 5 C.F.R.  1320.11. OMB withheld approval pending submission of the final rule. We are today submitting the collection contained in this final rule to OMB for approval. Once approval is received, we will publish a notice in the Federal Register. Unless renewed, OMB approval of this collection, including (if approved) the modifications here, expires on August 31, 2015. This collection (Class I Railroad Annual Report) has been assigned control number 2140-0009. The display of a currently valid OMB control number for this collection is required by law. Under the PRA and 5 C.F.R.  1320.11, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

 

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C.  601-612, generally requires a description and analysis of new rules that would have a significant economic impact on a substantial number of small entities. In drafting a rule, an agency is required to: (1) assess the effect that its regulation will have on small entities; (2) analyze effective alternatives that may minimize a regulation’s impact; and (3) make the analysis available for public comment. 5 U.S.C.  601-604. Under  605(b), an agency is not required to perform an initial or final regulatory flexibility analysis if it certifies that the proposed or final rules will not have a “significant impact on a substantial number of small entities.”

 

Because the goal of the RFA is to reduce the cost to small entities of complying with federal regulations, the RFA requires an agency to perform a regulatory flexibility analysis of small entity impacts only when a rule directly regulates those entities. In other words, the impact must be a direct impact on small entities “whose conduct is circumscribed or mandated” by the proposed rule. White Eagle Coop. Ass’n v. Conner, 553 F.3d 467, 478, 480 (7th Cir. 2009). An agency has no obligation to conduct a small entity impact analysis of effects on entities that it does not regulate. United Dist. Cos. v. FERC, 88 F.3d 1105, 1170 (D.C. Cir. 1996).

 

The rule changes adopted here will not have a significant economic impact upon a substantial number of small entities, within the meaning of the RFA. The reporting requirements are applicable only to Class I rail carriers, which, under the Board’s regulations, have annual carrier operating revenues of $250 million or more in 1991 dollars (adjusted for inflation using 2012 data, the revenue threshold for a Class I rail carrier is $452,653,248). Class I carriers generally do not fall within the Small Business Administration’s definition of a small business for the rail transportation industry.[61] Therefore, the Board certifies under 5 U.S.C.  605(b) that this rule will not have a significant economic impact on a substantial number of small entities within the meaning of the RFA.

 

This action will not significantly affect either the quality of the human environment or the conservation of energy resources.

List of Subjects

 

49 C.F.R. part 1241

 

Railroads

 

Reporting and recordkeeping requirements

 

It is ordered:

 

1. The rules set forth in Appendix A are adopted as final rules.

 

2. Notice of this decision will be published in the Federal Register. The final rules will be effective on September 19, 2013.

 

3. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration.

 

By the Board, Chairman Elliott, Vice Chairman Begeman, and Commissioner Mulvey.

Commissioner Mulvey dissented with a separate expression.

 

_______________________________________

 

COMMISSIONER MULVEY, dissenting:

 

I disagreed with the decision to propose the rules that the Board makes final today because I believed that doing so was premature. Nothing in this record has led me to a different conclusion. In Class I Railroad Accounting and Financial Reporting—Transportation of Hazardous Materials, Docket No. EP 681, the Board is considering whether and how it should update its railroad reporting requirements and the Uniform Railroad Costing System to better capture the operating costs of transporting hazardous materials. Yet in this decision, the Board begins to answer the “how” question without first determining “whether” it should even do so in the first place. The Board’s decision to put the proverbial cart before the horse will likely create uncertainty and confusion. On the one hand, the Board will be requiring carriers to submit very specific segregated data on PTC-related expenditures but, on the other hand, we have given stakeholders no clear rule on how such data may be used in Board proceedings, particularly in rate reasonableness cases.

 

The question of whether the substantial cost of PTC installation should be borne by all shippers proportionally or only by TIH shippers (or something in between) is important. The Board took comments on this issue more than three years ago and still has yet to propose rules to resolve it. The Board should have first resolved the cost allocation issue head-on and then used that resolution to guide any new reporting requirements. Accordingly, I respectfully dissent.

 


APPENDIX A

 

For the reasons set forth in the preamble, the Surface Transportation Board revises part 1241 of title 49, chapter X, subchapter C, of the Code of Federal Regulations to read as follows:

 

PART 1241—Annual, special, or periodic reports—Carriers subject to Part I of the Interstate Commerce Act

 

1. The authority citation for part 1241 continues to read as follows:

 

Authority: 49 U.S.C. 11145.

 

2. Amend 1241, to add a new paragraph (b) to read as follows:

 

1241.11 Annual reports of class I railroads.

 

(a) * * *

 

(b) Expenditures and certain statistical information, as described below, for Positive Train Control (PTC) installation, maintenance, and operation shall be separately identified in a supplement to the Railroad Annual Report Form R-1 and submitted with the Railroad Annual Report Form R-1. This supplement shall identify PTC-related expenditures on road property and equipment improvements, depreciation of road property and equipment, accumulated depreciation, investment in railway property, and railway operating expenses. The supplement shall also identify the total mileage on which carriers install PTC and the number of locomotives equipped with PTC. The supplement shall include PTC-related expenditures for passenger-only service not otherwise captured in the individual schedules. In addition to separating capital expenses and operating expenses incurred by the railroad for PTC, the respondent entity shall include the value of funds received from non-government and government transfers to include grants, subsidies, and other contributions or reimbursements that the respondent entity used to purchase or create PTC assets or to offset PTC costs.


 

 

APPENDIX B

 

PTC Versions of Schedules: 330, 332, 335, 352B, 410, 700, 710, 710S, and 720

 

 

 

Please the PDF file above to view Appendix B.



[1] The digest constitutes no part of the decision of the Board but has been prepared for the convenience of the reader. It may not be cited to or relied upon as precedent. Policy Statement on Plain Language Digests in Decisions, EP 696 (STB served Sept. 2, 2010).

[2] The Board designates three classes of freight railroads based upon their operating revenues, for three consecutive years, in 1991 dollars, using the following scale: Class I – $250 million or more; Class II – less than $250 million but more than $20 million; and Class III – $20 million or less. These operating revenue thresholds are adjusted annually for inflation. 49 C.F.R. pt. 1201, 1-1. Adjusted for inflation, the revenue threshold for a Class I rail carrier using 2012 data is $452,653,248. Today, there are seven Class I carriers.

[3] Information about the R-1 report, including the schedules discussed in this rulemaking, past R-1 reports, and a blank R-1 form, is available on the Board’s website. STB Industry Data, http://www.stb.dot.gov/stb/industry/econ_reports.html.

[4] The Federal Railroad Administration (FRA) provides more information online. Federal Railroad Administration, Positive Train Control, http://www.fra.dot.gov/Page/P0152 (last visited Aug. 6, 2013).

[5] We note that in a 2012 report to Congress, the FRA indicated that it was not likely that all PTC implementation under the statute would be completed by the 2015 deadline, and made a series of recommendations to Congress on how to address emerging issues on implementation. FRA, FRA Report to Congress: Positive Train Control: Implementation Status, Issues, and Impacts (2012), available at http://www.fra.dot.gov/eLib/Details/L03718 (last visited Aug. 13, 2013). See also Rail Safety: Preliminary Observations on Federal Rail Safety Oversight & Positive Train Control Implementation Before the S. Comm. on Commerce, Science, & Transp., 113th Cong. 12-17 (2013) (statement of Susan A. Fleming, Dir. Physical Infrastructure Issues, Gov’t Accountability Office), available at http://www.gao.gov/assets/660/655298.pdf (last visited Aug. 13, 2013).

[6] The PTC schedules are provided in Appendix B.

[7] The currently established R-1 will not change.

[8] See App. B, Table Footnote: PTC Grants.

[9] UP also joins the comments of AAR on both opening and reply. UP Opening 2 n.1; UP Reply 2 n.1.

[10] ACC/CI Opening 4-6.

[11] Id. at V.S. Crowley & Mulholland 8.

[12] Id.

[13] AAR Reply 4-5; UP Reply 4-5.

[14] ACC/CI Reply 2 (citing AAR Opening 9 n.12).

[15] ACC/CI Reply 2.

[16] ACC/CI Opening, V.S. Crowley & Mulholland 6.

[17] Id. at 8.

[18] See AAR Opening 9 n.12.

[19] ACC/CI Opening 6, V.S. Crowley & Mulholland 14-15. ACC/CI also append two reports by L.E. Peabody & Associates, Inc., and claim that the reports support the argument that PTC has system-wide benefits. ACC/CI Opening 3, Attachment 2, Attachment 3.

[20] ACC/CI Opening 2-3; ACC/CI Reply 4.

[21] ACC/CI Opening, V.S. Crowley & Mulholland 15.

[22] Id.

[23] Id.

[24] UP Reply 5-6.

[25] Id. at 5.

[26] Id. at 6.

[27] AAR Reply 5-7.

[28] ACC/CI Reply 3 (citing UP Opening 12).

[29] ACC/CI Opening 7-8.

[30] Id. at 7.

[31] Id.

[32] Id. at 7-8.

[33] Id.

[34] AAR Reply 7-8; UP Reply 7.

[35] AAR Reply 8.

[36] AAR Opening 11-13; UP Opening 12-14.

[37] AAR Opening 12; UP Opening 12-13.

[38] UP Opening 13-14.

[39] AAR Opening 12.

[40] UP Opening 13 n.26.

[41] AAR Opening 13.

[42] Id.

[43] We will leave to individual states to determine whether any state-specific versions of the PTC Supplement implemented by their agencies will reveal sensitive information, and if so, to appropriately address that issue. See AAR Opening 6 n.8.

[44] In addition, in the final rule, we replace the word “will” with “shall” to make it clear that the information is required. The final rule states: “The supplement shall include PTC-related expenditures for passenger-only service not otherwise captured in the individual schedules.” App. A (emphasis added).

[45] AAR Opening 14; UP Opening 11-12.

[46] AAR Opening 14; UP Opening 11.

[47] AAR Opening 14; UP Opening 12.

[48] AAR Opening 4; UP Opening 10 n.23.

[49] AAR Opening 9 n.11; UP Opening 10 n.23.

[50] UP Opening 10 n.23.

[51] AAR Opening 10-11.

[52] Id.

[53] AAR Opening 9-10; UP Opening 14.

[54] AAR Opening 9-10; UP Opening 14.

[55] AAR Opening 9-10.

[56] Id. at 9 n.12.

[57] Id.

[58] Id. at 10; UP Opening 14.

[59] AAR Opening 10; UP Opening 3, 14.

[60] AAR Opening 11.

[61] The Small Business Administration’s Office of Size Standards has established a size standard for rail transportation, pursuant to which a line-haul railroad is considered small if its number of employees is 1,500 or less, and a short line railroad is considered small if its number of employees is 500 or less. 13 C.F.R. 121.201 (industry subsector 482).