[Federal Register Volume 70, Number 243 (Tuesday, December 20, 2005)]
[Rules and Regulations]
[Pages 75414-75418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24267]


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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 225

[FRA-2005-20680, Notice No. 2]
RIN 2130-AB65


Revision of Method for Calculating Monetary Threshold for 
Reporting Rail Equipment Accidents/Incidents; Announcement of Reporting 
Threshold for Calendar Year 2006

AGENCY: Federal Railroad Administration (FRA), Department of 
Transportation (DOT).

ACTION: Final rule.

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SUMMARY: FRA is amending a portion of the accident reporting 
regulations. Specifically, FRA is amending the method for calculating 
the monetary threshold for reporting rail equipment accidents/
incidents. The amendment is necessary because, in 2001, the Bureau of 
Labor Statistics (BLS) ceased collecting and publishing railroad wage 
data used by FRA in the calculation. Consequently, FRA has had to seek 
a new source of publicly-available data. In the new formula, FRA uses 
wage data collected and maintained by the Surface Transportation Board 
(STB) in place of the unavailable BLS wage data. As equipment data 
remain available from the BLS, there is no change to the source of the 
equipment component of the reporting threshold. The purpose of the rule 
is to ensure and maintain comparability between different years of 
accident data by having the threshold keep pace with any increases or 
decreases in equipment and labor costs so that each year accidents 
involving the same minimum amount of railroad property damage are 
included in the reportable accident counts.
    In addition, FRA is using the newly established formula to 
calculate a new accident/incident monetary reporting threshold for 
calendar year 2006. This final rule increases the monetary threshold 
for reporting rail equipment accidents/incidents from $6,700 to $7,700, 
and applies to accidents and incidents involving railroad property 
damage that occur on or after January 1, 2006.

DATES: Effective Date: This final rule is effective January 1, 2006.

FOR FURTHER INFORMATION CONTACT: Arnel Rivera, Staff Director, Systems 
Support Division, RRS-22, Mail Stop 17, FRA, 1120 Vermont Ave., NW., 
Washington, DC 20590 (telephone 202-493-1331) or Roberta Stewart, Trial 
Attorney, Office of Chief Counsel, RCC-12, Mail Stop 10, FRA, 1120 
Vermont Ave., NW., Washington, DC 20590 (telephone 202-493-6027).

SUPPLEMENTARY INFORMATION:

Background

    FRA published a Notice of Proposed Rulemaking (NPRM) on April 19, 
2005 (70 FR 20333), proposing to amend the formula for calculating the 
rail equipment accident/incident monetary reporting threshold, and 
requested comments. The NPRM proposed to substitute railroad employee 
wage data collected by the STB for obsolete BLS data that is no longer 
collected. This final rule adopts the proposed formula, and establishes 
a new monetary threshold for calendar year 2006.
    A ``rail equipment accident/incident'' is a collision, derailment, 
fire, explosion, act of God, or other event involving the operation of 
railroad on-track equipment (standing or moving) that causes reportable 
damages greater than the reporting threshold for the year in which the 
event occurs to railroad on-track equipment, signals, tracks, track 
structures, or roadbed, including labor costs and the costs for 
acquiring new equipment and materials. 49 CFR 225.19(c). Each rail 
equipment accident/incident must be reported to FRA using the Rail 
Equipment Accident/Incident Report (Form FRA F 6180.54). 49 CFR 
225.19(b) and (c). As revised, effective in 1997, paragraphs (c) and 
(e) of 49 CFR 225.19 provide that the dollar figure that constitutes 
the reporting threshold for rail equipment accidents/incidents will be 
adjusted, if necessary, every year in accordance with the procedures 
outlined in appendix B to part 225, to reflect any cost increases or 
decreases. 61 FR 30942, 30969 (June 18, 1996); 61 FR 60632, 60634 (Nov. 
29, 1996); 61 FR 67477, 67490 (Dec. 23, 1996).
    FRA has periodically adjusted the reporting threshold based on the 
prices of a market basket of railroad labor and materials. The purpose 
of these adjustments has been to maintain the comparability between 
different years of data by having the threshold keep pace with 
equipment and labor costs so that each year the equivalent group of 
accidents is included in the reportable accident counts.
    Approximately three years have passed since the rail equipment 
accident/incident reporting threshold was last reviewed and revised. 67 
FR 79533 (Dec. 30, 2002). At that time, FRA published an interim final 
rule carrying over the $6,700 threshold from calendar year 2002 to 2003 
and subsequent years until adoption of a new threshold. 49 CFR 
225.19(c). FRA last revised the monetary threshold formula in 1996. 61 
FR 30940 (June 18, 1996); 61 FR 60632 (November 29, 1996). The calendar 
year 2002 threshold has been retained because the BLS ceased publishing 
certain data required to compute the wage component of the calculation, 
i.e., the average hourly earnings of production workers for Class I 
railroads and the National Railroad Passenger Corporation (Amtrak), due 
to inadequate sampling data. Specifically, the Class I railroads and 
Amtrak did not provide the monthly hours and earnings data for 
production workers that BLS needed to publish these numbers for 
calendar year 2002. BLS did not foresee a better response rate in 
future years and, as a result, changed its methodology and the 
information that it publishes. Therefore, it was not possible for FRA 
to calculate a new threshold for calendar years 2003 and beyond based 
on the existing formula.
    Congress has given FRA some direction for modifying the procedure 
for calculating the threshold in 49 U.S.C. 20901(b): ``[i]n 
establishing or changing a monetary threshold for the reporting of a 
railroad accident or incident, * * * damage cost calculations'' shall 
be based ``only on publicly available information obtained from (A) the 
Bureau of Labor Statistics; or (B) another department, agency or 
instrumentality of the United States Government if the information has 
been collected through objective, statistically sound survey methods or 
has been previously subject to a public notice and comment process in a 
proceeding of a Government department, agency or instrumentality.'' 
Congress allows an exception to this general rule only if the necessary 
data are not available from the sources described, and only after 
public notice and comment.
    Pursuant to this 1992 direction from Congress, FRA issued an NPRM 
earlier this year proposing a new method for calculation of the 
monetary reporting threshold. 70 FR 20333 (April 19, 2005).

[[Page 75415]]

Proposal

    Currently, the accident/incident reporting threshold adjustment is 
calculated utilizing two components. The first component is the average 
hourly earnings for Class I railroads and Amtrak workers. BLS was 
collecting these data and reporting them under LABSTAT Series Report, 
Standard Industrial Code (SIC) 4011 for Class I Railroad Average Hourly 
Earnings, Series ID EEU41401106, Not Seasonally Adjusted. These data 
are no longer available from BLS.
    In order to update the reporting threshold, FRA has searched for a 
new source of the wage component used in the reporting threshold 
formula. FRA found that railroads report wage data to the STB, and 
proposed to use these data as an alternative to the obsolete BLS data. 
The Class I railroads and Amtrak report hours of service and 
compensation data quarterly to the STB, on Form A--STB Wage Statistics. 
Form A organizes hours of service and compensation by five reporting 
groups: Executives, Officials, and Staff Assistants (Group No. 100); 
Professional and Administrative (Group No. 200); Maintenance of Way and 
Structures (Group No. 300); Maintenance of Equipment and Stores (Group 
No. 400); and Transportation, other than train and engine (Group No. 
500). By dividing the compensation by the corresponding hours of 
service, the wage rate for any reporting group can be found. In the 
NPRM, FRA proposed to use the average wage rate of reporting Groups No. 
300 and 400 as a substitute for BLS wage data.
    FRA believes that the STB wage data are a suitable substitute for 
several reasons. Most significantly, the data directly measure the 
wages for the two groups of employees whose skills are most used in 
repairing or replacing damaged railroad equipment. In contrast, BLS 
wage data were a broader measure of all Class I railroad and Amtrak 
employee wages. Alternative BLS wage data currently available also 
provide only broad measures. STB data are, additionally, consistent 
with Congressional requirements set forth in 49 U.S.C. 20901(b). The 
STB data are publicly available, although currently only in paper 
hardcopy, and the information is statistically sound. STB data are 
derived from a process that is virtually a census of Class I railroads 
and Amtrak (though the occasional railroad may be late in reporting) 
and should therefore represent a more accurate and statistically valid 
account of railroad wages than the BLS wage data.
    To further ascertain the suitability of STB wage data as a 
substitute for unavailable BLS wage data, FRA recalculated the 1997 to 
2002 reporting thresholds using STB data. This a posteriori comparison 
of STB- and BLS-based thresholds showed STB data are a reasonable 
substitute. The analysis also showed that weighting the wage component 
by 40% and the equipment component by 60%, rather than the 50/50 
current weights, produced a threshold that better approximated the 
existing threshold. The STB-based threshold, however, does increase at 
a faster rate than the BLS-based threshold. With 40/60 weights on wages 
and equipment, the new reporting threshold formula changes to:

Tnew = Tprior * [1 + 0.4(Wnew-Wprior)/Wprior + 0.6(Enew-Eprior)/100]
where the broad definitions of the variables remain the same as before 
but the underlying definitions of ``Wnew'' and ``Wprior'' are revised 
to reflect the use of STB wage data.
    In applying this new formula to periodically update the reporting 
threshold, FRA proposed using the latest data that would be available 
when the threshold is updated, instead of an average based on yearly 
data. As the threshold is typically calculated in the second half of 
the calendar year, and STB wage data are due 30 days after the close of 
a quarter, the latest STB data available will be second-quarter data. 
The calculation for the 2006 threshold will use the second-quarter 2005 
wage data from the STB. For equipment costs, FRA is continuing to use 
the corresponding BLS railroad equipment index in the equation. As the 
equipment index is reported monthly rather than quarterly, the average 
for the months of April, May, and June will be inputted into the 
threshold calculation. The newly calculated threshold reflects the 
changes in wages and equipment from the last time the threshold was 
updated to the present.
    As proposed in the NPRM, the procedure for adjusting the threshold 
is shown in the formula below. Additionally, the NPRM proposed that the 
weights in the threshold formula be adjusted from 50% on wages and 50% 
on equipment, to 40% on wages and 60% on equipment. It was found that 
the 40/60 weights produced a better approximation of the original 
accident threshold when the threshold was calculated using STB wage 
data.

New Formula

Tnew = Tprior * [1 + 0.4(Wnew-Wprior)/Wprior + 0.6(Enew-Eprior)/100]

Where:

    Tnew = New threshold.
    Tprior = Prior threshold. With reference to the threshold, 
``prior'' refers to the previous threshold rounded to the nearest $100, 
as reported in the Federal Register.
Wnew = New average hourly wage rate, in dollars.
Wprior = Prior average hourly wage rate, in dollars.
Enew = New equipment average PPI value.
Eprior = Prior equipment average PPI value.
    With reference to wages and equipment, ``prior'' refers to the 
previous wage and equipment averages used to calculate the prior 
threshold, Tprior. ``Prior'' does not necessarily refer to the wage and 
equipment averages for the immediately preceding year (although it may 
if the threshold is calculated annually). In calculating the threshold, 
the goal is to capture the change between the old wage and equipment 
prices and the new prices for these inputs.

New Reporting Threshold for Calendar Year 2006

    The equation used to calculate the reporting threshold measures the 
changes in railroad wages and equipment costs over a period of time, 
and updates the previous reporting threshold by these amounts. The 
values for Wprior and Eprior are those that were used to calculate the 
2002-2005 monetary reporting threshold.
    The value for Wnew is derived from STB wage data collected on Form 
A--STB Wage Statistics. Railroads report earnings to the STB quarterly 
on this form. FRA uses second-quarter data reported for the Maintenance 
of Way and Structures Group (Group No. 300), and the Maintenance of 
Equipment and Stores Group (Group No. 400). A wage rate is calculated 
by dividing the compensation paid to employees in these groups by their 
corresponding service hours, using the ``Time Worked and Paid for at 
Straight Times Rates'' category. The wage rates for these two groups 
are averaged to produce a composite wage, which is then weighted by 40% 
in the threshold calculation.
    The value for Enew is derived from BLS equipment index numbers that 
are used to measure changes in equipment costs. The equipment index is 
reported under LABSTAT Series Report, Producer Price Index (PPI) for 
Commodities, Series ID WPU144 for Railroad Equipment. As the index 
numbers are reported monthly, the index numbers for the months of 
April, May, and June are averaged to produce

[[Page 75416]]

a second-quarter equipment index number. The index numbers are divided 
by 100 to place them in the same decimal form as the wage rates.
    Thus, the specific inputs to the equation are:

------------------------------------------------------------------------
    Tprior          Wnew          Wprior          Enew         Eprior
------------------------------------------------------------------------
       $6700      $21.05563      $20.61668      160.16667      135.6000
------------------------------------------------------------------------

    Using the above figures, the calculated Tnew, new threshold, is 
$7,744.64, which is rounded to the nearest $100 for a final new 
reporting threshold of $7,700. The new threshold is $1,000 more than 
the previous threshold, which had been last calculated for CY 2002. The 
equipment cost component of the reporting threshold increased the most, 
rising from about 136 to 160.
    Appendix B is revised to show the new procedure and formula used by 
FRA for determining the reporting threshold. Additionally, Sec.  
225.19(e) is amended to reflect that the accident reporting threshold 
for calendar year 2006 is $7,700. Consistent with Sec.  225.19(c), this 
reporting threshold will be adjusted annually.

Comments

    No comments were received in response to the NPRM.

Notice and Comment Issues

    In this final rule, FRA is taking two steps. First, FRA is revising 
the method for calculating the reporting threshold and adopting a new 
formula, after notice and comment. Second, FRA is using that new 
formula to calculate the monetary reporting threshold for calendar year 
2006. The new threshold, based on the revised formula, is not subject 
to notice and comment. FRA finds that the current cost data inserted 
into this adopted formula and the cost data that they replace were 
obtained from reliable Federal government sources. FRA also finds that 
this rule imposes no additional burden, but rather provides a benefit 
by permitting the valid comparison of accident data over time. 
Accordingly, FRA concludes that notice and comment procedures with 
respect to the recalculation of the monetary reporting threshold are 
impracticable, unnecessary, and contrary to the public interest. By 
simply inserting values derived from reliable data into a formula 
adopted after notice and comment, FRA is not exercising discretion in a 
way that could be informed by further public comment. As a consequence, 
FRA is proceeding directly to this final rule with respect to the 
recalculation of the monetary reporting threshold.
    For similar reasons, there is good cause for not publishing the 
rule at least 30 days before its effective date as is ordinarily 
required by 5 U.S.C. 553(d). All interested parties have had notice of 
the provisions of this final rule since the publication of the NPRM on 
April 19, 2005 (70 FR 20333), more than 30 days prior to the effective 
date of this rule.

Final Rule

    The formula to calculate the monetary accident reporting threshold 
is adopted as proposed. Further, FRA has gathered the necessary data, 
has calculated a new threshold using the adopted formula, and is 
establishing the revised threshold dollar amount at $7,700. This 
revised threshold is effective beginning January 1, 2006.

Regulatory Impact and Notices

Executive Order 12866 and DOT Regulatory Policies and Procedures

    This rule has been evaluated in accordance with existing policies 
and procedures, and determined to be non-significant under both 
Executive Order 12866 and DOT policies and procedures (44 FR 11034; 
Feb. 26, 1979).

Regulatory Flexibility Act of 1980 and Executive Order 13272

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) requires 
a review of proposed and final rules to assess their impact on small 
entities, unless the Secretary certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Pursuant to Section 312 of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Pub. L. 104-121), FRA has issued a final policy 
that formally establishes ``small entities'' as including railroads 
that meet the line-haulage revenue requirements of a Class III 
railroad. 49 CFR part 209, app. C. For other entities, the same dollar 
limit in revenues governs whether a railroad, contractor, or other 
respondent is a small entity. Id.
    About 630 of the approximately 680 railroads in the United States 
are considered small entities by FRA. FRA certifies that this final 
rule will have no significant economic impact on a substantial number 
of small entities. To the extent that this rule has any impact on small 
entities, the impact will be neutral or insignificant. The frequency of 
rail equipment accidents/incidents, and therefore also the frequency of 
required reporting, is generally proportional to the size of the 
railroad. A railroad that employs thousands of employees and operates 
trains millions of miles is exposed to greater risks than one whose 
operation is substantially smaller. Small railroads may go for months 
at a time without having a reportable occurrence of any type, and even 
longer without having a rail equipment accident/incident. For example, 
current FRA data indicate that 2,738 rail equipment accidents/incidents 
were reported in 2002, with small railroads reporting 255 of them. In 
2003, 2,992 rail equipment accidents/incidents were reported, and small 
railroads reported 271 of them. Data for 2004 show that 3,296 rail 
equipment accidents/incidents were reported, with small railroads 
reporting 309 of them. In each of those three calendar years, small 
railroads reported ten percent or less of the total number of rail 
equipment accidents/incidents. FRA notes that these data are accurate 
as of the date of issuance of this final rule, and are subject to minor 
changes due to additional reporting.
    Absent this rulemaking (i.e., any increase in the monetary 
reporting threshold), the number of reportable accidents/incidents 
would increase, as keeping the 2002-2005 threshold in place would not 
allow it to keep pace with the increasing dollar amounts of wages and 
rail equipment repair costs. Therefore, this rule will be neutral in 
effect. Increasing the reporting threshold will slightly decrease the 
recordkeeping burden for railroads over time. Any recordkeeping burden 
would not be significant, and would affect the large railroads more 
than the small entities, due to the higher proportion of reportable 
rail equipment accidents/incidents experienced by large entities.

Paperwork Reduction Act of 1995

    There are no new information collection requirements associated 
with this final rule. Therefore, no estimate of a public reporting 
burden is required.

Federalism Implications

    Executive Order 13132, entitled, ``Federalism,'' issued on August 
4, 1999, requires that each agency ``in a separately identified portion 
of the preamble to the regulation as it is to be

[[Page 75417]]

issued in the Federal Register, provides to the Director of the Office 
of Management and Budget a federalism summary impact statement, which 
consists of a description of the extent of the agency's prior 
consultation with State and local officials, a summary of the nature of 
their concerns and the agency's position supporting the need to issue 
the regulation, and a statement of the extent to which the concerns of 
the State and local officials have been met * * *.'' This rulemaking 
action has been analyzed in accordance with the principles and criteria 
contained in Executive Order 13132. This rule will not have a 
substantial direct effect on States, on the relationship between the 
National Government and the States, or on the distribution of power and 
the responsibilities among the various levels of government, as 
specified in the Executive Order 13132. Accordingly, FRA has determined 
that this rule will not have sufficient federalism implications to 
warrant consultation with State and local officials or the preparation 
of a federalism assessment. Accordingly, a federalism assessment has 
not been prepared.

Environmental Impact

    FRA has evaluated this regulation in accordance with its 
``Procedures for Considering Environmental Impacts'' (FRA's Procedures) 
(64 FR 28545, May 26, 1999) as required by the National Environmental 
Policy Act (42 U.S.C. 4321 et seq.), other environmental statutes, 
Executive Orders, and related regulatory requirements. FRA has 
determined that this regulation is not a major FRA action (requiring 
the preparation of an environmental impact statement or environmental 
assessment) because it is categorically excluded from detailed 
environmental review pursuant to section 4(c)(20) of FRA's Procedures. 
64 FR 28545, 28547, May 26, 1999. In accordance with section 4(c) and 
(e) of FRA's Procedures, the agency has further concluded that no 
extraordinary circumstances exist with respect to this regulation that 
might trigger the need for a more detailed environmental review. As a 
result, FRA finds that this regulation is not a major Federal action 
significantly affecting the quality of the human environment.

Unfunded Mandates Reform Act of 1995

    Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency ``shall, unless 
otherwise prohibited by law, assess the effects of Federal regulatory 
actions on State, local, and tribal governments, and the private sector 
(other than to the extent that such regulations incorporate 
requirements specifically set forth in law).'' Section 202 of the Act 
(2 U.S.C. 1532) further requires that ``before promulgating any general 
notice of proposed rulemaking that is likely to result in the 
promulgation of any rule that includes any Federal mandate that may 
result in expenditure by State, local, and tribal governments, in the 
aggregate, or by the private sector, of [$120,700,000 or more (as 
adjusted for inflation)] in any 1 year and before promulgating any 
final rule for which a general notice of proposed rulemaking was 
published, the agency shall prepare a written statement'' detailing the 
effect on State, local, and tribal governments and the private sector. 
The final rule will not result in the expenditure, in the aggregate, of 
$120,700,000 or more in any one year, and thus preparation of such a 
statement is not required.

Energy Impact

    Executive Order 13211 requires Federal agencies to prepare a 
Statement of Energy Effects for any ``significant energy action.'' 66 
FR 28355 ( May 22, 2001). Under the Executive Order, a ``significant 
energy action'' is defined as any action by an agency (normally 
published in the Federal Register) that promulgates or is expected to 
lead to the promulgation of a final rule or regulation, including 
notices of inquiry, advance notices of proposed rulemaking, and notices 
of proposed rulemaking: (1)(i) That is a significant regulatory action 
under Executive Order 12866 or any successor order, and (ii) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (2) that is designated by the Administrator of the 
Office of Information and Regulatory Affairs as a significant energy 
action. FRA has evaluated this final rule in accordance with Executive 
Order 13211. FRA has determined that this final rule is not likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy. Consequently, FRA has determined that this regulatory action 
is not a ``significant energy action'' within the meaning of Executive 
Order 13211.

Privacy Act

    Anyone is able to search the electronic form of all our comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.

List of Subjects in 49 CFR Part 225

    Investigations, Penalties, Railroad safety, Reporting and 
recordkeeping requirements.

The Rule

0
In consideration of the foregoing, FRA is amending part 225, chapter 
II, subtitle B of title 49, Code of Federal Regulations as follows:

PART 225--[AMENDED]

0
1. The authority citation for part 225 continues to read as follows:

    Authority: 49 U.S.C. 103, 322(a), 20103, 20107, 20901-02, 21301, 
21302, 21311; 28 U.S.C. 2461, note; 49 CFR 1.49.


0
2. Amending Sec.  225.19 by revising the first sentence of paragraph 
(c) and revising paragraph (e) to read as follows:


Sec.  225.19  Primary groups of accidents/incidents.

* * * * *
    (c) Group II--Rail equipment. Rail equipment accidents/incidents 
are collisions, derailments, fires, explosions, acts of God, and other 
events involving the operation of on-track equipment (standing or 
moving) that result in damages higher than the current reporting 
threshold (i.e., $6,700 for calendar years 2002 through 2005, and 
$7,700 for calendar year 2006) to railroad on-track equipment, signals, 
tracks, track structures, or roadbed, including labor costs and the 
costs for acquiring new equipment and material. * * *
* * * * *
    (e) The reporting threshold is $6,700 for calendar years 2002 
through 2005 and $7,700 for calendar year 2006. The procedure for 
determining the reporting threshold for calendar years 2006 and beyond 
appears as paragraphs 1-8 of appendix B to part 225.


0
3. Revise appendix B to part 225 in its entirety to read as follows:

Appendix B to Part 225--Procedure for Determining Reporting Threshold

    1. Wage data used in the calculation are collected from 
railroads by the Surface Transportation Board (STB) on Form A--STB 
Wage Statistics. Rail equipment data from the U.S. Department of 
Labor, Bureau of Labor Statistics (BLS), LABSTAT Series reports are 
used in the calculation. The equation used to adjust the reporting 
threshold has two components: (a) The average hourly earnings of 
certain railroad maintenance employees as reported to the STB by the 
Class I railroads and Amtrak; and (b) an overall rail equipment cost 
index determined by the

[[Page 75418]]

BLS. The wage component is weighted by 40% and the equipment 
component by 60%.
    2. For the wage component, the average of the data from Form A--
STB Wage Statistics for Group No. 300 (Maintenance of Way and 
Structures) and Group No. 400 (Maintenance of Equipment and Stores) 
employees is used.
    3. For the equipment component, LABSTAT Series Report, Producer 
Price Index (PPI) Series WPU 144 for Railroad Equipment is used.
    4. In the month of October, second-quarter wage data are 
obtained from the STB. For equipment costs, the corresponding BLS 
railroad equipment indices for the second quarter are obtained. As 
the equipment index is reported monthly rather than quarterly, the 
average for the months of April, May and June is used for the 
threshold calculation.
    5. The wage data are reported in terms of dollars earned per 
hour, while the equipment cost data are indexed to a base year of 
1982.
    6. The procedure for adjusting the reporting threshold is shown 
in the formula below. The wage component appears as a fractional 
change relative to the prior year, while the equipment component is 
a difference of two percentages which must be divided by 100 to 
present it in a consistent fractional form. After performing the 
calculation, the result is rounded to the nearest $100.
    7. The weightings result from using STB wage data and BLS 
equipment cost data to produce a reasonable estimation of the 
reporting threshold that was calculated using the threshold formula 
in effect immediately before calendar year 2006, a formula that 
assumed damage repair costs, at levels at or near the threshold, 
were split approximately evenly between labor and materials.
    8. Formula:

New Threshold = Prior Threshold x [1 + 0.4(Wnew--Wprior)/Wprior + 
0.6(Enew - Eprior)/100]

Where:

Wnew = New average hourly wage rate ($).
Wprior = Prior average hourly wage rate ($).
Enew = New equipment average PPI value.
Eprior = Prior equipment average PPI value.

    Issued in Washington, DC, on December 14, 2005.
Clifford C. Eby,
Deputy Administrator, Federal Railroad Administration.
[FR Doc. 05-24267 Filed 12-19-05; 8:45 am]
BILLING CODE 4910-06-P