[Federal Register Volume 74, Number 181 (Monday, September 21, 2009)]
[Proposed Rules]
[Pages 48049-48050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22604]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1135

[STB Ex Parte No. 682]


Annual Submission of Tax Information for Use in the Revenue 
Shortfall Allocation Method

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board (Board) proposes that the 
Association of American Railroads (AAR) annually update each Class I 
railroad's weighted average State tax rate for use in the Revenue 
Shortfall Allocation Method (RSAM), which is one of three benchmarks 
that together are used to determine the reasonableness of a challenged 
rate under the Board's Simplified Standards for Rail Rate Cases, STB 
Docket No. 646 (Sub-No. 1) (STB served Sept. 5, 2007) (Simplified 
Standards). Pursuant to 49 U.S.C. 11145, the Board proposes that AAR 
calculate the weighted average State tax rate using the number of miles 
operated by each Class I carrier in each state and the corporate income 
tax rates for each State. The Board proposes that AAR submit this 
information on or before the due date for the Class I railroads to 
submit their Annual Report R-1, Schedule 250.

DATES: Comments must be filed by October 21, 2009. Replies are due 
November 10, 2009.

ADDRESSES: Comments may be submitted either via the Board's e-filing 
format or in the traditional paper format. Any person using e-filing 
should attach a document and otherwise comply with the instructions at 
the E-FILING link on the Board's Web site, at http://www.stb.dot.gov. 
Any person submitting a filing in the traditional paper format should 
send an original and 10 copies to: Surface Transportation Board, Attn: 
STB Ex Parte No. 682, 395 E Street, SW., Washington, DC 20423-0001.
    Copies of written comments will be available for viewing and self-
copying at the Board's Public Docket Room, Room 131, and will be posted 
to the Board's Web site.

FOR FURTHER INFORMATION CONTACT: Timothy J. Strafford at (202) 245-
0356. Assistance for the hearing impaired is available through the 
Federal Information Relay Service (FIRS) at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: The Board recently completed a revision to 
its methodology for calculating RSAM, one of the three benchmarks used 
in the rate standard applied to the smallest rate disputes under 
Simplified Standards. See Simplified Standards for Rail Rate Cases--
Taxes in Revenue Shortfall Allocation Method, STB Ex Parte No. 646 
(Sub-No. 2) (STB served May 11, 2009) (RSAM Taxes). Specifically, that 
revision addressed the methodology used to calculate railroad-specific 
tax rates to be reflected in RSAM. The calculation of the railroad-
specific weighted average state tax rates requires, as one component, 
the state tax rates applicable to each Class I railroad, which can vary 
by state and railroad depending on a number of factors. The Board noted 
in RSAM Taxes that, because of this variance, the Board would need 
updated tax information on an annual basis. Therefore, the Board is now 
instituting this proceeding to propose that AAR annually update each 
Class I railroad's weighted average state tax information.
    Under the Board's proposal the AAR would calculate the weighted 
average state tax rate for each Class I railroad using the state 
corporate income tax rates and the number of miles operated by each 
carrier in each state for the previous year. For the state corporate 
income tax rates, AAR would use the state corporate tax information

[[Page 48050]]

published on the website of the Tax Foundation,\1\ adjusted as 
necessary.\2\ For the route-mile portion of the average state tax 
equation, AAR would use information from each railroads' respective R-1 
Schedule 702 (Miles of Road at Close of Year--By States and Territories 
(Single Track)), column (g) of Schedule 702, which lists the total 
miles operated, including both ``line owned'' and ``line operated under 
trackage rights.'' AAR would also be required to submit workpapers 
detailing its calculations.
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    \1\ See http://www.taxfoundation.org.
    \2\ As the Board explained in RSAM Taxes, AAR had to adjust some 
of the State tax information reported on the Tax Foundation Web site 
due to the need for updated information, the Tax Foundation's 
rounding of tax rates for certain States, or carrier- or State-
specific adjustments such as franchise taxes, tax surcharges, and 
utility franchise taxes.
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    The Board proposes that AAR submit the state tax information 
annually on or before the due date for the Class I railroads to file 
their Annual Report R-1, Schedule 250, which is currently April 30 of 
each year. The Board proposes that within 10 days of receiving the 
AAR's state tax information, it would issue a notice that the AAR has 
filed the state tax information and publish that notice in the Federal 
Register. The Board would allow a period of 30 days from the date of 
the notice for interested parties to comment. If no comments are 
received within 30 days, then the tax rates submitted will 
automatically be adopted on the 31st day. This tax information would 
then be used for calculating the RSAM figures for that year. If 
comments opposing AAR's calculations are timely filed, AAR would have 
20 days to respond. The Board would then review the submission and 
comments and serve a decision, within 60 days from the close of the 
record, that either accepts, rejects, or modifies the AAR's railroad-
specific tax information.
    With regard to the Regulatory Flexibility Act of 1980, 5 U.S.C. 
601-612, this proposed action directly impacts the representative 
association for the Class I railroads but does not directly impact 
small entities within the meaning of the Regulatory Flexibility Act. 
Accordingly, pursuant to 5 U.S.C. 605(b), the Board certifies that the 
regulations proposed herein will not have a significant impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act. A copy of this decision is being provided 
to the Chief Counsel for Advocacy, Small Business Administration.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

List of Subjects in 49 CFR Part 1135

    Administrative practice and procedure, Railroads, and Reporting and 
recordkeeping requirements.

    Authority: 5 U.S.C. 553 and 49 U.S.C. 721 and 10708.

    By the Board, Chairman Elliott, Vice Chairman Nottingham, and 
Commissioner Mulvey.
Jeffery Herzig,
Clearance Clerk.

Appendix

    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend part 1135 of title 49, chapter 
X, of the Code of Federal Regulations as follows:

PART 1135--REPORTING REQUIREMENTS FOR RATE PROCEEDINGS

    1. The authority citation for part 1135 is revised to read as 
follows:

    Authority: 5 U.S.C. 553, and 49 U.S.C. 721, 10701, 10704, 10708, 
and 11145.

    2. Add Sec.  1135.2 to read as follows:


Sec.  1135.2  Revenue Shortfall Allocation Method: Annual state tax 
information.

    (a) To enable the Board to calculate the revenue shortfall 
allocation method (RSAM), which is one of the three benchmarks that are 
used to determine the reasonableness of a challenged rate under one 
standard of the Board's Simplified Standards for Rail Rate Cases, STB 
Docket No. 646 (Sub-No. 1) (STB served Sept. 5, 2007), the Association 
of American Railroads (AAR) shall file with the Board on or before the 
due date for the Class I railroads to submit their Annual Report R-1, 
Schedule 250, the weighted average state tax rates applicable to each 
Class I railroad for the previous year. The AAR shall submit workpapers 
detailing its calculations.
    (b) The Board will serve and publish in the Federal Register within 
10 days of the AAR's filing.
    (c) Any interested party may file comments on AAR's filing within 
30 days of the notice described in paragraph (b) of this section. If no 
comments are received within 30 days, the Board will automatically 
adopt AAR's weighted average state tax rates on the 31st day. If 
comments opposing AAR's calculations are received, AAR's response is 
due within 20 days of the comments. The Board will review the 
submission and comments and serve a decision within 60 days from the 
date of the close of the record that either accepts, rejects, or 
modifies the AAR's railroad-specific tax information.

[FR Doc. E9-22604 Filed 9-18-09; 8:45 am]
BILLING CODE 4915-01-P