[Federal Register Volume 76, Number 198 (Thursday, October 13, 2011)]
[Proposed Rules]
[Pages 63582-63599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26310]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1241

[Docket No. EP 706]


Reporting Requirements for Positive Train Control Expenses and 
Investments

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Board proposes to amend 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 
break out those expenses so that they can be viewed both as component 
parts of and 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 pursuant to federal legislation. We propose to 
adopt 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: Comments on this proposal are due by December 12, 2011. Replies 
are due by January 11, 2012.

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: 
Docket No. EP 706, 395 E Street, SW., Washington, DC 20423-0001.
    Copies of written comments received by the Board will be posted to 
the Board's Web site at http://www.stb.dot.gov and will be available 
for viewing and self-copying in the Board's Public Docket Room, Suite 
131, 395 E Street, SW., Washington, DC. Copies of the comments will 
also be available by contacting the Board's Chief Records Officer at 
(202) 245-0236 or 395 E Street, SW., Washington, DC. 20423-0001.

FOR FURTHER INFORMATION CONTACT: Paul Aguiar, (202) 245-0323. 
Assistance for the hearing impaired is available through Federal 
Information Relay Service (FIRS) at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: As authorized by 49 U.S.C. 11145, the Board 
requires large (Class I) \1\ rail carriers to submit annual reports,

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known as R-1 reports. 49 CFR 1241.11.\2\ The R-1 reports contain 
information about finances and operating statistics for each railroad. 
These reports ``shall contain 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). Currently, PTC expenditures are incorporated into the R-1 
report under the category of ``capital investments and expenses''; 
however, PTC expenditures are not separately broken out.
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    \1\ The Board designates 3 classes of freight railroads based 
upon their operating revenues, for 3 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 CFR pt. 1201, 1-1. Adjusted 
for inflation, the revenue threshold for a Class I rail carrier 
using 2009 data is $378,774,016. Today, there are 7 Class I 
carriers.
    \2\ 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 Web site. STB Industry Data, 
http://www.stb.dot.gov/stb/industry/econ_reports.html.
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    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.\3\ The Rail Safety Improvement Act of 2008 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 CFR 171.8, 173.115, and 173.132, are 
transported. 49 U.S.C. 20157(a)(1). In complying with the Rail Safety 
Improvement Act of 2008, rail carriers are expected to make 
expenditures related to installation, operation, and maintenance of 
PTC.
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    \3\ The Federal Railroad Administration (FRA) provides more 
information online. Federal Railroad Administration, Positive Train 
Control (PTC), http://www.fra.dot.gov/pages/784.shtml (last visited 
Sept. 28, 2011).
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    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. On November 2, 2010, the Canadian 
Pacific Railway Company replied in support of UP's petition and The 
Fertilizer Institute (TFI) replied in opposition. On November 24, 2010, 
the Norfolk Southern Railway Company (NSR) late-filed comments in 
support of UP's petition, and on January 18, 2011, PPG Industries, Inc. 
(PPG) late-filed comments in opposition. On January 21, 2011, UP 
responded to PPG's filing.
    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. The Board also 
accepted the late-filed comments from NSR and PPG, as well as the reply 
to a reply filed by UP. However, in that decision, we made no 
determination about the merits of UP's specific proposal, and stated 
that we would address the arguments raised by the parties in their 
filings in a subsequent decision, i.e., this notice.
    TFI argues that UP's petition is unnecessary because a pending 
rulemaking already encompasses UP's request. In Class I Railroad & 
Financial Reporting--Transportation of Hazardous Materials, EP 681 (STB 
served Jan. 5, 2009), the Board requested comments on ``whether and how 
it should improve its informational tools to better identify and 
attribute the costs'' of transporting hazardous materials. TFI argues 
that this inquiry encompasses PTC, and that in its comments in that 
proceeding, the Association of American Railroads (AAR), of which UP is 
a member, specifically discussed PTC and suggested changes to the 
Board's accounting and reporting requirements, including some of the 
same schedules raised by UP in this docket.\4\ TFI claims that 
gathering information on PTC expenses is premature, because we have not 
yet decided in Class I Railroad & Financial Reporting--Transportation 
of Hazardous Materials whether we will change our accounting practices 
and how the Board will use such information.
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    \4\ TFI Reply 2.
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    The Board recognizes that PTC expenses fall under the umbrella of 
the many issues in Class I Railroad & Financial Reporting--
Transportation of Hazardous Materials. But nothing precludes the Board 
from extracting from that complex proceeding for more expeditious 
treatment the relatively straightforward issue of identifying PTC 
expenses while continuing to consider the remaining issues--including 
the regulatory uses to which PTC data may be put--separately.
    The reporting requirement proposed here--a PTC schedule separate 
from the R-1 filings currently required--should provide us with 
important information. PTC expenses and investments, especially in the 
installation stage, are projected to be high.\5\ Class I rail carriers 
have indicated that they are already incurring PTC-related costs to 
meet the 2015 deadline for implementing the legislative mandate to 
install PTC.\6\ Moreover, PTC costs carry the distinction of 
representing a relatively specific set of expenditures prompted 
directly by legislative mandate. Although we are not here proposing 
changes to our Uniform Rail Costing System, nor are we doing anything 
in this proceeding that would change how costs are currently assigned 
in rate and other proceedings,\7\ we ought to be aware of these 
expenditures. This will help us to identify transportation industry 
changes that may require attention by the agency and to 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.
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    \5\ FRA estimates the total cost of PTC to the industry, 
including development, equipment, installation, and maintenance, 
over 20 years will be between $9.55 billion and $13.21 billion. 
Positive Train Control Systems, 75 FR 2,598, 2,684 (Jan. 15, 2010). 
That estimate may decrease, as FRA has proposed an amendment to its 
regulations that would likely save the railroad industry certain 
expenses related to PTC implementation. Positive Train Control 
Systems, 76 FR 52,918 (Aug. 24, 2011).
    \6\ See UP's Pet. 2; A Primer for PTC at CSX, http://www.csx.com/share/wwwcsx_mura/assets/File/About_CSX/Projects_and_Partnerships/PTC_101.pdf (last visited Sept. 28, 2011); Press 
Release, BNSF, BNSF Announces $3.5 Billion Capital Commitment 
Program, (Feb. 7, 2011).
    \7\ Having the costs broken out may encourage carriers to seek 
to recover specific PTC costs in individual cases, but they are 
already free to do that, and thus this rulemaking does not determine 
the outcome of disputes over PTC expenses in particular cases or in 
the broad proceeding in Class I Railroad & Financial Reporting--
Transportation of Hazardous Materials.
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    Confidentiality. UP argues that the supplemental schedules 
regarding specific expenditures on PTC and detailed information 
regarding TIH and PIH traffic should remain confidential. UP asserts 
that detailed cost data on PTC-specific investment and expenses is 
commercially sensitive, and UP is concerned that ``line-specific'' 
operating data is a security issue. Nonetheless, R-1 data is not 
``line-specific,'' and the proposal here is to collect aggregated PTC 
expenditures figures. Therefore, UP's concerns about security appear 
unwarranted, as the operating data does not contain schedules of train 
movements or other data that could be used to compromise safety.
    Tracking Benefits. PPG opposes UP's petition for a rulemaking, but 
it argues that, if the Board moves forward with a rulemaking 
proceeding, the Board should broaden the scope of the proceeding to 
include a reporting

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requirement that tracks any benefits of PTC, including efficiencies on 
the lines that have PTC installed. PPG also asks the Board to gather 
data on any efficiency gains caused by PTC on lines that do not have 
PTC installed. 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. UP argues the railroads are 
incurring real measurable costs to install PTC now, while calculating 
benefits from PTC, which will occur in the future, would be speculative 
and complex.
    PPG has not shown that its request 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 UP 
has proposed a viable approach, described below, to supplement the R-1 
reports and capture this data.\8\ 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, and PPG has not proposed a method of 
doing so.
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    \8\ The carriers' R-1 forms are independently audited; the Board 
monitors these audits and can take action if a carrier is 
misreporting expenses as PTC related.
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    Mechanics of the Change. Our proposed rule change would require a 
``PTC Supplement'' to be filed along with the R-1 annual report (which 
would not change).\9\ The supplement would 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 railway property), and 
410 (railway operating expenses) containing the dollar amounts that 
would reflect only the amounts attributable to PTC for the filing year. 
Also, the PTC Supplement would contain PTC versions of schedules 700 
and 720, to report the aggregate mileage on which PTC is installed as 
of the date of filing, and schedule 710 to identify the number of 
locomotives equipped with PTC. Railroads would 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.
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    \9\ Appendix B features samples of the proposed PTC versions of 
the schedules.
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    In addition to separating capital expenses and operating expenses 
incurred by the railroad for PTC, the respondent entity should include 
by footnote disclosure the value of funds from government transfers, 
including grants, subsidies, and other contributions or reimbursements, 
used or designated to purchase or create PTC assets or to offset PTC 
costs.\10\ These amounts represent non-railroad monies used or 
designated for PTC and would provide for full disclosure of PTC costs. 
This disclosure would identify the nature and location of the project 
by FRA identification, if applicable. This additional information will 
help the Board to monitor the financing of PTC installation.
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    \10\ See infra App. B, Table Footnote: PTC Grants.
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    UP also requests that the Board include schedule 755 (information 
on carloads, car-miles, and train-miles) in the PTC Supplement. 
However, we believe a supplement to schedule 755 is unnecessary to 
monitor the implementation of PTC, because gathering such data would 
not aid us in tracking expenditures made for PTC. Nevertheless, 
interested parties may comment on whether any final rule the Board 
promulgates should require the reporting of such information. Any such 
comments should address whether collecting such information would 
assist the Board in monitoring PTC implementation and, if so, how it 
would do so.
    Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, 
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. 
Sec. Sec.  601-604. In its notice of proposed rulemaking, the agency 
must either include an initial regulatory flexibility analysis, Sec.  
603(a), or certify that the proposed rule would not have a 
``significant impact on a substantial number of small entities,'' Sec.  
605(b). 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, 480 (7th Cir. 2009).
    The proposed rule, if adopted, will not have a significant impact 
on a substantial number of small entities. The proposed rule would 
affect only entities that are required to file R-1 reports; these 
reports are only required to be submitted by Class I carriers. 49 CFR 
1241.1. Class I carriers are all large railroads; \11\ accordingly, 
there will be no impact on small railroads (small entities).
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    \11\ See supra note 2.
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    Paperwork Reduction Act. Pursuant to the Paperwork Reduction Act 
(PRA), 44 U.S.C. 3501-3549, and Office of Management and Budget (OMB) 
regulations at 5 CFR 1320.8(d)(3), the Board seeks comments regarding: 
(1) Whether this collection of information, as modified in the proposed 
rule and further described in Appendix A, 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. Information pertinent to these issues is 
included in Appendix C. This proposed rule will be submitted to OMB for 
review as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11.
    A copy of this decision will be served upon the Chief Counsel for 
Advocacy, Office of Advocacy, U.S. Small Business Administration, 
Washington, DC 20416.
    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 1241

    Railroads, Reporting and recordkeeping requirements.

    Decided: October 3, 2011.

    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Mulvey. Commissioner Mulvey dissented with a separate 
expression.
Jeffrey Herzig,
Clearance Clerk.

Commissioner Mulvey, dissenting:

    In EP 681, Class I Railroad Accounting & Financial Reporting--
Transportation of Hazardous Materials, 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. By inclusion of the word 
``whether,'' the Board made clear in Ex Parte 681 that it has not 
decided that it should allow

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hazardous materials transportation costs to be used in a prescribed way 
in Board proceedings.
    The questions under consideration in EP 681 are important ones. The 
resolution has the potential to impact the rates paid by shippers of 
hazardous materials and, therefore, must be examined carefully. To gain 
the broadest possible comments from stakeholders, the Board began its 
consideration with an Advance Notice of Proposed Rulemaking. Even 
though the record in that ANPR has been complete since February 2009, 
the Board has yet to propose a rule regarding the treatment of 
hazardous materials transportation costs in Board proceedings.
    In light of this history, today's decision to propose rules that 
would require PTC-related costs to be separately reported from other 
capital expenditures is premature. The Board should first decide how 
such costs may be used in Board proceedings. Indeed, should the Board 
ultimately determine that hazardous materials transportation costs can 
be attributed to particular movements, any determination regarding how 
the information can be used could very well inform how it should be 
reported.
    Moreover, we must decide the issues raised in EP 681 soon. The 
costs associated with PTC are no doubt growing as the railroad industry 
moves closer to the current statutory deadline for compliance. Should 
the Board implement a comprehensive approach to the costing issues 
associated with hazardous materials, we may be able to minimize the 
complexity and expenditures associated with litigating this issue in 
individual Board proceedings. I fear that the ``cart before the horse'' 
approach that the Board is initiating today could do the opposite.
    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend part 1241 of title 49, chapter 
X, subchapter C, of the Code of Federal Regulations 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 Sec.  1241, by adding paragraph (b) to read as follows:


Sec.  1241.11  Annual reports of class I railroads.

* * * * *
    (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 will 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 should include the value of funds received from 
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.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendix A

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

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Appendix B

    The additional information below is included to assist those who 
may wish to submit comments pertinent to review under the Paperwork 
Reduction Act:

Description of Collection

    Title: Class I Railroad Annual Report.
    OMB Control Number: 2140-0009.
    STB Form Number: R-1.
    Type of Review: Modification of approved collection.
    Respondents: Class I railroads.
    Number of Respondents: 7.
    Estimated Time per Response: The proposed rule change that 
affects the R-1 report will not change the time per response, but it 
will require minimal time to adjust the process for reporting. Based 
on the limited amount of information involved, we estimate that the 
entire R-1 collection should not take more than 800 hours annually 
per Class I railroad. This estimate includes time spent reviewing 
instructions; searching existing data sources; gathering and 
maintaining the data needed; completing and reviewing the collection 
of information; and converting the data from the carrier's 
individual accounting system to the Board's Uniform System of 
Accounts (USOA), which ensures that the information will be 
presented in a consistent format across all reporting railroads, see 
49 U.S.C. 11141-43, 11161-64, 49 CFR 1200-1201.
    Frequency: Annually.
    Total Burden Hours (annually including all respondents): Up to 
5,600 hours annually for the entire R-1 report.
    Total ``Non-hour Burden'' Cost: No ``non-hour cost'' burdens 
associated with this collection have been identified.
    Needs and Uses: Annual R-1 reports are required to be filed by 
Class I railroads under 49 U.S.C. 11145. The reports show 
expenditures and operating statistics of the carriers. Expenditures 
include costs for right-of-way and structures, equipment, train and 
yard operations, and general and administrative expenses. Operating 
statistics include such items as car-miles, revenue-ton-miles, and 
gross ton-miles. The reports are used by the Board, other Federal 
agencies, and industry groups to monitor and assess railroad 
industry growth, financial stability, traffic, and operations, and 
to identify industry changes that may affect national transportation 
policy. The Board also uses this information to more effectively 
carry out other of its regulatory responsibilities, including: the 
regulation of maximum rail rates; acting on railroad requests for 
authority to engage in Board-regulated financial transactions such 
as mergers, acquisitions of control, and consolidations, see 49 
U.S.C. 11323-11324; analyzing the information that the Board obtains 
through the annual railroad industry waybill sample, see 49 CFR part 
1244; measuring off-branch costs in railroad abandonment 
proceedings, in accordance with 49 CFR 1152.32(n); developing the 
``rail cost adjustment factors,'' in accordance with 49 U.S.C. 
10708; and conducting investigations and rulemakings.
    The proposed identification of PTC information in the supplement 
to the R-1 reports will help the Board monitor the emergence of PTC 
in the rail industry. This notice does not propose that the Board 
use the identified PTC information for any additional purposes such 
as changing the Board's Uniform Rail Costing System or how costs are 
currently assigned in rate and other proceedings.

[FR Doc. 2011-26310 Filed 10-12-11; 8:45 am]
BILLING CODE 4915-01-P