[Federal Register Volume 78, Number 23 (Monday, February 4, 2013)]
[Proposed Rules]
[Pages 7718-7737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02037]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1247 and 1248

[Docket No. EP 431 (Sub-No. 4)]


Review of the General Purpose Costing System

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Through this Notice of Proposed Rulemaking, the Surface 
Transportation Board (Board) is proposing certain changes to its 
general purpose costing system, the Uniform Railroad Costing System 
(URCS). Specifically, the Board is proposing to adjust how URCS 
calculates certain system-average unit costs in Phase II, thereby 
obviating the need for URCS to apply a separate make-whole adjustment 
in Phase III. The Board is also proposing other related changes to URCS 
that would result in more accurate movement costs, as well as changes 
to two of its reporting requirements.

DATES: Comments are due by March 21, 2013; replies are due by April 22, 
2013.

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 431 (Sub-No. 4), 395 E Street 
SW., Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: The Board's Office of Public 
Assistance, Governmental Affairs, and Compliance at (202) 245-0238. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at (800) 877-8339.

SUPPLEMENTARY INFORMATION: In 1989, the Board's predecessor, the 
Interstate Commerce Commission (ICC), adopted URCS as its general 
purpose costing system. Adoption of the Unif. R.R. Costing Sys. as a 
Gen. Purpose Costing Sys. for All Regulatory Costing Purposes, 5 
I.C.C.2d 894 (1989). The Board uses URCS for a variety of regulatory 
functions. URCS is used to make the jurisdictional determination in 
railroad maximum rate reasonableness proceedings, as well as the 
revenue allocation methodology and rate prescription methodology. URCS 
is also used to develop variable costs for making cost determinations 
in abandonment proceedings; to provide the railroad industry and 
shippers with a standardized costing model; to cost the Board's Car 
Load Waybill Sample to develop industry cost information; and to 
provide interested parties with basic cost information. URCS develops a 
regulatory cost estimate that can be applied to a service that occurs 
anywhere on a rail carrier's system.
    URCS develops these cost estimates through three distinct phases. 
In Phase I, which was completed one time when URCS was originally 
developed, regression analyses were performed using the annual reports 
submitted by Class I rail carriers (R-1 reports) at the time and 
equations linking expense account groupings with particular measures of 
railroad activities were estimated. In Phase II, which is performed 
annually, URCS takes the aggregated cost data provided by Class I 
carriers in their most recent R-1 reports and disaggregates them by 
calculating the system-average unit costs associated with specific rail 
activites. In Phase III, URCS takes the unit costs from Phase II and 
applies them to the characteristics of a particular movement in order 
to calculate the system-average variable and total costs of that 
movement.
    The ICC and now the Board have made modest adjustments to URCS over 
the years.\1\ In August 2009, the Senate Committee on Appropriations 
directed the Board to submit a report providing options for updating 
URCS. In the report submitted by the Board in May 2010, the Board 
identified the ``make-whole adjustment'' as one area that warranted 
further review.\2\ This rulemaking is intended to address concerns with 
the make-whole adjustment in URCS.
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    \1\ See, e.g., Review of the Surface Transp. Bd.'s Gen. Costing 
Sys., EP 431 (Sub-No. 3) (STB served Apr. 6, 2009); Review of Gen. 
Purpose Costing Sys., EP 431 (Sub-No. 2) (STB served Dec. 5, 1997); 
Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2) (STB served 
Oct. 1, 1997); Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 
2) (ICC served July 21, 1993).
    \2\ Surface Transp. Bd., Surface Transportation Board Report to 
Congress Regarding the Uniform Rail Costing System, 14, 18-19 (May 
27, 2010).
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    The make-whole adjustment is applied by URCS to correct the fact 
that, when disaggregating data and calculating system-average unit 
costs in Phase II, URCS currently does not take into account the 
economies of scale realized from larger shipment sizes. The purpose of 
the make-whole adjustment, which is calculated and applied in Phase 
III, is to recognize the efficiency savings that a carrier obtains in 
its

[[Page 7719]]

higher-volume shipments and thus render more accurate unit costs.
    URCS applies the make-whole adjustment through a three-step 
process. First, URCS assumes that a movement's costs are equal to that 
of a system-average movement. Next, URCS applies ``efficiency 
adjustments'' to higher-volume movements (multi-car and trainload), 
thereby reducing the system-average unit costs of such movements.\3\ 
Last, URCS redistributes the total savings obtained in all of the 
higher-volume shipments (the ``shortfall'') across all of the lower-
volume shipments (single-car and multi-car), such that the sum of 
variable costs across all of the carrier's movements remains the same. 
Currently, single-car shipments are defined as 1 to 5 cars, multi-car 
shipments are defined as 6 to 49 cars, and trainload shipments are 
defined as 50 or more cars.\4\
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    \3\ There are 14 efficiency adjustments for multi-car and 
trainload movements, any number of which may apply to a particular 
movement.
    \4\ Single-car, multi-car, and trainload are the three basic 
categories for how shipments are treated under the make-whole 
adjustment. Because of its handling of the Empty/Loaded Ratio, 
however, URCS currently treats all trainload movements as dedicated 
unit train movements--that is, it assumes that every trainload 
movement travels from origination to destination and back to 
origination. Additionally, URCS treats intermodal traffic as a type 
of hybrid category. Prior to 1997, URCS treated intermodal traffic 
as single-car movements. In 1997, the Board concluded that more 
accurate costs would be obtained by applying to intermodal traffic 
many of the efficiency adjustments applicable to trainload 
movements. Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2), 
slip op. at 4-5 (STB served Oct. 1, 1997).
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    There are two primary concerns with how the make-whole adjustment 
is currently applied by URCS. The first concern involves the step 
function that results from the application of efficiency adjustments, 
which generally reduce the system-average unit costs by various set 
percentages depending on whether the movement is classified as 
trainload, multi-car, or single-car. For example, the system-average 
unit cost for a multi-car movement is the same whether it is a 6-car or 
49-car shipment. The same is true for the unit cost for a trainload 
movement, whether it be a 50-car or 85-car shipment. At the same time, 
however, the system-average unit cost for a 49-car multi-car shipment 
is noticeably higher than a 50-car trainload shipment. In other words, 
``break points'' exist between single-car and multi-car shipments, and 
between multi-car and trainload shipments. Our concern with respect to 
the efficiency adjustments is that there is a relatively large 
difference between the unit costs of a movement on one side of a break 
point compared to the unit costs just on the other side of a break 
point.
    The second concern is with how the make-whole adjustment 
redistributes the shortfall across single-car and multi-car movements. 
Currently, the shortfall is distributed across lower volume movements 
on a per-car basis. For example, under the per-car method for switching 
related costs, costs are increased in proportion to the number of cars 
switched (i.e., a two-car movement is costed as twice as expensive to 
switch as a one-car movement, a three-car movement is three times as 
expensive to switch as a one-car movement, etc.). Yet the actual 
switching costs for two cars as opposed to one car are not likely to be 
twice as expensive because the time, equipment, and personnel involved 
do not double. By not decreasing the per-car costs as shipment size 
increases, the redistribution of savings does not adequately account 
for economies of scale. Additionally, the redistribution of savings 
creates a second step function because the add-ons increase costs per-
car across single-car and multi-car shipments, but do not apply to 
trainload shipments. For example, under the current system, the costs 
are increased in proportion to the number of cars. If the shortfall 
redistribution for a one-car shipment is $1,000, then the shortfall 
redistribution for a 49-car shipment is $49,000. But because the add-
ons do not apply to trainload shipments, there is no redistribution of 
costs to a 50-car shipment. This causes the costs of a 49-car shipment 
to be higher than a 50-car shipment, thus creating a step function. 
This second step function, in which there is a relatively large 
difference between the variable costs of a 49-car movement and a 50-car 
movement, is caused by the current per-car method of redistributing the 
shortfall.

Proposed Changes

    Rather than attempting to refine the make-whole adjustment as it is 
currently applied, we believe that the best course of action is to more 
accurately calculate the system-average unit costs in Phase II. If the 
unit costs calculated in Phase II were to more accurately account for 
operating costs and economies of scale as shipment size increases, then 
it would no longer be necessary to apply a separate make-whole 
adjustment in Phase III. In other words, we propose to change how 
certain system-average unit costs are calculated in Phase II to better 
reflect railroad operations and to automatically reflect economies of 
scale as shipment size increases. This solution would thus obviate our 
concerns about the step functions, properly account for economies of 
scale, and ultimately render more accurate system-average unit costs.
    With this goal in mind, we evaluated the three categories of costs 
for which efficiency adjustments are made to determine what changes 
would be needed in order to adjust the calculation of system-average 
unit costs in Phase II. These categories are: (1) Switching costs 
related to switch engine minutes; (2) equipment costs for the use of 
railroad-owned cars during switching; and (3) station clerical costs. 
After addressing each category below, we will then address several 
other proposed changes to further improve URCS.
    Switching Costs Related to Switch Engine Minutes. This rulemaking 
proposes to adjust how URCS calculates the operating costs for 
switching cars, regardless of car ownership. These costs are referred 
to as ``switch engine minute'' (SEM) costs. Currently, in Phase II, 
URCS calculates SEM costs on a per-car basis, which we do not believe 
reflects actual railroad operations or economies of scale as shipment 
size increases. Instead, this rulemaking proposes to calculate SEM unit 
costs in Phase II on a per-shipment basis for all five types of 
switching accounted for by URCS, namely: (1) Industry switching; (2) 
inter-train & intra-train (I&I) switching; (3) interchange switching; 
(4) intraterminal switching; and (5) interterminal switching.\5\
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    \5\ Industry switching is switching that occurs at origin or 
destination points. I&I switching is switching that occurs at 
intermediate yards on a rail carrier's own lines, as opposed to 
interchange switching, which occurs between different carriers. 
Intraterminal switching is the switching of cars within a rail 
terminal, and interterminal switching is the switching of cars 
between rail terminals.
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    Operationally, a shipment of rail cars is generally connected into 
a contiguous block of cars prior to loading, and is handled as a 
contiguous block from origin to destination. As such, the costs to 
switch a shipment of a four-car block should be the same as the costs 
to switch a shipment of an eight-car block. For this reason, the costs 
for each type of SEM switching are better accounted for on a per-
shipment basis rather than a per-car basis. This change would not only 
better reflect actual operating costs, but the per-car cost of 
switching would drop as shipment size increases, thus properly 
reflecting economies of scale. As a result, URCS would no longer need 
to make a separate make-whole adjustment because the operating 
efficiencies of larger shipments would already be reflected in the unit 
costs.
    In order to calculate SEM unit costs on a per-shipment basis, we 
also propose adjusting our reporting requirements accordingly. In order 
to

[[Page 7720]]

calculate the SEM unit costs on a per-shipment basis, we propose to 
adjust the reporting requirements of both the Annual Report of Cars 
Loaded and Cars Terminated (Form STB-54) and the Quarterly Report of 
Freight Commodity Statistics (Form QCS). Specifically, in addition to 
the information currently required by both forms, the Form STB-54 would 
require information on shipments loaded and terminated, while the Form 
QCS would require information on number of shipments.\6\ For the 
purposes of both forms, a ``shipment'' would be defined as a block of 
one or more cars moving under the same waybill from origin to 
destination. See, e.g., App. A (proposed Sec.  1248.2(a)(3)); App. B 
(Form STB-54 Instructions). These new requirements should not pose a 
significant burden on the Class I rail carriers because it is likely 
that they are already tracking this information. The proposed rules 
governing the Form STB-54 and the Form QCS are set forth in Appendix 
A.\7\ Additionally, the proposed changes to the Form STB-54 and Form 
QCS are set out in Appendix B and C, respectively.
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    \6\ Because we are proposing to add information regarding number 
of shipments, we are also proposing to change the title of Form STB-
54 to Annual Report of Cars and Shipments Originated and Terminated.
    \7\ Because this rulemaking proposes changes to the Form QCS, we 
are taking this opportunity to propose a new instruction for the 
Form QCS related to Rule 11 movements, as the current instructions 
are silent on these types of movements. The proposed instruction, 
which would be located at 49 CFR 1248.4(o), is also set forth in 
Appendix A.
    Additionally, we are making certain other modifications to 
update and clarify the existing regulations in 49 CFR parts 1247 and 
1248 (subpart A), which govern the Form STB-54 and Form QCS, 
respectively. Consistent with the goals announced in Improving 
Regulation and Regulatory Review, EP 712, which seeks to ensure that 
existing regulations are current and effective, we seek comment on 
whether the Board could improve or update other language in parts 
1247 and 1248 (subpart A). We do not, however, plan to address the 
car types listed in the Form STB-54 in this rulemaking. Any updates 
to the car types would be addressed in a separate rulemaking 
examining car types across all of our reporting requirements.
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    Equipment Costs for the Use of Railroad-Owned Cars During 
Switching. Another category of system-average unit costs associated 
with switching pertains to the equipment costs for the use of railroad-
owned cars. Currently, URCS calculates the costs for use of railroad-
owned cars on a per-car basis in Phase II, and then applies the make-
whole adjustment in Phase III to account for efficiencies in multi-car 
and unit-train movements. We believe that these costs, which are 
distance- and time-related,\8\ are properly accounted for by URCS on a 
per-car basis. In other words, unlike SEM switching costs, we believe a 
two-car shipment will incur twice the car-miles and car-days as a one-
car shipment. Therefore, we propose to continue calculating equipment 
costs for the use of railroad-owned cars during switching on a per-car 
basis, which in turn requires the continued reporting of number of cars 
that are interchanged.
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    \8\ In other words, the costs for using a railroad-owned car are 
based both on the distance it travels and the time it is being used 
during the switching process. For example, if a railroad-owned car 
travels two miles during an interchange switch, but is held at the 
interchange for three days, the costs for use of that car will be 
based both on the two-miles it traveled and the three-days it was 
held.
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    Although we propose to continue calculating these costs on a per-
car basis in Phase II, this proposal nonetheless would affect a change 
in how these costs are applied in Phase III. Under our new proposal, 
which eliminates a separate make-whole adjustment in Phase III, the 
costs for the use of railroad-owned cars would not receive a subsequent 
adjustment because it does not appear that there are efficiencies 
associated with these costs.
    Station Clerical Costs. This rulemaking also proposes to adjust how 
URCS calculates station clerical costs, which are the administrative 
costs associated with a shipment. Currently, in Phase II, URCS 
calculates station clerical costs on a per-car basis, which we are 
concerned does not properly reflect actual railroad operations or 
economies of scale. We believe that, operationally, there is little 
difference in the administrative costs between shipments of different 
sizes. As such, we propose to also calculate station clerical costs in 
Phase II on a per-shipment basis. To implement this change, we would 
rely on the proposed changes to the Form QCS and the Form STB-54 
described above, wherein Class I railroads would be required to report 
on the number of shipments.
    Other Changes. In addition to the above changes to how URCS 
calculates system-average unit costs in Phase II, we also propose 
additional changes that would further our effort to more accurately 
calculate costs under URCS.
    Car-Mile Costs. In order to calculate car-mile costs, URCS 
currently uses what is referred to as the Empty/Loaded Ratio (E/L 
Ratio) to adjust the number of miles in a particular movement. The E/L 
Ratio is used when costing all movements because, although there are 
costs associated with both empty miles and loaded miles, URCS only 
requires a user to input loaded miles to cost a movement. Thus, to 
account for the costs of a carrier's total miles, URCS multiplies 
loaded miles by the E/L Ratio. The E/L Ratio, which can be described as 
total miles divided by loaded miles, is a figure computed by URCS based 
on data supplied by the Class I carriers.
    Currently, in Phase III, URCS uses the E/L Ratio for single-car and 
multi-car movements. For trainload movements, however, URCS replaces 
the E/L Ratio with the figure 2.0, which is meant to assume that a 
loaded car will return to its origination location, such that empty 
miles are equal to loaded miles. In other words, URCS treats all 
trainload movements as dedicated unit trains. Currently, if a rail 
carrier's E/L Ratio is less than 2.0 (i.e., there are fewer empty miles 
and thus more efficiencies), URCS will disregard that more efficient E/
L ratio and apply the less efficient value of 2.0.\9\
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    \9\ A trainload movement's E/L ratio might be greater or less 
than 2.0 for a variety of reasons, including whether the shipment at 
issue is moved in railroad-owned cars or privately-owned cars. In 
the case of the former, where the rail carrier typically controls 
the movement of its cars across its network, a shipment may travel 
from point A (loading origin) to point B (unloading destination) to 
point C (next loading origin). If point C is closer to point B than 
point A, then the E/L Ratio would be less than 2.0. If, however, 
point C is farther from point B than point A, then the E/L Ratio 
would be greater than 2.0. This is in contrast to, for example, the 
latter case involving a unit train of privately-owned cars that 
cycles between point A and point B, such that the movement's E/L 
Ratio would be equal to 2.0.
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    We believe that the E/L Ratio computed from data supplied by the 
carriers is the best reflection of a railroad's actual operations and 
that it should not be replaced by the figure 2.0 in the case of a 
trainload movement. Therefore, we propose to adjust URCS so that it 
would apply the E/L Ratio to all types of movements. With this change, 
URCS would no longer treat all trainload movements as unit trains, but 
would instead reflect unit train service only to the extent that such 
service is indicated by the E/L Ratio.
    I&I Switching Mileage. Currently, URCS assumes that single-car and 
multi-car shipments receive I&I switching every 200 miles. A number of 
years ago, the Board noted that this figure appeared to be outdated. 
Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2), slip op. at 5 
n.18 (STB served Oct. 1, 1997). We now propose to update this figure to 
reflect the fact that, since the mergers of the 1990s, the average 
length of haul on individual railroads has increased. Based on a 
comparison of the average length of haul for the Class I railroads in 
1990 (pre-mergers) and 2011 (post-mergers), we observed a 60% increase 
in the overall length of haul. We therefore propose to increase the 
distance between I&I

[[Page 7721]]

switches by 60%, from 200 miles to 320 miles. We acknowledge that the 
actual average distance between I&I switches may be greater than 320 
miles, and we encourage interested parties to submit data and comments 
on whether 60% is an appropriate increase, or whether the Board should 
consider an alternative distance between I&I switches that more 
accurately reflects railroad operations.
    Definition of Trainload. Under this proposal to eliminate a 
separate make-whole adjustment in Phase III, URCS would no longer make 
percentage reductions in Phase III based on the number of cars per 
movement. As such, the distinction between single-car and multi-car 
would become largely irrelevant. The definition of trainload would, 
however, continue to play a role, despite the fact that the E/L Ratio 
would no longer be adjusted exclusively for trainload movements under 
our proposal, because URCS assumes that trainload movements receive no 
I&I switching. In other words, when distinguishing movements based on 
the number of cars per movement, the operative distinctions under our 
proposal would be ``trainload'' and ``non-trainload.'' It is, 
therefore, appropriate to consider the proper definition of trainload.
    A trainload shipment is currently defined as a shipment consisting 
of 50 or more cars. Also inherent in the definition of trainload is the 
fact that a trainload shipment constitutes the only shipment on the 
particular train on which it moves. We propose to increase the number 
of cars in a trainload movement to account for the fact that train 
lengths have increased over the years due to a variety of factors, 
including higher horsepower engines and advances in distributive power. 
By way of example, today it is not unusual for a carrier to move 100 
cars or more in one train, which is double the figure at which 
trainload is currently defined. If the railroads can routinely move two 
50-car shipments on one train, then the current definition of trainload 
is likely inadequate, as a trainload movement is supposed to constitute 
the only shipment on the train.
    Therefore, we propose to define trainload as consisting of 80 cars 
or more. The 80-car figure appears appropriate because the shipment 
size is large enough that rail carriers do not routinely move two 80-
car shipments on one train.\10\ In other words, an 80-car shipment is 
likely to be the minimum size shipment that a carrier would move as a 
single train, consistent with the definition of trainload where only 
one shipment is on a train. A survey of the 2011 Waybill Sample, which 
is the most recently available data and thus the best reflection of 
current railroad operations, reveals that, for shipment sizes between 
50 and 90, there is a higher occurrence of 80-car movements than any 
other shipment size. This suggests that 80 cars may be an appropriate 
definition for trainload. Nevertheless, we encourage interested parties 
to submit data or comments on whether the Board should adopt the 
proposed definition or consider an alternate figure in defining 
trainload.
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    \10\ Based on a review of the 2011 Waybill Sample, the most 
frequently occurring shipment size between 100 cars and 160 cars is 
135 cars. These 135-car shipments represent a typical maximum train 
length for what is usually the longest train movement--unit coal 
trains.
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    Locomotive Unit-Mile. Finally, this rulemaking proposes to adjust 
the locomotive unit-mile (LUM) cost allocation. Currently, the LUM cost 
allocation produces a third step function between multi-car and 
trainload shipments, such that the LUM costs assigned to a 49-car 
shipment (the maximum multi-car shipment under the current definition) 
are higher than the costs assigned to a 50-car shipment (the minimum 
number of cars under the current definition of trainload). The total 
locomotive unit-miles are calculated by multiplying the total distance 
of a movement by the average number of locomotives for a particular 
type of train. Because a single-car or multi-car shipment (i.e., non-
trainload) should only incur a portion of the LUM costs for the entire 
train, as that train will contain other shipments, URCS allocates the 
LUM costs of the train to a shipment based on the gross tons of that 
shipment compared to the average gross tons of that entire train.\11\
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    \11\ The average gross tons for different types of trains are 
calculated by dividing gross ton-miles by train-miles, both of which 
are reported by carriers in Schedule 755 of the R-1 annual reports.
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    We therefore propose two modifications to how URCS currently 
allocates LUM costs. First, the entire train's LUM costs would be 
allocated to the trainload shipment, regardless of the gross tons of 
the trainload shipment relative to the average gross tons of a 
particular train. This should be more accurate than the current 
approach because, by definition, a trainload shipment has no other 
shipments that should share the LUM costs of that train.
    Second, the allocation of LUM costs for single and multi-car 
shipments would be based on the number of cars in the shipment relative 
to the minimum number of cars in a trainload shipment, which, as 
described above, we propose to be 80 cars. For example, a 20-car 
shipment would be allocated 25% (20/80) of the LUM costs.\12\ While the 
current allocation of LUM costs to single and multi-car shipments is 
based on the gross tons of the shipment relative to the average gross 
tons of way trains and through trains, basing the allocation on the 
number of cars in the shipment should be sufficiently precise, 
particularly if most cars are homogenously loaded at or near the 
maximum weight. Moreover, whenever practical, we seek a smooth cost 
function, such that there is no large cost discrepancy between a 79-car 
multi-car movement and an 80-car trainload movement. Basing this 
allocation on the number of cars in the shipment should assign LUM 
costs consistently on a prorated share of the total LUM costs and 
produce a smooth cost function across all shipment sizes, including 
trainload shipments.
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    \12\ Because we also propose to modify the definition of 
trainload from 50 or more cars to 80 or more cars, the prorated 
share of LUM costs assigned to non-trainloads will be less than 
under the current definition of trainload. For example, under the 
current definition of trainload, a 10-car shipment would be assigned 
the prorated costs of 10 cars out of 50, whereas under our proposed 
definition, a 10-car shipment would be assigned the prorated costs 
of 10 cars out of 80.
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Conclusion

    We believe that the proposed modifications to URCS described above 
would produce more accurate costs and would more accurately reflect the 
current state of rail industry operations. We also believe that the 
modifications to our reporting requirements, which update the existing 
regulations and add additional reporting requirements in order to 
implement the proposed changes to URCS, would not impose a significant 
burden on the railroads. We therefore invite public comment on each of 
the proposals described herein.

Regulatory Flexibility Act

    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. 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

[[Page 7722]]

a ``significant impact on a substantial number of small entities,'' 
Sec.  605(b).
    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 (DC Cir. 1996).
    This proposal will not have a significant economic impact upon a 
substantial number of small entities, within the meaning of the RFA. 
The reporting requirements that we are proposing here 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. Class I carriers generally do not fall within the Small 
Business Administration's definition of a small business for the rail 
transportation industry. The purpose of our changes to URCS is to 
improve the Board's general purpose costing system, which is used to 
develop regulatory cost estimates for rail carriers. These changes will 
result in more accurate estimates of variable costs. Therefore, the 
Board certifies under 49 U.S.C. 605(b) that this proposed rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA.

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 each of 
the collections of information (the Form QCS and the Form STB-54), as 
modified in the proposed rules and further described in Appendix D, 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. The modified 
collections in this proposed rule will be submitted to OMB for review 
as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

List of Subjects

49 CFR Part 1247

    Freight, Railroads, Reporting and recordkeeping requirements.

49 CFR Part 1248

    Freight, Railroads, Reporting and recordkeeping requirements, 
Statistics.

    It is ordered:
    1. The Board proposes to adjust URCS and to amend its rules as 
detailed in this decision. Notice of this decision and the proposed 
rules will be published in the Federal Register.
    2. Comments are due by March 21, 2013; replies are due by April 22, 
2013.
    3. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
    4. This decision is effective on its service date.

    Decided: January 25, 2013.

    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Mulvey.
Raina S. White,
Clearance Clerk.

    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend parts 1247 and 1248 of title 49, 
chapter X, of the Code of Federal Regulations as follows:

0
1. Revise part 1247 to read as follows:

PART 1247--REPORT OF CARS AND SHIPMENTS LOADED AND TERMINATED

    Authority:  49 U.S.C. 721, 10707, 11144, 11145.


Sec.  1247.1  Annual Report of Cars and Shipments Originated and 
Terminated.

    Each Class I railroad shall file Form STB-54, Annual Report of Cars 
and Shipments Originated and Terminated, together with the accompanying 
certification, with the Office of Economics, Surface Transportation 
Board, Washington, DC 20423, within 90 days after the end of the 
reporting year. Blank forms and instructions are available on the 
Board's Web site (http://www.stb.dot.gov) or can be obtained by 
contacting the Office of Economics.

PART 1248--FREIGHT COMMODITY STATISTICS

0
2. The authority citation for part 1248 continues to read as follows:

    Authority:  49 U.S.C. 721, 11144 and 11145.

0
3. Revise the note to part 1248 to read as follows:

    Note:  The report forms prescribed by part 1248 are available 
upon request from the Office of Economics, Surface Transportation 
Board, Washington, DC 20423-0001.

0
4. Amend Sec.  1248.2 by revising paragraph (a)(2) and by adding 
paragraph (a)(3) to read as follows:


Sec.  1248.2  Items to be reported.

    (a) * * *
    (2) For each commodity code used in reporting, except that the 
number of carloads for commodity code 431, ``Small packaged freight 
shipments,'' shall be omitted, the following items:
    Revenue freight originating on respondent's road:

Terminating on line:
    Number of carloads.
    Number of tons (2,000 pounds).
    Number of shipments.
Delivered to connecting rail carriers:
    Number of carloads.
    Number of tons (2,000 pounds).
    Number of shipments.
    Revenue freight received from connecting rail carriers:

Terminating on line:
    Number of carloads.
    Number of tons (2,000 pounds).
    Number of shipments.
Delivered to connecting rail carriers:
    Number of carloads.
    Number of tons (2,000 pounds).
    Number of shipments.
Total revenue freight carried:
    Number of carloads.
    Number of tons (2,000 pounds).
    Number of shipments.
Gross freight revenue.

    (3) For the purpose of reporting number of shipments under this 
section, a shipment is defined as a block of one or more cars moving 
under the same waybill from origin to destination.
0
5. Revise Sec.  1248.3 to read as follows:


Sec.  1248.3  Carload and L.C.L. traffic defined.

    (a) Commodity codes 01 through 422 and 44 through 462, named in 
Sec.  1248.101, shall include only carload traffic. All carloads 
weighing less than 10,000 pounds shall be included in commodity code 
431, ``Small packaged freight shipments.''
    (b) A carload for the purpose of this order shall consist of a 
carload of not less than 10,000 pounds of one commodity. A mixed 
carload for the

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purpose of this order shall be treated as a carload of that commodity 
which forms the majority of the weight. If a single shipment is loaded 
into more than one car, each car used shall be reported as a carload. 
If more than one carload shipment is loaded into one car, each shipment 
shall be reported separately as a carload.
0
6. Amend Sec.  1248.4 by revising paragraphs (a), (b), (d), (e), and 
(l); and by adding paragraph (o) to read as follows:


Sec.  1248.4  Originating and connecting line traffic.

    (a) Revenue freight reported as received from connecting rail 
carriers shall include all carloads and shipments received from 
connecting rail carriers, either directly or indirectly, so far as 
apparent from information on the waybills or abstracts.
    (b) Revenue freight reported as originating on respondent's road 
shall include carloads and shipments originating on line and carloads 
and shipments received from water lines and highway motor truck lines, 
except when identified as having had previous rail transportation, as 
provided in paragraph (a) of this section.
* * * * *
    (d) Revenue freight reported as delivered to connecting rail 
carriers shall include carloads and shipments delivered to connecting 
rail carriers, either directly or indirectly, as far as apparent from 
information on waybills or abstracts.
    (e) Revenue freight reported as terminating on respondent's road 
shall include carloads and shipments terminating on line and carloads 
and shipments delivered to water lines and highway motor truck lines, 
except when identified as to receive further rail transportation as 
provided in paragraph (d) of this section.
* * * * *
    (l) Freight accorded transit privileges shall be reported as 
``originated on respondent's road'' at the transit point, even though 
the outbound carload(s) or shipment may move under transit balances or 
proportional rates.
* * * * *
    (o) Rail carriers originating a Rule 11 traffic movement shall 
report the movement as originated and forwarded. Rail carriers 
receiving a Rule 11 traffic movement and completing the movement to 
final destination shall report the movement as received and terminated. 
Rail carriers receiving a Rule 11 traffic movement and forwarding the 
movement to another rail carrier shall report the movement as forwarded 
or received.
0
7. Remove the note to Sec.  1248.5.
0
8. Revise Sec.  1248.5(a) to read as follows:


Sec.  1248.5  Report forms and date of filing.

    (a) Reports required from Class I carriers by this section shall be 
filed in duplicate with the Office of Economics, Surface Transportation 
Board, Washington, DC 20423, on forms which will be furnished to the 
carriers. Data required under Sec.  1248.2 shall be filed on Form QCS 
on or before the 60th day succeeding the close of the period for which 
they are compiled.
* * * * *
0
9. Revise Sec.  1248.6 to read as follows:


Sec.  1248.6  Public inspection--railroad reports.

    The individual commodity statistics reports of Class I railroads, 
required to be filed under the terms of Sec.  1248.1, will be open for 
public inspection. Such required commodity statistics reports, however, 
to the extent that they involve traffic of less than three shippers, 
reportable in one of the commodity reporting classes, may be excluded 
from a railroad's regular freight commodity statistics report and filed 
in a supplemental report which will not be open for public inspection, 
except that access to supplemental reports may be given upon approval 
by the Board.
BILLING CODE 4915-01-P

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                               APPENDIX B
                            Proposed Form QCS
 
 

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BILLING CODE 4915-01-C

Appendix C

    The additional information below is included to assist those who 
may wish to submit comments pertinent to review under the Paperwork 
Reduction Act of the two collections for which modifications are 
proposed in this proceeding:

Collection Number 1

    OMB Control Number: 2140-0001.
    Title: Quarterly Report of Freight Commodity Statistics (Form 
QCS).
    Form Number: None.
    Type of Review: Revision of currently approved collection.
    Respondents: Class I railroads.
    Number of Respondents: 7.
    Estimated Time per Response: 217 hours, plus a one-time addition 
of 7.5 start-up hours.
    Frequency of Response: Quarterly, with an annual summation.
    Total Annual Hour Burden: 7,613 hours annually (includes 
additional 2.5 hours per year per railroad, which is 7.5 start-up 
hours annualized over the three-year approval period).
    Total Annual ``Non-Hour Burden'' Cost: No ``non-hour burden'' 
costs associated with this collection have been identified.
    Needs and Uses: This collection, which is based on information 
contained in carload waybills used by railroads in the ordinary 
course of business, reports car loadings and total revenues by 
commodity code for each commodity that moved on the railroad during 
the reporting period. See 49 CFR part 1248. While the public is the 
primary user of the quarterly data, the Board enters information 
from the annual report into URCS. The Board uses URCS as a tool in 
rail rate proceedings, in accordance with 49 U.S.C. 10707(d), to 
calculate the variable

[[Page 7737]]

costs associated with providing a particular service. The Board also 
uses this information to more effectively carry out other of its 
regulatory responsibilities, including: 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 
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. In addition, 
many other Federal agencies and industry groups depend on Form QCS 
for information regarding the cost of the movement of goods by 
railroads. The Board now proposes to modify this collection to 
require railroads to provide additional data regarding the number of 
shipments. This modification will provide the Board with information 
relevant to proposed changes in the way that URCS calculates switch 
engine minute costs and station clerical costs. There is no other 
source for the information contained in this report.

Collection Number 2

    Title: Annual Report of Cars Loaded and Cars Terminated. (Under 
the proposal described in this proceeding, the name of this report 
would be changed to ``Annual Report of Cars and Shipments Originated 
and Terminated'' to reflect the substantive modifications to the 
reporting requirements.)
    OMB Control Number: 2140-0011.
    Form Number: Form STB-54.
    Type of Review: Revision of currently approved collection.
    Number of Respondents: 7.
    Estimated Time per Response: 4 hours, plus a one-time addition 
of 9 start-up hours.
    Frequency of Response: Annual.
    Total Annual Hour Burden: 49 hours (includes additional 3 hour 
per year per railroad, which is 9 start-up hours annualized over the 
three-year approval period).
    Total Annual ``Non-Hour Burden'' Cost: No ``non-hour burden'' 
costs associated with this collection have been identified.
    Needs and Uses: This collection reports the number of cars 
loaded and cars terminated on the reporting carrier's line. See 49 
CFR part 247. Information in this report is entered into the Board's 
URCS, the uses of which are explained under Collection 1. The Board 
now proposes to modify this collection to require railroads to 
provide additional data regarding the number of shipments. This 
modification will provide the Board with information relevant to 
proposed changes in the way that URCS calculates switch engine 
minute costs and station clerical costs. There is no other source 
for the information contained in this report.

[FR Doc. 2013-02037 Filed 2-1-13; 8:45 am]
BILLING CODE 4915-01-P