[Federal Register Volume 84, Number 110 (Friday, June 7, 2019)]
[Notices]
[Page 26714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12058]
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SURFACE TRANSPORTATION BOARD
[Docket No. EP 682 (Sub-No. 10)]
2018 Tax Information for Use in the Revenue Shortfall Allocation
Method
AGENCY: Surface Transportation Board.
ACTION: Notice.
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SUMMARY: The Board is publishing, and providing the public an
opportunity to comment on, the 2018 weighted average state tax rates
for each Class I railroad, as calculated by the Association of American
Railroads (AAR), for use in the Revenue Shortfall Allocation Method
(RSAM).
DATES: Comments are due by July 8, 2019. If any comment opposing AAR's
calculation is filed, AAR's reply will be due by July 29, 2019. If no
comments are filed by the due date, AAR's calculation of the 2018
weighted average state tax rates will be automatically adopted by the
Board, effective July 9, 2019.
ADDRESSES: Comments may be submitted either via the Board's e-filing
format or in 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 website at http://www.stb.gov. Any person
submitting a filing in paper format should send an original referring
to Docket No. EP 682 (Sub-No. 10) to: Surface Transportation Board, 395
E Street SW, Washington, DC 20423-0001.
FOR FURTHER INFORMATION CONTACT: Amy Ziehm, (202) 245-0391. Assistance
for the hearing impaired is available through the Federal Relay Service
at (800) 877-8339.
SUPPLEMENTARY INFORMATION: The RSAM figure 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, EP 646
(Sub-No. 1), slip op. at 10 (STB served Sept. 5, 2007),\1\ as further
revised in Simplified Standards for Rail Rate Cases--Taxes in Revenue
Shortfall Allocation Method, EP 646 (Sub-No. 2) (STB served Nov. 21,
2008). RSAM is intended to measure the average markup that the railroad
would need to collect from all of its ``potentially captive traffic''
(traffic with a revenue-to-variable-cost ratio above 180%) to earn
adequate revenues as measured by the Board under 49 U.S.C. 10704(a)(2)
(i.e., earn a return on investment equal to the railroad industry cost
of capital). Simplified Standards--Taxes in RSAM, slip op. at 1. In
Simplified Standards--Taxes in RSAM, slip op. at 3, 5, the Board
modified its RSAM formula to account for taxes, as the prior formula
mistakenly compared pre-tax and after-tax revenues. In that decision,
the Board stated that it would institute a separate proceeding in which
Class I railroads would be required to submit the annual tax
information necessary for the Board's annual RSAM calculation. Id. at
5-6.
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\1\ Aff'd sub nom. CSX Transp., Inc. v. STB, 568 F.3d 236 (D.C.
Cir. 2009), vacated in part on reh'g, CSX Transp., Inc. v. STB, 584
F.3d 1076 (D.C. Cir. 2009).
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Pursuant to 49 CFR 1135.2, AAR is required to annually calculate
and submit to the Board the weighted average state tax rate for each
Class I railroad for the previous year. On May 30, 2019, AAR filed its
calculation of the weighted average state tax rates for 2018, listed
below for each Class I railroad:
Weighted Average State Tax Rates
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Railroad 2018 (%) 2017 \2\ (%) % Change
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BNSF Railway Company............................................ 5.312 5.289 0.023
CSX Transportation, Inc......................................... 5.238 5.628 -0.390
Grand Trunk Corporation......................................... 8.130 7.961 0.169
The Kansas City Southern Railway................................ 5.422 5.409 0.013
Norfolk Southern Combined....................................... 5.753 6.194 -0.441
Soo Line Corporation............................................ 8.193 8.134 0.059
Union Pacific Railroad Company.................................. 5.726 5.666 0.060
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Any party wishing to comment on AAR's calculation of the 2018
weighted average state tax rates should file a comment by July 8, 2019.
See 49 CFR 1135.2(c). If any comments opposing AAR's calculations are
filed, AAR's reply will be due by July 29, 2019. Id. If any comments
are filed, the Board will review AAR's submission, together with the
comments, and serve a decision within 60 days of the close of the
record that either accepts, rejects, or modifies AAR's railroad-
specific tax information. Id. If no comments are filed by July 8, 2019,
AAR's submitted weighted average state tax rates will be automatically
adopted by the Board, effective July 9, 2019. Id.
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\2\ As explained in Simplified Standards for Rail Rate Cases--
2017 RSAM and R/VC>180 Calculations, EP 689 (Sub-No. 10), slip op.
at 1 n.1 (STB served Apr. 22, 2019), adjustments to R-1 reporting
schedules were made to remove the accounting impacts of the Tax Cuts
and Jobs Act, Public Law 115-97, 131 Stat. 2054 (2017), and that
decision stated that the revised schedules impact the weighted
average state tax rates for 2017. For RSAM and R/VC>180
calculation purposes, the 2017 adjusted rates for BNSF Railway
Company, CSX Transportation, Inc., Norfolk Southern Combined, and
Union Pacific Railroad Company are 5.292%, 5.296%, 5.692%, and
5.672%, respectively. The workpapers for that decision are available
on the Board's website at: https://www.stb.gov/stb/industry/econ_reports.html, under the paragraph titled ``Revenue Shortfall
Allocation Method (RSAM)'' and the ``2017 RSAM Computation''
hyperlink.
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Decided: June 4, 2019.
By the Board, Allison C. Davis, Acting Director, Office of
Proceedings.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2019-12058 Filed 6-6-19; 8:45 am]
BILLING CODE 4915-01-P