[Federal Register Volume 84, Number 230 (Friday, November 29, 2019)]
[Proposed Rules]
[Pages 65768-65775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25924]


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SURFACE TRANSPORTATION BOARD

49 CFR Part 1244

[Docket No. EP 385 (Sub-No. 8)]


Waybill Sample Reporting

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board (Board) proposes to amend its 
regulations with respect to the Waybill Sample data that railroads are 
required to submit to the Board. The proposed amendments to the Waybill 
Sample regulations would simplify the sampling rates of non-intermodal 
carload shipments and specify separate sampling strata and rates for 
intermodal shipments.

DATES: Comments are due by January 28, 2020. Replies are due by 
February 27, 2020.

ADDRESSES: Comments and replies may be filed with the Board either via 
e-filing or in writing addressed to: Surface Transportation Board, 
Attn: Docket No. EP 385 (Sub-No. 8), 395 E Street SW, Washington, DC 
20423-0001. Comments and replies will be posted on the Board's website 
at www.stb.gov.

FOR FURTHER INFORMATION CONTACT: Jonathon Binet at (202) 245-0368. 
Assistance for the hearing impaired is available through the Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: A waybill is a ``document or instrument 
prepared from the bill of lading contract or shipper's instructions as 
to the disposition of the freight, and [is] used by the railroad(s) 
involved as the authority to move the shipment and as the basis for 
determining the freight charges and interline settlements.'' 49 CFR 
1244.1(c). Among other things, a waybill currently contains the 
following data: (1) The originating and terminating freight stations; 
(2) the railroads participating in the movement; (3) the points of all 
railroad interchanges; (4) the number and type of cars; (5) the car 
initial and number; (6) the movement weight in hundredweight; (7) the 
commodity; and (8) the freight revenue. Rail carriers are required to 
file a sample of waybills, which includes this data. See 49 CFR 
1244.2(a). The Board creates an aggregate compilation of the sampled 
waybills of all reporting carriers, referred to as the Waybill Sample. 
The Waybill Sample is the Board's principal source of data about 
freight rail shipments. It has broad application in, among other 
things, rate cases, the development of costing systems, productivity 
studies, exemption decisions, and analyses of industry trends.
    First collected in 1946 by the Board's predecessor,\1\ the 
Interstate Commerce Commission (ICC), the Waybill Sample is also used 
by other Federal agencies, state and local government agencies, the 
transportation industry, shippers, research organizations, 
universities, and others that have a need for rail shipment data. 
Because some of the submitted waybill data is commercially sensitive, 
the Board's regulations place limitations on the release and use of 
confidential Waybill Sample data. See 49 CFR 1244.9; see also 49 U.S.C. 
11904.\2\
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    \1\ See Bureau of Transp. Econ. & Stat., Interstate Com. Comm'n, 
Statement No. 543, Waybill Statistics their History and Uses 15, 19, 
40 (1954); Waybill Analysis of Transp. of Prop.--R.Rs., 364 I.C.C. 
928, 929 (1981) (``Since 1946, the Interstate Commerce Commission 
has collected a continuous sample of carload waybills for railroads 
terminating shipments.'').
    \2\ Any grant of access to confidential Waybill Sample data 
requires the requestor to execute a confidentiality agreement before 
receiving the data. See 49 CFR 1244.9(a)-(e). In addition to the 
confidential Waybill Sample, the Board also generates a Public Use 
Waybill File that includes only non-confidential data. See 49 CFR 
1244.9(b)(5).
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    In January 2018, the Board established its Rate Reform Task Force 
(RRTF), with the objectives of developing recommendations to reform and 
streamline the Board's rate review processes for large cases, and 
determining how to best provide a rate review process for smaller 
cases. After holding informal meetings throughout 2018, the RRTF issued 
a report on April 25, 2019 (RRTF Report).\3\ Among other 
recommendations, the RRTF Report included a recommendation that the 
Board change the sampling rates for its Waybill Sample. RRTF Report 14. 
The RRTF explained that data from the Waybill Sample is critical to 
certain rate cases, in particular the Three-Benchmark methodology, and 
that a more robust sample size would address issues with those cases. 
Id. at 47. Having considered the recommendations included in the RRTF 
Report and the overall utility of the current Waybill Sample, the Board 
now proposes to simplify the sampling rate for non-intermodal carload 
shipments and specify separate sampling strata and

[[Page 65769]]

rates for intermodal shipments, as explained below.
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    \3\ The RRTF Report was posted on the Board's website on April 
29, 2019, and can be accessed at https://www.stb.gov/stb/rail/Rate_Reform_Task_Force_Report.pdf.
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    Current Waybill Sampling Requirements. A railroad is required to 
file with the Board a sample of its waybill data for all line-haul 
revenue waybills terminated on its lines in the United States,\4\ if 
the railroad: (a) Terminated at least 4,500 revenue carloads in any of 
the three preceding years, or (b) terminated at least 5% of the revenue 
carloads terminating in any state in any of the three preceding years. 
49 CFR 1244.2(a). Currently, the number of waybills that a railroad is 
required to file (i.e., the sampling rate) is set forth at 49 CFR 
1244.4(b) and (c), and varies based on the number of carloads on the 
waybill.\5\ The current sampling rates for the computerized system of 
reporting waybills are shown in Table 1 below.
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    \4\ A railroad moving traffic on the United States rail system 
to the Canadian or Mexican border is required to ``include a 
representative sample of such international export traffic in the 
Waybill Sample.'' 49 CFR 1244.3(c).
    \5\ The Board's regulations set forth different sampling rates 
for computerized and manual systems of reporting. See 49 CFR 
1244.4(b)-(c). Under the manual system, railroads submit Waybill 
Sample data through authenticated copies of a sample of audited 
revenue waybills instead of using a computerized system. Id. section 
1244.4(a). The manual system is not currently used by any railroads 
and is not the primary subject of this notice of proposed rulemaking 
(NPRM). However, parties may provide comments on whether the manual 
system should be eliminated given its current lack of use.

                 Table 1--Current Waybill Sampling Rates
                   [Computerized System of Reporting]
------------------------------------------------------------------------
                                                            Sample rate
              Number of carloads on waybill                     \6\
------------------------------------------------------------------------
1 to 2..................................................            1/40
3 to 15.................................................            1/12
16 to 60................................................             1/4
61 to 100...............................................             1/3
101 and over............................................             1/2
------------------------------------------------------------------------

    RRTF Proposal and Board Rationale. In its report, the RRTF 
recommended changing the current waybill sampling rates for all non-
intermodal shipments to 1/10. RRTF Report 48. For intermodal shipments, 
the RRTF recommended two strata: (1) Intermodal shipments with one or 
two trailer or container units (TCUs) per waybill, recommended to be 
sampled at the current 1/40 rate, and (2) intermodal shipments with 
three or more TCUs per waybill, recommended to be sampled at the same 
rate proposed for non-intermodal shipments, 1/10. Id. at 48-49. 
Although these recommendations would both increase the sampling rates 
for most smaller shipments (with 1 to 15 carloads per waybill) from 1/
40 or 1/12 to 1/10 and decrease the sampling rates for larger shipments 
(with 16 or more carloads per waybill) from 1/2, 1/3, or 1/4 to 1/10, 
the RRTF determined that the net effect of the recommended changes 
would be an increase in the overall number of waybills sampled. Id. at 
48. In addition, by sampling intermodal traffic separately and (for one 
or two TCUs) at the current 1/40 rate, the RRTF concluded that a 
greater portion of the Waybill Sample data would represent regulated 
traffic instead of traffic that is currently exempt.\7\ Id. at 49.
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    \6\ The column showing the sample rate indicates the fraction of 
the total number of waybills within each stratum that must be 
submitted (e.g., for waybills of one to two carloads, the railroad 
must submit one out of every 40 waybills).
    \7\ Under 49 CFR 1090.2, rail and highway trailer-on-flatcar/
container-on-flatcar (TOFC/COFC) service--which generally covers 
intermodal shipments--is exempt from the requirements of 49 U.S.C. 
subtitle IV, regardless of the type, affiliation, or ownership of 
the carrier performing the highway portion of the service.
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    The RRTF supported its recommendation by describing the anticipated 
effect the changes would have in rate cases under the Board's Three-
Benchmark methodology.\8\ The RRTF stated that, by increasing its 
sampling of traffic, ``the Board could avoid the scarcity issue that 
has plagued some past Three-Benchmark cases.'' Id. at 47. See, e.g., US 
Magnesium, L.L.C. v. Union Pac. R.R., NOR 42114, slip op. at 9 n.12 
(STB served Jan. 28, 2010) (``We acknowledge that the failure of either 
party to submit a comparison group more similar to the traffic at issue 
here is likely due to limitations in the number of comparable movements 
in the Waybill Sample.''). The RRTF also stated that a robust sample 
size is a critical component of the Three-Benchmark methodology and 
explained that there must be enough observations in the Waybill Sample 
to select a group of traffic that reflects the nuances of the traffic 
in dispute. RRTF Report 47. It stated that its recommendation to modify 
waybill sampling rates would alleviate concerns about non-
representative samples and minimize the need for ``other relevant 
factors'' arguments. Id.
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    \8\ The Three-Benchmark methodology is a simplified process of 
rate review, intended for smaller rate disputes, where the potential 
rate relief is capped at $4 million. See Simplified Standards for 
Rail Rate Cases (Simplified Standards), EP 646 (Sub-No. 1) (STB 
served Sept. 5, 2007), aff'd in part sub nom. CSX Transp., Inc. v. 
STB, 568 F.3d 236 (D.C. Cir. 2009), vacated in part on reh'g, 584 
F.3d 1076 (D.C. Cir. 2009); Rate Regulation Reforms, EP 715 (STB 
served July 18, 2013), remanded in part sub nom. CSX Transp., Inc. 
v. STB, 754 F.3d 1056 (D.C. Cir. 2014). Under this methodology, the 
reasonableness of a challenged rate is judged by examining the 
challenged rate using three benchmark figures, each of which is 
expressed as a revenue-to-variable cost (R/VC) ratio. One of the 
benchmarks, R/VCCOMP, requires selection of a group of 
comparable traffic, the ``comparison group,'' that the Board 
concludes is most similar in aggregate to the issue movements. To 
``enable a prompt, expedited resolution of the comparison group 
selection,'' the Board requires each party to submit its final offer 
comparison group simultaneously, and the Board chooses one of those 
groups without modification. See Simplified Standards, EP 646 (Sub-
No. 1), slip op. at 18.
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    The Board agrees with the RRTF that a modification to its waybill 
sampling rates is warranted. Specifically, a net increase in sample 
size would provide more comprehensive information to the Board and 
other users of Waybill Sample data in a variety of contexts, such as 
exemption decisions, stratification reports, traffic volume and rate 
studies, Board-initiated investigations, certain rate cases (discussed 
in more detail below), and any other waybill data-related analysis the 
Board currently performs or might seek to perform in the future. A more 
robust data sample would augment the Board's ability to make informed, 
well-reasoned decisions in these areas. In addition, the Board agrees 
that it should change its sampling requirements so that a greater 
portion of the Waybill Sample data would represent regulated traffic 
instead of exempt traffic.
    Additionally, the added number of observations in the Waybill 
Sample would likely allow the Board to avoid redacting, for 
confidentiality reasons, as many results from some of the Board's 
routine analysis published on its website, such as the STCC 7 
stratification report. While such analysis serves as a useful barometer 
for stakeholders, its publication is limited by the Board's commitment 
to protect the confidentiality of identifiable railroad and shipper 
information when too few records exist within a given category of 
traffic. Moreover, because the Board currently receives monthly waybill 
data from Class I carriers and quarterly data from Class I, II, and III 
carriers, increasing the sampling rate would provide the Board with 
more observations in any given month or quarter from which it could 
draw meaningful insights throughout the year.
    The Board agrees with the RRTF that increasing waybill sampling 
rates would also assist parties in Three-Benchmark cases by providing a 
greater number of potentially comparable movements from which they 
could create their comparison group proposals.\9\ Parties

[[Page 65770]]

proposing comparison groups use a variety of comparability factors, 
such as the length of movement, commodity type, and traffic densities 
of the likely routes involved. In general, as more comparability 
factors are added to make the comparison group more specific to the 
case, the number of observations from the Waybill Sample that match 
those factors is likely to decrease. By increasing the observations in 
the Waybill Sample, parties generally would have more observations to 
choose from and increased flexibility to design comparison groups with 
relevant comparability factors. Accordingly, a more robust Waybill 
Sample could lead to more representative comparison groups, thereby 
increasing the reliability of the parties' presentations.
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    \9\ In a recently issued NPRM, the Board proposed a new 
procedure for challenging the reasonableness of railroad rates in 
smaller cases. See Final Offer Rate Review, EP 755 et al. (STB 
served Sept. 12, 2019). In that decision, the Board stated that, 
under the proposed Final Offer Rate Review (FORR) procedure, a party 
would be able to seek access to waybill data pursuant to the Board's 
regulations. Id. at 9. The benefits of increased waybill sampling 
discussed in this NPRM could also apply to the proposed FORR 
procedure, should a party choose to use comparable traffic to 
support its final offer.
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    The increased comparison group flexibility would also increase the 
number of potentially comparable movements available to shippers of 
categories of traffic for which there are currently insufficient 
observations in the Waybill Sample to create a representative 
comparison group.\10\ The Board's proposed changes in sampling, 
discussed below, would result in more shipments being included in the 
Waybill Sample, some of which may fall into categories of traffic that 
previously had fewer than 25 movements in the Waybill Sample.\11\ 
Moreover, for the reasons noted above, even for categories of traffic 
for which a comparison group with 25 or more observations can already 
be formed, more observations in the Waybill Sample could allow for the 
addition of more specific traffic characteristics and would further 
increase the reliability of the parties' presentations.\12\
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    \10\ According to the Central Limit Theorem, once a sample has 
sufficient observations, it is considered to be normally distributed 
and can be used to approximate the mean and variance of the 
population from which it was sampled. Generally, around 25 or 30 
observations is considered to be enough for those approximations. 
See Robert V. Hogg et al., Probability and Statistical Inference 202 
(9th ed. 2015). In Rail Transp. of Grain, Rate Reg. Review, EP 665 
(Sub-No. 1) et al., slip op. at 13-14 (STB served Aug. 31, 2016), 
the Board expressed concern about comparison groups with 
insufficient observations and sought comment on whether a 20-
observation minimum should be established in connection with a new 
comparison group approach it was exploring in that proceeding. 
Because the Board seeks to improve significantly the utility of the 
Waybill Sample in this proposal, it has used a 25-observation 
minimum for the purposes of analyzing this proposed rule.
    \11\ Based on an analysis of the 2014 through 2017 Waybill 
Samples, this tends to be the case for groups of traffic that do not 
have as high of a volume of movements as others, meaning that fewer 
of those movements are captured in the Waybill Sample.
    \12\ For example, comparability factors such as length of 
movement ranges could be tightened and more granular commodity codes 
could be used (e.g., seven-digit STCC level versus five-digit STCC 
level). In some cases, geographic comparability could be taken into 
consideration to make the comparison group more similar to the 
traffic at issue. Currently, depending on the commodity group at 
issue, the application of such specific criteria could result in a 
comparison group without sufficient observations.
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    The issue of whether to enlarge the Waybill Sample to include a 
larger sample of common carrier movements was briefly discussed in the 
Board's decision in Simplified Standards, EP 646 (Sub-No. 1), slip op. 
at 83. There, the Board declined to increase the waybill sampling size 
at that time due to concerns about the cost of gathering, processing, 
and costing a larger sample. However, it is now appropriate to revisit 
the issue. The Board finds that the expenses associated with increased 
sampling can be better managed by the agency because of technological 
and computing advances now available to it, and finds that the largely 
computerized and automated processes allow for the management of 
additional data at a reasonable additional cost. All reporting carriers 
submit waybill data in computerized form today, and the Board does not 
anticipate that it would be a significant burden for rail carriers, or 
the entity the carriers use to manage the data, to adjust their data 
collection and reporting mechanism(s) for the proposed sampling rates. 
Given that this data is critical to central regulatory functions of the 
Board, the additional cost is justified by the anticipated improvements 
in reliability of comparison group presentations and by the increased 
granularity of analyses performed by the Board.
    For the reasons discussed above, the Board proposes to adjust the 
waybill sampling rate for carriers using the computerized system of 
reporting as discussed below. The Board's proposal is intended to 
provide a more comprehensive sampling of waybills that would improve 
the utility of the Waybill Sample for both the Board and other users of 
waybill data in a variety of contexts (e.g., increasing the reliability 
of parties' evidentiary presentations in certain rate reasonableness 
proceedings), which would further the rail transportation policy goals 
of 49 U.S.C. 10101. See 49 U.S.C. 10101(2), (4), (6), (13).
    Proposed Waybill Sampling Rates. The Board proposes revisions to 
the sampling rates for the Waybill Sample for carriers using the 
computerized system of reporting. Although the RRTF recommended a 
sampling rate for all non-intermodal shipments of 1/10, based on 
additional analyses, described below, the Board instead proposes to 
increase the sampling rates to 1/5 for non-intermodal shipments in each 
of the existing sampling strata, as shown in Table 2 below. Under this 
proposed rule, the Board would continue to use separate strata for the 
sampling of non-intermodal shipments, with the strata differentiated by 
the number of carloads on the waybill. For non-intermodal shipments, 
the effect of the proposed rate would be an increase in the sampling 
rate for waybills with 1 to 15 carloads and a decrease in the sampling 
rate for waybills with 16 or more carloads.

[[Page 65771]]

    Because of the unique characteristics of intermodal shipment 
billing practices,\13\ the Board also proposes to separate sampling of 
intermodal shipments from carload shipments. Specifically, the Board 
would create two sampling strata specific to intermodal shipments--one 
for shipments with one to two TCUs per waybill and another for 
shipments with three or more TCUs per waybill. As shown in Table 2, 
intermodal shipments with one or two TCUs per waybill would be sampled 
at a rate of 1/40, and intermodal shipments with three or more TCUs per 
waybill would be sampled at the same proposed rate as non-intermodal 
shipments, 1/5. An increase in sampling of intermodal shipments with 
one or two TCUs per waybill, which comprise the vast majority of 
intermodal shipments, would lead to an over-sampling of those 
movements.\14\ The Board's proposed approach would not only 
appropriately differentiate sampling strata based on industry waybill 
practices, but it would also avoid instances in which blocks of TCUs 
comprising a single intermodal shipment are over-sampled.
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    \13\ In a separate proceeding that has since been discontinued, 
commenters noted that intermodal TCUs often move under separate 
waybills, even if the TCUs are placed on flatcars that move in 
multiple flatcar blocks. See Review of the Gen. Purpose Costing 
Sys., EP 431 (Sub-No. 4), slip op. at 13 (STB served Aug. 4, 2016).
    \14\ To illustrate, under the Board's current regulations, a 
block carrying 100 TCUs, all moving from the same origin to the same 
destination but with each moving under a separate waybill (i.e., 100 
total waybills), would be sampled at an average of 2.5 times (i.e., 
100 waybills sampled at a rate of 1/40). Under the Board's proposed 
regulations, if intermodal shipments were sampled at the same rate 
as non-intermodal shipments, the same large block would ultimately 
be sampled 20 times (i.e., 100 waybills sampled at a rate of 1/5). 
Considering this billing practice, along with the volume of 
intermodal shipments and the fact that intermodal transportation is 
generally exempt from Board regulation, the Board finds increasing 
the sampling rate of intermodal shipments with one to two TCUs per 
waybill is not necessary. By establishing separate sampling strata 
for intermodal shipments as proposed, the Board can avoid over-
sampling intermodal traffic with one or two TCUs per waybill by 
maintaining the current rate of 1/40, in which case the same large 
block carrying 100 TCUs would be sampled 2.5 times, as it would be 
under the current regulations.
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    The Board's proposal for intermodal shipments largely mirrors the 
RRTF recommendation that the Board adopt a sampling rate of 1/40 for 
waybills with one to two TCUs and apply the same sampling rate 
recommended for non-intermodal shipments for waybills with three or 
more TCUs. Consistent with the approach recommended by the RRTF, the 
Board proposes the same sampling rate for intermodal waybills with 
three or more TCUs as it proposes for non-intermodal shipments.

                Table 2--Proposed Waybill Sampling Rates
                 [Computerized System of Reporting) \15\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
   Number of non-intermodal carloads on              Sample rate
                  waybill
------------------------------------------------------------------------
1 to 2....................................  1/5
3 to 15...................................  1/5
16 to 60..................................  1/5
61 to 100.................................  1/5
101 and over..............................  1/5
------------------------------------------------------------------------
  Number of intermodal trailer/container             Sample rate
             units on waybill
------------------------------------------------------------------------
1 to 2....................................  1/40
3 and over................................  1/5
------------------------------------------------------------------------

    Analysis of Proposed Waybill Sampling Rates. As discussed above, 
these proposed changes would both provide a more robust sample 
generally and address the shortcomings that were acknowledged by the 
Board and parties in Board proceedings concerning the scarcity of data 
in some rate cases. See US Magnesium, L.L.C., NOR 42114, slip op. at 9-
12, 9 n.12 (noting the dearth of observations for certain toxic-by-
inhalation commodities in the parties' comparison groups); Simplified 
Standards, EP 646 (Sub-No. 1), slip op. at 83 (acknowledging that there 
may be instances in Three-Benchmark cases where a particular movement 
is so unique that there would be insufficient comparable movements in 
the Waybill Sample).
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    \15\ If the Board ultimately adopts changes to 49 CFR part 1244, 
the Board will publish notice in the Federal Register of a revised 
edition of Statement No. 81-1, Procedure for Sampling Waybill 
Records by Computer (2009 edition). See 49 CFR 1244.4(c)(1) 
(requiring the Board to publish notice of any change to Statement 
No. 81-1 in the Federal Register). The current edition of Statement 
No. 81-1 is posted on the Board's website and can be accessed by 
navigating to the tab Industry Data, the tab Economic Data, and then 
clicking on the link for ``Procedure for Sampling Waybill Records by 
Computer.''
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    To determine the impact of increasing its sampling rates, the Board 
has reviewed Waybill Sample data from 2014 to 2017; grouped the 
movements into categories based on commodity,\16\ mileage ranges,\17\ 
and terminating railroad; and analyzed how the proposed sampling rates 
would affect the number of these movement categories having fewer than 
25 observations.\18\ Under the current sampling rates, the Board found 
that, in an average year, approximately 7.6% of those movement 
categories have 25 or more observations. Under the Board's proposed 
sampling rates, an estimated 20.4% of those categories would have 25 or 
more observations, nearly triple the current number. Even though only 
one-fifth of the categories would have at least 25 observations under 
the Board's proposal, this segment represents most of the total revenue 
in the Waybill Sample. Under the current sampling rate, 84.2% of the 
revenue is represented in movement categories with at least 25 
observations. Under the proposed sampling rate, 93.4% of the revenue 
would be represented in movement categories with at least 25 
observations. The proposed modification would therefore capture more 
than half of the revenue that is currently moving in categories with 
fewer than 25 movements. These percentage breakdowns are shown in Table 
3 below.
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    \16\ Commodity categories were split at the seven-digit STCC 
level.
    \17\ Mileage ranges were split as follows: 0-499.9 miles; 500-
999.9 miles; 1,000-1,499.9 miles; and 1,500 miles or more.
    \18\ In order to estimate how counts of observations would 
change with the proposed sampling rate, the Board took the 
observations currently in the Waybill Sample, extrapolated how many 
observations exist in the total population of movements that 
occurred in a given year by multiplying counts of movements by their 
expansion factors, and then divided by five for non-intermodal 
movements and by 40 for intermodal movements. This is a slight 
simplification of the Board's proposed sampling rates, since it does 
not distinguish intermodal movement sampling rates depending on the 
number of TCUs, but it is reasonable for analysis purposes because 
the vast majority of intermodal moves are under the three TCU 
threshold.

[[Page 65772]]



                            Table 3--Estimated Movement Categories in an Average Year
                                                   [2014-2017]
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                                                                                                    Percent of
                                                                     Movement       Percent of      revenue in
                                                  Total movement    categories       movement        movement
                                                    categories       with 25+       categories      categories
                                                                   observations      with 25+        with 25+
                                                                                   observations    observations
----------------------------------------------------------------------------------------------------------------
Current Rate....................................          31,321           2,369             7.6            84.2
Proposed Rate...................................          31,321           6,395            20.4            93.4
----------------------------------------------------------------------------------------------------------------

    Similarly, under the current regulations, when aggregating the 
Waybill Sample data over the four-year 2014 to 2017 period, 19.7% of 
the same categories include 25 or more observations. Using the four-
year approach, under the proposed sampling rate, the number of 
categories with 25 or more observations would nearly double to 38.5%. 
Here the proposed modification would capture approximately two-thirds 
of the currently missed revenue, increasing from 94.0% to 97.9% of 
total revenue. This breakdown is shown in Table 4 below.

                             Table 4--Estimated Movement Categories Over Four Years
                                                   [2014-2017]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Percent of
                                                                     Movement       Percent of      revenue in
                                                  Total movement    categories       movement        movement
                                                    categories       with 25+       categories      categories
                                                                   observations      with 25+        with 25+
                                                                                   observations    observations
----------------------------------------------------------------------------------------------------------------
Current Rate....................................          31,321           6,177            19.7            94.0
Proposed Rate...................................          31,321          12,059            38.5            97.9
----------------------------------------------------------------------------------------------------------------

    The Board considered the 1/10 sampling rate for non-intermodal 
shipments recommended by the RRTF. The Board's analysis, however, 
showed that a \1/5\ sampling rate had a better chance of reducing the 
number of movement categories with scarce observations. Although the 
improvement was modest--for example, 90.4% of the revenue in the 
Waybill Sample would be in movement categories with 25 or more 
observations in an average year with a 1/10 sampling rate compared to 
93.4% with a \1/5\ sampling rate--the potential increase in covered 
movement categories would lead to a more robust sample without a 
significantly increased burden on reporting carriers. While the waybill 
sampling rates listed in Table 2 above may still, in some instances, 
fail to produce a representative sample for comparison, the proposed 
changes would significantly improve the chances of having sufficient 
observations for a representative sample as well as add to the 
robustness of any of Board analyses using the Waybill Sample.
    For movement categories that already have 25 or more observations, 
such as traffic in categories with a higher volume of movements by 
rail, the Board analyzed the extent to which more observations in the 
Waybill Sample would allow for more granular or even additional 
comparability factors. As can be seen in Table 5 below, the Board 
estimates that the proposed sampling rate would increase the median 
number of observations for categories that already have at least 25 
observations in an average year from 59 to 269, which is more than four 
times as many observations. This illustrates how the proposed sampling 
rate would shift the number of observations upwards across categories, 
even if the categories already had 25 observations. Such an increase in 
observations would increase the representativeness of potential 
comparison groups defined using the same criteria as these categories. 
Furthermore, as noted above, by having more observations in a 
comparison group, it would be possible to define the comparison group 
even more narrowly and still maintain robustness.

           Table 5--Quartile Analysis of Movement Categories With 25+ Observations in an Average Year
                                                   [2014-2017]
----------------------------------------------------------------------------------------------------------------
                                                                   1st Quartile       Median       3rd Quartile
                                                                   observations    observations    observations
----------------------------------------------------------------------------------------------------------------
Current Rate....................................................              37              59             126
Proposed Rate...................................................             101             269             562
----------------------------------------------------------------------------------------------------------------

    Table 6 below shows similar estimated increases in observations 
over four years of data. The Board estimates that the proposed sampling 
rate would increase the median number of observations for categories 
that already have at least 25 observations over the course of a four-
year period from 70 to 320.

[[Page 65773]]



             Table 6--Quartile Analysis of Movement Categories With 25+ Observations Over Four Years
                                                   [2014-2017]
----------------------------------------------------------------------------------------------------------------
                                                                   1st Quartile       Median       3rd Quartile
                                                                   observations    observations    observations
----------------------------------------------------------------------------------------------------------------
Current Rate....................................................              39              70             177
Proposed Rate...................................................             136             320             780
----------------------------------------------------------------------------------------------------------------

    Once again, the proposed sampling rate is estimated to result in 
more than four times as many observations as under the current rate. 
For example, consider the median category with at least 25 observations 
over four years as shown in Table 6. Using a 500-mile range as a 
comparability factor, a party would have 70 observations to include in 
a potential comparison group. If that party wanted to define the 
mileage range more narrowly, they would lose some of those observations 
depending on the mileage range chosen and, at some point, would likely 
have fewer than 25 observations. If, however, a party started with 320 
available observations with a 500-mile range, as we estimate would be 
the case in the median category under the proposed sampling rates, they 
could likely narrow the mileage range further without dropping below a 
sufficient number of observations. In other words, with more 
observations available, interested parties would be able to choose 
additional and more narrow comparability factors to identify movements 
that are more similar to the issue traffic but also still maintain a 
sufficient number of observations.
    Conclusion. For the reasons described above, the changes proposed 
in this NPRM (as shown below) would create a more robust Waybill Sample 
and result in more comprehensive information that would assist both the 
Board in its decision-making and analyses and other users of waybill 
data in their analyses without creating an undue burden on railroads 
(as shown below and in the Appendix). The changes also appropriately 
differentiate sampling strata based on current industry waybill 
practices for intermodal shipments. The Board invites public comment on 
this proposal.
    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 would have on 
small entities; (2) analyze effective alternatives that may minimize a 
regulation's impact; and (3) make the analysis available for public 
comment. Section 601-604. In its notice of proposed rulemaking, the 
agency must either include an initial regulatory flexibility analysis, 
section 603(a), or certify that the proposed rule would not have a 
``significant impact on a substantial number of small entities,'' 
section 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. v. Conner, 553 F.3d 467, 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 would not have a significant economic impact upon a 
substantial number of small entities, within the meaning of the 
RFA.\19\ Under the Board's existing regulations, a railroad is required 
to file Waybill Sample data for all line-haul revenue waybills 
terminated on its lines if: (a) It terminated at least 4,500 revenue 
carloads in any of the three preceding years; or (b) it terminated at 
least 5% of the revenue carloads terminating in any state in any of the 
three preceding years. 49 CFR 1244.2. Under this criteria, 53 railroads 
are currently required to report Waybill Sample data. Of these 53, the 
Board estimates that 36 are Class III carriers, and thus small 
businesses within the meaning of the RFA. Of the 53 railroads required 
to report Waybill Sample data, 45 railroads currently use Railinc 
Corporation (Railinc)--a wholly-owned information technology subsidiary 
of the Association of American Railroads--to sample their waybills.\20\ 
Eight railroads currently sample their own waybills.
---------------------------------------------------------------------------

    \19\ For the purpose of RFA analysis for rail carriers subject 
to Board jurisdiction, the Board defines a ``small business'' as 
only including those rail carriers classified as Class III carriers 
under 49 CFR 1201.1-1. See Small Entity Size Standards Under the 
Regulatory Flexibility Act, EP 719 (STB served June 30, 2016) (with 
Board Member Begeman dissenting). Class III carriers have annual 
operating revenues of $20 million or less in 1991 dollars, or 
$39,194,876 or less when adjusted for inflation using 2018 data. 
Class II carriers have annual operating revenues of less than $250 
million or $489,935,956 when adjusted for inflation using 2018 data. 
The Board calculates the revenue deflator factor annually and 
publishes the railroad revenue thresholds in decisions and on its 
website. 49 CFR 1201.1-1; Indexing the Annual Operating Revenues of 
R.Rs., EP 748 (STB served June 14, 2019).
    \20\ Some railroads hire a third party to collect their 
waybills. That third party then sends these waybills to Railinc for 
sampling.
---------------------------------------------------------------------------

    For the railroads that submit their waybills to Railinc for 
sampling, there would be no additional burden or costs on entities as 
result of the changes proposed in this NPRM. These entities would 
continue to submit all of their waybills to Railinc, which would then 
sample the data in accordance with the Board's revised sampling rates. 
Because the Board contracts with Railinc to sample railroads' waybills, 
the entities that use Railinc to sample their waybills would incur no 
additional costs from Railinc as a result of the Board's proposed 
changes. Of the approximately 36 Class III carriers, the Board 
estimates that 34 fall into this category and therefore would not incur 
any additional burden or cost.
    For the railroads that choose to sample their own waybills, the 
proposed amendments would not result in a significant economic impact. 
The purpose of the changes proposed in this NPRM is to create a more 
robust Waybill Sample, resulting in more comprehensive information that 
would assist both the Board in its decision-making and analyses and 
other users of waybill data in their analyses. The proposal would 
increase the rate at which the Board samples certain railroad shipments 
and appropriately differentiate sampling strata based on industry 
waybill practices for intermodal shipments. These changes would result 
in additional observations for certain shipments, but the proposed 
amendments would not significantly alter small entities' current 
practices for sampling their shipments. Based on the total burden hours 
described in the Paperwork Reduction Act analysis below, the Board 
estimates that, for

[[Page 65774]]

railroads conducting their own sampling, the change in reporting 
procedures would result in an estimated one-time burden of 
approximately 80 hours per railroad. Moreover, this impact would not be 
on a substantial number of small entities, as the Board estimates that 
only two of the approximately 36 Class III carriers would incur this 
burden.
    For the reasons described above, the Board certifies under 5 U.S.C. 
605(b) that this proposed rule, if promulgated, would 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. 3501-3521, Office of Management and Budget (OMB) 
regulations at 5 CFR 1320.8(d)(3), and in the Appendix, the Board seeks 
comments about the impact of the revisions in the proposed rules to the 
currently approved collection of Waybill Sample data (OMB Control No. 
2140-0015) regarding: (1) Whether the collection of data, as modified 
in the proposed rule and further described below, 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 data collected; and (4) ways to minimize the burden of the 
collection of data on the respondents, including the use of automated 
collection techniques or other forms of information technology, when 
appropriate.
    The Board estimates that the proposed requirements would add a 
total one-time hour burden of 640 hours (or approximately 213.3 hours 
per year as amortized over three years) because the railroads, in most 
cases, would need to edit their software programs to implement these 
changes. Once the burden of the one-time programming changes is 
incurred, the annual burden would remain the same as before this 
modification. The Board welcomes comment on the estimates of actual 
time and costs of collection of Waybill Sample data, as detailed below 
in the Appendix.\21\ The proposed rules will be submitted to OMB for 
review as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11. Comments 
received by the Board regarding the data collection will also be 
forwarded to OMB for its review when the final rule is published.
---------------------------------------------------------------------------

    \21\ In the Appendix, Tables B-2, B-3, and B-4 show a total 
annual burden of 774.6 hours, incorporating the annualized one-time 
hour burden of 213.3 hours under the proposed rule, and the existing 
annual burden of 561.3 hours.
---------------------------------------------------------------------------

List of subjects in 49 CFR Part 1244

    Freight, Railroads, Reporting and recordkeeping requirements.

    It is ordered:
    1. The Board proposes to amend its rules as detailed in this 
decision. Notice of the proposed rules will be published in the Federal 
Register.
    2. Comments are due by January 28, 2020. Replies are due by 
February 27, 2020.
    3. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration, 
409 3rd Street SW, Washington, DC 20416.
    4. This decision is effective on its service date.

    Decided: November 22, 2019.

    By the Board, Board Members Begeman, Fuchs, and Oberman.
Kenyatta Clay,
Clearance Clerk.

    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend part 1244 of title 49, chapter 
X, of the Code of Federal Regulations as follows:

PART 1244--WAYBILL ANALYSIS OF TRANSPORTATION OF PROPERTY--
RAILROADS

0
1. The authority citation for part 1244 continues to read as follows:

    Authority: 49 U.S.C. 1321, 10707, 11144, 11145.

0
2. Amend Sec.  1244.4 by revising the first sentence of paragraph 
(c)(1) and replacing the current table in paragraph (c)(2) with a new 
table to read as follows:


Sec.  1244.4  Sampling of waybills.

* * * * *
    (c) The Computerized System. (1) The tape shall be required to 
conform to the standards and format specified in Statement No. 81-1, 
Procedure for Sampling Waybill Records by Computer (2019 edition), 
issued by the Surface Transportation Board.
* * * * *
    (2) Effective January 1, 2021, and thereafter, unless otherwise 
ordered, the sampling rates for the computerized system are as follows:

------------------------------------------------------------------------
      Number of non-intermodal carloads on waybill          Sample rate
------------------------------------------------------------------------
1 to 2..................................................             1/5
3 to 15.................................................             1/5
16 to 60................................................             1/5
61 to 100...............................................             1/5
101 and over............................................             1/5
------------------------------------------------------------------------
 Number of intermodal trailer/container units on waybill    Sample rate
------------------------------------------------------------------------
1 to 2..................................................            1/40
3 and over..............................................             1/5
------------------------------------------------------------------------

* * * * *
    Note: This appendix will not appear in the Code of Federal 
Regulations

Appendix

Information Collected Under the Paperwork Reduction Act

    Title: Waybill Sample.
    OMB Control Number: 2140-0015.
    Form Number: None.
    Type of Review: Revision of a currently approved collection.
    Summary: As part of its continuing effort to reduce paperwork 
burdens, and as required by the Paperwork Reduction Act of 1995 
(PRA), 44 U.S.C. 3501-3521, the Surface Transportation Board (Board) 
gives notice that it is requesting from the Office of Management and 
Budget (OMB) approval for the revision of the currently approved 
data collection, Waybill Sample, OMB Control No. 2140-0015, as 
further described below. The requested revision to the currently 
approved collection is necessitated by this Notice of Proposed 
Rulemaking (NPRM), which would amend the Waybill Sample data 
railroads are required to submit to the Board pursuant to 49 CFR 
1244.4. All other data collected by the Board in the currently 
approved collection is without change from its approval (currently 
expiring on September 30, 2020).
    Respondents: Respondents include any railroad that is subject to 
the Interstate Commerce Act and that terminated at least 4,500 
carloads on its line in any of the three preceding years or that 
terminated at least 5% of the revenue carloads terminating in any 
state in any of the three preceding years. For the purposes of this 
analysis, the Board categorizes railroads required to report Waybill 
Sample data as either quarterly or monthly and as either sampling 
their own waybills or having a third party conduct their sampling. 
As a result, there are four categories of respondents, as shown in 
Table B-1 below.

                         Table B-1--Respondents
------------------------------------------------------------------------
                                                             Number of
                Categories of respondents                   respondents
------------------------------------------------------------------------
Railroads that conduct their own sampling and report                   5
 monthly................................................
Railroads that conduct their own sampling and report                   3
 quarterly..............................................
Railroads that have a third party sample their waybills                2
 and report monthly.....................................

[[Page 65775]]

 
Railroads that have a third party sample their waybills               43
 and report quarterly...................................
------------------------------------------------------------------------

    Number of Respondents: 53.
    Estimated Time Per Response: The estimated hour burden for 
waybill samples submitted to the Board is shown in Table B-2 below. 
(Note: respondents that are identified as reporting monthly actually 
report monthly, quarterly, and annually (or 17 times per year). All 
other respondents report quarterly and annually (five times a 
year)). The annualized one-time hour burden resulting from this NPRM 
is shown in Table B-3 below.

                   Table B-2--Estimated Existing Annual Hour Burden Under Current Regulations
----------------------------------------------------------------------------------------------------------------
                                                                                                       Total
                                                                   Total number      Estimated       estimated
            Categories of respondents                Number of      of samples     annual hours    annual hours
                                                    respondents      submitted      per sample      for samples
                                                                                     submitted       submitted
----------------------------------------------------------------------------------------------------------------
Railroads that conduct their own sampling and                  5              85             2.5           212.5
 report monthly.................................
Railroads that conduct their own sampling and                  3              15             2.5            37.5
 report quarterly...............................
Railroads that have a third party sample their                 2              34            1.25            42.5
 waybills and report monthly....................
Railroads that have a third party sample their                43             215            1.25           268.8
 waybills and report quarterly..................
                                                 ---------------------------------------------------------------
    Total Annual Hour Burden....................  ..............  ..............  ..............           561.3
----------------------------------------------------------------------------------------------------------------


                 Table B-3--Estimated Additional One-Time Hour Burden Under Proposed Regulations
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated
                                                                                   annual  one-    Total annual
                    Categories of respondents                        Number of      time  hour    one-time  hour
                                                                    respondents    burden  (per       burden
                                                                                    respondent)
----------------------------------------------------------------------------------------------------------------
Railroads that conduct their own sampling and report monthly....               5            26.7           133.3
Railroads that conduct their own sampling and report quarterly..               3            26.7            80.0
Railroads that have a third party sample their waybills and                    2             * 0             * 0
 report monthly.................................................
Railroads that have a third party sample their waybills and                   43             * 0             * 0
 report quarterly...............................................
                                                                 -----------------------------------------------
    Total Annual One-Time Hour Burden...........................  ..............  ..............           213.3
----------------------------------------------------------------------------------------------------------------
* The Board pays for the third-party contractor to prepare samples. There is no one-time hourly or non-hourly
  burden to these railroads.

    Frequency of Response: Seven respondents report monthly; 46 
report quarterly.
    Total Burden Hours (annually including all respondents): 774.6 
hours. This estimated total burden hours is shown in Table B-4 
below.

                                          Table B-4--Total Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated
                                                                     Estimated     annual  one-
                                                                   annual hours     time  hour     Total annual
                    Categories of respondents                       for samples       burden        hour burden
                                                                     submitted      (amortized
                                                                                   over 3 years)
----------------------------------------------------------------------------------------------------------------
Railroads that conduct their own sampling and report monthly....           212.5           133.3           345.8
Railroads that conduct their own sampling and report quarterly..            37.5            80.0           117.5
Railroads that have a third party sample their waybills and                 42.5             * 0            42.5
 report monthly.................................................
Railroads that have a third party sample their waybills and                268.8             * 0           268.8
 report quarterly...............................................
                                                                 -----------------------------------------------
    Total Annual Burden Hours...................................           561.3           213.3           774.6
----------------------------------------------------------------------------------------------------------------
* The Board pays for the third-party contractor to prepare samples. There is no one-time hourly or non-hourly
  burden to these railroads.

    Total Annual ``Non-Hour Burden'' Cost: There are no other costs 
identified because filings are submitted electronically to the 
Board.
    Needs and Uses: The Board is, by statute, responsible for the 
economic regulation of common carrier rail transportation in the 
United States. The information in the Waybill Sample is used by the 
Board, other federal and state agencies, and industry stakeholders 
to monitor traffic flows and rate trends in the industry, and to 
develop testimony in Board proceedings. The Board has authority to 
collect this data under 49 U.S.C. 11144 and 11145. As described in 
more detail above in the NPRM, the Board is amending the rules that 
apply to the collection of the Waybill Sample to simplify the 
sampling rates of non-intermodal carload shipments and to create 
more accurate sampling strata and rates for intermodal traffic. The 
Board's collection and use of this data enables the agency to meet 
its statutory duty to regulate the rail industry.

[FR Doc. 2019-25924 Filed 11-27-19; 8:45 am]
 BILLING CODE 4915-01-P