[Federal Register Volume 87, Number 107 (Friday, June 3, 2022)]
[Notices]
[Pages 33866-33867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11970]


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SURFACE TRANSPORTATION BOARD

[Docket No. EP 682 (Sub-No. 13)]


2021 Tax Information for Use in the Revenue Shortfall Allocation 
Method

    The Board is publishing, and providing the public an opportunity to 
comment on, the 2021 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).
    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 (Simplified Standards--Taxes in RSAM), EP 646 (Sub-No. 2) (STB 
served Nov. 21, 2008). RSAM is intended to measure the

[[Page 33867]]

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, EP 646 (Sub-No. 2), slip op. at 1. In Simplified 
Standards--Taxes in RSAM, EP 646 (Sub-No. 2), 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, 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 26, 2022, AAR filed its 
calculation of the weighted average state tax rates for 2021, listed 
below for each Class I railroad:

                    Weighted Average State Tax Rates
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                                            2021       2020
                Railroad                 (percent)  (percent)   % Change
------------------------------------------------------------------------
BNSF Railway Company...................      5.068      5.119     -0.051
CSX Transportation, Inc................      5.010      5.101     -0.091
Grand Trunk Corporation................      7.904      8.124     -0.220
The Kansas City Southern Railway             5.164      5.139      0.025
 Company...............................
Norfolk Southern Combined Railroad           5.671      5.713     -0.042
 Subsidiaries..........................
Soo Line Corporation...................      7.827      8.122     -0.295
Union Pacific Railroad Company.........      5.451      5.598     -0.147
------------------------------------------------------------------------

    Pursuant to 49 CFR 1135.2(b), notice of AAR's submission will be 
published in the Federal Register. Any party wishing to comment on 
AAR's calculation of the 2021 weighted average state tax rates should 
file a comment by July 5, 2022. See 49 CFR 1135.2(c). If any comments 
opposing AAR's calculations are filed, AAR's reply will be due by July 
25, 2022. 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 5, 2022, AAR's submitted weighted average state tax 
rates will be automatically adopted by the Board, effective July 6, 
2022. Id.
    It is ordered:
    1. Comments on AAR's calculation of the 2021 weighted average state 
tax rates for the Class I railroads are due by July 5, 2022. If any 
comments opposing AAR's calculations are filed, AAR's reply is due by 
July 25, 2022.
    2. If no comments are filed, AAR's calculation of the 2021 weighted 
average state tax rates for each Class I railroad will be automatically 
adopted by the Board, effective July 6, 2022.

    Decided: May 31, 2022.

    By the Board, Scott M. Zimmerman, Acting Director, Office of 
Proceedings.
Kenyatta Clay,
Clearance Clerk.
[FR Doc. 2022-11970 Filed 6-2-22; 8:45 am]
BILLING CODE 4915-01-P