[Federal Register Volume 88, Number 111 (Friday, June 9, 2023)]
[Notices]
[Page 37915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12378]


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SURFACE TRANSPORTATION BOARD

[Docket No. EP 682 (Sub-No. 14)]


2022 Tax Information for Use in the Revenue Shortfall Allocation 
Method

    The Board is publishing, and providing the public an opportunity to 
comment on, the 2022 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 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 30, 2023, AAR filed its 
calculation of the weighted average state tax rates for 2022. AAR then 
refiled their calculations on June 1, 2023, to correct the Annual 
Report (R-1) data that was previously submitted. Therefore, June 1 will 
be considered the filing date for AAR's submission. Listed below for 
each Class I railroad are AAR's calculations:

                                        Weighted Average State Tax Rates
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                            Railroad                                 2022 (%)        2021 (%)        % Change
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BNSF Railway Company............................................           4.960           5.068          -0.108
CSX Transportation, Inc.........................................           5.242           5.010           0.232
Grand Trunk Corporation.........................................           7.906           7.904           0.002
The Kansas City Southern Railway Company........................           4.897           5.164          -0.267
Norfolk Southern Combined Railroad Subsidiaries.................           5.620           5.671          -0.051
Soo Line Corporation............................................           7.802           7.827          -0.025
Union Pacific Railroad Company..................................           5.337           5.451          -0.114
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    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 2022 weighted average state tax rates should 
file a comment by July 10, 2023. See 49 CFR 1135.2(c). If any comments 
opposing AAR's calculations are filed, AAR's reply will be due within 
20 days of the filing date of the comments. 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 10, 
2023, AAR's submitted weighted average state tax rates will be 
automatically adopted by the Board, effective July 11, 2023. Id.
    It is ordered:
    1. Comments on AAR's calculation of the 2022 weighted average state 
tax rates for the Class I railroads are due by July 10, 2023. If any 
comments opposing AAR's calculations are filed, AAR's reply is due 
within 20 days of the filing of the comments.
    2. If no comments are filed, AAR's calculation of the 2022 weighted 
average state tax rates for each Class I railroad will be automatically 
adopted by the Board, effective July 11, 2023.

    Decided: June 6, 2023.

    By the Board, Mai T. Dinh, Director, Office of Proceedings.
Kenyatta Clay,
Clearance Clerk.
[FR Doc. 2023-12378 Filed 6-8-23; 8:45 am]
BILLING CODE 4915-01-P