[Federal Register Volume 90, Number 109 (Monday, June 9, 2025)]
[Notices]
[Pages 24310-24311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-10408]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36853]
2024 Tax Information for Use in the Revenue Shortfall Allocation
Method
The Board is publishing, and providing the public an opportunity to
comment on, the 2024 weighted average state tax rates for each Class I
railroad, as calculated by the Association of
[[Page 24311]]
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, 2025, AAR filed its
calculation of the weighted average state tax rates for 2024, listed
below for each Class I railroad:
Weighted Average State Tax Rates
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Railroad 2024 (%) 2023 (%) % Change
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BNSF Railway Company............................................ 4.739 4.894 -0.155
CSX Transportation, Inc......................................... 5.118 5.172 -0.054
Grand Trunk Corporation......................................... 7.575 7.728 -0.153
Canadian Pacific Kansas City.................................... 6.178 N/A N/A
Norfolk Southern Combined Railroad Subsidiaries................. 5.265 5.368 -0.103
Union Pacific Railroad Company.................................. 5.035 5.241 -0.206
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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 2024 weighted average state tax rates should
file a comment by July 8, 2025. 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 8, 2025,
AAR's submitted weighted average state tax rates will be automatically
adopted by the Board, effective July 9, 2025. Id.
It is ordered:
1. Comments on AAR's calculation of the 2024 weighted average state
tax rates for the Class I railroads are due by July 8, 2025. 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 2024 weighted
average state tax rates for each Class I railroad will be automatically
adopted by the Board, effective July 9, 2025.
3. Notice will be published in the Federal Register.
Decided: June 4, 2025.
By the Board, Scott M. Zimmerman, Acting Director, Office of
Proceedings.
Zantori Dickerson,
Clearance Clerk.
[FR Doc. 2025-10408 Filed 6-6-25; 8:45 am]
BILLING CODE 4915-01-P