2013-02037. Review of the General Purpose Costing System

AGENCY:

Surface Transportation Board.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

Through this Notice of Proposed Rulemaking, the Surface Transportation Board (Board) is proposing certain changes to its general purpose costing system, the Uniform Railroad Costing System (URCS). Specifically, the Board is proposing to adjust how URCS calculates certain system-average unit costs in Phase II, thereby obviating the need for URCS to apply a separate make-whole adjustment in Phase III. The Board is also proposing other related changes to URCS that would result in more accurate movement costs, as well as changes to two of its reporting requirements.

DATES:

Comments are due by March 21, 2013; replies are due by April 22, 2013.

ADDRESSES:

Comments may be submitted either via the Board's e-filing format or in the 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 Web site, at http://www.stb.dot.gov. Any person submitting a filing in the traditional paper format should send an original and 10 copies to: Surface Transportation Board, Attn: Docket No. EP 431 (Sub-No. 4), 395 E Street SW., Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT:

The Board's Office of Public Assistance, Governmental Affairs, and Compliance at [phone]. Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at [phone].

SUPPLEMENTARY INFORMATION:

In 1989, the Board's predecessor, the Interstate Commerce Commission (ICC), adopted URCS as its general purpose costing system. Adoption of the Unif. R.R. Costing Sys. as a Gen. Purpose Costing Sys. for All Regulatory Costing Purposes, 5 I.C.C.2d 894 (1989). The Board uses URCS for a variety of regulatory functions. URCS is used to make the jurisdictional determination in railroad maximum rate reasonableness proceedings, as well as the revenue allocation methodology and rate prescription methodology. URCS is also used to develop variable costs for making cost determinations in abandonment proceedings; to provide the railroad industry and shippers with a standardized costing model; to cost the Board's Car Load Waybill Sample to develop industry cost information; and to provide interested parties with basic cost information. URCS develops a regulatory cost estimate that can be applied to a service that occurs anywhere on a rail carrier's system.

URCS develops these cost estimates through three distinct phases. In Phase I, which was completed one time when URCS was originally developed, regression analyses were performed using the annual reports submitted by Class I rail carriers (R-1 reports) at the time and equations linking expense account groupings with particular measures of railroad activities were estimated. In Phase II, which is performed annually, URCS takes the aggregated cost data provided by Class I carriers in their most recent R-1 reports and disaggregates them by calculating the system-average unit costs associated with specific rail activites. In Phase III, URCS takes the unit costs from Phase II and applies them to the characteristics of a particular movement in order to calculate the system-average variable and total costs of that movement.

The ICC and now the Board have made modest adjustments to URCS over the years.^[1] In August 2009, the Senate Committee on Appropriations directed the Board to submit a report providing options for updating URCS. In the report submitted by the Board in May 2010, the Board identified the “make-whole adjustment” as one area that warranted further review.^[2] This rulemaking is intended to address concerns with the make-whole adjustment in URCS.

The make-whole adjustment is applied by URCS to correct the fact that, when disaggregating data and calculating system-average unit costs in Phase II, URCS currently does not take into account the economies of scale realized from larger shipment sizes. The purpose of the make-whole adjustment, which is calculated and applied in Phase III, is to recognize the efficiency savings that a carrier obtains in its higher-volume shipments and thus render more accurate unit costs.

URCS applies the make-whole adjustment through a three-step process. First, URCS assumes that a movement's costs are equal to that of a system-average movement. Next, URCS applies “efficiency adjustments” to higher-volume movements (multi-car and trainload), thereby reducing the system-average unit costs of such movements.^[3] Last, URCS redistributes the total savings obtained in all of the higher-volume shipments (the “shortfall”) across all of the lower-volume shipments (single-car and multi-car), such that the sum of variable costs across all of the carrier's movements remains the same. Currently, single-car shipments are defined as 1 to 5 cars, multi-car shipments are defined as 6 to 49 cars, and trainload shipments are defined as 50 or more cars.^[4]

There are two primary concerns with how the make-whole adjustment is currently applied by URCS. The first concern involves the step function that results from the application of efficiency adjustments, which generally reduce the system-average unit costs by various set percentages depending on whether the movement is classified as trainload, multi-car, or single-car. For example, the system-average unit cost for a multi-car movement is the same whether it is a 6-car or 49-car shipment. The same is true for the unit cost for a trainload movement, whether it be a 50-car or 85-car shipment. At the same time, however, the system-average unit cost for a 49-car multi-car shipment is noticeably higher than a 50-car trainload shipment. In other words, “break points” exist between single-car and multi-car shipments, and between multi-car and trainload shipments. Our concern with respect to the efficiency adjustments is that there is a relatively large difference between the unit costs of a movement on one side of a break point compared to the unit costs just on the other side of a break point.

The second concern is with how the make-whole adjustment redistributes the shortfall across single-car and multi-car movements. Currently, the shortfall is distributed across lower volume movements on a per-car basis. For example, under the per-car method for switching related costs, costs are increased in proportion to the number of cars switched (i.e., a two-car movement is costed as twice as expensive to switch as a one-car movement, a three-car movement is three times as expensive to switch as a one-car movement, etc.). Yet the actual switching costs for two cars as opposed to one car are not likely to be twice as expensive because the time, equipment, and personnel involved do not double. By not decreasing the per-car costs as shipment size increases, the redistribution of savings does not adequately account for economies of scale. Additionally, the redistribution of savings creates a second step function because the add-ons increase costs per-car across single-car and multi-car shipments, but do not apply to trainload shipments. For example, under the current system, the costs are increased in proportion to the number of cars. If the shortfall redistribution for a one-car shipment is $1,000, then the shortfall redistribution for a 49-car shipment is $49,000. But because the add-ons do not apply to trainload shipments, there is no redistribution of costs to a 50-car shipment. This causes the costs of a 49-car shipment to be higher than a 50-car shipment, thus creating a step function. This second step function, in which there is a relatively large difference between the variable costs of a 49-car movement and a 50-car movement, is caused by the current per-car method of redistributing the shortfall.

Proposed Changes

Rather than attempting to refine the make-whole adjustment as it is currently applied, we believe that the best course of action is to more accurately calculate the system-average unit costs in Phase II. If the unit costs calculated in Phase II were to more accurately account for operating costs and economies of scale as shipment size increases, then it would no longer be necessary to apply a separate make-whole adjustment in Phase III. In other words, we propose to change how certain system-average unit costs are calculated in Phase II to better reflect railroad operations and to automatically reflect economies of scale as shipment size increases. This solution would thus obviate our concerns about the step functions, properly account for economies of scale, and ultimately render more accurate system-average unit costs.

With this goal in mind, we evaluated the three categories of costs for which efficiency adjustments are made to determine what changes would be needed in order to adjust the calculation of system-average unit costs in Phase II. These categories are: (1) Switching costs related to switch engine minutes; (2) equipment costs for the use of railroad-owned cars during switching; and (3) station clerical costs. After addressing each category below, we will then address several other proposed changes to further improve URCS.

Switching Costs Related to Switch Engine Minutes. This rulemaking proposes to adjust how URCS calculates the operating costs for switching cars, regardless of car ownership. These costs are referred to as “switch engine minute” (SEM) costs. Currently, in Phase II, URCS calculates SEM costs on a per-car basis, which we do not believe reflects actual railroad operations or economies of scale as shipment size increases. Instead, this rulemaking proposes to calculate SEM unit costs in Phase II on a per-shipment basis for all five types of switching accounted for by URCS, namely: (1) Industry switching; (2) inter-train & intra-train (I&I) switching; (3) interchange switching; (4) intraterminal switching; and (5) interterminal switching.^[5]

Operationally, a shipment of rail cars is generally connected into a contiguous block of cars prior to loading, and is handled as a contiguous block from origin to destination. As such, the costs to switch a shipment of a four-car block should be the same as the costs to switch a shipment of an eight-car block. For this reason, the costs for each type of SEM switching are better accounted for on a per-shipment basis rather than a per-car basis. This change would not only better reflect actual operating costs, but the per-car cost of switching would drop as shipment size increases, thus properly reflecting economies of scale. As a result, URCS would no longer need to make a separate make-whole adjustment because the operating efficiencies of larger shipments would already be reflected in the unit costs.

In order to calculate SEM unit costs on a per-shipment basis, we also propose adjusting our reporting requirements accordingly. In order to calculate the SEM unit costs on a per-shipment basis, we propose to adjust the reporting requirements of both the Annual Report of Cars Loaded and Cars Terminated (Form STB-54) and the Quarterly Report of Freight Commodity Statistics (Form QCS). Specifically, in addition to the information currently required by both forms, the Form STB-54 would require information on shipments loaded and terminated, while the Form QCS would require information on number of shipments.^[6] For the purposes of both forms, a “shipment” would be defined as a block of one or more cars moving under the same waybill from origin to destination. See, e.g., App. A (proposed § 1248.2(a)(3)); App. B (Form STB-54 Instructions). These new requirements should not pose a significant burden on the Class I rail carriers because it is likely that they are already tracking this information. The proposed rules governing the Form STB-54 and the Form QCS are set forth in Appendix A.^[7] Additionally, the proposed changes to the Form STB-54 and Form QCS are set out in Appendix B and C, respectively.

Equipment Costs for the Use of Railroad-Owned Cars During Switching. Another category of system-average unit costs associated with switching pertains to the equipment costs for the use of railroad-owned cars. Currently, URCS calculates the costs for use of railroad-owned cars on a per-car basis in Phase II, and then applies the make-whole adjustment in Phase III to account for efficiencies in multi-car and unit-train movements. We believe that these costs, which are distance- and time-related,^[8] are properly accounted for by URCS on a per-car basis. In other words, unlike SEM switching costs, we believe a two-car shipment will incur twice the car-miles and car-days as a one-car shipment. Therefore, we propose to continue calculating equipment costs for the use of railroad-owned cars during switching on a per-car basis, which in turn requires the continued reporting of number of cars that are interchanged.

Although we propose to continue calculating these costs on a per-car basis in Phase II, this proposal nonetheless would affect a change in how these costs are applied in Phase III. Under our new proposal, which eliminates a separate make-whole adjustment in Phase III, the costs for the use of railroad-owned cars would not receive a subsequent adjustment because it does not appear that there are efficiencies associated with these costs.

Station Clerical Costs. This rulemaking also proposes to adjust how URCS calculates station clerical costs, which are the administrative costs associated with a shipment. Currently, in Phase II, URCS calculates station clerical costs on a per-car basis, which we are concerned does not properly reflect actual railroad operations or economies of scale. We believe that, operationally, there is little difference in the administrative costs between shipments of different sizes. As such, we propose to also calculate station clerical costs in Phase II on a per-shipment basis. To implement this change, we would rely on the proposed changes to the Form QCS and the Form STB-54 described above, wherein Class I railroads would be required to report on the number of shipments.

Other Changes. In addition to the above changes to how URCS calculates system-average unit costs in Phase II, we also propose additional changes that would further our effort to more accurately calculate costs under URCS.

Car-Mile Costs. In order to calculate car-mile costs, URCS currently uses what is referred to as the Empty/Loaded Ratio (E/L Ratio) to adjust the number of miles in a particular movement. The E/L Ratio is used when costing all movements because, although there are costs associated with both empty miles and loaded miles, URCS only requires a user to input loaded miles to cost a movement. Thus, to account for the costs of a carrier's total miles, URCS multiplies loaded miles by the E/L Ratio. The E/L Ratio, which can be described as total miles divided by loaded miles, is a figure computed by URCS based on data supplied by the Class I carriers.

Currently, in Phase III, URCS uses the E/L Ratio for single-car and multi-car movements. For trainload movements, however, URCS replaces the E/L Ratio with the figure 2.0, which is meant to assume that a loaded car will return to its origination location, such that empty miles are equal to loaded miles. In other words, URCS treats all trainload movements as dedicated unit trains. Currently, if a rail carrier's E/L Ratio is less than 2.0 (i.e., there are fewer empty miles and thus more efficiencies), URCS will disregard that more efficient E/L ratio and apply the less efficient value of 2.0.^[9]

We believe that the E/L Ratio computed from data supplied by the carriers is the best reflection of a railroad's actual operations and that it should not be replaced by the figure 2.0 in the case of a trainload movement. Therefore, we propose to adjust URCS so that it would apply the E/L Ratio to all types of movements. With this change, URCS would no longer treat all trainload movements as unit trains, but would instead reflect unit train service only to the extent that such service is indicated by the E/L Ratio.

I&I Switching Mileage. Currently, URCS assumes that single-car and multi-car shipments receive I&I switching every 200 miles. A number of years ago, the Board noted that this figure appeared to be outdated. Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2), slip op. at 5 n.18 (STB served Oct. 1, 1997). We now propose to update this figure to reflect the fact that, since the mergers of the 1990s, the average length of haul on individual railroads has increased. Based on a comparison of the average length of haul for the Class I railroads in 1990 (pre-mergers) and 2011 (post-mergers), we observed a 60% increase in the overall length of haul. We therefore propose to increase the distance between I&I switches by 60%, from 200 miles to 320 miles. We acknowledge that the actual average distance between I&I switches may be greater than 320 miles, and we encourage interested parties to submit data and comments on whether 60% is an appropriate increase, or whether the Board should consider an alternative distance between I&I switches that more accurately reflects railroad operations.

Definition of Trainload. Under this proposal to eliminate a separate make-whole adjustment in Phase III, URCS would no longer make percentage reductions in Phase III based on the number of cars per movement. As such, the distinction between single-car and multi-car would become largely irrelevant. The definition of trainload would, however, continue to play a role, despite the fact that the E/L Ratio would no longer be adjusted exclusively for trainload movements under our proposal, because URCS assumes that trainload movements receive no I&I switching. In other words, when distinguishing movements based on the number of cars per movement, the operative distinctions under our proposal would be “trainload” and “non-trainload.” It is, therefore, appropriate to consider the proper definition of trainload.

A trainload shipment is currently defined as a shipment consisting of 50 or more cars. Also inherent in the definition of trainload is the fact that a trainload shipment constitutes the only shipment on the particular train on which it moves. We propose to increase the number of cars in a trainload movement to account for the fact that train lengths have increased over the years due to a variety of factors, including higher horsepower engines and advances in distributive power. By way of example, today it is not unusual for a carrier to move 100 cars or more in one train, which is double the figure at which trainload is currently defined. If the railroads can routinely move two 50-car shipments on one train, then the current definition of trainload is likely inadequate, as a trainload movement is supposed to constitute the only shipment on the train.

Therefore, we propose to define trainload as consisting of 80 cars or more. The 80-car figure appears appropriate because the shipment size is large enough that rail carriers do not routinely move two 80-car shipments on one train.^[10] In other words, an 80-car shipment is likely to be the minimum size shipment that a carrier would move as a single train, consistent with the definition of trainload where only one shipment is on a train. A survey of the 2011 Waybill Sample, which is the most recently available data and thus the best reflection of current railroad operations, reveals that, for shipment sizes between 50 and 90, there is a higher occurrence of 80-car movements than any other shipment size. This suggests that 80 cars may be an appropriate definition for trainload. Nevertheless, we encourage interested parties to submit data or comments on whether the Board should adopt the proposed definition or consider an alternate figure in defining trainload.

Locomotive Unit-Mile. Finally, this rulemaking proposes to adjust the locomotive unit-mile (LUM) cost allocation. Currently, the LUM cost allocation produces a third step function between multi-car and trainload shipments, such that the LUM costs assigned to a 49-car shipment (the maximum multi-car shipment under the current definition) are higher than the costs assigned to a 50-car shipment (the minimum number of cars under the current definition of trainload). The total locomotive unit-miles are calculated by multiplying the total distance of a movement by the average number of locomotives for a particular type of train. Because a single-car or multi-car shipment (i.e., non-trainload) should only incur a portion of the LUM costs for the entire train, as that train will contain other shipments, URCS allocates the LUM costs of the train to a shipment based on the gross tons of that shipment compared to the average gross tons of that entire train.^[11]

We therefore propose two modifications to how URCS currently allocates LUM costs. First, the entire train's LUM costs would be allocated to the trainload shipment, regardless of the gross tons of the trainload shipment relative to the average gross tons of a particular train. This should be more accurate than the current approach because, by definition, a trainload shipment has no other shipments that should share the LUM costs of that train.

Second, the allocation of LUM costs for single and multi-car shipments would be based on the number of cars in the shipment relative to the minimum number of cars in a trainload shipment, which, as described above, we propose to be 80 cars. For example, a 20-car shipment would be allocated 25% (20/80) of the LUM costs.^[12] While the current allocation of LUM costs to single and multi-car shipments is based on the gross tons of the shipment relative to the average gross tons of way trains and through trains, basing the allocation on the number of cars in the shipment should be sufficiently precise, particularly if most cars are homogenously loaded at or near the maximum weight. Moreover, whenever practical, we seek a smooth cost function, such that there is no large cost discrepancy between a 79-car multi-car movement and an 80-car trainload movement. Basing this allocation on the number of cars in the shipment should assign LUM costs consistently on a prorated share of the total LUM costs and produce a smooth cost function across all shipment sizes, including trainload shipments.

Conclusion

We believe that the proposed modifications to URCS described above would produce more accurate costs and would more accurately reflect the current state of rail industry operations. We also believe that the modifications to our reporting requirements, which update the existing regulations and add additional reporting requirements in order to implement the proposed changes to URCS, would not impose a significant burden on the railroads. We therefore invite public comment on each of the proposals described herein.

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 will have on small entities; (2) analyze effective alternatives that may minimize a regulation's impact; and (3) make the analysis available for public comment. 5 U.S.C. 601-604. In its notice of proposed rulemaking, the agency must either include an initial regulatory flexibility analysis, § 603(a), or certify that the proposed rule would not have a “significant impact on a substantial number of small entities,” § 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. Ass'n v. Conner, 553 F.3d 467, 478, 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 will not have a significant economic impact upon a substantial number of small entities, within the meaning of the RFA. The reporting requirements that we are proposing here are applicable only to Class I rail carriers, which, under the Board's regulations, have annual carrier operating revenues of $250 million or more in 1991 dollars. Class I carriers generally do not fall within the Small Business Administration's definition of a small business for the rail transportation industry. The purpose of our changes to URCS is to improve the Board's general purpose costing system, which is used to develop regulatory cost estimates for rail carriers. These changes will result in more accurate estimates of variable costs. Therefore, the Board certifies under 49 U.S.C. 605(b) that this proposed rule, if promulgated, will 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. 3501-3549, and Office of Management and Budget (OMB) regulations at 5 CFR 1320.8(d)(3), the Board seeks comments regarding: (1) Whether each of the collections of information (the Form QCS and the Form STB-54), as modified in the proposed rules and further described in Appendix D, 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 information collected; and (4) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology, when appropriate. The modified collections in this proposed rule will be submitted to OMB for review as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11.

This action will not significantly affect either the quality of the human environment or the conservation of energy resources.

List of Subjects

49 CFR Part 1247

• Freight
• Railroads
• Reporting and recordkeeping requirements

49 CFR Part 1248

• Freight
• Railroads
• Reporting and recordkeeping requirements
• Statistics

It is ordered:

1. The Board proposes to adjust URCS and to amend its rules as detailed in this decision. Notice of this decision and the proposed rules will be published in the Federal Register.

2. Comments are due by March 21, 2013; replies are due by April 22, 2013.

3. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration.

4. This decision is effective on its service date.

Decided: January 25, 2013.

By the Board, Chairman Elliott, Vice Chairman Begeman, and Commissioner Mulvey.

Raina S. White,

Clearance Clerk.

For the reasons set forth in the preamble, the Surface Transportation Board proposes to amend parts 1247 and 1248 of title 49, chapter X, of the Code of Federal Regulations as follows:

1. Revise part 1247 to read as follows:

PART 1247—REPORT OF CARS AND SHIPMENTS LOADED AND TERMINATED

Authority: 49 U.S.C. 721, 10707, 11144, 11145.

§ 1247.1

Annual Report of Cars and Shipments Originated and Terminated.

Each Class I railroad shall file Form STB-54, Annual Report of Cars and Shipments Originated and Terminated, together with the accompanying certification, with the Office of Economics, Surface Transportation Board, Washington, DC 20423, within 90 days after the end of the reporting year. Blank forms and instructions are available on the Board's Web site (http://www.stb.dot.gov) or can be obtained by contacting the Office of Economics.

PART 1248—FREIGHT COMMODITY STATISTICS

2. The authority citation for part 1248 continues to read as follows:

Authority: 49 U.S.C. 721, 11144 and 11145.

3. Revise the note to part 1248 to read as follows:

Note:

The report forms prescribed by part 1248 are available upon request from the Office of Economics, Surface Transportation Board, Washington, DC 20423-0001.

4. Amend § 1248.2 by revising paragraph (a)(2) and by adding paragraph (a)(3) to read as follows:

§ 1248.2

Items to be reported.

(a) * * *

(2) For each commodity code used in reporting, except that the number of carloads for commodity code 431, “Small packaged freight shipments,” shall be omitted, the following items:

Revenue freight originating on respondent's road:

Terminating on line:

Number of carloads.

Number of tons (2,000 pounds).

Number of shipments.

Delivered to connecting rail carriers:

Number of carloads.

Number of tons (2,000 pounds).

Number of shipments.

Revenue freight received from connecting rail carriers:

Terminating on line:

Number of carloads.

Number of tons (2,000 pounds).

Number of shipments.

Delivered to connecting rail carriers:

Number of carloads.

Number of tons (2,000 pounds).

Number of shipments.

Total revenue freight carried:

Number of carloads.

Number of tons (2,000 pounds).

Number of shipments.

Gross freight revenue.

(3) For the purpose of reporting number of shipments under this section, a shipment is defined as a block of one or more cars moving under the same waybill from origin to destination.

5. Revise § 1248.3 to read as follows:

§ 1248.3

Carload and L.C.L. traffic defined.

(a) Commodity codes 01 through 422 and 44 through 462, named in § 1248.101, shall include only carload traffic. All carloads weighing less than 10,000 pounds shall be included in commodity code 431, “Small packaged freight shipments.”

(b) A carload for the purpose of this order shall consist of a carload of not less than 10,000 pounds of one commodity. A mixed carload for the purpose of this order shall be treated as a carload of that commodity which forms the majority of the weight. If a single shipment is loaded into more than one car, each car used shall be reported as a carload. If more than one carload shipment is loaded into one car, each shipment shall be reported separately as a carload.

6. Amend § 1248.4 by revising paragraphs (a), (b), (d), (e), and (l); and by adding paragraph (o) to read as follows:

§ 1248.4

Originating and connecting line traffic.

(a) Revenue freight reported as received from connecting rail carriers shall include all carloads and shipments received from connecting rail carriers, either directly or indirectly, so far as apparent from information on the waybills or abstracts.

(b) Revenue freight reported as originating on respondent's road shall include carloads and shipments originating on line and carloads and shipments received from water lines and highway motor truck lines, except when identified as having had previous rail transportation, as provided in paragraph (a) of this section.

* * * * *

(d) Revenue freight reported as delivered to connecting rail carriers shall include carloads and shipments delivered to connecting rail carriers, either directly or indirectly, as far as apparent from information on waybills or abstracts.

(e) Revenue freight reported as terminating on respondent's road shall include carloads and shipments terminating on line and carloads and shipments delivered to water lines and highway motor truck lines, except when identified as to receive further rail transportation as provided in paragraph (d) of this section.

* * * * *

(l) Freight accorded transit privileges shall be reported as “originated on respondent's road” at the transit point, even though the outbound carload(s) or shipment may move under transit balances or proportional rates.

* * * * *

(o) Rail carriers originating a Rule 11 traffic movement shall report the movement as originated and forwarded. Rail carriers receiving a Rule 11 traffic movement and completing the movement to final destination shall report the movement as received and terminated. Rail carriers receiving a Rule 11 traffic movement and forwarding the movement to another rail carrier shall report the movement as forwarded or received.

7. Remove the note to § 1248.5.

8. Revise § 1248.5(a) to read as follows:

§ 1248.5

Report forms and date of filing.

(a) Reports required from Class I carriers by this section shall be filed in duplicate with the Office of Economics, Surface Transportation Board, Washington, DC 20423, on forms which will be furnished to the carriers. Data required under § 1248.2 shall be filed on Form QCS on or before the 60th day succeeding the close of the period for which they are compiled.

* * * * *

9. Revise § 1248.6 to read as follows:

§ 1248.6

Public inspection—railroad reports.

The individual commodity statistics reports of Class I railroads, required to be filed under the terms of § 1248.1, will be open for public inspection. Such required commodity statistics reports, however, to the extent that they involve traffic of less than three shippers, reportable in one of the commodity reporting classes, may be excluded from a railroad's regular freight commodity statistics report and filed in a supplemental report which will not be open for public inspection, except that access to supplemental reports may be given upon approval by the Board.

APPENDIX B

Proposed Form QCS

Appendix C

The additional information below is included to assist those who may wish to submit comments pertinent to review under the Paperwork Reduction Act of the two collections for which modifications are proposed in this proceeding:

Collection Number 1

OMB Control Number: 2140-0001.

Title: Quarterly Report of Freight Commodity Statistics (Form QCS).

Form Number: None.

Type of Review: Revision of currently approved collection.

Respondents: Class I railroads.

Number of Respondents: 7.

Estimated Time per Response: 217 hours, plus a one-time addition of 7.5 start-up hours.

Frequency of Response: Quarterly, with an annual summation.

Total Annual Hour Burden: 7,613 hours annually (includes additional 2.5 hours per year per railroad, which is 7.5 start-up hours annualized over the three-year approval period).

Total Annual “Non-Hour Burden” Cost: No “non-hour burden” costs associated with this collection have been identified.

Needs and Uses: This collection, which is based on information contained in carload waybills used by railroads in the ordinary course of business, reports car loadings and total revenues by commodity code for each commodity that moved on the railroad during the reporting period. See 49 CFR part 1248. While the public is the primary user of the quarterly data, the Board enters information from the annual report into URCS. The Board uses URCS as a tool in rail rate proceedings, in accordance with 49 U.S.C. 10707(d), to calculate the variable costs associated with providing a particular service. The Board also uses this information to more effectively carry out other of its regulatory responsibilities, including: Acting on railroad requests for authority to engage in Board-regulated financial transactions such as mergers, acquisitions of control, and consolidations, see 49 U.S.C. 11323-11324; analyzing the information that the Board obtains through the annual railroad industry waybill sample, see 49 CFR 1244; measuring off-branch costs in railroad abandonment proceedings, in accordance with 49 CFR 1152.32(n); developing the “rail cost adjustment factors,” in accordance with 49 U.S.C. 10708; and conducting investigations and rulemakings. In addition, many other Federal agencies and industry groups depend on Form QCS for information regarding the cost of the movement of goods by railroads. The Board now proposes to modify this collection to require railroads to provide additional data regarding the number of shipments. This modification will provide the Board with information relevant to proposed changes in the way that URCS calculates switch engine minute costs and station clerical costs. There is no other source for the information contained in this report.

Collection Number 2

Title: Annual Report of Cars Loaded and Cars Terminated. (Under the proposal described in this proceeding, the name of this report would be changed to “Annual Report of Cars and Shipments Originated and Terminated” to reflect the substantive modifications to the reporting requirements.)

OMB Control Number: 2140-0011.

Form Number: Form STB-54.

Type of Review: Revision of currently approved collection.

Number of Respondents: 7.

Estimated Time per Response: 4 hours, plus a one-time addition of 9 start-up hours.

Frequency of Response: Annual.

Total Annual Hour Burden: 49 hours (includes additional 3 hour per year per railroad, which is 9 start-up hours annualized over the three-year approval period).

Total Annual “Non-Hour Burden” Cost: No “non-hour burden” costs associated with this collection have been identified.

Needs and Uses: This collection reports the number of cars loaded and cars terminated on the reporting carrier's line. See 49 CFR part 247. Information in this report is entered into the Board's URCS, the uses of which are explained under Collection 1. The Board now proposes to modify this collection to require railroads to provide additional data regarding the number of shipments. This modification will provide the Board with information relevant to proposed changes in the way that URCS calculates switch engine minute costs and station clerical costs. There is no other source for the information contained in this report.

Footnotes

1.  See, e.g., Review of the Surface Transp. Bd.'s Gen. Costing Sys., EP 431 (Sub-No. 3) (STB served Apr. 6, 2009); Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2) (STB served Dec. 5, 1997); Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2) (STB served Oct. 1, 1997); Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2) (ICC served July 21, 1993).

2.  Surface Transp. Bd., Surface Transportation Board Report to Congress Regarding the Uniform Rail Costing System, 14, 18-19 (May 27, 2010).

3.  There are 14 efficiency adjustments for multi-car and trainload movements, any number of which may apply to a particular movement.

4.  Single-car, multi-car, and trainload are the three basic categories for how shipments are treated under the make-whole adjustment. Because of its handling of the Empty/Loaded Ratio, however, URCS currently treats all trainload movements as dedicated unit train movements—that is, it assumes that every trainload movement travels from origination to destination and back to origination. Additionally, URCS treats intermodal traffic as a type of hybrid category. Prior to 1997, URCS treated intermodal traffic as single-car movements. In 1997, the Board concluded that more accurate costs would be obtained by applying to intermodal traffic many of the efficiency adjustments applicable to trainload movements. Review of Gen. Purpose Costing Sys., EP 431 (Sub-No. 2), slip op. at 4-5 (STB served Oct. 1, 1997).

5.  Industry switching is switching that occurs at origin or destination points. I&I switching is switching that occurs at intermediate yards on a rail carrier's own lines, as opposed to interchange switching, which occurs between different carriers. Intraterminal switching is the switching of cars within a rail terminal, and interterminal switching is the switching of cars between rail terminals.

6.  Because we are proposing to add information regarding number of shipments, we are also proposing to change the title of Form STB-54 to Annual Report of Cars and Shipments Originated and Terminated.

7.  Because this rulemaking proposes changes to the Form QCS, we are taking this opportunity to propose a new instruction for the Form QCS related to Rule 11 movements, as the current instructions are silent on these types of movements. The proposed instruction, which would be located at 49 CFR 1248.4(o), is also set forth in Appendix A.

Additionally, we are making certain other modifications to update and clarify the existing regulations in 49 CFR parts 1247 and 1248 (subpart A), which govern the Form STB-54 and Form QCS, respectively. Consistent with the goals announced in Improving Regulation and Regulatory Review, EP 712, which seeks to ensure that existing regulations are current and effective, we seek comment on whether the Board could improve or update other language in parts 1247 and 1248 (subpart A). We do not, however, plan to address the car types listed in the Form STB-54 in this rulemaking. Any updates to the car types would be addressed in a separate rulemaking examining car types across all of our reporting requirements.

8.  In other words, the costs for using a railroad-owned car are based both on the distance it travels and the time it is being used during the switching process. For example, if a railroad-owned car travels two miles during an interchange switch, but is held at the interchange for three days, the costs for use of that car will be based both on the two-miles it traveled and the three-days it was held.

9.  A trainload movement's E/L ratio might be greater or less than 2.0 for a variety of reasons, including whether the shipment at issue is moved in railroad-owned cars or privately-owned cars. In the case of the former, where the rail carrier typically controls the movement of its cars across its network, a shipment may travel from point A (loading origin) to point B (unloading destination) to point C (next loading origin). If point C is closer to point B than point A, then the E/L Ratio would be less than 2.0. If, however, point C is farther from point B than point A, then the E/L Ratio would be greater than 2.0. This is in contrast to, for example, the latter case involving a unit train of privately-owned cars that cycles between point A and point B, such that the movement's E/L Ratio would be equal to 2.0.

10.  Based on a review of the 2011 Waybill Sample, the most frequently occurring shipment size between 100 cars and 160 cars is 135 cars. These 135-car shipments represent a typical maximum train length for what is usually the longest train movement—unit coal trains.

11.  The average gross tons for different types of trains are calculated by dividing gross ton-miles by train-miles, both of which are reported by carriers in Schedule 755 of the R-1 annual reports.

12.  Because we also propose to modify the definition of trainload from 50 or more cars to 80 or more cars, the prorated share of LUM costs assigned to non-trainloads will be less than under the current definition of trainload. For example, under the current definition of trainload, a 10-car shipment would be assigned the prorated costs of 10 cars out of 50, whereas under our proposed definition, a 10-car shipment would be assigned the prorated costs of 10 cars out of 80.