Federal Register, Volume 78 Issue 23 (Monday, February 4, 2013)

[Federal Register Volume 78, Number 23 (Monday, February 4, 2013)]
[Proposed Rules]
[Pages 7718-7737]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02037]

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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1247 and 1248

[Docket No. EP 431 (Sub-No. 4)]

Review of the General Purpose Costing System

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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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 (202) 245-0238.
Assistance for the hearing impaired is available through the Federal
Information Relay Service (FIRS) at (800) 877-8339.

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.
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\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).
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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

[[Page 7719]]

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\
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\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).
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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\
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\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.
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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

[[Page 7720]]

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 Sec. 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.
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\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.
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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.
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\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.
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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\
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\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.
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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

[[Page 7721]]

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.
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\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.
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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\
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\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.
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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.
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\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.
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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, Sec. 603(a), or certify that
the proposed rule would not have

[[Page 7722]]

a ``significant impact on a substantial number of small entities,''
Sec. 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:

0
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.

Sec. 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

0
2. The authority citation for part 1248 continues to read as follows:

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

0
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.

0
4. Amend Sec. 1248.2 by revising paragraph (a)(2) and by adding
paragraph (a)(3) to read as follows:

Sec. 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.
0
5. Revise Sec. 1248.3 to read as follows:

Sec. 1248.3 Carload and L.C.L. traffic defined.

(a) Commodity codes 01 through 422 and 44 through 462, named in
Sec. 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

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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.
0
6. Amend Sec. 1248.4 by revising paragraphs (a), (b), (d), (e), and
(l); and by adding paragraph (o) to read as follows:

Sec. 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.
0
7. Remove the note to Sec. 1248.5.
0
8. Revise Sec. 1248.5(a) to read as follows:

Sec. 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 Sec. 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.
* * * * *
0
9. Revise Sec. 1248.6 to read as follows:

Sec. 1248.6 Public inspection--railroad reports.

The individual commodity statistics reports of Class I railroads,
required to be filed under the terms of Sec. 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.
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APPENDIX B
Proposed Form QCS

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BILLING CODE 4915-01-C

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

[[Page 7737]]

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.

[FR Doc. 2013-02037 Filed 2-1-13; 8:45 am]
BILLING CODE 4915-01-P