40283                                    SERVICE DATE – OCTOBER 26, 2009

EB

This decision will be included in the bound volumes of the STB

printed reports at a later date.

 

SURFACE TRANSPORTATION BOARD

 

DECISION

 

STB Ex Parte No. 552 (Sub-No. 13)

 

RAILROAD REVENUE ADEQUACY - 2008 DETERMINATION

 

Decided:  October 16, 2009

 

One Class I railroad (Norfolk Southern Railway Company) is found to be revenue adequate for the year 2008.  All other Class I railroads are found to be revenue inadequate.

 

BY THE BOARD: 

 

            This annual determination of railroad revenue adequacy is made in accordance with the standards and procedures developed in Standards for Railroad Revenue Adequacy, 364 I.C.C. 803 (1981), Standards for Railroad Revenue Adequacy, 3 I.C.C.2d 261 (1986), and Supplemental Reporting of Consolidated Information for Revenue Adequacy, 5 I.C.C.2d 65 (1988).  Pursuant to those procedures, which are essentially mechanical, a railroad is considered revenue adequate under 49 U.S.C. 10704(a) if it achieves a rate of return on net investment (ROI) equal to at least the current cost of capital for the railroad industry.  We perform the annual revenue adequacy exercise because we have been directed to do so by Congress.

 

            In Railroad Cost of Capital — 2008, STB Ex Parte No. 558 (Sub-No. 12) (STB served

Sept. 25, 2009) we determined that the 2008 railroad industry cost of capital was 11.75%.  By comparing this figure to the 2008 ROI data obtained from the carriers’ Annual Report R-1 Schedule 250 filings, we have made revenue adequacy calculations for each of the Class I freight railroads that were in operation as of December 31, 2008. 

 

            A summary of the ROIs for all Class I railroads is set forth in the Appendix to this decision.  We find one carrier (Norfolk Southern Railway Company) to be revenue adequate for 2008.  Our findings with respect to the Class I carriers will be final on the effective date of this decision. 

 

Environmental and Energy Considerations

 

            We conclude that this action will not significantly affect either the quality of the human environment or the conservation of energy resources.

 

 

Regulatory Flexibility Analysis

 

            Pursuant to 5 U.S.C. 605(b), we conclude that our action in this proceeding will not have a significant economic impact on a substantial number of small entities.  The purpose and effect of the action are merely to update the annual railroad industry revenue adequacy finding.  No new reporting or other regulatory requirements are imposed, directly or indirectly, on small entities.

 

            It is ordered:

 

1.  This decision is effective on October 26, 2009.

 

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

 

 

Anne K. Quinlan

Acting Secretary

 

APPENDIX