|SURFACE TRANSPORTATION BOARD DECISION DOCUMENT|
|RAILROAD REVENUE ADEQUACY-2009 DETERMINATION|
|DECISION FOUND THAT NO CLASS I RAILROAD HAS ACHIEVED REVENUE ADEQUACY FOR THE YEAR 2009, IN ACCORDANCE WITH THE BOARD'S STANDARDS AND PROCEDURES DEVELOPED TO MAKE THAT DETERMINATION.|
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|Full Text of Decision|
41189 SERVICE DATE – NOVEMBER 10, 2010
This decision will be included in the bound volumes of the STB
printed reports at a later date.
SURFACE TRANSPORTATION BOARD
Docket No. EP 552 (Sub-No. 14)
RAILROAD REVENUE ADEQUACY—2009 DETERMINATION
Digest: The agency finds that no Class I railroad is revenue adequate for the year 2009, meaning none of the Class I railroads achieved a rate of return equal to or greater than the Board’s calculation of the average cost of capital to the freight rail industry.
Decided: November 9, 2010
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 Purposes, 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—2009, EP 558 (Sub-No. 13) (STB served Sept. 30, 2010), we determined that the 2009 railroad industry cost of capital was 10.43%. By comparing this figure to the 2009 ROI data obtained from the carriers’ Annual Report R-1 Schedule 250 filings, we have calculated a revenue adequacy figure for each of the Class I freight railroads that were in operation as of December 31, 2009.
A summary of the ROIs for all Class I railroads is set forth in Appendix A to this decision. Appendix B provides the railroads’ R-1 Schedule 250 data that was used to compute the ROIs. We find no carrier to be revenue adequate for 2009. Our findings with respect to the Class I carriers will be final on the effective date of this decision.
This action will not significantly affect either the quality of the human environment or the conservation of energy resources.
It is ordered:
1. This decision is effective on November 10, 2009.
By the Board, Chairman Elliott, Vice Chairman Mulvey, and Commissioner Nottingham.
 The digest constitutes no part of the decision of the Board but has been prepared for the convenience of the reader. It may not be cited to or relied upon as precedent. Policy Statement on Plain Language Digests in Decisions, EP 696 (STB served Sept. 2, 2010).