Reporting Requirements for Positive Train Control Expenses and Investments, 51078-51096 [2013-20116]

Agencies

• Surface Transportation Board
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 78, Number 161 (Tuesday, August 20, 2013)]
[Rules and Regulations]
[Pages 51078-51096]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20116]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1241

[Docket No. EP 706]


Reporting Requirements for Positive Train Control Expenses and 
Investments

AGENCY: Surface Transportation Board, DOT.

ACTION: Final rule.

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SUMMARY: The Surface Transportation Board (Board) is amending its rules 
to require rail carriers that submit to the Board R-1 reports that 
identify information on capital and operating expenditures for Positive 
Train Control (PTC) to separately report those expenses so that they 
can be viewed both as component parts of, as well as separately from, 
other capital investments and expenses. PTC is an automated system 
designed to prevent train-to-train collisions and other accidents. Rail 
carriers with traffic routes that carry passengers and/or hazardous 
toxic-by-inhalation (TIH) or poisonous-by-inhalation (PIH) materials, 
as so designated under federal law, must implement PTC according to 
federal legislation. Pursuant to the notice of proposed rulemaking 
published in the Federal Register on October 13, 2011, we are adopting 
supplemental schedules to the R-1 to require financial disclosure with 
respect to PTC to help inform the Board and the public about the 
specific costs attributable to PTC implementation.

DATES: This rule is effective on September 19, 2013.

FOR FURTHER INFORMATION CONTACT: Paul Aguiar, (202) 245-0323. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at (800) 877-8339.

SUPPLEMENTARY INFORMATION: Rail carriers must file with the Board an 
annual report containing ``an account, in as much detail as the Board 
may require, of the affairs of the rail carrier.'' 49 U.S.C. 
11145(b)(1). As authorized by this provision, the Board requires large 
(Class I) \1\ rail carriers to submit annual reports, known as R-1 
reports. 49 CFR 1241.11.\2\ The R-1 reports contain information about 
finances and operating statistics for each railroad. Currently, PTC 
expenditures are incorporated into the R-1 under the category of 
``capital investments and expenses;'' however, PTC expenditures are not 
reported separately.
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    \1\ The Board designates three classes of freight railroads 
based upon their operating revenues, for three consecutive years, in 
1991 dollars, using the following scale: Class I--$250 million or 
more; Class II--less than $250 million but more than $20 million; 
and Class III--$20 million or less. These operating revenue 
thresholds are adjusted annually for inflation. 49 CFR part 1201, 1-
1. Adjusted for inflation, the revenue threshold for a Class I rail 
carrier using 2012 data is $452,653,248. Today, there are seven 
Class I carriers.
    \2\ Information about the R-1 report, including the schedules 
discussed in this rulemaking, past R-1 reports, and a blank R-1 
form, is available on the Board's Web site. STB Industry Data, 
https://www.stb.dot.gov/stb/industry/econ_reports.html.
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    PTC is a system designed to prevent train-to-train collisions, 
over-speed derailments, incursions into established work zone limits, 
and the movement of a train through a switch left in the wrong 
position. 49 U.S.C. 20157(i)(3). PTC systems may include digital data 
link communications networks, positioning systems, on-board computers 
on locomotives, throttle-brake interfaces on locomotives, wayside 
interface units at switches and wayside detectors, and control center 
computers.\3\ The Rail Safety Improvement Act of 2008 (RSIA) requires 
Class I rail carriers to implement PTC by December 31, 2015, on 
mainlines where intercity rail passenger transportation or commuter 
rail passenger transportation is regularly scheduled, and/or on 
mainlines over which TIH or PIH, as designated in 49 CFR 171.8, 
173.115, and 173.132, are transported. 49 U.S.C. 20157(a)(1).\4\ In 
complying with the RSIA, rail carriers are expected to make 
expenditures related to installation, operation, and maintenance of 
PTC.
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    \3\ The Federal Railroad Administration (FRA) provides more 
information online. Federal Railroad Administration, Positive Train 
Control, https://www.fra.dot.gov/Page/P0152 (last visited Aug. 6, 
2013).
    \4\ We note that in a 2012 report to Congress, the FRA indicated 
that it was not likely that all PTC implementation under the statute 
would be completed by the 2015 deadline, and made a series of 
recommendations to Congress on how to address emerging issues on 
implementation. FRA, FRA Report to Congress: Positive Train Control: 
Implementation Status, Issues, and Impacts (2012), available at 
https://www.fra.dot.gov/eLib/Details/L03718 (last visited Aug. 13, 
2013). See also Rail Safety: Preliminary Observations on Federal 
Rail Safety Oversight & Positive Train Control Implementation Before 
the S. Comm. on Commerce, Science, & Transp., 113th Cong. 12-17 
(2013) (statement of Susan A. Fleming, Dir. Physical Infrastructure 
Issues, Gov't Accountability Office), available at https://www.gao.gov/assets/660/655298.pdf (last visited Aug. 13, 2013).
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    On October 13, 2010, the Union Pacific Railroad Company (UP), a 
Class I rail carrier, filed a petition requesting that the Board 
institute a rulemaking proceeding to adopt supplemental schedules that 
would require Class I carriers to separately identify PTC expenditures 
in annual R-1 reports to the Board. Various parties filed comments 
supporting and opposing UP's petition. In Reporting Requirements for 
Positive Train Control Expenses & Investments, EP 706 (STB served Feb. 
10, 2011), the Board instituted a rulemaking proceeding in response to 
UP's petition, but the Board made no determination about the merits of 
UP's specific proposal and stated that it would address the arguments 
raised by the parties in their filings in a subsequent decision. On 
October 13, 2011, the Board served a Notice of Proposed Rulemaking (PTC 
NPRM) announcing proposed changes to its reporting rules to supplement 
the R-1 with details of the expenditures attributable to the 
installation, operation, and maintenance of PTC systems. The Board 
explained that the proposed ``PTC Supplement,'' which would separately 
identify PTC-related expenses from the R-1 filings currently required, 
would provide it with important information that would help identify 
transportation industry changes that may require attention by the 
agency and would assist the Board in preparing financial and 
statistical summaries and abstracts to provide itself, Congress, other 
government agencies, the transportation industry, and the public with 
transportation data useful in making regulatory policy and business 
decisions.
    The new rule will require a PTC Supplement \5\ to be filed along 
with each carrier's R-1 annual report.\6\ The supplement will provide 
for PTC versions of schedules 330 (road property and equipment 
improvements), 332 (depreciation base and rates--road property and 
equipment), 335 (accumulated depreciation), 352B (investment in 
railroad property), and 410 (railway operating expenses) containing 
dollar amounts that reflect only the amounts attributable to PTC for 
the filing year. The PTC Supplement will also contain PTC versions of 
schedules 700 (mileage operated at close of year), 710 (inventory of 
equipment), 710S (unit cost of equipment installed during the year), 
and 720 (track and traffic conditions). Railroads will also

[[Page 51079]]

report, by footnote in each supplement schedule, PTC-related 
expenditures for passenger-only service not otherwise captured in the 
individual schedules to allow the Board to understand fully the 
railroads' PTC expenditures. In addition to separating capital expenses 
and operating expenses incurred by the railroad for PTC, the respondent 
entity will include by footnote disclosure the value of funds from non-
government and government transfers, including grants, subsidies, and 
other contributions or reimbursements, used or designated to purchase 
or create PTC assets or to offset PTC costs.\7\
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    \5\ The PTC schedules are provided in Appendix A.
    \6\ The currently established R-1 will not change.
    \7\ See App. A, Table Footnote: PTC Grants.
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    The American Chemistry Council and the Chlorine Institute 
(collectively, ACC/CI) jointly filed opening comments in response to 
the rules proposed in the PTC NPRM. UP and the Association of American 
Railroads (AAR) also filed opening comments. These same parties also 
filed reply comments.\8\ We have considered the parties' arguments and 
will adopt final rules, accordingly. We address below the comments 
received on the PTC NPRM. The final rules are in full below.
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    \8\ UP also joins the comments of AAR on both opening and reply. 
UP Opening 2 n.1; UP Reply 2 n.1.
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    Nature of PTC-related costs. ACC/CI argue that the Board should not 
adopt the PTC Supplement because the Board has not provided sufficient 
guidance about which PTC-related costs may be recorded, and how they 
should be recorded.\9\ ACC/CI argue that a lack of guidance on how to 
separate PTC-related expenses from non-PTC expenses will result in 
inconsistent reporting, and speculate that, for example, one railroad 
might report as a PTC-related expense the entire cost of a PTC-equipped 
locomotive, while another might report as PTC-related only the expense 
of PTC equipment on the locomotive.\10\ ACC/CI also claim that the 
potential for inconsistencies is shown in PTC implementation plans 
filed by carriers with the FRA, citing the differences among the 
carriers' FRA reports.\11\
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    \9\ ACC/CI Opening 4-6.
    \10\ Id. at V.S. Crowley & Mulholland 8.
    \11\ Id.
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    AAR and UP reply that the rules at 49 CFR Part 1201 Subpart A--
Uniform System of Accounts, independent auditing of the R-1, and the 
Board's monitoring of that auditing provide sufficient guidance and 
assurance that PTC-related expenses will be properly reported.\12\ ACC/
CI state that the comments of AAR and UP show that carrier accounting 
practices vary, citing AAR's comment that it will be ``difficult to 
decide'' on the appropriate PTC portion of maintenance expenses for 
wayside devices that also supply power to non-PTC equipment.\13\ 
However, ACC/CI also state on reply that because UP is the only 
individual carrier that filed comments on the PTC NPRM, the record does 
not show the full diversity of carrier accounting practices.\14\
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    \12\ AAR Reply 4-5; UP Reply 4-5.
    \13\ ACC/CI Reply 2 (citing AAR Opening 9 n.12).
    \14\ ACC/CI Reply 2.
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    With respect to ACC/CI's argument that there is insufficient 
guidance on recording of PTC-related costs, the Board's Uniform System 
of Accounts (USOA) and the auditing process provide sufficient 
assurance of proper supplement reporting. The Board will address any 
questions railroads have about application of the USOA to the PTC 
supplement. If a railroad proposes an accounting treatment that varies 
from the USOA, Board review and approval is required. The example that 
ACC/CI give of potential improper reporting related to a PTC-equipped 
locomotive is not a realistic example of improper reporting because 
even if a railroad were to report an entire PTC-equipped locomotive as 
a PTC expense, the auditing process would address such a misallocation. 
ACC/CI also give an example of how carriers have reported PTC-related 
expenses differently in their ``PTC implementation plans,'' which they 
are required to file with the FRA indicating the sequence and schedule 
on which each railroad will install PTC equipment.\15\ Specifically, 
ACC/CI note that railroads have chosen to include information on 
wayside devices in different sections of their reports.\16\ ACC/CI do 
not explain why this or other differences among the carriers' FRA 
reports are significant or why the differences indicate potential 
problems with the PTC Supplement. ACC/CI do not indicate whether the 
FRA reports were subject to auditing as the PTC Supplement will be. 
While ACC/CI claim that the filings of AAR and UP show variations in 
carrier accounting practices, ACC/CI cite only one statement involving 
wayside devices by AAR to support the claim. However, with its 
statement about wayside devices, AAR merely argues that allocation of 
operating costs to the appropriate locations in PTC schedule 410 is a 
more difficult, and therefore more time-consuming, task than other PTC-
related reporting and requests that mandatory filing of PTC schedule 
410 be delayed.\17\ AAR does not argue that carriers have insufficient 
guidance to make the allocations, and, as discussed below, mandatory 
reporting will not begin until the 2013 R-1 filings are due in 2014. 
Railroads should therefore have sufficient time to address this issue. 
The Board's Uniform System of Accounts and the auditing process will 
provide sufficient assurance of proper reporting, although some 
reporting tasks may be more time consuming than others.
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    \15\ ACC/CI Opening, V.S. Crowley & Mulholland 6.
    \16\ Id. at 8.
    \17\ See AAR Opening 9 n.12.
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    Tracking benefits. ACC/CI argue that the Board should also require 
carriers to report any benefits of PTC, some of which, they argue, are 
clear.\18\ ACC/CI claim that recording PTC costs but not benefits is a 
lopsided treatment that ignores the foreseeability of PTC benefits. 
ACC/CI express concern that carriers will place the burden of paying 
for PTC on TIH shippers and passenger rail, while, they argue, PTC 
benefits a wide range of shippers as well as the railroads.\19\
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    \18\ ACC/CI Opening 6, V.S. Crowley & Mulholland 14-15. ACC/CI 
also append two reports by L.E. Peabody & Associates, Inc., and 
claim that the reports support the argument that PTC has system-wide 
benefits. ACC/CI Opening 3, Attachment 2, Attachment 3.
    \19\ ACC/CI Opening 2-3; ACC/CI Reply 4.
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    ACC/CI offer two approaches to measuring PTC benefits.\20\ First, 
they suggest that currently reported performance measures be split into 
subsets of segments with and without PTC, and that ``[t]he relative 
changes in performance measures between the two groups could then be 
used to tease out productivity gains attributable to PTC.'' \21\ 
Second, they suggest new measures, such as car miles per locomotive 
unit mile, carloads per train start, or carloads per crew start, to 
assess the extent to which PTC and related train management software 
allow more efficient use of equipment and personnel.\22\ In reply, UP 
states that it would not oppose a separate proceeding to address the 
benefits from PTC, but UP opposes broadening this proceeding to require 
the reporting of benefits from PTC because it will add complications 
and delay.\23\ UP argues the railroads are incurring measurable costs 
to install PTC now, while calculating benefits from PTC, which will 
occur in the future, would be speculative and complex.\24\ UP claims 
that ACC/CI's proposals on how to measure PTC benefits are impractical 
and

[[Page 51080]]

underdeveloped.\25\ AAR makes similar arguments for why ACC/CI's 
proposal should not be adopted, and claims that studies show that the 
benefits to railroads from PTC will be small in relation to costs.\26\ 
On reply, ACC/CI, citing UP's statement that it ``could provide 
information about TIH traffic in a PTC version of schedule 755'' (which 
collects operating statistics), argue that UP and AAR's proposals to 
include a PTC schedule that collects operating statistics shows that 
the carriers' objective is to recover PTC costs from TIH shippers.\27\
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    \20\ ACC/CI Opening, V.S. Crowley & Mulholland 15.
    \21\ Id.
    \22\ Id.
    \23\ UP Reply 5-6.
    \24\ Id. at 5.
    \25\ Id. at 6.
    \26\ AAR Reply 5-7.
    \27\ ACC/CI Reply 3 (citing UP Opening 12).
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    We will not adopt ACC/CI's proposal. We considered a similar 
request in PTC NPRM, slip op. at 4-5, and, as the Board concluded 
there, we also conclude here that ACC/CI have not shown that the 
request to track benefits is practical or warranted at this time. While 
carriers state that they are incurring costs now to meet the 2015 
implementation deadline, any efficiencies that arise will occur after 
implementation. Moreover, identifying the costs associated with 
implementing PTC appears to be relatively straightforward, and the 
revised rules represent a viable approach to supplement the R-1 and 
capture this data. By contrast, it is not clear how, at this point, we 
would identify those productivity gains that may arise as a result of 
PTC investments.
    Abuse of reporting rules. ACC/CI propose that the Board not adopt 
the PTC Supplement because of the potential that the supplement will 
enable over-recovery of PTC costs from shippers.\28\ Citing the Board's 
statement that failure to adopt the PTC Supplement will not deprive 
carriers of the opportunity to recover PTC costs, PTC NPRM, slip op. at 
4 n.8, ACC/CI argue that carriers may still seek to recover legitimate 
costs without the PTC Supplement, and that failure to adopt the rule 
would therefore not injure carriers.\29\ ACC/CI also claim that the 
benefits of reporting are speculative and slight.\30\ They argue that 
the railroads' reason for seeking the PTC Supplement is to facilitate 
cost recovery and to enable double or triple recovery from 
shippers.\31\ ACC/CI cite Rail Fuel Surcharges, EP 661, slip op. at 10-
11 (STB served Jan. 26, 2007), where the Board found that certain fuel 
surcharges were ``double dipping'' and therefore an unreasonable 
practice for the proposition that the PTC Supplement may facilitate 
similar carrier actions in relation to PTC costs.\32\
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    \28\ ACC/CI Opening 7-8.
    \29\ Id. at 7.
    \30\ Id.
    \31\ Id. at 7-8.
    \32\ Id.
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    AAR and UP reply that, as noted by the Board in the PTC NPRM, slip 
op. at 4 n.8, carriers may seek to recover PTC costs regardless of 
whether the Board adopts the PTC Supplement and that this proceeding 
will not determine whether or how the Board uses the data in 
proceedings.\33\ AAR notes that the Board can investigate any claims of 
abuse.\34\
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    \33\ AAR Reply 7-8; UP Reply 7.
    \34\ AAR Reply 8.
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    We disagree that the PTC Supplement will facilitate abuse by 
carriers. Because PTC reporting will be audited by the Board using the 
same processes currently in place for other Board reporting 
requirements, we have no reason to conclude that adding PTC reporting 
requirements would result in the railroads' over-recovery of PTC 
expenses. Further, as noted in PTC NPRM, slip op. at 4 n.8, carriers 
may seek to recover PTC costs regardless of the outcome of this 
rulemaking, and ACC/CI do not adequately explain how the PTC Supplement 
would enable abuse. Finally, as explained in PTC NPRM, slip op. at 3-4, 
we believe that the PTC Supplement will provide important information 
about current expenditures. Therefore, we conclude that the Board 
should begin collecting information on PTC costs now to identify 
transportation industry changes as they arise and to be prepared to 
provide interested parties with data useful in making regulatory policy 
and business decisions.
    PTC grants. AAR and UP filed comments on the proposal in the PTC 
NPRM to collect information about PTC grants.\35\ They argue that the 
footnote schedule should not be adopted because any grants would not be 
part of a railroad's net capital expenditures, and that the grants 
footnote is therefore unnecessary to separate PTC expenditures from 
total expenditures.\36\ UP suggests, in the alternative, that the Board 
modify the proposal to require a carrier to disclose a transfer if the 
carrier includes the value of the transfer in its road and equipment 
property and depreciation schedules.\37\ AAR's alternative suggestion 
is for the Board to require carriers to file the information in a 
separate report that, on the request of the carrier and approval by the 
Board, would remain confidential in order to protect sensitive 
security-related and commercial information.\38\
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    \35\ AAR Opening 11-13; UP Opening 12-14.
    \36\ AAR Opening 12; UP Opening 12-13.
    \37\ UP Opening 13-14.
    \38\ AAR Opening 12.
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    UP claims that the information sought by the grants footnote is 
available from public sources, and to the extent that it is not, 
reporting it in the R-1 would be inappropriate, as the Board stated in 
the PTC NPRM, slip op. at 4, that confidential filing of the 
supplemental PTC schedules is unnecessary.\39\ Similarly, AAR proposes 
that if the Board chooses to require the grants footnote, the Board 
modify that footnote to protect potentially sensitive information by 
(1) requiring the ``location of the project funded'' information only 
at a state or regional level for projects not identified by FRA grant 
number and (2) allowing carriers to petition on a case-by-case basis 
for treatment of information as confidential.\40\ Finally, AAR requests 
that the Board clarify what constitutes a ``government transfer,'' 
argues that the term should be limited to direct grants from 
departments or agencies of government, and claims that the term should 
exclude Amtrak or other quasi-public entities.\41\
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    \39\ UP Opening 13 n.26.
    \40\ AAR Opening 13.
    \41\ Id.
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    We will adopt the proposal to require the grants footnote, and 
incorporate several recommendations offered by commenters, described 
below. This additional information will help the Board monitor the 
financing of PTC installation. The Board is aware that funds received 
by grant are not part of carriers' capital expenditures.
    We also conclude that AAR and UP have not shown that the grants 
footnote will collect sensitive information, and therefore we will not 
eliminate the footnote on that basis or adopt the proposal to obtain 
the information through a separate, confidential filing. As UP points 
out, much of the information is available from public sources. The 
Board and public will find it informative to have the grant information 
related to each railroad aggregated on that railroad's PTC Supplement. 
However, recognizing that sufficiently detailed geographic information 
might reveal confidential information, we will adopt AAR's proposal to 
require that carriers provide the ``location of the project funded'' 
information only at a state or regional level for projects not 
identified by FRA grant number.\42\
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    \42\ We will leave to individual states to determine whether any 
state-specific versions of the PTC Supplement implemented by their 
agencies will reveal sensitive information, and if so, to 
appropriately address that issue. See AAR Opening 6 n.8.

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[[Page 51081]]

    We will also modify the language in the grants footnote schedule to 
address AAR's request that we clarify what grants must be reported. 
However, as we wish to receive the full scope of information available 
to inform the Board and the public, we will not adopt AAR's proposal to 
limit the sources of grants that must be reported to government 
agencies and departments. To clarify this and to make the change 
regarding project locations, we will modify the footnote language to 
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state:

    ``In addition to separating capital expenses and operating 
expenses incurred by the railroad for PTC, the respondent entity 
shall include by footnote disclosure here the value of funds 
received from non-government and government transfers to include 
grants, subsidies, and other contributions or reimbursements that 
the respondent entity used to purchase or create PTC assets or to 
offset PTC costs. These amounts represent non-railroad monies that 
the respondent entity used or designated for PTC and would provide 
for full disclosure of PTC costs on an annual basis. This disclosure 
shall identify the nature and location of the project by FRA 
identification, if applicable. If FRA identification is not 
applicable, the disclosure shall identify the location at the state 
or regional level.''
    See App. A, Table Footnote: PTC Grants. The final rule reflects 
corresponding changes.\43\ See Regulatory Text below.
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    \43\ In addition, in the final rule, we replace the word 
``will'' with ``shall'' to make it clear that the information is 
required. The final rule states: ``The supplement shall include PTC-
related expenditures for passenger-only service not otherwise 
captured in the individual schedules.'' See Regulatory Text below 
(emphasis added).
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    Operating statistics. In the PTC NPRM, slip op. at 5, the Board 
stated that it did not believe that a PTC schedule 755, which would 
collect information on PTC-related carloads, car-miles, and train-
miles, would aid the Board in tracking expenditures made for PTC 
implementation at this time. However, the Board invited parties to 
comment on the issue. Id. at 5-6. AAR and UP argue that the Board 
should adopt a PTC schedule 755 because such statistics would be useful 
if the Board decides to modify the Uniform Railroad Costing System 
(URCS) regarding hazardous materials transportation costs.\44\ AAR and 
UP argue that the operating statistics would inform the Board about the 
impacts of PTC and be useful in regulatory decision making.\45\ They 
also argue that the burden will be on the carriers to submit the 
information, and that the carriers are willing to do so.\46\
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    \44\ AAR Opening 14; UP Opening 11-12.
    \45\ AAR Opening 14; UP Opening 11.
    \46\ AAR Opening 14; UP Opening 12.
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    We will not add a PTC schedule 755. As the Board explained in the 
PTC NPRM, the PTC Supplement's purpose is to collect information on PTC 
expenditures. AAR and UP offered no compelling justification for 
collecting the additional information. If the Board needs the 
information for changes to URCS or other purposes, it can seek the 
information at that time.
    PTC schedule 352B. The Board stated in the PTC NPRM, slip op at 5, 
that the proposed supplement would include a PTC version of schedule 
352B. AAR and UP note that PTC schedule 352B was not included in the 
PTC NPRM appendix that provided the proposed schedules.\47\ PTC 
schedule 352B was mistakenly omitted from the PTC NPRM appendix and 
will be included in the final version of the PTC Supplement as shown in 
Appendix A.
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    \47\ AAR Opening 4; UP Opening 10 n.23.
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    PTC schedule 710S. The information reported on PTC schedule 710S, 
unit cost of equipment installed during the year, is: class of 
equipment, number of units, total weight, total cost, and method of 
acquisition. AAR and UP argue that the Board should not require a PTC 
schedule 710S because it would result in the duplication of information 
gathered by PTC schedule 330 (annual expenditures on property and 
equipment) and PTC schedule 710 (inventory of owned and leased 
equipment).\48\ Alternatively, UP requests that the Board clarify what 
additional information it seeks from a PTC schedule 710S.\49\
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    \48\ AAR Opening 9 n.11; UP Opening 10 n.23.
    \49\ UP Opening 10 n.23.
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    PTC Schedule 710S is not duplicative, and we will include a PTC 
schedule 710S to determine PTC locomotive costs on a unit basis. PTC 
schedule 710S will gather unit cost information on locomotives and 
passenger train cars, while PTC schedule 710 will capture the number of 
units, and PTC schedule 330 will capture aggregate costs.
    Grace period. AAR proposes that the Board allow a 90-day grace 
period following the filing of the R-1 for railroads to file the PTC 
Supplement.\50\ AAR argues that preparation of the R-1 is time 
consuming for carriers, and that the grace period may be necessary for 
carriers to complete the supplement.\51\
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    \50\ AAR Opening 10-11.
    \51\ Id.
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    We will not provide for a 90-day grace period. A grace period is 
not necessary, as the R-1 and the supplement are both computer 
generated. Given that much of the supplemental information will already 
be contained in the R-1 in aggregate form, the railroads' accounting 
systems should be able to be modified to capture or separate this 
information from the current R-1 reporting. AAR has not shown that 
carriers need additional time to complete the PTC Supplement.
    Beginning of mandatory reporting. AAR and UP propose to delay 
mandatory filing of PTC schedule 410, which will collect operating 
expenses, until the 2014 calendar year.\52\ AAR claims, and UP agrees, 
that because PTC-related operating expenses are unlikely to be incurred 
before PTC systems are in operation, allowing carriers additional time 
to develop systems for capturing PTC operating expenses would benefit 
carriers and the Board.\53\ This is because, AAR argues, PTC-related 
operating expenses are more difficult to capture than PTC-related 
capital expenditures.\54\ AAR gives the example of wayside devices; it 
claims it will be simple to identify the costs of adding PTC equipment 
to a wayside device, but more difficult to determine the proper 
allocation of maintenance activity costs that apply to the entire 
wayside device.\55\ AAR also states that carriers must address more 
accounts when determining operating expenses.\56\ AAR and UP suggest 
that carriers be allowed to file PTC schedule 410 on a voluntary basis 
for calendar years before 2014.\57\
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    \52\ AAR Opening 9-10; UP Opening 14.
    \53\ AAR Opening 9-10; UP Opening 14.
    \54\ AAR Opening 9-10.
    \55\ Id. at 9 n.12.
    \56\ Id.
    \57\ Id. at 10; UP Opening 14.
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    We will not provide for delayed filing of the PTC schedule 410, and 
we will require carriers to file the full PTC Supplement with their 
next R-1 filings (this will be the filings regarding 2013, which will 
be due in 2014). We recognize that any PTC operating expenses may be 
minimal until carriers begin to use the PTC systems, but carriers can 
include PTC schedule 410 showing zero dollars of operating expenses. 
The minimal nature of current PTC operating statistics should ease the 
difficulties AAR and UP claim may occur in completing PTC schedule 410. 
Carriers have had ample notice of the new rule and time to develop 
compliance methods.
    Voluntary reporting of calendar years before 2013. AAR and UP 
request that the Board allow carriers to voluntarily file PTC 
Supplements for prior calendar years.\58\ We will permit carriers to

[[Page 51082]]

voluntarily file PTC Supplements for the years 2008-2012. This 
information will be useful to fully inform the Board and the public 
about PTC expenditures. Because the RSIA was enacted in 2008, that is 
the earliest year for which carriers may voluntarily report.
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    \58\ AAR Opening 10; UP Opening 3, 14.
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    Review of reporting requirements. AAR proposes that the Board 
provide for a mandatory reevaluation of the PTC Supplement within one 
year after the full implementation of PTC.\59\ AAR suggests that such a 
review would be useful to reevaluate the PTC Supplement in light of 
experience. We will not adopt this proposal. The Board can undertake 
such a review any time at its discretion should experience demonstrate 
that it would be helpful.
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    \59\ AAR Opening 11.
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Paperwork Reduction, Regulatory Flexibility, and Environmental 
Certifications

    In the PTC NPRM, published in the Federal Register at 76 FR 63582 
on October 13, 2011, the Board sought comments pursuant to the 
Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3549, and Office of 
Management and Budget (OMB) regulations at 5 CFR 1320.11, regarding: 
(1) Whether this collection of information, as modified in the proposed 
rule, 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. Comments 
regarding the necessity, utility, and clarity of the information 
collection were received and are addressed above. No comments 
concerning the Board's burden estimates were received.
    The proposed collection was submitted to OMB for review as required 
under the PRA, 44 U.S.C. 3507(d), and 5 CFR 1320.11. OMB withheld 
approval pending submission of the final rule. We are today submitting 
the collection contained in this final rule to OMB for approval. Once 
approval is received, we will publish a notice in the Federal Register. 
Unless renewed, OMB approval of this collection, including (if 
approved) the modifications here, expires on August 31, 2015. This 
collection (Class I Railroad Annual Report) has been assigned control 
number 2140-0009. The display of a currently valid OMB control number 
for this collection is required by law. Under the PRA and 5 CFR 
1320.11, an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless the 
collection displays a currently valid OMB control number.
    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. Under 
Sec.  605(b), an agency is not required to perform an initial or final 
regulatory flexibility analysis if it certifies that the proposed or 
final rules will not have a ``significant impact on a substantial 
number of small entities.''
    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).
    The rule changes adopted here will not have a significant economic 
impact upon a substantial number of small entities, within the meaning 
of the RFA. The reporting requirements 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 
(adjusted for inflation using 2012 data, the revenue threshold for a 
Class I rail carrier is $452,653,248). Class I carriers generally do 
not fall within the Small Business Administration's definition of a 
small business for the rail transportation industry.\60\ Therefore, the 
Board certifies under 5 U.S.C. 605(b) that this rule will not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the RFA.
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    \60\ The Small Business Administration's Office of Size 
Standards has established a size standard for rail transportation, 
pursuant to which a line-haul railroad is considered small if its 
number of employees is 1,500 or less, and a short line railroad is 
considered small if its number of employees is 500 or less. 13 CFR 
121.201 (industry subsector 482).
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    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. The rules set forth below are adopted as final rules.
    2. Notice of this decision will be published in the Federal 
Register. The final rules will be effective on September 19, 2013.
    3. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration.

List of Subjects in 49 CFR part 1241

    Railroads, Reporting and recordkeeping requirements.

    Decided: August 13, 2013.
    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Mulvey. Commissioner Mulvey dissented with a separate 
expression.
Jeffrey Herzig,
Clearance Clerk.
    Commissioner Mulvey, dissenting:
    I disagreed with the decision to propose the rules that the Board 
makes final today because I believed that doing so was premature. 
Nothing in this record has led me to a different conclusion. In Class I 
Railroad Accounting and Financial Reporting--Transportation of 
Hazardous Materials, Docket No. EP 681, the Board is considering 
whether and how it should update its railroad reporting requirements 
and the Uniform Railroad Costing System to better capture the operating 
costs of transporting hazardous materials. Yet in this decision, the 
Board begins to answer the ``how'' question without first determining 
``whether'' it should even do so in the first place. The Board's 
decision to put the proverbial cart before the horse will likely create 
uncertainty and confusion. On the one hand, the Board will be requiring 
carriers to submit very specific segregated data on PTC-related 
expenditures but, on the other hand, we have given stakeholders no 
clear rule on how such data may be used in Board proceedings, 
particularly in rate reasonableness cases.
    The question of whether the substantial cost of PTC installation 
should be borne by all shippers proportionally or only by TIH shippers 
(or something in between) is important. The Board took comments on this 
issue more than three years ago and still has

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yet to propose rules to resolve it. The Board should have first 
resolved the cost allocation issue head-on and then used that 
resolution to guide any new reporting requirements. Accordingly, I 
respectfully dissent.
    For the reasons set forth in the preamble, the Surface 
Transportation Board amends part 1241 of title 49, chapter X, 
subchapter C, of the Code of Federal Regulations as follows:

PART 1241--ANNUAL, SPECIAL, OR PERIODIC REPORTS--CARRIERS SUBJECT 
TO PART I OF THE INTERSTATE COMMERCE ACT

0
1. The authority citation for part 1241 continues to read as follows:

    Authority: 49 U.S.C. 11145.


0
2. Amend Sec.  1241.11 by adding paragraph (b) to read as follows:


Sec.  1241.11  Annual reports of class I railroads.

    (a) * * *
    (b) Expenditures and certain statistical information, as described 
below, for Positive Train Control (PTC) installation, maintenance, and 
operation shall be separately identified in a supplement to the 
Railroad Annual Report Form R-1 and submitted with the Railroad Annual 
Report Form R-1. This supplement shall identify PTC-related 
expenditures on road property and equipment improvements, depreciation 
of road property and equipment, accumulated depreciation, investment in 
railway property, and railway operating expenses. The supplement shall 
also identify the total mileage on which carriers install PTC and the 
number of locomotives equipped with PTC. The supplement shall include 
PTC-related expenditures for passenger-only service not otherwise 
captured in the individual schedules. In addition to separating capital 
expenses and operating expenses incurred by the railroad for PTC, the 
respondent entity shall include the value of funds received from non-
government and government transfers to include grants, subsidies, and 
other contributions or reimbursements that the respondent entity used 
to purchase or create PTC assets or to offset PTC costs.

    Note:  The following appendices will not appear in the Code of 
Federal Regulations.

Appendix A--PTC Versions of Schedules: 330, 332, 335, 352B, 410, 700, 
710, 710S, and 720

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[FR Doc. 2013-20116 Filed 8-19-13; 8:45 am]
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