Railroad Cost of Capital-2007
The Board is instituting a proceeding to determine the railroad industry's cost of capital for 2007. The decision solicits comments on: (1) The railroads' 2007 current cost of debt capital; (2) the railroads' 2007 current cost of preferred stock equity capital (if any); (3) the railroads' 2007 cost of common stock equity capital; and (4) the 2007 capital structure mix of the railroad industry on a market value basis.
Canadian National Railway Company and Grand Trunk Corporation Control-EJ&E West Company
On October 30, 2007, the Canadian National Railway Company (CN) and Grand Trunk Corporation (collectively CN or the Applicants) filed an application with the Surface Transportation Board (Board or STB) seeking the Board's approval to acquire control of EJ&E West (EJ&EW) Company, a wholly owned noncarrier subsidiary of the Elgin, Joliet and Eastern Railway Company\1\ (EJ&E). In their application, Applicants state that they plan to construct six new rail connections and approximately 19 miles of siding extensions and second mainline track (double track). EJ&E is a Class II railroad that currently operates approximately 200 miles of track in northeastern Illinois and northwestern Indiana.
Consummation of Rail Line Abandonments That Are Subject to Historic Preservation and Other Environmental Conditions
The Surface Transportation Board is issuing this policy statement to clarify when, under the agency's regulation at 49 CFR 1152.29(e)(2), a carrier may ``consummate'' abandonment and file a ``notice of consummation'' of the abandonment of a rail line where the Board has imposed conditions on its abandonment authorization in order to satisfy section 106 of the National Historic Preservation Act (NHPA), 16 U.S.C. 470f, or the National Environmental Policy Act, 42 U.S.C. 4321 et seq. (NEPA). In cases where a condition is imposed under NHPA, a notice of consummation should not be filed for any part of the line until the historic review process is completed and the condition is removed. However, where a NHPA condition is needed only for a segment of the line or for a particular structure or structures, the railroad may request that the Board modify the condition to allow the railroad to salvage the portions of the line not affected by that condition. In contrast, a condition imposed under NEPA that is related to salvage activities is not a regulatory barrier to consummation of an abandonment.\1\ A notice of consummation may be filed prior to satisfying such a salvage condition. However, filing a notice of consummation in that situation does not remove the condition, which must still be satisfied if and when salvage activities are conducted. If a property encumbered with salvage conditions changes ownership, the new owner must show that it agrees to abide by the salvage conditions at the time of conveyance by referencing the conditions in the instrument of conveyance, and providing a copy of the instrument of conveyance to the Board so that it can be filed in the pertinent abandonment proceeding. Additionally, railroads are cautioned to comply fully with section 106 of NHPA.
On April 15, 2008, the Board served a decision to update its computation of the railroad industry's cost-of-capital for 2006. The composite after-tax cost-of-capital rate for 2006 is found to be 9.94%, based on a current cost-of-debt of 5.97%; a cost of common equity capital of 11.13%; and a capital structure mix comprised of 23.05% debt and 76.95% common equity. The cost-of-capital finding made in this proceeding will be used in a variety of Board proceedings.
United States Department of Energy-Rail Construction and Operation-Caliente Rail Line in Lincoln, Nye, and Esmeralda Counties, NV
The Board is publishing notice of an application filed by the United States Department of Energy (DOE) seeking authority to construct and operate an approximately 300-mile rail line, to be known as the Caliente Line, connecting an existing Union Pacific Railroad Company line near Caliente, NV, to a proposed geologic repository at Yucca Mountain, Nye County, NV. The purpose of this proposed rail line is to allow DOE to transport spent nuclear fuel and high-level radioactive waste for disposal at the proposed geologic repository, as well as to provide common carrier rail service to communities situated along the proposed line. The Board, on its own motion, is adopting a procedural schedule that calls for notices of intent to participate and establishes filing dates for submissions on whether this application meets the criteria of 49 U.S.C. 10901.
Stagecoach Group PLC and Coach USA, Inc., et al.-Control-Megabus Northeast LLC
On March 13, 2008, Stagecoach Group PLC (Stagecoach) and its subsidiary, Coach USA, Inc. (Coach), noncarriers, and various subsidiaries of each (collectively, applicants) filed an application under 49 U.S.C. 14303 to acquire control of the newly created Megabus Northeast LLC (Northeast), which is owned by co-applicant Independent Bus Company, Inc. (Independent), a motor passenger carrier and wholly owned subsidiary of Coach. Independent also wholly owns Megabus USA, LLC, a motor carrier of passengers. Applicants state that currently Northeast does not hold federally issued authority to operate as a motor common carrier of passengers. Applicants supplemented the application in a March 19, 2008 filing. This application is filed on the premise that Northeast actually obtains the authority it seeks. Persons wishing to oppose this application must follow the rules at 49 CFR 1182.5 and 1182.8. The Board has tentatively approved the transaction, and, if no opposing comments are timely filed, this notice will be the final Board action.
Quarterly Rail Cost Adjustment Factor
The Board has approved the second quarter 2008 rail cost adjustment factor (RCAF) and cost index filed by the Association of American Railroads. The second quarter 2008 RCAF (Unadjusted) is 1.077. The second quarter 2008 RCAF (Adjusted) is 0.497. The second quarter 2007 RCAF-5 is 0.471.
Alaska Railroad Corporation-Petition for Exemption-To Construct and Operate a Rail Line Between North Pole, Alaska and Delta Junction in Alaska
On July 6, 2007, the Alaska Railroad Corporation (ARRC) filed a petition with the Surface Transportation Board (Board) pursuant to 49 U.S.C. 10502 for authority to construct and operate a new rail line from the vicinity of North Pole to Delta Junction, Alaska. The project would involve the construction and operation of approximately 80 miles of new main line track. Figure 1 shows ARRC's existing track and the proposed rail line extension from North Pole to Delta Junction (All figures are available for viewing on the Board's Web site at www.stb.dot.gov by going to ``Environmental Matters,'' then selecting ``Key Cases'' in the dropdown; and then when the next page appears, clicking ``Alaska RailroadNorthern Rail Extension''). Because the construction and operation of this project has the potential to result in significant environmental impacts, the Board's Section on Environmental Analysis (SEA) has determined that the preparation of an Environmental Impact Statement (EIS) is appropriate. To help determine the scope of the EIS, and as required by the Board's regulations at 49 CFR 1105.10(a)(2), SEA published in the Federal Register and mailed to the public on November 1, 2005, the Notice of Availability of Draft Scope of Study for the EIS, Notice of Scoping Meetings, and Request for Comments. SEA also prepared and distributed to the public a fact sheet that introduced ARRC's Northern Rail Extension, announced SEA's intent to prepare an EIS, requested comments, and gave notice of three public scoping meetings to over 400 citizens, elected officials, Federal, state, and local agencies, tribal organizations, and other potentially interested organizations received this information. SEA held three public scoping meetings in North Pole, Delta Junction, and Anchorage, Alaska on December 6, 7, and 8, 2005, respectively. The scoping comment period concluded January 13, 2006. The U.S. Army Corps of Engineers, Alaska District (USACE); U.S. Coast Guard, Seventeenth Coast Guard District (USCG); Bureau of Land Management, Alaska State Office (BLM); U.S. Department of Defense, Alaskan Command (ALCOM); U.S. Department of Defense, 354th Fighter Wing, Eielson Air Force Base (354th); Federal Transit Administration, Region 10 (FTA); Federal Railroad Administration (FRA); and Alaska Department of Natural Resources (ADNR) requested and were granted cooperating agency status in preparation of the EIS. After review and consideration of all comments received, this notice sets forth the final scope of the EIS. The final scope reflects any changes to the draft scope as a result of the comments, summarizes and addresses the principal environmental concerns raised by the comments, and briefly discusses pertinent issues concerning this project that further clarify the final scope.
Railroad Cost Recovery Procedures-Productivity Adjustment
In a decision served on February 22, 2008, we proposed to adopt 1.008 (0.8% per year) as the measure of average change in railroad productivity for the 2002-2006 (5-year) averaging period. This value was a decline of 0.9 of a percentage point from the current measure of 1.7% that was developed for the 2001-2005 period. That decision stated that comments may be filed addressing any perceived data and computational errors in our calculation. It also stated that, if there were no further action taken by the Board, the proposed productivity adjustment would become effective on March 17, 2008. On March 13, 2008, the Board received comments from both the Association of American Railroads and the Western Coal Traffic League. Both parties requested that the Board revisit the development of the output index calculation and make certain other clarifications. By a decision served on March 17, 2008, we postponed the effective date of the annual productivity adjustment. We have reviewed the calculations of the output index for 2006. During that review, we found inconsistencies in the weights associated with certain movements reported in the waybill sample data, and found that these inconsistencies caused a distortion in the resulting productivity calculation. This circumstance has been rectified and the Board is issuing modifications to its annual productivity decision. The Board's original calculation of the output index for 2006 of 0.994 should be modified to 1.018. We will adopt 1.013 (1.3% per year) as the measure of average change in railroad productivity for the 2002-2006 (5-year) averaging period. This value is a decline of 0.4 of a percentage point from the current measure of 1.7% that was developed for the 2001-2005 period. The proposed 5-year (2002-2006) productivity trend calculated using a geometric average is 1.012, or 1.2% per year.
Itasca County Regional Rail Authority-Petition for Exemption-Construction of a Line of Railroad in Itasca County, MN
On March 9, 2007, the Itasca County Regional Rail Authority (ICRRA) filed a petition with the Surface Transportation Board (Board) seeking authority to construct and operate a new rail line in Itasca County, Minnesota. The Board, through its Section of Environmental Analysis (SEA) and in cooperation with the U.S. Army Corps of Engineers (USACE), is the lead agency responsible for the preparation of the Environmental Assessment (EA). The proposed line would extend approximately nine miles, starting at the connection with an existing rail line at Taconite and continuing to the site of a new steel mill to be built by Minnesota Steel Industries, LLC (Minnesota Steel) at the end of the line at Nashwauk, Minnesota. Principal commodities to be handled include miscellaneous chemicals, outbound steel slabs, and taconite pellets. The proposed rail line would initially serve the Minnesota Steel facility, but would also handle any additional traffic that future customers that may locate along the right-of-way generate. The proposed rail line would accommodate one round trip per day, seven days per week. Based on the information provided from all sources to date and its independent analysis, SEA preliminarily concludes that construction and operation of the proposed rail line would not have significant environmental impacts if the Board imposes and ICRRA implements the recommended mitigation measures set forth in the EA. Copies of the EA have been served on all interested parties and will be made available to additional parties upon request. The entire EA is also available for review on the Board's Web site (http:// www.stb.dot.gov) by clicking on the ``Decisions and Notices'' link, then ``E-LIBRARY'' and searching by the Service Date (March 28, 2008) or Docket Number (FD 34992). SEA, working with USACE, will consider all comments received in making its final recommendations to the Board. The Board will then consider SEA's final recommendations and the complete environmental record in making its final decision in this proceeding.