STB amends revenue thresholds for classifying railroads

The Surface Transportation Board (STB) has adopted a final rule that amends the operating-revenue thresholds for classifying rail carriers.

The final rule will raise the Class I revenue threshold to $900 million and round the current Class II/Class III threshold to $40.4 million. The final rule will use 2019 dollars as the baseline for revenue calculations going forward, STB officials said in a press release.

The rulemaking follows a petition that Montana Rail Link Inc. (MRL) filed on Feb. 14, 2020, requesting the board increase the revenue threshold for Class I carriers. MRL contended that it was likely in the near term to be reclassified as a Class I under the existing threshold — with operating revenue of $504.8 million or more — despite its historical status as a regional railroad with a comparatively smaller footprint than current Class Is.

As a Class I, MRL would have been subject to additional regulatory requirements, including extensive reporting of financial and economic information.

After consideration of all comments, the STB determined it was appropriate to modify the classification standard.

"This action represents a common-sense modification of our regulations to reflect the real-world distinction between the largest railroads in the freight-rail network and the comparatively smaller regional and short-line carriers, and the balance the agency needs to set with respect to reporting requirements that differ based on this distinction," said STB Chairman Martin Oberman.