STB seeks public comments on railroad revenue adequacy methodologies

The Surface Transportation Board (STB) is seeking written public comments in advance of a future hearing that will explore both the board’s methodology for determining railroad revenue adequacy and the revenue-adequacy component used to judge the reasonableness of rail rates. Comments are due on July 1 and reply comments are due on Aug. 15.

The STB is statutorily required to determine which railroads are revenue adequate each year. Since standards were established in 1981, the board has adjusted its methodology to more accurately determine revenue adequacy.

But during the past decade, both the structure of the rail industry and the flow of commerce have continued to change substantially, so an examination of revenue adequacy is in order, STB members said in a press release.

"This proceeding is intended as a public forum to discuss the board's methodology in fulfilling its statutory mandate to determine railroad revenue adequacy, as well as the revenue adequacy component of the board's standard for judging the reasonableness of rail freight rates, with a view to what, if any, changes [we] should consider," STB members said in a decision rendered yesterday.

In addition, the board recently instituted a rulemaking proceeding to address how it determines the rail industry’s cost of equity capital, a component of the methodology used to determine revenue adequacy. The board also is accepting comments until July 1 that address the cost-of-capital calculation.