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Editor-in-Chief Commentary

Welcome to the first Editor-in-Chief commentary under the ATLP’s new blog format.  As you probably know or have deduced, ATLP has transitioned Association Highlights from a bi-monthly newsletter format publishing six issues per year to a blog format endeavoring to publish weekly.  Under this new format, you will continue to receive informative transportation content delivered via email.  You can access the Association Highlights blog posts at the ATLP website, https://www.atlp.org/association-highlights-blog.  We hope that you find this new format to make it easier for you to read all of the high-quality content produced by the ATLP Highlights editors.

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RAILROADS - STB Update

On January 2, 2020, the Board provided its fourth quarter 2019 report on Pending STB Regulatory Proceedings, as required by Section 15 of the STB Reauthorization Act of 2015. 

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RAILROADS: The Board Issues Three Demurrage Decisions

On October 7, 2019, the Board concurrently served three decisions related to demurrage.  These decisions arose, at least in part, as a result of the testimony and comments provided in Oversight Hearing on Demurrage & Accessorial Charges, Ex Parte 754.  Comments on all three of these proposals were due on November 6, 2019, and reply comments were due on December 6, 2019. 

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RAILROADS: The Board Discontinues the Rail Fuel Surcharges Proceeding and Denies a Petition for Reconsideration

In August, the Board issued a decision discontinuing the Rail Fuel Surcharges (Safe Harbor) proceeding, in which the Board had sought comment on whether to modify or remove the “safe harbor” provision of its current fuel surcharge rules.  Ex Parte 661 (Sub-No. 2) (STB served Aug. 29, 2019).  This proceeding began in May 2014, when the Board issued an advanced notice of proposed rulemaking (ANPRM) to better understand “whether the sort of growing spread between” safe harbor HDF Index-based costs and actual costs seen in Cargill, Inc. v. BNSF Ry., NOR 42120, (STB served Aug. 12, 2013), “was unique to BNSF during a period of particularly high price volatility (or instead a widespread phenomenon in the rail industry).”  Id., slip op. at 2.  The ANPRM was also issued to “determine whether to modify or remove the safe harbor provision.”  Id.  The Board stated that the comments and replies received in response to the ANPRM were “varied,” and many did not directly address the issue raised.  Id.  The Board explained that, since the comment period, it has been unable to reach a majority decision on what action to take in response to the comments received.  Id., slip op. at 3.  Therefore, “the Board Members agree that this docket should be discontinued.”  Id. 

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RAILROADS: The Board Proposes to Revise its Methodology for Determining the Railroad Industry’s Cost of Capital

In October, the Board issued a notice of proposed rulemaking to revise its methodology for determining the cost-of-equity component of the cost of capital.  Revisions to the Board’s Methodology for Determining the R.R.  Indus.’s Cost of Capital, Ex Parte 664 (Sub-No. 4) (STB served Oct. 11, 2019).  The proposed rule would add a third model, in addition to the two models (the Capital Asset Pricing Model (CAPM) and the Morningstar/Ibbotson Multi-Stage Discounted Cash Flow Model (MSDCF)) currently used.  Id., slip op. at 3.  The new model, called “Step MSDCF,” would continue to calculate growth of earnings in three stages, like MSDCF.  The first and third stages would be the same as those of MSDCF.  The growth rate of the second stage (years six through 10) of Step MSDCF “would be a gradual transition between the first and third stages.”  Id., slip op. at 5.  Under the proposal, the Board would calculate the cost of capital by using the average of the three models, weighted as follows: CAPM at 50%, MSDCF at 25%, and Step MSDCF at 25%.  Id., slip op. at 3.  As the Board noted, since its move in 2009 from a cost-of-equity estimate based solely on CAPM to one based on the simple average of the CAPM and MSDCF estimates, it has considered revising this calculation at various times.  Id., slip op. at 4-6.

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RAILROADS: The Board Solicits Additional Information on Cost-Benefit Analysis Petition for Rulemaking

In November 2019, the Board issued a decision seeking additional information on integrating cost-benefit analysis into its rulemaking process.  Ass’n of Am. R.R.s—Petition for Rulemaking, Ex Parte 752 (STB served Nov. 4, 2019).  This decision was issued in response to a petition filed by AAR in March to institute a rulemaking to adopt rules that “would require a cost-benefit analysis in certain Board rulemaking proceedings and would set certain data requirements.”  Id., slip op. at 1.  Specifically, the Board sought information on the following four topics:

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2019 May - June Highlights: Railroads

This article summarizes the recent Surface Transportation Board (STB or Board) activities and decisions.

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