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Proposed Rule

Reporting Requirements for Positive Train Control Expenses and Investments

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Surface Transportation Board, DOT.


Notice of proposed rulemaking.


The Board proposes to amend 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 break out those expenses so that they can be viewed both as component parts of and 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 pursuant to federal legislation. We propose to adopt 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.


Comments on this proposal are due by December 12, 2011. Replies are due by January 11, 2012.


Comments may be submitted either via the Board's e-filing format or in the traditional paper format. Any person using e-filing should attach a document and otherwise comply with the instructions at the E-FILING link on the Board's Web site, at Any person submitting a filing in the traditional paper format should send an original and 10 copies to: Surface Transportation Board, Attn: Docket No. EP 706, 395 E Street, SW., Washington, DC 20423-0001.

Copies of written comments received by the Board will be posted to the Board's Web site at and will be available for viewing and self-copying in the Board's Public Docket Room, Suite 131, 395 E Street, SW., Washington, DC. Copies of the comments will also be available by contacting the Board's Chief Records Officer at (202) 245-0236 or 395 E Street, SW., Washington, DC. 20423-0001.

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Paul Aguiar, (202) 245-0323. Assistance for the hearing impaired is available through Federal Information Relay Service (FIRS) at 1-800-877-8339.

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As authorized by 49 U.S.C. 11145, the Board requires large (Class I) [1] rail carriers to submit annual reports, Start Printed Page 63583known as R-1 reports. 49 CFR 1241.11.[2] The R-1 reports contain information about finances and operating statistics for each railroad. These reports “shall contain 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). Currently, PTC expenditures are incorporated into the R-1 report under the category of “capital investments and expenses”; however, PTC expenditures are not separately broken out.

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 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). In complying with the Rail Safety Improvement Act of 2008, rail carriers are expected to make expenditures related to installation, operation, and maintenance of PTC.

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. On November 2, 2010, the Canadian Pacific Railway Company replied in support of UP's petition and The Fertilizer Institute (TFI) replied in opposition. On November 24, 2010, the Norfolk Southern Railway Company (NSR) late-filed comments in support of UP's petition, and on January 18, 2011, PPG Industries, Inc. (PPG) late-filed comments in opposition. On January 21, 2011, UP responded to PPG's filing.

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. The Board also accepted the late-filed comments from NSR and PPG, as well as the reply to a reply filed by UP. However, in that decision, we made no determination about the merits of UP's specific proposal, and stated that we would address the arguments raised by the parties in their filings in a subsequent decision, i.e., this notice.

TFI argues that UP's petition is unnecessary because a pending rulemaking already encompasses UP's request. In Class I Railroad & Financial Reporting—Transportation of Hazardous Materials, EP 681 (STB served Jan. 5, 2009), the Board requested comments on “whether and how it should improve its informational tools to better identify and attribute the costs” of transporting hazardous materials. TFI argues that this inquiry encompasses PTC, and that in its comments in that proceeding, the Association of American Railroads (AAR), of which UP is a member, specifically discussed PTC and suggested changes to the Board's accounting and reporting requirements, including some of the same schedules raised by UP in this docket.[4] TFI claims that gathering information on PTC expenses is premature, because we have not yet decided in Class I Railroad & Financial Reporting—Transportation of Hazardous Materials whether we will change our accounting practices and how the Board will use such information.

The Board recognizes that PTC expenses fall under the umbrella of the many issues in Class I Railroad & Financial Reporting—Transportation of Hazardous Materials. But nothing precludes the Board from extracting from that complex proceeding for more expeditious treatment the relatively straightforward issue of identifying PTC expenses while continuing to consider the remaining issues—including the regulatory uses to which PTC data may be put—separately.

The reporting requirement proposed here—a PTC schedule separate from the R-1 filings currently required—should provide us with important information. PTC expenses and investments, especially in the installation stage, are projected to be high.[5] Class I rail carriers have indicated that they are already incurring PTC-related costs to meet the 2015 deadline for implementing the legislative mandate to install PTC.[6] Moreover, PTC costs carry the distinction of representing a relatively specific set of expenditures prompted directly by legislative mandate. Although we are not here proposing changes to our Uniform Rail Costing System, nor are we doing anything in this proceeding that would change how costs are currently assigned in rate and other proceedings,[7] we ought to be aware of these expenditures. This will help us to identify transportation industry changes that may require attention by the agency and to 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.

Confidentiality. UP argues that the supplemental schedules regarding specific expenditures on PTC and detailed information regarding TIH and PIH traffic should remain confidential. UP asserts that detailed cost data on PTC-specific investment and expenses is commercially sensitive, and UP is concerned that “line-specific” operating data is a security issue. Nonetheless, R-1 data is not “line-specific,” and the proposal here is to collect aggregated PTC expenditures figures. Therefore, UP's concerns about security appear unwarranted, as the operating data does not contain schedules of train movements or other data that could be used to compromise safety.

Tracking Benefits. PPG opposes UP's petition for a rulemaking, but it argues that, if the Board moves forward with a rulemaking proceeding, the Board should broaden the scope of the proceeding to include a reporting Start Printed Page 63584requirement that tracks any benefits of PTC, including efficiencies on the lines that have PTC installed. PPG also asks the Board to gather data on any efficiency gains caused by PTC on lines that do not have PTC installed. 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. UP argues the railroads are incurring real measurable costs to install PTC now, while calculating benefits from PTC, which will occur in the future, would be speculative and complex.

PPG has not shown that its request 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 UP has proposed a viable approach, described below, to supplement the R-1 reports and capture this data.[8] 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, and PPG has not proposed a method of doing so.

Mechanics of the Change. Our proposed rule change would require a “PTC Supplement” to be filed along with the R-1 annual report (which would not change).[9] The supplement would 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 railway property), and 410 (railway operating expenses) containing the dollar amounts that would reflect only the amounts attributable to PTC for the filing year. Also, the PTC Supplement would contain PTC versions of schedules 700 and 720, to report the aggregate mileage on which PTC is installed as of the date of filing, and schedule 710 to identify the number of locomotives equipped with PTC. Railroads would also 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 should include by footnote disclosure the value of funds from government transfers, including grants, subsidies, and other contributions or reimbursements, used or designated to purchase or create PTC assets or to offset PTC costs.[10] These amounts represent non-railroad monies used or designated for PTC and would provide for full disclosure of PTC costs. This disclosure would identify the nature and location of the project by FRA identification, if applicable. This additional information will help the Board to monitor the financing of PTC installation.

UP also requests that the Board include schedule 755 (information on carloads, car-miles, and train-miles) in the PTC Supplement. However, we believe a supplement to schedule 755 is unnecessary to monitor the implementation of PTC, because gathering such data would not aid us in tracking expenditures made for PTC. Nevertheless, interested parties may comment on whether any final rule the Board promulgates should require the reporting of such information. Any such comments should address whether collecting such information would assist the Board in monitoring PTC implementation and, if so, how it would do so.

Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, 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. §§ 601-604. In its notice of proposed rulemaking, the agency must either include an initial regulatory flexibility analysis, § 603(a), or certify that the proposed rule would not have a “significant impact on a substantial number of small entities,” § 605(b). 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, 480 (7th Cir. 2009).

The proposed rule, if adopted, will not have a significant impact on a substantial number of small entities. The proposed rule would affect only entities that are required to file R-1 reports; these reports are only required to be submitted by Class I carriers. 49 CFR 1241.1. Class I carriers are all large railroads; [11] accordingly, there will be no impact on small railroads (small entities).

Paperwork Reduction Act. Pursuant to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3549, and Office of Management and Budget (OMB) regulations at 5 CFR 1320.8(d)(3), the Board seeks comments regarding: (1) Whether this collection of information, as modified in the proposed rule and further described in Appendix A, 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. Information pertinent to these issues is included in Appendix C. This proposed rule will be submitted to OMB for review as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11.

A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416.

This action will not significantly affect either the quality of the human environment or the conservation of energy resources.

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List of Subjects in 49 CFR Part 1241

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Decided: October 3, 2011.

By the Board, Chairman Elliott, Vice Chairman Begeman, and Commissioner Mulvey. Commissioner Mulvey dissented with a separate expression.

Jeffrey Herzig,

Clearance Clerk.

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Commissioner Mulvey, dissenting:

In EP 681, Class I Railroad Accounting & Financial Reporting—Transportation of Hazardous Materials, 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. By inclusion of the word “whether,” the Board made clear in Ex Parte 681 that it has not decided that it should allow Start Printed Page 63585hazardous materials transportation costs to be used in a prescribed way in Board proceedings.

The questions under consideration in EP 681 are important ones. The resolution has the potential to impact the rates paid by shippers of hazardous materials and, therefore, must be examined carefully. To gain the broadest possible comments from stakeholders, the Board began its consideration with an Advance Notice of Proposed Rulemaking. Even though the record in that ANPR has been complete since February 2009, the Board has yet to propose a rule regarding the treatment of hazardous materials transportation costs in Board proceedings.

In light of this history, today's decision to propose rules that would require PTC-related costs to be separately reported from other capital expenditures is premature. The Board should first decide how such costs may be used in Board proceedings. Indeed, should the Board ultimately determine that hazardous materials transportation costs can be attributed to particular movements, any determination regarding how the information can be used could very well inform how it should be reported.

Moreover, we must decide the issues raised in EP 681 soon. The costs associated with PTC are no doubt growing as the railroad industry moves closer to the current statutory deadline for compliance. Should the Board implement a comprehensive approach to the costing issues associated with hazardous materials, we may be able to minimize the complexity and expenditures associated with litigating this issue in individual Board proceedings. I fear that the “cart before the horse” approach that the Board is initiating today could do the opposite.

For the reasons set forth in the preamble, the Surface Transportation Board proposes to amend part 1241 of title 49, chapter X, subchapter C, of the Code of Federal Regulations as follows:

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

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Authority: 49 U.S.C. 11145.

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2. Amend § 1241, by adding paragraph (b) to read as follows:

Annual reports of class I railroads.
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(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 will 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 should include the value of funds received from 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.


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

Appendix A

Proposed PTC Versions of Schedules: 330, 332, 335, 352B, 410, 700, 710, and 720

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Appendix B

The additional information below is included to assist those who may wish to submit comments pertinent to review under the Paperwork Reduction Act:

Description of Collection

Title: Class I Railroad Annual Report.

OMB Control Number: 2140-0009.

STB Form Number: R-1.

Type of Review: Modification of approved collection.

Respondents: Class I railroads.

Number of Respondents: 7.

Estimated Time per Response: The proposed rule change that affects the R-1 report will not change the time per response, but it will require minimal time to adjust the process for reporting. Based on the limited amount of information involved, we estimate that the entire R-1 collection should not take more than 800 hours annually per Class I railroad. This estimate includes time spent reviewing instructions; searching existing data sources; gathering and maintaining the data needed; completing and reviewing the collection of information; and converting the data from the carrier's individual accounting system to the Board's Uniform System of Accounts (USOA), which ensures that the information will be presented in a consistent format across all reporting railroads, see 49 U.S.C. 11141-43, 11161-64, 49 CFR 1200-1201.

Frequency: Annually.

Total Burden Hours (annually including all respondents): Up to 5,600 hours annually for the entire R-1 report.

Total “Non-hour Burden” Cost: No “non-hour cost” burdens associated with this collection have been identified.

Needs and Uses: Annual R-1 reports are required to be filed by Class I railroads under 49 U.S.C. 11145. The reports show expenditures and operating statistics of the carriers. Expenditures include costs for right-of-way and structures, equipment, train and yard operations, and general and administrative expenses. Operating statistics include such items as car-miles, revenue-ton-miles, and gross ton-miles. The reports are used by the Board, other Federal agencies, and industry groups to monitor and assess railroad industry growth, financial stability, traffic, and operations, and to identify industry changes that may affect national transportation policy. The Board also uses this information to more effectively carry out other of its regulatory responsibilities, including: the regulation of maximum rail rates; acting on railroad requests for authority to engage in Board-regulated financial transactions such as mergers, acquisitions of control, and consolidations, see 49 U.S.C. 11323-11324; analyzing the information that the Board obtains through the annual railroad industry waybill sample, see 49 CFR part 1244; measuring off-branch costs in railroad abandonment proceedings, in accordance with 49 CFR 1152.32(n); developing the “rail cost adjustment factors,” in accordance with 49 U.S.C. 10708; and conducting investigations and rulemakings.

The proposed identification of PTC information in the supplement to the R-1 reports will help the Board monitor the emergence of PTC in the rail industry. This notice does not propose that the Board use the identified PTC information for any additional purposes such as changing the Board's Uniform Rail Costing System or how costs are currently assigned in rate and other proceedings.

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1.  The Board designates 3 classes of freight railroads based upon their operating revenues, for 3 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 pt. 1201, 1-1. Adjusted for inflation, the revenue threshold for a Class I rail carrier using 2009 data is $378,774,016. Today, there are 7 Class I carriers.

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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,​stb/​industry/​econ_​reports.html.

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3.  The Federal Railroad Administration (FRA) provides more information online. Federal Railroad Administration, Positive Train Control (PTC),​pages/​784.shtml (last visited Sept. 28, 2011).

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4.  TFI Reply 2.

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5.  FRA estimates the total cost of PTC to the industry, including development, equipment, installation, and maintenance, over 20 years will be between $9.55 billion and $13.21 billion. Positive Train Control Systems, 75 FR 2,598, 2,684 (Jan. 15, 2010). That estimate may decrease, as FRA has proposed an amendment to its regulations that would likely save the railroad industry certain expenses related to PTC implementation. Positive Train Control Systems, 76 FR 52,918 (Aug. 24, 2011).

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6.  See UP's Pet. 2; A Primer for PTC at CSX,​share/​wwwcsx_​mura/​assets/​File/​About_​CSX/​Projects_​and_​Partnerships/​PTC_​101.pdf (last visited Sept. 28, 2011); Press Release, BNSF, BNSF Announces $3.5 Billion Capital Commitment Program, (Feb. 7, 2011).

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7.  Having the costs broken out may encourage carriers to seek to recover specific PTC costs in individual cases, but they are already free to do that, and thus this rulemaking does not determine the outcome of disputes over PTC expenses in particular cases or in the broad proceeding in Class I Railroad & Financial Reporting—Transportation of Hazardous Materials.

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8.  The carriers' R-1 forms are independently audited; the Board monitors these audits and can take action if a carrier is misreporting expenses as PTC related.

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9.  Appendix B features samples of the proposed PTC versions of the schedules.

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10.  See infra App. B, Table Footnote: PTC Grants.

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11.  See supra note 2.

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[FR Doc. 2011-26310 Filed 10-12-11; 8:45 am]