STB Finds 5 Class 1s Revenue Adequate

Five Class 1 railroads operating in the United States were revenue adequate in 2019 the U.S. Surface Transportation Board has determined.

The railroads included Norfolk Southern, CSX, BNSF, Canadian Pacific’s Soo Line Corporation and Union Pacific.

To be deemed revenue adequate a railroad must achieve a rate of return on net investment equal to at least the current cost of capital for the railroad industry in a given year.

The STB said that in 2019 the rate of return figure was 9.34 percent. It said all five Class 1 railroads it identified exceeded the agency’s calculation of the industry’s cost of capital.

In another development, the STB said it is seeking public comment on a proposed approach developed by its Office of Economics for use in considering class exemption and revocation issues.

The proposed approach would be used to help the STB evaluate market conditions using a variety of metrics related to rail competition.

In a news release, the agency said the proposal would serve as a way to evaluate market conditions governing a commodity, including changes in conditions over time.

 However, the STB said it would not serve as a mechanical test for determining whether the commodity exemptions at issue should be revoked or whether a new exemption should be issued.

Public comment is due by Dec. 4 and replies to initial comments are due by Jan. 4, 2021.

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