STB Changes Railroad Classification Thresholds

The Surface Transportation Board will change how it classifies railroads based on their operating revenue.

The new rule increases the Class I revenue threshold to $900 million and the Class II/Class III threshold to $40.4 million.

The STB will use 2019 dollars as its baseline for revenue calculations.

The changes were made in response to a petition by Montana Rail Link seeking changes in the the revenue threshold for Class I carriers.

MRL said it was likely in the near-term to be re-classified as a Class I railroad under the existing threshold of operating revenues of $504,803,294 or more.

However, MRL said that historically it has been designated as a regional railroad with a comparatively smaller footprint and revenue base than the seven Class I systems.

“As a Class I railroad, MRL would have been subject to additional regulatory requirements, in particular, extensive reporting of financial and economic information,” the STB noted in its recent decision.

STB Chairman Martin J. Oberman described the new rule as “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.”

The STB said its new rule preserves an appropriate balance between the Board’s need for financial and economic information and the imposition of additional requirements on regional railroads.

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