82 FR 18947 - Revisions to Railroad Annual Report Form R-1 and Quarterly Operating Reports

SURFACE TRANSPORTATION BOARD

Federal Register Volume 82, Issue 77 (April 24, 2017)

The Surface Transportation Board (STB or Board) is revising certain schedules in the Annual Report for Class I railroads (R-1 or Form R-1) and quarterly operating reports. These revisions are needed to correct certain accounting and reporting changes the Board enacted in 2016 and to better meet accounting and reporting requirements and industry needs.

[Federal Register Volume 82, Number 77 (Monday, April 24, 2017)]
[Notices]
[Pages 18947-18948]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-08236]


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SURFACE TRANSPORTATION BOARD

[Docket No. EP 720 (Sub-No. 1)]


Revisions to Railroad Annual Report Form R-1 and Quarterly 
Operating Reports

AGENCY: Surface Transportation Board.

ACTION: Notice of modifications to annual and quarterly reporting 
forms.

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SUMMARY: The Surface Transportation Board (STB or Board) is revising 
certain schedules in the Annual Report for Class I railroads (R-1 or 
Form R-1) and quarterly operating reports. These revisions are needed 
to correct certain accounting and reporting changes the Board enacted 
in 2016 and to better meet accounting and reporting requirements and 
industry needs.

DATES: This decision is effective on May 24, 2017. These modifications 
will apply beginning with the annual R-1 reports for the year ending 
December 31, 2017, and the quarterly operating reports for the second 
calendar quarter of 2017.

FOR FURTHER INFORMATION CONTACT: Pedro Ramirez at (202) 245-0333. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: The Board is authorized, under 49 U.S.C. 
11142, to prescribe a uniform accounting system for rail carriers 
subject to its jurisdiction and, under 49 U.S.C. 11161, to maintain 
cost accounting rules for rail carriers.\1\ Sections 11142 and 11161 
both require the Board to conform its accounting rules to generally 
accepted accounting principles (GAAP) ``[t]o the maximum extent 
practicable.'' The Board's accounting rules, known as the Uniform 
System of Accounts (USOA), are set forth in the Board's regulations at 
49 CFR part 1201--subpart A. The USOA is used by the Class I railroads 
\2\ to provide the Board an annual report, known as the Form R-1 
report, and quarterly operating reports that contain information about 
their finances and operating statistics. 49 CFR 1241.11, 1243.1, and 
1243.2.
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    \1\ The Board has economic oversight of railroads, 49 U.S.C. 
10101-11908, and prescribes a uniform accounting system for rail 
carriers to use for regulatory purposes, 49 U.S.C. 11141-43, 11161-
64; 49 CFR parts 1200-1201. In addition, pursuant to its authority 
at 49 U.S.C. 11145, the Board requires Class I railroads to submit 
quarterly and annual reports containing financial and operating 
statistics, including employment and traffic data. 49 CFR 1241-1246, 
1248.
    \2\ The Board designates three classes of freight railroads 
based upon their operating revenues, for three 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 part 1201, 1-
1. Adjusted for inflation based on 2015 data, Class I carriers have 
annual carrier operating revenues of $457,913,998 or more; Class II 
carriers have annual carrier operating revenues of less than 
$457,913,998 but more than $36,633,120; and Class III carriers have 
annual carrier operating revenues of $36,633,120 or less. Today, 
there are seven Class I carriers.
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Discussion

    In Accounting & Reporting of Business Combinations, Security 
Investments, Comprehensive Income, Derivative Instruments & Hedging 
Activities, EP 720 (STB served Apr. 6, 2016), the Board adopted rules 
that updated the accounting and reporting requirements under the USOA 
for Class I railroads to reflect accounting standard updates to GAAP. 
As relevant here, the Board amended the USOA by adding new general 
instructions and accounts to recognize changes in the fair value of 
certain security investments, items of other comprehensive income, 
derivative instruments, and hedging activities. Additionally, 
corresponding changes were made to the Form R-1. Id. at 3-7. However, 
no corresponding changes were made to the related quarterly reports.
    To avoid confusion, ensure proper reporting, and promote uniformity 
with the USOA, the Board has determined that certain technical and 
formatting modifications to the Form R-1 and the quarterly reports are 
necessary. These minor changes, which are detailed below, are not 
substantive and fall into one of the following categories: (1) 
Correcting the Form R-1 to fully implement the changes in accounting 
and reporting requirements already made through notice and comment 
rulemaking in Docket No. EP 720; (2) applying the accounting and 
reporting changes in Docket No. EP 720 to the quarterly reports; and 
(3) making minor clarifications, formatting, and grammatical changes. 
Accordingly, for good cause shown, the Board finds that notice and 
comment on these revisions are unnecessary. See 5 U.S.C. 553(b)(3)(B). 
The specific changes are explained below.
    Comprehensive Income. The Form R-1 Schedule 210 A (Consolidated 
Statements of Comprehensive Income) adopted in Docket No. EP 720 
included two unnecessary columns: ``Freight-related revenues & 
expenses'' and ``Passenger-related revenue & expenses.'' Because the 
information in these two columns is not used in the calculation of 
comprehensive income and other comprehensive income, these columns will 
be eliminated in Schedule 210 A.
    Results of Operations. In Docket No. EP 720, a single line for 
``Earnings per share, basic and diluted'' in Form R-1 Schedule 210 
(Results of Operations) was added. However, basic and diluted earnings 
per share are two separate calculations and must be reported 
individually. Therefore, the revised Form R-1 Schedule 210 adopted here 
will display these items in two lines: Basic Earnings Per Share and 
Diluted Earnings Per Share.
    Quarterly Reports. Although the Board did not address quarterly 
operating reports in Docket No. EP 720, the items reported in the 
quarterly operating reports, Condensed Balance Sheet (CBS) and 
Revenues, Expenses, and Income (RE&I), should correspond with the Form 
R-1 reports and be kept in conformity with the USOA for Class I 
railroads.
    Accordingly, the quarterly CBS report will be revised to include a 
line for the reporting of account 799, Accumulated

[[Page 18948]]

Other Comprehensive Income. Additionally, the quarterly RE&I report 
will be revised to include four new lines for the reporting of Net 
Income attributable to non-controlling interest, Net Income 
attributable to reporting railroad, Basic Earnings Per Share, and 
Diluted Earnings Per Share. These additional lines, which track 
information required on the Form R-1, provide a place to report the 
data collected on a quarterly basis and maintain uniformity with annual 
reporting requirements in the USOA.
    Other Minor Changes. The Board will also revise Form R-1 reporting 
schedules and quarterly operating reports to make minor clarifications, 
formatting changes, and grammatical corrections. Some of the changes 
are the result of previous updates to the USOA, in which accounts were 
either established, eliminated, or changed. Revisions include updating 
schedule titles, cross-checks, page numbering, layout, and 
parenthetical references for specific line items with current USOA 
accounts. These revisions will ensure proper reporting of data 
collected. Below are some of the notable revisions:
     Form R-1 Schedule 210 A, Consolidated Statement of 
Comprehensive Income: References to certain line items that improperly 
instruct how to calculate Comprehensive Income, Other Comprehensive 
Income, and Comprehensive Income Attributable to Reporting Railroads 
will be removed.
     Form R-1 Schedule 245, Working Capital: This schedule will 
be updated to reflect a line numbering change that occurred among other 
changes in Schedule 200.
     Form R-1 Schedule 510, Separation of Debtholdings Between 
Road Property and Equipment: The sources for Lines 1 through 8 will be 
updated to show the line numbering change in Schedule 200, and the 
sources for Lines 16, 17, and 21 will be modified to properly show 
total road property and equipment debt and total interest.
     Form R-1 Schedule 342, Accumulated Depreciation--
Improvements to Road and Equipment Leased from Others: Instructions 2 
and 3 will be amended to instruct users to refer to the notes and 
remarks section for Schedule 342 and no longer specifically to page 
number 39.
    These and other minor changes (except for non-substantive 
formatting changes) are highlighted and annotated in appendices 
attached to the Board's served decision.
    In sum, the modifications discussed in this notice will correct 
certain accounting and reporting changes the Board enacted in 2016 and 
provide clarification and improve usability of the Form R-1 and 
quarterly operating reports to better meet accounting and reporting 
requirements and industry needs. Appendix A to the Board's served 
decision includes annotated copies of the revised Form R-1 Table of 
Contents, schedules 210A and 510, and the impacted pages of schedules 
200, 210, 245, and 342. Appendix B to the Board's served decision 
includes annotated copies of the revised CBS and RE&I quarterly 
reports. The served decision is available on the Board's Web site at 
www.stb.gov. The revised forms in their entirety will be posted on the 
Board's Web site at https://www.stb.gov/stb/industry/econ_reports.html.

Regulatory Flexibility Act Statement

    The Regulatory Flexibility Act of 1980 (RFA), 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. 5 U.S.C. 601-604. Under 
section 605(b), an agency is not required to perform an initial or 
final regulatory flexibility analysis if it certifies that the proposed 
or final rules will not have a ``significant impact on a substantial 
number of small entities.''
    Because the goal of the RFA is to reduce the cost to small entities 
of complying with federal regulations, the RFA requires an agency to 
perform a regulatory flexibility analysis of small entity impacts only 
when a rule directly regulates those entities. In other words, 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, 478, 480 (7th Cir. 2009).
    The reporting requirements modified here will not have a 
significant economic impact upon a substantial number of small entities 
within the meaning of the RFA. The reporting requirements will apply 
only to Class I rail carriers. 49 CFR 1241.1. Accordingly, there will 
be no impact on small railroads (small entities).\3\ Therefore, the 
Board certifies under 5 U.S.C. 605(b) that these modifications will not 
have a significant economic impact on a substantial number of small 
entities within the meaning of the RFA. 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.
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    \3\ Effective June 30, 2016, for the purpose of RFA analysis for 
rail carriers subject to the Board's jurisdiction, the Board defines 
a ``small business'' as a Class III rail carrier under 49 CFR 
1201.1-1. See Small Entity Size Standards Under the Regulatory 
Flexibility Act, EP 719 (STB served June 30, 2016) (with Board 
Member Begeman dissenting).

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    Authority: 49 U.S.C. 11142 and 11164.

    It is ordered:
    1. The modifications set forth in this decision are adopted and 
will be effective beginning with the annual R-1 reports for the year 
ending December 31, 2017, and the quarterly operating reports for the 
second calendar quarter of 2017. Notice of the modifications adopted 
here will be published in the Federal Register.
    2. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
    3. This decision is effective on May 24, 2017.

    Decided: April 19, 2017.

    By the Board, Board Members Begeman, Elliott, and Miller.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2017-08236 Filed 4-21-17; 8:45 am]
BILLING CODE 4915-01-P