STB’s determination of revenue adequacy (Docket Number EP_552_17) is based on its calculation of the average cost of capital to the freight rail industry, compared to an individual carrier’s rate of return on net investment (ROI). The STB’s average cost of capital to the freight rail industry for 2012 is 11.12%. Union Pacific (14.69%) and Norfolk Southern (11.48%) are revenue-adequate.
The other carriers’ 2012 ROIs are as follows: CSX, 10.81%; Grand Trunk (CN), 10.19%; Kansas City Southern, 9.54%; SOO (Canadian Pacific), 5.15%.
BNSF was listed as “to be determined.” STB said it has not calculated BNSF’s 2012 revenue adequacy in this decision, because BNSF is due to refile its R-1 reports for 2010, 2011, and 2012 by Oct. 23, 2013, in compliance with the Board’s order in Western Coal Traffic League—Petition for Declaratory Order, FD 35506 (STB served July 25, 2013). Following receipt and verification of BNSF’s revised R-1 reports, the Board will reissue BNSF’s 2010 and 2011 revenue adequacy calculations, and will issue its 2012 calculation.
STB’s annual determination of railroad revenue adequacy under 49 U.S.C. § 10704(a)(3) is made in accordance with the standards and procedures developed in Standards for Railroad Revenue Adequacy (Standards I), 364 I.C.C. 803 (1981), Standards for Railroad Revenue Adequacy (Standards II), 3 I.C.C. 2d 261 (1986), and Supplemental Reporting of Consolidated Information for Revenue Adequacy (Supplemental Reporting), 5 I.C.C. 2d 65 (1988). Pursuant to those procedures, which STB said “are essentially mechanical,” a railroad is considered revenue adequate under 49 U.S.C. § 10704(a) if it achieves an ROI equal to at least the current cost of capital for the railroad industry.