STB Sets 2017-2021 ‘Deflator Factors’

The Surface Transportation Board has published its annual deflator factor and inflation-adjusted railroad revenue thresholds for 2021.

“The deflator factor is used by the railroads to adjust their gross annual operating revenues for classification purposes,” STB explained. “This indexing methodology ensures that railroads are classified based on real business expansion and not on the effects of inflation. Classification is important because it determines the extent to which individual railroads must comply with the Board’s reporting requirements.”

The Board’s annual deflator factor is based on the annual average Railroad Freight Price Index developed by the Bureau of Labor Statistics “and is used to deflate revenues for comparison with established revenue thresholds,” STB Acting Director, Office of Economics Francis O’Connor noted. “Application of the annual deflator factors for 2017-2021 results in the following annual revenue thresholds”:

The annual inflation-adjusted deflator factor and revenue thresholds for 2021 are effective Jan. 1, 2021.

FOOTNOTES TO TABLE

1. In Montana Rail Link, Inc., & Wisconsin Central Ltd., Joint Petition for Rulemaking with Respect to 49 C.F.R. Part 1201, 8 I.C.C.2d 625 (1992), the Board’s predecessor, the Interstate Commerce Commission, raised the revenue classification level for Class I railroads from $50 million (1978 dollars) to $250 million (1991 dollars), effective for the reporting year beginning January 1, 1992. The Class II threshold was also raised from $10 million (1978 dollars) to $20 million (1991 dollars). In Montana Rail Link, Inc.—Petition for Rulemaking—Classification of Carriers, EP 763 (STB served Apr. 5, 2021), the revenue classification level for Class I railroads was raised from $250 million (1991 dollars) to $900 million (2019 dollars), and the Class II threshold was converted and rounded from $20 million (1991 dollars) to $40.4 million (2019 dollars), effective for the reporting year beginning January 1, 2020.
2. The 2019 values reflect those in Indexing the Annual Operating Revenues of Railroads, EP 748 (STB served June 10, 2020).
3. The 2020 and subsequent values are based on the thresholds established in Docket No. EP 763, and the deflator factor is referenced to the new base year of 2019. As the Railroad Freight Price Index remained the same from 2019 to 2020, the annual deflator factor for 2020 was 1.0000.