Notice2022-28110
Quarterly Rail Cost Adjustment Factor; Decision
Primary source
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Published
December 27, 2022
Issuing agencies
Surface Transportation Board
Full Text
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<title>Federal Register, Volume 87 Issue 247 (Tuesday, December 27, 2022)</title>
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[Federal Register Volume 87, Number 247 (Tuesday, December 27, 2022)]
[Notices]
[Pages 79413-79415]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28110]
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SURFACE TRANSPORTATION BOARD
[Docket No. EP 290 Sub-No. 5; 2023-1]
Quarterly Rail Cost Adjustment Factor; Decision
In Railroad Cost Recovery Procedures, 1 I.C.C.2d 207 (1984), the
Interstate Commerce Commission (ICC) outlined the procedures for
calculating the all-inclusive index of railroad input prices and the
method for computing the rail cost adjustment factor (RCAF). Under the
procedures, the Association of American Railroads (AAR) is required to
calculate the index on a quarterly basis and submit it to the agency on
the fifth day of the last month of each calendar quarter. In Railroad
Cost Recovery Procedures--Productivity Adjustment, 5 I.C.C.2d 434
(1989), aff'd sub nom. Edison Electric Institute v. ICC, 969 F.2d 1221
(D.C. Cir. 1992), the ICC adopted procedures that require the
adjustment of the quarterly index for a measure of productivity.
The provisions of 49 U.S.C. 10708 direct the Surface Transportation
Board (Board) to continue to publish both an unadjusted RCAF and a
productivity-adjusted RCAF. In Productivity Adjustment--Implementation,
1 S.T.B. 739 (1996), the Board decided to publish a second
productivity-adjusted RCAF called the RCAF-5. Consequently, three
indices are now filed with the Board: the RCAF (Unadjusted); the RCAF
(Adjusted); and the RCAF-5. The RCAF (Unadjusted) is an index
reflecting cost changes experienced by the railroad industry, without
reference to changes in rail productivity. The RCAF (Adjusted) is an
index that reflects national average productivity changes as originally
developed and applied by the ICC, the calculation of which is currently
based on a five-year moving average. The RCAF-5 is an index that also
reflects national average productivity changes; however, those
productivity changes are calculated as if a five-year moving average
had been applied consistently from the productivity adjustment's
inception in 1989.
As required by statute, the denominator of the RCAF is to be
rebased every five years. See 49 U.S.C 10708(a). The Board has verified
AAR's proposed rebasing calculations, and they comply with the statute.
The rebasing calculations are shown in Table C of the Appendix.
The index of railroad input prices, RCAF (Unadjusted), RCAF
(Adjusted), and RCAF-5 for the first quarter of 2023 are shown in Table
A of the Appendix to this decision. Table B shows the third quarter
2022 index and the RCAF calculated on both an actual and a forecasted
basis. The difference between the actual calculation and the forecasted
calculation is the forecast error adjustment.
AAR's calculations have been examined by the Board's Office of
Economics, and the Board finds that AAR has complied with agency
procedures. The Board finds that the first quarter 2023 RCAF
(Unadjusted) is 1.010, an increase of 1.0% from the fourth quarter 2022
RCAF (Unadjusted) of 1.000. The RCAF (Adjusted) is calculated, in part,
using the RCAF (Unadjusted) and a five-year moving geometric average of
productivity change for U.S. Class I railroads from 2016-2020, which is
1.025 (2.5% per year). The first quarter 2023 RCAF (Adjusted) is 0.408,
an increase of 0.2% from the fourth quarter 2022 RCAF (Adjusted) of
0.407.\1\
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\1\ The first quarter 2023 RCAF Adjusted (0.408) is calculated
by dividing the first quarter 2023 RCAF Unadjusted (1.010) by the
first quarter productivity adjustment factor (PAF) of 2.4740. The
first quarter 2023 PAF is calculated by multiplying the fourth
quarter 2022 productivity adjustment of 2.4588 by the fourth root
(1.0062) of the 2016-2020 annual average productivity growth rate of
2.5%.
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In accordance with Productivity Adjustment--Implementation, 1
S.T.B. at 748-49, the RCAF-5 for this quarter will use a productivity
trend for the years 2016-2020, which is 1.025 (2.5% per year). The
RCAF-5 for the first quarter of 2023 is 0.390, an increase of
[[Page 79414]]
0.3% from the fourth quarter 2022 RCAF-5 of 0.389.\2\
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\2\ The first quarter 2023 RCAF-5 (0.390) is calculated by
dividing the first quarter 2023 RCAF Unadjusted (1.010) by the first
quarter productivity adjustment factor-5 (PAF-5) of 2.5898. The
first quarter 2023 PAF-5 is calculated by multiplying the fourth
quarter 2022 PAF-5 of 2.5738 by the fourth root (1.0062) of the
2016-2020 annual average productivity growth rate of 2.5%.
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This action is categorically excluded from environmental review
under 49 CFR 1105.6(c).
Authority: 49 U.S.C. 10708.
It is ordered:
1. The Board finds that the first quarter 2023 RCAF (Unadjusted) is
1.010, RCAF (Adjusted) is 0.408, and RCAF-5 is 0.390.
2. Notice of this decision will be published in the Federal
Register.
3. The effective date of this decision is January 1, 2023.
Decided: December 20, 2022.
By the Board, Fuchs, Hedlund, Oberman, Primus, and Schultz.
Kenyatta Clay,
Clearance Clerk.
Table A--EP 290 (Sub-No. 5) (2023-1) All Inclusive Index of Railroad Input Costs
[Endnotes following Table C]
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Fourth
Line No. Index component 2021 Weights quarter 2022 First quarter
(percent) forecast 2023 forecast
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1............................... LABOR......................... 31.4 479.6 546.0
2............................... FUEL.......................... 14.2 475.2 467.1
3............................... MATERIALS AND SUPPLIES........ 4.5 335.3 328.9
4............................... EQUIPMENT RENTS............... 4.9 253.8 250.1
5............................... DEPRECIATION.................. 17.5 233.3 234.8
6............................... INTEREST...................... 2.4 50.1 50.1
7............................... OTHER ITEMS \1\............... 25.1 290.6 280.0
8............................... WEIGHTED AVERAGE.............. 100.0 360.6 377.4
9............................... LINKED INDEX \2\.............. .............. 331.3 346.7
10.............................. PRELIMINARY RAIL COST .............. 96.8 101.3
ADJUSTMENT FACTOR \3\.
11.............................. FORECAST ERROR ADJUSTMENT \4\. .............. 0.032 -0.003
12.............................. RCAF (UNADJUSTED) (LINE 10 + .............. 1.000 1.010
LINE 11).
13.............................. RCAF (ADJUSTED)............... .............. 0.407 0.408
14.............................. RCAF-5........................ .............. 0.389 0.390
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Table B--EP 290 (Sub-No. 5) (2023-1) Comparison of Third Quarter 2022 Index
[Calculated on both a forecasted and an actual basis]
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2020 Weights Third quarter Third quarter
Line No. Index component (%) 2022 forecast 2022 actual
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1..................................... LABOR................... 32.4 472.4 472.4
2..................................... FUEL.................... 9.7 459.6 484.4
3..................................... MATERIALS AND SUPPLIES.. 4.5 305.0 305.0
4..................................... EQUIPMENT RENTS......... 5.2 256.0 251.4
5..................................... DEPRECIATION............ 18.5 233.2 233.7
6..................................... INTEREST................ 2.7 51.1 51.1
7..................................... OTHER ITEMS............. 27.0 302.4 289.7
8..................................... WEIGHTED AVERAGE........ 100.0 350.8 349.7
9..................................... LINKED INDEX............ .............. 328.7 327.7
10.................................... RAIL COST ADJUSTMENT .............. 96.0 95.7
FACTOR.
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Table C--Rebasing the Denominator of the RCAF to the Fourth Quarter 2022
Level
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1........................... Fourth Quarter 2022 Linked 331.3
Index.
2........................... Second Quarter 2022 Linked 324.8
Index Calculated Using
Actual Data.
3........................... Second Quarter 2022 Linked 313.8
Index Calculated Using
Forecasted Data.
4........................... Difference................ 11.0
5........................... Rounding Adjustment to 0.0
Force 1.000.
6........................... Fourth Quarter 2022 Linked 342.3
Index Adjusted for Second
Quarter 2022 Forecast
Error (Line 1 plus Line 4
plus Line 5).
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Endnotes:
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[GRAPHIC] [TIFF OMITTED] TN27DE22.035
[FR Doc. 2022-28110 Filed 12-23-22; 8:45 am]
BILLING CODE 4915-01-P
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