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>From the Surface Transportation Board, Washington, D.C.
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The Surface Transportation Board announced today that it has made its
determinations of revenue adequacy for the seven Class I freight railroads
(the Nation's largest) for 2006. The Board found that three Class I
railroads, the BNSF Railway Company, the Norfolk Southern Railway Company,
and the Soo Line Railroad Company (a subsidiary of Canadian Pacific Railway
Company), were revenue adequate for 2006. All other Class I freight
railroads were found to be revenue inadequate for that year.
A railroad is considered to be revenue adequate, under 49 U.S.C. 10704(a),
if it achieves a rate of return on net investment (ROI) equal to at least
the current cost of capital (i.e., the cost of borrowing) for that
railroad. Congress directed the Board to conduct such revenue adequacy
determinations on an annual basis.
In its April 15, 2008 decision in the Board proceeding entitled Railroad
Cost of Capital—2006, STB Ex Parte No. 558 (Sub-No. 10), the agency
determined that the 2006 rail industry cost of capital was 9.94 percent.
By comparing that figure to 2006 ROI data filed with the agency by the
Class I railroads in their Annual Report R-1 Schedule 250 filings, the
Board made revenue adequacy calculations for each railroad operating as of
December 31, 2006.
A summary of the ROIs for all Class I freight railroads is as follows:
Railroad
ROI
BNSF Railway Company
11.43%
CSX Transportation, Inc.
8.15%
Grand Trunk Corporation Consolidated (Including all Canadian
National U.S. affiliates)
9.47%
Kansas City Southern Railway Company
9.31%
Norfolk Southern Railway Company
14.36%
Soo Line Railroad Company (Including all Canadian Pacific U.S.
affiliates)
11.60%
Union Pacific Railroad Company
8.21%
The Board issued its revenue adequacy determination today, May 6, 2008, in
the case entitled Railroad Revenue Adequacy—2006 Determination, STB Ex
Parte No. 552 (Sub-No. 11)(
http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/38963?OpenDocument
)
. That decision is available for viewing and downloading via the Board's
Web site at http://www.stb.dot.gov, under "E-Library," then under
"Decisions & Notices," beneath the date "5/6/08."
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