2140-0028 -- Supporting Statement - Rail Depreciation Studies 2023 (to ROCIS)

2140-0028
May 2023
SUPPORTING STATEMENT
FOR REQUEST OF OMB APPROVAL
UNDER THE PAPERWORK REDUCTION ACT AND 5 C.F.R. § 1320
The Surface Transportation Board (STB or Board) requests a three-year extension of
approval of the regulations governing the collection of rail depreciation studies from Class I
railroads.
A. Justification:
1. Need for Information in Collection. The Surface Transportation Board (Board) has
broad statutory authority to provide economic regulatory oversight of railroads, addressing such
matters as rates; service; the construction, acquisition, and abandonment of rail lines; carrier mergers;
and interchange of traffic among carriers (49 U.S.C. §§ 10101-11908). Under 49 U.S.C. § 11143,
the Board is required to identify those classes of property for which rail carriers may include
depreciation charges under operating expenses, and the Board must also prescribe a rate of
depreciation that may be charged to those classes of property. Pursuant to the Board’s authority
under § 11145 and 49 C.F.R. Part 1201, § 4-2(b), the seven Class I (large) rail carriers are required to
submit depreciation studies to the Board. Using appropriate industry-wide models for determining
depreciation rates, these railroads submit information about their depreciable property and propose
depreciation rates for this property. The Depreciation Study includes support for all the factors (such
as average service lives, salvage ratios, and average remaining lives) used to develop the depreciation
rates.
2. Use of Data Collected. The Board reviews the Depreciation Studies provided by Class I
railroads and uses the information in these studies to prescribe depreciation rates. These depreciation
rate prescriptions state the period for which the depreciation rates apply. Class I railroads apply the
prescribed depreciation rates to their investment base to determine a monthly and annual depreciation
expense. This expense is included in the railroads’ operating expenses, which are reported in their
“R-1 reports” (OMB Control Number 2140-0009). Depreciation expenses are also used by the
railroads to develop income statements and are included in the operating costs applied in various
proceedings before the Board, such as rate reasonableness cases and determination of railroad
“revenue adequacy.” Railroads also use the depreciation rates authorized by the Board in their own
budgeting and preparation of appropriate financial statements for other purposes.
3. Reduction through Improved Technology. The carriers submit this collection to the
Board electronically.
4. Identification of Duplication. The Board has exclusive jurisdiction over the economic
regulation of freight railroads. No other Federal agency collects the information in the rail
depreciation studies, nor is this information available from any other source.

5. Minimizing Burden for Small Businesses. No small entities will be affected by the
collection of this information. Only the seven largest (Class I) railroads are subject to this
reporting requirement.
6. Consequences if Collection not Conducted or Conducted Less Frequently.
Depreciation rates must be reviewed frequently to ensure continuing accuracy. Depreciation studies
are collected every three years for equipment and every six years for other depreciable property, such
as track. Less frequent studies could result in significant misstatements of operating expenses, which
are critical components of Board determinations of overall railroad revenue adequacy and of the
reasonableness of particular rail rates challenged by shippers.
7. Special Circumstances. No special circumstances apply to this collection.
8. Consultation with Outside Agency. The Board published a notice in the Federal
Register, providing a 60-day comment period regarding this collection. See 88 Fed. Reg. 16512
(December 12, 2019). No comments were submitted. A 30-day notice was published
concurrently with this submission to Office of Management and Budget (OMB). See 88 Fed.
Reg. 33955 (May 25, 2023).
9. Payments or Gifts. No payments or gifts to respondents are made.
10. Confidentiality. The Class I carriers have been providing this information for many
years and are aware that the information provided in their depreciation studies is considered
commercially confidential and is protected from disclosure under the Freedom of Information Act.
Only the depreciation rate prescriptions, which are set by the Board based on this information, are
made public by posting them on the Board’s website.
11. Sensitive Information. This collection contains no information of a sensitive nature.
12. Estimated Burden Hours. The following information pertains to the estimate of
burden hours associated with this collection:
(1) Number of respondents. Seven
(2) Frequency of response. Biennial. (Under 49 CFR Part 1201, 4-1 to 4-4, the
Board requires all class 1 (large) carriers to submit depreciation studies no less frequently than
every three years for equipment property and every six years for road and track property. That
means that for any given six-year period the Class I railroads submit no fewer than three
depreciation reports or the equivalent of 0.5 depreciation reports per year.)
(3) Annual hour burden per respondent and total for all respondents. 875 hours
(250 hours X 0.5 studies/year X 7 Class I railroads). The Board estimates an hourly burden of
approximately 250 hours per study (estimating that studies will require between 125 hours and
375 hours depending on the extent to which the carriers provide assistance to outside consultants
performing the study for them).

13. Estimated Total Annual Cost to Respondents. Approximately $210,000 per year.
Board staff estimates that each biennial study will cost between $20,000 and $100,000, which
converts to an annual cost of approximately $10,000-$50,000 per year. Using an average cost
($30,000 per year X seven Class I railroads), the non-hourly burden cost is estimated to be
approximately $210,000 per year.
14. Annualized Cost to the Federal Government. The Board estimates that, annually, it
takes staff a total of 350 hours (GS 14) to review the depreciation study submissions to ensure
they include all relevant information (property type, accounts impacted, supporting
documentation, etc.), to perform detailed review of rates requested and rationale for changes, and
to prepare a report summarizing the rates requested.
15. Explanation of Program Changes or Adjustments. In 2020, the Board's staff
reviewed respondents' time and costs to provide the required rail depreciation to the Board and
determined that improvements in accounting, programming, and information technology (used
by these large companies) have reduced both the hourly and non-hourly burdens on respondents.
After staff’s 2023 review, these burdens are estimated to hold steady, but an adjustment was
estimated for inflation of non-hourly cost burdens.
16. Plans for tabulation and publication. The Board does not publish the information
submitted in depreciation studies because this information is considered confidential. However, the
depreciation rate prescriptions, which are prepared by the Board based on information in the
depreciation studies, are posted on the Board’s website at https://prod.stb.gov/ by navigating to
“Reports & Data” and clicking on “Economic Data.”
17. Display of expiration date for OMB approval. No form is used for this collection.
Once the collection is approved, the Board will display the control number and expiration date of
the collection by publishing a special notice in the Federal Register stating the control number
and expiration date of the collection as provided in 5 C.F.R. § 1320.3(f)(3).
18. Exceptions to Certification Statement. No exceptions are sought.
B. Collections of Information Employing Statistical Methods:
Not applicable.