“The deflator factor is used by the railroads to adjust their gross annual operating revenues for classification purposes,” the STB reported June 24. “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 STB’s annual deflator factor is based on the annual average of the Producer Price Index industry (PPI) data for line-haul railroads published by the Bureau of Labor Statistics and is used to deflate revenues for comparison with established revenue thresholds.
Application of the annual deflator factors for 2020-2024 results in the following annual revenue thresholds:
Footnotes to Table, Courtesy of STB:
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 Jan. 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 April 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 Jan. 1, 2020.
2. The 2020 and subsequent values are based on the thresholds established in Docket No. EP 763, and the deflator factor is indexed with a base year of 2019. As the PPI industry index for line-haul railroads remained the same from 2019 to 2020, the annual deflator factor for 2020 was 1.0000.
Further Reading: STB Publishes Annual Deflator Factor for Railroads
