86876 Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Proposed Rules 

1 In that decision, the Board found five carriers 

(BNSF Railway Company, CSX Transportation, Inc. 

(CSXT), Norfolk Southern Combined Railroad 

Subsidiaries, Soo Line Corporation, and UP) 

revenue adequate in 2019. R.R. Revenue 

Adequacy—2019 Determination, EP 552 (Sub-No. 

24), slip op. at 2. 

2The petition also proposes certain modifications 

to the calculation of ROI, as discussed below. (See 

also Pet. 35–36.) 

3The Joint Carriers state that banking and real 

estate companies were excluded from the 

comparison groups because they have different 

comments on all aspects of the proposed 

regulations. Any electronic comments 

submitted, and to the extent practicable 

any paper comments submitted, will be 

available at http://www.regulations.gov 

or upon request. 

A public hearing will be scheduled if 

requested in writing by any person who 

timely submits electronic or written 

comments as prescribed in this 

preamble under the DATES heading. 

Requests for a public hearing are also 

encouraged to be made electronically. If 

a public hearing is scheduled, notice of 

the date and time for the public hearing 

will be published in the Federal 

Register. Announcement 2020–4, 2020– 

17 I.R.B. 1, provides that until further 

notice, public hearings conducted by 

the IRS will be held telephonically. Any 

telephonic hearing will be made 

accessible to people with disabilities. 

Drafting Information 

The principal author of these 

regulations is Juli Ro Kim of the Office 

of Associate Chief Counsel 

(Passthroughs and Special Industries). 

Other personnel from the Treasury 

Department and the IRS participated in 

the development of the regulations. 

Statement of Availability of IRS 

Documents 

IRS Revenue Procedures, Revenue 

Rulings notices, and other guidance 

cited in this document are published in 

the Internal Revenue Bulletin (or 

Cumulative Bulletin) and are available 

from the Superintendent of Documents, 

U.S. Government Publishing Office, 

Washington, DC 20402, or by visiting 

the IRS website at http://www.irs.gov. 

List of Subjects in 26 CFR Part 300 

Estate taxes, Excise taxes, Gift taxes, 

Income taxes, Reporting and 

recordkeeping requirements, User fees. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 300 is 

proposed to be amended as follows: 

PART 300—USER FEES 

■ Paragraph 1. The authority citation 

for part 300 continues to read as 

follows: 

Authority: 31 U.S.C. 9701. 

■ Par. 2. Section 300.0 is amended by 

adding paragraph (b)(13) to read as 

follows: 

§ 300.0 User fees; in general. 

* * * * * 

(b) * * * 

(13) Requesting an estate tax closing 

letter. 

■ Par. 3. Section 300.13 is added to read 

as follows: 

§ 300.13 Fee for estate tax closing letter. 

(a) Applicability. This section applies 

to the request by a person described in 

paragraph (c) of this section for an estate 

tax closing letter from the IRS. 

(b) Fee. The fee for issuing an estate 

tax closing letter is $67. 

(c) Person liable for the fee. The 

person liable for the fee is the estate of 

the decedent or other person properly 

authorized under section 6103 of the 

Internal Revenue Code to receive and 

therefore to request the estate tax 

closing letter with respect to the estate. 

(d) Applicability date. This section 

applies to requests received by the IRS 

after [date that is 30 days after these 

regulations are published as final 

regulations in the Federal Register]. 

Douglas W. O’Donnell, 

Acting Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2020–28931 Filed 12–29–20; 4:15 pm] 

BILLING CODE 4830–01–P 

SURFACE TRANSPORTATION BOARD 

49 CFR Chapter X 

[Docket No. EP 766] 

Joint Petition For Rulemaking—Annual 

Revenue Adequacy Determinations 

AGENCY: Surface Transportation Board. 

ACTION: Petition for rulemaking. 

SUMMARY: The Surface Transportation 

Board (Board or STB) opens a 

rulemaking proceeding to consider a 

petition by several Class I railroads to 

change the Board’s procedures for 

annually determining whether Class I 

rail carriers are revenue adequate. The 

Board seeks public comment on the 

petition and several specific related 

issues. 

DATES: Comments are due March 1, 

2021; replies are due March 31, 2021. 

ADDRESSES: Comments and replies may 

be filed with the Board via e-filing on 

the Board’s website at www.stb.gov and 

will be posted to the Board’s website. 

FOR FURTHER INFORMATION CONTACT: 

Amy Ziehm at (202) 245–0391. 

Assistance for the hearing impaired is 

available through the Federal Relay 

Service at (800) 877–8339. 

SUPPLEMENTARY INFORMATION: On 

September 1, 2020, Union Pacific 

Railroad Company (UP), Norfolk 

Southern Railway Company, and the 

U.S. rail operating affiliates of Canadian 

National Railway Company 

(collectively, Joint Carriers) filed a joint 

petition for rulemaking to change the 

Board’s procedures for determining 

which Class I rail carriers are earning 

adequate revenues under 49 U.S.C. 

10704(a)(3). 

The Board annually determines each 

Class I railroad’s revenue adequacy in 

successive subdockets under Docket No. 

EP 552, most recently in Railroad 

Revenue Adequacy—2019 

Determination, EP 552 (Sub-No. 24) 

(STB served Oct. 1, 2020).1 Under the 

Board’s procedures, ‘‘a railroad is 

considered 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 for the 

railroad industry.’’ Id. at 1. 

The Joint Carriers propose two 

changes to the Board’s procedures for 

annually determining revenue 

adequacy. First, the Joint Carriers 

propose that the Board determine 

whether a railroad is revenue adequate 

by comparing the extent by which its 

ROI exceeds the rail industry’s cost of 

capital to the extent by which 

companies in the S&P 500 exceed their 

cost of capital—in short, to examine 

railroads in comparison with the larger 

universe of S&P 500 companies (the 

Comparison Proposal). (Pet. 3, 8.) The 

Joint Carriers contend that railroads 

compete against other firms for capital, 

and that the financial health of the 

railroad industry ‘‘must be considered 

in relation to the competition railroads 

face in the capital markets from other, 

unregulated firms.’’ (Id. at 3.) More 

specifically, the Joint Carriers argue that 

the Board should define annual revenue 

adequacy to mean that a railroad’s 

‘‘Adjusted STB ROI’’ 2 exceeds the rail 

industry cost of capital by more than the 

median S&P 500 firm’s ROI exceeds its 

cost of capital. (Id. at 20–21.) Under the 

Comparison Proposal, the Board would 

direct the Association of American 

Railroads to submit ‘‘Adjusted STB 

ROI’’ and cost of capital calculations for 

every S&P 500 company, and the Board 

‘‘would calculate the median difference 

between the Adjusted STB ROI and the 

cost of capital for all companies in the 

S&P 500, except for banking and real 

estate companies.’’ 3 (Id. at 21.) As part 


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capital structures than other firms; railroads were 

also excluded. (Pet. 35.) 

4The shippers are: The American Chemistry 

Council, Corn Refiners Association, American Fuel 

& Petrochemical Manufacturers, The National 

Industrial Transportation League, The Chlorine 

Institute, and The Fertilizer Institute (collectively, 

Joint Shippers). 

5Under 49 CFR 1104.13(c), a reply to a reply is 

not permitted. However, in the interest of a more 

complete record, the Board will grant the Joint 

Carriers’ motion and accept their reply into the 

record. See City of Alexandria—Pet. for Declaratory 

Order, FD 35157, slip op. at 2 (STB served Nov. 6, 

2008) (allowing a reply to a reply ‘‘[i]n the interest 

of compiling a full record’’). 

6The Board has also received testimony and 

comments in two informational dockets related to 

revenue adequacy. See Hearing on Revenue 

Adequacy, Docket No. EP 761; R.R. Revenue 

Adequacy, Docket No. EP 722. 

7Under 49 U.S.C. 10704(a)(2), the Board shall 

maintain and revise as necessary standards and 

procedures for establishing revenue levels for rail 

carriers providing transportation subject to its 

jurisdiction under this part that are adequate, under 

honest, economical, and efficient management, for 

the infrastructure and investment needed to meet 

the present and future demand for rail services and 

to cover total operating expenses, including 

depreciation and obsolescence, plus a reasonable 

and economic profit or return (or both) on capital 

employed in the business. The Board shall make an 

adequate and continuing effort to assist those 

carriers in attaining revenue levels prescribed under 

this paragraph. Revenue levels established under 

this paragraph should: Provide a flow of net income 

plus depreciation adequate to support prudent 

capital outlays, assure the repayment of a 

reasonable level of debt, permit the raising of 

needed equity capital, and cover the effects of 

inflation; and attract and retain capital in amounts 

adequate to provide a sound transportation system 

in the United States. 

of the Comparison Proposal, the Joint 

Carriers also propose including nongoodwill intangible assets in the 

railroads’ and S&P 500 companies’ asset 

bases. (Id. at 35.) 

The second proposal from the Joint 

Carriers is that the Board change how it 

treats deferred taxes in the revenue 

adequacy determination (the Deferred 

Taxes Proposal). Rather than the Board’s 

current ‘‘utility method,’’ which 

removes annual deferred taxes from net 

operating income and removes 

accumulated deferred taxes from a 

company’s investment base, the Joint 

Carriers propose a flow-through 

approach, under which annual deferred 

taxes and accumulated deferred taxes 

would not be removed from net 

operating income and the investment 

base, respectively. (Id. at 38.) The Joint 

Carriers state that the practical effect 

would be ‘‘an annual measurement that 

is on a cash basis, where the impact of 

any deferred taxes is captured by the 

measurement of financial health if and 

when those taxes come due.’’ (Id. at 38– 

39.) 

On September 21, 2020, the Board 

received three replies to the petition, 

one each from CSXT, the Western Coal 

Traffic League (WCTL), and a group of 

several shippers.4 CSXT supports the 

petition, while WCTL and the Joint 

Shippers oppose it. 

CSXT urges the Board to grant the 

petition because doing so ‘‘would 

provide a more accurate picture of 

railroad financial performance.’’ (CSXT 

Reply 2.) CSXT also urges the Board to 

consider the use of replacement costs 

when determining long-term revenue 

adequacy and argues that the Board 

should abandon the revenue adequacy 

constraint in determining whether 

individual rates are reasonable. (Id. at 

3–8.) 

WCTL argues that the petition 

misrepresents the role of revenue 

adequacy and is an attempt by the Joint 

Carriers to avoid being found revenue 

adequate and thus potentially subject to 

the revenue adequacy rate constraint. 

(WCTL Reply 4–5.) Regarding the 

Comparison Proposal, WCTL asserts 

that many S&P 500 firms have different 

capital structures than railroads and 

hundreds are not capital intensive. (Id. 

at 12.) WCTL also argues that the 

Comparison Proposal would result in 

revenue adequacy determinations at 

odds with the investment community’s 

perception of railroads’ financial health. 

(Id. at 13 (citing Joint Opening 

Comments of WCTL 11–12, Sept. 5, 

2014, R.R. Revenue Adequacy, EP 722).) 

Regarding the Deferred Taxes Proposal, 

WCTL argues that the flow-through 

approach ignores tax deferrals and the 

fact that railroads pay taxes below the 

corporate rate. (Id. at 14–16.) WCTL also 

questions the relevance and accuracy of 

the Joint Carriers’ examples of the utility 

and flow-through methods. (Id. at 17.) 

The Joint Shippers argue that the 

Comparison Proposal would ‘‘render all 

Class I railroads revenue-inadequate and 

likely maintain that status for decades to 

come.’’ (Joint Shippers Reply 4.) They 

contend that the current annual 

revenue-adequacy determination 

already sets a conservatively high bar, 

(id. at 4–8), and assert that the Joint 

Carriers’ rationales for the Comparison 

Proposal do not actually support the 

proposal, (id. at 11–12 (stating that the 

Joint Carriers’ arguments ‘‘assume a role 

for revenue adequacy as a measure of 

market power, competitive failure and 

monopoly profits that Congress never 

intended’’)). 

On October 13, 2020, the Joint 

Carriers filed a motion for leave to 

respond to the reply comments, along 

with a response addressing WCTL’s and 

the Joint Shippers’ arguments against 

both proposals.5

The Board will open a rulemaking 

proceeding to further consider the Joint 

Carriers’ petition and the issues that it 

raises.6 The Board invites comment on 

the issues raised in the petition 

generally as well as on the following 

specific questions: 

General Considerations 

1. With specificity, in what ways do 

each of the Joint Carriers’ proposals 

advance or fail to advance each of the 

components of 49 U.S.C. 10704(a)(2)? 7

2. Are there other ways in which the 

Board’s current procedures could be 

modified to further advance the 

statutory goals of 10704(a)(2)? 

The Comparison Proposal 

1. As noted above, the Joint Carriers 

propose that Class I carriers be 

considered revenue adequate only if 

their ROI exceeds their cost of capital by 

more than the median S&P 500 firm’s 

ROI exceed its cost of capital. Why is 

the median S&P 500 firm’s differential 

an appropriate benchmark and not, for 

example, the 25th, 33rd, or 75th 

percentile? Does the Joint Carriers’ 

proposal assume that below-median 

S&P 500 firms do not earn adequate 

revenues, and, if so, why is that 

assumption appropriate (or 

inappropriate)? 

2. WCTL and the Joint Shippers 

criticize the proposal to use the S&P 500 

as a comparison group. (See WCTL 

Reply 12; Joint Shippers Reply 9–10.) 

The Joint Carriers express openness to 

using a different comparison group and 

note that similar results are reached if 

railroads are compared to the S&P 500 

Industrials sector group or a group of 

S&P 500 railroad customers. (See Joint 

Carriers Response 11–12.) Would any of 

these alternative comparison groups be 

an appropriate benchmark? Are there 

other comparison groups that might be 

appropriate? Is it appropriate to 

compare regulated entities like railroads 

with a group that includes a significant 

number of non-regulated entities, and— 

if not—is there a set of regulated 

companies that could be used as a 

comparison group? 

3. A company is typically removed 

from the S&P 500 index if its market 

capitalization falls below a certain 

threshold. Does the changing 

constituency of the index pose a 

problem with respect to the Joint 

Carriers’ proposed methodology? 

The Deferred Taxes Proposal 

In Standards for Railroad Revenue 

Adequacy, 3 I.C.C.2d 261 (1986), the 

Board’s predecessor, the Interstate 

Commerce Commission (ICC), based its 

decision to adopt the utility method on 

several grounds, including analogizing 


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86878 Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Proposed Rules 

captive rail shippers to utility 

customers, favoring an approach that 

conforms to Generally Accepted 

Accounting Principles (GAAP), and 

determining that removing the effect of 

deferred taxes led to a more accurate 

representation of railroad profitability. 

See id. at 272–75; Consol. Rail Corp. v. 

United States, 855 F.2d 78, 93 (3rd Cir. 

1988) (affirming the ICC’s decision and 

finding that the ‘‘adjustment of its 

formula in the interests of accuracy is 

rational’’). Does the ICC’s reasoning for 

adopting the utility method remain 

valid, specifically with respect to 

analogizing captive shippers to utility 

customers, determining whether the 

utility method continues to conform 

with GAAP today, and finding that the 

utility method led to a more accurate 

representation of railroad profitability? 

Additionally, the Joint Carriers will be 

requested to file workpapers sufficient 

to replicate the analysis underlying their 

proposals and to make those 

workpapers available, upon request, to 

other participants in this proceeding, 

under an appropriate protective order. 

Interested persons may file comments 

by March 1, 2021. If any comments are 

filed, replies will be due by March 31, 

2021. 

It is ordered: 

1. A rulemaking proceeding is 

initiated, as discussed above. 

2. Comments are due March 1, 2021; 

replies are due March 31, 2021. 

3. The Joint Carriers are requested to 

file workpapers sufficient to replicate 

the analysis underlying their proposals 

and to make those workpapers available, 

upon request, to other participants in 

this proceeding, under an appropriate 

protective order. 

4. Notice of this decision will be 

published in the Federal Register. 

5. This decision is effective on its 

service date. 

Decided Date: December 22, 2020. 

By the Board, Board Members Begeman, 

Fuchs, and Oberman. 

Andrea Pope-Matheson, 

Clearance Clerk. 

[FR Doc. 2020–28864 Filed 12–30–20; 8:45 am] 

BILLING CODE 4915–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Parts 229 and 697 

[Docket No. 201221–0351] 

RIN 0648–BJ09 

Taking of Marine Mammals Incidental 

to Commercial Fishing Operations; 

Atlantic Large Whale Take Reduction 

Plan Regulations; Atlantic Coastal 

Fisheries Cooperative Management 

Act Provisions; American Lobster 

Fishery 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: NMFS proposes to amend the 

regulations implementing the Atlantic 

Large Whale Take Reduction Plan to 

reduce the incidental mortality and 

serious injury to North Atlantic right 

whales (Eubalaena glacialis), fin whales 

(Balaenoptera physalus), and humpback 

whales (Megaptera novaeangliae) in 

northeast commercial lobster and crab 

trap/pot fisheries to meet the goals of 

the Marine Mammal Protection Act and 

the Endangered Species Act. In 

addition, this action also proposes a 

small revision to Federal regulations 

implemented under the Atlantic State 

Marine Fisheries Commissions’ 

Interstate Fishery Management Plan for 

Lobster to increase the maximum length 

of a lobster trap trawl groundline. This 

action is necessary to reduce the risks to 

North Atlantic right whales and other 

large whales associated with the 

presence of fishing gear in waters used 

by these animals. 

DATES: Submit comments on or before 

March 1, 2021. 

Public Hearings: Eight or more remote 

public meetings will be held during the 

public comment period. See ADDRESSES

to obtain public hearing notification 

details. 

ADDRESSES: You may submit comments, 

identified by NOAA–NMFS–2020–0031, 

by either of the following methods: 

• Electronic Submission: Submit all 

electronic public comments via the 

Federal eRulemaking Portal. Go to 

www.regulations.gov/ 

#!docketDetail;D=NOAA-NMFS-2020- 

0031, click the ‘‘Comment Now!’’ icon 

and complete the required fields, and 

enter or attach your comments. 

Instructions: All comments received 

that are timely and properly submitted 

are a part of the public record and will 

generally be posted for public viewing 

on www.regulations.gov without change. 

All personal identifying information 

(e.g., name, address, etc.), confidential 

business information, or otherwise 

sensitive information submitted 

voluntarily by the sender will be 

publicly accessible. We will accept 

anonymous comments (enter ‘‘N/A’’ in 

the required fields if you wish to remain 

anonymous). Comments sent by any 

other method, to any other address or 

individual, or received after the end of 

the comment period, may not be 

considered by us. 

Oral Comments: Remote public 

meeting access information will be 

posted on the Plan website 

fisheries.noaa.gov/ALWTRP or contact 

Colleen Coogan for information on 

locations and dates. Contact information 

below. 

Copies of this action, including the 

Draft Environmental Impact Statement 

(DEIS) and the Regulatory Impact 

Review/Initial Regulatory Flexibility 

Analysis (DEIS/RIR/IRFA) prepared in 

support of this action, are available via 

the internet at https://

www.regulations.gov/ or by contacting 

Colleen Coogan at the contact 

information below. 

Several of the background documents 

for the Plan and the take reduction 

planning process can be downloaded 

from the Plan website. Copies of the 

DEIS/RIR/IRFA for this action can also 

be obtained from the Plan website. 

Information on the Decision Support 

Tool and Co-Occurrence model used to 

support the development and analysis 

of the proposed regulations can be 

found in appendices to the DEIS. The 

complete text of current regulations 

implementing the Plan can be found in 

50 CFR 229.32 or downloaded from the 

Plan’s website, along with outreach 

compliance guides to current 

regulations. The complete text of 

current regulations implementing the 

Lobster Plan can be found at 50 CFR 

part 697. 

FOR FURTHER INFORMATION CONTACT: 

Colleen Coogan, NMFS, Greater Atlantic 

Regional Fisheries Office, 978–281– 

9181, Colleen.Coogan@noaa.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

Background 

Summary of Proposed Changes 

Changes Proposed To Reduce the Number of 

Vertical Buoy Lines 

Changes to Closure Areas 

Gear Modifications To Include Weak Line or 

Weak Insertions in Buoy Lines 

Gear Marking Changes 

Addition to Definitions 


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