Federal Register / Vol. 71, No. 185 / Monday, September 25, 2006 / Notices 55825 

toward completion. The first Working 

Group meeting was held May 8–10, 

2006. The Working Group met on 

August 8–9, 2006, and the next meeting 

is scheduled for September 25–26, 2006. 

Contact: George Scerbo, (202) 493–6249. 

Task 06–02—Track Safety Standards 

and Continuous Welded Rail. Section 

9005 of the Safe, Accountable, Flexible, 

Efficient Transportation Equity Act: A 

Legacy for Users (Pub. L. No. 109–59, 

‘‘SAFETEA–LU’’), the 2005 surface 

transportation authorization act, 

requires FRA to issue requirements for 

inspection of joint bars in continuous 

welded rail (CWR) to detect cracks that 

could affect the integrity of the track 

structure. 49 U.S.C. 20142(e). FRA 

published an Interim Final Rule 

establishing new requirements for 

inspections on November 2, 2005, (70 

FR 66288). On October 11, 2005, FRA 

offered the RSAC a task to review 

comments on this IFR, but the 

conditions could not be established 

under which the Committee could have 

undertaken this with a view toward 

consensus. Comments on the IFR were 

received through December 19, 2005. 

FRA is reviewing the comments. On 

February 22, 2006, the RSAC accepted 

this task to review and revise the CWR 

related to provisions of the Track Safety 

Standards, with particular emphasis on 

reduction of derailments and 

consequent injuries and damage caused 

by defective conditions, including joint 

failures, in track using CWR. A Working 

Group has been established. The 

Working Group will report any planned 

activity to the full Committee at each 

scheduled full RSAC meeting, including 

milestones for completion of projects 

and progress toward completion. The 

first Working Group meeting was held 

April 3–4, 2006, at which time the 

Working Group reviewed comments on 

the IFR. The second Working Group 

meeting was held April 26–28, 2006. 

The Working Group also met May 24–

25, 2006, and July 19–20, 2006. The 

Working Group reported consensus 

recommendations for the final rule that 

were accepted by the full Committee by 

mail ballot on August 11, 2006. FRA is 

currently preparing a final rule. Contact: 

Ken Rusk, (202) 493–6236. 

Completed Tasks 

Task 96–1—(Completed) Revising the 

Freight Power Brake Regulations. 

Task 96–2—(Completed) Reviewing 

and recommending revisions to the 

Track Safety Standards (49 CFR Part 

213). 

Task 96–3—(Completed) Reviewing 

and recommending revisions to the 

Radio Standards and Procedures (49 

CFR Part 220). 

Task 96–5—(Completed) Reviewing 

and recommending revisions to Steam 

Locomotive Inspection Standards (49 

CFR Part 230). 

Task 96–6—(Completed) Reviewing 

and recommending revisions to 

miscellaneous aspects of the regulations 

addressing Locomotive Engineer 

Certification (49 CFR Part 240). 

Task 96–7—(Completed) Developing 

Roadway Maintenance Machines (OnTrack Equipment) Safety Standards. 

Task 96–8—(Completed) This 

Planning Task evaluated the need for 

action responsive to recommendations 

contained in a report to Congress 

entitled, Locomotive Crashworthiness & 

Working Conditions. 

Task 97–1—(Completed) Developing 

crashworthiness specifications (49 CFR 

Part 229) to promote the integrity of the 

locomotive cab in accidents resulting 

from collisions. 

Task 97–3—(Completed) Developing 

event recorder data survivability 

standards. 

Task 97–4 and Task 97–5—

(Completed) Defining Positive Train 

Control (PTC) functionalities, describing 

available technologies, evaluating costs 

and benefits of potential systems, and 

considering implementation 

opportunities and challenges, including 

demonstration and deployment. 

Task 97–6—(Completed) Revising 

various regulations to address the safety 

implications of processor-based signal 

and train control technologies, 

including communications-based 

operating systems. 

Task 97–7—(Completed) Determining 

damages qualifying an event as a 

reportable train accident. 

Task 00–1—(Completed—task 

withdrawn) Determining the need to 

amend regulations protecting persons 

who work on, under, or between rolling 

equipment and persons applying, 

removing or inspecting rear end 

marking devices (Blue Signal 

Protection). 

Task 01–1—(Completed) Developing 

conformity of FRA’s regulations for 

accident/incident reporting (49 CFR Part 

225) to revised regulations of the 

Occupational Safety and Health 

Administration (OSHA), U.S. 

Department of Labor, and to make 

appropriate revisions to the FRA Guide 

for Preparing Accident/Incident Reports 

(Reporting Guide). 

Please refer to the notice published in 

the Federal Register on March 11, 1996, 

(61 FR 9740) for more information about 

the RSAC. 

Issued in Washington, DC, on September 

18, 2006. 

Grady C. Cothen, Jr. 

Deputy Associate Administrator for Safety 

Standards and Program Development. 

[FR Doc. 06–8124 Filed 9–22–06; 8:45 am] 

BILLING CODE 4910–06–P 

DEPARTMENT OF TRANSPORTATION 

Surface Transportation Board 

[STB Ex Parte No. 664] 

Methodology To Be Employed in 

Determining the Railroad Industry’s 

Cost of Capital 

AGENCY: Surface Transportation Board. 

ACTION: Request for comments. 

SUMMARY: The Board is seeking 

comments on the appropriate 

methodology to be employed in 

determining the railroad industry’s 

estimated cost of capital to be used in 

future annual cost-of-capital 

determinations. We are also soliciting 

comments on how evidence should be 

submitted and analyzed in future costof-capital proceedings. 

DATES: Comments are due on or before 

November 6, 2006. 

ADDRESSES: Send comments (an original 

and 10 copies) referring to STB Ex Parte 

No. 664 to: Surface Transportation 

Board, 1925 K Street, NW., Washington, 

DC 20423–0001. 

FOR FURTHER INFORMATION CONTACT: Paul 

Aguiar, (202) 565–1527. [Assistance for 

the hearing impaired is available 

through the Federal Information Relay 

Service (FIRS) at 1–800–877–8339.] 

SUPPLEMENTARY INFORMATION: Section 

205 of the Railroad Revitalization and 

Regulatory Reform Act of 1976 (4R Act) 

first codified the requirement for the 

Board or its predecessor to establish and 

maintain standards for railroad revenue 

adequacy. This provision stated that 

railroad revenues 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, cover 

the effects of inflation, and attract and 

retain capital in amounts adequate to 

provide a sound transportation system 

in the United States. Subsequent laws 

(including the ICC Termination Act of 

1995) have retained this requirement. 

Thus, each year the Board makes a 

determination of which railroads are or 

are not revenue adequate. 

The annual determination of the 

railroad industry’s cost of capital is used 

in evaluating the adequacy of railroad 


rwilkins on PROD1PC63 with NOTICES
55826 Federal Register / Vol. 71, No. 185 / Monday, September 25, 2006 / Notices 

1NHDOT originally filed its notice of exemption 

on March 14, 2006. After consulting with the 

Board’s Section of Environmental Analysis (SEA), 

NHDOT filed an amended notice of exemption on 

September 5, 2006, which became the official filing 

date. 

2NHDOT states that, prior to the filing of this 

notice of exemption, the property was acquired by 

James R. Irwin, & Sons, Inc., and currently is being 

used for a commercial boat storage facility and 

marina. 

3The Board will grant a stay if an informed 

decision on environmental issues (whether raised 

by a party or by SEA in its independent 

investigation) cannot be made before the 

exemption’s effective date. See Exemption of Outof-Service Rail Lines, 5 I.C.C.2d 377 (1989). Any 

request for a stay should be filed as soon as possible 

so that the Board may take appropriate action before 

the exemption’s effective date. 

4Each OFA must be accompanied by the filing 

fee, which currently is set at $1,300. See 49 CFR 

1002.2(f)(25). 

revenues each year. It may also be 

utilized in other Board proceedings, 

including, but not necessarily limited 

to, those involving the prescription of 

maximum reasonable rate levels. 

The cost-of-capital calculation has 

three elements: (1) The railroads’ costof-debt capital; (2) the railroads’ cost of 

preferred stock equity capital; (3) the 

railroads’ cost of common stock equity 

capital; and (4) the capital structure mix 

of the railroad industry on a market 

value basis. With respect to the cost of 

equity, there are essentially two general 

approaches. It can be estimated directly 

by estimating its component parts, the 

factors for which investors ask 

compensation. These parts are the real 

time value of money, a premium for 

expected inflation, and a premium for 

risk. This is commonly referred to as the 

Capital Asset Pricing Model (CAPM) 

methodology. Alternatively, it can be 

estimated indirectly on the basis of the 

return expectations embodied in the 

prices investors are willing to pay for 

stocks, the Discounted Cash Flow (DCF) 

methodology. The point has often been 

raised, most notably by the railroads, 

that investors place less importance on 

historical growth factors than on the 

analysts’ forecasts, thus making the 

forecast more meaningful. Other parties 

contend that investors do rely on 

historical trends and tend to discount 

the analysts’ forecasts as being overly 

optimistic. 

The Board has, for all previous costof-capital determinations, relied upon 

the DCF methodology to determine the 

railroads’ cost of capital. We have also 

used the Institutional Brokers Estimate 

System (IBES) consensus forecast data 

to determine the growth rate (‘‘g’’) 

component of the DCF formula. While 

the Board has relied on the use of the 

DCF methodology for determining the 

cost of common equity, there are other 

methodologies that could be employed. 

These include the CAPM, risk premium 

methods other than CAPM, earningsprice ratios, and the comparable 

earnings method. 

We are seeking comments on the 

appropriate techniques and 

methodologies to be used to develop 

and evaluate the evidence submitted for 

the cost of capital. Parties should 

discuss any changes in underlying 

railroad industry economic conditions 

that would create the need to change the 

methodology currently employed by the 

Board, and how any proposed 

methodology will overcome the 

shortcomings, if any, of the currently 

used DCF method. 

This proceeding will provide all 

interested parties an opportunity to 

comment on the DCF model, the proper 

source for the inputs to that model, and 

whether the Board should adopt an 

alternative to that method, such as the 

CAPM model, for future cost of capital 

determinations. 

This action will not significantly 

affect either the quality of the human 

environment or the conservation of 

energy resources. 

Pursuant to 5 U.S.C. 605(b), we certify 

that the proposed action would not have 

a significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act. 

Board decisions and notices are 

available on our Web site at http:// 

www.stb.dot.gov. 

Decided: September 15, 2006. 

By the Board, Chairman Nottingham, Vice 

Chairman Mulvey, and Commissioner 

Buttrey. 

Vernon A. Williams, 

Secretary. 

[FR Doc. 06–8098 Filed 9–22–06; 8:45 am] 

BILLING CODE 4915–01–P 

DEPARTMENT OF TRANSPORTATION 

Surface Transportation Board 

[STB Docket No. AB–871X] 

State of New Hampshire Department of 

Transportation—Abandonment 

Exemption—in Belknap County, NH 

The State of New Hampshire, 

Department of Transportation, Bureau of 

Rail and Transit (NHDOT), has filed an 

amended notice of exemption 1 under 49 

CFR part 1152 subpart F—Exempt 

Abandonments to abandon a portion of 

rail line known as the Lakeport Spur, in 

Belknap County, NH, extending from 

engineering station 1 + 70 to 

engineering station 11 + 28.11 (on 

Valuation Section V.21, Map 65–A).2

The line traverses United States Postal 

Service Zip Code 03246. 

NHDOT has certified that: (1) No local 

traffic has moved over the line for at 

least 2 years; (2) there is no overhead 

traffic on the line to be rerouted; (3) no 

formal complaint filed by a user of rail 

service on the line (or by a state or local 

government entity acting on behalf of 

such user) regarding cessation of service 

over the line either is pending with the 

Surface Transportation Board or with 

any U.S. District Court or has been 

decided in favor of complainant within 

the 2-year period; and (4) the 

requirements at 49 CFR 1105.7 

(environmental reports), 49 CFR 1105.8 

(historic reports), 49 CFR 1105.11 

(transmittal letter), 49 CFR 1105.12 

(newspaper publication), and 49 CFR 

1152.50(d)(1) (notice to governmental 

agencies) have been met. 

As a condition to this exemption, any 

employee adversely affected by the 

abandonment shall be protected under 

Oregon Short Line R. Co.—

Abandonment—Goshen, 360 I.C.C. 91 

(1979). To address whether this 

condition adequately protects affected 

employees, a petition for partial 

revocation under 49 U.S.C. 10502(d) 

must be filed. 

Provided no formal expression of 

intent to file an offer of financial 

assistance (OFA) has been received, this 

exemption will be effective on October 

25, 2006, unless stayed pending 

reconsideration. Petitions to stay that do 

not involve environmental issues,3

formal expressions of intent to file an 

OFA under 49 CFR 1152.27(c)(2),4 and 

trail use/rail banking requests under 49 

CFR 1152.29 must be filed by October 

5, 2006. Petitions to reopen or requests 

for public use conditions under 49 CFR 

1152.28 must be filed by October 16, 

2006, with the Surface Transportation 

Board, 1925 K Street, NW., Washington, 

DC 20423–0001. 

A copy of any petition filed with the 

Board should be sent to NHDOT’s 

representative: Stephen G. LaBonte, 

Assistant Attorney General, Office of the 

Attorney General, 33 Capitol Street, 

Concord, NH 03301. 

If the verified notice contains false or 

misleading information, the exemption 

is void ab initio. 

NHDOT has filed a combined 

environmental report and historic report 

which addresses the effects, if any, of 

the abandonment on the environment 

and historic resources. SEA will issue 

an environmental assessment (EA) by 

September 29, 2006. Interested persons 

may obtain a copy of the EA by writing 

to SEA (Room 500, Surface 

Transportation Board, Washington, DC 


rwilkins on PROD1PC63 with NOTICES