• Regulatory requirements of Class Is vs Class IIs

  • For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.
For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.

Moderator: Jeff Smith

  by MattW
 
I was doing a little research the other day on Class I and Class II railroads and I know the definition has been changed several times, and may be a gain, because a few Class II railroads don't want to be reclassified as Class Is because of "increased regulatory requirements." My question is, what requirements? I can see something like FEC that runs intrastate (with interstate connections), but for other Class IIs that have interstate trackage, what would change?
  by Gilbert B Norman
 
Railway Operating Revenues is the measuring stick. I can remember when a Class I with $1M (that's "Million with an M") was the threshold. Suffice to say, it's a "mite bit higher" nowadays.
  by Engineer Spike
 
Gilbert B Norman wrote: Thu Nov 19, 2020 11:32 am Railway Operating Revenues is the measuring stick. I can remember when a Class I with $1M (that's "Million with an M") was the threshold. Suffice to say, it's a "mite bit higher" nowadays.
Not only do we have to account for inflation, but the size of the present class one systems. Consider that CSX has the combined revenues of all of the former class one roads which it now encompasses. On top of that, one reason to merge is economies of scale in supply purchases, and also consolidated facilities.
  by WhartonAndNorthern
 
MattW wrote: Wed Nov 11, 2020 12:25 pm I was doing a little research the other day on Class I and Class II railroads and I know the definition has been changed several times, and may be a gain, because a few Class II railroads don't want to be reclassified as Class Is because of "increased regulatory requirements." My question is, what requirements? I can see something like FEC that runs intrastate (with interstate connections), but for other Class IIs that have interstate trackage, what would change?
I think it's increased reporting requirements to the STB and possibly different provisions of the Railway Labor Act. I think the next RR to be close to knocking on the door of the Class 1 threshold is Montana Raillink. And the threshold is somewhere around $1B, and KCS (which may disappear into CP) is the smallest Class 1 at around $2B. All industry thoughts were that if MRL got close to $1B, they'd ask the STB to bump the numbers higher.
  by JayBee
 
One thing that surprised me is that the combined CP and KCS would have more revenue and more net income than either CSX or NS
  by Gilbert B Norman
 
Whoa, Mr. JayBee; the measurement of a Class I includes only US roads. Presuming that CP will incorporate the KCS US properties into the SOO Line, the measurement will include only the SOO.

There is a long-standing treaty requiring Canadian roads doing business in the US - and vice versa - that they be incorporated in the US covering their US operations.

Applying this measurement, Chessie and Topper will likely remain larger; Grand Trunk (CN) and SOO will still be #6 and #7. As Mr. Wharton immediately notes, Montana Rail Link could join the Club, bringing the total to eight.

All a far FAR cry from the 114 roads, out of 635, that were designated as Class I during the '50's when I first started following industry affairs.
  by Jeff Smith
 
I saw that as well. The change was requested by Montana Rail Link. Class I was increased from a bit above $500,000,000. The only real opposition was AFL-CIO TTD (Transportation Trades Department).

It seems to me that classification based on revenue only is unwise, as MRL pointed out. So basically, what the STB had to do was raise the revenue limit to accommodate MRL's clear distinction as a Class II, a back-door way to skirt the regulation.