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39709 SERVICE DATE – LATE RELEASE FEBRUARY 18, 2009EBThis decision will be printed in the bound volumes of the STB printed reports at a later date.SURFACE TRANSPORTATION BOARDDECISIONSTB Docket No. 42088WESTERN FUELS ASSOCIATION, INC., ANDBASIN ELECTRIC POWER COOPERATIVEv.BNSF RAILWAY COMPANYDecided: February 17, 2009The Board finds that the defendant railroad has market dominance over thetransportation at issue and that the challenged rates are unreasonably high.Maximum reasonable rates are prescribed and reparations are ordered.
TABLE OF CONTENTS
ACRONYMS......................................................................................................................1OVERVIEW.......................................................................................................................2PRELIMINARY MATTERS..............................................................................................3A. Motion to Dismiss.....................................................................................................3B. BNSF Motion to Strike.............................................................................................3C. Collateral Attack on Major Issues by BNSF.............................................................41. BNSF’s Arguments Against ATC.....................................................................52. BNSF’s Arguments Against MMM...................................................................6a. Rerouting Issue........................................................................................6b. Short-Hauls.............................................................................................73. BNSF’s Arguments Against 20-Year Rate Prescription....................................8D. Scope of Recoverable Relief.....................................................................................8STAND-ALONE COST ANALYSIS................................................................................9A. LRR Configuration...................................................................................................9B. LRR Traffic Group..................................................................................................111. Rerouted Traffic...............................................................................................112. Cross-Over Traffic...........................................................................................12a. Application of ATC to Total Revenue Contribution.............................12
 
 STB Docket No. 42088iib. Densities................................................................................................13c. Rerouted Cross-Over Traffic.................................................................143. Tonnage and Revenues....................................................................................15C. Operating Expenses.................................................................................................151. Operating Plan.................................................................................................152. Interchange at Northport..................................................................................16a. Interchange Location..............................................................................16b. Train Dwell Times at Northport............................................................17D. Road Property Investment.......................................................................................18E. DCF Analysis..........................................................................................................191. Cost of Equity...................................................................................................19a. The History of the Board’s Cost of Equity Determination...................20b. Historical Figures: 2002-2007.............................................................22c. Forecasts: 2008-2024...........................................................................262. DCF Results......................................................................................................26F. Rate Prescription......................................................................................................29APPENDIX A—TRAFFIC VOLUMES AND REVENUES...........................................33A. Tonnage...................................................................................................................33B. Revenue...................................................................................................................34APPENDIX B—OPERATING EXPENSES....................................................................35A. Locomotives............................................................................................................351. Locomotive Requirements...............................................................................352. Locomotive Operating Expense.......................................................................36B. Railcars.....................................................................................................................371. Railcar Requirements.......................................................................................372. Railcar Lease Expense, Maintenance Expense, Private Car Allowance.........38C. Train Crew Personnel..............................................................................................38D. Non-Train Crew Personnel.....................................................................................381. Equipment Inspectors.......................................................................................392. Crew Callers.....................................................................................................39E. General & Administrative Personnel.......................................................................39F. Wages & Salaries.....................................................................................................39G. Materials, Supplies, and Equipment.......................................................................40H. Start-Up Costs.........................................................................................................40I. Ad Valorem Tax.......................................................................................................40J. Loss and Damage.....................................................................................................40K. Maintenance-of-Way..............................................................................................411. Staffing.............................................................................................................41a. Track Maintenance.................................................................................41b. Signals and Communications Maintenance...........................................41c. Purchasing and Materials Management.................................................412. Equipment........................................................................................................423. Contract Maintenance......................................................................................42
 
 STB Docket No. 42088iiia. Track Geometry Testing.......................................................................42b. Brush Cutting/Mowing.........................................................................42c. Communications Inspections/Spot Maintenance..................................42d. Equipment Maintenance.......................................................................43e. Bridge and Culvert Inspection..............................................................43f. Building Maintenance............................................................................43L. Insurance..................................................................................................................44APPENDIX C—LRR ROAD PROPERTY INVESTMENT...........................................45A. Land........................................................................................................................45B. Roadbed Preparation...............................................................................................46C. Track Construction..................................................................................................49D. Tunnels....................................................................................................................50E. Bridges.....................................................................................................................50F. Signals & Communication.......................................................................................50G. Buildings & Facilities.............................................................................................511. Headquarters Building.....................................................................................512. Fueling Facilities..............................................................................................513. Yard Site Costs................................................................................................52a. Access to Orin Yard...............................................................................52b. Access between the Locomotive Shop and Car Shop............................52c. Yard Lighting.........................................................................................534. Locomotive Repair Facility.............................................................................535. Car Repair Shop...............................................................................................536. Crew Change Facilities, Roadway Buildings, and Yard Offices.....................537. Wastewater Treatment.....................................................................................53H. Public Improvements..............................................................................................54I. Mobilization..............................................................................................................54J. Engineering..............................................................................................................55K. Contingencies..........................................................................................................55
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