30-Day Federal Register Notice

8400

Federal Register / Vol. 73, No. 30 / Wednesday, February 13, 2008 / Notices

Issued in Washington, DC, on February 7,
2008.
Kathleen C. DeMeter,
Director, Office of Defects Investigation.
[FR Doc. E8–2694 Filed 2–12–08; 8:45 am]
BILLING CODE 4910–59–P

DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials
Safety Administration
[Docket No. PHMSA–2008–0018 (Notice No.
08–1)]

Information Collection Activities Under
OMB Review; 2008 Renewals
Pipeline and Hazardous
Materials Safety Administration
(PHMSA), DOT.
ACTION: Notice and request for
comments.

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AGENCY:

SUMMARY: In compliance with the
Paperwork Reduction Act of 1995, this
notice announces that the Information
Collection Requests (ICR) abstracted
below will be forwarded to the Office of
Management and Budget (OMB) for
review and comments. The ICRs
describe the nature of the information
collections and their expected burden.
A Federal Register Notice with a 60-day
comment period soliciting comments on
the following collections of information
was published in the Federal Register
on November 30, 2007 [72 FR 67782]
under Docket No. PHMS–2007–27181
(Notice No. 07–11). No comments
pertaining to the renewal of these
information collections were received.
DATES: Interested persons are invited to
submit comments on or before March
14, 2008.
ADDRESSES: Send comments regarding
the burden estimate, including
suggestions for reducing the burden, to
the Office of Management and Budget
(OMB), Attention: Desk Officer for
PHMSA, 725 17th Street, NW.,
Washington, DC 20503. Comments are
invited on: Whether the proposed
collection of information is necessary
for the proper performance of the
functions of the Department, including
whether the information will have
practical utility; the accuracy of the
Department’s estimate of the burden of
the proposed information collection;
ways to enhance the quality, utility and
clarity of the information to be
collected; and ways to minimize the
burden of the collection of information
on respondents, including the use of
automated collection techniques or
other forms of information technology.
A comment to OMB is most effective if

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OMB receives it within 30 days of
publication.
FOR FURTHER INFORMATION CONTACT:

Deborah Boothe or T. Glenn Foster, U.S.
Department of Transportation, Office of
Hazardous Materials Standards (PHH–
11), Pipeline and Hazardous Materials
Safety Administration, 1200 New Jersey
Avenue, SE., East Building, 2nd Floor,
Washington, DC 20590–0001,
Telephone (202) 366–8553.
SUPPLEMENTARY INFORMATION: Section
1320.8(d), Title 5, Code of Federal
Regulations requires PHMSA to provide
interested members of the public and
affected agencies an opportunity to
comment on information collection and
recordkeeping requests. This notice
identifies information collection
requests that PHMSA will be submitting
to OMB for renewal and extension.
These information collections are
contained in 49 CFR parts 110 and 130
and the Hazardous Materials
Regulations (HMR; 49 CFR parts 171–
180). PHMSA has revised burden
estimates, where appropriate, to reflect
current reporting levels or adjustments
based on changes in proposed or final
rules published since the information
collections were last approved. The
following information is provided for
each information collection: (1) Title of
the information collection, including
former title if a change is being made;
(2) OMB control number; (3) abstract of
the information collection activity; (4)
description of affected public; (5)
estimate of total annual reporting and
recordkeeping burden; and (6)
frequency of collection. PHMSA will
request a three-year term of approval for
each information collection activity and,
when approved by OMB, publish notice
of the approval in the Federal Register.
PHMSA requests comments on the
following information collections:
Title: Testing, Inspection and Marking
Requirements for Cylinders.
OMB Control Number: 2137–0022.
Type of Request: Extension of a
currently approved information
collection.
Abstract: Requirements in § 173.301
for qualification, maintenance and use
of cylinders require that cylinders be
periodically inspected and retested to
ensure continuing compliance with
packaging standards. Information
collection requirements address
registration of retesters and marking of
cylinders by retesters with their
identification number and retest date
following conduct of tests. Records
showing the results of inspections and
retests must be kept by the cylinder
owner or designated agent until
expiration of the retest period or until

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the cylinder is reinspected or retested,
whichever occurs first. These
requirements are intended to ensure that
retesters have the qualifications to
perform tests and to identify to cylinder
fillers and users that cylinders are
qualified for continuing use.
Information collection requirements in
§ 173.303 require that fillers of acetylene
cylinders keep, for at least 30 days, a
daily record of the representative
pressure to which cylinders are filled.
Affected Public: Fillers, owners, users
and retesters of reusable cylinders.
Recordkeeping:
Estimated Number of Respondents:
139,352.
Estimated Number of Responses:
153,287.
Estimated Annual Burden Hours:
168,431.
Frequency of collection: On occasion.
Title: Approvals for Hazardous
Materials.
OMB Control Number: 2137–0557.
Type of Request: Extension of a
currently approved information
collection.
Abstract: Without these requirements
there is no means to: (1) Determine
whether applicants who apply to
become designated approval agencies
are qualified to evaluate package design,
test packages, classify hazardous
materials, etc.; (2) verify that various
containers and special loading
requirements for vessels meet the
requirements of the HMR; and (3) assure
that regulated hazardous materials pose
no danger to life and property during
transportation.
Affected Public: Businesses and other
entities which must meet the approval
requirements in the HMR.
Recordkeeping:
Estimated Number of Respondents:
10,723.
Estimated Number of Responses:
11,074.
Estimated Annual Burden Hours:
25,605.
Frequency of collection: On occasion.
Title: Rail Carrier and Tank Car Tank
Requirements.
OMB Control Number: 2137–0559.
Type of Request: Extension of a
currently approved information
collection.
Abstract: This information collection
consolidates and describes the
information provisions in parts 172,
173, 174, 179, and 180 of the HMR on
the transportation of hazardous
materials by rail and the manufacture,
qualification, maintenance and use of
tank cars. The types of information
collected include:
(1) Approvals of the Association of
American Railroads (AAR) Tank Car

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Federal Register / Vol. 73, No. 30 / Wednesday, February 13, 2008 / Notices
Committee: An approval is required
from the AAR Tank Car Committee for
a tank car to be used for a commodity
other than those specified in part 173
and on the certificate of construction.
This information is used to ascertain
whether a commodity is suitable for
transportation in a tank car. AAR
approval also is required for an
application for approval of designs,
materials and construction, conversion
or alteration of tank car tanks
constructed to a specification in part
179 or an application for construction of
tank cars to any new specification. This
information is used to ensure that the
design, construction or modification of
a tank car or the construction of a tank
car to a new specification is performed
in accordance with the applicable
requirements.
(2) Progress Reports: Each owner of a
tank car that is required to be modified
to meet certain requirements specified
in § 173.31(b) must submit a progress
report to the Federal Railroad
Administration (FRA). This information
is used by FRA to ensure that all
affected tank cars are modified before
the regulatory compliance date.
(3) FRA Approvals: An approval is
required from FRA to transport a bulk
packaging (such as a portable tank, IM
portable tank, intermediate bulk
container, cargo tank, or multi-unit tank
car tank) containing a hazardous
material in container-on-flat-car or
trailer-on-flat-car service other than as
authorized by § 174.63. FRA uses this
information to ensure that the bulk
package is properly secured using an
adequate restraint system during
transportation. Also an FRA approval is
required for the movement of any tank
car that does not conform to the
applicable requirements in the HMR.
PHMSA proposed (September 30, 1999;
64 FR 53169) to broaden this provision
to include the movement of covered
hopper cars, gondola cars, and other
types of railroad equipment when they
no longer conform to Federal law but
may safely be moved to a repair
location. These latter movements are
currently being reported under the
information collection for special permit
applications.
(4) Manufacturer Reports and
Certificate of Construction: These
documents are prepared by tank car
manufacturers and are used by owners,
users and FRA personnel to verify that
rail tank cars conform to the applicable
specification.
(5) Quality Assurance Program:
Facilities that build, repair, and ensure
the structural integrity of tank cars are
required to develop and implement a
quality assurance program. This

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information is used by the facility and
DOT compliance personnel to ensure
that each tank car is constructed or
repaired in accordance with the
applicable requirements.
(6) Inspection Reports: A written
report must be prepared and retained for
each tank car that is inspected and
tested in accordance with § 180.509 of
the HMR. Rail carriers, users, and the
FRA use this information to ensure that
rail tank cars are properly maintained
and in safe condition for transporting
hazardous materials.
Affected Public: Manufacturers,
owners and rail carriers of tank cars.
Recordkeeping:
Estimated Number of Respondents:
266.
Estimated Number of Responses:
16,782.
Estimated Annual Burden Hours:
2,689.
Frequency of collection: Annually.
Title: Inspection and Testing of Meter
Provers.
OMB Control Number: 2137–0620.
Type of Request: Extension of a
currently approved information
collection.
Abstract: This information collection
and recordkeeping burden is the result
of efforts to eliminate special permits
that are no longer needed and
incorporate the use, inspection, and
maintenance of mechanical
displacement meter provers (meter
provers) used to check the accurate flow
of liquid hazardous materials into bulk
packagings, such as portable tanks and
cargo tank motor vehicles, under the
HMR. These meter provers are used to
ensure that the proper amount of liquid
hazardous materials is being loaded and
unloaded involving bulk packagings,
such as cargo tanks and portable tanks.
These meter provers consist of a gauge
and several pipes that always contain
small amounts of the liquid hazardous
material in the pipes as residual
material; and, therefore, must be
inspected and maintained in accordance
with the HMR to ensure they are in
proper calibration and working order.
These meter provers are not subject to
the specification testing and inspection
requirements in Part 178. However,
these meter provers must be visually
inspected annually and hydrostatic
pressure tested every five years in order
to ensure they are properly working as
specified in § 173.5a of the HMR.
Therefore, this information collection
requires that:
(1) Each meter prover must undergo
and pass an external visual inspection
annually to ensure that the meter
provers used in the flow of liquid

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hazardous materials into bulk
packagings are accurate and in
conformance with the performance
standards in the HMR.
(2) Each meter prover must undergo
and pass a hydrostatic pressure test at
least every five years to ensure that the
meter provers used in the flow of liqiuid
hazardous materials into bulk
packagings are accurate and in
conformance with the performance
standards in the HMR.
(3) Each meter prover successfully
completing the test and inspection must
be marked in accordance with
§ 180.415(b) and in accordance with
§ 173.5a.
(4) Each owner must retain a record
of the most recent visual inspection and
pressure test until the meter prover is
requalified.
Affected Public: Owners of meter
provers used to measure liquid
hazardous materials flow into bulk
packagings such as cargo tanks and
portable tanks.
Recordkeeping:
Estimated Number of Respondents:
50.
Estimated Number of Responses: 250.
Estimated Annual Burden Hours: 175.
Frequency of collection: On occasion.
Title: Requirements for United
Nations (UN) Cylinders.
OMB Control Number: 2137–0621.
Type of Request: Extension of a
currently approved information
collection.
Abstract: This information collection
and recordkeeping burden is the result
of efforts to amend the HMR to adopt
standards for the design, construction,
maintenance and use of cylinders and
multiple-element gas containers
(MEGCs) based on the standards
contained in the United Nations (UN)
Recommendations on the Transport of
Dangerous Goods. Aligning the HMR
with the UN Recommendations will
promote flexibility, permit the use of
technological advances for the
manufacture of the pressure receptacles,
provide for a broader selection of
pressure receptacles, reduce the need
for exemptions, and facilitate
international commerce in the
transportation of compressed gases.
Information collection requirements
address domestic and international
manufacturers of cylinders that request
approval by the approval agency for
cylinder design types. The approval
process for each cylinder design type
includes review, filing, and
recordkeeping of the approval
application. The approval agency is
required to maintain a set of the
approved drawings and calculations for

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Federal Register / Vol. 73, No. 30 / Wednesday, February 13, 2008 / Notices

each design it reviews and a copy of
each initial design type approval
certificate approved by the Associate
Administrator for not less than 20 years.
Affected Public: Fillers, owners, users,
and retesters of UN cylinders.
Recordkeeping:
Estimated Number of Respondents:
50.
Estimated Number of Responses: 150.
Estimated Annual Burden Hours: 900.
Frequency of collection: On occasion.
Issued in Washington, DC on February 8,
2008.
Edward T. Mazzullo,
Director, Office of Hazardous Materials
Standards.
[FR Doc. E8–2662 Filed 2–12–08; 8:45 am]
BILLING CODE 4910–60–P

DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Ex Parte No. 664 (Sub–No. 1)]

Use of a Multi-Stage Discounted Cash
Flow Model in Determining the
Railroad Industry’s Cost of Capital
AGENCY:

Surface Transportation Board,

DOT.
Notice and request for
comments.

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ACTION:

SUMMARY: The Board is seeking
comments on the use of a multi-stage
Discounted Cash Flow Model to
complement the use of the Capital Asset
Pricing Model in determining the
railroad industry’s cost of capital.
DATES: Comments are due on or before
April 14, 2008.
ADDRESSES: Send Comments (an original
and 10 copies) referring to [STB Ex Parte
No. 664 (Sub-No.1)] to: Surface
Transportation Board, 395 E Street, SW.,
Washington, DC 20423–0001.
FOR FURTHER INFORMATION CONTACT: Paul
Aguiar, (202) 245–0323. [Assistance for
the hearing impaired is available
through the Federal Information Relay
Service (FIRS) at 1–800–877–8339.]
SUPPLEMENTARY INFORMATION: Each year
the Board measures the cost of capital
for the railroad industry in the prior
year. The Board then uses this cost-ofcapital figure for a variety of regulatory
purposes. It is used to evaluate the
adequacy of individual railroads’
revenues for that year.1 It is also
employed in cases involving rail rate
review, feeder line applications, rail line
1 See 49 U.S.C. 10704(a)(2),(3); Standards for
Railroad Revenue Adequacy, 364 I.C.C. 803 (1981),
modified, 3 I.C.C.2d 261 (1986), aff’d sub nom.
Consolidated Rail Corp. v. United States, 855 F.2d
78 (3d Cir. 1988).

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abandonment proposals, trackage rights
compensation cases, and rail merger
review, as well as in our Uniform Rail
Costing System (URCS).
The Board calculates the cost of
capital as the weighted average of the
cost of debt and the cost of equity, with
the weights determined by the capital
structure of the railroad industry (i.e.,
the proportion of capital from debt or
equity on a market-value basis). While
the cost of debt is observable and
readily available, the cost of equity (the
expected return that equity investors
require) can only be estimated. How
best to calculate the cost of equity is the
subject of a vast amount of literature. In
each case, however, because the cost of
equity cannot be directly observed,
estimating the cost of equity requires
adopting a finance model and making a
variety of simplifying assumptions.
In Methodology to be Employed in
Determining the Railroad Industry’s
Cost of Capital, STB Ex Parte No. 664
(STB served Jan. 17, 2008), the Board
changed the methodology that it will
use to calculate the railroad industry’s
cost of equity. We concluded that the
time had come to modernize our
regulatory process and replace the aging
single-stage DCF model that had been
employed since 1981. We decided to
calculate the cost of equity using a
Capital Asset Pricing Model (CAPM).
Many parties had urged that the Board
use a multi-stage Discounted Cash Flow
model (DCF) in conjunction with
CAPM. The record in that proceeding
did not support adopting any particular
DCF model. However, we did not want
to foreclose the possibility of
augmenting CAPM with a DCF
approach. As we explained in the
January 2008 decision (footnotes
omitted):
There may be merit to the idea of using
both models to estimate the cost of equity.
While CAPM is a widely accepted tool for
estimating the cost of equity, it has certain
strengths and weaknesses, and it may be
complemented by a DCF model. In theory,
both approaches seek to estimate the true
cost of equity for a firm, and if applied
correctly should produce the same expected
result. The two approaches simply take
different paths towards the same objective.
Therefore, by taking an average of the results
from the two approaches, we might be able
to obtain a more reliable, less volatile, and
ultimately superior estimate than by relying
on either model standing alone.

Ultimately, both CAPM and DCF are
economic models that seek to measure
the same thing. CAPM seeks to do so by
estimating the level of expected returns
that investors would demand given the
perceived risks associated with the
company. By contrast, DCF models

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estimate the expected rate of return
based on the present value of the cash
flows that the company is expected to
generate. Both approaches are plausible
and intuitive, but are merely models.
The Federal Reserve Board noted in
its testimony in STB Ex Parte No. 664
that ‘‘academic studies had
demonstrated that using multiple
models will improve estimation
techniques when each model provides
new information. * * *’’2 There is, in
fact, robust economic literature
confirming that in many cases
combining forecasts from different
models is more accurate than relying on
a single model.3
Though the record before us in STB
Ex Parte No. 664 was insufficient for us
to adopt a DCF model, it did illuminate
a number of criteria to guide us in this
effort. First, and foremost, the DCF
model should be a multi-stage model.
From 1981 through 2005, the agency
relied on a single-stage DCF. That model
required few inputs and few judgment
calls, permitting the agency to promptly
develop an estimate of the cost-of-equity
component of the cost of capital. The
simplicity of this model, however, was
due in part to an assumption that the 5year growth rate would remain constant
thereafter. That assumption proved
problematic. In recent years, railroad
earnings have grown at a very rapid
pace, exceeding the long-run growth
rate of the economy as a whole. While
it is certainly possible that railroad
earnings will continue to grow rapidly
for many years, they cannot do so
forever as the single-stage DCF model
assumes. Thus, in years when the 5-year
growth rate is very high, this model may
overstate the cost of equity. Similarly, in
years when the railroads experience a
downturn and the predicted 5-year
growth rate is very low, the model may
understate the cost of equity.
Second, the DCF model should not
focus on dividend payments only.
Finance theory suggests that the value of
a firm should be independent of its
dividend policy.4 Certainly, changes in
2 February

2007 Hearing Tr. at 18.
generally David F. Hendry & Michael P.
Clements, Pooling of Forecasts, VII Econometrics
Journal 1 (2004); J.M. Bates & C.W.J. Granger, The
Combination of Forecasts in Essays in
Econometrics: Collected Papers of Clive W.J.
Granger. Vol. I: Spectral Analysis, Seasonality,
Nonlinearity, Methodology, and Forecasting 391–
410 (Eric Ghysels, Norman R. Swanson, & Mark W.
Watson, eds., 2001); Spyros Makridakis and Robert
L. Windler, Averages of Forecasts: Some Empirical
Results, XXIX Management Science 987 (1983).
4 See, e.g., Franco Modigliani & Merton H. Miller,
The Cost of Capital, Corporation Finance, and the
Theory of Investment, 48 Am. Econ. Rev., 261–97
(1958). By integrating tax- and information-related
considerations on capital structure and dividend
policy choices, Modigliani and Miller greatly
3 See

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