StaffAnswer.doc

Deputy Attorney General
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, ID 83720-0074
Tele: (208) 334-
Idaho Bar No. 3366
FAX: [phone]

Street Address for Express Mail:

472 W Washington
Boise, ID 83702-5983

Attorney for the Idaho Public Utilities Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF EASTERN IDAHO RAILROAD’S PETITION FOR A REFUND OF ITS ANNUAL REGULATORY FEE FOR THE CALENDAR YEARS 1999 AND 2000. ))))))
CASE NO. EIR-R-01-1

ANSWER OF THE COMMISSION STAFF

COMES NOW the Commission Staff by and through its attorney of record, Donald L. Howell, II, Deputy Attorney General, and submits an Answer to Eastern Idaho Railroad’s petition for a refund of its annual regulatory fee for calendar years 1999 and 2000. On January 8, 2001, Eastern Idaho Railroad filed a “request for relief of fees” in a letter from the Railroad’s Director of Governmental Affairs. The Railroad stated in the letter that it had “over reported [its gross intrastate operating] revenue for each of the past three years resulting in the overpayment of [regulatory fees] to the Idaho Public Utilities Commission by more than $100,000.” EIRR Letter at 1.
At its decision meeting of January 16, 2001, the Commission decided to treat the Railroad’s letter as a Petition seeking relief. The Commission directed the Staff to file an Answer to the Railroad’s request. The Staff’s Answer is provided below.

BACKGROUND
A. The Statutory Scheme
The Commission’s operating funds are derived by assessing regulatory fees upon utilities and railroads subject to the Commission’s jurisdiction. Each year, the Legislature authorizes the Idaho Public Utilities Commission to expense funds necessary to regulate and supervise utilities and railroads. Idaho Code §§ 61-1001 and 62-611. For example, the Legislature appropriated $4,241,500 to the Commission for Fiscal Year 2001 (July 1, 2000 through June 30, 2001) to supervise and regulate utilities and railroads. 2000 Idaho Sess. Laws, Chpt. 44. As set out in Order No. 28344 (Case No. F-2000-2) the Railroad’s proportionate share of the Commission’s appropriation was $137,100. See Staff Exh. 7.
Idaho Code § 61-1003 provides that on or before April 1st of each year, each railroad corporation shall report its gross operating revenues from its intrastate railroad business in Idaho for the proceeding calendar year. For example, the gross intrastate revenues from railroad operations in Idaho totaled $27,490,575 for calendar year 1999. Staff Exh. 1. Accordingly, the proportionate share of each railroad’s 2000 regulatory fee was assessed at .4987% (.004987) multiplied by each railroad’s gross intrastate operating revenue. See Order No. 28394. Id.
Once each railroad’s regulatory fee is determined, the Commission notifies the railroads of their respective regulatory fees no later than May 1st of each year. Such fees may be paid to the Commission in equal semi-annual installments. Idaho Code § 61-1005. Any railroad may object to its fee “on or before the time specified for payment of the first installment of the assessment made against it.” Idaho Code § 61-1007.
B. The Railroad’s Petition
As alleged in its letter, Eastern Idaho Railroad requests that its 1999 and 2000 annual regulatory fees be refunded. The Railroad allegedly became aware that it over-reported its gross intrastate revenues for calendar years 1998 and 1999 (used to calculate the 1999 and 2000 regulatory fees, respectively) and notified the Commission’s Deputy Administrator on or about May 15, 2000. See Affidavit of David Hattaway, Staff Exh. 2. In essence, the Railroad claims that it reported its interstate gross operating revenue instead of its intrastate gross operating revenue.
The Railroad requests that its regulatory fee for the year 2000 be waived. As indicated in the Affidavit of Mr. Hattaway, the Railroad has not paid its 2000 regulatory fees but has timely contested it in this proceeding. Staff Exh. 2. Turning to its 1999 regulatory fee, the Company seeks a refund in the amount of $29,808.26. This amount is arrived at by subtracting the “corrected” regulatory fees for 1999 and 2000 from its paid 1999 regulatory fee. ($37,024.78 (1999 fee) - $3,754.71 (2000 fee) - $3,461.81 (1999 fee) = $29,808.26).
THE 1999 REGULATORY FEE
In a letter dated February 26, 1999, the Eastern Idaho Railroad was asked to report its gross intrastate operating revenue for calendar year 1998. On April 2, 1999, the Railroad reported that its gross intrastate operating revenue for calendar year 1998 was $9,354,416. See Staff Exh. 3. Once all the railroads had reported their revenues, the Commission calculated that the gross intrastate revenues from all railroads totaled $34,638,195 for calendar year 1998. Staff Exh. 4 (Order No. 27974).
In Order No. 27974 issued April 26, 1999, the Commission calculated that the railroads’ share of the FY 2000 operating budget was $137,100. Id. The Commission next calculated that each railroad’s regulatory fee was to be assessed at .3958% (.003958) of each railroad’s gross intrastate operating revenues. Staff Exh. 4. Consequently, on or about April 26, 1999, Staff advised Eastern Idaho that its regulatory fee for 1999 was $37,024.78. ($9,354,416 x .003958). Staff Exh. 5. The letter further advised the Railroad that its first installment of its regulatory fee was due no later than May 15, 1999. The Railroad timely paid its first half fee in the amount of $18,512.39. See Staff Exh. 6. The Railroad timely paid its second half of regulatory fee in November 1999 in the amount of $18,612.39. See Staff Exh. 7. As indicated in the affidavit of Mr. Hattaway, the Railroad did not lodge an objection to its 1999 regulatory fee until on or about May 15, 2000. Staff Exh. 2 ¶ 4. This objection was not timely. The Staff asserts that there are three primary reasons why the Commission should not refund Eastern Idaho’s 1999 regulatory fee.
1. Time Barred. First and foremost, Staff maintains that the Railroad is time barred from seeking a refund of its 1999 fee. Idaho Code § 61-1007 provides that any claim made that the Commission’s assessment against a railroad is
erroneous, excessive, unlawful or invalid, …shall [be lodged] on or before the time specified for payment of the first installment of the assessment made against it, [by filing] with the commission its written objections to such assessment, setting out specifically the grounds upon which it claims said assessment to be erroneous, excessive, unlawful or invalid.

Idaho Code § 61-1007 (emphasis added). As set out above, Eastern Idaho did not meet the statutory requirement of timely objecting to its 1999 regulatory fee. The objection was a year too late. Given the passage of time (with approximately 45 days remaining in FY 2000), it should be obvious why a timely objection is necessary.
As explained above, calculation of the assessment percentage is based upon the total amount of intrastate revenue reported by each railroad. As the total amount of railroad operating revenue increases, the assessment percentage decreases. For purposes of the Commission’s 1999 regulatory fee, a reduction in Eastern Idaho’s intrastate operating revenue from calendar year 1998 from $9,354,416 to its alleged “corrected” revenues of $63,570 (Staff Exh. 11) represents a reduction in reported operating revenue of $9,290,846. If correct, this reduction would have increased the 1999 assessment percentage from .003958 to .005409.
By failing to timely object to the 1999 assessment, Eastern Idaho, for all practical purposes, has deprived the Commission of its ability to “correct” the assessment percentage and recalculate the regulatory fees for the other railroads. The affect of reducing Eastern Idaho’s regulatory fee increases the regulatory fees of the remaining railroad, unless a railroad is only paying the minimum regulatory fee. See Idaho Code § 61-1004(3).
2. Funds Already Expended. The second reason for denying Eastern Idaho’s request for reimbursement of its 1999 regulatory fee is that the Commission has already expensed the 1999 regulatory fees. Again as explained above, the Legislature sets the Commission’s appropriation devoted to railroad operations each year. Idaho Code § 61-1008(1). When the railroads pay their regulatory fees, these fees are deposited in the Commission’s “public utilities commission fund.” Idaho Code § 61-1008(2). At the end of each fiscal year, any unexpended funds “shall be credited ratably by the commission to the respective railroad corporations and other public utilities according to the respected proportions of such fees determined hereunder to be assessable against each railroad corporation and other public utility, respectively, for the ensuing fiscal year.” Idaho Code § 61-1008(3). The statute further provides that the respective regulatory fee assessed against each railroad “for such ensuing fiscal year shall be correspondingly reduced….” Id.
Because the Commission’s operating budget is appropriated annually (except for that portion carried over from the prior fiscal year), the Commission does not have the ability to make such an adjustment relating back to the prior fiscal year as requested by the Railroad.
3. Due Process Satisfied. Both the state and federal constitutions provide that a state may not deprive any person of property without due process of law. U.S. Const., Amdt. 14, § 1; Idaho Const. Art. I, § 13. Idaho Code § 61-1007 provides railroads with a “predeprivation” opportunity to challenge the Commission’s assessment of a regulatory fee. In McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, Dept. of Business Regulation of Florida, the United States Supreme Court noted that states must provide procedural safeguards against the unlawful payment of fees in order to satisfy the requirements of the Due Process Clause. 496 U.S. 18, 110 S.Ct. 2238 (1990). In that case, the Court stated that the “availability of a predeprivation hearing constitutes a procedural safeguard against unlawful deprivation sufficient by itself to satisfy the Due Process Clause, and taxpayers cannot complain if they fail to avail themselves of this procedure.” 496 U.S. at 39, 110 S.Ct. at 2251.
In McKesson, the Court was examining a “postdeprivation” procedure where a Florida taxpayer was required to pay a liquor tax and then seek redress. The Court held that the Due Process and Equal Protection Clauses require that the taxpayer receive a refund for the unlawful over-collection of taxes with all other factors remaining the same. However, the Court acknowledged that “states may avail themselves of a variety of procedural protections against any disruptive affects of a [fee] scheme’s invalidation, such as . . . enforcing relatively short statutes of limitation” applicable to protesting the assessment of a regulatory fee. Id. at 50, 110 S.Ct. at 2257. Thus, Eastern Idaho’s failure to avail itself of its predeprivation opportunity prior to paying its 1999 regulatory fee is sufficient to satisfy the due process requirement.
THE 2000 REGULATORY FEE
In a letter dated February 10, 2000, the Commission’s fiscal section forwarded a letter to each railroad asking them to report their gross intrastate operating revenues for the calendar year 1999. When it returned the letter on March 15, 2000, Eastern Idaho Railroad reported that its 1999 calendar year intrastate operating revenues was $8,045,750. Staff Exh. 8. In March 2000, the Legislature appropriated the Commission’s operating budget totaling approximately $4.2 million. 2000 Idaho Sess. Laws, Chpt. 44. The Railroads’ portion was $137,100 (the same as 1999). See Staff Exh. 1 (Order No. 28344). Based upon the reported revenues of all the railroads ($27,490,575), the Commission calculated that the assessment percentage for each railroad was .4987% (.004987).
In a letter dated April 21, 2000, Mr. Hattaway informed Eastern Idaho that its 2000 regulatory fee was $40,124.16. Staff Exh. 9. This letter also advised the Railroad that its first installment of the regulatory fee was due no later than May 15, 2000. Id. As set out in Mr. Hattaway’s affidavit, the Railroad advised him on or about May 15, 2000, that it had significantly over-reported its gross intrastate operating revenues for calendar years 1998 and 1999. Staff Exh. 2.
In a telephone conversation, Mr. McKechnie and Mr. Hattaway discussed the Railroad’s 2000 regulatory fee. As Mr. McKechnie memorialized in a letter to Mr. Hattaway dated May 19, 2000, the over-reporting of intrastate revenue was attributable to the Railroad reporting “all revenues generated by Eastern Idaho rather than the intrastate revenue required by the Idaho Code.” Staff Exh. 10. In a letter dated May 26, 2000, Mr. McKechnie again wrote Mr. Hattaway reporting that Eastern Idaho’s “adjusted” gross intrastate revenue for 1999 was just $34,710, instead of the $8.045 million originally reported. Staff Exh. 11.
On June 20, 2000, the Staff and Eastern Idaho met to discuss the Railroad’s regulatory fee and its objection to the fee. The participants discussed the appropriate meaning of “intrastate operating revenues” as it relates to revenue from rail freight operations. The Railroad offered to determine whether the short-line industry association had any information relating to the allocation of freight revenues between intrastate and interstate jurisdictions. For its part, the Staff agreed to determine whether other state laws or regulations could shed light on this inquiry. Staff also agreed to review how other Idaho railroads calculate their gross intrastate revenues. Staff Exh. 2, 14.
After this June 20 meeting, Staff initiated an audit of how railroads account for their gross intrastate operating revenues. This audit was performed by Staff Auditor Alden Holm. Staff Exh. 12. A report of his activities and findings are contained in a Staff Audit Report entitled “Railroad Assessment Calculation” dated September 22, 2000. Staff Exh. 13. His report concluded that gross intrastate revenues should consist of eight standardize categories or revenue accounts established by the Surface Transportation Board (STB). Once this task was done, Mr. Hattaway informed Mr. McKechnie in a letter dated September 26, 2000 (Staff Exh. 14) of the primary results of that survey.
Staff Auditor Holm then performed an audit on Eastern Idaho Railroad. Staff Exh. 12. The results of his audit are contained in an audit report entitled “Eastern Idaho Railroad Audit Report” dated December 12, 2000. Staff Exh. 15. Based upon the Staff’s construction of the definition of “gross intrastate operating revenue,” he concluded that the Railroad had intrastate operating revenues of $752,900 for calendar year 1999 instead of the adjust amount reported by Eastern Idaho of $34,710. Based upon that revenue amount and the assessment rate of .4987%, he calculated that the 2000 regulatory fee should be $3,754.71. Id.
In a letter dated December 20, 2000, Mr. Hattaway informed Mr. McKechnie of the results of Mr. Holm’s audit. Staff Exh. 17. Attached to his letter was a letter also dated December 20 notifying the Company that Staff determined its 2000 regulatory fee is $3,754.71. Staff Exh. 18.
If the Staff’s audited results of intrastate operations for Eastern Idaho is substituted for the amount of operating revenue originally reported, then the 2000 regulatory assessment percent should have been .6788% (.006788). Using this adjusted assessment rate, Eastern Idaho’s 2000 regulatory fee should have been $5,110.69. The table below portrays the adjusted 2000 fees for all the railroads.

Railroad Initial 2000 Fee Adjusted 2000 Fee Difference BN-SF $ 70 $ 95 $ 25 Camas Prairie 6,178 8,409 2,231 Eastern Idaho 40,124 5,111 <35,013> Idaho Northern 50 50 0 Montana Rail Link 50 50 0 Palouse River 50 50 0 St. Maries 2,126 2,894 768 Union Pacific 91,457 124,485 33,028
Source: Staff Exh. 13

OTHER SPECIFIC ISSUES RAISED IN THE PETITION
In its letter requesting the refunds, Eastern Idaho Railroad raised four specific issues concerning the classification of various types of revenue and the Commission’s jurisdiction over the Railroad in general. The first three issues take exception to findings contained in the Staff’s audit of Eastern Idaho Railroad. Staff Exh. 15. The last issue concerns whether the Staggers Rail Act of 1980 preempts the Commission’s jurisdiction over railroads. After discussing the regulatory scheme, these issues are addressed in greater detail below.
A. Background: Sources of Gross Intrastate Revenue
The Railroad takes issue with the Staff’s inclusion of revenue from several “incidental sources.” This incidental revenue was included in the Staff’s calculation of Eastern Idaho’s gross intrastate revenues. As explained on pages 2 and 3 of the audit report (Staff Exh. 15), the Staff included a total of $353,273 of incidental revenue in the Company’s total intrastate operating revenues of $752,900. As explained in the Staff’s audit, the various categories or revenue accounts generally mirror the eight revenue accounts established by the STB in 49 C.F.R. § 1152.31(b). These eight categories are identified below:

Account No. Revenue Souce/Activity 101
104
106
110
121
122
510
519 Freight
Switching
Demurrage
Incidental
Joint Facility-Credit
Facility-Debt
Miscellaneous Rent Income
Miscellaneous Income

It is well settled that the Commission’s jurisdiction is limited; nothing is to be presumed in its favor. The Washington Water Company v. Kootenai Environmental Alliance, 99 Idaho 875, 591 P.2d 122 (1979). However, once jurisdiction is clear, the Commission is allowed all power necessary to effectuate its purpose. Id. The Public Utilities Law defines “railroad corporation” as every corporation or person, their lessees, trustees, receivers or trustees appointed by any court whatsoever, owning, controlling, operating or managing any railroad for compensation within this state. Idaho Code § 61-111. The term “railroad” is defined as including
all tracks, bridges, trussels, right of way,…stations, tunnels, depots,…yards, grounds, terminals, terminal facilities, structures and equipment, and all other real estate, fixtures and personal property of every kind used in connection therewith, owned, controlled, operated or managed for public use in the transportation of persons or property.

Idaho Code § 61-110 (emphasis added). Finally, the Public Utilities Law defines the term “transportation of property” as including “every service in connection with or incidental to the transportation of property including in particular its receipt, delivery, elevation, transfer, switching, carriage, ventilation, refrigeration, icing, dunnage, storage, and handling….” Idaho Code § 61-107 (emphasis added).
The term “gross operating intrastate revenues” is not defined in the Public Utilities Law. However, Idaho Code § 63-3011 defines the term “gross income” as having the same meaning as defined in Section 61(a) of the Internal Revenue Code. The Tax Code defines “gross income” as
all income from whatever sources derived, including (but not limited to) the following items: compensation for services, including fees, commissions, fringe benefits, and similar items; gross income derived from business; gains derived from dealings in property; interests; rents; royalties; dividends; . . . annuities, income from life insurance and endowment contracts; pensions; income from discharge of indebtedness; distributive shares of partnership gross income; income in respect of a decedent; and income from an interest in an estate or trust. 26 U.S.C. § 61(a) (emphasis added).

In discussing the concept of “gross income,” our Supreme Court has interpreted gross income as including income from any source. Henderson v. Smith, 128 Idaho 444, 915 P.2d 6 (1996) (construing the Idaho Child Support Guideline, I.R.C.P. 6(c)(6)). When construing words used in a statute, the Idaho Supreme Court assigns to them their plain and ordinary meaning unless to do so would reach an absurd result. Idaho State Tax Commission v. Beacom, 131 Idaho 569, 961 P.2d 660 (Ct. App. 1998). The term “gross revenue” is defined by Black’s Law Dictionary as “receipts of a business before deductions for any purpose except those items specifically exempted.” 633 (5th ed. 1979).
B. Switching Revenues
Returning to Eastern Idaho’s first issue, the Railroad insinuates that it is being mistreated. More specifically, the Railroad asks whether there are other companies “that are not railroads, but do contract switching” that do not pay a regulatory fee to the Commission. EIRR Letter at 2 ¶ 4.2. The Railroad asks what “requirements are there for these types of companies to register with the Idaho Public Utilities Commission to ensure equity”? Id.
To the best of Staff’s knowledge, there are no other companies which do “contract switching.” While it may be true that some industries may move or switch cars within their plants or industries, such activities are not dedicated for “public use” or performed “for compensation within this state.” Idaho Code §§ 61-110 and 61-111. Idaho Code § 61-129 defines railroads subject to the Commission’s jurisdiction as railroad services performed or delivered to the public or some portion thereof for compensation. Burlington Northern Railroad Company v. Idaho Public Utilities Commission, 112 Idaho 693, 735 P.2d 1004 (1987). Railroad switching services provided in this state for compensation would be subject to the Commission’s jurisdiction. Idaho Code §§ 61-107, 61-110, and 61-111. Eastern Idaho’s switching revenues are appropriately included as part of its gross intrastate operating revenue.
C. Mechanical Car Repair Revenues
The Railroad next asks whether it is equitable for its regulatory fee to be based upon revenues it receives from car repair operations if there are other companies, not railroads, that perform mechanical car repair work not regulated by the Commission. As set out in the audit report at page 2, the Staff concluded that Eastern Idaho earned revenue from car repair operations. Staff Exh. 15. The Staff noted that Eastern Idaho fixed railroad cars and billed the owner of those cars for the repairs. The Company received revenues in the amount of $21,255 for calendar year 1999. Id.
Turning to the Railroad’s question, the only companies required to pay a regulatory fee to the Commission are those subject to its jurisdiction. Staff is aware that there is one company that performs mechanical car repair (in particular locomotive refurbishment) which is Boise Locomotive. This company is not regulated by the Idaho Public Utilities Commission because it is not engaged in the “transportation of property,” hence it is not a railroad as defined in Idaho Code § 61-110. Moreover, its facilities and services are not dedicated for public use as a common carrier. Id. Car repair income clearly falls within the definition of gross operating revenues.
D. Income from Real Property and Easements
The Railroad also challenges the appropriateness of including revenues from the leasing of Idaho real property and easements. EIRR Letter at p. 2, ¶ 4.4. The Railroad claims that it is subject to inequal treatment because the Commission does not license “real estate brokers or…a citizen that leases land or grants an easement.” Id.
As set out in EIRR’s audit, Staff determined that the Railroad receives significant revenue associated with the leasing of land, easements, and right of ways. For the calendar year 1999, Staff calculated the Railroad received $328,218 in miscellaneous or rent income (STB Account 510). Staff Exh. 15. Staff maintains that this revenue – from real estate located in Idaho – is appropriately considered in definition of “gross operating revenue.” Again, rights of way, grounds, “and all other real estate…of every kind” is included within the definition of a “railroad” contained in Idaho Code § 61-110. As previously mentioned, the STB includes income from leases, rentals and easement when calculating bench line revenues. 49 C.F.R. § 1152.31 (1999).
Turning to the allegation that a Class I railroads does not report similar income as part of its gross intrastate operating revenues, the Staff’s audit does not support this claim. While Staff acknowledges that there may be some inconsistency on how railroads report gross intrastate operating revenues in the past, that will not continue in the future. The Staff has designed a more detailed schedule by category for railroads to report their gross intrastate operating revenues. See Staff Exh. 17. In particular, the new report form requires railroads to report their incidental revenue including revenue from activities such as: tolls; sale of ballast, gravel, or water; industrial land rent; equipment rent; royalties; easement revenues; and other railroad-related incidental revenues. Id.
E. Staggers Rail Act of 1980
Lastly, Eastern Idaho maintains that the Commission has no authority to regulate Eastern Idaho pursuant to the Staggers Rail Act of 1980. Eastern Idaho does “not believe the definition of intrastate commerce (because it is not by federal law considered a utility) includes switching, real estate, or granting of easements.” EIRR at 2 ¶ 4.5. Id. The letter continues:
The Public Utilities Commission cannot regulate those items preempted by federal law or in a manner inconsistent with the 14th amendment of the Constitution of the United States of America guaranteeing equal protection. If the state is going to regulate something it must be done in a consistent manner, which is not currently the case in Idaho.

The Staggers Rail Act was intended to streamline regulation regarding the rail industry. The Act provides that a state commission may regulate intrastate transportation provided by a railroad but only to the extent that it conforms with the federal Act and only if the Interstate Commerce Commission (ICC) determines that the state’s proposed regulatory standard are consistent with the then ICC standards. Interstate Commerce Commission v. Texas, 479 U.S. 450, 107 S.Ct. 787 (1987); 49 U.S.C. § 11501 (1985). The Staggers Rail Act began the substantial economic deregulation of railroads. Pejepscot Indust. Park v. Main Central R. Company, 215 F.3d 195 n.7 (1st Cir. 2000).
Staff acknowledges that while many of the Commission’s economic authority over railroads has been preempted by federal law, it is too broad a statement that the States “have no authority to regulate a railroad.” In Case No. GNR-R-97-1, the Commission found that the Interstate Commerce Commission Termination Act of 1995 (the ICCTA) preempted the Commission’s jurisdiction over the economic regulation of railroads. See Order No. 26971 at 7. In that case, the Commission concluded that “there is nothing in the ICCTA, nor any of the authorities cited by any of the participants in this proceeding suggesting that the Commission’s authority to impose and enforce safety regulations has been preempted.” Order No. 26971 at 7.
Although the Commission may no longer economically regulate railroad operations, the Legislature has entrusted the Commission with other important duties. These duties include: (1) representing the state in abandonment proceedings pursuant to Idaho Code § 62-424; (2) promulgating and enforcing safety regulations pursuant to Idaho Code § 61-515 and 515A; (3) establishing clearance safety rules IDAPA 31.71.01.000 et seq.; and (4) deciding grade crossing disputes pursuant Idaho Code § 62-304. In Order No. 22196, the Commission specifically found that the Staggers Act does not preempt the Commission’s rail abandonment responsibilities under Idaho Code § 62-424. Case Nos. UP-RR-88-1; BN-RR-88-1; CP-RR-88-1. The Commission has also entered into a joint state-federal program with the Federal Railroad Administration to promote and enforce federal safety regulations relating to the transportation of hazardous materials by rail in Idaho. The Federal Railroad Safety Act (FRSA) does not prohibit states from promulgating and enforcing safety issues not addressed by the FRSA. Union Pacific RR. Co. v. California PUC, 109 F. Supp. 2d 1186 (N.D. Cal 2000).
Substantive due process is guaranteed by both the Idaho and United States Constitutions, and requires that “a statute bear a reasonable relationship to a permissible legislative objective.” Aberdeen-Springfield Canal Company v. Peiper, 133 Idaho 82, 90, 982 {P.2d 917, 925 (1999) citing In re McNeely, 119 Idaho 182, 189, 804 P.2d 911, 918 (Ct. App. 1991). When dealing with statutes involving economic interest, the Idaho Supreme Court assumes a deferential standard of review. Id. When determining whether there is a violation of substantive due process, the Court evaluates whether the legislation which deprives a person of property has a rationale basis. Id.
In past cases involving assessments or fees, the Supreme Court has looked to whether the assessment or fee is reasonably related to the costs of performing the supervisory duties. There can be little doubt that imposition of railroad regulatory fees is reasonably related to the Commission’s regulation of railroads. See Kootenai County Property Association v. Kootenai County, 115 Idaho 676, 769 P.2d 553 (1989).
The Commission’s imposition of a regulatory fee is rationally related to its purpose. Mainly, the fees defray the cost of the Commission’s various railroad programs and oversight. The fees are allocated on a proportionate basis based upon the amount of gross intrastate operating revenues reported by each of the railroads. Consequently, the Staff asserts that the statute imposing regulatory fees are rationally based and are non-discriminatory.
CONCLUSION
For the reasons outlined above, the Commission Staff believes that it is inappropriate for the Commission to refund any portion of the 1999 regulatory fee to Eastern Idaho Railroad. As to the 2000 regulatory fee, the Commission Staff is not insensitive to the plight of Eastern Idaho. Consequently, the Staff believes that it is appropriate to waive Eastern Idaho’s 2000 regulatory fee. The value of this fee should be $5,110.69 as adjusted for the Railroad’s lower intrastate gross operating revenue and adjusting the assessment percentage accordingly.
The Staff does not seek a hearing on this matter.
RESPECTIVELY submitted this 31st day of January 2001.

Deputy Attorney General
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The 1999 annual regulatory fee letter sent to Eastern Idaho Railroad contains a typographical error in the date of the letter. As indicated in Exhibit 5, the letter informing Eastern Idaho of its 1999 regulatory fee was misdated as April 26, 1998 instead of April 26, 1999.
Railroads are included within the definition of “common carrier” found at Idaho Code § 61-113(1).

ANSWER OF THE COMMISSION STAFF 12