Editing Railroad classes (section)

==Background==
Initially (in 1911) the former federal agency [[Interstate Commerce Commission]] (ICC) classified railroads by their annual [[gross revenue]]. Class I railroads had an annual operating revenue of at least $1 million, while Class III railroad incomes were under $100,000. Railroads in both classes were subject to reporting requirements on a quarterly or annual schedule. In 1925, the ICC reported 174 Class I railroads, 282 Class II railroads, and 348 Class III railroads.<ref>{{Cite web |last=Gathman |first=Bruce |date=2015-12-01 |title=Railroad Classification |url=https://hubcityrrmuseum.org/sites/hubcityrrmuseum.org/files/newsletters/CRHA%20Carolina%20Conductor%202015-12.pdf |access-date=2024-04-10 |website=Carolina Conductor |publisher=Carolina Railroad Heritage Association, Inc.}}</ref>

The $1 million criterion established in 1911 for a Class I railroad was used until January 1, 1956, when the figure was increased to $3 million. In 1956, the ICC counted 113 Class I line-haul operating railroads (excluding "3 class I companies in systems") and 309 Class II railroads (excluding "3 class II companies in systems"). The [[Class III railroad|Class III]] category was dropped in 1956 but reinstated in 1978. By 1963, the number of Class I railroads had dropped to 102; cutoffs were increased to $5 million by 1965,<ref>New ICC classification becomes effective ''[[Railway Age]]'' February 8, 1965 page 7</ref> to $10 million in 1976 and to $50 million in 1978, at which point only 41 railroads qualified as Class I.

In a special move in 1979, all switching and terminal railroads were re-designated Class III — even those with Class I or Class II revenues.

In early 1991, two Class II railroads, [[Montana Rail Link]] and [[Wisconsin Central Ltd.|Wisconsin Central]], asked the ICC to increase the minimum annual operating revenue criteria (then established at US$93.5 million) to avoid being redesignated as Class I, which would have resulted in increased administrative and legal costs.<ref>Arrivals and Departures, ''[[Trains (magazine)|Trains]]'' March 1991</ref> The Class II maximum criterion was increased in 1992 to $250 million annually, which resulted in the [[Florida East Coast Railway]] having its status changed to Class II.

The thresholds set in 1992 were:
*Class I: A carrier earning revenue greater than $250 million
*Class II: A carrier earning revenue between $20 million and $250 million
*Class III: A carrier earning revenue less than $20 million

Since dissolution of the ICC in 1996, the [[Surface Transportation Board]] (STB) has become responsible for defining criteria for each railroad class. The STB continues to use designations of Class II and Class III as there are different [[labor law|labor]] regulations for the two classes. The bounds are typically redefined every several years to adjust for inflation and other factors.

Class II and Class III designations are now rarely used outside the rail transport industry. The [[Association of American Railroads]] typically divides non–Class I companies into three categories:
*[[Regional railroad]]s: operate at least {{Convert|350|mi|}} or have revenue of at least $40 million per year.
*Local railroads: smaller than a regional railroad, but engage in line-haul service.
*[[Switching and terminal railroad]]s: mainly switch cars between other railroads and/or provide service in a common terminal.