This
is the decision of the Railroad Retirement
Board with regard to the coverage of American
Railroads Corporation. (ARC) under the Railroad
Retirement Act (45 U.S.C. §231 et seq.)
(RRA) and the Railroad Unemployment Insurance
Act (45 U.S.C. §351 et seq.) (RUIA).
According to information supplied by Edwin
Josephson, outside corporate counsel for
ARC, and by Edward McClure, Chairman, President,
and Chief Executive Officer of ARC, ARC
was incorporated in 1990. ARC is a privately
held company owned by Mr. Richard McClure,
Mr. Robert J. Geib, and Mr. Michael H. Minton.
ARC is primarily engaged in shortline consulting
and acquisitions. The owners of ARC also
own the Gulf, Colorado & San Saba Railway
Corporation (GCSR), an employer under the
Acts (BA No. 3891) since May 11, 1993. Sweetwater
Central Switching Company1,
is a wholly owned subsidiary of the Gulf,
Colorado & San Saba Railway Company.
In addition, ARC owns the Missouri &
Valley Park Railroad Corporation2.
ARC reportedly has five employees. Its employees
were first compensated in November 1990.
ARC provides the following services for
its affiliated companies:
a. search for new opportunities for the
acquisition of switching contracts or shortline
railroads;
b. sales assistance and procurement of
new customers;
c. tax accounting, including procurement
of data for its outside public accountants;
d. final billing to customers;
e. maintenance of accounting records;
f. payroll services, including preparation
of periodic payroll for employees of affiliated
companies and payroll recordkeeping;
g. procurement and negotiation of insurance
contracts with carriers for general liability
and health insurance;
h. administration of insurance claims on
behalf of its affiliates with insurance
adjusters and carriers;
i. procurement of legal services, permits
and licenses.
Section 1(a)(1) of the Railroad Retirement
Act (RRA) (45 U.S.C. 231(a)(1)), insofar
as relevant here, defines a covered employer
as:
(i) any carrier by railroad subject to
the jurisdiction of the Surface Transportation
Board under part A of subtitle IV of title
49, United States Code;
(ii) any company which is directly or
indirectly owned or controlled by, or under
common control with, one or more employers
as defined in paragraph (i) of this subdivision,
and which operates any equipment or facility
or performs any service (except trucking
service, casual service, and the casual
operation of equipment or facilities) in
connection with the transportation of passengers
or property by railroad * * *.
Sections 1(a) and 1(b) of the Railroad
Unemployment Insurance Act (RUIA), 45 U.S.C.
351(a) and (b) contain substantially similar
definitions, as does section 3231 of the
Railroad Retirement Tax Act (RRTA), 26 U.S.C.
3231.
ARC is clearly not a carrier by rail. Whether
ARC is covered as a rail carrier affiliate
depends in the first instance on whether
it is under common control with a rail carrier.
Section 202.5 of the Board’s regulations
(20 CFR 202.5) defines common control as
follows:
A company or person is under common control
with a carrier, whenever the control (as
that term is used in § 202.4) of such
company or person is in the same person,
persons, or company as that by which the
carrier is controlled.
Messer. McClure, Minton and Geib own and
control ARC and a carrier, GCSR. This clearly
creates common control in these individuals
over both ARC and a carrier. Since ARC is
under common control with a carrier, it
would be an employer subject to the Acts
if it performs a service in connection with
railroad transportation. The services the
ARC performs for its affiliates are clearly
services in connection with railroad transportation.
Cf. Adams v. Railroad Retirement Board,
214 F.2d 534 (9th Cir. 1954). During 2002,
40% of ARC’s consulting revenue was
obtained from GCSR.
Based on the above facts, it is the determination
of the Board that ARC has been an employer
under the Acts since May 11, 1993, the date
as of which GCSR became a rail carrier employer
under the Acts. Service and compensation
of ARC employees may be credited to the
extent permitted by section 9 of the Railroad
Retirement Act and section 211.16 of the
Board’s regulations (20 CFR 211.16).
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