EMPLOYER STATUS DETERMINATION

The WV Southern Railway Co.

The Railroad Company, Inc.

MAY 1 7 2004

This is the determination of the Railroad Retirement Board concerning the status

of The Railroad Company, Inc. (TRC) and The WV Southern Railway Co. 

(WVSR) as employers under the Railroad Retirement Act (45 U.S.C. § 231 et

seep) (RRA) and the Railroad Unemployment Insurance Act (45 U.S.C. § 351 et

seq.) (RUIA).

According to Surface Transportation Board Finance Docket No. 34384, decided

August 7, 2003, TRC and its wholly owned subsidiary WVSR jointly filed a verified

notice of exemption to acquire and operate a 12-mile rail line owned by CSX

Transportation (CSXT) (B.A. No. 1524). The rail line extends from milepost 0.00

at Thurmond, to milepost 12.0 at Mt. Hope, in Fayette County, West Virginia.

Information regarding TRC was provided by Roger S. Lipscomb. According to

Mr. Lipscomb, both he and Mr. Jon Dragan own TRC. TRC, a privately held

corporation, was incorporated on September 17, 2002 and began operations on

August 18, 2003. Mr. Lipscomb stated that TRC does not have a CEO; however,

both he and Mr. Dragan serve as operating partners. He stated that TRC was

formed to negotiate and purchase from CSXT the 12 miles of rail line discussed

above. Mr. Lipscomb advised that although TRC has no employees, TRC formed

the WVSR, a wholly-owned subsidiary, to perform freight railroad operations over

this line. He stated that WVSR, which began operations on the rail line on

August 18, 2003, provides switching services for shippers on the rail line. He

further stated that WVSR interchanges freight with CSXT.

Mr. Lipscomb also provided information pertaining to TRC’s subsidiary, The WV

Southern Railway Company, a privately held corporation. According to

Mr. Lipscomb, WVSR was incorporated on July 16, 2003 and began rail

operations on August 18, 2003. Mr. Lipscomb and Mr. Dragan also serve as

operating partners of WVSR. WVSR employs four (4) full time employees and

two (2) part time employees. WVSR's employees were first compensated on

September 1, 2003. WVSR employees provide freight operations pursuant to a

License and Assumption Agreement between TRC and WVSR.

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BA#9018
The WV Southern Railway Co.

The Railroad Company, Inc.

Section 1(a)(1) of the Railroad Retirement Act (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 ofsubtitle IV of title 49,

United States Code;

Section 1 of the RUIA contains essentially the same definition, as does section

3231 of the Railroad Retirement Tax Act.

In applying section 1 of the RRA and the RUIA, the evidence of record

establishes that WVSR is a rail carrier operating in interstate commerce.

Accordingly, it is determined that The WV Southern Railway Company became

an employer within the meaning ofsection 1 (a)(1) (i) of the Railroad Retirement

Act and the corresponding provision of the Railroad Unemployment Insurance

Act effective August 18, 2003, the date it began rail operations.

With respect to TRC, the Board notes that in its decision regarding Railroad

Ventures, Inc. (B.C.D. 00-47), the Board held that an entity that has STB

authority7 to operate a rail line but leases or contracts with another to operate the

line in question, is covered under the Acts administered by the Board unless the

Board determines that the entity is not a carrier. The Board enunciated a threepart test in B.C.D. No. 00-47 to be applied in making this determination. An

entity that leases a line to another company or contracts with another company to

operate the line, is a carrier under the Railroad Retirement Act unless the Board

finds that all three of the following factors exist: 1) the entity does not have as a

primary business purpose to profit from railroad activities; 2) the entity does not

operate or retain the capacity to operate the rail line; and 3) the operator of the

rail line is already covered or would be found to be covered under the Acts

administered by the Board.
The WV Southern Railway Co.

The Railroad Company, Inc.

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The Verified Notice of Exemption filed by TRC and WVSR in Finance Docket

No. 34384 indicates that the projected annual revenue of the subject rail line

would not exceed $5 million. There is no information that would indicate that

TRC’s intent in purchasing the line was primarily designed to preserve rail service

rather than profit from railroading activities. Therefore, the Board finds that TRC

is an enterprise which is intended to profit from railroad activities and that it is a

carrier under the Railroad Ventures test. The Board finds further that TRC

became an employer under the RRA and the RUIA effective August 18, 2003, the

date railroad operations began on that rail line.

V. M. Speakman, Jr.

Jerome F. Kever