B.C.D. 02-63

EMPLOYER STATUS DETERMINATION

Colorado Central Railroad Company

Kern Valley Railroad Company

SEP 0 4 2002

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

Colorado Central Railroad Company and Kern Valley Railroad Company as

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

Railroad Unemployment Insurance Act (45 U.S.C. § 351 et seq.).

Information regarding these companies was provided by Court R. Hammond, 

Chairman ofColorado Central, and Fritz B. Kahn, counsel for Kern Valley. Kern 

Valley acquired a rail line from Trinidad Railway, Inc.1, and contracted with 

Colorado Central to operate it. According to Mr. Hammond, Colorado Central

began doing business October 28, 2001. Colorado Central currently has two 

employees. It acts as agent for the Kern Valley Railroad in operating a rail line of

28.5 miles which interchanges with the Burlington Northern Santa Fe and the Union

Pacific Railroad.

Colorado Central moves coal from a mine at Lorancito, Colorado, to the New Elk

Mine and the Picketwire Processing plant where the coal is processed and stockpiled 

for movement on Burlington Northern Santa Fe trains2.

Section 1(a)(1) ofthe Railroad Retirement Act (45 U.S.C. § 231(1 )(a)(l)), insofar as

relevant here, defines a covered employer as:

(i) any carrier by railroad subject to the jurisdiction ofthe

Surface Transportation Board under Part A ofsubtitle IV oftitle 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) ofthis subdivision, and which operates any

equipment or facility or performs any service (except trucking service,

1 The coverage ofTrinidad under the Acts was terminated effective October 31, 2000 (B.C.D. 02-53). However, the

service agreement dated October 25, 2001, between Colorado Central and Kern Valley states that Trinidad is

attempting to obtain Surface Transportation Board authority to operate the line in question, and that Colorado Central

is intended to be merely an interim operator. Accordingly, the Board is re-examining the status ofTrinidad.

2 As ofJuly 15, 2002, the Lorancito Coal Company closed its mining operations at Lorencito. Consequently, no trains

are currently operating .

BA# 3793
Colorado Central Railroad Company

Kern Valley Railroad Company

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) ofthe Railroad Unemployment Insurance Act (45 U.S.C.

§§ 351(a) and (b)) contain substantially similar definitions.

The evidence ofrecord establishes that Colorado Central is a carrier operating in

interstate commerce. Accordingly, it is determined that Colorado Central is an

employer within the meaning ofsection l(a)(l)(i) ofthe Railroad Retirement Act

(45 U.S.C. § 231(a)(l)(i)) and the corresponding provision ofthe Railroad 

Unemployment Insurance Act as of October 28, 2001, the date as ofwhich it

commenced railroad operations.

In regard to the cessation of operations by Colorado Central, it should be noted that

section 202.11 ofthe Board’s regulations provides that:

The employer status of any company or person shall terminate

whenever such company or person loses any ofthe characteristics essential to

the existence of an employer status.

Although Colorado Central is not currently transporting coal, it has not lost the

characteristics essential to the existence of an employer status. Accordingly, the

Board does not find that Colorado Central ceased to be an employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts.

With respect to Kem Valley, 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 authority 

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 three-part 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 ofthe
Colorado Central Railroad Company

Kern Valley Railroad Company

-3-

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 ofthe rail line is already covered or would

be found to be covered under the Acts administered by the Board. The evidence in

this case indicates that Kern Valley owns a rail line and contracted with Colorado

Central to be the operator ofthe line as the “Agent” of Kern Valley. The preamble

ofthe Service Agreement provides that Kern Valley “desires to remain the sole

common carrier on the Rail Line.” The Service Agreement between Kern Valley

and Colorado Central states in section 8 that Kern Valley shall be reimbursed for its

expenses. There is no information that would indicate that Kern Valley’s intent in

acquiring the rail line was primarily designed to preserve rail service rather than 

profit from railroading activities. Accordingly, not of all ofthe factors set out in the

Railroad Ventures decision may be found to exist in this case. Therefore, the Board 

finds that Kern Valley is also an employer under the Acts as ofthe date on which 

Colorado Central began operations, October 28, 2001.

V. M. Speakman, Jr.

Jerome F. Kever