B.C.D. 00-17

Employer Status Determination

Union Pacific Technologies

Decision on Reconsideration

w 1 6 2000

This is the decision on reconsideration of the Railroad Retirement Board

regarding the status of Union Pacific Technologies (UPT) as an employer under

the Railroad Retirement and Railroad Unemployment Insurance Acts. UPT was

determined in Legal Opinion L-88-65 to be an employer under the Acts, with

service creditable from May 1987. In B.C.D. No. 97-72, the Board determined that

UPT ceased to be an employer effective September 30,1996, due to its merger into

Union Pacific Corporation on that date. UPT has requested reconsideration ofthe

date its coverage terminated. More specifically, UPT asked that its coverage be

terminated December 31, 1991, and submitted, in connection with its request for

reconsideration, additional facts regarding the period January 1, 1992 to

September 30, 1996.

As recounted in prior determinations, UPT began operations on May 28, 1987, as

the wholly owned subsidiary ofthe Union Pacific Corporation. The Union Pacific

Corporation is also the parent company ofthe Union Pacific Railroad. At the time

of formation, UPT was an electronic data processing firm which derived a

significant portion of its business from the railroad. Accordingly, UPT was

determined to be a covered employer under the Acts effective May 1987, as a 

company under common control with a rail carrier which performed service in

connection with railroad transportation. See Legal Opinion L-88-65.

In December 1991, Union Pacific Technologies Transportation Systems, Inc. was

created as the subsidiary of UPT. Effective January 1, 1992, responsibilities for

electronic data processing for the Railroad, and the employees engaged in

performance of that service, wrere transferred to Union Pacific Technologies

Transportation Systems. Union Pacific Technologies Transportation Systems was

determined to be a covered employer under the Acts effective January 1992, as a

company under common control with a rail carrier which performed service in

connection with railroad transportation. See Board Coverage Decision 97-63.

A small core of employees remained with UPT after December 1991 to perform

administrative services for Union Pacific Technologies Transportation Systems

and for another subsidiary company not engaged in service for the railroad

industry. However, after 1991, revenues earned by UPT for services dropped from

over $26 million to an average of $27,750 per year over the period 1992 through

1995. As noted above, UPT merged into its parent company, Union Pacific

Corporation, effective September 30, 1996.

BA# 9740
Union Pacific Technologies

Decision on Reconsideration

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Section 1(a)(1) ofthe 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) ofthis 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) ofthe Railroad Unemployment Insurance Act (45 U.S.C. §§

351(a) and (b)) contain substantially similar definitions, as does section 3231 ofthe

Railroad Retirement Tax Act (26 U.S.C. § 3231).

UPT was clearly not a carrier by rail. However, as a subsidiary ofthe Union Pacific

Corporation, which also owns the Union Pacific Railroad, UPT throughout its

existence was under common control with a rail carrier within the meaning of

section 1(a)(1)(h) ofthe Railroad Retirement Act. The question thus remains as

to whether the administrative services performed by the remaining staff of UPT

during the period January 1992 through September 1996 constituted a service in

connection with railroad transportation within the meaning of the statutes.

The Board considered a similar situation in CSX Technology. Inc.. Board Coverage

Decision 97-31. In that case, as with UPT, the subject company was itself a

subsidiary of a holding company which also owned a rail carrier subsidiary. CSX

Technology in turn provided administrative services to its own subsidiary data

processing companies. The Board concluded in that case, Labor Member

dissenting, that, as no services were provided by CSX Technology directly to its

sister railroad subsidiary, the administrative services to the data processing

companies did not constitute services in connection with railroad transportation

under the Acts. Accordingly, based on the reasoning in CSX Technology, a

majority of the Board, Labor Member dissenting, finds that effective with the

transfer of rail-related data processing to Union Pacific Technologies

Transportation Systems, UPT lost the characteristics essential to its status as an
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Union Pacific Technologies

Decision on Reconsideration

employer under the Acts. See regulations of the Board at 20 CFR 202.11. A

majority ofthe Board, Labor Member dissenting, finds that UPT ceased to be an

employer under the RRA and RUIA effective with the close of business on

December 31, 1991. The request for reconsideration is granted.

V. M. Speakman, Jr. (dissenting)

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