B.C.D. 15-17 July 13, 2015

EMPLOYER STATUS DETERMINATION

Bucks County Railroad Preservation and Restoration Corporation

d/b/a New Hope & Ivyland Railroad

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

Bucks County Railroad Preservation and Restoration Corporation d/b/a New Hope

& Ivyland Railroad (New Hope & Ivyland) (BA No. 3378) as an employer under

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

Unemployment Insurance Act (45 U.S.C. §351 et seg.) (collectively known as “the

Acts”).

In Board Coverage Decision, B.C.D. 92-62.1, New Hope & Ivyland was 

determined to be an employer under the Railroad Retirement Act and Railroad

Unemployment Insurance Act effective October 12, 1990.

In a letter dated March 4, 2014, Attorney Stephen A. Dennis, on behalf of New

Hope & Ivyland, forwarded to the Board a letter dated August 18, 1996 directed to

the Internal Revenue Service (IRS). In that letter, New Hope & Ivyland argued

that substantially all ofthe activities ofthe railroad fell outside ofthe parameters of

the Acts. New Hope & Ivyland operates solely within Pennsylvania on a privately

owned right of way used by no one else. It argued that only a small portion of the

business involved freight transportation which on occasion linked up with the

interstate rail network. The primary purpose of the company was to serve 

passengers through an old style ride through the Pennsylvania countryside. The

letter states that more than 90% of the railroad’s operation was exempt activities

and more than 90% ofthe railroad’s employees should be exempt from the system.

In a letter dated, March 5, 1998, Mason Stewart, Internal Revenue Agent, found

that New Hope & Ivyland qualified for segregation. The letter stated that data

provided for 1996 indicated that approximately 92.3% of the revenues of the 

business came from the tourist operation. For 1997, 89% of total man hours and 

90% of total salary paid was in conjunction with the tourist operation. The IRS 

concluded that New Hope & Ivyland was not principally engaged in a carrier

business and may be permitted to take advantage of 20 CFR §202.3, the provision

which allows for segregation of employees.

BA # 3378
Section 202.3 ofthe Board’s regulations states that:

§ 202.3 Company or person principally engaged in non-carrier business.

(a) With respect to any company or person principally engaged in business

other than carrier business, but which, in addition to such principal business,

engages in some carrier business, the Board will require submission of

information pertaining to the history and all operations of such company or

person with a view to determining whether some identifiable and separable

enterprise conducted by the person or company is to be considered to be the 

employer. The determination will be made in the light of considerations such

as the following:

(1) The primary purpose of the company or person on and since the date

it was established;

(2) The functional dominance or subservience of its carrier business in

relation to its non-carrier business;

(3) The amount of its carrier business and the ratio ofsuch business to its

entire business;

(4) Whether its carrier business is a separate and distinct enterprise. 20

CFR §202.3

The information submitted to the IRS shows that the primary purpose of New

Hope & Ivyland was not interstate commerce, but rather operation of a tourist

train. The tourist operation is approximately 90% of the business and therefore,

functionally dominant in relation to the carrier business and the ratio of carrier

business in relation to the entire business is quite small. In addition to the evidence

submitted by New Hope & Ivyland, the IRS found there to be sufficient evidence

to qualify for segregation under section 202.3. Although the Acts and its

regulations are administered by the Board and the Railroad Retirement Tax Act is

administered by the IRS, the laws are in pari materia and must be read together for

regulatory consistency.

Accordingly, it is determined that B.C.D. 92-62.1 holding New Hope & Ivyland to

be an employer under the Acts is modified so that only that portion of the New

Hope & Ivyland operation which performs service related to its non-tourist train,

freight operation constitutes an employer under the Railroad Retirement and 

Railroad Unemployment Insurance Acts. The beginning date of coverage remains

the same as held in B.C.D. 92-62.1, October 12, 1990. Segregation of non-covered

employees is effective March 5, 1998, the date of the IRS letter. Service and
compensation may be credited to the extent permitted by section 9 of the Railroad

Retirement Act and section 211.16 ofthe Board’s regulations.

Walter A. Barrows

Steven J. Anthony