NOV 2 1 2002

EMPLOYER STATUS DETERMINATION

Chicago Heights Switching Company

This is a determination of the Railroad Retirement Board concerning

the status of Chicago Heights Switching Company (CHSC) as an

employer 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).

In Surface Transportation Board (STB) Finance Docket No. 34147

decided January 4, 2002, the owners of CHSC, Paula Mudge-Gibson and

Don L. Gibson, were granted an exemption to continue in control of

CHSC “upon CHSC’s becoming a carrier”. STB Finance Docket No.

34147 served January 15, 2002, page 1. Authority for CHSC to operate

a line of railroad at Bulkmatic Distribution Center, a total of 3.9 miles,

in Chicago Heights, Illinois, was obtained in STB Finance Docket No. 

34146, decided January 4, 2002. The line of railroad interchanges with

the Union Pacific Railroad (BA 1713), a carrier engaged in interstate

commerce, and the Elgin, Joliet, & Eastern Railway Company (BA 

1309), a carrier engaged in interstate commerce. CHSC states that it

has 6 employees.

The Board notes that in his letter dated February 12, 2002, Mr. Thomas

F. McFarland stated his opinion that CHSC would not be an employer

under the Acts since it would not consummate the exemption granted in

STB Finance Docket 34146. However, this assertion is not consistent

with the grant of authority given by the STB in Finance Docket 34145

(to Bulkmatic Railroad Corporation to acquire by sublease from

Bulmatic Transport Company approximately 3.9 miles of railroad) and

in Finance Docket 34146, (to CHSC to operate the 3.9 miles of railroad ).

It also is inconsistent with the statement contained in a later letter,

dated July 29, 2002, from Mr. McFarland that CHSC did in fact start

providing rail service on April 2, 2002.

The evidence indicates that CHSC provides rail-switching operations

within Bulkmatic Distribution Center at Chicago Heights, Illinois as an

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agent for Bulkmatic Railroad Corporation (BMRC), an STB-authorized

rail carrier unaffiliated with CHSC.

Switching that involves the making up or break up of trains for road

movement is subject to the jurisdiction of the Surface Transportation

Board. In Sinkler v. Missouri P. R. Co.. 356 U.S. 326, 327, 2 L. Ed. 2d

799, 801, 78 S. Ct. 758 (1958), the Court described switching as “a vital

operational activity of railroading consisting in the breaking up and

assembly of trains and the handling of cars in interchange with other

carriers”. The switching activities that CHSC performs at the

Bulkmatic Distribution Center are of this nature.

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 of subtitle 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.

Although Mr. McFarland contends that CHSC is not an employer

subject to the Acts administered by the Board, he provides no support

for that conclusion. It is uncontroverted that CHSC is providing

switching services over a line of rail that is engaged in interstate

commerce. STB Finance Docket 34147 clearly stated that CHSC would

become a carrier. The Board concludes that the evidence of record

establishes that CHSC is a rail carrier operating in interstate

commerce. Accordingly, it is determined that the Chicago Heights

Switching Company became an employer within the meaning of section
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l(a)(l)(i) of the Railroad Retirement Act and the corresponding

provision of the Railroad Unemployment Insurance Act effective April 2,

2002, the date it began rail operations.

Cherryl Jl\ Thomas

V. M. Speakman, Jr.

'hii

erome F. Kever