B.C.D. 02-57

EMPLOYER DETERMINATION AUG 0 1 2002

Dakota Rail. Inc.

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

status of Dakota Rail, Inc. (DR) as an employer under the Railroad Retirement 

Act (45 U.S.C. § 231 et seq.) (RRA) and the Railroad Unemployment Insurance 

Act (45 U.S.C. § 351 et seq.) (RUIA). DRI has been a rail carrier employer under

the Acts, with service creditable from April 1, 1982 (B.A. No. 3640).

In a Surface Transportation Board decision dated August 24, 2001 (Finance 

Docket No. AB-472 (Sub-No. IX)), DRI filed a petition for exemption to abandon

its entire rail line. The rail line is located at milepost 24.6, near Wayzata, to the

end ofthe line at milepost 68.5, in Hutchinson, a distance of approximately 43.9

miles, in McLeod, Carver, and Hennepin Counties, Minnesota. DRI further 

sought exemption from statutory provisions concerning offer of financial

assistance (OFA) and public use conditions. According to the STB decision, DRI

contended that the exemption from the governing provisions was necessary to

avoid delay in the sale of DRI’s stock to McKnight Rail Road. L.L.C. (McKnight) 

and the anticipated donation by McKnight of portions ofthe line to various 

localities.

In an STB decision in docket no. AB-472 (Sub- No. IX) dated December 27,

2001, the STB stated that in a decision served on November 30, 2001, the STB

had exempted from the prior approval requirements of 49 U.S.C. 10903 the

abandonment by DRI ofits entire rail line. The decision further stated that the

exemption was scheduled to become effective on December 30, 2001, unless an

offer of financial assistance was filed on or before December 10, 2001. The STB

decision stated further that on December 10, 2001, Hennepin County Regional

Railroad Authority (HCRRA) filed an OFA to purchase the entire 43.9 rail line.

By decision served on December 14, 2001. HCRRA was found to be financially 

responsible and the effective date ofthe decision authorizing abandonment ofthe

line was postponed to permit the financial assistance process to proceed. By letter 

filed on December 20, 2001, DRI advised the STB that DRI and HCRRA had

reached an agreement for HCRRA. to acquire the line from DRI. Accordingly, in

its decision of December 27, 2001. the STB dismissed the petition for exemption 

and authorized HCRRA. to acquire DR's rail line.1

The Board’s Audit and Compliance Section is reviewing whether HCRRA may have become an

employer under the RRA and RUIA.

BA# 3640
Dakota Rail, Inc.

Information regarding DRI was provided by Mr. Gary Laakso, Vice President and

Regulatory Counsel for RailAmerica and Pamela Slifka also with RailAmerica. 

According to Mr. Laasko, DRI last provided service in May 2000 and last

compensated its employees on May 24, 2000. However, in an e-mail transmittal 

dated April 25, 2002, to the Board’s Audit and Compliance section, Ms. Slifka

stated that DRI last provided sendee in June 2000 and did not have any employees 

thereafter. Mr. Laasko stated that in December 2001, DRI sold its non-equipment

assets to Hennepin County Regional Rail Authority. He further stated that DRI

has not been dissolved as a corporation.

Section 202.11 states:

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.

The evidence clearly indicates that Dakota Rail, Inc. no longer possesses the 

characteristics of a covered railroad employer under the Acts. Therefore, effective 

June 30, 2000, the last day ofthe last month in which it ran a train, the Board finds

that Dakota Rail, Inc. ceased being a covered employer under the Railroad 

Retirement Act and the Railroad Unemployment Insurance Act.

V. M. Speakman, Jr.

Jerome F. Kever