Employer Status Determination

Northwestern Pacific Railroad

(also known as North Coast Railroad Authority)

JUL 2 6 2001

This is the determination of the Railroad Retirement Board regarding

the continuing status of Northwestern Pacific Railroad (also known as

North Coast Railroad Authority) (B.A. No. 3783) 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 seep) (RUIA).

On July 23, 1992, North Coast Railroad Authority was held to be an

employer under the Acts effective April 1, 1992. North Coast Railroad

Authority was created by the California State Legislature for the

purpose of ensuring railroad service if the Interstate Commerce

Commission authorized the abandonment or discontinuance of service

on, or in the event of the bankruptcy or sale of, among others, the

Eureka Southern Railroad line. On July 22, 1996, North Coast

Railroad Authority became known as Northwestern Pacific Railroad

(NWP), although it appears that the name "North Coast Railroad

Authority” continued to be used.

On May 12, 1998, NWP contracted with Rail-Ways, Inc., to lease and

operate the rail line. As a consequence, Rail-Ways was held to be a 

covered employer under the Acts (B.A. No. 2790). Although the contract

was not entered into until May 12, 1998, Rail-Ways began operations

February 23, 1998, and was held to be an employer effective with that

date. Since that date NWP reports that it has had one to two employees

(an administrative assistant and an executive director). Northwestern

Pacific Railway, LLC purchased the contract from Rail-Ways and, on 

February 13, 2001, began operating the rail line. On April 30, 2001, the

Board held Northwestern Pacific Railway. LLC to be an employer

effective February 13, 2001 (B.C.D. No. 01-37; B.A. No. 2793). See 

Surface Transportation Board Finance Docket No. 33998, decided

January 30, 2001.

On June 7, 2001, Mr. Christopher J. Neary, counsel for NWP, wrote the

Board and requested that coverage of NWP be terminated.

BA# 3783
-2-

Northwestern Pacific Railroad

(also known as North Coast Railroad Authority)

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;

Sections 1(a) and 1(b) of the Railroad Unemployment Insurance Act (45

U.S.C. §§ 351(a) and (b)) contain substantially the same definition, as

does section 3231 of the Railroad Retirement Tax Act (26 U.S.C. §

3231).

With respect to NWP, 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 of the 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 of the rail line is already covered or

would be found to be covered under the Acts administered by the Board.

In this case, the Board finds that all three factors do exist. NWP did

not have a primary purpose to profit from railroad activities but was

explicitly created to preserve rail service where it was feared such

service would be terminated. NWP does not retain the capacity to

operate the rail line; and, as mentioned above, the company, Rail-Ways,

Inc., which operated the rail line beginning February 23, 1998, and

I
Northwestern Pacific Railroad

(also known as North Coast Railroad Authority)

Northwestern Pacific Railway, LLC, which operated the rail line

beginning February 13, 2001, are both employers under the Acts.

Accordingly, the Board finds that the coverage of Northwestern Pacific

Railroad, also known as North Coast Railroad Authority, terminated

effective February 23, 1998.

CherryFT. Thomas

^Jerome F. Kever