FEB 1 3 2002 B.C.D. 02-13

EMPLOYER STATUS DETERMINATION

Bellingham International Railroad, LLC

Decision on Reconsideration

This is the decision of the Railroad Retirement Board with respect to a

request by the Bellingham International Railroad, LLC (BIR) that the

Board reconsider its decision (B.C.D. 01-07) dated January 10, 2001,

that BIR has been an employer covered by 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) from December 11, 1998.

In Board Coverage Decision (B.C.D). No. 01-07, issued January 10,

2001, the Board found that the BIR was an employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts.

That decision was based on the Board’s finding that BIR was organized

with a primary business purpose to profit from its rail activities. The

facts set forth in the initial decision are as follows:

Information regarding BIR was provided by Ms. Cynthia

Thomas, attorney for BIR. Ms. Thomas stated that BIR was

formed on April 24, 1998. It is a privately held limited liability

company owned by the Bellingham Cold Storage Co. BIR

reportedly has no employees and owns the track and signaling

equipment between milepost 2.98 and 4.98 in Bellingham,

Washington. In a decision in Surface Transportation Board

(STB) Finance Docket No. 33635 entered on July 27, 1998, the

STB indicated that BIR had filed an exemption under 49 CFR 

1150.31 to acquire from the Burlington Northern and Santa Fe

Railway Company (B.A. No. 1621) (BNSF) the exclusive rail

freight easement and all track, track materials, and related

structures and to operate 2.0 miles of rail line between the above

cited mileposts. Information obtained indicates that on

December 11, 1998, BIR began operating, via an Agency 

Agreement with BNSF, under which BNSF operates the rail line 

for BIR. BIR received reporting marks from the Association of

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Bellingham International Railroad, LLC

Decision on Reconsideration

American Railroads (AAR) and is considered to be a class III rail

carrier by both the AAR and the STB. [See letter to Attorney

Thomas from J. J. Carroll, of the AAR dated January 15, 1999,

and footnote 1 to STB Finance Docket No. 33635 (63 F.R. 41619,

Aug. 4, 1998)].

A recent Board Coverage Decision in Railroad Ventures, Inc. (B.C.D. 00­

47, November 7, 2000) refined the standard that the Board would use to

determine when an entity that has its railroad functions performed by

another would be found to be an employer under the Acts. In Railroad

Ventures, the Board set forth a three-part test that it would use to

determine the employer status of such an entity. The three-part test is

as follows:

1) whether the entity does not have as a primary purpose to 

profit from railroad activities;

2) whether the entity does not operate or retain the capacity to

operate the rail line;

3) whether the operator of the rail line is already covered under

the RRA and RUIA. B.C.D 00-47, at pages 4-5.

In our initial decision we found that

[T]he Surface Transportation Board (STB) decision [STB Finance

Docket No. 33635 (63 F.R. 41619, Aug.4, 1998)] cited above notes

that BIR certified to the STB that its projected revenues would

not exceed those that would qualify it as a Class III rail carrier

and that its revenues were not projected to exceed $5 million.
Bellingham International Railroad, LLC

Decision on Reconsideration

There is no information that would indicate that Bellingham

International Railroad. LLC’s intent in purchasing the line is

primarily designed to preserve rail service rather than profit

from railroading activities. The Board therefore finds that BIR is

an enterprise which is intended to profit from railroad activities.

The Board therefore finds that BIR became a rail carrier

employer under the RRA and RUIA effective December 11, 1998,

the date rail operations began on its rail line.

Thus, we concluded that BIR failed the first prong of the three-prong

test enunciated in Railroad Ventures.

In its request for reconsideration, BIR provides new evidence to support

its contention that BIR was established solely to maintain rail service

on a line of rail that would otherwise have been abandoned. Mr. Karl

Morell, attorney for BIR, provided additional information. BIR is a

wholly owned subsidiary of Bellingham Cold Storage Company (BCS).

BCS operates a storage facility at the end of the 2-mile line of rail that

is owned by BIR. In November 1996, the Burlington Northern Santa Fe

(BNSF) ceased all operations on the line due to the poor condition of the

track. BNSF informed BCS that BNSF would have to abandon

operations on that rail line since the volume of traffic did not justify the

expense of rehabilitating the rail line. In order to preserve rail service

for itself and its customers, BCS organized BIR to acquire the track and

rehabilitate and maintain the track. On July 24, 1998, BIR acquired

the track and hired a contractor to rehabilitate the track. On December

10, 1998, BNSF resumed operations on the line. During the last three

years, BIR has hired a contractor to maintain the track. BIR has no

employees. It owns no rolling stock. All movement of freight on the rail

line is made by BNSF, an employer under the Acts. BIR receives $20
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Bellingham International Railroad, LLC

Decision on Reconsideration

for each loaded freight car the BNSF moves over the track. BNSF

retains all other revenues. BIR spent approximately $180,000 to

rehabilitate the rail line. In 1998 BNSF originated or terminated 8

cars; in 1999, 139 cars; in 2000, 100 cars, and through September 2001,

86 cars. BIR argues that the revenue of $20 per car does not cover the

cost of maintenance and insurance. In 2000, the revenues, $2000, 

constituted approximately 24% of the total maintenance costs of $8,290,

and about 16% of the insurance costs of $12,125. In addition, the

revenue cannot repay the capital expense of $180,000 invested by BIR

to rehabilitate the rail line.

Based on this additional evidence, we conclude that BIR does not have

as a primary business purpose to profit from its rail activities. The

revenue generated by the rail line does not even cover the operating

expenses of BIR let alone repay the investment needed to rehabilitate

the rail line. It is clear that the primary business purpose of BIR was

and is to prevent the abandonment of the rail line that runs to the BCS

facility. The second prong of the Railroad Ventures test is also met,

since BIR has no employees or rolling stock and it lacks the ability to

operate the rail line. Finally, BIR meets the third prong of the Railroad

Ventures test, since BNSF operates the rail line and is an employer

covered by the Acts.

Based on the above the Board finds that BIR is not an employer covered

by the Railroad Retirement Act (45 U.S.C. §231 et seq.) (RRA) and the
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Bellingham International Railroad, LLC

Decision on Reconsideration

Railroad Unemployment Insurance Act (45 U.S.C. §351 et seq.) (RUIA).

B.C.D. 01-07 is hereby reversed.

CherryMAT. Thomas

V. M. Speakman, Jr.