B.C.D. 03-36

APR 2 2 2003

EMPLOYER STATUS DETERMINATION

Quality Terminal Services, L.L.C.

This is the determination of the Railroad Retirement Board concerning

the status of Quality Terminal Services, L.L.C. (QTS), as an employer

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

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

Information regarding QTS was provided by Mr. Mike Ogborn, Manager

of QTS. QTS began operations on April 1, 1994, and is owned by MCS 

Properties, L.L.C. MCS is a Colorado limited liability company that is

owned by Cashel Partners, L.L.C. (SO.1%)1, Quality Holdings, Inc.

(38.92%), and Pat Broe (10.98%). Pat Broe is sole owner of OmniTrax,

Inc., a company which was held by the Railroad Retirement Board not

to be an employer covered under the Acts (B.C.D. 97-5). OmniTRAX

owns a number of shortline railroads. OmniTRAX provides certain

services to QTS, such as accounting and human resources, under a

management contract between OmniTRAX and QTS. Three of the

managers of QTS are managers of MCS. According to information

provided by Mr. Ogborn, Pat Broe also owns 100 percent of Quality

Holdings, Inc.

QTS performs intermodal terminal operations including ramp/deramp

services, lift equipment maintenance services, checkpoint services,

coordinator/planner services, and notification services. These services

are performed for Burlington Northern Santa Fe Railway Company, the

Union Pacific Railroad Company, and Triple Crown Services, Inc. In

CSX Intermodal, Inc., BCD No. 96*82, decided September 24, 1996, the

Board held that, generally, intermodal services are not covered under

the Acts. However, QTS also performs switching services at the

Alliance Intermodal Facility of the Burlington Northern Santa Fe

Railway Company, a carrier employer covered under the Railroad

Retirement Act, near Fort Worth, Texas.

1 The Board was previously advised that a 49 percent interest in MCS was held by Neptune Partners, Ltd., and

Cashel Partners was not mentioned. In view ofthe Board’s decision in this case, which finds, in part, that QTS is

not an affiliate employer under the Acts, it is unnecessary to determine the reason for the discrepancy.

BA# 4874
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Quality Terminal Services, L.L.C.

In 1998, 100 percent of QTS’s business was with the Burlington

Northern Santa Fe Railway Company. In 1999, approximately 80

percent of QTS’s business was with the Burlington Northern Santa Fe

Railway Company! 10 percent of its business was wdth the Union Pacific 

Railroad Company, a carrier employer covered under the Railroad

Retirement Act! and the balance was with other customers. With

regard to revenues, in 1998, 100 percent of QTS’s revenue was

attributable to business with the Burlington Northern Santa Fe

Railway Company. In 1999, approximately 91 percent of QTS’s revenue

was from the Burlington Northern Santa Fe Railway Company2, 3

percent of its revenue was from the Union Pacific Railroad Company,

and 6 percent was from Triple Crown Services, Inc. QTS has submitted

copies of its contracts with the Union Pacific, which were entered into

on April 1, 2000, and June 1, 1999, for equipment maintenance and

repair, and gatehouse administration and inspection, respectively.

In 1998, 6.74 percent of QTS’ revenues were derived from its switching

services, which are performed exclusively for the Burlington Northern

Santa Fe Railroad at the Alliance facility! in 1999, 6.13 percent! and in

2000, 4.3 percent. In 1998, 5.8 percent of QTS’s employee time

consisted of switching services! in 1999, 4.7 percent! and in 2000, 3

percent.

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!

: Erroneously stated to be Union Pacific Railroad Company by Mr. Ogbom; clearly the Burlington Northern Santa

Fe Railway Company is meant.
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Quality Terminal Services, L.L.C.

(ii) any company which is directly or indirectly owned

or controlled by, or under common control with, one or more

employers as defined in paragraph (i) of this subdivision,

and which operates any equipment or facility or performs

any service (except trucking service, casual service, and the

casual operation of equipment or facilities) in connection

with the transportation of passengers or property by railroad

•k k Jc

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

U.S.C. § 351(a) and (b)) contain substantially similar definitions, as

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

3231).

The evidence of record shows that QTS is performing switching service

for the Burlington Northern Santa Fe Railway Company. The

definitional provision establishing the jurisdiction of the Surface

Transportation Board over railroad transportation defines “railroad” to

include “a switch, spur, track, terminal, terminal facility, and a freight

depot, yard, and ground, used or necessary for transportation * * *.” 49

U.S.C. § 10102(6)(C). Accordingly, that evidence establishes that QTS 

is a carrier operating in interstate commerce.

Section 202.3 of the regulations of the Board provides that:

(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
Quality Terminal Services, L.L.C.

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 of such

business to its entire business!

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

enterprise.

(b) In the event that the employer is found to be an

aggregate of persons or legal entities or less than the whole

of a legal entity or a person operating in only one of several

capacities, then the unit or units competent to assume legal

obligations shall be responsible for the discharge of the

duties of the employer.

In this case, QTS is not predominantly engaged in carrier business, and

its only carrier business is the switching operation at Alliance. As

indicated earlier in this discussion, the evidence of record indicates that

the switching operation constitutes a very small percent of QTS’s

business. Mr. Ogborn advises that QTS can segregate its switching

operations from the balance of its operations at the Alliance facility.

Accordingly, it is the determination of the Board that section 202.3 of
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Quality Terminal Services, L.L.C.

the regulations applies so that QTS is a covered employer within the

meaning of the Acts as of April 1, 1994, the date as of which it

commenced operations, only to the extent that its employees engage in

the switching operation. The Labor Member of the Board dissents from

that portion of this decision which finds that intermodal services

performed by QTS are not covered under the Acts.

CherryFT. Thomas

Q-4..

V. M. Speakman, Jr.

(dissenting in part)

<LA

erome F. Kever