EMPLOYER STATUS DETERMINATION

OmniTRAX Leasing, Ltd.

This is the determination of the Railroad Retirement Board

concerning the status of OmniTRAX Leasing, Ltd. (OLL) as an

employer under the Railroad Retirement Act (45 U.S.C. §231 et sec. )

(RRA) and the Railroad Unemployment Insurance Act (45 U.S.C. §351

et seq.) (RUIA).

Information about OLL was furnished by its Controller, Mr. James A.

Mogen. OLL owns, rebuilds, and leases locomotives and freight cars

to railroads. OLL owns 270 older locomotives which have been

rebuilt, are in the process of being rebuilt, are awaiting

rebuilding or are awaiting determination as to whether they can be

effectively rebuilt. In addition, OLL owns 50 freight cars which

are under lease to a related railroad. OLL has 37 employees who

were first compensated in June 1994. OLL began operation in July

1994 .

OLL is owned by OmniTRAX Equipment, Inc., which in turn is owned by

Patrick D. Broe. Mr. Broe also owns OmniTRAX, Inc., which in turn

owns the majority interest in each of the following railroads: (1)

Central Kansas Railway, LLC (BA No. 2765) ; (2) Kansas Southwestern

Railway, LLC (BA No. 3774) ; (3) Chicago Rail Link, LLC (BA No.

4713); (4) Panhandle Northern Railway, LLC (BA No. 5816); (5)

Newburgh and South Shore Railroad, LTD. (BA No. 3268); (6) Great

Western Railway of Colorado, LLC (BA No. 2706); (7) Manufacturers

Junction Railway, LLC (BA No. 4609); (8) Great Western Railway of

Iowa, LLC (BA No. 3779) ; (9) Georgia Woodlands Railway, LLC (BA No.

5513) ; (10) Great Western Railway of Oregon, Inc. (BA No. 2770) ;

and (11) Chicago, West Pullman and Southern Railway, LLC (BA No.

4317). Mr. Broe personally owns the majority in the Northern Ohio

and Western Railway, Ltd. (BA No. 2263). OLL leases locomotives

and freight cars to these railroads and does repair work for

several of them. In 1994, more than 50% of OLL's business was with

its affiliated railroads. From January through September 1995, 20%

of OLL's business was conducted with its affiliated railroads. Mr.

Mogen explained that the e percentage figures represent lease and

sales revenue compared to total revenue.

Section 1 of the RRA defines the term "employer" to include:

(i) any express company, sleeping car company, and

carrier by railroad, subject to subchapter I of chapter

105 of Title 49;

(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

BCD 1995-111 BA # 9010
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OmniTRAX Leasing, Ltd.

passengers or property by railroad, or the receipt,

delivery, elevation, transfer in transit, refrigeration

or icing, storage, or handling of property transported by

railroad. [45 U.S.C. §231(a)(i) and (ii)].

Section 1 of the RUIA contains essentially the same definition.

Looking at the definition of "employer" set out above, the Board

notes that one individual, Patrick D. Broe, owns a majority

interest in the company which owns OLL and owns another company

(OmniTRAX, Inc.) which owns the majority interest in 11 carrier

employers. In addition, Mr. Broe personally owns the majority

interest in a twelfth railroad. The Board therefore finds that OLL

is under common control with rail carrier, employers within the

definition of "employer" in section 1 of the RRA and the RUIA.

Turning to the second part of the definition of "employer" in

section 1(a) (ii), the Board notes that courts have found that

rebuilding locomotives and freight cars constitutes service in

connection with railroad transportation. See Livingston Rebuild

Center. Inc, v. Railroad Retirement Board. 970 F.2d 295 (7th Cir.

1992); Despatch Shoos Inc, v. Railroad Retirement Board. 153 F.2d

644 (D.C. Cir. 1946). OLL's entire business consists of owning,

rebuilding and leasing locomotive and freight cars. In addition,

more than 50% of OLL's business in 1994 was with railroads with

which OLL is under common control ("affiliated railroads"); and 20%

of its business for the first 9 months of 1995 was with affiliated

railroads. It is the opinion of a majority of the Board that OLL

provides service in connection with railroad transportation.

A majority of the Board thus concludes that OmniTRAX Leasing, Ltd.

became an employer under the RRA and the RUIA effective June 1,

1994, the first day of the first month in which it compensated

employees.

' Glen L. Bower

-1 ^

V. M, Speakman, Jr".

c t ‘-u

/ytferome F. Kever (Dissenting

opinion attached)
DISSENT

Jerome F. Kever

Management Member

OmniTRAX Leasing, Ltd.

I take exception to finding leasing activities to be service

in connection with transportation based on Itel v. U.S. Railroad

Retirement Board. 710 F. 2d 1243 (7th Cir. 1983) . While the

decision finds that 50 percent of OmniTRAX's Leasing, Ltd. 1994

revenue was with affiliated carriers, it does not distinguish the

level of locomotive repair and rebuilding services performed versus

the leasing activity. Therefore, I cannot reach a determination

as to whether the other than leasing services are more than casual

service exempt from coverage.

Jerome F. Kever

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