B.C.D. 04-10 FE6 2 6 2004

EMPLOYER STATUS DETERMINATION

D&W Railroad. Inc.

This is the determination of the Railroad Retirement Board concerning

the status of the D&W Railroad. Inc. (D&W) as an employer under the

Railroad Retirement Act (45 LT.S.C. § 231, et seep) (RRA) and the

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

(RUIA).

Information regarding D&W was provided by Mr. Thomas F.

McFarland, attorney for D&W. Mr. McFarland stated that D&W is the

owner of a rail line which is operated by Iowa Northern Railway

Company (IANR) (B.A. No. 3643). He further stated that D&W is not

an operating rail carrier; has no rail operating employees and no legal

obligation to provide rail service over the line operated by IANR as long

as IANR is providing that service. However, if IANR were to be

relieved of its obligation to service that rail line, Mr. McFarland said

that D&W would be obliged to arrange for another carrier to do so and,

if not, D&W would be obliged to provide that service itself. Concurrent

Surface Transportation Board (STB) decisions, STB Finance Docket

Nos. 34401 and 34402, issued on October 1, 2003, respectively exempted

D&W in acquiring 51.95 miles of rail line, including incidental trackage

rights, all located in Blackhawk, Buchanan and Fayette Counties, Iowa,

from the Union Pacific Railroad Company (UP); and exempted IANR in

the operation of the aforesaid rail line pursuant to an operating

agreement with D&W. IANR began these operations on October 2,

2003, according to Mr. Mark Sabin, General Manager of IANR.

Section 1(a)(1) ofthe 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:

BA#9016
D&W Railroad. Inc.

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).

In its decision regarding the employer status of 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 that 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 STB Finance Docket 34401, cited above, D&W certified to the

STB that its projected revenues would not exceed those that would

qualify it. as a Class III rail carrier. There is no information that

would indicate that the intent of D&W in purchasing the line was

primarily designed to preserve rail service rather than profit from

railroading activities. The Board therefore finds D&W is an

enterprise which is intended to profit from railroad activities and

is thus a carrier under the Railroad Ventures test.
-3-

D&W Railroad, Inc.

In view of the foregoing, the Board finds that D&W Railroad. Inc.

became a rail carrier employer under the RRA and RUIA effective

October 2, 2003, the date rail operations began on its rail line.

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Michael S. Schwartz

K~X/V\Z\ -ou-yi^ Q

V. M. Speakman, Jr.