EMPLOYER STATUS DETERMINATION

RailTex, Inc.

This is a determination as to the employer status of RailTex, Inc.

(RailTex) under the Railroad Retirement Act (RRA) (45 U.S.C. §231

et sea.) and the Railroad Unemployment Insurance Act (RUIA) (45

U.S.C. §351 et sea.). RailTex has previously been held to be an

employer under the Acts because it was under common control with a

rail carrier employer and performed services in connection with

rail transportation, and has filed a timely request for

reconsideration of that initial decision.

At the time of the original determination, RailTex was parent

company of five rail carrier subsidiaries. In addition, the Vice

President of RailTex's Rail Division, and the RailTex's Vice

President of Operations, also served as the President and Vice

President, respectively, of each of the five rail carrier

subsidiaries. It was therefore concluded that:

The Board has by regulation defined a company as being

under common control with a covered railroad employer

whenever the control of that company is in the same

persons as that of a railroad employer. The majority

ownership of the railroad subsidiaries by RailTex and the

mutual use of directors and principal officers (who are

employees) by RailTex and its subsidiaries clearly falls

within this provision of the Board's regulations.

Therefore, RailTex is under common control with one or

more railroad employers, (citations omitted).

Section 1 of the RRA defines "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

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) (1) (i) and (ii)).

Section 1 of the RUIA (45 U.S.C. § 351) and section 3231 of the

Railroad Retirement Tax Act (RRTA) (26 U.S.C. § 3231) contain

essentially the same definition.

BCD 1995-25 BA # 6803
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RailTex, Inc.

A recent decision of the United States Court of Appeals for the

Federal Circuit regarding a claim for refund of taxes under the

RRTA held that a parent corporation which owns a rail carrier

subsidiary is not under common control with the subsidiary within

the meaning of §3231. Union Pacific Corporation v. United States.

5 F. 3d 523, (Fed. Cir., 1993) . The Court reasoned that the phrase

"any company which is directly or indirectly controlled by one or

more such carriers" would be rendered superfluous if the term

"common control" by itself included parent-subsidiary corporate

relationships. Id. at 8.

The facts in the Union Pacific case are indistinguishable from

those presented by RailTex. Accordingly, a majority of the Board

determines on reconsideration that RailTex Incorporated is not and

has never been an employer covered by the RRA and the RUIA, because

it is not under common control with its rail carrier subsidiaries.

An appropriate Form G-215 is attached.

Glen L. Bower

V. M.z Speakman, Tte-r

(Dissenting opinion attached)

M.zSpeakman,

Jerome F. Kever

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