EMPLOYER STATUS DETERMINATION

DECISION ON RECONSIDERATION

Pabtex, Inc.

This is the decision of the Railroad Retirement Board in response

to a request for reconsideration of the determination by the Deputy

General Counsel dated October 10, 1990, that Pabtex, Inc., has been

an employer covered under the Railroad Retirement and Railroad

Unemployment Insurance Acts (hereafter Acts) since January 1, 1985.

The initial decision in this case was based on information to the

effect that Pabtex is an affiliate of the Kansas City Southern

Railway Company and operates a bulk handling facility which

transfers coal and coke from trucks and rail cars to ships and 

barges.

A brief submitted to the Board by counsel for Pabtex describes a

substantially different factual situation. Pabtex's customers are

brokers which purchase the coke from petroleum refineries for 

resale. The brokers arrange for shipping the coke to Pabtex by

truck or rail. The coke is unloaded and crushed by Pabtex. It is

weighed and graded and then conveyed to a stacker and reclaimer

where it is segregated by customer and grade, and later carried to

a ship loader. Pabtex provides blending service, which consists of

combining portions of various grades of coke to produce a batch of

a given grade; approximately 90 percent of the coke must be

blended. Pabtex also stores the coke, which requires frequent

spraying of the coke, until the broker locates a buyer. Pabtex

bills the brokers for the services rendered by Pabtex, according to

the amount of coke involved, and the brokers pay Pabtex directly.

Section 1(a) (1) of the Railroad Retirement Act 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

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)]

BCD 1995-112
-2-

DECISION ON RECONSIDERATION

Pabtex, Inc.

A virtually identical definition is found in sections 1 (a) and (b)

of the Railroad Unemployment Insurance Act (45 U.S.C. § 351(a) &

(b) ) .

Pabtex and the Kansas City Southern Railway Company are both owned

and controlled Joy Kansas City Industries. Accordingly, Pabtex is

under common control with a railroad employer. Therefore, if

Pabtex provides a service in connection with the transportation of

passengers or property by railroad it is an employer under the

Acts. Section 202.7 of the regulations (20 CFR 202.7) defines a

service as being in connection with railroad transportation if it

is reasonably directly related, functionally or economically, to

the performance of rail carrier obligations.

The Kansas City Southern is a carrier which provides interstate

freight service. There is no evidence that Pabtex provides any 

service to the Kansas City Southern in connection with that 

operation. Rather, the evidence shows that Pabtex performs all

operations, which are analogous to a manufacturing operation and 

not rail-related services, pursuant to contractual arrangements

with brokers. Because Pabtex does not perform a service in

connection with rail transportation, the Board finds that it is not

a covered employer under the Railroad Retirement and Railroad

Unemployment Insurance Acts.

The Board upon reconsideration of the initial decision of the

Deputy General Counsel reverses that decision and determines that

Pabtex is not an employer under the Railroad Retirement and

Railroad Unemployment Insurance Acts.

Glen L. Bower

V. Mf. Speakman, Jr.