B.C.D. 15-23

Employer Status Determination

Baja California Railroad, Inc. (BJRR)

September 17,2015

This is the decision of the Railroad Retirement Board regarding the status of Baja

California Railroad Inc. (BJRR) as an employer under the Railroad Retirement and 

Railroad Unemployment Insurance Acts, collectively known as the Acts. The status of

this company has not previously been considered.

Information regarding BJRR was submitted by the company’s controller—first Ana

Laura Tufo and then Manuel Hernandez. Alejandro de la Torre Martinez is the Chief

Executive Officer and owns the company along with Fernando Beltran and Fernando

Cano. There are no affiliated companies. BJRR has offices in San Diego, California

and Tijuana, Mexico. It is a short line operator located in the international border

region of San Diego, California and Baja California, Mexico. The BJRR stretches 71

kilometers from the San Ysidro, Califomia-Tijuana, Mexico port ofentry to the city of

Tecate, Mexico. BJRR interchanges at the San Ysidro rail yard with the San Diego 

and Imperial Valley Railroad, a covered employer under the Acts (BA No. 3758).

BJRR interchanges solely with the San Diego and Imperial Valley Railroad. BJRR

runs approximately lA mile in the United States and then goes southbound through

customs and into Mexico providing rail freight services to customers from various

industries such as gas, construction, food, and manufacturing. All deliveries are made 

in Mexico. The annual volume is approximately 4,500 carloads ofexports to Mexico.

Section 1(a)(1) ofthe Railroad Retirement Act (RRA) (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

ofthe Surface Transportation Board under part A ofsubtitle 

IV oftitle 49, United States Code;

(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 ofequipment or facilities)

in connection with the transportation of passengers or

property by railroad * * *.

BA # 5751
Sections 1(a) and 1(b) of the Railroad Unemployment Insurance Act (RUIA), 45

U.S.C. 351 (a) and (b), contain substantially similar definitions, as does section 3231 of

the Railroad Retirement Tax Act (RRTA), 26 U.S.C. 3231.

The Surface Transportation Board hasjurisdiction over rail transportation in the United 

States between a place in a State and a place in the same or another State as part ofthe

interstate rail network. See49U.S.C. 10501(a)(2)(A). As noted above, BJRR engages

in rail activity in the San Ysidro rail yard with the San Diego and Imperial Valley

Railroad and then through the United States border with Mexico. As a result, it

operates rail transportation in the United States between a State and place in the same

States as part of the interstate rail network. In light ofthe evidence as summarized

above, it is determined that BJRR is an employer within the meaning of section

l(a)(l)(i) of the Railroad Retirement Act (45 U.S.C. § 231(a)(l)(i)) and the

corresponding provision of the Railroad Unemployment Insurance Act effective

January 1, 2013, the date it first compensated employees. Cf. Rev Ruling 82-100,

1982-1 C.B. 155, wherein the Internal Revenue Service ruled that arailroad becomes

an employer subject to taxes under the Railroad Retirement Tax Act when the company

first hires employees to perform functions directly related to its carrier operations.

However, the Board further notes that section l(d)(2)(i) ofthe Railroad Retirement Act

qualifies the defmition of covered employment with respect to employees of nonUnited States companies as follows:

(i) an individual shall be deemed to be in the service ofan employer ***

not conducting the principal part ofits business in the United States only 

when he is rendering service to it in the United States;

Section 1(e) ofthe RUIA contains a defmition ofservice substantially identical to the 

above, as does section 3231(d) ofthe RRTA (26 U.S.C. 3231(d)). The Board has held

that service performed for a company not conducting the principal part ofits business

in the United States is creditable only as to the service that is performed in the United

States (L-37-1106 and L-46-331).
The evidence available indicates that BIRR is a Mexican company which derives the

principal portion ofits income from the operation of all but V2 mile of 71.4 kilometers

of rail line in Mexico. Since BJRR conducts the principal part of its business in

Mexico, the Board finds pursuant to section l(d)(2)(i) that effective January 1, 2013, 

BJRR is an employer only with respect to any service by its employees which is

performed within the United States. Service performed within Mexico, whether by

Mexican residents or citizens, or by citizens or residents of the Untied States, is

excluded from coverage under the Acts.

Walter A. Barrows