B.C.D. 04-36

JUL Z 3 2004

EMPLOYER STATUS DETERMINATION

N&T Railway Company, LLC

PAV Railroad, Inc.

Republic N&T Railroad, Inc.

This is the determination of the Railroad Retirement Board concerning the status of

N&T Railway Company, LLC (N&T Railway), PAV Railroad, Inc. (PAV Railroad), and

Republic N&T Railroad, Inc. (Republic N&T) as employers under the Railroad

Retirement Act (45 U.S.C. § 231 et seep) and the Railroad Unemployment Insurance

Act (45 U.S.C. § 351 et seep). N&T Railway has previously been determined to be a

covered employer, with service creditable beginning January 1,2003. The status of

Republic N&T and PAV Railroad has not previously been considered.

The evidence is that N &T Railway acquired from Nimishillen & Tuscarawas, LLC, two 

unconnected lines of rail in central Ohio in Stark County: the “Canton line” consisting of

about 21 miles of track in Canton Township; and the “Massillon line” of about 15 miles 

of track in Perry Township. N&T Railway also leased a third line of 150 miles of track in

the vicinity of the city of Lorain, Ohio, situated near Lake Erie. The rail lines serve steel

processing plants operated at those locations by Republic Engineered Products, LLC,

which is the parent company of N&T Railway, and interchange with CSX Transportation

(BA 1524), Norfolk Southern Railway (BA 1525), Lake Terminal Railroad Co. (BA

4221), and Wheeling & Lake Erie Railway Co. (BA 3373). In Board Coverage Decision 

03-45, the Board determined N&T Railway to be a rail carrier employer under the Acts

effective with commencement of operations on January 1,2003.

Republic Engineered Products filed for bankruptcy protection in October 2003, and

solicited bids for its assets, including its steel plants and the rail lines of N&T Railway.

As a result, it sold all assets to PAV Republic, Inc. The asset transfer was completed 

effective with close of business December 18, 2003, and N&T Railway had no assets or

employees, and conducted no operations after that date.

On December 15, 2003, PAV Railroad, Inc., was incorporated as a Delaware 

corporation as a wholly owned subsidiary of PAV Republic. As part of the PAV

Republic purchase of assets from the bankrupt company, on December 19, 2003, PAV

Railroad received the assets of N&T Railway, and hired all of the railway’s 91

employees. The Surface Transportation Board (STB) on December 19, 2003,

approved a notice of exemption to allow PAV Railroad to operate the rail lines of N&T

Railway. See: PAV Railroad, Inc.—Acquisition and Operation Exemption—Assets of

N&T Railway Company LLC, Finance Docket No. 34450. On January 5, 2004, PAV

Railroad then amended its articles of incorporation to change its name to Republic N&T

Railroad, Inc.

BA#2282
N&T Railway Company, LLC

PAV Railroad, Inc.

Republic N&T Railroad, Inc.

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Section 1(a)(1) of the 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:

Section 1 of the RUIA (45 U.S.C. § 351) contains essentially the same definitions, as

does section 3231 of the Railroad Retirement Tax Act (26 U.S.C.§ 3231).

Regulations of the Board at 20 CFR 202.11 provide that the status of an employer as

covered by the Acts terminates “whenever such company or person loses any of the 

characteristics essential to the existence of an employer status ” Section 202.12(b) of

the regulations further provides that evidence considered in determining that employer

status ends includes cessation of business and the sale, transfer or lease of property

equipment or machinery essential to continuance of an employer function.

The Board finds that evidence of record establishes that N&T Railway Company, LLC,

ceased to be a covered rail carrier employer effective with the close of business 

December 18, 2003, the date it disposed of all rail assets and no longer had

employees. The Board further determines that PAV Railroad, Inc. became a rail carrier 

employer within the meaning of section 1 (a)(1)(i) of the Railroad Retirement Act and its

corresponding provision of the Railroad Unemployment Insurance Act effective 

December 19, 2003, the date as of which it began operating the rail lines received from 

N&T Railway. Cf. Rev. Rule. 82-100, 1982-1 C.B. 155, wherein the IRS held that a

company became an employer under the Railroad Retirement Tax Act on the date it

hired employees to perform functions directly related to its carrier operations. Effective

January 5, 2004, PAV Railroad changed its name to Republic N&T Railroad, Inc. The

mere change of name has no effect on the continued status of the re-named 

corporation as a covered employer.

Section 8(a) of the RUIA (45 U.S.C. §358(a)) requires that employers covered under 

the Act shall make contributions based on compensation paid to their employees at a

rate which shall take into consideration the benefits paid after December 31, 1989

under the RUIA to employees of that employer. See section 8(a)(15) of the RUIA (45

U.S.C.§ 358(a)(15)) and regulations of the Board at 20 CFR 345.302(f). Section

8(a)(19) of the RUIA (45 U S C § 358(a)(19)), and regulations of the Board promulgated
N&T Railway Company, LLC 

PAV Railroad, Inc.

Republic N&T Railroad, Inc.

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pursuant thereto (20 CFR 345.204(a)), further provide that where property of an

employer is sold or transferred to an entity which becomes an employer as a result of

the sale, the individual employer record of such employer shall be prorated among the 

entities that receive the property and become an employer by reason of such 

transaction. However, where an employer abandons a line of track in accordance with

the provisions of the Interstate Commerce Act, and a new entity is formed to operate or

continue service over such line, then the Board will assign to such entity a newemployer contribution rate.

The evidence of record is that the property of N&T Railway was transferred to the 

company which is now named Republic N &T Railroad without abandonment of

operations. Accordingly, pursuant to section 8(a)(19) of the RUIA, the Board finds that

Republic N&T Railroad is the successor employer of N&T Railway LLC for purposes of

contribution rates.

Michael S. Schwartz

A

V. M. Speakman, Jr. ^

rome F. Kever