BCD 1996-33

Rail Tours, Inc..

Decision on Reconsideration

Issued March 22, 1996

No G-215 Available
Notice No. 96-35

R.C.D. 96-33

EMPLOYER STATUS DETERMINATION ON RECONSIDERATION

RAIL TOURS, INC. MAR 2 2 1996

This is the decision of the Railroad Retirement Board regarding the

request for reconsideration of the Board's decision holding Rail

Tours, Inc., to be an employer under the Railroad Retirement and

Railroad Unemployment Insurance Acts. In a decision dated January 

30, 1995, the Board held that Rail Tours is an employer by reason 

of its being under common control with a carrier and its performing

services in connection with rail transportation.

In its request for reconsideration, Rail Investments argues that it

is not under "common control." In the request for reconsideration, 

counsel for Rail Tours states that it is a corporation owned 

entirely by Mr. John C. Larkin and that Mr. Larkin is the President 

and only officer of Rail Tours. The Escanaba & Lake Superior 

Railroad Company is a corporation owned by Mr. Wade W. Larkin, Mr.

John C. Larkin, and Ms. Avis K. Larkin. It is controlled by a

voting trust agreement of which Mr. Wade W. Larkin and Mr. John C.

Larkin each control 49 percent and Ms. Avis K. Larkin controls 2

percent. Mr. John C. Larkin is the President of Rail Tours.

Section 202.4 of the Board's regulations provides that:

A company or person is controlled by one or more 

carriers, whenever there exists in one or more such 

carriers the right or power by any means, method or

circumstance, irrespective of stock ownership to direct,

either directly or indirectly, the policies and business 

of such a company or person and in any case in which a

carrier is in fact exercising direction of the policies

and business of such a company or person.

Section 202.5 of the Board's regulations provides that:

A company or person is under common control with a

carrier, whenever the control (as the term is used in

§202.4) of such company or person is in the same person,

persons, or company as that by which such carrier is

controlled.

Rail Tours contends that according to the decision in Union Pacific

Corporation v. United States. 5 F. 3d 523 (Fed. Cir. 1993), there

is no common control in this case. A majority of the Board does

not agree with Rail Tours' reading of that case. Union Pacific

held that a parent company was not under common control with its

subsidiary. In the view of the majority, Union Pacific did not

hold that companies could not be under common control by reason of

common ownership or management. In the instant case Rail Tours and

the Escanaba and Lake Superior Railroad Company are not parent and

subsidiary but have common management in that the same person has

the right to control the management and operations of both 

companies. Mr. John C. Larkin is the sole owner and President of
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RAIL TOURS, INC.

Rail Tours and is President of the Escanaba and Lake Superior 

Railroad Company. He is also owns a substantial interest in the

latter company, which is entirely owned by him and his parents. It

is the opinion of the majority that the evidence establishes that

both Rail Tours and the Escanaba and Lake Superior Railroad are

under control of the same persons within the meaning of sections

202.4 and 202.5 of the Board's regulations. Accordingly, it is the

determination of a majority of the Board that Rail Tours is under 

common control with a covered rail carrier employer, the Escanaba 

and Lake Superior Railroad Company.

Rail Tours does not challenge the Board's finding in its January

30, 1995, decision that Rail Tours performs a service in connection

with rail transportation. The Board agrees with the earlier 

decision that Rail Tours does provide a service in connection with

rail transportation.

The previous decision of the Board is affirmed by a majority of the

Board.

Glen L. Bower

Jerome F. Kever (Dissenting)