B.C.D. 03-56

EMPLOYER STATUS DETERMINATION

American Railroads Corporation

This is the decision ofthe Railroad Retirement Board with regard to the coverage 

ofAmerican Railroads Corporation. (ARC) under the Railroad Retirement Act (45

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

U.S.C. §351 et seq.) (RUIA).

According to information supplied by Edwin Josephson, outside corporate counsel

for ARC, and by Edward McClure, Chairman, President, and Chief Executive 

Officer of ARC, ARC was incorporated in 1990. ARC is a privately held company

owned by Mr. Richard McClure, Mr. Robert J. Geib, and Mr. Michael H. Minton. 

ARC is primarily engaged in shortline consulting and acquisitions. The owners of 

ARC also own the Gulf, Colorado & San Saba Railway Corporation (GCSR), an

employer under the Acts (BA No. 3891) since May 11, 1993. Sweetwater Central

Switching Company1, is a wholly owned subsidiary ofthe Gulf, Colorado & San

Saba Railway Company. In addition, ARC owns the Missouri & Valley Park 

Railroad Corporation2. ARC reportedly has five employees. Its employees were 

first compensated in November 1990.

ARC provides the following services for its affiliated companies:

a. search for new opportunities for the acquisition ofswitching contracts or

shortline railroads;

b. sales assistance and procurement of new customers;

c. tax accounting, including procurement of data for its outside public

accountants;

d. final billing to customers;

e. maintenance of accounting records;

f. payroll services, including preparation of periodic payroll for employees

of affiliated companies and payroll recordkeeping;

The coverage status ofthe Sweetwater Central Switching Company is currently under review.

The coverage status ofthe Missouri & Valley Park Railroad Corporation is currently under review.

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American Railroads Corporation

g. procurement and negotiation ofinsurance contracts with carriers for

general liability and health insurance;

h. administration of insurance claims on behalf ofits affiliates with

insurance adjusters and carriers;

i. procurement oflegal services, permits and licenses.

Section 1(a)(1) of the 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 of the

Surface Transportation Board under part A of subtitle IV of title 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) ofthis 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 * * *.

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

ARC is clearly not a carrier by rail. Whether ARC is covered as a rail carrier

affiliate depends in the first instance on whether it is under common control with a

rail carrier. Section 202.5 of the Board’s regulations (20 CFR 202.5) defines

common control as follows:

A company or person is under common control with a carrier, whenever 

the control (as that term is used in § 202.4) ofsuch company or person is in
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American Railroads Corporation

the same person, persons, or company as that by which the carrier is

controlled.

Messer. McClure, Minton and Geib own and control ARC and a carrier, GCSR.

This clearly creates common control in these individuals over both ARC and a

carrier. Since ARC is under common control with a carrier, it would be an

employer subject to the Acts if it performs a service in connection with railroad

transportation. The services the ARC perfonns for its affiliates are clearly services

in connection with railroad transportation. Cf Adams v. Railroad Retirement 

Board, 214 F.2d 534 (9th Cir. 1954). During 2002, 40% of ARC’s consulting 

revenue was obtained from GCSR.

Based on the above facts, it is the determination ofthe Board that ARC has been an

employer under the Acts since May 11, 1993, the date as ofwhich GCSR became a

rail carrier employer under the Acts. Service and compensation of ARC

employees may be credited to the extent permitted by section 9 ofthe Railroad

Retirement Act and section 211.16 ofthe Board’s regulations (20 CFR 211.16).

V. M. Speakman, Jr.