B.C.D. 04-11

EMPLOYER STATUS DETERMINATION FEB Z 7 2004

Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division 

SierraPine LLP

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

Sierra Pacific Industries, Incorporated, Quincy Railroad Division (Sierra Pacific); the 

Quincy Railroad Company (Quincy Railroad); and Sierra-Pine LLP, as employers under

the Railroad Retirement Act (45 U.S.C. 231 et seg.) and the Railroad Unemployment

Insurance Act (45 U.S.C. 351 et seg.). The Quincy Railroad has previously been 

determined to be a covered employer (BA 3731) under the Railroad Unemployment

Insurance Act and the Railroad Retirement Acts of 1974 and 1937, with service 

creditable from November 1917 to date. The status of Sierra Pacific and Sierra-Pine

have not previously been the subject of formal consideration by the Board.1

Sierra Pacific is a privately held California corporation formed in 1969 which owns

timber land and lumber mills. See: “Profile of Sierra Pacific Industries”, George

Draffan, Endgame Corporate Profile website. Sierra Pacific ranks among the Forbes

500 list of private corporations, and has over 3,000 employees. The company’s own

internet site states that it owns approximately 1.5 million acres, making Sierra Pacific

the largest private timberland owner in North America. The evidence is that Sierra 

Pacific has also acquired three lines of railroad: the Quincy Railroad, the Amador

Central Railroad, and the Susanville-Wendel line.

In a letter dated December 17, 2002, Sierra Pacific stated that in May 1976, it

purchased a lumber mill located in Quincy, California from the DiGiorgio Lumber

Company. Sierra Pacific acquired in that transaction the plant itself, title to the 60 acre

mill site, and the Quincy Railroad Company. The Quincy Railroad consisted of three

miles of track from the lumber mill at Quincy to a junction with a trunk line now operated

by the Union Pacific Railroad, the entire line lying within Plumas County. Because

there was no other shipper on the line other than the lumber mill, DiGiorgio Lumber and

Sierra Pacific believed the line to be a private track, and did not seek approval of the

sale by the former Interstate Commerce Commission. On December 21,1995, Sierra 

Pacific filed a certificate of ownership with the California Secretary of State which 

certified as sole owner that it had merged Quincy Railroad into Sierra Pacific. Sierra

Pacific sought no approval of this transaction from the ICC or the Surface 

Transportation Board (STB) as well. Sierra Pacific continues to use the line to bring

lumber from the mill to the junction with the Union Pacific, operating as the Quincy Rail

Road division of Sierra Pacific. No notices have ever been filed with the STB regarding

Sierra Pacific’s conduct of this operation.

1 Both Sierra Pacific and SierraPine have been the subject of prior coverage reviews by the Audit and

Compliance section of the Board’s Bureau of Fiscal Operations which were closed without referral to the

members of the Board for decision.

.1
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Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division

SierraPine LLP

In a separate letter also dated December 17, 2002, Sierra Pacific stated that on April 

21, 1986 the Quincy Railroad began leasing from the Southern Pacific Transportation

Company (now the Union Pacific Railroad) a 25 mile-long rail line running from 

Susanville to Wendel in Lassen County, California. The line serves a lumber mill

owned by Sierra Pacific and a millwork plant operated by Jeld-Wen, both located in

Susanville, and interchanges with the Union Pacific at Wendel. Following merger of

Quincy Railroad into Sierra Pacific in December 1995, operation of the line has been

conducted by the Quincy Railroad division of Sierra Pacific. There is no physical 

connection between the Susanville-Wendel rail line and the Quincy rail line, which lie

approximately 30 miles apart. There is no record that the ICC ever approved the 

original lease between the Southern Pacific and Quincy Railroad, or that the STB has

ever been notified of the continued lease between the Union Pacific and Sierra Pacific.

In Surface Transportation Board (STB) Finance Docket No. 33378, decided April 3,

1997, Sierra Pacific did file a verified notice of exemption to acquire and operate an

approximately 12 mile line of track between lone and Martel, California formerly owned 

and operated by the Amador Central Railroad Company. See: Sierra Pacific 

Industries: Acquisition and Operation Excemption—Amador Central Railroad Company

62 Fed. Reg. 17284, April 9, 1997. By letter dated August 19,1997, Sierra Pacific

notified the Board that when it acquired the Amador Central from its prior owner, 

Georgia Pacific Corporation, it hired none of the former Amador Central employees,

and did not intend to conduct rail operations itself. On November 7, 1997, the Board

determined that following sale of the line to Sierra Pacific, Amador Central “no longer

possesses the characteristics of an operating railroad company" and therefore ceased

to be an employer under the Acts. B.C.D. 97-101, Amador Central Railroad Company.

No determination was rendered by the Board regarding the status of Sierra Pacific.

Consistent with its August 1997 letter to the Board, Sierra Pacific filed a notice with the 

STB that it intended to sell the Amador Central line to the Sierra Railroad, an unrelated

short line. See: Sierra Railroad Company—Acquisition and Operation Exemption—

Sierra Pacific Industries 62 Fed. Reg. 63747, December 2, 1997, However, the sale

was not completed. Sometime during 1998, SierraPine LLP, which is evidently a

California limited partnership between Rockland Timber Co., a Delaware corporation,

Sierra Pacific, and others2 purchased a particle board plant located in Martel. On

2 SierraPine is a privately held company owned by the principals of Timber Products Company and Sierra

Pacific Industries. “Weyerhaeuser to sell composite products facilities, ply-veneer plant to SierraPine

Limited,” Business Wire. April 13, 1999.
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Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division

SierraPine LLP

December 15, 1998, SierraPine leased the line of the Amador Central from Sierra

Pacific. SierraPine filed a notice of this transaction with the STB. See SierraPine—

Lease and Operation Exemption—Sierra Pacific Industries. Finance Docket No. 33679, 

63 Fed. Reg. 68505, December 11, 1998. Later, SierraPine sought to revoke the STB

determination that the line was subject to its jurisdiction on grounds that the line of rail

was actually a private switching line. Id., November 21,2001. The STB denied the

petition to revoke, and subsequently denied reconsideration of the denial. IcL, August

22,2002.

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 contains essentially the same definition, as does section 3231 of

the Railroad Retirement Tax Act.

Decisions of the Board in prior cases have concluded that where a short line of track is

operated as a common carrier, the operator is a rail carrier employer under the Acts.

B.C.D. 96-19 GW! Switching Services, L.P. Whether the operator owns the rail line, or

leases the line from another company does not affect the outcome, but where the 

operator does not hold itself out as a common carrier, the Board has concluded that the

track is operated as a private carrier, and consequently is not a covered rail carrier

employer. See, e.g., B.C.D. 94-29 Hardin Southern Railroad Company, B.C.D. 94­

105.2 Great Miami & Western Railway.

Regulations of the Board at 20 CFR 202.2 provide that “Any company or person 

principally engaged in carrier business is an employer” within the meaning of section

1(a)(1) of the RRA and 1 of the RUIA. Where the principal business of a company is

not carrier business, Board regulations further provide that the Board will consider

whether some identifiable and separable enterprise is considered to be the employer.

See: 20 CFR 202.3(a). That regulation further provides that in determining whether a

segregable portion of a business may be determined to be a rail carrier employer, the

Board will consider evidence such as:
Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division

SierraPine LLP

(1) The primary purpose of the company or person on and since the date it was

established;

(2) The functional dominance or subservience of its carrier business in relation to

its non-carrier business;

(3) The amount of its carrier business and the ratio of such business to its entire

business;

(4) Whether its carrier business is a separate and distinct enterprise.

Where a line of railroad is owned by one entity but operated as a rail carrier by a

second, unrelated entity, the RRA, the RUIA and the agency’s regulations do not

directly address the status under the Acts of the lessor company as an employer. In

November 2000, the Board defined the circumstances under which it would consider

that the lessor-owner of a rail line leased to another would be a rail carrier employer

under the Acts. See Board Coverage Decision 00-47, Railroad Ventures, Inc.,

(reconsideration decision). Pursuant to that decision, the Board will determine the

lessor to be an employer unless:

(1) the lessor does not have as a primary purpose to profit from railroad activities;

(2) the lessor does not operate or retain the capacity to operate the rail line; and

(3) the operator of the rail line is already a covered employer under the RRA and

RUIA. See: B.C.D. 02-13, Bellingham International Railroad, LLC (decision on

reconsideration).

Applying these standards to the companies under consideration here, the evidence

regarding the Quincy Railroad is that it merged with its parent corporation Sierra Pacific

in December 1995 and ceased to exist as a corporate entity. Regulations of the Board 

provide that the status of a company as an employer covered by the Acts ends

“whenever such company or person loses any of the characteristics essential to the 

existence of an employer status.” 20 CFR 202.11. Accordingly, the Board determines
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Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division

SierraPine LLP

that the status of the Quincy Railroad as a covered employer ended December 21,

1995, when it lost its corporate identity. Moreover, from at least the time of sale to

Sierra Pacific in May 1976 and continuing to the present, the Quincy lumber mill owned 

by Sierra Pacific has been the only shipper on the line. The switching operation

conducted by the Quincy Railroad division of the Sierra Pacific is in reality the 

movement of rail cars for itself over track it owns to a junction siding connecting to a

trunk carrier. The Board concludes that effective December 22, 1995, Sierra Pacific

has engaged in private carriage over the former Quincy Railroad which is not rail carrier

service within the meaning of the RRA and RUIA.

As noted above, the Board previously determined that Amador Central Railroad 

Company ceased to be an employer under the Acts effective with the sale to Sierra

Pacific of all its rail assets March 31, 1997. There is no evidence contradicting Sierra 

Pacific’s assertion at the time of sale that it would not operate the Amador Central line

itself. Rather, the record shows Sierra Pacific immediately sought to resell the line to a

rail carrier. When that transaction failed, Sierra Pacific then entered into the operating

lease with SierraPine. However, since at least the time of the SierraPine purchase of

the particle board plant in Martel, the Amador Central rail line has served two shippers

The record also shows that over the objection of SierraPine, the STB has twice

determined that SierraPine’s operation of the Amador Central rail line remains subject

to STB jurisdiction. In the words of the STB:

Here, SierraPine sought and acquired authority via exemption to provide 

common carrier service over a line that has historically been operated as

a regulated line of railroad. Petitioner cannot unilaterally extinguish its

common carrier obligation on the basis that it did not in the past, and does 

not now, require regulatory authority to conduct what it describes as its

primarily private carrier, switching operations. SierraPine—Lease and

Operation Excemption—Sierra Pacific Industries, Finance Docket No.

33679, August 26, 2002.

As the matter stands, the STB has determined, reviewed and re-determined that 

SierraPine is a rail carrier subject to its jurisdiction.3 Of course, section 1 (a)(i) of the

3 SierraPine appealed the decision of the STB to the United States Court of Appeals for the District of 

Columbia Circuit. Sierra Pine v. Surface Transportation Board. No 02-1327, (U S Court of Appeals. D C

Circuit, filed October 24, 2002). The Clerk of the Court of Appeals advises that on September 8, 2003

the Court granted the motion of petitioner SierraPine to dismiss the case
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Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division

SierraPine LLP

RRA and section 1 of the RUIA define a covered rail carrier employer as “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”. Based on the STB decision that SierraPine

is a rail carrier with respect to the operation of the Amador Central line under lease, the 

Board therefore determines that SierraPine is a rail carrier employer under the RRA and

RUIA, effective December 15, 1998, the date SierraPine assumed operations on the 

Amador Central line. However, it is clear that SierraPine is primarily in the lumber

business rather than a common carrier by rail. Pursuant to section 202.3(a) of the 

Board’s regulations regarding segregation of the rail carrier portion of a company’s

business (20 CFR 202.3(a)), SierraPine is an employer only with respect to its

operation of the former Amador Central rail line.

It remains to consider the status of Sierra Pacific as operator of the Susanville-Wendel

line, and as owner-lessor of the Amador Central. The circumstances of Sierra Pacific’s

operation of the Susanville-Wendel line are similar to those of SierraPine’s operation of

the former Amador Central in that both lines serve another shipper in addition to the 

plant of the rail line operator. Unlike the Amador Central, however, at the time of

transfer of ownership, the Susanville-Wendel rail line was only a spur of a trunk rail line

rather than a complete short line railroad. Although no decision of the former Interstate

Commerce Commission has been located, the transfer of ownership from the Southern

Pacific Railway to one of the two shippers on the line would appear to be an

abandonment, potentially within jurisdiction of the ICC. See, The Atchison. Topeka and

Santa Fe Railway Company—Abandonment Exemption—In Lyon County. KS, Docket

AB-52 (Sub-No. 71X)(June 17, 1991). Absent a decision to the contrary by the ICC or

STB, in the Board’s view, the abandonment by the Southern Pacific and subsequent

Sierra Pacific operation of the Susanville-Wendel rail line for itself and Jeld-Wen

renders the operation private rather than common carriage. An operator of a rail line as

a private carrier is not a rail carrier employer under the Acts. Hardin Southern Railroad

Company, supra.

The last matter for consideration is the status of Sierra Pacific as an employer by

reason of its lease of the Amador Central line to SierraPine. The Board is satisfied that

the Railroad Ventures factors noted above are met. The size of Sierra Pacific's lumber

business in relation to the rail line, and the location of its mill on the line evidence that

the primary purpose for obtaining the Amador Central was to maintain rail access to the 

mill, not to profit from railroad activities. Under the second factor, it is noteworthy the
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Quincy Railroad Company

Sierra Pacific Industries, Incorporated, Quincy Railroad Division

SierraPine LLP

STB determined SierraPine to be a rail carrier on the basis of STB’s analysis of the

lease as leaving the lessor without recourse to operate the line itself upon lessee

SierraPine’s default. See: SierraPine—Lease and Operation Excemption—Sierra

Pacific Industries, Finance Docket No. 33679, August 26, 2002. The Board defers to

the STB’s finding that Sierra Pacific does not retain the capacity to operate the Amador

Central line itself. Under the final Railroad Ventures factor, the Board has with this

decision determined that SierraPine is an employer with respect to operation of the line.

As all three of the factors required by Railroad Ventures are present, the Board

consequently determines that Sierra Pacific is not a lessor rail carrier employer under

the Acts.

V. M. Speakman, Jr.