Board Coverage Decision

2004-50

D&W Railroad, Inc.

D&W Railroad, Inc, request for reconsideration denied

The Board denied the petition for reconsideration of its decision

that D&W Railroad, Inc. is a covered rail employer.

No Form G-215 Available

BA#9016
OCT 0 5 2004 EMPLOYER STATUS DETERMINATION UW

DECISION ON RECONSIDERATION

D&W Railroad, Inc.

This is the determination on reconsideration of the Railroad Retirement Board

concerning the status of D&W Railroad, Inc., (D&W) as an employer under the

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

Insurance Act (45 U.S.C. § 351 et sea.).

In a decision dated February 26, 2004, the Board held that D&W became a rail 

carrier employer effective October 2, 2003 (B.C.D. No. 04-10). That decision was

based on D&W being the owner of a rail line which is operated by Iowa Northern

Railway Company (IANR) (B.A. No. 3643). D&W is not an operating rail carrier and

reportedly has no rail operating employees. Concurrent Surface Transportation

Board (STB) decisions, STB Finance Docket Nos. 34401 and 34402, issued on

October 1,2003, respectively authorized D&W to acquire 51.95 miles of rail line,

including incidental trackage rights, all located in Blackhawk, Buchanan and

Fayette Counties, Iowa, from the Union Pacific Railroad Company (UP); and

authorized IANR to operate the aforesaid rail line pursuant to an operating

agreement with D&W.

As mentioned in B.C.D. No. 04-10, the Board, in its decision regarding the

employer status of Railroad Ventures, Inc. (B.C.D. 00-47), held that an entity

that has STB authority to operate a rail line, but leases or contracts with

another to operate the line in question, is covered under the Acts

administered by the Board unless that Board determines that the entity is

not a carrier. The Board enunciated a three-part test in B.C.D. No. 00-47 to

be applied in making this determination. An entity that leases a line to

another company or contracts with another company to operate the line,

is a carrier under the Railroad Retirement Act unless the Board finds that all

three of the following factors exist: 1) the entity does not have as a primary

business purpose to profit from railroad activities; 2) the entity does not

operate or retain the capacity to operate the rail line; and 3) the operator

of the rail line is already covered or would be found fo be covered under

the Acts administered by the Board.

D&W clearly meets the second and third criteria. We must therefore

determine whether D&W meets the first Railroad Ventures factor identified

above. In support of its request for reconsideration, D&W has submitted a

verified statement to support its position that it is not a carrier under the
Railroad Ventures test. The statement indicates that Union Pacific formerly

operated the rail line in question and that the principal customer of the line

was Transco Railway Products, Inc. The statement indicates that Transco

Railway Products is a subsidiary of Transco, Inc., which formed D&W to

acquire the rail line in lieu of abandonment, in order to preserve rail services

for Transco Railway Products.

In response to a request for support for the contention that Union Pacific

intended to abandon the line in question, counsel for D&W submitted a

reproduction of an undated map of the line which states that it is

anticipated that the line will be the subject of an abandonment

application within three years. The document states that the “CHICAGO

AND NORTH WESTERN RAILWAY COMPANY (AB-1) publishes this amendment

to its System Diagram Map * *

The name of the Chicago and North Western Railway Company was

changed to the Chicago and North Western Transportation Company

effective June 1, 1972. The Chicago and North Western Transportation

Company was merged into the Union Pacific effective October 1, 1995. It

appears therefore that the announcement of the possible abandonment

of the rail line at issue may be over 30 years old. A majority of the Board

finds this documentation to be insufficient evidence of a current

proceeding to abandon the rail line. Moreover, the line sale contract

pursuant to which D&W acquired the rail line not only made no reference

to any abandonment proceeding, but specifically reserved for the seller,

Union Pacific, the right to repurchase the line during the first 60 days

following the date of the agreement in the event of certain adverse actions

by the labor organizations representing any of seller's contract employees

(Line Sale Contract dated September 26, 2003, Section 2.C.). Finally, the

decision in STB Finance Docket No. 34401 clearly indicated that D&W

anticipated revenues from the rail line, stating that “D&W certifies that its

projected revenues as a result of this transaction will not exceed those that

would qualify it as a Class III rail carrier." A majority of the Board therefore

finds that the evidence in this case shows that D&W does have as a primary

purpose to profit from railroad activities.
-3-

The Board's initial decision in this case is affirmed. The petition for reconsideration

is denied.

V. M. Speakman, Jr.

erome F. Kever (Dissenting)