EMPLOYER STATUS DETERMINATION MAR 2 4 2000

Pacific and Arctic Railway and Navigation Company

This is the determination of the Railroad Retirement Board concerning the

continued status ofthe Pacific and Arctic Railway and Navigation Company

(“Pacific”) (B.A. No. 2903) as an employer under the Railroad Retirement Act

(45 U.S.C. §231 etseq.) (“RRA”) and the Railroad Unemployment Insurance Act

(45 U.S.C. §351 etseq.) (“RUIA”).

B.C.D. 00-9

Background

In 1943, Legal Opinion L-43-177 held that the White Pass & Yukon Railway

Company Ltd. was not an employer under the Acts administered by the Board.

The legal opinion noted that the White Pass & Yukon Railway held the bonds

and stocks of four other companies, including Pacific, which collectively were

known as the White Pass and Yukon Route. The other three companies which

then comprised the White Pass and Yukon Route were the British Yukon

Railway Company, the British Columbia Yukon Railway Company, and the

British Yukon Navigation Company, Ltd. Both the British Yukon Railway

Company and the British Columbia Yukon Railway Company were held in

Legal Opinion L-41-520 not to be employers under the RRA and the RUIA.

Legal Opinion L-45-813, issued December 26, 1945, held that service to the

British Yukon Navigation Company, Ltd., at least outside ofthe United States,

was not creditable under the RRA and the RUIA.

The Pacific and Arctic Railway and Navigation Company was incorporated in

the State ofWest Virginia in 1898. It has been covered as a rail carrier

employer under the RRA and the RUIA from its commencement of rail

operations in 1898. Its continued status as an employer under those Acts was

examined in Legal Opinion L-46-194, after its operations were leased to the

United States during World War II. It was determined at that time that Pacific

continued to be an employer under the Acts. See also Legal Opinion L-46-222.

According to articles filed with the State ofAlaska on December 20, 1979,

Pacific was merged into PARN, Inc., an Alaskan corporation which was then

renamed the Pacific and Arctic Railway and Navigation Company. A recent

coverage investigation concluded that there is no indication that the Board was

notified of the changes affecting the corporation over the years since the

coverage ruling in 1946. Reports of service and compensation have continued

to be made using the BA number assigned to Pacific. The recent coverage

investigation obtained information that Pacific is now a third-level subsidiary

of Tri-White Corporation, a Canadian corporation.

BA# 2903
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The name “White Pass and Yukon Route Railroad” (“White Pass”) is now a

trade name for railway operations conducted by three affiliated railroads from

Skagway, Alaska, to Whitehorse, Yukon Territory, a distance of approximately

110 miles. The trackage consists of 20 miles in Alaska, 33 miles in British

Columbia, and 57 miles in the Yukon. The trade name is registered with the

State of Alaska, and is a registered trademark in the United States and Canada.

The three affiliated railroads involved in the White Pass operation are Pacific,

The British Columbia Yukon Railway Company, and The British Yukon

Railway Company, Limited. The other two railroads are owned directly by TriWhite Corporation.

In 1978, the Klondike Highway between Skagway, Alaska and Whitehorse,

Canada opened, thereby allowing ore to be transported by trucks from Yukon

mines to Skagway. Freight had previously been carried by the White Pass

group. According to its current Chief Financial Officer, the White Pass group

on October 16, 1982, suspended rail operations due to economic losses, when a 

major ore concentrate customer shut down its mine. In 1988, with an influx of

cruise ships arriving in Skagway, the railroad re-opened as a tourist operation

to the White Pass summit. In 1989, railroad operations were extended to

Fraser, British Columbia and Lake Bennett, British Columbia. In 1996, the

White Pass group discontinued operations to Lake Bennett for one year.

The excursion service currently provided by the White Pass group involves

three different train routes. The first, the White Pass Summit Excursion, is a

three-hour ride which briefly crosses the United States border by

approximately 150 yards, where the engines then switch from the front of the

train to the back to resume the trip back to Skagway. Passengers are not

allowed to disembark the train. During the trip an on-board tour guide

provides a narrative ofthe scenery and a history of the train. Gift shop items

are available for purchase.

The second route, the Lake Bennett Adventure, is an eight-hour ride to Lake

Bennett, British Columbia, where passengers may disembark the train for a

walking tour and lunch during a two-hour layover prior to boarding the train

for the return trip to Skagway. Proof of citizenship is required for travel across

the border.

The third route is the SkagwayWhitehorse train and bus trip, which takes

passengers from Skagway to Fraser, British Columbia. There, they transfer to

a bus owned either by tour bus and/or cruise ship companies to continue to

Whitehorse, Yukon Territory. For the return trip, the White Pass picks up

passengers who arrived by bus from Whitehorse, Yukon Territory, and takes
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them to Skagway, where they continue the trip either by bus or cruise ship. All

transfers take place in Fraser, British Columbia, and proof of citizenship is

required. Individuals hiking the 33-mile Chilkoot Trail can also pick up the

train at Bennett for crossing the border for a return trip to Skagway.

White Pass has contracts with cruise ship operators to sell vouchers on the

ships for scenic railway land tours. The cruise ships receive a 20% commission

on the ticket price. White Pass and Yukon Excursions can be purchased from

various travel agents around the world. Travel agents receive a 10% to 15%

commission on selling vouchers. In 1997, cruise ships accounted for 82 percent

of passengers; bus and airline package tours accounted for five percent; and

independent travelers made up the other 13 percent. The amount of one way

ticket sales for the period 1995 to date was less than one percent.

White Pass operates from May through September each year. In 1997, White

Pass, which includes the three railroads identified earlier in this discussion,

had 120 employees. Pacific operates over approximately 20 miles of rail line.

Although much of the White Pass rail lines operate in Canada, Pacific’s portion

of those lines is located in Alaska. More specifically, Pacific’s mileage begins

in Skagway and ends at the United States-Canadian border at milepost 20.4.

The British Columbia Yukon Railway Company (“BCYR”) owns the right-ofway in Canada between milepost 20.4 and 52.58. BCYR is operating as part of

the tourist railroad through scheduled tours to Lake Bennett in Canada at

milepost 40.5. The British Yukon Company Limited (“BYR”) owns the trackage

in Canada between milepost 52.58 and 110, which terminates in Whitehorse,

Yukon.

Applicable Law and Regulations

Section 1(a)(1) of the RRA defines the term “employer” to include:

(i) any carrier by railroad subject to the

jurisdiction of the Surface Transportation Board under

part A ofsubtitle IV of Title 49 [45 U.S.C. §231(a)(l)(i)].

Section 1 of the RUIA contains essentially the same definition.

Prior to January 1,1996, section l(a)(l)(i) of the RRA defined a carrier employer

as “any express company, sleeping car company, and carrier by railroad,

subject to subchapter I of chapter 105 of Title 49.” Section 1 ofthe RUIA

contained the same definition. The wording ofthe carrier definition of an

employer was amended by the ICC Termination Act of 1995, Public Law 104-88.
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The changes in the definition of carrier employer were, however, conforming

amendments made to reflect the fact that P. L. 104-88 gave to the new Surface

Transportation Board jurisdiction over railroad transportation previously

conferred on the Interstate Commerce Commission. P. L. 104-88 made it clear

that it enacted no changes in the coverage of employers or employees under

the RRA and the RUIA, expressly providing that:

The enactment of the ICC Termination Act of 1995

shall neither expand nor contract coverage of

employees and employers by the Railway Labor Act,

the Railroad Retirement Act of 1974, the Railroad

Retirement Tax Act, and the Railroad Unemployment

Insurance Act. [P. L. 104-88, Title I, section 102(a), 109

Stat. 808, codified at 49 U.S.C. § 10501(c)(3)(B)].

Thus, P. L. 104-88 made no substantive changes in coverage under the RRA

and the RUIA.

Section 201. l(j) of the Board’s regulations defines the term “person” as follows:

The term “person” includes an individual, trust,

estate, partnership, association, joint stock company,

company, corporation, and institution. 20 CFR 201.l(j).

Section 202.2 of the Board’s regulations states that:

Any company or person principally engaged in

carrier business is an employer. (20 CFR 202.2).

Section 259.1(b)(1) ofthe Board’s regulations provides in pertinent part that:

(b) The General Counsel of the Railroad Retirement Board or

his or her designee shall make the initial investigations with

respect to:

(1) The status of any person as an employer under the

Railroad Retirement Act and the Railroad Unemployment

Insurance Act and the rules and regulations issued thereunder; 20

CFR 259.1(b)(1).

Section 259.2(a) provides that with respect to a determination “concerning the

status of a person as an employer . . . that person shall be a party to such

determination . ..” (Emphasis supplied.).
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Discussion

A coverage ruling issued by the Board applies to a “person” as that term is

defined in section 201.10) of the Board’s regulations. See 20 CFR 259.1(b)(1)

and 259.2(a). Thus, a coverage ruling may apply to a business organized as a

sole proprietorship, a partnership, an association, a joint stock company, or a

corporation. A coverage ruling does not, however, apply to a particular line of

railroad: a rail line does not fall within the definition of “person.” In a case

where a new entity takes over the railroad operations previously carried on by

another entity, the Board separately considers whether the new entity falls

within the definition of a carrier employer under the ERA and the RUIA. The

coverage ruling with respect to the status ofthe former operator ofthe rail line

does not automatically carry over and apply to the new operator.1

In this case, Pacific, a West Virginia corporation, has been an employer under

the RRA and the RUIA since 1898. The recent coverage investigation, however,

located evidence that Pacific merged into an Alaskan corporation named

PARN, Inc., in 1979. Since PARN, Inc. was the surviving corporation ofthat

merger, Pacific ceased to exist as a result ofthat merger. The Board therefore

finds that Pacific ceased to be an employer under the RRA and the RUIA

effective December 20, 1979.

The evidence also shows that PARN, Inc. was renamed the Pacific and Arctic

Railway and Navigation Company (“Pacific 2") on that same date and used the

assigned BA number of the original Pacific (“Pacific 1") to file reports ofservice

and compensation with the Board. Coverage under the RRA and the RUIA is

not voluntary or elective. Only this Board has authority to determine whether

a particular “person” falls within the definition of an “employer” under those

Acts based upon all the relevant facts and circumstances. The evidence in this

case indicates that Pacific 2 conducted railroad freight operations from

December 20, 1979 until it suspended operations on October 16, 1982. The

Board finds that Pacific 2 became a rail carrier employer under the RRA and

the RUIA effective December 20,1979, and remained an employer at least until

October 16, 1982. We must next address, however, the question ofwhether it

remained an employer after that date.

'See, for example, Board Coverage Decision (“B.C.D.”) No. 99-18, St. Louis Car 

Company d/b/a Cumbres & Toltec Scenic Railroad and B.C.D. No. 98-44, Golden Isles Terminal 

Railroad, Inc.
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Section 202.12 of our regulations offers some guidance in responding to this

question. Subparagraph (a) of that regulation provides that:

In determining whether a cessation of an

essential characteristic, such as control or service in

connection with railroad transportation, has occurred,

consideration will be given only to those events or

actions which evidence a final or complete cessation.

Mere temporary periods of inactivity or failure to

exercise functions or to operate equipment or facilities

will not necessarily result in a loss of employer status.

[20 CFR 202.12(a)],

When Pacific 2 resumed operations in 1988, it did so only as part of an

excursion railroad conducted with two affiliated Canadian companies. The

Board has held that railroad passenger excursion service which does not

operate as part of an interstate rail network does not fall within the definition

of an employer under the RRA and the RUIA. See, e.g., B.C.D. No. 99-18, St.

Louis Car Company, d/b/a Cumbres & Toltec Scenic Railroad, and the

decisions cited therein. The legal basis for this line of Board decisions is that a

tourist railroad which conducts only passenger excursion service and does not

connect with interstate transportation does not constitute an operation in

interstate commerce and therefore is not subject to the jurisdiction ofthe

Surface Transportation Board (formerly the Interstate Commerce

Commission).

In this case, the evidence indicates that Pacific 2 owns track and operates

railroad excursion service within the State of Alaska. Since, however, two of

the three routes operated by Pacific 2 together with its two Canadian affiliates

as part of the White Pass and Yukon Route Railroad extend into Canada, the

facts about this particular excursion service do not fit precisely into the

guidelines discussed in prior Board coverage decisions. Section 10501(a)(2)(F) 

of Title 49 gives to the Surface Transportation Board jurisdiction “only to

transportation in the United States between a place in . . . the United States and

a place in a foreign country.” Thus, in this case we must address the question

of whether the fact that the White Pass and Yukon Route Railroad crosses the

border into Canada should affect the status of Pacific 2 as an employer under

the RRA and the RUIA. For the reasons explained below, we find that the fact

that the excursion service in this case crosses the Alaskan border and

continues into Canada does not warrant a departure from prior Board coverage

decisions.
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In order to fall within the definition of a rail carrier employer under the RRA

and the RUIA, a railroad must be subject to the jurisdiction ofthe Surface

Transportation Board under part A ofsubpart IV of Title 49. Prior to enactment

of the ICC Termination Act of 1995 (Public Law 104-88), the former Interstate

Commerce Commission had jurisdiction over interstate railroad transportation.

The ICC Termination Act expressly provided that the Act made no changes in

the coverage of employees and employers by the RRA and the RUIA. See 49

U.S.C. § 10501(c)(3)(B). In other words, if an entity would have been ruled to be

a covered employer prior to enactment of the ICC Termination Act, nothing in

that Act would change the status ofthat entity with respect to its coverage

under the RRA and the RUIA. Decisions ofthe Interstate Commerce

Commission (ICC) that we have reviewed consistently ruled that the ICC did

not have jurisdiction over excursion railroad service. See ICC Finance Docket

No. 31024, The Durango & Silverton Narrow Gauge Railroad Company -

Petition for Declaratory Order or Exemption, 1988 ICC LEXIS 345, Nov. 21,

1988; ICC Finance Docket No. 31371, Allegany Central Railroad - Application

for a Modified Certificate of Public Convenience and Necessity, 1989 ICC

LEXIS 48, Feb. 23, 1989; ICC Finance Docket No. 31156, Napa Valley Wine

Train, Inc., Petition for Declaratory Order; 7 I.C.C. 2d 954, 1991 ICC LEXIS 195,

July 18, 1991; Maener-O’Hara Scenic Railway v. ICC. 692 F.2d 441 (6th Cir. 1982).

Factors cited in these decisions include the following considerations. (1) The

service was conducted solely within one state. (2) The service did not

physically interchange equipment for the through movement of passengers.

(3) The service did not through ticket passengers. (4) The entity marketed its

rail service as a local tourist excursion rather than as a conveyance for the

through movement of passengers.

Although we have not located any ICC or STB decision which dealt with an

excursion service that operated in both the United States and Canada, we do

not believe that either would find that it had jurisdiction over the excursion

service in which Pacific 2 participates. The rail transportation policy set out in

section 10101 of Title 49 clearly indicates that the STB (and formerly the ICC)

has as a primary purpose to ensure fair competition in the conduct of interstate

commerce by the railroad industry. Pacific 2 is not engaged in interstate

railroad transportation. It is engaged in tourism. The recent coverage

investigation revealed that in 1997, cruise ships accounted for 82% of White

Pass’s passengers, bus or airline package tours accounted for 5%, and

independent travelers made up the other 13%. The amount of one-way ticket

sales for the period from 1995 to date was less than one percent (0.62%).

The equipment owned and maintained by Pacific and its Canadian affiliates is

geared toward tourists. The White Pass owns and operates 20 narrow gauge
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diesel locomotives, a restored steam engine manufactured in 1947, and a

restored steam snow plow manufactured in 1899. White Pass owns 51 parlor

cars, many of which are restored vintage cars. The White Pass maintains rail

lines to the ship docks and provides dockside service for the convenience of

the cruise ship passengers. The White Pass has “people movers,” which are

modified golf carts, on the dock to transport passengers from the cruise ships

to the front of the dock.

White Pass’s train depot in Skagway includes a gift shop. Of the 120 employees

who worked for White Pass in 1997, 14 were gift shop personnel. White Pass

does not operate year-round, but only during the tourist season from May

through September. The nature of the business conducted by WTiite Pass is

illustrated by the fact that it was listed in the 26th Annual Steam Passenger

Service Directory, published in 1991 by Locomotive & Railway Preservation,

Ltd. for the Empire State Railway Museum. The title page of that volume

identifies the book as:

An illustrated directory listing tourist-railroad, trolley,

and railway-museum operations in the United States

and Canada with regularly scheduled or intermittent

passenger service. Also included are model and toytrain exhibits and live-steam railroads.

White Pass also has a web page (www.whitepassrailroad.com) which depicts it

as a tourist railroad. The web page includes links to scenic photographs, a

brochure, and “The Train Shoppe,” from which souvenir items may be

purchased directly or ordered through a toll free telephone number.

A new undertaking of the White Pass is the negotiation of a joint venture with a

company called “Lumberjack Sports International” (“LSI”). The business

name for the joint venture is The Great Alaskan Lumberjack Show (“TGALS”).

The show which TGALS plans to present beginning in April 2000 will be a

demonstration of what it is like to be a lumberjack. Although LSI is

conducting this type of show in several locations throughout the United States,

White Pass will only be involved in the Ketchikan operation. Mr. Curt Dodd,

Chief Financial Officer of White Pass, explained in a letter dated November 8,

1999, that:

White Pass wishes to become more active in this

particular aspect of the tourism market, which is

widely known as “shore excursions”. People want

something to do when they arrive at ports within
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Alaska, and when they disembark the ship they go

looking for it. We have proven that we can provide a 

first class “shore excursion” in Skagway with our

railway tour and so we are now attempting to apply our

expertise elsewhere within Southeast Alaska.

The evidence concerning the railroad operated by White Pass demonstrates

that Pacific 2 does not operate a railroad in interstate commerce. Black’s Law

Dictionary defines the term “commerce” as “The exchange of goods and

services, esp. on a large scale involving transportation between cities, states,

and nations” (Black’s Law Dictionary. Seventh Ed. 1999, p. 263). “Interstate

Commerce” is defined as:

Trade and other business activities between those

located in different states; esp., traffic in goods and

travel of people between states. For purposes ofthis

phrase, most statutory definitions include a territory of

the United States as a state. Some statutory

definitions of interstate commerce include commerce

between a foreign country and a state. (JcL, p. 263).

White Pass does not conduct railroad service which constitutes a part of

interstate commerce. It does not move goods, and it does not transport people

for the purpose of getting them from one place to another. White Pass provides

train rides specifically designed for entertainment. The Board finds that the

evidence overwhelmingly demonstrates that White Pass, of which Pacific 2 is a 

part, does not operate as a rail carrier in interstate commerce which would be

subject to the jurisdiction of the Surface Transportation Board. Rather, White

Pass operates a seasonal excursion railroad solely for amusement purposes.

The Board therefore finds that Pacific 2 is currently not an employer under the

RRA and the RUIA.

The final question which we must address is when Pacific 2 ceased to be an

employer under the RRA and the RUIA. As indicated earlier in this discussion,

Pacific 2 conducted railroad freight operations from December 1979 until it

suspended operations on October 16, 1982. Section 202.12(a) ofthe Board’s

regulations provides that mere temporary periods of inactivity will not necessarily

result in loss of employer status. In 1988, White Pass began to conduct its

excursion railroad service, thereby demonstrating that it had replaced its freight

operations with railroad excursion service. We find that Pacific 2 ceased to be a

rail carrier employer on April 30, 1988, which is the last day ofthe last month

prior to the beginning of the tourist season in May ofthat year.
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Conclusions

For the reasons discussed above, the Board makes the following findings:

1. The West Virginia corporation, Pacific and Arctic Railway and Navigation

Company (BA No. 2903), was a rail carrier employer under the RRA and

the RUIA from 1898 until it merged into the Alaskan corporation, PARN,

on December 20, 1979.

2. PARN, which changed its name to Pacific and Arctic Railway and

Navigation Company on December 20,1979, became a rail carrier

employer on December 20, 1979 and ceased to be a rail carrier employer

with the close of business on April 30,1988, the last day of the last month

before the beginning of its first season as an operator of the railroad

excursion service known as the White Pass and Yukon Route Railroad.

erome F. Kever