B.C.D. 00-30

EMPLOYER STATUS DETERMINATION

Mount Hood Railway Company AUG 0 7 2000

Rails End Cafe, LLC

This is the determination ofthe Railroad Retirement Board concerning the

status of Rails End Cafe, LLC, as an employer under the Railroad Retirement

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

IJ.S.C. S351 et sea.).

Mount Hood is a closely held Oregon corporation which was organized in 1987

to purchase a 22-mile short line from the Union Pacific Railroad. It was held to

be an employer under the Acts effective October 16,1987 (B.A. No. 3623). The

line runs from Hood River, Oregon, to Parkdale, Oregon. The railroad owns

nearly all of its real property and equipment, and, except for larger projects,

maintains all of its own equipment and trackage. The railroad conducts yearround freight operations in addition to a seasonal passenger schedule which

operates from April through December. Mount Hood runs both scenic

excursions, aboard vintage Pullman cars, and an elegant Brunch and Dinner

Train that has lounge and kitchen cars. Mount Hood carries approximately

50,000 passengers each year, and freight operations handle between 200 and

300 cars per year.

The railroad recently acquired Rails End Cafe, LLC, a small cafe located at its

Parkdale terminus in order to keep the cafe open for its own passengers and for

the local tourist traffic. In addition, the cafe will eventually serve as the

primary caterer for the railroad’s passenger operations. In this capacity, it

would take over many ofthe food service needs that the railroad currently

contracts out, such as barbeques, box lunches, parties, and a Brunch and

Dinner Train food service. The cafe has been open under various ownerships,

nearly continuously, since the late 1960s. It is a public restaurant, open during

hours when the train is not present, and restaurant and catering personnel

have nothing to do with the operation of the rail line. It is projected that up to

55 percent of the total revenues of the cafe will be attributable to serving

tourists, local residents, and local businesses, and to catering contracts. The

balance of its revenues will be attributable to the provision of food service to

customers on Mount Hood’s excursion railway.

The cafe is not a carrier employer within the meaning ofsection l(a)(l)(i) of the

Railroad Retirement Act. Accordingly, we turn to section l(a)(l)(ii) in order to

determine whether it is an employer within the meaning of that section. Under

section l(a)(l)(ii), a company is a covered employer if it meets both of two

criteria: ifit provides "service in connection with" rail transportation and if it is

owned by or under common control with a rail carrier employer. Ifit fails to

meet either criterion, it is not a covered employer within section l(a)(l)(ii).
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Mount Hood Railway Company

Rails End Cafe, LLC

The cafe is a limited liability corporation owned by Mount Hood.

Accordingly, it is owned by a rail carrier employer. Mount Hood is a

covered employer by reason of its freight service; if Mount Hood were

engaged solely in the scenic excursion passenger business, it would not

be an employer under the Acts. Rails End Cafe provides no service in

connection with Mount Hood’s freight service, the only service it

provides to Mount Hood is in connection with the scenic excursion

service. It is the opinion of the Board that since the only service

provided by the Cafe to Mount Hood is in connection with that portion of

Mount Hood’s rail operation which, if not associated with Mount Hood’s

freight operations, would not be covered under the RRA and RUIA, it is

not performing a service in connection with rail transportation within the

meaning ofsection l(a)(l)(ii) of the Railroad Retirement Act and section

1(a) ofthe Railroad Unemployment Insurance Act.