B.C.D. 01-18

FEB 0 9 2001

EMPLOYER STATUS DETERMINATION

IRW Railway, LLC (IRWR)

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

IRW Railway, LLC (IRWR) as an employer under the Railroad Retirement Act (45

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

U.S.C. §351 et sea.) (RUIA).

In Surface Transportation Board (STB) Finance Docket No. 33919, decided on

September 8, 2000, IRWR filed a notice of exemption to acquire the West Tennessee

Railroad Corporation (BA No. 2568) (WTR) fine from the Gibson County Railroad

Authority (GCRA). The WTR line extends from milepost 394.5, north of Carol,

Tennessee, to milepost 431.31, at Kenton, Tennessee, a distance of 36.8 miles.

According to the STB decision, IRW'R planned to acquire ownership of the title to

the lands and track of the WTR fine.

According to a footnote in the STB decision in Finance Docket No 33919, the rail

operation obligations of GCRA were to be transferred to IRWR and WTR would

continue to operate the rail fine. This notice of exemption also related to Finance

Docket No. 33918 in which Henry G. Hohorst, Bruce Hohorst, Joan D. Hohorst, and

Anthony M. Linn sought an exemption to continue in control of IRWR after IRWR 

acquired the WTR line.

The STB decision in Finance Docket No. 33918 noted that these same four

individuals own a controlling interest in South Central Rail Group, Inc., which owns 

the WTR. The same individuals also hold a controlling interest in the Tennken

Railroad Company (BA No. 3594).

Information regarding IRWR was furnished by Mr. Bruce Hohorst, President for 

WTR. Mr. Hohorst stated that IRWR is a limited liability corporation and as such

does not have a CEO. IRWR is currently owned by himself with 83% of the shares,

Anthony Linn with 16%, and Henry Hohorst holding 1% of the outstanding shares.

According to Mr. Hohorst, IRWR was formed August 14, 2000 and reportedly has no

employees. Mr. Hohorst stated that WTR continues to operate the rail fine exactly

as it did when the rail fine was owned by the GCRA. WTR now pays IRWR for use

of the rail fine, according to the information submitted by Mr. Hohorst. IRWR

interchanges with CSXT and Norfolk Southern.

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 ofsubtitle IV of title 49, United States

Code;

BA# 5581
-2-

IRW Railway, LLC (IRWR)

Sections l(a) and (l)(b) of the Railroad Unemployment Insurance Act (45 U.S.C.

§§ 351(a) and (b)) contain substantially similar definitions, as does section 3231 of

the Railroad Retirement Tax Act (26 U.S.C § 3231).

In its decision regarding the employer status of Railroad Ventures, Inc. (B.C.D. (DO47), the Board held that an entity that has STB authority to operate a rail line, but

leases or contracts with another to operate the fine in question, is covered under the

Acts administered by the Board unless the Board determines that the entity is not a

carrier. The Board enunciated a three-part test in B.C.D. 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 fine is a carrier under the Railroad

Retirement Act unless the Board finds that all three of the following factors exist:

l) 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

fine; and 3) the operator of the rail line is already covered or would be found to be 

covered under the Acts administered by the Board.

Applying this test to the facts of IRWR, the Board determines that IRWR is a 

covered rail carrier employer under the Acts. IRWR currently conducts no common

carrier operations on its own, but contracts its trackage for use by WTR. Mr.

Hohorst stated that IRWR derives its income from the leasing of trackage rights.

The evidence shows that IRWR is under common ownership with the WTR and with

the Tennken Railroad Company. In our decision in B.C.D. No. 00-47, we noted that

an entity that is affiliated through common ownership with other for profit carriers

is presumed to have as a primary business purpose to profit from the ownership of

the fine. Accordingly, we do not have to reach the other two considerations, since all 

three need to be present to remain outside the coverage of the RRA and the RUIA.

For the reasons explained above, the Board finds that IRWR became a rail carrier

employer under section l(a)(l)(i) of the RRA and the corresponding sections of the

RUIA beginning August 14, 2000, the date it was formed.

Cherryl T. Thomas