Employer Status Determination

Rail Tours, Inc.

This is the decision of the Railroad Retirement Board regarding the

status of Rail Tours, Inc. (RTI), as an employer under the Railroad

Retirement and Railroad Unemployment Insurance Acts.

RTI is a subchapter S corporation which is privately held by three

shareholders, Mr. John C. Larkin, Mr. Wade W. Larkin and Ms. Avis

K. Larkin. These three individuals act as officers of the

corporation and also own the Escanaba & Lake Superior Railroad

Comoany (E&LS), a carrier employer under the Acts. RTI has stated

that John C. Larkin is the company's only employee.

RTI was incorporated October 16, 1984. RTI, through John Larkin,

manages, supervises, and operates the E&LS. Among the duties

performed by the RTI for the E&LS under a management agreement are

the following:

— negotiate and execute any and all contracts and leases

relating to property owned by the E&LS;

— collect all freight rates, rental and other income due

the E&LS and deposit them into the railroad's account;

— contract and supervise the performance of any repairs and

alterations to the premises and property, purchase

supplies and equipment maintain and manage the premises

and property of the E&LS;

— negotiate any and all labor agreements, handle

arbitrations and grievances, and deal with any unions

which may be a party to a contract with the E&LS.

E&LS pays RTI a fee under the contract and in turn John Larkin is

compensated by RTI.

Section 1(a)(1) of the Railroad Retirement Act (RRA) (45 U.S.C.

§ 231(a)(1)), insofar as relevant here, defines a covered employer

as :

(i) any express company, sleeping-car company, and

carrier by railroad, subject to subchapter I of chapter

105 of Title 49;

(ii) any company which is directly or indirectly

owned or controlled by, or under common control with one

or more employers as defined in paragraph (i) of this

subdivision and which operates any equipment or facility

or performs any service (other than trucking service,

casual service, and the casual operation of equipment and

facilities) in connection with the transportation of

passengers or property by railroad * * *.

BCD 1995-14 BA # 9626
Rail Tours, Inc

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Section 1(a) and 1(b) of the Railroad Unemployment Insurance Act

(RUIA) (45 U.S.C. § § 351(a) and (b)) contain substantially similar

definitions, as does section 3231 of the Railroad Retirement Tax

Act (RRTA) (26 U.S.C. § 3231).

RTI is clearly not a carrier and, therefore, is not covered under

section 1(a)(1)(i) of the Railroad Retirement Act. However, the

officers of RTI are the same individuals who own EScLS; thus, RTI

and E&LS are under common control. Accordingly, the question

becomes whether RTI performs a service in connection with railroad

transportation.

It is the Board's opinion that the management services performed by

RTI for its affiliate, E&LS, constitute service in connection with

railroad transportation. Adams v. Railrcad Retirement Board. 214

F. 2d 534 (9th Cir. , 1954). Indeed, the sole purpose of RTI's

existence is to provide such services and as an economic entity RTI

and E&LS are the same operation.

Therefore, RTI is both under common control with a rail carrier and 

performing services in connection with railroad transportation.

Accordingly, it is the determination of the Board that RTI is and 

has been a covered employer under the Acts from the date of its

incorporation, October 16, 1984.