B.C.D. 01-84 DEC 0 4 2001

EMPLOYER STATUS DETERMINATION

Buffalo Ridge Regional Railroad Authority

This is the determination of the Railroad Retirement Board concerning

the status of Buffalo Ridge Regional Railroad Authority (BRRRA) 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 seq.) (RUIA).

Initially, Nobles Rock Railroad, Inc. (NRRR) (B.A. No. 2650) provided

rail operations over a rail line owned by Buffalo Ridge Regional

Railroad Authority. The rail line is between milepost 0.0, at or near

Agate, Minnesota, and milepost 41.44, at or near Manley, Minnesota, a

distance of approximately 41.44 miles. However, BRRRA terminated

NRRR’s operation lease and NRRR ceased rail operations on July 23,

2000. In Surface Transportation Board (STB) Finance Docket No.

33925, decided December 14, 2000, BRRRA filed a verified notice of

exemption to operate its rail line. In a decision dated August 27, 2000,

we held that effective with the close of business on July 23, 2000, 

NRRR ceased being a covered employer under the Railroad Retirement

Act and the Railroad Unemployment Insurance Act.

Information regarding BRRRA was provided by Mr. Donald R.

Klosterbuer, Executive Secretary of BRRRA. According to Mr.

Klosterbuer, BRRRA is a political subdivision formed pursuant to

Minnesota Statues Chapter 398A. Mr. Klosterbuer stated that BRRRA

was formed primarily for the purpose of acquiring a railroad line that

was about to be abandoned and to own the line for the sole purpose of

leasing the line to different rail operators. In 1988, BRRRA acquired

the rail line from Chicago Northwestern (CNW) prior to the date CNW

abandoned the rail line. Mr. Klosterbuer stated that since the date

BRRRA acquired the rail line, the line has historically been leased to 

operators who were responsible for the operations of the line.

Mr. Klosterbuer stated that BRRRA, however, began rail operations on

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Buffalo Ridge Regional Railroad Authority

July 24, 2000 because its previous operator, NRRR, was unable to

provide continued service of BRRRA’s rail line. However, on

November 27, 2000, Minnesota Southern Railway, Inc. began rail

operations over BRRRA’s rail line.1 Mr. Klosterbuer also stated that

BRRRA leased the locomotives and equipment during the period it

operated its rail line.

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 Transpiration Board under Part A of subtitle IV of title

49, United States Code;

Section 1 of the RUIA contains essentially the same definition, as does 

section 3231 of the Railroad Retirement Tax Act.

The evidence of record establishes that beginning July 24, 2000,

BRRRA became a rail carrier operating in interstate commerce.

Accordingly, it is determined that Buffalo Ridge Regional Railroad

Authority became an employer within the meaning of section 1 (a)(1)(i)

of the Railroad Retirement Act and the corresponding provision of the

Railroad Unemployment Insurance Act effective July 24, 2000.

In its decision on reconsideration of the employer status of Railroad

Ventures, Inc. (B.C.D. 00-47), the Board held that an entity that has

1 On August 30, 2001, the Board held that Minnesota Southern Railway, Inc became an

employer within the meaning of section l(a)(l)(i) ofthe Railroad Retirement Act (45 U.S.C.

§ 231(a)(l)(i)) and the corresponding provision of the Railroad Unemployment Insurance Act

effective November 27, 2000, the date on which it commenced operations.
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Buffalo Ridge Regional Railroad Authority

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 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

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 to be covered under the Acts administered by the Board.

Applying this test to the facts of BRRRA, the Board determines that

effective November 27, 2000, BRRRA ceased to be a covered employer

under the Acts. The evidence of record shows that BRRRA is a political

authority and is controlled by the counties of Rock and Nobles, political

subdivisions of the State of Minnesota. The rail line in question was

slated for abandonment by Chicago Northwestern prior to its

acquisition by BRRRA. BRRRA acquired the rail line to preserve the

rail line for future use by other carriers. Based on these facts, we find

that BRRRA does not have as a primary business purpose to profit from 

railroad activities. With respect to the second part of the Railroad

Ventures test, BRRRA only provided rail service during the period

between July 24, 2000 and November 27, 2000, because its previous

carrier, Nobles-Rock, was insolvent and was no longer able to service

BRRRA’s rail line. Because BRRRA had to provide continuous service

along its line, BRRRA leased the equipment used to operate the line to 

provide rail service. However, once BRRRA entered into a lease and

operating agreement with Minnesota Southern Railway, BRRRA ceased

all rail operations effective November 27, 2000. Turning to the third of
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Buffalo Ridge Regional Railroad Authority

the criteria, the record shows that Minnesota Southern Railway, a

covered rail carrier employer, conducts railroad operations over the

line. The Board therefore finds that effective November 27, 2000, 

BRRRA ceased to be a carrier under the test set out in our Railroad

Ventures decision.

CherrywT. Thomas

V. M. Speakman, Jr.