EMPLOYER STATUS DETERMINATION

SLA Property Management, Ltd. (SLAM)

NOV 0 7 2000

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

of SLA Property Management, Ltd. (SLAM) as an employer under the Railroad

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

Insurance Act (45 U.S.C. § 351 et seq.) (RUIA).

Mrs. Teresa V. Foltz, Secretary/Treasurer of SLAM, provided information

regarding SLAM. According to Mrs. Foltz, SLAM is a limited partnership

which owns and maintains the 38 miles of land and track on which the Sisseton

Millbank Railroad (SMRR) (B. A. No. 3661), a Class III regional railroad under

the Acts since July 1, 1989, provides freight service. According to Mrs. Foltz,

“SMRR owns the engines, hires the engineers and provides service to the four

elevators along the SLA track.” Mrs. Foltz stated that the Farmers Coop

Elevator, Ralph Schmidt, John Wenschlag, Art Weinkauf, S and H Cattle

Company, Steve Hannasch, Jason Hannasch and Ted Horning own shares in

both the SMRR and SLAM. Of a total of 3,780 outstanding shares of

SMRR and the partnership interest in SLAM, Farmers Coop Elevator of

Sisseton owns 1,380 shares of SMRR and 48.2761 percent of SLAM;

Ralph Schmidt owns 60 shares of SMRR and 1.7241 percent of SLAM;

John Wenschlag owns 720 shares of SMRR and 20.6896 percent of

SLAM; Art Weinkauf owns 60 shares of SMRR and 1.7241 percent of

SLAM; S and H Cattle Company owns 300 shares of SMRR and 8.6207

percent of SLAM; Steve Hannasch owns 180 shares of SMRR and 1.7241

percent of SLAM; Jason Hannasch owns 180 shares of SMRR and 1.7241

percent of SLAM; and Ted Horning owns 120 shares of SMRR and

3.4483 percent of SLAM (for totals of 3.000 shares of SMRR and 87.9311

percent of SLAM).

Gary Hansen represents the Farmers Coop Elevator on the SLAM Board of

Directors, according to Mrs. Foltz. Mrs. Foltz stated that the use of the track is 

leased to SMRR for 50 % of the freight charge per car. According to the SLAM

Limited Partnership Agreement, SLAM was formed for the sole purpose of

acquiring all of the SMRR branch line. Additional information obtained from a

coverage audit reveals that SLAM owns no facilities, does not perform work for

any other company and receives 100 percent of its revenue from SMRR freight

car revenue. Mrs. Foltz stated that SLAM was formed on March 30, 1982.

SMRR interchanges with the Soo Line (B. A. No. 1606) and the Burlington

Northern Santa Fe Railroad (B. A. No. 1621).

BA# 9631
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SLA Property Management, Ltd. (SLAM)

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 ofthe Surface

Transportation Board under Part A ofsubtitle IV of title 49, United States

Code;

(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 (except trucking service, casual service,

and the casual operation of equipment or facilities) in connection with

the transportation of passengers or property by railroad***.

Sections 1(a) and 1(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).

The information summarized above indicates that SLAM is not a rail carrier

employer under the definition of employer in subparagraph (i) quoted above.

This conclusion, however, leaves open the question as to whether SLAM is an

employer under the definition in subparagraph (ii), commonly referred to as

the “affiliate definition.”

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

two criteria: if it is owned by or under common control with a rail carrier

employer and if it provides “service in connection with” railroad transportation.

If it fails to meet either condition, it is not a covered employer within section

1(a)(1)(h).

From the information summarized above, it appears that SLAM is an employer

under the definition in subparagraph (ii), as explained in more detail below.

Mrs. Foltz stated that both SLAM and SMRR are owned and managed by the

same shareholders. Additionally, SLAM derives 100 percent of its operating

revenue from the SMRR, a covered class III rail carrier employer under the

Acts. Accordingly, the Board finds that SLAM is under common control with

the SMRR.
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SLA Property Management, Ltd. (SLAM)

Section 202.7 of the Board’s regulations (20 CFR 202.7) defines service in

connection with railroad transportation as follows:

The service rendered or the operation of equipment or facilities by

persons or companies owned or controlled by or under common control

with a carrier is in connection with the transportation of passengers or

property by railroad, or the receipt, delivery, elevation, transfer in transit,

refrigeration or icing, storage, or handling of property transported by

railroad, ifsuch service or operation is reasonably directly related,

functionally or economically, to the performance of obligations which a

company or person or companies or persons have undertaken as a

common carrier by railroad, or to the receipt, delivery, elevation, transfer

in transit, refrigeration or icing, storage, or handling of property

transported by railroad.

According to Mrs. Foltz, SLAM owns and maintains the track on which SMRR

performs freight service. Since a rail carrier cannot operate a train without

track on which to run and the maintenance provided therefore, the Board finds

that SLAM is providing a service in connection with railroad transportation.

The information summarized above indicates that SLAM is under common

control with and performing a service in connection with railroad

transportation for SMRR. Accordingly, it is determined that SLA Property

Management, Ltd. became an employer within the meaning ofsection l(a)(l)(ii)

of the Railroad Retirement Act [(45 U.S.C. §23l(a)(l)(ii)] and the corresponding

provision of the Railroad Unemployment Insurance Act effective July 1, 1989,

the date on which SMRR, the rail carrier with which SIAM is under

common control and for which SLAM performs services, became an

employer under those Acts.

V. M. Speakman, Jr.