B.C.D. 15-02 February 13. 2015

EMPLOYER STATUS DETERMINATION

American Railroad Group Transportation Services, LLC (ARG Trans)

d/b/a ARG Trans

f/k/a Arizona Railroad Group

This is a determination ofthe Railroad Retirement Board concerning the continued

status ofAmerican Railroad Group Transportation Services, LLC d/b/a ARG Trans

(ARG Trans) 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.XRUIA). The status of ARG Trans under the Acts has previously been

considered. In B.C.D. 04-5 issued February 11, 2005, the Board found that

Arizona Railroad Group, LLC1 was not a covered entity under the Acts. The

Board found that Arizona Railroad Group, LLC was a holding company for two

covered subsidiaries and did not provide services to the railroad industry.

Subsequent to B.C.D. 04-5, additional information has been submitted to the

Board. On July 1, 2009, Arizona Railroad Group, LLC changed its name to 

American Railroad Group Transportation Services, LLC (ARG Trans) for the 

purpose of attracting additional clients outside of the Arizona geographical area. 

ARG Trans is a privately held corporation wholly owned by Scott and Maura

Parkinson. Mr. Scott Parkinson, the President and CEO of ARG Trans provided

the information regarding the formation, name change, and continuing operations

for ARG Trans. Mr. Parkinson reports that two new employees were hired to

perform management services for subsidiary covered railroad entities and the first

date of compensation of employees working for ARG Trans was February 1, 2013.

As found previously, ARG Trans is the parent company of Cochise Trails, a real 

estate developer and holding company and the parent company for Coos Bay Rail 

Link (CBR - BA#5745) and the San Pedro Operating Company d/b/a San Pedro &

Southwestern Railroad (SPSR - BA#4786). The two railroad subsidiaries have

been found to be railroad employers covered under the Acts2.

In Surface Transportation Board (STB) Finance Docket No. 35550, decided

September 9, 2011, ARG Trans filed a verified notice of exemption to operate

approximately 133 route miles of railroad line in Oregon owned by the Oregon

International Port ofCoos Bay. The rail line runs from an interchange with the

1 Arizona Railroad Group was the previous name of ARG Trans as discussed in the following

paragraph.

2 CBR found covered in B.C.D. 11-92, issued October 17, 2011. SPSR found covered in B.C.D.

04-3, issued February 2, 2004.
2

Union Pacific Railroad at Eugene, Oregon to the end of the track at Coquille,

Orgeon. ARG Trans, through CBR, will interchange with Union Pacific Railroad.

CBR is wholly owned by ARG Trans.

ARG Trans other subsidiary railroad, SPSR, operates 10 miles of track from an

interchange with the Union Pacific Railroad at Benson, Arizona to an interchange

with the Union Pacific Railroad at Willcox, Arizona. This line has been in

operation since the creation of ARG Trans as previously addressed. SPSR

interchanges with the Union Pacific Railroad.

According to documents provided, ARG Trans was formed as a holding company

for the SPSR and Cochise Trails real estate as described. Mr. Parkinson reports

that acquisition of CBR ultimately required changes to the status of ARG Trans.

ARG Trans reports that it has ceased to be merely a holding company and has 

hired two employees to directly administer and manage the subsidiary railroads.

The two employees were first compensated beginning on February 1, 2013. ARG

Trans and its subsidiaries derive 100% of the total business from interchange with

the Union Pacific Railroad and derive 90% of their revenue from Union Pacific

Railroad. ARG Trans and its subsidiaries will handle freight with revenues that

will not result in ARG Trans becoming a Class I or Class II rail carrier.

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 of subtitle 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 defiend 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 ***.

Section 1(a) and 1(b) of the Railroad Unemployment Insurance Act [RUIA (45

U.S.C. § 351)] contains essentially the same definition, as does section 3231 ofthe

Railroad Retirement Tax Act (26 U.S.C.§ 3231).
3

The Board recognizes that ARG Trans is seeking status as a railroad entity covered

under the Acts; however, the Board finds that established legal precedent and past

Board Coverage Decisions prevent such a finding for ARG Trans under the 

“common control” doctrine and the corporate organization present in the

relationship of the companies described by Mr. Parkinson. To qualify as an

employer under the Railroad Retirement Tax Act [RRTA (26 USC §§ 3201-3233)]

the two-prong test to find a railroad entity covered under the “common control”

doctrine is that the railroad entity must; (1) be either directly or indirectly owned or

controlled by one or more such carriers or under common control with the carrier

and (2) the railroad entity must perform service (other than trucking or casual

service) in connection with the transportation of passengers or property by railroad,

(see Union Pacific Corporation v. United States 5 F. 3d 523, 1993.) The Court in

Union Pacific further clarified “common control” by stating:

The term “under common control” does not usually apply to two companies

in a parent-subsidiary relationship. These words—“under common control”

- convey a meaning of mutual subordination to a controlling principal. A

company which controls another is not “under common control” with its

subsidiary. Rather two companies most naturally fit within the term “under

common control” when occupying parallel position as subsidiaries

controlled by a common parent. (Union Pacific at 525 and 526.)

The Board applied this standard to determine “common control” in numerous

coverage decisions since the holding in Union Pacific. Additionally, the Union

Pacific definition of “common control” was found to hold true regardless of

whether a railroad entity was a publicly held or privately held corporation in the 

recent United States Court of Appeals for the District of Columbia decision of

Indiana Boxcar Corporation v. Railroad Retirement Board (712 F.3d 590, 2013)3.

3 Indiana Boxcar applied the Union Pacific standard of “common control6 to Indiana Boxcar

Corporation and found it to not be under common control with its subsidiaries, even though

Indiana Boxcar was a privately held corporation where the owner was also owner and president

of each of Indiana Boxcar Corporation’s subsidiary railroads. The Court ruled that since the

Board found other railroad entities with closely held, publicly traded corporations not to be

under common control, the fact that Indiana Boxcar was a privately held corporation was not a

material distinction and a privately held corporation should be subject to the same common

control standard. The fact that Indiana Boxcar Corporation had employees performing

management duties was not addressed since the Union Pacific common control standard was

not met.
4

In the present case, ARG Trans argues that since it has directly hired two

employees to manage and have direct supervision over railroad operations at the

subsidiary railroads, that ARG Trans should now be found to be a railroad

employer covered under the Acts. The Board finds that ARG Trans circumstances

to be essentially the same as those found in the Indiana Boxcar Corporation case;

wherein the management functions of certain employees are immaterial to the

common control analysis. Just like ARG Trans, Indiana Boxcar Corporation was 

shown to be a privately held parent corporation with subsidiary railroad entities

covered under the Acts. The parent company and the subsidiary railroad

employers were all held and owned by the same individual. Indiana Boxcar

Corporation also performed direct management services for its subsidiaries. The

Board originally found Indiana Boxcar Corporation to be a covered railroad

employer because it was under common control with its subsidiary entities and that

the management services it provided to its subsidiaries was considered service in

connection with railroad transportation. As indicated previously, the holding ofthe

Court directed that Indiana Boxcar was not under common control with its

affiliates, and the issue ofmanagement or supervision services was not material.

ARG Trans has the same relationship with its subsidiaries as Indiana Boxcar

Corporation has with its subsidiaries because ARG Trans is the corporate parent of

two subsidiary railroads covered under the Acts and all entities are owned by the

same limited group of people4. As established by the Court’s holding in Indiana

Boxcar, a corporate parent cannot be found to be under common control with its

subsidiaries, regardless of any report of management services being provided by 

employees of the parent company because the common control analysis does not

satisfy the first prong of common control under the Union Pacific standard.

Accordingly, the Board must find that ARG Trans is not under common control

with its affiliates and the Board will not proceed to address the management

services since the first prong ofthe common control test is not met.

The evidence of record establishes that even though ARG Trans has hired new

employees under its own name to manage its subsidiary railroads, ARG Trans

cannot be held to be under common control with its subsidiary railroads as

discussed. Accordingly, it is determined that American Railway Group

Transportation Services, LLC, is not an employer within the meaning ofsection

4 Information presented to the Board indicates that ARG Trans, SPSR, CBR, and Cochise Trails

are all owned and/or managed by Scott Parkinson, Maura Parkinson, or David Parkinson.
5

l(a)(l)(i) of the Railroad Retirement Act and its corresponding provision of the

Railroad Unemployment Insurance.

Additionally, the Board finds that it has not previously addressed the name change

for ARG Trans referenced at the beginning ofthis decision. In the initial coverage

determination (B.C.D. 04-5, February 11, 2004) ARG Trans was originally named

Arizona Railroad Group, LLC. Mr. Parkinson reported that On July 1, 2009,

Arizona Railroad Group, LLC changed its name to American Railroad Group

Transportation Services, LLC (ARG Trans) for the purpose of attracting additional

clients outside of the Arizona geographical area. Mr. Parkinson did not report any

additional changes to ARG Trans not already addressed in this decision. The

Board finds that evidence of record indicates that there are no substantial changes

to the status of American Railroad Group Transportation Service, LLC d/b/a ARG

Trans f/k/a Arizona Railroad Group. Records of the Board will be changed to 

reflect the new name. The Board finds that no changes need to be made to the

records of the subsidiary railroads (SPSR and CBR) covered under the Acts based

upon the name change to the parent company.

Walter A. Barrows

Steven J. Anthony