B.C.D. 10-41

EMPLOYER STATUS DETERMINATION

Keolis Rail Services Virginia, LLC MAY 2 8 2010

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

Keolis Rail Services Virginia, LLC (KRSV) as an employer under the Railroad

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

Act (45 U.S.C. §351 et sea.).

On December 21, 2009, Virginia Railway Express (VRE), a commuter rail service

which connects the northern Virginia suburbs to Washington D.C.’s Union Station'

via two lines (the Fredericksburg Line from Fredericksburg, Virginia and the

Manassas Line from Bristow, Virginia) awarded a five-year contract to Keolis Rail

Services America, LLC (KRSA) to oversee commuter-rail operations and

maintenance services* 2. VRE's operations/maintenance contract was previously

with Amtrak, an employer under the Acts (B.A. No. 8301).

Information regarding KRSA was provided by Steve H. Townsend, President of

KRSA and Mr. Colin J. Byrne of KRSA. Additional information was provided in a

letter dated March 25, 2010 from Attorney Ronald Lane. According to Mr.

Townsend, KRSA, a wholly-owned subsidiary of Keolis America Inc.3, was

incorporated on August 10, 2009, to provide commuter rail services throughout

the United States. Mr. Lane explained that KRSA entered into an Operations and

Maintenance contract on December 21, 2009 to operate VRE service beginning

on June 28, 2010. Upon being awarded the VRE contract, KRSA formed Keolis Rail

Services Virginia, LLC (KRSV) to perform the VRE contract. KRSV was formed on

January 4, 2010, and is a wholly-owned subsidiary of KRSA.

According to Mr. Lane, KRSV began non-operating activity on January 4, 2010,

and rail operations will commence June 28, 2010. Two management employees

were first compensated on January 4, 2010, and operating employees will be first

compensated June 28, 20104. Under the contract with VRE, KRSV will provide train

operations, locomotive and railcar equipment maintenance and repair, yard 

operations, and warehouse management. Mr. Lane explained that KRSV will

perform train and yard operations with its own employees, and locomotive and

railcar repair and maintenance, and warehouse management will continue to be

subcontracted.

' VRE is not an employer covered under the Acts.

2 The Northern Virginia Transportation Commission and Potomac and Rappahannock Transportation 

Commission oversee VRE, and gave final approval of the change.

3 Keolis America Inc. is a wholly-owned subsidiary of Keolis SA (Keolis). According to Mr. Townsend, Keolis "is

a leading passenger transportation operator in seven European countries and Canada. With annual revenue

of over $4.4 billion, Keolis is the largest private transportation operator in France".

4 Mr. Lane noted that some engineers not currently working in the service may be trained in advance of

June 28, 2010.

BA # 9411
2

Under the Operations and Maintenance contract entered into by VRE and KRSV

there is a transition period prior to June 28, 2010, during which KRSV must establish

policies, develop software, hire and train a workforce, and perform other startup

activities. During this transition period, VRE service will continue to be performed

by Amtrak and mechanical operations will continue to be performed by Amtrak's

subcontractor, RailPlan International (RPI). KRSV will take over operations on June

28, 2010, and on that day train crews employed by KRSV (some of whom may be

former Amtrak employees currently performing that service) will operate the

trains; mechanical work will continue to be performed by RPI, but as a

subcontractor to KRSV5, rather than as subcontractor to Amtrak. Operating

employees of KRSV will perform work on right-of-way owned by Norfolk Southern,

CSX Transportation Company, and Amtrak.

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;

Sections 1 (a) and 1 (b) of the Railroad Unemployment Insurance Act (45 U.S.C. §§

351 (a) and (b)) contain substantially the same definition, as does section 3231 of

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

The Surface Transportation Board has jurisdiction over rail transportation in the

United States between a place in a State and a place in the same or another

State as part of the interstate rail network. See 49 U.S.C. 10501 (a)(2)(A). The VRE

commuter rail system is comprised of 2 lines of railroad which are part of the 

interstate rail network. In addition to the commuter service provided between

Virginia and Washington, D.C. Amtrak provides intercity rail passenger service

over the same lines6.

In light of the evidence as summarized above, it is determined that KRSV became

an employer within the meaning of section 1 (a) (1)(i) of the Railroad Retirement 

Act (45 U.S.C. § 231 (a)(l)(i)) and the corresponding provision of the Railroad

Unemployment Insurance Act as of January 4, 2010, the date it first compensated

employees for the purpose of setting up its rail operation. Cf. Rev Ruling 82-100,

5 The Operations and Maintenance Agreement was executed on December 18, 2009.

6 Amtrak service to Richmond. Virginia runs over the Fredericksburg Line, and Amtrak service to Atlanta,

Georgia and New Orleans, Louisiana runs over the Manassas Line.
3

1982-1 C.B. 155, wherein the Internal Revenue Service ruled that a railroad

becomes an employer subject to taxes under the Railroad Retirement Tax Act

when the company first hires employees to perform functions directly related to its

carrier operations.

Michael S. Schwartz

V. M. Speakman, Jr.

(Jerome F. Kever