B.C.D. 02-14 Notice No. 02-16

EMPLOYER STATUS DETERMINATION -

Decision on Reconsideration

Central Illinois Railroad Company

FEB 1 3 2002

This is the determination on reconsideration of the Railroad Retirement 

Board concerning the status of Central Illinois Railroad Company, as an

employer under the Railroad Retirement Act (45 U.S.C. § 231 et seep)

and the Railroad Unemployment Insurance Act (45 U.S.C. § 351 et 

seq.). Central Illinois was held to be an employer effective May 1, 2001,

by the Board in a decision dated September 20, 2001 (B.C.D. No. 01-73;

B.A. No. 4785).

In that decision, it was stated that in Surface Transportation Board

Finance Docket No. 34035, Central Illinois filed a notice of exemption to

lease and operate approximately 25 miles of rail line owned by Union 

Pacific Railroad Company and the Canadian Pacific Rail System.

Central Illinois’ operations involve switching freight cars to and from

the facilities of shippers and receivers in Centex Industrial Park, Elk 

Grove Village, Illinois, as agent for Union Pacific. Central Illinois is

compensated for its services by a monthly fee paid by Union Pacific.

Central Illinois objects that the Board’s decision did not note that there

is no interchange agreement between Central Illinois and Union Pacific

and that, consequently, all shipments that Central Illinois “transports

to or from Centex Industrial Park remain in [Union Pacific’s] account

during such transportation.” Central Illinois argues that it acts as a

contract switching agent for Union Pacific, not as a common carrier

terminal company or switching company; that it does not quote rates,

bill shippers, collect charges, receive a division of the total freight 

charges from Union Pacific, or bear the cost of maintenance of the 

trackage over which it operates, and that it does not hold itself out to

the shipping public as a rail carrier. Central Illinois contends that its
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Central Illinois Railroad Company

only customer is Union Pacific, and analogizes its situation to that of a

private carrier, as described in the Board’s decision regarding GWI

Switching, B.C.D. 94-113.

Initially, as pointed out in the Board’s original decision, the definition

section of Part A of Subtitle IV of Title 49 of the United States Code

defines “railroad” to include a switch, spur, track, terminal, or terminal

facility as well as a freight depot, yard, and ground used or necessary

for transportation (49 U.S.C. § 10102(6)(C)). That Act also provides

that the Surface Transportation Board has jurisdiction over 

“transportation in the United States between a place in - (A) a State

and a place in the same or another State as part of the interstate rail

network” (49 U.S.C. § 10501(a)(2)). As stated in the Board’s original

decision, a terminal or switching company is a common carrier rather

than a private carrier if it holds itself out to be one, acts in that

capacity, and is dealt with in that capacity by railroads in general. U.S.

v. California, 297 U.S. 175 (1936). The Board has held switching

railroads to be covered employers under the Railroad Retirement and

Railroad Unemployment Insurance Acts where they act in the capacity

of a common carrier subject to the jurisdiction of the Surface

Transportation Board.

The Board does not agree with Central Illinois’ contention that it is in

effect a private carrier. As pointed out by the Board in its original

decision, Central Illinois conducts its operations as a liaison between

Union Pacific and shippers and receivers. Even though its contract is

with Union Pacific only, and it is compensated by Union Pacific (which 

is compensated by the shippers and receivers), by transporting freight

to and from the Union Pacific, it is engaged in interstate commerce. In

one sense, it provides services only to the company with which it has

contracted; however, that company is a carrier in interstate commerce
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Central Illinois Railroad Company

and Central Illinois connects that company, Union Pacific, with a

number of shippers and receivers.

The Board believes that analogy with a private carrier is misplaced. As

the Board stated in its original decision, where switching operations are

conducted by a plant owner for itself, these operations do not result in

the plant owner being a covered employer under the Acts. In other

words, where a manufacturer ships its goods to a carrier, that activity 

does not result in the manufacturer being a covered employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts.

Analogously, where a company contracts with a manufacturer to ship 

the manufacturer’s goods to a carrier, that activity will not result in the

company being a covered employer. In both cases, the shipper is a

private carrier.

In the instant case, however, the company with which Central Illinois 

has contracted is not a manufacturer (and Central Illinois is not itself a

manufacturer). Rather, Central Illinois contracts with a major rail

carrier, and Central Illinois connects that carrier to shippers and

receivers as directed by the carrier.

Moreover, with respect to Central Illinois’ reliance on B.C.D. No. 94­

113, the Board must point out that that decision was reversed on

reconsideration of the status of GWI Switching Services, L.P. after GWI

Switching Services, L.P. had informed the agency that the original

coverage decision contained a factual error in that the company does

hold itself out as a common carrier. See B.C.D. No. 96-19. Since the 

situation described in B.C.D. No. 94-113 was not entirely factually

accurate, the Board finds that it would be inappropriate to compare the

facts described therein to the case of Central Illinois Railroad Company.
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Central Illinois Railroad Company

The Board therefore affirms its initial decision that Central Illinois

became a rail carrier employer within the definition set out in section

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

the corresponding provision of the Railroad Unemployment Insurance

Act effective May 1, 2001, the date as of which it commenced 

operations.

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Cherryl/T. Thomas