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August 26,2013 BCD 13-21 EMPLOYER STATUS

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August 26,2013 BCD 13-21 EMPLOYER STATUS B.C.D. 13-21 August 26,2013 EMPLOYER STATUS DETERMINATION Woodland Rail, LLC (Woodland) This is a determination of the Railroad Retirement Board concerning the status of Woodland Rail, LLC (Woodland) 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). The status of Woodland under the Acts has not previously been considered. Woodland is wholly owned by Woodland Pulp, LLC, which is a non-carrier. Mr. James E. Howard, an attorney representing Woodland, provided information on Woodland’s operations and corporate structure in a response dated June 6, 2012 to an Audit and Compliance questionnaire and provided copies of the Surface Transportation Board (STB) decisions regarding Woodland’s operations. Mr. Howard explained that Woodland would not operate the rail line it was acquiring but would acquire the rail line from Maine Central Railroad Co. (MEC - BA# 1107) and lease the line to Eastern Maine Railway Co. (EMR - BA# 2128). In a separate agreement, EMR will maintain and dispatch the line. Woodland’s corporate office is in Baileyville, Maine. The STB in Finance Docket Nos. 35628 and 35629 (decided June 1, 2012), decided in favor of Woodland’s verified notice of exemption to acquire and operate a rail line known as the Calais Industrial Track from Maine Central Railroad Co. (MEC). The line is approximately 11.83 track miles in length. Approximately 6.75 miles are located in Maine and approximately 5.08 miles are located in New Brunswick, Canada. Woodland acknowledged that the STB exemption only applies to the portion of the line within the United States. The STB also granted limited trackage rights to EMR over the portion of the line in the United States. Woodland (through EMR) will directly serve a pulp mill owned by Woodland Pulp, LLC (Woodland’s parent company) in Baileyville, Maine. Woodland (through EMR) will interchange with the New Brunswick Southern Railway. Woodland does not have any employees and does not intend to have any employees. Woodland Pulp is the only rail customer served by the line. Woodland Rail entered into a purchase and sale transaction with MEC to acquire ownership of the line. As a result of the transaction, Woodland will be the owner of the line; however, rail service will be provided to Woodland Pulp by EMR, 2 which is a covered employer under the Acts, pursuant to trackage rights that Woodland has granted to EMR. Woodland does not anticipate conducting any rail operations. Two separate purchase agreements were utilized - one pertaining to the portion of the line in the United States and one pertaining to the portion of the line in Canada. Woodland does not have a chief executive officer and as a Delaware limited liability company, it is managed by a board of 4 managers. Section l(a)(l)(i) of the Railroad Retirement Act (45 U.S.C. § 23l(a)(l)(i)), insofar as is 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; Section 1 of the RUIA (45 U.S.C. § 351) contains essentially the same definition, as does section 3231 of the Railroad Retirement Tax Act (26 U.S.C.§ 3231). The evidence of record shows that the STB found Woodland to have both acquisition and operating authority, but does not conduct railroad operations over its line. In its decision on reconsideration of the status of Railroad Ventures. Inc. (B.C.D. 00-47), the Board held that an entity that has 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. An entity is not a carrier under the Railroad Retirement Act if 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. 3. The operator of the rail line is already covered or would be found covered under the Acts administered by the Board. In the case presented, Woodland Rail acquired the line to serve only one customer - which is the parent company, Woodland Pulp. Woodland Rail was formed by Woodland Pulp for the exclusive purpose of acquiring title to the line of rail that will actually be operated by EMR, which is a covered employer. Thus, Woodland 3 Pulp formed Woodland Rail not to profit from operating a rail line but to preserve rail access. Even, if Woodland Rail actually conducted rail operations, past decisions of the Board would hold them to be a private carrier since the only customer is Woodland’s parent company. As all Railroad Venture factors do exist, the Board finds that Woodland is functioning as a private carrier, and is not a rail carrier employer under the Acts administered by the Board..
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