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Memorandum SEP 13 1988 L-8 8-98- to Director of Compensation and Certification

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Memorandum SEP 13 1988 L-8 8-98- to Director of Compensation and Certification UNITED STATES GOVERNMENT RAILROAD RETIREMENT BOARD Memorandum SEP 13 1988 L-8 8-98- TO Director of Compensation and Certification FROM Deputy General Counsel SUBJECT: Marine Atlantic, Incorporated Employer Status This is in reply to your request of April 26, 1988, for my opinion as to the status of Marine Atlantic, Incorporated, as an employer under the Railroad Retirement and Railroad Unemployment Insurance Acts. The status of this company has not previously been considered. The evidence in file reflects that on January 1, 1985, the Government of Canada formed Marine Atlantic, Incorporated, (MAI) as a Canadian Crown corporation to conduct operations formerly performed by the Marine division (CN Marine) of the Canadian National Railway Company (CNR). MAI is headquartered in Moncton, New Brunswick, and ferries railcars and containers to the Canadian provinces of Nova Scotia, Newfoundland, Prince Edward Island, and New Brunswick, and to Bar Harbor, Maine. MAI rents from CNR equipment formerly used by CN Marine in port facilities in four Canadian ports and in Bar Harbor. As of March 1988, CNR and MAI were negotiating to transfer this equipment to MAI. Mr. G. J. James, MAI1s Director General, Human Resources St Administration, estimates that from seven to eight percent of MAI1s business is rail-related, the balance apparently constituting transportation of property by vessels. In answer to correspondence from this office, Mr. James further wrote that "Marine Atlantic's terminal at Bar Harbor, Maine is not serviced by rail" and that "Marine Atlantic does not lease or own a line of railroad at Bar Harbor, and no rail carrier conducts train operations by agreement with Marine Atlantic." With respect to payroll bookkeeping, he wrote that: "We continue to rely on Central Vermont at St. Albans and Grand Trunk Western at Detroit for support services associated with payrolls and benefit plan administration. These include actual payroll preparation and issuance of pay cheques, calculation and remittance of employee taxes, social security, benefit plan, union dues deductions and so on, as well as enrolment of employees Director of Compensation and Certification in the various plans, and a certain handling of employee enquiries and applications, etc. Disbursements by CV and GTW of course are reimbursed through a regular billing arrangement. "These arrangements derive from the pre-1985 period when our operations were a part of Canadian National Railways, and it was customary to have CN's U.S. subsidiaries, such as CV and GTW, act on behalf of other small CN groups, such as our own, then resident in the United States. While Marine Atlantic Inc. is now totally separate from Canadian National Railways, we have endeavoured to preserve a continuity in such areas as employee services." Section 1(a)(1) of the Railroad Retirement Act and sections 1(a) and 1(b) of the Railroad Unemployment Insurance Act provide that carriers by railroad, subject to Part I of the Interstate Commerce Act, are employers under the Acts. In addition, section 1(a) of both the RRA and RUIA also include as covered employers companies under common control with a carrier employer, which provide a service in connection with railroad transportation. Finally, both Acts provide that where an employer (such as CNR) conducts the principal part of its business outside the United States, only service performed by employees within the United States shall be creditable. See sections 1(d)(2) and 1(e) of the RRA and RUIA, respectively, and Legal Opinion L-40-383. Where a public authority is created by law to operate port facilities, but conducts some rail service in connection with the transfer of property between rail and water transportation, it has been held that the portion of the authority which conducts rail service is a covered rail carrier employer within the meaning of the Acts. See L-48-228; L-85-6. However, where a company not under common control with a railroad ferries persons or property, but does not connect with a rail carrier, this office has held the ferry company not to be an employer under the Acts. See: L-40-486 (Brooklyn and Richmond Ferry Company). As a Canadian Crown corporation, MAI cannot be considered a United States employer. Only service performed for MAI within the United States which would be creditable to a United States employer may be considered creditable under the Acts. MAI does not own or operate any rail facilities at Bar Harbor, Maine, its only facility in the United States; MAI therefore cannot be considered a rail carrier employer under the Acts with respect to that facility. Further, it appears there is no rail carrier service to the facility at all. Director of Compensation and Certification Consequently, MAI may not be considered to be an employer by reason of performing services in connection with rail transportation within the United States. No other coverage provisions of the Acts are relevant to this case. As Mr. James notes, Central Vermont and Grand Trunk Western, both covered rail carriers under the Acts, did and may continue to perform some administrative services for MAI. It appears MAI reimburses the expenses of this service. Because the services are performed by the carriers for MAI, and MAI does not transport property by rail or itself perform a service in connection with the railroads' operations, these administrative services do not constitute "service in connection with the transportation of property by rail" within the meaning of the Board's regulations. See 20 CFR 202.7. Accordingly, it is my opinion that Marine Atlantic, Incorporated has not been an employer covered by the Railroad Retirement and Railroad Unemployment Insurance Acts from the date it began operation, January 1, 1985. However, it appears the individuals employed at Bar Harbor were reported as being in the service of CNR through December 1987. Service within the United States to the Canadian National Railway Company of course continues to be creditable under the Acts. L-40-383. An appropriate Form G-215 giving effect to the foregoing is attached. Steven A. Bartholow Attachment cc: District Manager Boston Massachusetts cmw 0048o/C. 940-88.
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