Herzog Transit has previously been determined not to be a covered employer. See: B.C.D. 94-109 Herzog Transit Services, Inc. SF RTA and Trinity have also previously been determined not to be covered employers under the names Tri-County Commuter Rail Organization and Dallas Area Rapid Transit (DART) . See Coverage Notices No. 89-35, dated April 19, 1989; and No. 91-66, dated August 19, 1991, respectively. After a review of the evidence, in section II of this decision a majority of the Railroad Retirement Board, Labor Member Speakman dissenting, determines that SF RTA is not a covered employer under the Acts. A majority of the Board, Management Member Kever dissenting, also determines, as explained in sections II and III below, that Herzog Transit is a covered employer only with respect to train dispatching over the rail line of Trinity Railway Express in Texas. The majority of the Board further determines in section III below that Trinity itself is not a covered employer to the extent the train dispatching operation conducted on Trinity’s behalf is reported by Herzog Transit. Management Member Kever dissents from the determination that Herzog Transit is a covered employer with respect to train dispatching for Trinity.

This is also the determination of the Railroad Retirement Board pursuant to 20 CFR 259.1 concerning the status of JAS as a covered employee of CSXT under the Acts. As explained in section IV of this decision, the majority of the Board, Labor Member Speakman dissenting, determines that JAS is not in the service of CSXT while operating a locomotive driving a Herzog Transit passenger train for SF RTA.

1. PRIOR BOARD PROCEEDINGS

In a summary decision dated April 19, 1989, the Deputy General Counsel of the Railroad Retirement Board determined pursuant to regulations of the Board then in effect (20 CFR 259.1(1991)) that the commuter passenger rail service operated by Tri-County Commuter Rail Organization through contract with UTDC Transit Services, Inc., was not an employer covered by the RRA and RUIA. See: Notice No. 89-35, Tri-County Commuter Rail Organization.

In 1994, the Board learned that Tri-County had contracted with Herzog Transit Services, Inc. (Herzog Transit) to operate its commuter service. On December 5, 1994, the Board determined that Herzog Transit was not a covered employer under the Acts. Though a rail carrier, Herzog was not engaged in interstate commerce. See: Board Coverage Decision (B.C.D.) 94-109 Herzog Transit Services, Inc.

Beginning November 2003, the Board began receiving letters from Herzog Transit employees, directly and referred by Members of Congress. These letters requested the Board to reopen its prior decisions regarding Tri-County and Herzog Transit to find the service by these employees to be covered as well. The Board directed the Secretary to the Board to respond to these letters that the earlier decisions regarding Tri-County and Herzog Transit were final decisions, and further, that while under the regulations of the Board the Tri-County/Herzog employees may submit briefs or argument, they were not party to a determination of the status of a company as employer. See 20 CFR 259.2(a).

JAS also claimed in a letter received in December 2003 that his operation of a locomotive for Tri-County actually constituted service as an employee of CSXT Transportation. He stated his belief that his service was performed under the direction and control of CSXT because he was governed by CSXT rules, his locomotive was dispatched by CSXT dispatchers, interchanged cars with CSXT, and he held a Federal Railroad Administration license. Unlike a determination of the status of Tri-County as an employer, his claim for service as a CSXT employee rendered Mr. Santangelo a party to the Board’s determination. See 20 CFR 259.2(b). Accordingly, on December 17, 2003, the Board therefore directed the Chief of the Audit and Compliance Section to review whether Mr. Santangelo’s service would be creditable under the Acts.

The Chief of Audit and Compliance obtained evidence from SF RTA, from Herzog Transit, and from the employees. After reviewing the evidence obtained, on February 2, 2006, the Board issued Board Order 06-12, appointing a Hearing Examiner pursuant to section 258.1 of the Board’s regulations (20 CFR 258.1). The Board directed the Hearing Examiner to conduct a hearing and to obtain documents and testimony, and to prepare a recommendation to the Board as to:

“whether there has been a change in the operations of Herzog Transit services, Inc., which would affect its status as an employer under the Railroad Retirement and Railroad Unemployment Insurance Acts, as determined in Board Coverage Decision 94-109.”

The Hearing Examiner held a hearing in Miami, Florida on May 16, 2006. The employees, the United Transportation Union (UTU), and Herzog Transit then submitted post-hearing briefs and additional documentary evidence. On August 18, 2006, the Hearing Examiner closed the administrative record.

The Hearing Examiner made his report to the Board on April 30, 2007, with copies furnished to Herzog Transit, UTU, and the employees. In his report, the Examiner recommended that the Board find that the changes in operations by Herzog Transit as a result of its commuter rail passenger operations for SF RTA in Miami; for Altamont Commuter Express in San Joaquin, California; for Waterfront Red Car in San Pedro, California; and for Rail Runner Express in Albuquerque, New Mexico did not render it a covered employer under the Acts. The Examiner further recommended that the Board find that Herzog Transit employees who dispatch freight service over the rail line of Trinity Railway Express (Trinity) in the Dallas-Fort Worth, Texas, are engaged in rail carrier service under a prior Board Decision. However, because Trinity had not been notified of or otherwise participated in the proceedings leading to the Hearing Examiner’s report, the Examiner recommended the Board address the matter in a separate decision.

UTU, Herzog Transit, and the employees submitted exceptions to the Examiner’s report on June 28, 2007. Herzog Transit also filed a response to the UTU exceptions on July 7, 2007. At the Board’s direction, on December 7, 2007, the Hearing Examiner wrote to Trinity Railway Express to furnish a copy of his April 2007 report, and to allow Trinity to file any exceptions to the report as well. Trinity responded on January 17, 2008.

2. STATUS OF HERZOG TRANSIT AND SF RTA AS RAIL CARRIER EMPLOYERS

After reviewing the record and considering the Hearing Examiner’s report and the exceptions thereto filed by the UTU, by Herzog Transit, by Trinity, and by Herzog employees, as well as the response to UTU exceptions filed by Herzog Transit, the majority of the Board, Labor Member Speakman dissenting, renders the following decision with respect to the status of Herzog Transit and SF RTA as rail carrier employers under the Acts:

1. Except as determined in Section III of this Decision below regarding the status of Herzog Transit as a lessee employer, the changes in the passenger service operations of Herzog Transit Services Inc. since the Board issued B.C.D. 94-109 do not render Herzog Transit a rail carrier employer covered by RRA section 1(a)(1)(i) and RUIA sections 1(a) and 1(b) because it is not subject to the jurisdiction of the Surface Transportation Board under part A of subtitle IV of title 49, United States Code, and does not meet the conditions for coverage of commuter operations specified by 49 U.S.C. § 10501(c)(3).
    
2. The changes in the operations of Herzog Transit Services Inc. since the Board issued B.C.D. 94-109 do not render Herzog Transit an employer covered by RRA section 1(a)(1)(ii) and RUIA section 1(a) as a non-carrier affiliate which is under common control with a rail carrier employer because Herzog Transit Services Inc. does not provide services to its affiliated rail carrier company.
    
3. SF RTA is not a rail carrier lessor employer under the Acts because profit from railroad activities is not the primary purpose of SF RTA; because SF RTA does not operate or retain the capacity to operate its rail line; and because the operator/lessee of the rail line which provides freight rail service (CSXT) is already a covered employer under the RRA and RUIA.

In rendering this decision, the Board unanimously adopts and hereby incorporates the findings of fact Numbers 1 through 41 in the report of the Hearing Examiner, except that the Board modifies Finding Number 26, based on the January 17, 2008 submission by Trinity, to state that no Amtrak intercity trains run on Trinity rail lines. In addition, the majority of the Board, Labor Member Speakman dissenting, adopts and hereby incorporates conclusions of law 1 through 5, and analysis Parts I and II of the report of the Hearing Examiner, into this determination as if set forth in full herein. The Hearing Examiner’s report is appended to this decision.

The Board in Board Order 06-12 did not direct the Hearing Examiner to consider the status of SF RTA under the Acts. However, the Board notes that the evidence of record is that SF RTA and the Florida Department of Transportation are both public entities not formed for profit, which have contracted the right to conduct interstate freight service over the SF RTA line to CSXT. Under the factors set forth in B.C.D. 00-47, Railroad Ventures, Inc., (reconsideration decision), and which are discussed further by section III of this decision below, the majority of the Board, Labor Member dissenting, is satisfied that SF RTA is not a lessor of a rail line which is a covered rail carrier employer.

With respect to Herzog Transit, the UTU argues that the Board should not adopt either of the two recommended decisions of the Examiner. Regarding Herzog Transit’s status as a rail carrier employer, UTU first argues it is anomalous that the Miami commuter operation would be conducted by a covered rail carrier under the RRA and RUIA if conducted by Herzog Transit subsidiary Transit America LLC, but not covered when conducted by Herzog Transit itself. UTU would have the Board consider all Herzog companies together as constituting one railroad system. However, UTU cited no authority to the Examiner, and now cites none to the Board, which would render one entirely intra-state passenger rail operator a rail carrier under Title 49 U.S. Code, Part A, subtitle IV, merely because it is under common ownership with an unconnected rail carrier in another State. UTU further argues that the language of section 10501(c)(3)(A) of Title 49 U.S.C. defines all local commuter passenger operators as rail carrier employers for purposes of the RRA and RUIA. The majority of the Board, Labor Member dissenting, agrees with the Hearing Examiner that this interpretation overlooks the subsequent language in section 10501(c)(3)(B), which limits STB authority over local commuter operations to those which would have met the standards for STB jurisdiction prior to 1996.

UTU also argues that Herzog Transit is a covered employer under the RRA and RUIA because it performs services in connection with railroad transportation. UTU attacks the Hearing Examiner’s Conclusion of Law number 5, which states that a non-carrier company must perform more than a minimal proportion of services in connection with railroad transportation to the affiliated rail carrier to be held a covered employer under RRA section 1(a)(1)(ii) and RUIA section 1(a). UTU initially argues that this interpretation of the Acts, which follows the Board’s decision in B.C.D. 93-79 VMV Enterprises, unnecessarily restricts both the amount of service performed, and the company which receives the services. In VMV Enterprises, the majority of the Board found that the Court of Appeals decision in Railroad Concrete Crosstie Corp. v. Railroad Retirement Board, 709 F. 2d 1404, (11th Cir., 1984) would require more than minimal service to find the non-carrier affiliated company to be a covered employer. The majority of the Board declines to disturb the rule stated by VMV Enterprises, and accordingly, the majority of the Board, Labor Member dissenting, finds that the Hearing Examiner correctly stated the rule to be applied to Herzog Transit.

UTU alternatively argues that even using the minimal services standard, Herzog Transit is a covered non-carrier affiliate employer because Mr. Robert Smith, an employee of Herzog corporate subsidiary Transit America, acts as head of Herzog Transit labor relations. However, Transit America is a covered rail carrier employer, while Herzog Transit is the non-carrier affiliate. Assuming arguendo that by reason of Mr. Smith’s work Transit America is performing a service in connection with railroad transportation, and further assuming that the service Transit America performs to Herzog Transit is more than minimal, the fact remains that the service is performed by the rail carrier to the non-carrier affiliate, rather than the reverse. Nothing in the RRA, RUIA, or the Board’s regulations defines as a covered employer a non-carrier company which receives services from, rather than provides to, a rail carrier employer.

The majority of the Board, Labor Member Speakman dissenting, finds the exceptions by the UTU are without merit.

3. STATUS OF HERZOG TRANSIT DISPATCHERS FOR TRINITY RAILWAY EXPRESS

After reviewing the record and considering the Hearing Examiner’s report and the exceptions thereto filed by the UTU, by Herzog Transit, by Trinity Railway Express, as well as the Herzog Transit response to the UTU exceptions, the majority of the Board, Management Member Kever dissenting, renders the following decision with respect to the status of Herzog Transit and Trinity Railway Express as rail carrier employers under the Acts:

3. Since the Board issued B.C.D. 94-109, Herzog Transit Services Inc. has contracted to operate the Trinity Railway Express in Dallas-Fort Worth, Texas. Trinity operates over a rail line which is jointly owned by the two constituent local transit agencies, Dallas Rapid Transit (DART) and the Fort Worth Rapid Transit agency (“the T”). In addition to operating commuter passenger trains, beginning January 2001 Herzog Transit has dispatched all train traffic over the Trinity line, including interstate freight trains. Trinity’s retention of authority to direct train service over the rail lines owned by Trinity through DART and the T constitutes active rail carrier operation of the Trinity Railway Express rail line under the RRA and RUIA by Trinity as the owner/lessor. The assumption of this portion of active rail carrier operation by Herzog Transit Services under contract with Trinity renders Herzog Transit a lessee rail carrier employer under the RRA and RUIA effective January 1, 2001, the date Herzog Transit assumed the new duty under its contract. However, the unit of Herzog Transit which dispatches trains over the Trinity line constitutes a discrete unit which is segregable from the commuter passenger business of Herzog Transit pursuant to section 202.3 of the Board’s regulations.

In rendering this decision, the Board unanimously adopts the Hearing Examiner’s findings of fact as if set forth in full herein, except that the Board finds sufficient evidence following the January 2008 submission by Trinity to render a decision as part of this proceeding. In addition, a majority of the Board adopts the Examiner’s conclusions of law 6 and 7, and the Examiner’s analysis Part III as if set forth in full herein. The Hearing Examiner’s report is appended to this decision. Management Member Kever dissents from the majority decision to adopt the Examiner’s conclusions of law 6 and 7.

Both Herzog Transit and Trinity have filed exceptions to the Hearing Examiner’s report, arguing that as Herzog Transit is a bona fide business, independent from ownership or control by Trinity, which supplies to Trinity a service pursuant to a contract negotiated at arms-length, no employees of Herzog should be considered to be employees of a rail carrier. This analysis is based upon the decisions of the Tenth and Eight Circuit Courts of Appeals in Nicholas v. Denver & Rio Grande Western R.R. Co., 195 F. 2d 428, (10th Cir., 1952); and Kelm v. Chicago, St. P. M. & O Ry. Co., 206 F. 2d 831, (8th Cir., 1953). The Board has applied the rule in Kelm to determine in numerous cases that the service of employees of an independent contractor are not attributed to the contracting railroad for purposed of coverage under the RRA and RUIA. See, e.g., B.C.D. 01-25 Adecco Employment Services; and B.C.D. 03-01 Training Consulting Connection. However, the majority of the Board will not apply the Kelm decision to Trinity’s contract with Herzog Transit because the question in this instance is not the service performed by the employees, but rather the activity conducted by their employer, Herzog Transit, on behalf of Trinity. That is, the issue is not whether individuals on the payroll of a contractor are statutory employees of a railroad under RRA sections 1(b)(1) and 1(d)(1) and RUIA sections 1(d) and 1(e), but rather whether the contractor itself is a rail carrier employer under RRA section 1(a)(1) and RUIA section 1(a).

As the Hearing Examiner noted, a line of Board decisions have defined the circumstances under which the owner which leases or contracts operation of its rail line to a rail carrier would remain a rail carrier employer under the Acts. B.C.D. 00-47, Railroad Ventures, Inc., (reconsideration decision). Under Railroad Ventures the Board will determine that the rail line owner continues to be a rail carrier employer under the RRA and RUIA unless three conditions are met:

(1) the owner/lessor does not have as a primary purpose to profit from railroad activities;

(2) the owner/lessor does not operate or retain the capacity to operate the rail line; and

(3) the operator/lessee of the rail line is already a covered employer under the RRA and RUIA.

Applying the Railroad Ventures factors to the evidence, the majority of the Board agrees with the Hearing Examiner that Herzog Transit is operating as a rail carrier employer with respect to the track owned by Trinity. The two constituent transit authorities and Trinity own the rail line which Trinity uses for its local passenger service. Standing alone, this passenger service does not constitute rail carrier operation under the RRA and RUIA. However, Trinity’s rail line is also used for interstate freight service. There is no doubt that if Trinity itself conducted this freight service over its line, Trinity would be a covered rail carrier under the Acts. California v. Anglim, 129 F. 2d 455 (9th Cir., 1942)(belt freight railroad operated by California held rail carrier subject to RRTA). Instead, freight service over Trinity’s rail line is provided by four companies which are rail carrier employers under the RRA and RUIA: the Fort Worth & Western Railroad; the Dallas, Garland & Northeastern Railroad; the Union Pacific Railroad; and the Burlington Northern Santa Fe Railroad. Prior to 2001, when all aspects of this freight service were provided by covered rail carriers, Trinity thus met all three Railroad Ventures factors: its primary purpose was not profit from railroad activities; it did not operate or retain the capacity to operate freight rail service; and the freight rail service was conducted by covered railroad employers. Consequently, under Railroad Ventures Trinity is excluded from the coverage prior to 2001.

Beginning January 2001, the majority of the Board finds that Trinity took back from the freight railroads one aspect of rail operation: the power to dispatch trains running over its rail line. Train dispatching includes routing and tracking train progress, and coordinating the movement of one train with others. Dictionary of Occupational Titles with O*NET Definitions, (5th Ed. 2003), Occupation No. 184.167-262 Train Dispatcher, and O*NET Occupation No. 11-3071.01 Transportation Managers. Train dispatching is an essential element of safe train operation over a rail line. Canadian Pacific Limited, et al.—Purchase and Trackage Rights—Delaware & Hudson Railway Company, Surface Transportation Board Finance Docket No. 31700 (Sub. No. 13) December 4, 1998, (employer’s transfer of train dispatchers voided due to adverse affect on rail safety). The majority of the Board recognizes that rail safety depends upon many other factors, such as proper track and signal maintenance, and even the purchase of proper equipment. These activities, however necessary though, impact on train operation indirectly and may be required to be performed while trains are not running (e.g., removal and replacement of track). In contrast, dispatching is as inextricable a part the actual motion of trains as is the operation of a train’s locomotive controls by the engineer.

A rail line lessor which employs locomotive engineers to run freight trains in interstate commerce over its line would clearly be operating the rail line, regardless of other provisions of its agreement with a lessee. Compare, American Orient Express Ry. v. Surface Transportation Board, 484 F. 3d 554, (D.C. Cir., 2007)(company which owned neither locomotives nor track but contracted with rail carrier to operate company trains over designated interstate routes was held a rail carrier employer). Given the direct link between operating trains and dispatching trains, the majority of the Board agrees with the Hearing Examiner’s conclusion that if an owner of a rail line dispatches or routes trains in interstate freight rail service over its line, the company is actively conducting rail carrier business within the meaning of RRA section 1(a)(1)(i) and RUIA sections 1(a) and 1(b). Where the company or entity is principally engaged in non-carrier business, under regulations of the Board at 20 CFR 202.3(a), only the dispatching operation is the covered employer. B.C.D. 02-12, Southern California Regional Rail Authority, Segregation of Dispatching Department (train dispatching department of commuter rail authority held a covered employer).

In sum, Trinity’s rail line is used in interstate freight rail service. If Trinity conducted all aspects of this freight service, it would be a covered employer; if Trinity conducted none of the freight service and merely held ownership of the rail line, Trinity would not be a covered employer. The facts are that rather than contracting all aspects of the freight service together, Trinity split the leased freight activity into two parts: operation of freight locomotives is leased to four rail carriers, while dispatching of those locomotives and their trains is contracted to Herzog Transit. As the Hearing Examiner correctly stated, under Railroad Ventures removing this aspect of rail carrier operation from the covered freight rail carriers cannot remove that portion of the operation from coverage. The record before the Board now includes a response from Trinity. Based on the record as supplemented by Trinity’s January 17, 2008 response (subsequent to the Hearing Examiner’s April 2007 report), the majority of the Board, Management Member Kever dissenting, finds Herzog Transit to be a rail carrier employer under the RRA and RUIA as lessee of the train dispatching operation over the Trinity rail line. Because Herzog Transit’s principal business is operation of intrastate passenger rail service, however, only the dispatching unit under the contract with Trinity is the enterprise which is considered to be the employer under the regulations of the Board. 20 CFR 202.3(a).

4. STATUS OF JAS AS EMPLOYEE OF CSXT

As noted in the summary of prior proceedings at section I of this decision, JAS also claimed in a letter received in December 2003 that his operation of a locomotive for Tri-County actually constituted service as an employee of CSXT Transportation. The Board has determined in section II above that SF RTA and Herzog Transit are not covered employers with respect to the Miami commuter passenger operation. The question remains whether JAS should be considered to be an employee of a covered rail carrier employer (CSXT) rather than of Herzog Transit, for purposes of crediting service and compensation under the RRA and RUIA. Board Order 06-12 did not request that the Hearing Examiner address JAS’s claim in his report. Based on a review of the evidence in record compiled by the Hearing Examiner, including JAS’s testimony at the hearing held May 16, 2006, the majority of the Board now determines that JAS’s service is not creditable under the Acts as service to CSXT. Labor Member Speakman dissents from this determination.

Section 1(b) of the Railroad Retirement Act and section 1(d) of the Railroad Unemployment Insurance Act both define a covered employee as an individual in the service of an employer for compensation. Section 1(d)(1) of the RRA further defines an individual as "in the service of an employer" when:

(i)(A) he is subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service, or (B) he is rendering professional or technical services and is integrated into the staff of the employer, or (C) he is rendering, on the property used in the employer's operations, personal services the rendition of which is integrated into the employer's operations; and

(ii) he renders such service for compensation * * *.

Section 1(e) of the RUIA contains a definition of service substantially identical to the above, as do sections 3231(b) and 3231(d) of the RRTA (26 U.S.C. §3231(b) and (d)).

The focus of the test under paragraph (A) is whether the individual performing the service is subject to the control of the service-recipient not only with respect to the outcome of his work but also the way he performs such work. JAS argues his service was performed under the direction and control of CSXT because he was governed by CSXT rules, his locomotive was dispatched by CSXT dispatchers, interchanged cars with CSXT, and he held a Federal Railroad Administration license. However, as locomotive engineer JAS provides passenger rail service according to the schedule set by SF RTA, which also provides the locomotive. His working hours and compensation are evidently set by Herzog Transit, which directly compensates him for his services. Though he is subject to CSXT employee rules, he is also subject to safety plans and operating policies of SF RTA. The majority of the Board finds that the evidence does not establish that JAS is subject to CSXT directions to a degree that his service is controlled by that company rather than by Herzog Transit or SF RTA. Accordingly, the control test in paragraph (A) is not met.

The tests set forth under paragraphs (B) and (C) go beyond the test contained in paragraph (A) and would hold an individual to be a covered employee if he is integrated into the railroad's operations even though the control test in paragraph (A) is not met. However, the majority of the Board, Labor Member dissenting, finds that under the Eighth Circuit decision in Kelm v. Chicago, St. Paul, Minneapolis and Omaha Railway Company, supra, these tests do not apply to employees of independent contractors performing services for a railroad where such contractors are engaged in an independent trade or business. B.C.D. 03-01 Training Consulting Connection.

It is true that CSXT uses in its freight carriage the rail line on which JAS operates a locomotive, and in that sense he works on the property used by a rail carrier employer. However, CSXT shares the line with Herzog Transit, and when JAS works as a passenger engineer, the rail line is not being used in CSXT’s freight business but in the passenger service provided by Herzog Transit and SF RTA. The majority of the Board finds that JAS in the regular course of his employment operates passenger equipment not part of the CSXT freight service. The evidence of record also supports a conclusion that Herzog Transit is a truly independent business. Though Herzog Transit does not own the passenger equipment or the rail line it operates for SF RTA, it conducts operations in California, New Mexico and Texas which have no relation to the service in Florida for SF RTA. The majority of the Board finds that Kelm would prevent the application of paragraphs (B) and (C) of the definition of covered employee to attribute JAS’s work for Herzog Transit to CSXT.

Accordingly, it is the determination of the majority of the Board, Labor Member Speakman dissenting, that service performed by JAS to Herzog Transit is not covered under the Acts as service to CSXT.

SEPARATE OPINION OF
V. M. SPEAKMAN, JR.
LABOR MEMBER

EMPLOYER STATUS DETERMINATION
Tri-County Commuter Rail Organization
South Florida Regional Transportation Authority
Trinity Railway Express-Train Dispatching
Herzog Transit Services, Incorporated

EMPLOYEE STATUS DETERMINATION
JAS

I feel compelled to comment on certain aspects of the thorough and thoughtful Report of the Hearing Examiner on the above-captioned matters. A Majority of the Board has adopted the Hearing Examiner’s findings with regard to the commuter operations of South Florida Regional Transportation Authority and Herzog Transit Services under the Railroad Retirement Act and Railroad Unemployment Insurance Act.

I.

I support the United Transportation Union’s position with respect to the operations of these entities: namely, that the South Florida Regional Transportation Authority (SF RTA) and its lessee operator Herzog Transit Services (Herzog Transit) are covered under the Railroad Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA) by virtue of 49 U.S.C. 10501(c)(3)(A).

Under this language, set out on page 31 of the Hearing Examiner’s Report, all local governmental agencies providing mass transit by rail are subject to retirement and unemployment systems provided for rail employees, i.e., the RRA and RUIA. The UTU position places all commuter operations operated by local governmental entities on the same footing, and corrects an anomaly recognized by the Hearing Examiner.

The Hearing Examiner’s conclusions create two classes of commuter operations. Under the Hearing Examiner’s rationale, if a governmental authority assumes rail passenger commuter operations previously conducted by a rail carrier, which was covered as an employer under the RRA and RUIA, then (c)(3)(A) requires that operation to continue to be covered by the RRA and RUIA, without regard to whether the operation would be exempt from jurisdiction of the Surface Transportation Board (STB). (Report, page 31). However, a newly established operation must show that it would have been subject to the jurisdiction of the Interstate Commerce Commission (ICC) prior to January 1, 1996, in order to be presently subject to STB jurisdiction and, thus, covered under the RRA and RUIA. Consequently, employees are covered under the RRA or RUIA not based upon the type of work they do but on whether it is a legacy or newly started operation. This, to me, is not a sensible result.

Furthermore, under the Hearing Examiner’s analysis, commuter operations can be covered or not covered based upon the status of the operating entity under the RRA and RUIA, apart from the operation in question. For example, if SF RTA had contracted out the operations in question to Amtrak, the employees in question would be covered under the RRA and RUIA because Amtrak is a covered employer under those statutes by virtue of its interstate passenger operations. An even more anomalous result would have occurred had SF RTA contracted with Herzog Transit’s subsidiary, Transit America LLC, to operate the commuter line. Transit America LLC was found to be a covered employer under the RRA and RUIA by virtue of its operation of a 2.6 mile line of rail in Buchanan County, Missouri. (Report, finding 38, page 24 and B.C.D. 03-10). Any employee hired by Transit America LLC to operate SF RTA commuter line would be covered under the RRA and RUIA by virtue of its operations in Missouri, not in Florida, even though employees of its parent, Herzog Transit, would not be covered while performing the same work.

The Hearing Examiner concedes that standing alone (c)(3)(A) dictates that, regardless of STB jurisdiction, employees of government entities conducting mass transit by rail (and their contractors) are subject to the RRA and RUIA. (Report, page 31). To me, this is the better result.

Even under the analytical frame work established by the Hearing Examiner, Herzog Transit’s operations in Florida have sufficient connections with interstate commerce, such that they would have been under the jurisdiction of the ICC prior to the ICC Termination Act of 1995. The SF RTA line is physically connected to the interstate rail system and is used for interstate traffic by CSXT and Amtrak. Passengers may make a connection to and from Amtrak and the SF RTA by using five shared train stations (Report of Hearing Examiner, page 45). SF RTA commuter trains cannot move unless dispatched by CSXT dispatchers (Report of Hearing Examiner, Finding 18, page 14). Thus, I would find that even accepting the Hearing Examiner’s statutory interpretation as correct, SF RTA and Herzog Transit are covered under the RRA and RUIA by virtue of 49 U.S.C. 10501(c)(3)(B).

II.

The Hearing Examiner finds that Herzog Transit is under common control with an employer covered by our statutes; namely, its subsidiary Transit America LLC., and finds that it performs services in connection with railroad transportation. That is, it operates a multi-state system of commuter operations by rail. Nevertheless, he finds that he is prevented from finding Herzog Transit covered under section 1(a)(1)(ii) of the RRA and section 1(a) of the RUIA because of the Board’s decision in VMV Enterprises, B.C.D. 93-79. In that decision, from which I dissented, a Majority of the Board determined that to fall within the non-carrier provision of the RRA and RUIA, the non-carrier affiliate must provide more than a minimum of services to its carrier affiliate. Since Herzog performs no services for its carrier affiliates, he finds that Herzog Transit is not covered as a non-carrier affiliate (Report of Examiner, Conclusion of Law 5, page 27).

As I indicated in my dissent in VMV Enterprises, there is nothing in the RRA, RUIA, or their regulations which even suggests that the services in connection with railroad transportation performed by a non-carrier affiliate must be directed at all toward its affiliate carrier. This was indirectly noted in Livingston Rebuild Center v. Railroad Retirement Board, 970 F.2d. 295,296 (1992) wherein the court stated “Although the Center is thus not a captive in the sense that is devoted predominantly to serving one railroad’s needs, it is nonetheless ‘under common control with’ MLR, making it a statutory ‘employer ’if rebuilding rolling stock is a ‘service***in connection with the transportation of persons or property by railroad.” Thus, I would conclude that Herzog Transit is an employer covered by the RRA section 1(a)(1)(ii) and RUIA section 1(a) as a non-carrier affiliate.