This
is the determination of the Railroad Retirement
Board concerning the status of Watco Companies,
Inc., and Watco Transportation Services as
employers under the Railroad Retirement Act
(45 U.S.C. § 231 et seq.) and the
Railroad Unemployment Insurance Act (45 U.S.C.
§ 351 et seq.). Information
dated August 30, 2002, from Watco Companies
states that Watco Companies was incorporated
(as Generations Holdings, Inc.) on January
12, 1998 (the name was changed to Watco
Companies on December 1, 1999). On January
1, 2001, Watco, Inc.1,
Watco Switching2,
and three other companies3
were merged into Watco Companies. Watco
Companies is described as a “privately
held corporation of four separate families
none of whom own a majority or controlling
interest.” The business of Watco Companies
is chiefly with non-carrier companies including
paper companies, smelting and mining companies,
petro-chemical companies, agricultural companies,
steel processing companies, and utilities.
Four percent of Watco Companies’ employees
perform work related to rail carriers, including
rail car repair, locomotive maintenance,
major track repair, and warehousing services.
Watco Companies owns Watco Transportation
Services.
Information dated
March 26, 2001, from Watco Transportation
Services indicates that operations began
January 1, 2001. It owns six railroads,
Eastern Idaho Railroad, Inc. (B.A. No. 2768);
Palouse River & Coulee City Railroad,
Inc. (B.A. No. 2643); South Kansas and Oklahoma
Railroad, Inc. (B.A. No. 3880); Stillwater
Central Railroad, Inc. (B.A. No. 2878);
Kansas and Oklahoma Railroad (B.A. No. 2797);
and Timber Rock Railroad, Inc. (B.A. No.
2877), all of which are employers under
the Acts. The operations of Watco Transportation
Services included the following provided
for its subsidiary railroads: track maintenance,
locomotive maintenance, railcar repair and
vehicle repair, and management and marketing
services. Watco Transportation Services
is wholly owned by Watco Companies, Inc.
Watco Companies
is owned as follows: Charles R. Webb, 47.24
percent; Richard B. and Stacy Webb, 25.20
percent; Gary L. and Susan Lundy, 23.56
percent; and C. Wayne and Glenda Sigley,
4.00 percent.
The directors of
the above-companies are as follows: Watco
Companies, Richard B. Webb; Watco Transportation
Services, Richard B. Webb and Gary L. Lundy;
Eastern Idaho Railroad, Richard B. Webb;
South Kansas and Oklahoma Railroad, Richard
B. Webb and Gary L. Lundy; Palouse River
& Coulee City Railroad, Richard B. Webb;
Stillwater Central Railroad, Charles R.
Webb, Richard B. Webb, Stacy L. Webb, Gary
L. Lundy, and Susan K. Lundy; Timber Rock
Railroad, Richard B. Webb, Gary L. Lundy,
Donald M. Wilson, Deborah Moody, and Leslie
Elmore; and Kansas and Oklahoma Railroad,
Richard B. Webb and Gary L. Lundy.
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;
(ii) any company
which is directly or indirectly owned or
controlled by, or under common control with,
one or more employers as defined in paragraph
(i) of this subdivision, and which operates
any equipment or facility or performs any
service (except trucking service, casual
service, and the casual operation of equipment
or facilities) in connection with the transportation
of passengers or property by railroad *
* *.
Sections 1(a) and
1(b) of the Railroad Unemployment Insurance
Act (45 U.S.C. §§ 351(a) and (b))
contain substantially similar definitions,
as does section 3231 of the Railroad Retirement
Tax Act (26 U.S.C. § 3231).
Watco Transportation
Services is the sole shareholder of its
affiliated carriers, who are covered employers
under the Acts. In turn, Watco Transportation
Services is wholly owned by Watco Companies.
Therefore, Watco Transportation Services
is under common control with its affiliated
carriers. The remaining question is whether
Watco Transportation performs services in
connection with transportation to its affiliated
carriers. In performing track maintenance,
locomotive maintenance, railcar repair and
vehicle repair, and management and marketing
services for its subsidiary railroads, Watco
Transportation Services is clearly performing
services in connection with railroad transportation.
The Board therefore finds that Watco Transportation
Services is a covered employer under the
Acts administered by the Board effective
January 1, 2001, the date as of which it
came into existence.
The next question
is whether Watco Companies is a covered
employer. The evidence of record indicates
that the business of Watco Companies is
chiefly with non-carrier companies and that
only four percent of Watco Companies’
employees perform work related to rail carriers.
The Board finds that this level of rail
related work is insubstantial and is thus
“casual service” and is not
service in connection with railroad transportation.
See 20 CFR 202.6. Because the Board finds
that Watco Companies does not perform service
in connection with railroad transportation,
we do not address the issue of whether it
is under common control with one or more
rail carrier employers. Accordingly, the
Board finds that Watco Companies is not
an employer under the Railroad Retirement
Act and the Railroad Unemployment Insurance
Act.
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