26 NMB No. 60

FILE NO. CJ-6209

FINDINGS UPON

INVESTIGATION-

DETERMINATION OF

JURISDICTION

June 7, 1999

This determination responds to the decision of the U.S. Court of Appeals for the D.C. Circuit in International Longshoremen's Association, AFL-CIO v. National Mediation Board, 870 F.2d 733 (D.C. Cir. 1989). In that decision, the Court remanded the case for further consideration of the issue of whether, as agencies of the State of North Carolina, the North Carolina State Ports Authority (NCSPA or Ports Authority) is under common control with the North Carolina Ports Railway Commission (PRC or Railway Commission) for purposes of the Railway Labor Act (RLA or the Act).

After further investigation and consideration as detailed below, the Board finds that the NCSPA and the PRC are not carriers subject to the Act. As a result, the Board finds the common control issue moot.

PROCEDURAL HISTORY

On June 8, 1982, the National Mediation Board dismissed an application filed by the International Longshoremen's Association (ILA) pursuant to Section 5, First, of the Act, 45 U.S.C. § 155, First, seeking the Board's mediation services to resolve its disputes with the Ports Authority. The NCSPA asserted that it was no longer a carrier subject to the Act. Basing its finding upon the fact that the NCSPA's railroad functions had been transferred to the PRC, the Board found that the NCSPA was no longer a rail carrier subject to the Act. The Board also found the NCSPA independent of the PRC.

The ILA appealed the Board's determination to the U.S. District Court for the District of Columbia. The District Court, on March 28, 1985, held that it lacked jurisdiction to review the NMB's decision. International Longshoremen's Association v. National Mediation Board, 607 F. Supp. 113 (D.D.C. 1985). The U.S. Court of Appeals for the District of Columbia reversed the District Court's decision and remanded the case to the lower court. International Longshoremen's Association v. National Mediation Board, 785 F.2d 1098 (D.C. Cir. 1986). After further review, the District Court again held that it was without jurisdiction to review the NMB's decision. International Longshoremen's Association v. National Mediation Board, No. 82-2216 (D.D.C. April 25, 1988). The ILA appealed anew and the Court of Appeals again reversed the District Court. International Longshoremen's Association v. National Mediation Board, 870 F.2d 733 (D.C. Cir. 1989).

In its second decision, the Court of Appeals held that the Board did not adequately address the issue of whether NCSPA and PRC were commonly controlled. The Court stated that "the NMB's failure to analyze explicitly the common control test as it applies in this case 'frustruate[s] effective judicial review.'" CA No. 88-5179, March 24, 1989, Slip op. at 6. The Court remanded the case to the District Court with instructions that it be returned to the Board for further consideration of the common control test.

The District Court returned the case to the Board, and the Board received submissions from the parties on July 31 and August 18, 1989, December 16, 1991, October 11, 1996, and January 29, 1997.

ISSUE

Is the PRC a carrier subject to the Railway Labor Act? If so, is the NCSPA, as an agency of the State of North Carolina, subject to the Railway Labor Act because it is under common control with the Railway Commission? If not, is the common control issue moot?

CONTENTIONS

The ILA asserts that the creation of the PRC is an attempt by the State of North Carolina to divest the Board of jurisdiction over employees whose functions are integrally involved with the operation of a terminal railway. In addition, the ILA argues that the Ports Authority and the Railway Commission are a single interdependent entity and hold themselves out to the public as such. The ILA further asserts that the activities of the Ports Authority in connection with the operations of the terminal railway and the mission of the Port facilities persist following the "changeover" from the Ports Authority to the Railway Commission in 1981. The ILA asserts that the PRC is a carrier and that the NCSPA and the PRC, as agencies of the State of North Carolina, are under common control. Therefore, the ILA argues the NCSPA is subject to the Act.

The NCSPA asserts that it operates ocean port terminals and is not a railroad operation.

The PRC asserts that it is not a carrier subject to the Railway Labor Act. The PRC further argues that since it is not a carrier subject to the Act, the Board should determine that the Ports Authority is not subject to the Act regardless of any relationship between the PRC, NCSPA and the State of North Carolina. Alternatively, since PRC is no longer operating as a rail carrier, PRC argues that whether PRC and SPA are under common control for RLA purposes is moot. Finally, the PRC asserts that it is not under common control with the NCSPA.

FINDINGS OF LAW

Determination of the issues in this matter is governed by the Railway Labor Act, 45 U.S.C. §§ 151- 188. Accordingly, the Board finds as follows:

I.

The ILA is a labor organization as provided by 45 U.S.C. § 151, Sixth, of the Act.

II.

Section 151, First defines a carrier as including:

[A]ny railroad subject to the jurisdiction of the Surface Transportation Board, any express company that would have been subject to subtitle IV of title 49, United States Code, as of December 31, 1995, and any company which is directly or indirectly owned or controlled by or under common control with any carrier by railroad and which operates any equipment or facilities or performs any service (other than trucking service) in connection with the transportation, receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, and handling of property transported by railroad, and any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the business of any such 'carrier.'

45 U.S.C. § 151, First, (emphasis added).

STATEMENT OF FACTS

I. BACKGROUND

The Board found the NCSPA subject to the Railway Labor Act in North Carolina State Ports Authority, 5 NMB 267 (1969). The Board's investigation established that, at that time, the NCSPA operated six miles of track at Wilmington, NC and three miles of track at Morehead City, NC. The operations included the movement of freight to and from freight cars owned by interstate rail carriers, the switching of railroad cars, and the storage of freight moved in interstate and foreign commerce.

The Board conducted elections and certified the ILA as the representative of the crafts or classes of Dock and Warehousemen and Security Guards employed by NCSPA. North Carolina State Port Authority, 5 NMB 288 (1970). After protracted litigation, the Ports Authority and the ILA subsequently negotiated two successive contracts covering the employees in the certifications.

In 1979, the North Carolina General Assembly established the PRC and transferred rail operations previously conducted by the NCSPA to the PRC. When, in 1980, the ILA sought the Board's mediation assistance in negotiating a new contract the NCSPA asserted that it was no longer a carrier subject to the RLA.

At that time, after conducting hearings, the Board found that the NCSPA was not directly or indirectly owned or controlled by the PRC. Accordingly, the Board found, "any basis the Board had for asserting jurisdiction over any employees of the North Carolina State Ports Authority has been removed." North Carolina State Ports Authority, 9 NMB 398, 409 (1982). The Board continued, finding the "PRC is not owned or controlled by the [NCSPA]." However, the Board also stated that, "the Railway Commission is a carrier subject to the jurisdiction of the Railway Labor Act." Id. The Board also held the Railway Commission was independent of the Ports Authority. As a result, the Board found that since the Ports Authority is no longer a carrier as defined by the Act, the certifications held by the ILA were no longer of any effect.

The litigation leading to the return of this case to the Board ensued. As a result, the Board addresses the issues raised upon more contemporary facts as detailed below.

II. THE NCSPA AND THE PRC

A. The NCSPA

The NCSPA is an instrumentality of the State of North Carolina. N.C. Gen Stat. § 143B-453 (1999). The Ports Authority is governed by an eleven member board, six of whom are appointed by the Governor. Four members are appointed by the General Assembly and the remaining position is filled by the Secretary of Commerce. N.C. Gen. Stat. 143B-452(a) (1999). After the expiration of terms designed to stagger membership (the last expiring in 2001), all members serve for six year terms. The Governor appoints the Chairman and Vice Chairman of the NCSPA Board, and the Members of the Board appoint the Treasurer and Secretary.

The Ports Authority is administered by an executive director. That executive director is empowered and directed by statute to "appoint, employ, dismiss and, within the limits of available funding, fix the compensation of such other employees as he deems necessary." N.C. Gen. Stat. 143B- 454(a)(5)(1999).

Under North Carolina law, the NCSPA is

Authorized and empowered to acquire, construct, maintain, equip and operate any wharves, docks, piers, quays, elevators, compresses, refrigeration storage plants, warehouses and other structures, and any and all facilities needful for the convenient use of the same in aid of commerce, including the dredging of approaches thereto, and the construction of beltline road and highways and bridges and causeways thereon, and other bridges and causeways necessary or useful in connection therewith, and shipyards, shipping facilities, and transportation facilities incident thereto and useful or convenient for the use thereof, excluding terminal railroads.

N.C. Gen. Stat. 143B-454(a)(4)(1999) (emphasis added).

Pursuant to this authority, the Ports Authority operates ocean port terminals. The NCSPA employs approximately sixty-two individuals at its Maritime Building in Wilmington, NC. These employees are responsible for administration of the Wilmington and Morehead City ports.

At the Port of Wilmington, the Ports Authority employs over 160 individuals who operate the Port. They receive cargo into warehouses, deliver cargo to overland carriers and maintain the Port's plant and equipment. On occasion, NCSPA employees load or unload cargo, usually wood pulp, from railcars and place the cargo in Port warehouses. At the Wilmington terminal, approximately five plant maintenance employees maintain the Port's industrial and spur trackage that serves the Port's warehouses. Pursuant to a rail switching agreement that is renewed annually, the Wilmington Terminal Railroad (WTR) operates the switching railroad at the Port. The agreement provides that the WTR will provide "rail services involving loaded car movements."

The Ports Authority employs approximately forty- five employees at the Port of Morehead City. These individuals work primarily at loading and unloading phosphate cargo delivered to the Port by barge for export. At Morehead City, most cargo delivered by rail is handled by private contractors who are lessees of the Ports Authority. In July 1995, the NCSPA entered into an agreement with the North Carolina Railroad Company (NCRC) to create a twenty-five year easement for the NCRC to construct scales to weigh rail cars at the Port of Morehead City. The agreement provides that the scales and improvements shall remain the property of the NCRC. On January 1, 1996, the NCSPA leased the scales to the PRC for fifteen years.

The Ports Authority enjoys the powers of the State of North Carolina, including that of eminent domain.	N.C. Gen. Stat. 143B-457 (1999).

B. The PRC

The PRC is an agency of the State of North Carolina governed by a Board of five members who are appointed by the Governor for four year terms. The Commission's powers include the following:

(1) To sue and be sued, to make contracts, and to adopt and use a common seal and to alter the same as may be deemed expedient;

(2) To rent, lease, buy, own, acquire, mortgage, otherwise encumber, and dispose of all such property, real or personal, as the Commission may deem necessary;

(3) To operate, maintain and control all railway equipment and railway operations transferred to it by the State Ports Authority;

(4) To acquire, own, lease, locate, install, construct, equip, hold, maintain, control and operate at harbors and seaports terminal railroads in addition to those transferred to it by the State Ports Authority with necessary sidings, turnouts, spurs, branches, switches, yard tracks, bridges, trestles, and causeways and in connection therewith shall have the further right to lease, install, construct, acquire, own, maintain, control and use any and every kind or character of motive power and conveyances or appliances necessary or proper to carry goods, wares and merchandise over, along or upon the track of such railway, or other conveyance;

(5) To make agreements as to scale or wages, seniority and working conditions with railroad employees . . . .

(6) To connect with or cross any other railway upon payment of just compensation and to receive, deliver to and transport the freight, passengers and the cars of common carrier railroads as though it were an ordinary common carrier;

(7) To appoint, with the approval of the Governor, a general manager of the Commission who shall serve at the pleasure of the board. The salary for the general manager shall be fixed by the General Assembly in the Current Operations Appropriations Act. The general manager shall have the authority to appoint, employ and dismiss such number of employees as may be deemed necessary by the board to accomplish the purposes of this Article. The compensation of such employees shall be fixed by the board.

N.C. Gen. Stat. § 143B-169.1 (1999).

From its creation in 1981 until 1986, the PRC provided rail service at the Wilmington and Morehead City ports. The PRC discontinued the provision of rail services at Wilmington and Morehead City on October 1, 1986.

Pursuant to a lease agreement dated September 15, 1986, the Commission leased the rail operations to the WTR. WTR's operations were expanded on November 17, 1993, when the Ports Railway Commission purchased 4½ miles of track at Wilmington from CSXT and leased that track to WTR. North Carolina Ports Railway Commission–-Purchase and Operation Exemption-–CSX Transportation, Inc., Line in North Carolina (Finance Docket 32345); Wilmington Terminal Railroad, L.P.–Lease and Operation Exemption-–North Carolina Ports Railway Commission, (Finance Docket 32345 (Sub-
No.1)).

Also on September 15, 1986, the PRC leased its Morehead City operations to Carolina Rail Services Company, Inc. (CRS).1 On January 1, 1996, the PRC leased from the Ports Authority the right to operate a railroad scale on yard track no. 6 at the Morehead City Port. That scale is operated by CRS under the terms of the September 15, 1986 lease agreement.

By letter dated July 20, 1994, the Railroad Retirement Board (RRB) stated:

In Legal Opinion L-89-129, the RRB found that the NCPRC was no longer an employer covered under the jurisdiction of the Railroad Retirement and Railroad Unemployment Insurance Acts, therefore, no further Annual Compensation reports should be filed with the RRB.

In 1995, the North Carolina General Assembly directed the North Carolina Department of Transportation (NCDOT) to plan and construct a replacement railroad trestle for the existing wooden trestle spanning the Newport River section of the Intercoastal Waterway between Morehead City and Radio Island. According to the PRC, the purpose of constructing a new trestle was "to promote the future development of property owned by the NCSPA." In order to permit the NCDOT to construct the trestle, the NCDOT needed title to the trestle and the right of way upon which it is located. As a result, the PRC was granted a perpetual right of way and exclusive franchise to conduct rail operations over the trestle and right of way. Therefore the Beaufort and Morehead Railway, Inc. (BMRI) which had previously owned and operated the track, deeded the land to the PRC. As a wholly-owned subsidiary of the PRC, the BMRI continues to operate the one mile length of track serving Radio Island. All members of the PRC's Board serve on the BMRI Board of Directors, and the PRC's General Manager serves as President of the BMRI. The PRC's only other employee serves as the Assistant Secretary-Treasurer of BMRI.

According to William Taylor, the General Manager of the Railway Commission, the PRC's funding is "derived from rail operations; leases and rentals on equipment and property; reimbursements for maintenance; and interest and income." The PRC does not receive funding from the State of North Carolina or any other public entity.

C.

The Ports Authority and the Railway Commission function under the jurisdiction of the North Carolina State Department of Commerce. N.C. Gen. Stat. § 143B- 431(a)(2)(l)(1999).

Section 143B-469.2 of the North Carolina General Statutes provides:

It shall be the duty and responsibility of the Commission to cooperate with the North Carolina State Ports Authority to insure that the State ports shall operate efficiently and effectively and to insure the orderly and effective development of the State ports.

DISCUSSION

At issue is whether the NCSPA is a carrier subject to the Railway Labor Act. The Board finds that it is not.

I.

The Ports Authority operates ocean port terminals and its employees deliver cargo from ocean going vessels to warehouses and overland carriers, primarily trucks. The Ports Authority is prohibited by North Carolina statute from operating the terminal railroads in the ports. Most cargo loaded and unloaded onto and off of rail cars is loaded by employees of the shippers. On occasion, Ports Authority employees load or unload cargo onto rail cars. Five of the approximately 160 Ports Authority employees maintain the industrial spur trackage serving its warehouses.

Based upon these facts, the Board finds that the Ports Authority does not operate as a common carrier by railroad. That a few of its employees perform track maintenance and that other employees occasionally load or unload rail cars is not sufficient to find that the Ports Authority is a carrier absent a relationship with a common carrier by rail.

Since the Ports Authority does not directly operate a railroad, this inquiry focuses upon whether the Ports Authority is a carrier by virtue of its relationship with the PRC. In order to resolve this question, the Board must first determine whether the PRC is subject to the Act. The Board finds that it is not.

Under Section 151, First, an entity may be a carrier either directly, by operating a railroad, or indirectly as a subsidiary or derivative carrier. See Federal Express Corp., 23 NMB 32, 75 (1995). A derivative or subsidiary carrier is one that is "directly or indirectly owned or controlled by or under common control with any carrier by railroad." 45 U.S.C. § 151, First.

When the Board seeks to determine whether such an entity is a subsidiary or derivative carrier, it applies a two-part test. The Board determines whether the company at issue is directly or indirectly owned or controlled by a common carrier or carriers, and whether the functions it performs are traditionally performed by employees of air or rail carriers. Chelsea Catering Corp., 19 NMB 301, 305 (1992); Bankhead Industries, 17 NMB 153, 157 (1990).

In North Carolina State Ports Authority, 9 NMB 398, 409 (1982), the Board found the PRC a carrier by rail because it acquired and operated the Port Authority's rail properties. In 1986, the PRC leased its original rail operations to the WTR and the CRS and no longer directly operates those railroads. At present, the PRC has only two employees; a general manager and an administrative assistant. These employees handle the administrative requirements of the WTR and CRS leases and WTR and CRS conduct the rail operations.

Applying the function prong of the two part test, the functions performed by the PRC are not those generally performed by rail employees. The two individuals employed by the PRC are charged with administering the leases to the WTR, CRS and BMRI.2 Specifically, these individuals are responsible for collecting payments from the railroads and other administrative duties associated with North Carolina's leases to the railroads. Rail employees typically do not perform the functions of state government.

Nor is the PRC a derivative carrier by virtue of its relationship with WTR and CRS because it is not owned or controlled by either of these entities. Rather, it owns the track upon which these railroads operate. Mere ownership of track by a state entity is not sufficient to create RLA jurisdiction.

The PRC's relationship with the WTR and the CRS is analogous to the relationship between the Metropolitan Transportation Authority (MTA) and the Long Island Rail Road (LIRR) and Metro North Commuter Railroad (MN). The MTA, like the PRC, is a public entity. Although both of the MTA's subsidiary railroads are subject to the Railway Labor Act, the MTA is not. Metropolitan Transportation Authority, 8 NMB 1 (1980). Likewise, the WTR and the CRS are subject to the Railway Labor Act and the PRC is not.

In 1995, the PRC acquired a perpetual right of way and exclusive franchise to operate the BMRI. The PRC's two employees serve as the President and Secretary-Treasurer respectively of the BMRI and the PRC's Board of Directors serves as the Board of Directors of the BMRI.

The PRC exercises control over the BMRI by virtue of its common officers and boards of directors. A derivative or subsidiary carrier is an entity that is "controlled" by a carrier. That an entity may exercise control over a carrier by itself is not sufficient to make the entity a carrier. Therefore, finding the PRC to be a carrier by virtue of its control over carriers would be tantamount to finding a holding company to be a carrier solely by virtue of its relationship with an airline or railroad.

Because the Board finds that the PRC is no longer a carrier subject to the Act, the issue of whether the Ports Authority and the Ports Rail Commission are under common control is moot. Therefore, the Board does not address it further. See RLEA v. NMB, 29 F.3d 655, amended, 38 F. 3d 1224 (D.C. Cir. 1994), cert. denied, 514 U.S. 1032 (1995).

CONCLUSION

The Board finds that the North Carolina Ports Railway Commission is no longer a common carrier by rail subject to the Railway Labor Act. The Board finds further that the North Carolina State Ports Authority is not a common carrier by rail pursuant to Section 151, First of the Railway Labor Act. Because neither the North Carolina Ports Railway Commission nor the North Carolina State Ports Authority are carriers subject to the Act, the Board finds the issue of common control between state entities is moot.

By direction of the NATIONAL MEDIATION BOARD.

Stephen E. Crable

Chief of Staff