If the General Assembly abolishes the NC Ports Railway Commission (PRC) and transfers its assets to the State Ports Authority (SPA), will that hurt the ongoing federal labor litigation between SPA, PRC, and the longshoremen's union over whether SPA is a Railway Labor Act 'carrier'?

Plain-English summary

North Carolina transportation officials asked about a draft bill that would abolish the Ports Railway Commission (PRC) and transfer its assets to the State Ports Authority (SPA). Litigation involving those bodies and the longshoremen's union was pending before the National Mediation Board. The draft transferred assets only and expressly withheld authority for SPA to operate railroads or function as a common carrier by rail. The AG said its opinion could differ if all of PRC's powers and operating responsibilities were transferred too.

The opinion traced why the asset transfer still mattered. PRC had leased its terminal rail operations to private companies. The Interstate Commerce Commission later exempted PRC from regulation but found it retained a "residual common carrier obligation" because it had not abandoned the railroads. If PRC's assets, including the leases, moved to SPA, SPA would probably inherit that residual obligation.

The AG described two possible routes to renewed carrier status for SPA. If the leases ended and no successor operator was found, SPA might operate the railroads itself and become subject to the Railway Labor Act. Even without operating them, its railroad ownership, residual obligation, and limited rail-related port activities taken together could support a carrier finding. Railroad ownership alone was insufficient.

The AG did not say an adverse effect on the litigation was probable. It said such an effect was unlikely, yet the risk could not be called insignificant. On that basis it recommended against abolishing PRC at that time. The draft bill itself would abolish PRC; the opinion did not propose keeping PRC alive through that bill.

Currency note

This opinion evaluated a particular 1994 draft and pending litigation. Check current law, institutional arrangements, and any later rulings for a present rail-labor question.

Background and statutory framework

The National Mediation Board had earlier treated SPA as a Railway Labor Act carrier while it operated terminal railroads. After PRC took over operations, the Board found SPA was no longer a carrier and PRC was its successor. The dispute remained before the Board after court review directed further consideration of an alleged common-control relationship.

PRC later leased its rail operations to private companies. The Interstate Commerce Commission's exemption did not erase the residual common carrier obligation. The AG's risk analysis focused on whether that obligation and other rail-related facts might affect SPA if PRC's assets were transferred.

Common questions

Did the AG say abolition would probably harm SPA's pending case?

No. It said an adverse effect was unlikely, but the risk was not insignificant, and recommended against abolition at that time.

Did the draft leave PRC in place?

No. The draft would abolish PRC and transfer its assets to SPA. It did not authorize SPA to operate railroads or become a common carrier by rail.

Why could an asset transfer matter if the draft withheld operating authority?

The opinion said SPA would probably inherit PRC's residual common carrier obligation with the assets. Depending on later operations and the combined rail-related facts, that could support a Railway Labor Act carrier finding.

Citations

• N.C.G.S. §§ 143B-469 et seq. (NC Ports Railway Commission, established 1979)
• 45 U.S.C. §§ 151 et seq. (federal Railway Labor Act; defines "carrier" to include any common-controlled or carrier-controlled entity operating rail-related facilities)
• ILA v. Harris County Houston Ship Channel Navigation District, NNB No. C-3865 (NMB; similar carrier-status analysis)

Source

• Landing page: https://ncdoj.gov/opinions/proposed-abolishment-of-the-north-carolina-ports-railway-commission/

Original opinion text

June 13, 1994

Mr. David King
Deputy Secretary for Public Transportation
North Carolina Department of Transportation
Raleigh, North Carolina

Re: Advisory Opinion: Proposed Abolishment of the North Carolina Ports Railway Commission

Dear Mr. King:

In your memorandum of May 31, 1994, you stated that legislation had been drafted which would abolish the North Carolina Ports Railway Commission (PRC) and transfer its powers, duties and responsibilities to the North Carolina State Ports Authority (SPA). You noted that pending litigation between the International Longshoreman's Association, AFL-CIO (ILA), the SPA and the PRC "raises implications which should be addressed" and asked for our opinion "as to any negative legal consequences" and the "degree of risk involved" in the abolishment of the PRC.

We first note that the draft of the proposed legislation which has been furnished to this office would not transfer all of PRC's powers, duties and responsibilities to the SPA. It provides only that the assets of PRC be transferred to SPA, and specifically does not authorize SPA to operate railroads or function as a common carrier by rail. Our opinion could be different if all of PRC's powers, duties and operational responsibilities were to be transferred to SPA along with its assets.

The most likely "negative consequence" of abolishing PRC and transferring its assets to SPA would be in connection with the litigation involving SPA, PRC, and the ILA which is pending before the National Mediation Board. That litigation had its origins in 1970, when the National Mediation Board (Board) certified the ILA as bargaining representative for certain classes of SPA employees under the provisions of the Railway Labor Act (45 USC §§ 151 et seq.). That ruling was based on SPA's operation of terminal railroads at the ports in Wilmington and Morehead City. The Railway Labor Act applies to "carriers" and defines the term "carrier" to include "any … carrier by railroad, subject to the Interstate Commerce Act, 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 … in connection with the transportation … and handling of property transported by railroad … ." After an unsuccessful court challenge to the Board's jurisdiction, SPA entered into a series of agreements with the ILA, the last terminating December 30, 1980. In 1979, the General Assembly established PRC (§§ 143B-469 et seq.) and provided for the transfer to it of all of SPA's railway equipment and operations. PRC then applied to the Interstate Commerce Commission (ICC) for a Certificate of Convenience and Necessity authorizing it to acquire and operate SPA's terminal railroads, and received that certificate in December of 1980. In January 1981 SPA conveyed its railroad equipment to PRC and granted PRC trackage use rights over all of its tracks at Wilmington and Morehead City. PRC began operating the terminal railroads as of January 12, 1981.

In November of 1980 the ILA invoked the mediation services of the Board. In January, 1981, SPA moved to dismiss the case, contending that it was no longer a carrier therefore not subject to the Board's jurisdiction. On June 8, 1982, the Board found that SPA was "no longer a carrier within the meaning of the Railway Labor Act" and that PRC was its successor. Having twice been appealed to the D.C. Circuit Court of Appeals, this case is still before the Board. The court has instructed the Board to further consider whether SPA is a carrier because (as alleged by the ILA and denied by SPA and PRC) SPA is under "common control" with PRC.

In September of 1986, PRC leased all of its rail facilities and railroad operations to two private corporations and dismissed all of its employees except for its General Manager and a secretary. In March, 1988, PRC petitioned the ICC for a declaratory order that it was no longer subject to ICC jurisdiction. In Finance Docket No. 31248, decided September 21, 1988, the ICC denied PRC's request but "on its own motion" exempted PRC altogether from ICC regulation. The ICC noted in that decision that PRC had not abandoned the terminal railroads, but had only transferred the right to conduct operations over them. The ICC therefore found that PRC had a "residual common carrier obligation" and indicated that the exemption might be revoked if the private companies should discontinue their operations.

PRC's "residual common carrier obligation," although not clearly defined by the ICC, apparently means that its common carrier status could be reactivated. If all PRC's assets were transferred to SPA, including the operating leases, SPA would probably also inherit this "residual common carrier obligation". SPA might then become a carrier subject to ICC and Railway Labor Act regulation in either of two fact situations. First, if the existing operating leases were terminated and SPA was unable to find successor operators, SPA might have to operate the terminal railroads itself rather than abandon them. If it did so, SPA would be subject to the Railway Labor Act, at least with respect to its rail operations personnel and probably with respect to all of its non-managerial personnel. Second, even if the SPA never operates the terminal railroads, it could still be at some risk due to the proposed transfer. Railroad ownership alone does not make one a common carrier. Edwards V. Pacific Fruit Express Co., 390 US 538 (1960); ILA v. Harris County Houston Ship Channel Navigation District, NNB No. C-3865. However, the SPA's ownership of the railroad facilities, its "residual common carrier obligation" and the limited railroad related activities in which it engages as part of its operation of the port terminals, when taken together, could be sufficient to support a finding that SPA is a carrier subject to the Railway Labor Act.

We are reluctant to speculate on the "degree of risk" that the proposed transfer would have an adverse effect on the pending litigation. While it is unlikely, we cannot say that the risk is insignificant. For this reason, we do not recommend that the PRC be abolished at this time.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General

Dennis P. Myers
Assistant Attorney General

Roy A. Giles, Jr.
Assistant Attorney General