If the NC General Assembly abolishes the Ports Railway Commission and transfers its rail assets and liabilities to the State Ports Authority, will the SPA become a 'common carrier' subject to the federal Railway Labor Act?

Plain-English summary

Senate Bill 1115 (S.L. 2002-126) included a section abolishing the North Carolina Ports Railway Commission (PRC) and transferring its assets and liabilities to the North Carolina State Ports Authority (SPA). The legislation conditioned subsections 6.6(a) through (e) on the Attorney General opining, within 45 days, that the consolidation would not subject the SPA to "common carrier" status under the federal Railway Labor Act (RLA). That conditional structure was unusual but reflected real concern about a 30-year history of litigation: the SPA had previously been ruled a carrier in 1969, had bargained with the International Longshoreman's Association (ILA), and then had been released from carrier status only after the PRC was created in 1979 to act as a structural "buffer."

The risk was that abolishing the PRC and folding its rail assets back into the SPA would re-trigger carrier status, force the SPA back into RLA collective bargaining with the ILA, and undo the 20-plus years of legal positioning the PRC structure had achieved.

Senior Deputy AGs Reginald Watkins and Grayson Kelley concluded that the consolidation would not subject the SPA to the RLA. Their reasoning had three parts:

The SPA cannot itself operate as a carrier. Subsection 6.6(c) of the bill rewrites N.C.G.S. § 143B-454(a)(4) so that the SPA may acquire and maintain rail facilities but may not operate them. With the SPA legally barred from running trains, continued rail service at Wilmington and Morehead City has to flow through private operators: Wilmington Terminal Railroad (WTR) takes Wilmington, Carolina Rail Service (CRS) takes Morehead City. Those private operators take on the common-carrier obligation. The SPA stays an owner of rail assets but not a railroad.

The STB has already agreed. On October 31, 2002, the Surface Transportation Board granted the SPA's motion to dismiss its own acquisition exemption notice, holding that "this transaction does not require Board action, and we will not exercise jurisdiction over it." That ruling confirmed the SPA was not a common carrier as a result of the asset acquisition.

The "common control" test also fails. The National Mediation Board's two-prong test asks (1) whether the entity performs work traditionally done by carrier employees, and (2) whether the entity is owned by, controlled by, or under common control with a carrier. Even if the AG concedes prong one for incidental rail-related activities, prong two fails. The SPA, as a state agency, is not owned by, controlled by, or under common control with WTR, CRS, or the BMRI (a small operator on Radio Island). Under Union Pacific (1993), "common control" requires parallel subordination to a common parent, not the parent-subsidiary relationship that exists between the SPA and the BMRI it would acquire. The Federal Circuit was specific: "A company which controls another is not 'under common control' with its subsidiary." Also, since 1991 the STB has repeatedly allowed state DOTs (Maine, Vermont, Georgia, Texas, Wisconsin) to acquire rail assets without inheriting common-carrier status, provided operating authority transfers to a third-party carrier.

The AG's conclusion: SB 1115 §§ 6.6(a)-(e), if they become effective, will not subject the SPA to RLA carrier status.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. State port and rail asset structures have evolved since 2002; STB precedent on state acquisitions has developed further; and labor law positions of the National Mediation Board have shifted with administration changes. Anyone analyzing a current state-port restructuring should review the current SPA enabling statutes, current STB decisions on state rail asset acquisitions, and recent NMB jurisdictional cases.

Background and statutory framework

The Railway Labor Act and what makes someone a carrier. The RLA, 45 U.S.C. §§ 151-188, governs labor relations on the railroads (and later, the airlines). The Act defines "carrier" to include any railroad subject to STB jurisdiction 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 . . . of property transported by railroad."

The 1969-1981 SPA litigation. The National Mediation Board in 1969 found the SPA was a carrier because it owned and operated terminal railroads. The ILA was certified as bargaining representative for SPA dock workers. Two rounds of federal litigation (4th Circuit 1972 and 1975) confirmed carrier status. The SPA bargained two collective agreements with the ILA, 1975-1980.

The PRC structural fix. In 1979 the General Assembly enacted N.C.G.S. §§ 143B-469 to -469.3 to create the PRC and move all railroad assets and operations from the SPA to the PRC. By 1982 the NMB agreed the SPA was no longer a carrier. From 1986 onward the PRC itself leased its operations to private carriers (WTR for Wilmington, CRS for Morehead City) so even the PRC was no longer operating trains. The ICC granted the PRC an exemption in 1988.

The 1989 D.C. Circuit remand. The ILA pressed the question of whether the SPA and PRC, as sister state agencies, were under "common control" so as to keep the SPA a derivative carrier. The D.C. Circuit (870 F.2d 733) remanded for the NMB to consider. In 1999 the NMB held both the PRC and SPA were not carriers and that the common-control issue was moot.

The 1999 follow-up opinion. The AG had already opined in 1999 that the SPA could safely lease ports switching operations directly to private operators (skipping the PRC buffer) and remain a non-carrier. That opinion set up SB 1115's premise that the PRC was structurally unnecessary.

The "common control" test. Union Pacific (Fed. Cir. 1993) holds that "common control" requires parallel subordination to a common parent, not a parent-subsidiary relationship. A parent that controls a subsidiary is not "under common control" with that subsidiary. This case is the lynchpin of the AG's conclusion that the SPA's acquisition of the BMRI (a small carrier on Radio Island that the PRC owned) does not make the SPA itself a carrier.

The STB precedent for state acquisitions. Maine, Vermont, Georgia, Texas, Wisconsin DOTs have all acquired rail assets without inheriting common carrier status, by structuring transactions to keep operating authority with a private third party. The AG cited those decisions to show this approach is well-established.

Common questions

Q: Why did the General Assembly condition the consolidation on the AG's opinion?

A: Because the cost of being wrong was very high: a carrier finding would have re-imposed RLA collective bargaining obligations on the SPA, with substantial legal and labor-cost consequences. Conditioning the legislation on the AG's pre-effective-date opinion let the legislature back out painlessly if the structure was legally flawed. Once the AG issued the opinion, the sections took effect by operation of law.

Q: Did the new statute actually prohibit the SPA from running trains, or was it a constructive prohibition?

A: Express prohibition. § 6.6(c) rewrites N.C.G.S. § 143B-454(a)(4) so the SPA "may not operate" rail facilities. That statutory bar is the legal hook for the SPA's defense against carrier status. The agency literally lacks the legal authority to operate as a carrier.

Q: What happened to ILA collective bargaining?

A: After the 1999 NMB decision, the SPA was already not a carrier and the ILA had no representational authority over SPA dock workers. The 2002 consolidation maintained that status. The dock workers' representation question turns on whether the SPA is a carrier under the RLA, which the AG's opinion confirms it remains not.

Q: What if the SPA later tried to operate the BMRI directly, despite the new statute?

A: That would require new legislative action to amend § 143B-454(a)(4). The current statutory bar makes the AG's conclusion robust against creeping operational involvement. The AG's analysis is essentially a snapshot of the structure created by SB 1115.

Citations

Statutes and regulations:
- N.C.G.S. §§ 143B-452 to -468 (State Ports Authority enabling statute)
- N.C.G.S. § 143B-454(a)(4) (SPA rail powers as rewritten by S.L. 2002-126)
- N.C.G.S. §§ 143B-469 to -469.3 (Ports Railway Commission enabling statute, 1979)
- S.L. 2002-126, § 6.6(a) through (f) (Senate Bill 1115)
- 45 U.S.C. § 151 (RLA definition of "carrier")
- 45 U.S.C. §§ 151-188 (Railway Labor Act)
- 49 U.S.C. § 10501(b) (STB exclusive jurisdiction)
- 49 U.S.C. § 10502 (STB exemption authority)
- 49 U.S.C. §§ 10101-11908 (ICC Termination Act of 1995)

Cases:
- International Longshoreman's Ass'n v. NC Ports Authority, 463 F.2d 1 (4th Cir. 1972), cert. denied, 409 U.S. 982 (1972)
- International Longshoreman's Ass'n v. NC Ports Authority, 370 F. Supp. 33 (E.D.N.C. 1974), aff'd, 511 F.2d 1 (4th Cir. 1975)
- International Longshoreman's Ass'n, AFL-CIO v. National Mediation Board, 870 F.2d 733 (D.C. Cir. 1989)
- Union Pacific Corp. v. United States, 5 F.3d 523 (Fed. Cir. 1993) ("common control" requires parallel subordination)
- Utah Copper Co. v. Railroad Retirement Bd., 129 F.2d 358 (10th Cir.), cert. denied, 317 U.S. 687 (1942)

NMB and ICC/STB decisions:
- In re NC State Ports Authority, 5 NMB 267 (1969)
- In re NC State Ports Authority, 9 NMB 398 (1982)
- In re NC State Ports Authority and ILA AFL-CIO, 26 NMB 305 (1999)
- North Carolina Ports Railway Commission, ICC Finance Docket No. 31248 (1988)
- NC Ports Railway Commission-Acquisition of Control Exemption-Beaufort & Morehead Railway, Inc., ICC Finance Docket No. 32735 (1995)
- NC State Ports Authority-Acquisition Exemption-NC Ports Railway Commission, STB Finance Docket No. 34258 (Oct. 31, 2002)
- State of Maine DOT-Acquisition and Operation Exemption-Maine Central Railroad Co., 8 I.C.C. 2d 835 (1991)
- State of Vermont-Acquisition Exemption-Boston and Maine Corporation, STB Docket No. 33830 (June 1, 2000)
- State of Georgia DOT-Acquisition Exemption-South Carolina Central Railroad, Inc., STB Docket No. 34057 (Apr. 30, 2002)

Source

• Landing page: https://ncdoj.gov/opinions/state-ports-authority/

Original opinion text

November 12, 2002

Honorable President Pro Tempore of the Senate Marc Basnight
Honorable Speaker of the House of Representatives James Black
16 West Jones Street
Raleigh, North Carolina 27603

Re: Advisory Opinion: Senate Bill 1115. S.L. 2002-126 (Ratified September 20, 2002/Signed by the Governor September 30, 2002)

Dear Senator Basnight and House Speaker Black:

Subsections 6.6(a) through 6.6(e) of Senate Bill 1115 would repeal the legislation creating the North Carolina Ports Railway Commission ("PRC") and transfer its assets and liabilities to the North Carolina State Ports Authority ("SPA"). Subsection 6.6(f) provides in part that within forty-five (45) days of the section becoming law the Attorney General "shall render an Opinion as to whether or not Subsections (a) through (e) of this section will subject the State Ports Authority to status as a common carrier subject to the Railway Labor Act." Subsection 6.6(f) further provides that subsections (a) through (e) thereof will become effective only if the Attorney General's opinion is that their becoming law "does not subject the State Ports Authority to status as a common carrier subject to the Railway Labor Act." This opinion is issued in response to the mandate of the General Assembly.

The SPA is an agency of the State, created for the purpose of owning and operating the State's deep-water port terminals and ancillary facilities (N.C.G.S. §§ 143B-452 to -468). In 1969, the National Mediation Board (hereafter "Board"), which was established by the Railway Labor Act, 45 U.S.C. §§ 151-188 ("RLA") to settle disputes between carriers and labor, found that the SPA was subject to the RLA based on the fact that it owned and operated terminal railroads connecting the ports with the two main railroads passing through the state. In Re North Carolina State Ports Authority, 5 NMB 267 (1969). In 1970, the Board certified the International Longshoreman's Association, AFL-CIO ("ILA") as the collective bargaining representative of the SPA's dock workers, warehousemen and security guards. There followed a period of litigation concerning both that certification and the SPA's obligation to bargain with the ILA, resulting in a determination that the SPA was a "carrier" subject to the RLA, and thus subject to the jurisdiction of the Board. See International Longshoreman's Association v. North Carolina Ports Authority, 463 F.2d 1 (4th Cir. 1972), cert. denied, 409 US 982 (1972); International Longshoreman's Association v. North Carolina Ports Authority, 370 F. Supp. 33 (E.D.N.C. 1974), aff'd, 511 F.2d 1 (4th Cir. 1975). Thereafter, the SPA entered into two successive collective bargaining agreements with the ILA, which lasted from 1975 to 1980.

In 1979, the General Assembly enacted N.C.G.S. §§ 143B-469 to -469.3, creating the PRC and directing that it assume control and operation of the SPA's railroad facilities. The SPA and the PRC subsequently entered into agreements to accomplish the transfer of those facilities and operations. In 1980, the ILA initiated a Board investigation of its continuing representational dispute with the SPA. In 1981, the SPA moved to dismiss the case for lack of jurisdiction, asserting that after the transfer of the railroad equipment and functions to the PRC the SPA was no longer a carrier under the RLA. The Board agreed, concluding that the SPA was no longer a carrier subject to the RLA, that the ILA therefore no longer had authority to represent the SPA's employees, and that "any basis the Board had for asserting jurisdiction over any employees of the North Carolina State Ports Authority has been removed." In Re North Carolina State Ports Authority, 9 NMB 398, 409 (1982).

The ILA appealed the Board's decision, and in 1989 the United States Court of Appeals for the D.C. Circuit remanded the case to the Board for further consideration of the issue of whether, as state agencies, the SPA and the PRC were under "common control" and whether for that reason the SPA continued to be a "carrier" as defined by the RLA. International Longshoreman's Association, AFL-CIO v. National Mediation Board, 870 F.2d 733 (D.C. Cir. 1989). In the interim, the operations of the PRC had changed. The PRC had initially operated the switching railroads for the ports of Wilmington and Morehead City with its own equipment and personnel, but in 1986 it entered into agreements with Wilmington Terminal Railroad, L.P. ("WTR") and with Carolina Rail Service, Inc. (now Carolina Rail Service, LLC) ("CRS") for the operation of the terminal switching railroads in Wilmington and Morehead City, respectively. In 1988, based on the fact that it no longer operated a railroad, the PRC sought and received an exemption from Interstate Commerce Commission ("ICC") jurisdiction, subject only to a "residual common carrier obligation." North Carolina Ports Railway Commission — Petition for Declaratory Order or Prospective Abandonment Exemption, ICC Finance Docket No. 31248 (1988). In 1990, the PRC acquired the Beaufort and Morehead Railroad Company, which owned the railroad tracks leading from Morehead City across the Newport River to Radio Island. Rail operations on that line were conducted by the Beaufort and Morehead Railway, Inc. ("BMRI"), which the PRC acquired in 1995. North Carolina Ports Railway Commission — Acquisition of Control Exemption — Beaufort & Morehead Railway, Inc. ICC Finance Docket No. 32735 (December 22, 1995). The BMRI continued to provide service on that portion of the Morehead City line until late 1999. In Wilmington, the PRC acquired a section of line formerly owned by CSX, which was added to the lines operated by the WTR pursuant to the 1986 lease.

In 1994, this Office issued an advisory opinion to Mr. David King, Deputy Secretary of the North Carolina Department of Transportation, regarding a proposal to abolish the PRC. Mr. King noted that the litigation among the ILA, SPA and PRC raised "implications which should be addressed" and asked for the Attorney General's opinion "as to any negative legal consequences" and the "degree of risk involved" if the PRC were to be abolished. In response, we stated that "[t]he most likely 'negative consequence' of abolishing PRC and transferring its assets to SPA would be in connection with the litigation . . . pending before the National Mediation Board." We noted that although the ICC had exempted the PRC from its regulation, it had found that the PRC had a "residual common carrier obligation." We considered the possibility that the SPA would inherit this "residual common carrier obligation" if it absorbed the PRC's functions, and stated that there was some possibility that such a result would support a finding that the SPA was a carrier subject to the RLA. Finally, we stated:

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.

In 1999, the Board issued its decision in the ILA/SPA/PRC dispute. The Board, noting that the PRC had discontinued providing rail service at Wilmington and Morehead City, and that the ICC had exempted the PRC from regulation, held that the PRC was not a carrier subject to the RLA. It so held despite noting that the PRC had acquired the BMRI, stating "[t]hat an entity may exercise control over a carrier by itself is not sufficient to make the entity a carrier." In Re: North Carolina State Ports Authority and International Longshoreman's Association, AFL-CIO, 26 NMB 305, 318, 26 NMB No. 60 (1999). The Board also held that the SPA was not a carrier, and that since neither the SPA nor the PRC were carriers subject to the RLA, the issue of whether they were under "common control" was moot.

After the Board's 1999 decision the Executive Director of the SPA requested that this Office reconsider our opinion as to whether the SPA would be subject to the RLA if it leased the ports switching operations directly to private operators without the 'buffer' of the PRC. In response to that request, by letter dated October 11, 1999, we issued an advisory opinion which concluded:

Given the holding of the Board, it is our opinion that it is highly unlikely that either the NMB or the federal courts would find the SPA to be a "carrier" for purposes of the RLA if it leased the ports switching operations directly to private operators "without the buffer of the PRC."

In November of 1999, the PRC (d/b/a Beaufort & Morehead Railway) filed a Notice of Exemption with the Surface Transportation Board ("STB") announcing that the BMRI would "assign its lease and cease being a railroad" and that PRC would itself become the common carrier railroad. Thereafter, in a filing dated December 19, 2001, that transaction was reversed by the PRC and on January 1, 2002 the BMRI again became the operator over the Radio Island trackage.

Senate Bill 1115 was subsequently enacted and signed into law on September 30, 2002. On October 1, 2002, the CRS and the WTR filed "Acquisition and Operation Exemptions" with the STB stating their intent to acquire operating authority from the PRC with respect to all of the railroad facilities in Morehead City and Wilmington. The SPA filed an "Acquisition Exemption" with respect to the railroad assets of the PRC both in Wilmington and in Morehead City. In the same Docket the SPA filed a Motion to Dismiss the Notice of Exemption on the grounds that the transaction is not subject to the STB's jurisdiction. These filings (which were made contingent on the legislation becoming law) would transfer all operating authority for the Wilmington trackage to the WTR and for the Morehead City trackage to the CRS. It is our understanding that the WTR and the CRS have agreed, as evidenced by their submissions to the STB, to assume all common carrier responsibilities with respect to the terminal railroads. The PRC's board ratified these transactions on November 6, 2002. On October 31, 2002, the STB issued its decision with respect to the SPA's filings in Finance Docket No. 34258. The STB granted the SPA's Motion to Dismiss its filing on the grounds that the SPA would not become a common carrier as a result of the transaction.

We have been directed by Senate Bill 1115 to issue an opinion as to whether the enactment of subsections (a) through (e) of the legislation, abolishing the PRC and transferring its assets and liabilities to the SPA, will subject the SPA to status as a common carrier subject to the RLA. The RLA defines "carrier" as including "any railroad subject to the jurisdiction of the Surface Transportation Board" 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, receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage and handling of property transported by railroad. . . ." 45 U.S.C. § 151. As previously noted, the PRC was granted an exemption from STB (previously ICC) jurisdiction in 1988, primarily because it no longer operated a railroad. Consistent with this premise, the Board in its 1999 decision concluded that neither the PRC nor the SPA were carriers subject to the RLA in view of the following factors:

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. . . . [and] leased its Morehead City operations to Carolina Rail Services Company, Inc. (CRS) . . . .

. . . .

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. . . ."

On these facts, the Board stated:

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. . . . [T]he WTR and the CRS are subject to the Railway Labor Act and the PRC is not.

. . . .

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.

In Re: North Carolina State Ports Authority and International Longshoreman's Association, AFL-CIO, 26 NMB 305, 318, 26 NMB No. 60 (1999).

The Board therefore specifically found that the PRC was "no longer a common carrier by rail subject to the Railway Labor Act."

Section 6.6(d) of Senate Bill 1115 provides that all of the assets and liabilities of the PRC, including its contractual obligations, are to be transferred to the SPA. Section 6.6(c) of the legislation rewrites N.C.G.S. § 143B-454(a)(4) to provide that while the SPA may acquire and maintain rail facilities, it may not operate them. The SPA is thus precluded by its own enabling legislation from directly providing rail services. Furthermore, as reflected in the October 1, 2002 STB filings by the SPA, CRS and WTR, the continuation of rail services at the Wilmington and Morehead City ports will necessitate the transfer of operating authority, as well as permanent operational easements, to third party common carriers. Finally, in granting the SPA's Motion to Dismiss its notice of exemption the STB stated: "This transaction does not require Board action, and we will not exercise jurisdiction over it." North Carolina State Ports Authority — Acquisition Exemption — North Carolina Ports Railway Commission, decision, p. 5, STB Finance Docket No. 34258 (decided and served October 31, 2002). In view of these factors, we do not believe the enactment of Senate Bill 1115 will subject the SPA to RLA jurisdiction as a result of its own operations.

The remaining issue is therefore whether the SPA, as a non-operating owner of rail lines and facilities, could be determined to be under "common control" with a "carrier" and thereby subject to the RLA. The Board applies a two-prong test in determining whether an entity which does not operate as a carrier may become one because it is under common control with a carrier. First, it determines if the nature of the work performed by the entity is the type which would traditionally be performed by employees of carriers. Second, it determines whether the entity is owned by, controlled by, or under common control with a carrier. In order for the Board to assert jurisdiction, both parts of the test must be satisfied. In Re: Committee for a Better Dowfort, 27 NMB 196 (2000); In Re: Milepost Industries, 27 NMB 362 (2000).

The enactment of Senate Bill 1115 would not, in our opinion, subject the SPA to RLA jurisdiction under this two-part "common control" test. Even if the Board found incidental rail-related activities of SPA employees to be evidence establishing the "traditional function" prong of the test, the SPA, as an agency of the State of North Carolina, is clearly neither owned by, controlled by nor under common control with a carrier. While implementation of Senate Bill 1115 will result in the SPA acquiring the BMRI, which is a carrier, prior cases have established that the parent company of a subsidiary carrier does not itself become a carrier unless its own operations define it as such. See Union Pacific Corp. v. United States, 5 F.3d 523 (Fed. Cir. 1993). At issue in Union Pacific was whether a holding company was under common control with its wholly owned subsidiary, which was a Class I railroad. The Federal Circuit Court of Appeals held that in order to be under common control, companies must be in parallel relationships to each other, both controlled by a common parent. As stated by the court:

The term "under common control" does not usually apply to two companies in a parent-subsidiary relationship. These words — "under common control" — convey a meaning of mutual subordinance to a controlling principal. A company which controls another is not "under common control" with its subsidiary. Rather two companies most naturally fit within the term "under common control" when occupying parallel positions as subsidiaries controlled by a common parent. See, e.g., Utah Copper Co. v. Railroad Retirement Bd., 129 F.2d 358, 363 (10th Cir.) cert. denied, 317 U.S. 687, 87 L. Ed. 551, 63 S. Ct. 258 (1942).

5 F.3d 523, 525 (Fed. Cir. 1993)

Since 1991, the STB has frequently permitted state entities to acquire railroad assets without acquiring any common carrier obligation. See, e.g. State of Wisconsin, DOT — Petition for Declaratory Order, STB Docket No. 341810 (August 1, 2002); State of Georgia, DOT — Acquisition Exemption — South Carolina Central Railroad, Inc., STB Docket No. 34057 (April 30, 2002); State of Texas — Acquisition Exemption — West Texas & Lubbock Railroad Company Inc., STB Docket No. 33889 (March 6, 2002); State of Vermont — Acquisition Exemption — Certain assets of Boston and Maine Corporation, STB Docket No. 33830 (June 1, 2000); State of Georgia, DOT — Acquisition Exemption — Line of Central of Georgia Railroad Co., STB Docket No. 33690 (June 23, 1999); State of Maine, Department of Transportation — Acquisition and Operation Exemption — Maine Central Railroad Co., 8 I.C.C. 2d 835 (1991). In the State of Maine case, the state argued that its acquisition of certain rail lines owned by one railroad company and operated by another would not subject the state to common carrier status because state law prohibited Maine from operating as a carrier and its acquisition of the physical assets of the railroad would not alter the current carrier's service obligations. The ICC concurred, stating:

[T]he fundamental test for determining whether a party is a common carrier is whether there has been a holding out to the public as a common carrier. . . ." See Status of Bush Universal, Inc., 342 I.C.C. 550, 564, (1973). In the typical sale of a non-abandoned rail line the new owner is presumed to succeed the former owner in assuming the obligation to insure that service continues over the line. However, we have recognized that such rail lines may be sold under certain limited circumstances, without imposing a service obligation on the new owner.

In the more recent State of Vermont case, the state acquired approximately forty miles of railroad line but, in order to avoid becoming a common carrier, structured the transaction to transfer the existing common carrier obligation to a third-party railroad company. The STB again concluded that the transfer of common carrier operations and obligations to a third party carrier insulated the state from jurisdictional status as a carrier. State of Vermont — Acquisition Exemption — Certain Assets of Boston and Maine Corporation, STB Docket No. 33830 (June 1, 2000).

By transferring all of the PRC's assets and obligations to the SPA, Senate Bill 1115 effectively puts SPA in the same jurisdictional posture as that of the PRC. The ICC has stated that its exception of the PRC from regulation effectively eliminates any future common carrier obligation. The Board, likewise, has specifically found that the PRC is not a common carrier by rail subject to the RLA. The SPA is prohibited by statute from becoming a carrier in its own right, and it would not meet the "common control" test for RLA and Board jurisdiction with respect to any other carrier's operations.

It is therefore our opinion that if Senate Bill 1115, subsections 6.6 (a) through 6.6(e) become law, they will not subject the State Ports Authority to status as a common carrier subject to the Railway Labor Act.

Sincerely,

Reginald L. Watkins
Senior Deputy Attorney General

Grayson G. Kelley
Senior Deputy Attorney General