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This is the determination of
the Railroad Retirement Board concerning the
status of FNG Logistics Company (FNG) as a covered
employer under the Railroad Retirement Act (45
U.S.C. § 231, et seq.) (RRA) and the Railroad
Unemployment Insurance Act (45 U.S.C. §
351, et seq.) (RUIA).
Mr. Daniel A. LaKemper, Attorney for FNG, provided
the following information. FNG is a subsidiary
of Flex-N-Gate Corporation (Flex). Flex filed
an offer of financial assistance to purchase
a railroad line being abandoned by New York
Central Lines, LLC (NYC) and CSX Transportation,
Inc. (CSX) (see STB Finance Docket No. AB-565
(Sub-No. 4x), decided April 25, 2003). FLEX
substituted FNG as the purchaser. Vermillion
Valley Railroad Company, Inc. (VVRR) (B.A. No.
2396), an employer covered under the RRA and
RUIA, operates the rail line under contract
with FNG (see STB Finance Docket No. 34340,
decided May 7, 2003). According to the STB decision,
the rail line in question is approximately 6.12
miles between milepost QSO-5.18 near the Illinois/Indiana
State line and milepost QSO-11.30 near Olin,
in Vermillion and Warren Counties, Indiana.
VVRR operates on approximately 5.91 miles of
this trackage and interchanges with CSX near
Danville, Illinois.
Mr. LaKemper stated that FNG purchased the
rail line in order to provide continued service
to the Flex-N-Gate facility at Olin, Indiana.
VVRR began operations on April 24, 2003.
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.
Sections 1(a) and 1(b) of the Railroad Unemployment
Insurance Act (45 U.S.C.
§§ 351(a) and (b)) contain substantially
the same definition, as does section 3231 of
the Railroad Retirement Tax Act (26 U.S.C. §
3231).
The Board notes that in its decision regarding
Railroad Ventures, Inc. (B.C.D. 00-47), the
Board held that an entity that has STB authority
to operate a rail line, but leases or contracts
with another to operate the line in question,
is covered under the Acts administered by the
Board unless the Board determines that the entity
is not a
carrier. The Board enunciated a three-part test
in B.C.D. No. 00-47 to be applied in making
this determination. An entity that leases a
line to another company or contracts with another
company to operate the line, is a carrier under
the Railroad Retirement Act unless the Board
finds that all three of the following factors
exist: 1) the entity does not have as a primary
business purpose to profit from railroad activities;
2) the entity does not operate or retain the
capacity to operate the rail line; and 3) the
operator of the rail line is already covered
or would be found to be covered under the Acts
administered by the Board.
FNG was created for the sole purpose of insuring
that continuing railroad service would be provided
to its parent corporation’s facility at
Olin, Indiana. This was accomplished through
intervention in the abandonment proceedings
of the rail line owned by NYC and CSX and FNG’s
ultimate purchase of the rail line. Thus, since
the primary purpose of FNG is to maintain continued
rail service on a rail line that would otherwise
have been abandoned, the Board finds that FNG
does not have a primary business purpose to
profit from railroad activities. FNG does not
have the capacity to operate itself on the rail
line which it owns and contracts with VVCR for
railroad operations inasmuch as FNG has no railroad
assets. VVCR is a covered employer under the
RRA and RUIA.
In view of the foregoing, the Board finds that
the three part test set forth in the Railroad
Ventures decision has been satisfied. It is
the determination of the Railroad Retirement
Board that FNG Logistics Company is not an employer
under the RRA or RUIA.
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