B.C.D. 00-10

Employer Status Determination ^ ® 2000

Bulk Intermodal Distribution Services, Incorporated

This is the decision ofthe Railroad Retirement Board regarding the status of

Bulk Intermodal Distribution Services, Inc. (BIDS) as an employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts. The status

of this company has not previously been considered.

The evidence is that BIDS was incorporated on March 17,1995, as the wholly

owned subsidiary of CSX Corporation, the parent company of CSX

Transportation (CSXT), a covered rail carrier employer under the Acts. Prior to

that date, the services performed by BIDS were performed by Total

Distribution Services, Incorporated (TDSI). The status of TDSI under the Acts

is being separately considered. On February 27,1995, the stock of Fairfax

Forwarding, Inc., was indirectly contributed by CSX Corporation to Total

Distribution Services. Total Distribution Services then contributed the assets

ofthe bulk transload function to Fairfax Forwarding. On March 17, 1995, 

Fairfax Forwarding was merged into another CSX Corporation subsidiary. The

name of the surviving company was changed to BIDS.

BIDS performs a bulk transload function. It transfers customers' bulk product

from one transportation mode to another and performs various services in

connection with those goods, including blending, heating, sifting, and

packaging. Specifically, BIDS transfers bulk product from plant to rail, from

barge, ship, or truck to rail, from rail to truck to barge or ship, and from truck

to rail; heats products such as corn syrup, vegetable oils, and fuel oils for use

upon delivery; blends and mixes products such as asphalt, hydrogen peroxide

solutions, and food grade products; provides warehousing of products; sifts

products for immediate use; transfers products from rail cars into containers;

performs quality control by product sampling; and provides inventory control

and reporting.

BIDS has 107 terminals located in 19 states east of the Mississippi. BIDS owns

one terminal and leases 106 terminals from CSXT. BIDS also leases all

terminal equipment from CSXT. The terminals are operated by independent

contractors which employ 270 persons. Information provided indicates that the

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services identified in the preceding paragraph are actually performed by these

independent contractors. BIDS has 12 employees which manage the contracts

with the independent contractors for operation of the terminal facilities. BIDS’

12 employees also design the “rail to truck" processes, maintain field and

terminal equipment (although it is owned by CSXT), and provide technical

support to the bulk marketing group1 on an as-needed basis. The “rail to

truck" processes are a series of BIDS-developed customized handling

procedures that vary depending on the nature ofthe bulk materials handled

(wet, dry, food grade, hazardous, etc). One of BID’S four directors is both the

Assistant Corporate Secretary for BIDS and a Vice President/Secretary for

CSXT.

In a letter of December 9,1999, Tax Counsel for CSX submitted information

which indicated that revenue from loading and unloading accounts for between

50 and 60 percent of BIOS’s gross revenue, that revenue attributable to valueadded services accounts for 30 to 35 percent of BIOS’s gross revenue, and that

“much ofthe revenue attributable to the value-added services is now billed and

collected either through CSXT invoices or as a component of CSXT’s line haul

tariff."

Section 1(a)(1) of the Railroad Retirement Act (RRA) (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 ofthe 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) ofthis 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 * * *.

Bulk Intermodal Distribution Services, Incorporated

1 Information provided indicates that BIDS does not maintain a separate sales and marketing

group, but uses CSXTs marketing department to market its services under the name "CSX

Transflo."
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Sections 1(a) and 1(b) of the Railroad Unemployment Insurance Act (RUIA), 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).

BIDS is clearly not a carrier by rail. However, BIDS is a wholly-owned

subsidiary of CSX Corporation, which also controls CSX Transportation, a rail

carrier employer under the RRA and the RUIA. Accordingly, the Board finds

that since March 17, 1995, BIDS has been under common control with a rail

carrier employer. Therefore, if BIDS provides a service in connection with the

transportation of property by rail, it is an employer under the Acts.

The most recent information provided by CSX Tax Counsel indicates that the

majority of BIDS’ revenue, between 50 and 60 percent, comes from the loading

and unloading services which BIDS provides. The United States Supreme

Court, early in the Board’s history, agreed with the Board that loading and

unloading are services in connection with railroad transportation, Railroad

Retirement Board v. Duauesne Warehouse Co.. 326 U.S. 446, 90 L. Ed. 192

(1946). The Duauesne case was one of the earliest dealing with the affiliate

definition of an “employer.” The Supreme Court affirmed a ruling by the U.S.

Court ofAppeals for the District of Columbia, 149 F.2d 507 (D.C. Cir. 1945),

which wrote that:

... the Board has construed the carrier affiliate coverage provision as

denoting services which are an integral part of, or are closely related to,

the rail transportation system of a carrier and as including within its

coverage (1) carrier affiliates engaged in activities which are themselves

railroad transportation or which are rendered in connection with goods in

the process of transportation, such as loading and unloading railroad

cars, receipt, delivery, transfer in transit, and other handling of property

transported by railroad; and also (2) carrier affiliates engaged in activities

which enable a railroad to perform its rail transportation, such as

maintenance and repair of way and equipment, and activities which

enable a railroad to operate its rail system more successfully and to

improve its services to the public such as auxiliary bus transportation,

dining facilities, and incidental warehousing services.

We agree with the Board’s construction ofthe Act. It follows the ordinary

meaning of the words used in the statute. It achieves a common sense

result well within what we conceive to be the policy of Congress, i.e., to

Bulk Intermodal Distribution Services, Incorporated
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cover the business of railroading as it is actually carried on. (Footnote

omitted.) (149 F.2d at 509).

The Board finds that in this case once again, the loading and unloading

services provided by BIDS constitute service in connection with railroad

transportation.

In addition, the Board finds significant the fact that much of the BIDS revenue

attributable to value-added services is now billed and collected either through

CSXT invoices or as a component of CSXT’s line haul tariff. CSXT is the rail

carrier affiliate of BIDS. The Supreme Court wrote in the Duquesne case that

the question to be addressed in deciding whether a service is service in

connection with railroad transportation:

... is whether a carrier’s affiliate is performing a service that could

be performed by the carrier and charged for under the line-haul

tariffs. Ifit is such a service, it is a transportation service within

the meaning ofthe present Acts. 326 U.S. at 454, 90 L.Ed. 197-198.

The Board finds that the fact that BIDS’ customers are billed for BIDS’ valueadded services through CSXT invoices or as a component of CSXT’s line haul

tariff is an indication that those services are a transportation service within the

affiliate definition of an “employer’ under the RRA and the RUIA.

For the reasons explained above, the Board finds that both the loading and

unloading services and the value-added services which BIDS performs

constitute service in connection with railroad transportation within the affiliate

definition of a covered employer.

Accordingly, the Board finds that BIDS became an employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts effective

March 17, 1995.

Bulk Intermodal Distribution Services, Incorporated
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Bulk Intermodal Distribution Services, Incorporated

For experience-rating purposes, BIDS should be treated as a new employer.

Cherry! !nyi T. Thomas

V. M. Speakman, Jr. i/

Jerome F. Kever