EMPLOYER STATUS DETERMINATION

CAGY Industries, Inc.

This is the determination of the Railroad Retirement Board

concerning the status of CAGY Industries, Inc. (CAGY) as an

employer under the Railroad Retirement Act (45 U.S.C. §231 et sea. )

(RRA) and the Railroad Unemployment Insurance Act (45 U.S.C. §351

et sea.) (RUIA).

Information about CAGY was furnished by Mr. H. Lynn Gibson, CAGY's

Vice President and Chief Financial Officer. CAGY was incorporated

in the State of Delaware on March 27, 1987, and was organized on

June 8, 1987. It is a publicly held corporation registered with

the Securities and Exchange Commission (SEC). The corporation was

organized for the specific purpose of acquiring, owning, and

holding stock of other corporations, and to perform all acts and

things covered generally by the denomination of "holding

corporation" or "holding company."

CAGY has one class of stock, common stock. The stock is registered

with the SEC and is owned and held by 401 shareholders, not one of

which is a railroad. No railroad has a direct financial interest

in the corporation, nor does any railroad have an indirect stock or

financial interest in the corporation through a parent company or

"brother-sister corporation."

CAGY owns 92.024% of the capital stock of the Columbus and

Greenville Railway Company (BA No. 2563) (C&G), which it first

acquired in 1988. The remaining 7.076% of C&G stock is owned by a

number of individual shareholders.

In addition to the C&G stock, CAGY owns one hundred percent of the

capital stock of three other corporations: (1) Railway Management,

Inc. (RMI), a Mississippi corporation organized in 1988, which

keeps records of railcar earnings for lessor-owners of freight cars

leased for use in interchange service; (2) The Chattooga and

Chickamauga Railway Company (CCKY) (BA No. 5527), a Mississippi

corporation organized in 1989, which operates as a common carrier

of freight over 67 miles of track in Northwest Georgia and in

Chattanooga, Tennessee, leased with the option to purchase from the

Central of Georgia Railroad Company (BA No. 1505), the Tennessee,

Alabama, & Georgia Railway Company (BA No. 2540), and the Alabama

Great Southern Railroad (BA No. 1501); and (3) Redmont Railway

Company (BA No. 5558) (RRC), a Mississippi corporation organized in

1994, which operates as a freight railroad on 41.5 miles of track

between Corinth, Mississippi, and Red Bay, Alabama, under a lease

contract from the Mississippi-Alabama Railroad Authority, a nonprofit corporation organized pursuant to an Interstate Compact

between the States of Mississippi and Alabama.

CAGY also owns 49% of the stock of Southeastern Rail, Inc., a

Mississippi corporation organized in 1994, which is engaged in the

BCD 1995-92
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CAGY Industries, Inc.

business of construction of railroad tracks, bridges, and

facilities for railroads, industries, and public authorities in the

Southeastern region of the United States.

The officers of CAGY are Lester Myers, Chairman of the Board; Roger

D. Bell, President and Chief Executive Officer; H. Lynn Gibson,

Executive Vice President and Chief Financial Officer; Sheila M.

Cain, Secretary; and Milton C. Neyman, Jr. , Treasurer. The

directors of CAGY are Lester Myers, Roger D. Bell, Sam Y. Wilhite,

James D. Bryan, Henry Weiss, Birney Imes, Seymour B. Johnson, Paul

L. Smith, Bruce J. Brumfield, and Jerrell M. Bearden. CAGY's

officers and directors are also officers and directors of C&G and

CCKY. CAGY's officers are also officers of RRC. The directors of

RRC are Lester Myers, Roger D. Bell, and H. Lynn Gibson.

CAGY provides financial, accounting, and computer services and

manages non-operating properties for its subsidiary corporations,

for which the subsidiaries pay a fee. CAGY does not, either alone

or in conjunction with any one of its subsidiary railroad

corporations, perform services in the transportation of property by

rail. CAGY's revenues consist primarily of fees and rental income

from the lease of equipment. CAGY has four employees, consisting

of two accountants, a secretary, and an administrative assistant.

CAGY's primary assets, in addition to the capital stocks identified

above, consist of office and computer equipment, locomotives, and

railcars. Locomotives owned by CAGY are leased to C&G and CCKY,

and railcars owned by CAGY are leased to C&G. However, there is no

joint control of any equipment or facilities owned by CAGY, such

control being vested in the lessee exclusively.

Section 1 of the RRA defines the term "employer" to include:

(i) any express company, sleeping car company, and

carrier by railroad, subject to subchapter I of chapter

105 of Title 49;

(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) of this

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, or the receipt,

delivery, elevation, transfer in transit, refrigeration
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CAGY Industries, Inc.

or icing, storage, or handling of property transported by

railroad.

Section 1 of the RLJIA and section 3231 of the Railroad Retirement

Tax Act (RRTA) (26 U.S.C. §3231) contain essentially the same

definition.

In a decision regarding a claim for refund of taxes under the RRTA,

the United States Court of Appeals for the Federal Circuit held

that a parent corporation which owns a rail carrier subsidiary is

not under common control with the subsidiary within the meaning of

§3231. Union Pacific Corporation v. United States. 5 F. 3d 523 (Fed

Cir. 1993).

The facts regarding common control in the Union Pacific case are

indistinguishable from those presented in the case of CAGY, which,

like Union Pacific, is a publicly held company with a large number

of shareholders. Accordingly, a majority of the Board finds that

CAGY Industries, Inc. is not an employer covered by the RRA and the

RUIA because it is not under common control with its rail carrier

subsidiaries.

Glen L. Bower

Jerome F. Kever