B.C.D. 04-27

MAY 2 4 2004

EMPLOYER STATUS DETERMINATION

ENG Logistics Company

This is the determination ofthe Railroad Retirement Board concerning the status of 

ENG Logistics Company (ENG) 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 ENG, provided the following information. 

ENG 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) ofthe 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 ofthe

Surface Transportation Board under Part A ofsubtitle IV oftitle 49,

United States Code.

Sections 1(a) and 1 (b) ofthe Railroad Unemployment Insurance Act (45 U.S.C.

§§ 351(a) and (b)) contain substantially the same definition, as does section 3231

ofthe Railroad Retirement Tax Act (26 U.S.C. § 3231).

The Board notes that m 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 ofthe 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 ofthe 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 ofinsuring 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 ofthe rail line

owned by NYC and CSX and FNG’s ultimate purchase ofthe 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 WCR

for railroad operations inasmuch as FNG has no railroad assets. WCR is a

covered employer under the RRA and RUIA.

In view ofthe 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.

Michael S. Schwartz

:rome F. Kever