B.C.D. 04-37

EMPLOYER STATUS DETERMINATION JUL 2 8 2004

Southern Freight Logistics LLC

doing business as Southern Freight Railroad

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

Southern Freight Logistics LLC (SF Logistics) doing business as Southern Freight 

Railroad Corporation (SF Railroad), as an employer under the Railroad Retirement Act 

(45 U.S.C. § 231 et seq.) and the Railroad Unemployment Insurance Act (45 U.S.C.

§ 351 et seq.). The status of this company has not previously been considered.

The evidence is that SF Logistics is a tenant in the “Heritage Center” of the East 

Tennessee Technology Park, located near Oak Ridge, Tennessee. The Park, which is

owned by the United States Department of Energy, formerly operated as the Oak Ridge 

K-25 Site for production of components of nuclear weapons. The existing structures

are now operated as an industrial park by Heritage Center LLC, a subsidiary of the

Community Reuse Organization of East Tennessee (CROET). SF Logistics was

granted an exemption by the Surface Transportation Board (STB) allowing it to lease

from CROET and to operate a total of 14.5 miles of rail line consisting of 7 miles of rail

from an interchange with the Norfolk Southern Railway at Blair, Tennessee to the

Technology Park, and 24 industrial spurs located within the Park which total an

additional 7.5 miles of track. See: Southern Freight Logistics LLC—Lease and

Operation Exemption—Community Reuse Organization of East Tennessee, STB

Finance Docket No. 33392, 62 Fed. Reg. 26848, May 15, 1997. The STB notice stated 

the transaction between SF Logistics and CROET was to be concluded on or about

May 2, 1997.

SF Logistics operates five businesses: Southern Freight Express and Lakeway

Trucking carry freight by motor truck; Southern Air Logistics transports passengers and

freight by air; and Southern Freight Warehousing and Distribution operates a

warehouse and distribution center in the Heritage Center. As noted above, SF Logistics 

also provided rail freight service to tenants of the Technology Park under lease with

CROET, doing business as SF Railroad. By letter dated February 10, 2004, the 

secretary for SF Logistics stated that two SF Logistics employees operate one leased

locomotive one day per week. The balance of time these employees drive trucks. SF

Logistics states that it also has two clerical employees, and four full time truck drivers,

for a total of eight employees.

CROET later filed a notice of exemption with the STB stating it has formed Heritage 

Railroad Corporation (Heritage RR) to provide rail service to Heritage Center tenants.

See: Heritage Railroad Corporation—Lease and Operation Exemption—Rail Line of

United States Energy Department, STB Finance Docket No. 34372, July 16, 2003, 68

Fed. Reg. 44140. As stated in that notice, Heritage RR entered into an agreement

September 30, 2000 allowing SF Railroad to operate freight service until September 15,

2005. Although the notice of exemption further states that Heritage RR notified SF

Railroad that the agreement would terminate and Heritage RR would assume operation

September 14, 2003, the letter dated February 10, 2004 states the SF Railroad

continues to conduct operations.

BA#5591
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Southem Freight Logistics LLC

doing business as Southern Freight Railroad

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;

Section 1 of the RUIA (45 U.S.C. § 351) contains essentially the same definitions, as

does section 3231 of the Railroad Retirement Tax Act (26 U.S.C.§ 3231). Regulations 

of the Board at 20 CFR 202.3(a) further provide that where a company principally 

engages in business other than rail carrier business, but engages in some rail carrier

business, the Board will consider whether some identifiable and separable enterprise 

conducted by the company may be considered to be the employer covered by the Acts

The evidence of record establishes that SF Logistics d/b/a SF Railroad has been

operating as a rail carrier in interstate commerce since concluding a lease agreement

with CROET on May 2, 1997. However, SF Logistics’ primary business is shipping

freight by truck or airplane or in storage of freight in connection with those activities.

Only two of the eight employees work in the rail carrier operation part-time. Moreover,

SF Logistics operates under the rubric SF Railroad when conducting these rail carrier

operations. Accordingly, it is determined that SF Logistics d/b/a SF Railroad became 

an employer within the meaning of section 1 (a)(1 )(i) of the Railroad Retirement Act and

its corresponding provision of the Railroad Unemployment Insurance Act effective

May 2, 1997, the date it began operations under the lease with CROET. Pursuant to

section 202.3(a) of the regulations, SF Logistics is an employer only with respect to the 

rail carrier operations conducted as SF Railroad under the agreement with CROET and

Heritage RR.1

Jerome F. Kever

1 The Board notes that if Heritage RR meets the requirements set forth by the Board in Railroad

Ventures, Inc., B.C.D. 00-47, it is also a covered rail carrier employer under the Acts by reason ofits

lease of a line ofrail to SF Railroad. The Board will consider the status of Heritage RR in a separate

decision.