B.C.D 16-04 

Employer Status Determination 

Decision on Reconsideration 

Four Rivers Finance Company, Inc. (FRFC) 

February 17, 2016 

This is a decision upon reconsideration of the Railroad Retirement Board based on 

the request of Four Rivers Finance Company, Inc. (FRFC). The Board issued an 

initial determination in Board Coverage Decision 12-1 , rendered December 15, 

2011, finding that FRFC became an employer covered under the Railroad 

Retirement and Railroad Unemployment Insurance Acts, effective October 30, 

2003. For the reasons set forth below, the Board determines upon reconsideration 

that FRFC is an employer covered by the Railroad Retirement and Railroad 

Unemployment Insurance Acts (RRA and RUIA), but modifies the effective date 

of coverage under the RUIA to December 15, 2011, the date of the initial Board 

decision. 

Information provided for the initial decision described the services provided by 

FRFC to be "centralized loan administration and cash management services to its 

affiliates P&L, EVRW and A&0" 1

, further described as administrative services, 

including handling bank accounts, preparation and documentation of Board of 

Director meetings, accounting services, and centralized loan administrative 

services. Over 95% of these services were provided to FRFC's rail carrier 

affiliates P&L, EVWR, and A&O. Accordingly, the Board found that FRFC was a 

covered employer because it was under common control with employers covered 

by the Act and performs services in connection with the transportation of 

passengers or property by railroad. 

In its request for reconsideration, FRFC does not challenge that it is an employer 

covered by the Acts but rather the retroactive aspects of the decision. Through its 

counsel, FRFC argues that the Board decision subjects FRFC to unique 

administrative hardship if it is required to revisit records for its numerous, shortterm employees, all of which were employed by FRFC strictly on a part-time basis 

while concurrently providing similar financial services for other, non-covered 

employers. 

1

FRFC, a Delaware corporation, is a wholly owned subsidiary of Four Rivers Transportation, 

Inc. (FRT), a non-covered entity. In addition to FRFC, FRT also owns the Paducah & Louisville 

Railway, Inc. (P&L), Evansville Western Railway, Inc. (EVWR), and Appalachian and Ohio 

Railroad, Inc. (A&O), all rail carrier employers covered by the Acts. 

BA # 9367
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In support of its request for reconsideration, FRFC submits the following relevant 

information: 

• FRFC provides financial services commonly required within corporate 

families that include multiple capital-intensive enterprises. Because the 

FR T corporate family includes three short line railroad operations, each of 

which may at separate times faces significant capital expenditures, FRT 

requires specialized intra-corporate financial guidance that FRFC's 

employees provide. FRFC manages, distributes, and allocates funds among 

the FRT corporate family. It functions similarly to a bank or credit 

institution and it performs many of the same services that a non-carrier 

holding company that controls several railroad subsidiaries performs to 

oversee the allocation and/or re-allocation of intra-corporate family funds 

among its various railroad subsidiaries. 

• FRFC was created in order to provide the above services. They hire up to 

two part-time corporate finance specialists that assist with transactions 

among the FRT corporate family. These part-time specialists provide more 

expertise than FR T would normally have had on its own. 

• The part-time, short-term nature of this work creates a revolving door of 

employees, some of which work for FRFC for a matter of months. 

• If FRFC had not been created, the services it provides would have been 

shouldered by FR T or by an unaffiliated third party. FR T is not a covered 

employer and presumably, neither would an unaffiliated third party. 

• Since its beginning in 2003, FRFC made contributions for its employees to 

FICA in good faith on the understanding that it was not a covered employer 

under the RRA. Similarly, FRFC has subscribed to the applicable state 

unemployment system, again on the good faith understanding that this was 

the applicable unemployment benefit system. 

• Given the short-term nature of the work done by each FRFC employee, and 

the amount of the total annual income each FRFC employee earned through 

FRFC compared to his or her work for other companies, the difference 

between what was withheld and/or paid based upon FICA and state 
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unemployment versus what would have been done under the RRA and 

RUIA is small. 

The representatives for FRFC have cited to Short Lines, IncorporatedReconsideration, B.C.D. No. 93-57, as precedent for finding an employer covered 

on a prospective basis. In fact, that decision does not find that coverage under the 

RRA may be applied on a prospective basis. At this time, there is no provision in 

the RRA that allows for coverage on a prospective basis. The information 

submitted shows that FRFC began operations on October 2003 and therefore, 

coverage under the RRA began at that time. The Board maintains that coverage 

under the RRA began in October 2003 and does not modify that part of its decision 

in B.C.D. No. 12-1. 

However, Short Lines does note that the Board has the ability to find an employer 

covered under the RUIA prospectively from the date of the Board's initial ruling if 

certain circumstances are present. RailTex Trac Company, Inc., B.C.D. No. 95-86, 

discusses the authority and history of this provision of the RUIA in detail. It notes 

that section 8(k) of the RUIA gives the Board the authority to decide not to give 

retroactive effect to a coverage ruling with respect to the RUIA. Rulings on nonretroactive coverage under the RUIA have been granted by the Board in cases 

where: 

1. The evidence suggests that the employer paid taxes under the 

Federal/State unemployment compensation system believing in good faith that he 

was covered by that system; 

2. No benefits have been paid to the employer's employees under the RUIA; 

and· ' 3. Where retroactive coverage would impose undue burden on the Board, the 

employer, and the state system for no apparent gain. 

In this case, the facts are consistent with the facts present in other cases where the 

Board has rendered non-retroactive rulings regarding RUIA coverage. Information 

submitted shows that FRFC believed that it was not a covered employer in good 

faith and FRFC covered these employees under FICA and state unemployment 

systems since FRFC began operations. It appears that no benefits have been paid 

to employees under the RUIA. In addition, the information submitted shows that 

making coverage under the RUIA retroactive to October 2003 would create a 

unique burden for FRFC due to the part-time, short-term nature of its employees. 

Finally, it appears that FRFC was not created in order to subvert the Acts and 
4 

classify covered employees as non-covered employees. Rather, it was created to 

address a specialized need through a new company that was found to be a covered 

employer. The information submitted shows that making coverage under the 

RUIA retroactive to October 2003 would create a unique burden for FRFC due to 

the part-time, short-term nature of its employees. Based on the foregoing, the 

Board finds that it would be appropriate to hold FRFC to be a covered employer 

under the RUIA prospectively from the date of the Board's initial ruling in this 

case. 

The Board's decision dated December 15, 2011 is modified to change the effective 

date of coverage under the RUIA to December 15, 2011, the date of the Board's 

initial decision. 

ll;ff)-4 

Walter A. Barrows ~ 

Steven J. Anthony