• B.C.D. 10-49

EMPLOYER STATUS DETERMINATION AUG 23 2010

Southwest Railway Services, Inc.

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

of Southwest Railway Services, Inc. (SRS) as an 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). Information about SRS was

furnished by Jack C. Norman the controller of SRS and its affiliates.

Mr. Norman reported in the responses to the Audit and Compliance

questionnaire that SRS was incorporated in Texas on October 29, 2009. SRS

began operations on November 1,2009. The owner of SRS is TNW Corporation

which also owns Texas North Western Railway (BA 3757), Texas Gonzales and

Northern Railway (BA 2866), Nebraska Railway (BA 3790), and Texas Rock

Crusher Railway (BA 3893). TNW Corporation and SRS have several common

directors and officers. Robert F. Murchison serves as Chairman and Director of

both entities. Dennis Rrewett serves as President and Director of both entities.

Burk Murchison, Margaret Murchison, and Elise Murchison all serve as officers of

both entities.

SRS's business consists of providing track maintenance services and materials for

railroads. SRS spends 98% of its business time providing these services for the

railroad subsidiaries of TNW Corporation. SRS’s operations are designed to

excavate rock to be used as ballast for constructing track and maintain track

using tamping and ballast regulators. SRS's assets are used to provide the

materials and services for the other subsidiaries of TNW Corporation.

Mr. Norman reports that SRS has no written contracts with any other rail carrier

and SRS does not lease equipment to or from any other entity. The STB has not

made any rulings regarding SRS’s status and the IRS has not ruled on the

applicability of the Railroad Retirement Tax Act (RRTA) to SRS. Mr. Norman

further reports that 98% of revenue for SRS is received from the rail carriers under

TNW Corporation. As of May 31,2010, Mr. Norman reported that SRS did not

have any employees.

Section 1 (a)(l) of the RRA defines the term "employer" to include:

(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;

(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

BA # 9850
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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 or icing, storage, or handling of

property transported by railroad.

Section 1 of the RUIA contains essentially the same definitions, as does 

section 3231 of the Railroad Retirement Tax Act.

It is clear from the record in this case that SRS is not a rail carrier employer

under section 1 (a)(1 )(i) of the RRA and section 1 of the RUIA. Turning to

the definition in subparagraph 1 (a)(1) (ii), we find that SRS is under

common control with Texas North Western Railway (BA 3757), Texas

Gonzales and Northern Railway (BA 2866), Nebraska Railway (BA 3790),

and Texas Rock Crusher Railway (BA 3893). All the preceding entities are 

owned by TNW Corporation. Additionally, it is clear that ownership and

leadership of TNW Corporation and SRS is fully intermingled. Five officers 

have the same title in TNW Corporation and SRS. Further, Mr. Norman

indicated that SRS was formed for the purpose of providing specific

services to the railroads under TNW Corporation’s control. Prior to the

formation of SRS, TNW's other railroads performed the tasks necessary to

operate SRS. The formation of SRS is an attempt to consolidate the

excavation, processing and transport of ballast rock to TNW's other

railroads.

Based on the evidence of record, we find that SRS provides service in

connection with railroad transportation within the meaning of section

1 (a) (1) (ii) of the RRA and the corresponding section of the RUIA.

In accordance with the above discussion we find that Southwest Railway 

Services, Inc., became an employer under the Railroad Retirement and

Railroad Unemployment Insurance Acts effective November 1,2009, the

date SRS began operations.