MAY 2 1 2003

EMPLOYER STATUS DETERMINATION

Southern Gulf Railway Company

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

Southern Gulf Railway Company as an employer under the Railroad Retirement

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

U.S.C. § 351 etseg.)-

Information regarding Southern Gulfwas provided by Jeffrey G. Herndon,

Manager, Coal Supply, for Entergy Services, Inc. According to Mr. Herndon,

Southern Gulf is a wholly-owned subsidiary ofEntergy Gulf States, Inc., which in

turn is a wholly-owned subsidiary of Entergy Corporation, an investor-owned

public utility holding company.

Southern Gulf owns a rail line of approximately 4.28 miles which connects with a

line jointly owned by Burlington Northern and Santa Fe Railway Company

(BNSF) (B.A. No. 1621) and Union Pacific Railroad Company (UP) (B.A. No.

1713). Southern Gulfreports that it has no employees and serves as connector

track between the Roy S. Nelson Generating Station and the connection with the

BNSF and UP. ,

Rail operations over the track began in February 2000 after the signing of a

contract between Entergy Gulf States and BNSF for the transportation of coal to 

the Generating Station. Maintenance and rail operations over the track are

performed by TimberRock Railroad, Inc., a covered employer under the Acts (B.A.

No. 2877). '

In Interstate Commerce Commission Finance Docket No. 32321, Southern Gulf

filed a notice of exemption to construct and operate1 the rail line described above

(August 27, 1993). In Surface Transportation Board Finance Docket No. 34184, 

Southern Gulf filed a notice of exemption to grant trackage rights over the line to 

BNSF.

1 The notice of exemption was not for operating authority. However, the decision pointed out that, nevertheless,

“Southern Gulf will be a rail carrier and have a common carrier obligation to provide service regardless of whether it

obtains formal operation authorization.”

BA#9051
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Southem GulfRailway Company

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 of the

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 in its decision regarding Railroad Ventures, Inc. (B.C.D. GO47), 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 of the rail line is already covered or would be found to be 

covered under the Acts administered by the Board. A majority ofthe Board finds 

that in this case, the purpose of Southern Gulfis to enable its affiliate to market 

coal, a primary business purpose being therefore to enable that company to profit

from the operation ofthe Southern Gulfrail line. Accordingly, a majority ofthe 

Board finds that Southern Gulf does not meet all three factors listed above, and that 

the evidence ofrecord establishes that Southern Gulfis a carrier operating in

interstate commerce. Therefore, it is determined by a majority ofthe Board that 

Southern Gulfis an employer within the meaning ofsection l(a)(l)(i) ofthe
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Southem Gulf Railway Company

Railroad Retirement Act (45 U.S.C. § 231 (a)(l)(i)) and the corresponding

provision ofthe Railroad Unemployment Insurance Act as ofFebruary 1, 2000, the

date as ofwhich it commenced operations.

tout

Cherryl V. Thomas

V. M. Speakman, Jr. Z

erome F. Kever (Dissenting, 

separate dissenting opinion attached)
DISSENT OF THE MANAGEMENT MEMBER

SOUTHERN GULF RAILWAY COMPANY

May 8, 2003

I hereby dissent from the majority decision finding Southern Gulf Railway Company

(Southern Gulf) to be an employer under the Railroad Retirement Act and the Railroad

Unemployment Insurance Act (Acts).

The majority determined that the Railroad Ventures, Inc. (Railroad Ventures) decision 

(B.C.D. 00-47) did not apply to Southern Gulf because Southern Gulf has as its primary

business purpose to profit from railroad activities. I disagree with the majority for the

following reasons.

Southern Gulf was builtto provide new rail access to its parent electric company’s (Entergy 

Gulf States, Inc.) facility and hence provide more options for supply of coal. This lowered

the costs for purchasing and transporting coal and in turn, reduced the costs of electricity 

sold to the public. Southern Gulf does not operate nor does it have the means to operate 

the railroad. Operations are provided through a license with a carrier covered under the

Acts. Southern Gulf does not share in any transportation fees collected by this carrier.

Any profit from reduced transportation costs benefits the public utility and the general 

public not Southern Gulf. These profits however are not related to railroad activities of

Southern Gulf.

Therefore, I find that Southern Gulf is not a covered employer under the Acts because it

does not have as its primary business purpose to profit from railroad activities. Also, the

othertwo tests in Railroad Ventures are met since Southern Gulf does not have the means

to operate the railroad and it licenses a covered carrier to provide the service.