B.C.D. 04-56

EMPLOYER STATUS DETERMINATION

Heritage Railroad Corporation

NOV 2 3 2004

This is the determination of the Railroad Retirement Board concerning

the status of Heritage Railroad Corporation (HRC) 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). HRC has not heretofore been ruled to be an employer under

the RRA and RUIA.

Mr. Jeff Deardorff, President, HRC, advised that HRC is a private nonprofit corporation that was chartered to preserve and rehabilitate a rail

system serving the former Department of Energy (DOE) K-25 Gaseous

Diffusion site in Oak Ridge, Tennessee. HRC has no employees. HRC

and its parent corporation, the Community Reuse Organization of East

Tennessee (CROET) leased the railroad from DOE and has run the line

initially by operating contract from August 25, 2000 with Southern

Freight Logistics LLC (SF Logistics) d/b/a Southern Freight Railroad

(SF Railroad) (an employer under the RRA and RUIA and designated as

B.A. No. 5591) and from September 17, 2003, by operating contract with

Walden Ridge Railroad Corporation (WRRC), currently a non-carrier.

As set forth in B.C.D. 04-37, decided on July 28, 2004, we determined

that a portion of SF Logistics, which is known as SF Railroad, and

which operated the railroad operations for HRC, is an employer under

the RRA and RUIA. The rail operation is over 14.5 miles of track

consisting of seven miles from the interchange with the Norfolk

Southern Railway (B. A. No. 1525) at Blair, Tennessee to the East

Tennessee Technology Park and 24 industrial spurs within the park

which total an additional seven and one half miles of track. In view7 of

the fact that WRRC has taken over the very same operations conducted

by SF Railroad, a carrier, it wmuld appear that WRRC, a non-carrier,

will be determined to be an employer under the RRA and RUIA. The

status of WRRC as an employer under the Acts will be considered in a 

separate Board decision.
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Section 1(a)(1) of the Railroad Retirement Act (45 U.S.C. §231(a)(l),

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;

Sections 1(a) and (l)(b) of the Railroad Unemployment Insurance Act

(45 U.S.C. §§351(a) and (b)) contain substantially similar definitions, as

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

In its decision regarding the employer status of Railroad Ventures, Inc.

(B.C.D. 00-47), the Board held that an entity that has Surface

Transportation Board 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. 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 of the 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.

Applying this to the facts of HRC, the Board determines that HRC is

not a covered employer under the Acts. The evidence of record shows

that HRC is a non-profit corporation. HRC was chartered to preserve

and rehabilitate a rail system on a reindustrialization site owned by the

DOE. Based on these facts, we find that HRC does not have as a

primary business purpose to profit from railroad activities. With

respect to the second part of the Railroad Ventures test, the evidence

shows that HRC does not operate the rail line and does not have the

capacity to operate the rail line inasmuch as HRC owns no railroad

assets nor does it have any employees. Turning to the third part of the
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criteria, the record shows that WRRC, a non-carrier employer which it

appears would be found to be covered under the Acts administered by

the Board, conducts the same railroad operations over the same line

previously conducted by a carrier employer. The Board therefore finds

that HRC is not a carrier under the test set out in our Railroad

Ventures decision.

Accordingly, the Board finds that Heritage Railroad Corporation is not

a rail carrier employer under the Railroad Retirement Act or the

Railroad Unemployment Insurance Act.

Michael S. Schwartz

V. M. Speakman,Jr.

Jerome F. Kever