RAILROAD RETIREMENT BOARD

IN THE MATTER OF CSX INTERMODAL, INC. AND ITS STATUS

UNDER THE RAILROAD RETIREMENT AND RAILROAD

UNEMPLOYMENT INSURANCE ACTS

STATEMENT OF THE CASE

By Order of January 31, 1995, the Railroad Retirement Board

appointed Thomas W. Sadler, Assistant General Counsel, to act as

designated hearing examiner for the Board under 20 CFR Part 258 and 

in that capacity, to hold a hearing, receive evidence and argument,

and thereafter to formulate findings of fact, conclusions of law,

recommendations and reasons therefore on the following question:

Whether CSX Intermodal, Inc. or any of its business segments

or subsidiaries is operating a facility or performing any service

in connection with the transportation of persons or property by

railroad which is not casual service or trucking service within the

meaning of the Railroad Retirement Act and Railroad Unemployment

Insurance Act.

In accordance with the Board order, a hearing was held on May 

22 and 23 at the Board's offices in Chicago, Illinois. Designated

as parties to the hearing were CSX Intermodal, Inc., the

International Brotherhood of Firemen and Oilers, and the United 

Transportation Union. Only CSX Intermodal participated in the

hearing. Post hearing briefs and affidavits were submitted by all

parties and the record was closed October 1, 1995 .

On November 14, 1995, the Report of Designated Hearing

Examiner was issued. On December 13, 1995, Exceptions to the

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BCD 1996-82.2
Report were filed by CSXI Intermodal Inc. (CSXI) and the United

Transportation Union (UTU).

On December 27, 1995, CSXI filed a reply to UTU's Exceptions.

On February 22, 1996, a majority of the Board, Labor Member

Speakman dissenting, denied the request of the Transportation

Communications International Union (TCU) to file Exceptions to the

hearing officer's report on the grounds that TCU had waived its

right to be considered a party to the proceeding under 20 CFR Part

358. However, TCU's Exceptions were made part of the record.

NATURE OF THE CASE

This case involves difficult issues of first impression for

the Board. The issues are difficult because some of the operations

of CSX Intermodal Inc., (CSXI) are unique within the transportation

industry and because the statutes and regulations under which the

Board operates were enacted when trucking conducted by railroads

was a small and distinct segment of their business, and the

intermodal transportation business, in which CSXI operates, was in

its infancy.

Intermodalism may be defined as the movement of cargo from 

shipper to consignee by at least two different modes of

transportation without having to unload, reload or repackage

between modes. The goal of intermodal transportation is the

continuous and seamless transfer of goods from origin to final

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destination in the most cost and time effective way. Exh. 37 at 8. 1

(Intermodal Industry Assessment, A. T. Kearney).

The principal participants in the intermodal industry are

those companies that provide the packaging of fully-integrated

intermodal services. Tr. 314-315 (Zubrod).2 Third-party agents

such as Intermodal Marketing Companies (IMCs), are among the

leading participants in the intermodal industry. Id. at 290. IMCs

are typically non-asset owning companies that represent shippers in

arranging for intermodal service packages. .Id. at 291. CSXI is

generally recognized as a leading participant in the intermodal 

industry. Id. at 357. Although CSXI functions much like an IMC,

the company is distinctive because of its significant ownership of

assets and direct operation of the drayage part of an intermodal 

move. .Id. at 355-59.

Intermodal marketers compete directly with over-the-road

trucking companies. Both operate in the time-sensitive, timedefinite, high value-added market segment. Tr. 318, 367, 384

(Zubrod). Likewise, both offer a similar array of services,

including dispatch, equipment supply, information services, direct

delivery; and both contract for line-haul transport with multiple 

rail carriers. .Id. at 367. In the case of intermodal marketing,

the provision of services requires the coordination by intermodal

1 References "Exh." are to exhibits in the List of Exhibits 

set forth in Appendix B of the Examiner's Report.

References "Tr." are to the transcript of the hearing 

conducted May 22 and 23, 1995 by the Examiner.

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marketers of drayage companies, terminal operators, railroad

companies and steamship operators. .Id. at 309-315, 318.

The rapid growth of the intermodal industry has tended to blur 

the traditional definitions of trucking and railroading. Tr. 413

(Zubrod). The growth of the intermodal industry benefits the rail

industry as a whole. Id. at 376 . In many marketplaces, intermodal 

companies, like CSXI, have taken business away from over-the-road

trucking companies and provided additional business to railroads.

Id. at 377.

STATUTORY AND REGULATORY FRAMEWORK

Railroad Retirement Act of 1974

Section 1(a)(1) of the Railroad Retirement Act (45 U.S.C. § 231

(1)(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;

(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 facility or performs any service (other than

trucking service, casual service, and the casual

operation of equipment and facilities) in

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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.3

A similar definition is found in section 1(a) of the Railroad

Unemployment Insurance Act (45 U.S.C. 351(a)) and section 3231(a)

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

Regulations under this section are found at 20 CFR Part 202

(1995). These regulations were promulgated by the Board in 1939.

4 Fed. Reg. 1478 (1939)

§ 202.7 Service or operation in connection with railroad

transportation.

The service rendered or the operation of equipment or

facilities by persons or companies owned or controlled by or

under common control with a carrier is 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, if such service or operation is

reasonably directly related, functionally or economically, to

the performance of obligations which a company or person or

3Since the Examiner filed his report section 1(a) (1) was

amended to reflect abolition of the Interstate Commerce Commission.

There was no substantive change in the definition. Sections 323

and 324 of the Pub. Law 104-88 (109 Stat. 950)

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companies or persons have undertaken as a common carrier byrailroad, or to the receipt, delivery, elevation, transfer in

transit, refrigeration or icing, storage, or handling of

property transported by railroad.

§ 202.8 Controlled company or person principally engaged in

service or operation in connection with railroad

transportation.

Any company or person owned or controlled by one or

more carriers or under common control therewith, whose 

principal business is the operation of equipment or

facilities or the performance of service (other than 

trucking service) in connection with the transportation 

of passengers or property by railroad, shall be an

employer.

§ 202.9 Controlled company or person not principally engaged in

service or operation in connection with railroad

transportation.

(a) With respect to any company or person owned or

controlled by one or more carriers or under common 

control therewith, performing a service or operating 

equipment in connection with the transportation of

passengers or property by railroad, or in the receipt,

delivery, elevation, transfer in transit, refrigeration

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or icing, storage, or handling of property transported by

railroad, but which is principally engaged in some other 

business, the Board will require the submission of

information pertaining to the history and all operations 

of such company or person with a view to determining 

whether it is an employer or whether some identifiable 

and separable enterprise conducted by the person or

company is to be considered to be the employer, and will

make a determination in the light of considerations such 

as the following:

(1) The primary purpose of the company or person on

and since the date it was established;

(2) The functional dominance or subservience of its

business which constitutes a service or operation of

equipment or facilities in connection with the

transportation of passengers or property by railroad in

relation to its other business;

(3) The amount of its business which constitutes a

service or operation of equipment or facilities in

connection with the transportation of passengers or

property by railroad and the ratio of such business to

its entire business;

(4) Whether such service or operation is a separate 

and distinct enterprise;

(5) Whether such service or operation is more than 

casual, as that term is defined in § 202.6.

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(b) In the event that the employer is found to be an

aggregate of persons or legal entities or less than the

whole of a legal entity or a person operating in only one

of several capacities, then the unit or units competent 

to assume legal obligations shall be responsible for the

discharge of the duties of the employer.

§ 202.11 Termination of employer status

The employer status of any company or person shall

terminate whenever such company or person loses any of

the characteristics essential to the existence of an

employer status.

§ 202.12 Evidence of termination of employer status

(a) In determining whether a cessation of an essential 

characteristic, such as control or service in connection

with railroad transportation, has occurred, consideration

will be given only to those events or actions which

evidence a final or complete cessation. Mere temporary

periods of inactivity or failure to exercise functions or

to operate equipment or facilities will not necessarily

result in a loss of employer status.

*****

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FINDINGS AND CONCLUSIONS

The Board has considered the Report of the Designated Hearing

Examiner and the Exceptions and Reply to Exceptions thereto and

decides as follows:

1. A majority of the Board, Labor Member dissenting, adopts the

Findings of Fact of the Designated Hearing Examiner numbered

1-164 .

2. With respect to the status of CSX Intermodal, Inc., a majority 

of the Board, Labor Member dissenting, affirms and adopts

Conclusion of Law Number 1 of the Designated Hearing Examiner.

3. With respect to the status of CSX Sea-Land Terminals, Inc.

(Deferred).

4. With respect to the status of CSX Services, Inc., a majority 

of the Board, Labor Member dissenting, affirms and adopts

Conclusion of Law Number 3 of the Designated Hearing Examiner.

5. With respect to the status of 0/0 Truck Sales, Inc., the Board

affirms and adopts Conclusion of Law Number 4 of the

Designated Hearing Examiner.

ANALYSIS

I. Is CSX Intermodal, Inc. performing a service in connection with

the transportation of property by railroad?

In his first conclusion of law, the Examiner found that CSXI

was not an employer within the meaning of the Acts. The Examiner

found that CSXI, which is not a carrier by rail but which concedes

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that it is under common control with an employer under the Acts,

was not performing a service in connection with the transportation

of persons or property by railroad and, even if it were performing

such a service, the service would be considered trucking.

CSXI, a subsidiary of CSX Corporation, which also owns CSX 

Transportation (CSXT), an employer under the Acts, is involved in

packaging for shippers the movement of freight by a combination of

truck, rail, and barge. CSX/Sealand Terminal, Inc. (CSLT) a

subsidiary of CSXI, operates CSXI's intermodal terminals for CSXI

and CSX Services, Inc. another subsidiary performs ancillary

services at those terminals. 0/0 Truck Sales, Inc. is a subsidiary

of CSXI which performs various trucking services for CSXT. The

examiner approached his analysis by looking at each component part,

as described above. The Board will do the same.

CSXI can be described as an intermodal marketing company

which, in connection with that function, also operates a motor 

carrier operation and, through subsidiaries, operates intermodal 

terminals. FOF 58, 59-60, 84-94.4

CSXI provides services with respect to freight shipped in

containers or trailers that can be stacked on rail cars. It is in

the business of providing a door-to-door delivery service under a

single bill of lading usually by a combination of truck-rail-truck

transportation and in some cases, the use of barge. FOF 29, 34-37,

59. It will arrange for the pick-up of a shipper's containers or

4 The reference " FOF" is to the Findings of Fact of the

Designated Hearing Examiner.

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trailers, either using its own truck owner-operators or through an

independent drayage firm; deliver the containers or trailers to one

of its intermodal terminals and place them on flat cars of the

carrier that services that terminal for line-haul to another

intermodal terminal at which point the trailers or containers are

removed from the flat cars and are delivered to their ultimate

destination either by CSXI owner- operators or independent drayage 

firms. Tr. 86-89 (Sorrow). Ideally, the shipper, such as a major

ocean carrier like Sea-Land, will have a large enough shipment so

that CSXI is able to "purchase" a train dedicated just for that

shipment. FOF 65. If a shipper provides its own pick-up and

delivery, CSXI will arrange only the rail portion of the trip. FOF

111. If the goods will reach their destination more timely by

substitute truck-for-rail, CSXI will provide or arrange the

substitute trucking. FOF 88-91. If a shipper needs a chassis for

the transport of a container or trailer, CSXI will lease it to

them. Exh. 67 (Interrogatories # 3). For an additional charge, it

will repair a shipper's trailer or container. FOF 164. CSXI will

continuously track the loaded trailer or container and, if

possible, use the trailer or container for transport on a return 

trip to avoid charging the shipper the costs of retrieving an empty 

trailer or container. In short, CSXI offers the whole spectrum of

intermodal services and it operates its own drayage and terminals.

FOF 57, 61, 81, 94.

In his decision the Examiner traces the history of service in

connection with railroad transportation and applies that history in

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making his recommended findings. He suggests a reasoned, common

sense method of applying the service in connection with language in

the Railroad Retirement and Railroad Unemployment Insurance Acts so

as to give meaning to the spirit of the Acts as well as the

language. The Examiner traces his approach to a very early legal

opinion in the case of Lenoir Car Works et. al. (Legal Opinion

L-38-650), which states that decisions as to whether a particular

service is a service in connection with railroad transportation

should be made after consideration of all relevant facts and 

circumstances. Legal Opinion L-38-650 suggests that factors such 

as the following should be considered.

1. The physical relation of the affiliates's 

operations to the rail operations.

2. The history and origin of the affiliate.

3. For whose benefit are the affiliate's services 

performed.

4. The amount of the affiliate's business with 

the public.

The Examiner points out that this same type of analysis was

applied by the Board in its consideration of the employer status of

VMV Enterprises, Inc. (BCD 93-79). We shall now discuss whether

CSXI is performing any service in connection with railroad

transportation within the framework provided for in L-38-650 and

used by the Examiner.

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Physical Location

Putting its terminal operations aside, which will be examined

later when we look at CSLT, the location of CSXI offices is

separate and distinct from that of CSXT's. CSXI is headquartered

in Huntsville, Maryland, while CSXT is headquartered in

Jacksonville, Florida. FOF 1, 3.

Furthermore, CSXT and CSXI have no officers in common nor are

any officers of these companies directors of the other. No officer

or senior manager of CSXI reports to anyone at CSXT. Only one

senior officer of CSXI came from CSXT. FOF 142-147. CSXI is not

subsidized by CSXT. FOF 19.

History and Origin of CSXI

CSXI did not originate as an offshoot of CSXT's intermodal 

operations. Its predecessor, ISI, was a social security covered 

subsidiary of Sea-Land and was already involved in the intermodal 

business with respect to Sea-Land's shipments. FOF 4-11, 21-22.

CSX Corporation's purchase of Sea-Land and its subsidiaries was not

primarily for the purpose of increasing traffic for CSXT, although

this was a consideration, but rather to enter the intermodal 

container market on a national level. FOF 20. CSX Corporation

later merged CMX Trucking, a social security covered employer, into

CSXI to expand CMX Trucking, formerly a regional motor carrier for

the Chesapeake and Ohio Railway Company and later, CSXT, into a

national operation. FOF 7, 87.

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The evidence of record does not show that CSXI was formed to

remove individuals from coverage under the RRA. At its inception,

about 87 of CSXT employees were transferred to CSXI to perform such 

duties as sales, marketing and clerical functions. At that time

CSXI had a total work force of approximately 200. FOF 138-139.

With the exception of a small number of clerks (and a sizeable 

number of terminal employees transferred to CSLT), there has been 

little subsequent movement from CSXT to CSXI, except on a voluntary

basis. FOF 139-141.

For Whose Benefit Does CSXI Operate

CSXI is operated as an independent profit center in the CSX

family. FOF 19. FOF 148. This is not to say that CSXT does not

benefit from the existence of CSXI. CSXI extensively uses the

trackage of CSXT. FOF 69. In 1994, 30% of CSXI's rail purchases

were from CSXT. FOF 63. These purchases amounted to 2.9% of

CSXT's revenue for 1994. For 1993 CSXI purchases were 2.87% of

revenue and for 1992, 2.84%. FOF 64. Although this amount may not

appear significant, one must keep in mind that the existence of

CSXI eliminates the need for CSXT to expend funds to develop its

own intermodal operations. Tr. 110-111 (Sorrow). By being under 

the same corporate umbrella with CSXI, CSXT has enhanced 

marketability for its own transportation with respect to other 

shippers. FOF 69. Although CSXT does move some intermodal traffic 

independent of CSXI, one of the reasons for CSX Corporation to

enter into the intermodal field was to increase CSXT's intermodal

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traffic which, to date, had not proven very profitable to CSXT.

Exh. 61 (Suppl. Dec. of Allen at H?).

However, the decision to use CSXT for the rail portion of a

move is not based on CSXT's business goals but rather CSXI's.

Thus, CSXT must meet CSXI's price and time constraints or CSXI will

contract out to another carrier or use truck only. FOF 75, 88.

In the same vein CSXT can refuse CSXI's business if it does not fit

CSXT's business goals. FOF 70-71. CSXI has replaced CSXT with 

other rail carriers for all or a portion of a particular line-haul,

where other rail carriers were more competitive. FOF 75.

CSXI negotiates rail purchases with other carriers in the same

manner it negotiates with CSXT. FOF 72. CSXI must maintain an

arms-length relationship with CSXT so as to maintain leverage with 

other rail systems that compete with CSXT, such as the Norfolk 

Southern. FOF 74.

CSX Corporation does not "pressure" CSXI to use CSXT but may 

question why CSXT was not used for a particular rail move. FOF

149. Although the sales forces of CSXI and CSXT are in frequent

contact with each other, CSXI's sales force receives no incentives

to use CSXT. FOF 150.

Business with the Public

This criterion set forth in L-38-650 was initially intended to

measure a company's sales of products and services to its carrier

affiliate compared to its sales to nonrailroads and to other

carriers. In the context of CSXI this test does not apply. This

is because CSXI does not exactly sell a product or service to

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railroads. It sells a service to customers which service usually

includes the purchase of rail services from a carrier. Thus, in

the context of CSXI's operations one must compare the amount of

rail purchases from CSXT verses its purchases from other carriers.

CSXI purchases rail services from every class I carrier. FOF

62. It biggest supplier is the Southern Pacific. Id. In 1994 37%

of CSXI's rail purchases were from the Southern Pacific; 30% from 

CSXT; 16% from the Burlington Northern; 5% from Conrail; and the

remainder from 19 other carriers. FOF 63. CSXI purchases rail

services from CSXT on a cost-plus-return-on-investment basis. FOF

70. This is the same basis upon which it purchases rail services 

from other carriers. In its rail purchases, CSXI approaches CSXT 

in the same manner it negotiates with other carriers, and attempts 

to attain the best price for its customers. FOF 71-73.

Based upon the above, a majority of the Board finds that CSXI

is not performing a service in connection with railroad 

transportation as that phrase has been interpreted by the Board.

However, the majority believes that the context in which CSXI

operates places it in an analogous position to companies 

represented by the Pullman Standard Car Manufacturing Company line

of legal opinions and Board decisions, cited by the Examiner, which 

held that such companies, although providing a product which was

supportive of railroad transportation - in the case of CSXI,

increased rail traffic - were not performing a service in

connection with railroad transportation where they provided this

product in the regular course of business to all railroads. The

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majority puts great weight on these early decisions of the Board

and opinions of its General Counsel since these decisions and 

opinions were written contemporaneously with the enactment of the

statutory provisions under examination.

The majority also believes that the conclusion is consistent 

with the analytical guidelines set forth in the Standard Office 

Building case, discussed by the Examiner. The predecessor of CSXI

was a social security covered employer and CSXI was not formed to

siphon off employees from CSXT, nor to replace an intermodal

division of CSXT. The benefits which CSXT derives from CSXI are

increased purchases of rail transport which it would not have

absent CSXI's business. However, these purchases are not the

direct result of efforts by CSXI to increase CSXT's business, but

are the indirect result of CSXI promoting its own business goals.

In this regard, CSXT is no different from any other class I carrier 

which benefits by CSXI's business, nor is CSXI any different 

from any non-affiliated intermodal agent who would seek to purchase 

rail transportation from CSXT.

The Transportation Communications International Union (TCU)

and the United Transportation Union (UTU) (hereinafter Unions)

filed exceptions to the Examiner's conclusions of Law numbers 1 and

2. In a letter dated February 22, 1996, a majority of the Board 

determined that TCU was not a party to this proceeding on the basis

that it had previously waived participation in the proceeding.

However, the Board did permit TCU to file exceptions to the

Examiner's report.

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TCU represents approximately 57 employees of CSXI and 300

employees of CSLT. UTU represents yardmasters who work for CSLT at

the CSXI Bedford Park Terminal. Employees of CSXI are not

presently covered under the Acts nor has any employee of that

company ever asserted a claim for creditable service. Employees of

CSLT are presently covered employees.

The Unions initially argue that the Examiner ignored the plain

language of section 202.7 of the Board's regulations (cited above)

in finding that CSXI was not performing a service in connection

with railroad transportation. The majority concedes that the ambit

of section 202.7 is broad enough to permit the Board to reach a

conclusion that the operations of CSXI are services in connection

with railroad transportation. After all, CSXI's intermodal 

business clearly increases the revenue not only of its affiliate 

CSXT, but also of the railroad industry in general.

However, the majority believes that the Examiner's conclusion 

of law is consistent with interpretations of the coverage 

provisions of the Acts adopted very early after the inception of

the railroad retirement system. These interpretations are

represented by legal opinions, such as Lenoir Car Works, cited

earlier, and many others cited in the Examiner's report. The

majority concedes that CSXI's operations benefit the rail industry 

by its purchases of rail service for its customers in the ordinary

course of its intermodal operations, but this would be true of any

intermodal operator whether or not it is affiliated with a carrier.

Indeed, the majority is not able to discern how purchases from a

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carrier in the ordinary course of business even could be

characterized as a "service."

Furthermore, as the Examiner pointed out, from its inception

the Board, when analyzing whether an affiliate of a carrier is

performing a "service" in connection with railroad transportation, 

has focused on the affiliate's relationship with that carrier not

with the railroad industry in general. As we have shown above, in

its method and manner of operation, CSXI acts no differently from

a nonaffiliated intermodal company that purchases rail service from

CSXT in the ordinary course of its business. It sets terms and

price in the same manner as it does with any other carrier and is

not operated for the benefit of CSXT as opposed to any other

carrier. Thus, CSXI is not performing a service in connection with 

the transportation of persons or property by railroad as that

phrase has been interpreted by the Board.

II. If CSX Intermodal, Inc. is performing a service in connection

with the transportation of property by railroad, may such service

be characterized as "trucking service" as that phrase is used in

section 1(a) (1) (ii) of the RRA?

Even if the Board were to find that CSXI were performing a

service in connection with railroad transportation, CSXI claims

that such service would be exempted trucking service. Exh. 70

(CSXI's Post-Hearing Brief). Although not necessary to the

outcome, because of the importance of the issue, the majority feels

it important to discuss the application of the trucking exception 

to this case. In dealing with the trucking service exception one

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must keep in mind that in analyzing the questioned activity we are 

assuming a fortiori that such activity is a "service" in connection

with the transportation of property by railroad, but now seek to

determine whether such service may be properly characterized as

"trucking". The second thing to keep in mind is that just because

a company calls itself a trucking company or is a certified motor

carrier does not necessarily mean it falls within the exception.

As the Examiner indicated in his discussion of the trucking service

exception, this exception does not encompass any use of a truck by

a railroad affiliate, but covers certain types of activities which

are performed by independent trucking companies with which

railroads desire to compete.

The majority believes that CSXI, a certified motor carrier

under the Interstate Commerce Act, performs certain services which

clearly come within what was intended to be encompassed by the

trucking service exception, as originally enacted. See the

Examiner's discussion of trucking service in his report. These

would include line-haul by motor carrier, substitute truck-forrail, and pick-up and delivery within the terminal area of a

carrier. EOF 80-85, 88-91. It does this through its own 

independent owner-operators and through contract with other drayage

firms. CSXI also operates truck terminals. FOF 95. The question

then becomes whether CSXI's involvement in intermodal operations,

which includes significant transport by rail, and sometimes only by

rail, removes it from this exception.

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Missouri Pacific Truck Lines. Inc, v. united States. 3 Ct. Cl.

14 (1983); affirmed 736 F. 2d 706 (Fed Cir. 1984), discussed by the

Examiner at pages 41-43 of his report, appears to hold that the

fact that a trucking subsidiary of a carrier moves a substantial 

portion of its freight by rail as part of an intermodal operation

does not place the subsidiary outside the scope of the trucking

exception. As indicated earlier, CSXI originated with ISI, a

subsidiary of Sea-Land. ISI possessed a motor carrier certificate.

CSXI later merged with CMX Trucking, a railroad-controlled company

exempted from the RRA by the trucking exception, and retained its

motor carrier certificate. FOF 7, 87. As noted earlier, CSXI

performs pick-up and delivery, line-haul by motor carrier,

substitute truck- for-rail and operates truck only terminals. Its

focus is the same as a trucking company, that is, door-to-door

delivery of high value goods with emphasis on timeliness of

delivery as opposed to rail terminal to rail terminal delivery. Tr.

383, 388 (Zubrod) . More importantly, it competes for the same

traffic as do independent trucking firms. Indeed, its main 

competitors are independent trucking firms, and it is truck prices

which drive the economics of the intermodal industry. FOF 77-78.

In this respect, CSXI does serve the purpose of the trucking 

service exemption, which is to permit railroads to compete for

truck traffic through truck-like operations. Tr. 376-378 (Zubrod).

The majority of the Board emphasizes that not all intermodal 

operations would necessarily fall within the ambit of the trucking 

exception. However, CSXI retains the motor carrier certificate of

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%

CMX Trucking which was covered by the trucking service exception.

It operates its own drayage and competes in a market against other

independent trucking companies. Granted that it also moves a

significant amount of freight by rail, but as the court in Motruck

pointed out, the fact that a truck trailer or container is moved by'

rail or a flat car does not compel the conclusion that the movement

of the trailer or container has been transformed from "trucking to

"railroading" supra at 28.

The Unions also argue that CSXI's activities should not be 

considered exempted trucking services. As noted earlier, a

decision on this question is not essential to resolution of this

case in light of the majority's finding on the first issue.

However, the majority wishes to address two arguments raised by the 

Unions on this issue. First, they appear to argue that CSXI cannot

be exempted by the trucking exception since it neither owns trucks

nor employs drivers. However, under this theory a company which

leases tractors (as opposed to making a capital investment by their

purchase) and who uses independent contractors can never be

considered a trucking company. The majority rejects this

reasoning. CSXI engages independent owner-operators who work fulltime for CSXI and transport trailers and containers with the CSXI 

placard on their tractors. This method of operation is common

within the trucking industry.

Secondly, the Unions argue that because 68% of CSXI's move

segments involved some portion of purchased rail service while only

32% involved truck only moves, CSXI should not be considered a

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trucking company. However, the predominance of rail move segments 

would also be the case with respect to an independent trucking 

concern engaged in intermodal operations since the nature of

intermodalism is to maximize efficiencies by use of rail wherever

possible. Thus, CSXI operates much like and competes with 

independent trucking concerns engaged in intermodal operations.

This is by no means to say that any affiliate of a railroad engaged 

in intermodal operations is exempted from coverage by virtue of the

trucking service exemption. As stated earlier, the majority's 

decision is based on the uniqueness of CSXI's operations within the

intermodal industry.

III. Is CSX Sea-Land Terminals, Inc. (CSLT) performing any service

in connection with the transport of property by railroad which is

not casual or trucking service? If not, when did CSLT's employer

status terminate? (Deferred)

IV. IS CSX SERVICES, INC. PERFORMING ANY SERVICE IN CONNECTION

WITH THE TRANSPORTATION OF PROPERTY BY RAILROAD?

The Examiner found that CSX Services, Inc. was not an employer 

under the Acts. No exceptions were filed to this conclusion. A

majority of the Board, Labor Member dissenting, affirms and adopts

the findings and conclusions of the Examiner on this issue.

V. IS 0/0 TRUCK SALES, Inc. PERFORMING SERVICE IN CONNECTION WITH

THE TRANSPORTATION OF PROPERTY BY RAILROAD WHICH IS NOT CASUAL OR

TRUCKING SERVICE?

-23-
The Examiner found that 0/0 Truck Sales, Inc. was an employer

under the Acts. No exceptions were filed with respect to this 

conclusion. The Board affirms and adopts the findings and

conclusions of the Examiner on this issue.

Glen L. Bower

V. NL Speakman, .

Labor Member (Dissenting in

part, opinion

attached)

erome F.

Management Member

-24-
DISSENT OF THE LABOR MEMBER ON CSXI

I must dissent from the decision ofthe majority ofthe Board holding CSX Intermodal 

(“CSXF) and CSX Services not to be employers under the Railroad Retirement and

Railroad Unemployment Insurance Acts (“the Act”).

In my view, the majority has misapplied the Act, the Board’s own prior rulings, and

judicial precedent in its rush to exclude CSXI from coverage. The Hearing Examiner’s

findings establish that CSXI markets intermodal services and that it operates an intermodal

network — including the operation ofintermodal terminals — which had been previously

operated, in large part, by its own rail affiliate. These functions are CSXI’s primary

purpose, and render it an employer covered by the Act, 45 U.S.C. 5 231(a) (1) (ii), as

interpreted by the Supreme Court in Duquesne Warehouse, by the Board’s General

Counsel in CSLT. L-90-18, Florida East Coast Railway Co.. L-79-76, and National Fitch

Corp.. L-40-260, and by the National Mediation Board (applying the same standard) in

Bankhead Enterprises, 17 NMB 153 (1990) and Pacific Rail Services. 16 NMB 468

(1989).

Indeed, the Board’s analysis is flatly contrary to the position we recently — and

successfully — advanced before the United States Court ofAppeals for the District of

Columbia Circuit in the Reloads case, Interstate Quality Services v. Railroad Retirement 

Board. 83 F.3d 1463 (D C. Cir. 1996), raising questions concerning the rationality ofthe

Board’s action here.

The majority has rejected this substantial body oflaw, however, and relies instead on a

fifty-eight year old legal opinion by the General Counsel, Lenoir Car Works. But that 

opinion has been supplanted by later holdings ofthe courts and this Board, and can no

longer be used to resolve a question concerning the Act’s application to a situation of

recent vintage. It is odd that the Board relies so heavily on an opinion formulated when

this segment ofthe rail industry was in its infancy.

Viewed within the proper framework, as established by the relevant precedents, it is clear

that CSXI is an employer covered by the Act.

The record establishes that CSXI markets intermodal services and operates an intermodal

network which had, in large part, previously been operated by its rail affiliate, CSX 

Transportation (CSXT). CSXI thus operates facilities and performs services “in

connection with the transportation of property by railroad, or the receipt, delivery ...

transfer in transit, ... or handling of property by railroad,” 45 U. S. C. § 231(a) (1) (ii), and

is covered by the Act.
-2-

The record is also clear that CSXI is intimately involved in the business ofCSXT, a

covered rail carrier employer. Approximately 30% ofCSXI’s business is with CSXT, and

a CSXI executive testified that CSXT is the preferred carrier for shipments arranged by

CSXI. In 1994, for example, only 20% ofCSXI’s operating revenue came from traffic

which did not include line-haul freight movement by CSXT. Indeed, CSXI and CSXT are

so interrelated that, in 1992, CSXI absorbed a $45-million charge for a CSXT buyout of

locomotive engineers. The majority’s conclusion that CSXI is meaningfully independent

ofCSXT, for purposes ofthe analysis here, simply cannot bear scrutiny.

In any event, the majority has mistakenly assumed that the determination ofwhether a

carrier’s affiliate performs a covered ’’service” involves looking only to the affiliate’s

relationship with that carrier, and not at its relationship with the railroad industry in

general. We rejected that notion in VMV Enterprises. B-93-79, as have two courts of

appeals, Interstate Quality Services. 83 F.3d at 1464-65; Livingston Rebuild Center. Inc,

v. Railroad Retirement Board. 970 F.2d 295, 296 (7th Cir. 1992). The majority’s abrupt 

reversal of position here is simply unwarranted. Under the settled standard, ifthe

company does more than minimal business with its affiliate, we look to the amount ofits

business with the rail industry generally. Here, two-thirds ofCSXI’s 1994 “move

segments” involved rail service, and the vast bulk ofits revenue came from rail shipments.

Accordingly, CSXI is a covered employer providing rail service as defined by the Act.

Independently, the majority has concluded that CSXI would be exempt from the Act

under the trucking service exemption. This finding is also without any legal or factual

basis and, accordingly, I must dissent from it as well.

The Board has consistently held that when a substantial amount of a company’s business is

rail-related, the presence ofsome trucking functions will not exempt it from the Act.

CSXI easily fits in this category; it operates 33 Intermodal terminals, and only 3 trucking 

terminals; two-thirds ofits “move segments” in 1994 involved no truck activity

whatsoever; and, perhaps even more to the point, it owns no trucks and employs no

truckers. As the Hearing Examiner’s Finding ofFact 111 shows, 95% ofCSXI’s trucking 

traffic is handled by independent drayage companies. The majority’s conclusion that,

under these facts, CSXI performs “trucking services” which should exempt it from the 

Act’s coverage, allows the exception to swallow the rule.

Nor is the majority’s conclusion supported or compelled by Missouri Pacific Truck Lines.

Inc, v. United States. 3 Cl. Ct. 14 (1983), afFd, 736 F.2d 706 (Fed. Cir. 1984). There,

the company in question did own and operate trucks; it derived most ofits revenue from

over-the-road trucking; and it did not own or operate any rail facilities whatsoever. 3 Cl.

Ct. at 16, 19. Nothing suggests that a decision under those facts is applicable here. I note 

that the Board’s General Counsel, in a memorandum addressed to the Board dated May

21, 1996 agreed , in effect, with my reading of the statute and the Missouri Pacific

Trucking case.
-3-

In sum, the majority has mistakenly concluded that CSXI does not perform services which

bring it within the Act’s coverage, and has compounded that error by assuming that CSXI 

would be exempt from coverage under the trucking service exception. Because the

majority is in error on both counts, I must dissent.

V. M. Speakman, Jr. c/

_ifnb c:

Date