Agency Rulings

Decision No. 273-R-2001

May 24, 2001

APPLICATION, as amended, filed jointly by the Agence métropolitaine de transport and Metropolitan Railways Inc., pursuant to section 91 of the Canada Transportation Act, S.C., 1996, c. 10, for a certificate of fitness to operate a commuter train service on the right of ways owned by the Canadian National Railway Company and the St. Lawrence & Hudson Railway Company Limited in the metropolitan region of Montréal, in the province of Quebec.

File No. R 8005/A3

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APPLICATION

On June 6, 2000, the Agence métropolitaine de transport (hereinafter AMT) applied to the Canadian Transportation Agency (hereinafter the Agency) for a certificate of fitness to operate a commuter train service on the right of ways owned by the Canadian National Railway Company (hereinafter CN) and the St. Lawrence & Hudson Railway Company Limited (hereinafter CP) in the metropolitan region of Montréal, in the province of Quebec.

By Decision No. LET-R-201-2000 dated July 7, 2000, AMT was requested to provide further clarification concerning its eligibility to apply for a certificate of fitness pursuant to the Canada Transportation Act (hereinafter the CTA). At the same time, CN, CP, Transport Canada and the ministère des Transports of the Province of Quebec were requested to provide comments on the AMT application.

In a letter dated July 26, 2000, AMT requested an extension of 60 days to file a response to the Agency's request. Similar requests were received from CN and CP. By Decision Nos. LET-R-225-2000 and LET-R-226-2000 dated August 4, 2000, the Agency granted the requests for an extension.

On October 6, 2000, AMT and Metropolitan Railways Inc. (hereinafter MRI) filed jointly with the Agency an amended application for a certificate of fitness as set out in the title.

By Decision No. LET-R-299-2000 dated October 10, 2000, the Agency granted CN, CP, Transport Canada and the ministère des Transports of the Province of Quebec an additional 30 days to provide their comments on the amended application.

By Decision No. LET-R-317-2000 dated October 30, 2000, the Agency solicited comments from provincial governments as well as provincial transit authorities and operators of specialty train services that operate on the lines of railways under the jurisdiction of the Parliament of Canada and that may be impacted by an Agency decision on the AMT/MRI application.

Submissions were received from the following interveners: Greater Toronto Transit Authority (hereinafter GO Transit), Edmonton Transit System, CN, Government of Alberta - Alberta Infrastructure, West Coast Express Limited (hereinafter WCE) and CP.

On December 18, 2000, AMT/MRI filed its reply to the submissions received by the interveners.

By Decision No. LET-R-16-2001 dated January 16, 2001 and in accordance with section 18 of the National Transportation Agency General Rules, SOR 88-23, AMT/MRI was requested to respond within 15 days to a series of interrogatories from the Agency.

On January 26, 2001, AMT/MRI filed its response to the Agency's interrogatories.

By Decision No. LET-R-101-2001 dated March 1, 2001, the parties of record were requested to provide their comments on the response filed by AMT/MRI. A submission was received from CN on March 16, 2001. AMT/MRI filed its reply on March 23, 2001.

Pursuant to subsection 29(1) of the CTA, the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, AMT/MRI agreed to an extension of the deadline until May 26, 2001.

ISSUE

The issue to be addressed is whether AMT/MRI is eligible to receive a certificate of fitness pursuant to sections 87, 90 and 92 of the CTA.

FACTS

AMT was created by the Government of Quebec in 1995 under An Act respecting the Agence métropolitaine de transport, R.S.Q., c. A-7.02 (hereinafter the AMT Act). AMT was created as a legal person and mandatary of the Government of Quebec for the purposes of supporting, developing, coordinating and promoting mass transportation in the metropolitan region of Montréal, including commuter train services. On January 1, 1996, AMT succeeded the Société de transport de la Communauté urbaine de Montréal and now has exclusive authority within its area of jurisdiction over public transportation by commuter train, as provided for by section 22 of the AMT Act. MRI, a wholly-owned subsidiary of AMT, was incorporated under federal law for the purpose of operating the commuter train service.

Commuter train system

The commuter train system in the metropolitan region is currently composed of four lines: Montréal/Deux-Montagnes (hereinafter the Deux-Montagnes line), Montréal/Dorion-Rigaud (hereinafter the Dorion-Rigaud line), Montréal/Blainville (hereinafter the Blainville line) and Montréal/Saint-Hilaire (hereinafter the Saint-Hilaire line).

The Deux-Montagnes line runs from mileage 0.0 to mileage 21.80 on CN's Deux-Montagnes Subdivision. Operation of the commuter train service on CN's right of way is made possible by an agreement between CN and AMT dated September 21, 1996. Under that agreement, AMT is recognized as the operator of the commuter train service while CN, which owns and operates the Deux-Montagnes Subdivision railway right of way, is to supply AMT with services and equipment, including operating and running the commuter trains.

The Dorion-Rigaud line runs from mileage 0.2 to mileage 4.6 on CP's Westmount Subdivision, from mileage 0.0 to mileage 18.9 on CP's Vaudreuil Subdivision and from mileage 0.0 to mileage 16.5 on CP's M&O Subdivision. Operation of the commuter train service on CP's right of ways is made possible by an agreement between CP and AMT dated March 31, 1998. Although the terms of that agreement provide that it was to expire on December 31, 2000, the parties agreed in writing to extend it on a month-to-month basis until the Agency renders its decision. Under that agreement, AMT is authorized to operate a commuter train service, and CP agrees to permit the use of its right of ways and to provide the services described in the contract.

The Blainville line runs from mileage 44.5 to mileage 49.3 on CP's Adirondack Subdivision, from mileage 4.9 to mileage 20.3 on CP's Lachute Subdivision, from mileage 0.0 to mileage 3.6 on CP's Sainte-Agathe Subdivision and from mileage 0.0 to mileage 2.2 on CP's Westmount Subdivision. Operation of the commuter train service on CP's right of ways is made possible by a contractual agreement between CP and AMT dated August 28, 1998. Although the terms of that agreement provide that it was to expire on December 31, 2000, the parties agreed in writing to extend it on a month-to-month basis until the Agency renders its decision. Under that agreement, CP provides services to maintain a commuter train service between Montréal and Blainville.

The Saint-Hilaire line runs from mileage 0.2 to mileage 1.2 on CN's Montréal Subdivision and from mileage 55.5 to mileage 73.1 on CN's Saint-Hyacinthe Subdivision. Operation of the commuter train service on CN's right of ways is made possible by an agreement entered into on May 26, 2000. Although that agreement terminated on December 18, 2000, an interim agreement was entered into by AMT and CN for the period from December 19, 2000 to August 30, 2002. Under that agreement, AMT is recognized as the operator of the commuter train service, while CN, which owns the right of way of the Montréal and Saint-Hyacinthe Subdivisions, is to supply AMT with services and equipment, including operating and running the commuter trains. As well, an agreement was also made between the parties for upgraded service for the period from September 3, 2002 to August 31, 2012.

Roles and responsibilities

The Deux-Montagnes line

For the purposes of the operation of the commuter train service on the Deux-Montagnes line, AMT is the owner or lessee of the rolling stock, locomotives, electrical infrastructure, loudspeaker systems on platforms, platforms not on the right of way, shelters, ticketing and customer information facilities, and the commuter train sidings and maintenance sites in Saint-Eustache. AMT has rights of ownership or occupation in the buildings and equipment at the stations and the parking lots. AMT is responsible for major maintenance of the platforms, stations, buildings and equipment, electrical infrastructure, rolling stock, as well as operation and maintenance of parking lots, maintenance of the loudspeaker systems on platforms, ticketing and customer service, setting of schedules, passenger screening and payment verification, user conduct, price setting, establishment of terms and conditions of service and service advertising.

CN is the owner of the railway right of way and infrastructure, signalling and communication facilities and the Montréal Central Station. CN is responsible for maintaining fixed facilities and the railway infrastructure, signalling and communications. On a contract basis for AMT, CN handles, or is responsible for, rail traffic regulation and control, preventive maintenance and minor repairs to the electrical infrastructure, the sidings in Saint-Eustache, the stations and AMT's rolling stock, the operation of SCADA, train operations, supplying personnel and related services necessary to run the trains.

The Dorion-Rigaud line

For the purposes of the operation of the commuter train service on the Dorion-Rigaud line, AMT is the owner or lessee of the locomotives, platforms not on the right of way, loudspeaker systems on platforms, ticketing and customer information facilities, shelters, train siding sites in Dorion, electrical service facilities for trains in stations and the commuter trains' rolling stock. AMT has rights of ownership or occupation in the buildings and equipment at the stations and the parking lots. AMT is responsible for major maintenance of the platforms, stations, buildings and equipment, loudspeaker systems on platforms, rolling stock and electrical supply systems for trains in stations, as well as major maintenance and operation of the parking lots, ticketing and customer service, setting of schedules, passenger screening, payment verification, user conduct, price setting, service advertising, and establishment of terms and conditions and level of service.

CP is the owner of the railway right of way and infrastructure, signalling and communication facilities, and the Windsor Terminal, as well as of the train sidings in Glen and Dorion. CP is responsible for maintaining fixed facilities and the railway infrastructure, signalling and communications. On a contract basis for AMT, CP handles, or is responsible for, rail traffic regulation and control, maintenance of AMT's rolling stock, preventive maintenance and minor repairs to stations, platforms, electrical supply systems for trains in stations, parking lots and loudspeaker systems on platforms, operation and running of trains, supplying personnel and related services necessary to run the trains.

The Blainville line

For the purposes of the operation of the commuter train service on the Blainville line, AMT is the owner or lessee of the rolling stock, locomotives, platforms not on the right of way, loudspeaker systems on platforms, ticketing and customer information facilities, shelters, train sidings in Sainte-Thérèse, and electrical supply facilities for trains in stations. AMT has rights of ownership or occupation in the buildings and equipment at the stations and parking lots. AMT is responsible for maintenance of the stations, loudspeaker systems on the platforms, electrical supply systems for trains in stations, the buildings and equipment, the ticketing and customer service, as well as the operation and maintenance of the parking lots, setting of schedules, payment verification, user conduct, price setting, service advertising, passenger screening, establishment of terms and conditions and level of service, and major maintenance of the rolling stock, platforms and access staircases.

CP is the owner of the railway right of way and infrastructure, signalling and communications facilities, the Windsor Terminal and train sidings in Glen and Sainte-Thérèse. CP is responsible for maintaining fixed facilities and the railway infrastructure, signalling and communications. On a contract basis for AMT, CP handles, or is responsible for, rail traffic regulation and control, maintenance of AMT's rolling stock, preventive maintenance and minor repairs to platforms, access staircases and loudspeaker systems on platforms, operation and running of trains, supplying personnel and related services necessary to run the trains.

The Saint-Hilaire line

For the purposes of the operation of the commuter train service on the Saint-Hilaire line, AMT is the owner or lessee of the locomotives, the ticketing and customer service facilities, and the passenger cars. AMT has rights of ownership or occupation in the buildings and equipment at the stations and the parking lots. AMT is responsible for the maintenance of the platforms, stations, buildings and equipment, ticketing and customer service, as well as operation and maintenance of the parking lots, setting of schedules, passenger screening, payment verification, user conduct, price setting, service advertising, establishment of terms and conditions and level of service, and major maintenance of the rolling stock.

CN is the owner of the railway right of way and infrastructure, signalling and communication facilities, and the Montréal Central Station. CN is responsible for maintaining the fixed facilities and the railway infrastructure, signalling and communications. On a contract basis for AMT, CN handles, or is responsible for, rail traffic regulation and control, operation and running of trains, supplying personnel and related services necessary to run the trains. VIA Rail Canada Inc. (hereinafter VIA Rail) is responsible for the maintenance of the rolling stock and the train siding during the night.

MRI

AMT intends in the future to assign MRI the responsibility of operating the commuter train service on the railway lines of CN and CP in the metropolitan region of Montréal and to grant it all the rights necessary for this purpose. These rights would derive from the contractual agreements that AMT has with CN and CP. However, AMT plans to have MRI operate its commuter train service only if a major expansion in the service requires AMT to divide up its operations and it is compelled to have MRI operate because of labour legislation. AMT plans to retain ownership of the equipment and infrastructure and lease them to MRI who in turn would be responsible for the operation.

Future plans

AMT plans to use its own personnel or MRI's personnel to run its trains and plans to have several activities that are currently contracted out to CN or CP carried out by MRI's personnel or by external suppliers other than CN or CP.

Studies are currently under way to assess the possibility of establishing additional commuter railway lines in the Montréal-Mascouche, Montréal-Delson and Montréal-Dorval corridors, as well as the possibility of extending the Blainville line to Saint-Jérôme.

AMT wishes to acquire the necessary railway lines and infrastructure for its commuter train service and for the expansion of this service, as lines and infrastructure become available. In addition, as AMT develops these new lines, it will have to establish new sites for the storage and maintenance of its locomotives and rolling stock.

POSITIONS OF THE PARTIES

AMT

AMT states that all of the lines on which AMT currently operates its commuter train service and on which it is considering expanding this service belong to either CN or CP. As these lines fall under federal jurisdiction, AMT argues that the Agency has jurisdiction with respect to the present application.

According to AMT, CN and CP continue to operate their freight services on the same railway lines used for running AMT's commuter trains.

AMT points out that VIA Rail, a federal passenger railway company, operates several trains daily on the Saint-Hilaire line. AMT also maintains that the Agency has jurisdiction over passenger transportation services to ensure the implementation of the national transportation policy.

AMT states that, under these circumstances, the Agency, pursuant to the CTA, has jurisdiction over these lines, and hence has the right to recognize an agency that is operating services on these lines as a railway company.

According to AMT, nothing in the CTA limits the operation of a railway to the owner of that railway alone. Rather, as the CTA and the associated regulations expressly recognize, a railway may be operated by persons other than its owner. This can be seen clearly in sections 90 and 91 of the CTA. Logic dictates that if someone who leases a railway (which includes someone who is authorized to run trains on a railway belonging to someone else) may apply for a certificate of fitness, it is because this person is considered to be "operating a railway" within the meaning of section 90 of the CTA. Otherwise, that person would have no need for such a certificate.

AMT cites in support of its position the decision of the Supreme Court of Canada in Her Majesty The Queen in the Right of the Province of Ontario v. Board of Transport Commissioners (1968) S.C.R., 118 (hereinafter the GO Transit Decision), in which the Supreme Court of Canada recognized the Board of Transport Commissioners' (a predecessor of the Agency) jurisdiction over GO Transit. AMT states that the situation described in that decision does not differ from the one in which AMT finds itself today with respect to its operations on the railway infrastructure.

According to AMT, the GO Transit Decision establishes two things. The first is that a transportation undertaking operates a railway when it uses a railway to transport passengers, even if the railway as such belongs to another person. The second is that such a transportation undertaking becomes subject to federal jurisdiction as soon as it provides transportation on a railway that falls under federal jurisdiction, even if this undertaking transports passengers only within the boundaries of a single province.

AMT submits that the Supreme Court of Canada decided implicitly in the GO Transit Decision that the commuter service was subject to the jurisdiction of the Board of Transport Commissioners and the legislative authority of Parliament. AMT argues that it is hard to conceive how the jurisdiction over railway tariffs in that case for commuter train service could have been established unless the commuter service itself was considered a federal railway undertaking. Though it is not mentioned explicitly, AMT argues that the Supreme Court of Canada considered GO Transit a "federal railway undertaking" precisely because it was participating in the operation of a federal railway, which explains why it was subject to the federal railway regulations then applicable to such undertakings.

AMT believes that because it has the right to operate its commuter train service on lines that are subject to federal jurisdiction, it must apply to the Agency to obtain a certificate of fitness; AMT already has, and will continue to have after it has carried out its future plans, all the characteristics of a railway company, and the same will be true of MRI. Thus, AMT is entitled to apply for and be issued a certificate of fitness if the Agency is satisfied that AMT has the liability insurance specified by regulation, including acceptable self-insurance. In this respect, AMT states that it has such insurance, including self-insurance.

CN

CN argues that MRI has neither the constitutional nor the legislative qualifications to obtain a certificate of fitness authorizing it to operate a railway on CN's lines, and that AMT/MRI's application is prima facie ill-founded both in fact and in law.

CN further argues that AMT is not a railway company within the meaning of section 87 of the CTA, because its corporate characteristics do not satisfy these requirements. In this respect, CN states that AMT's role, as defined in section 21 of the AMT Act, gives it the mandate to improve commuter train services, but not to operate a railway. AMT may operate a public rail transportation undertaking, however, this does not, according to CN, make it a federal railway company.

CN states that to acquire the attributes of a federal railway company, such an undertaking must operate an international, interprovincial railway or railway line or have been declared to be for the general advantage of Canada under subsection 92(10) of the Constitution Act, 1867, 30 & 31 Victoria, c. 3 (U.K.). According to CN, none of these apply to AMT. While CN acknowledges that AMT's equipment is operated by CN under operating agreements, this is not sufficient to make MRI the operator of a federal railway.

With respect to MRI, CN states that it does not own any railway equipment or property and remains a non-operating corporate entity. CN adds that it has no contractual relationship with MRI and has in no way assigned any running rights on its railway lines to either AMT or MRI.

CN maintains that in the GO Transit Decision, the Supreme Court of Canada never considered the commuter train to be a federal railway undertaking or a federal railway. According to CN, the Supreme Court of Canada recognized only one railway undertaking in that case: CN. More particularly, according to CN, the Supreme Court of Canada did not recognize that a transportation undertaking operates a federal railway simply by virtue of the fact that this transportation occurs on a railway that belongs to a railway company and therefore is under federal jurisdiction.

WCE

WCE supports the application and issuance of a certificate of fitness as long as the Agency is satisfied that there will be adequate liability insurance coverage.

WCE submits that the mere fact that a provincially-incorporated and provincially-regulated commuter rail authority, such as WCE, operates over the trackage of a federally-regulated carrier does not automatically make its operations subject to federal jurisdiction. WCE states that the only way that such a commuter rail operation may become subject to federal jurisdiction is through the process of "accession". Thus, the fact that AMT/MRI has applied for a certificate of fitness means that it has acceded to federal jurisdiction.

GO Transit

GO Transit states that it operates a commuter rail authority and that its existing operations are similar in concept to those of AMT in that it does not operate its own rail transit service but enters into contracts with CN and CP for the operation of the rail transit services on their rail corridors.

GO Transit asserts that AMT is not currently an operating railway company as it does not own any rail corridors in its own right, it does not maintain any track, nor does it dispatch or crew any trains. As such, GO Transit does not support the issuance of a certificate to AMT or MRI on jurisdictional grounds.

Edmonton Transit System

Edmonton Transit System states that it cannot comment on the application because its light rail transit system only operates on City-owned tracks.

Government of Alberta - Alberta Infrastructure

Government of Alberta - Alberta Infrastructure submits that it would be concerned if rail entities operating on the right of ways of federally-regulated railway companies but not on the actual federally-regulated tracks were designated under the legislative authority of Parliament.

CP

CP submits that it has no comment at this time, stating that it reserves the right to comment at a later date.

AMT's reply

AMT believes that CN is alone in opposing the application and states that the agreements in place recognize its status as the operator of a federal railway and assign certain specific activities to CN and CP as contractors. Thus, if no such agreements were in place and AMT held its own certificate of fitness, it could apply to the Agency to obtain running rights.

In its reply to CN, AMT argues that section 22 of the AMT Act grants AMT exclusive authority over public transportation by commuter train within its area of jurisdiction. Under this authority, AMT can acquire railway tracks, right of ways and any property needed for the operation of its commuter train services. In response to CN's statement that AMT has the mandate to improve commuter train services only, AMT maintains that it also has the mandate to develop such services (section 21 of the AMT Act), and for this purpose, it may operate a public rail transportation undertaking(section 24 of the AMT Act). Thus, according to AMT, its powers are sufficiently broad to allow it to operate a railway to provide commuter train services within its area of jurisdiction. Section 24 of the AMT Act also permits the creation of a separate federally-chartered company for the purposes of operating a federal railway.

AMT disagrees with CN's argument that AMT is not a railway company within the meaning of section 87 of the CTA. AMT responds that the relevant definition in this section is not that of a "railway" but that of a "railway company". According to AMT, the definition of a "railway" deals with the physical elements of a railway line that is subject to the legislative authority of Parliament. A "railway company", on the other hand, is defined as a person that holds a certificate of fitness. AMT is a person that wishes to obtain a certificate of fitness and once a railway system is subject to the legislative authority of Parliament and the person who is applying for the certificate of fitness provides the necessary proof of solvency, that person is entitled to obtain a certificate.

AMT further argues that, as set out in section 87 of the CTA, a person becomes a "railway company" when that person becomes the holder of a certificate of fitness; the definition does not refer to the operation of a service but rather to the holding of a certificate. According to section 91 of the CTA, any person can apply for a certificate of fitness, even if they do not own any lines of railway (in other words, and contrary to what CN argues, an undertaking can become a railway company even if it does not itself own any railways). It is this certificate that AMT has applied for. Once its application has been approved, AMT will be a "railway company" within the meaning of the CTA. Because its operations will take place on a portion of a "railway under the legislative authority of Parliament", it is clear that only the Agency has jurisdiction under the circumstances.

AMT notes that WCE supports AMT's application and its right to be granted a certificate of fitness on the basis that AMT's application indicates that it wishes to accede to federal jurisdiction. However, according to AMT, WCE's analysis of constitutional law asserts that a provincially-incorporated and provincially-regulated commuter train authority cannot be de facto regarded as a federal carrier subject to federal regulation, although it can become subject to federal regulation if it manifests the desire to accede to such regulation, as provided for in sections 90 to 92 of the CTA.

AMT feels that WCE's position must be evaluated in light of the specific factual context of AMT's activities. That is, the railway lines that compose AMT's commuter train system belong either to CN or to CP. In addition to being used by commuter trains, these lines are used for the carriage of goods by CN or CP. The federal regulatory authority therefore has jurisdiction over these lines, with regards to infrastructure and railway safety, as well as with respect to the operations conducted on these lines. AMT asserts that it already meets the requirements of the federal legislation in these areas and that only the Agency can authorize AMT to conduct railway operation activities on these lines so long as they remain subject to federal jurisdiction.

In response to the comments of GO Transit, AMT states that it is operating a railway even though it does not own the railway corridors, does not maintain them, and does not dispatch the trains, and even though the crews of these trains are not composed of AMT employees. AMT counters that it is the operator of the commuter train system and that it acts either directly as operator, or indirectly through contractors to whom by agreement it entrusts specific activities.

According to AMT, it is, by virtue of the legislation that created it, the sole authority responsible for ensuring commuter train services in the Montréal region. Thus, AMT controls the provision of services either directly or by contracting out certain specific services to third parties, decides on the trains' schedules and frequency, as well as on ticket prices, selects railway equipment, advertises the service, controls passenger conduct and verifies payment. The agreements that AMT concludes with respect to the running of its trains on the CN and CP tracks recognize its status as an operator. In fact, the current commuter train service in the Montréal region would not exist if AMT did not assume the task of operating it.

ANALYSIS AND FINDINGS

In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.

There are a number of statutory provisions in Part III of the CTA that are relevant to the Agency's consideration of this case.

The definition of a "railway" set out in section 87 of the CTA, is as follows:

"railway" means a railway within the legislative authority of Parliament and includes

(a) branches, extensions, sidings, railway bridges, tunnels, stations, depots, wharfs, rolling stock, equipment, stores, or other things connected with the railway, and

(b) communications or signalling systems and related facilities and equipment used for railway purposes;

Subsection 90(1) of the CTA states that:

No person shall construct or operate a railway without a certificate of fitness.

Subsection 92(1) of the CTA reads:

The Agency shall issue a certificate of fitness for the proposed construction or operation of a railway if the Agency is satisfied that there will be adequate liability insurance coverage for the proposed construction or operation, as determined in accordance with the regulations.

Subsection 90(1) of the CTA provides that no person shall construct or operate a railway without a certificate of fitness. Section 87 of the CTA defines a "railway", in part, as a railway within the legislative authority of Parliament. Therefore, in order to obtain a certificate of fitness, an applicant must first demonstrate that the certificate of fitness applied for relates to a railway that is within the legislative authority of Parliament. If within the legislative authority of Parliament, subsection 92(1) of the CTA provides that the Agency shall issue a certificate of fitness for the proposed construction or operation of a railway if it is satisfied that the applicant has adequate liability insurance coverage for the proposed construction or operation, as determined in accordance with the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337.

In the case at hand, before determining whether the railway contemplated by the AMT/MRI application is a railway within the legislative authority of Parliament, the Agency must identify whether the operating proposal identified in the application is fundamentally a "railway". In undertaking such a task and having regard to the specific facts of this case, the Agency must determine whether there are two (CN and CP) or three (CN, CP and AMT/MRI) railway works or undertakings. If there are only two railway works or undertakings, CN and CP, no additional certificate of fitness would need to be issued, as CN and CP already have certificates of fitness to operate their respective railways. In the other event, if it were established that there are three railway works or undertakings, CN, CP and AMT/MRI, it would then become necessary to determine whether the railway that is the subject of the AMT/MRI application is a railway within the legislative authority of Parliament. If, at this point, it is established to the satisfaction of the Agency that the AMT/MRI railway is subject to the jurisdiction of the Parliament of Canada, the Agency must then, under subsection 92(1) of the CTA, ensure that AMT/MRI has adequate liability insurance coverage.

In the present case, although the evidence indicates that the railway right of ways on which the AMT/MRI commuter train service is operated belong to CN and CP, the Agency is of the opinion, in light of its assessment of the roles and responsibilities of each of the parties with respect to the operation of the commuter train services, that AMT/MRI has the necessary attributes to be characterized as a railway work or undertaking. Apart from its apparent financial and commercial autonomy from CN and CP, the Agency notes, but without limiting the generality of the following, that AMT/MRI is the owner or lessee of its own locomotives, its rolling stock, the sidings for maintaining its rolling stock and locomotives, certain buildings and platforms not on the right of ways, certain related equipment used in the railway operations such as the electrical infrastructure, loudspeaker systems on the platforms, parking lots, ticket operations and electrical supply systems for trains in the stations. In addition, AMT/MRI is partially responsible for maintaining its locomotives and rolling stock, platforms, stations and parking lots, and it is entirely responsible for advertising relating to the service, fixing the terms and conditions of service, setting prices, user conduct and setting schedules.

The Agency is therefore of the opinion that AMT/MRI is a railway work or undertaking. In addition, the Agency finds that it is one that is separate from CN's and CP's works or undertakings. Accordingly, what is needed, in order to determine whether a railway is within the legislative authority of Parliament, is a constitutional characterization of AMT/MRI's railway work or undertaking.

Subsection 92(10) of the Constitution Act, 1867 provides as follows:

In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated, that is to say,

...

(10) Local Works and Undertakings other than such as are of the following Classes:

(a) Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province;

(b) Lines of Steam Ships between the Province and any British or Foreign Country;

(c) Such Works as, although wholly situate within the Province, are before or after their Execution declared by the Parliament of Canada to be for the general Advantage of Canada or for the Advantage of Two or more of the Provinces.

Subsections 88(1) and (2) of the CTA provide as follows:

(1) This Part applies to all persons, railway companies and railways within the legislative authority of Parliament.

(2) Without limiting the effect of subsection (1), this Part applies to

(a) a company operating a railway from the United States into Canada; and

(b) a railway, or a portion of a railway, whether or not constructed under the authority of an Act of Parliament, that is owned, controlled, leased or operated by a person who operates a railway within the legislative authority of Parliament.

The Constitution Act, 1867 and the CTA therefore provide for three ways in which a railway work or undertaking may be brought within the jurisdiction of the Parliament of Canada. First, a railway work or undertaking will be subject to the jurisdiction of the Parliament of Canada if the work or undertaking connects, or crosses the borders of, a province (paragraph 92(10)(a) of the Constitution Act, 1867). Second, even if a railway work operates only within the boundaries of a province, it will be subject to the jurisdiction of the Parliament of Canada if the work is declared to be for the general advantage of Canada (paragraph 92(10)(c) of the Constitution Act, 1867). Third, paragraph 88(2)(b) of the CTA makes a railway work or undertaking that is owned, controlled, leased or operated by a person who operates a railway within the legislative authority of Parliament, even if it operates only within the boundaries of a province, subject to the jurisdiction of the Parliament of Canada.

In this case, both the existing operation of the commuter train service and the AMT/MRI railway work are limited to the Montréal metropolitan region. In addition, the AMT/MRI railway work has not been declared to be a work for the general advantage of Canada, nor is the AMT/MRI work or undertaking owned, controlled, leased or operated by a person who operates a railway within the legislative authority of Parliament. Consequently, without more, and in accordance with the constitutional and statutory provisions cited above, the railway that is the subject of the AMT/MRI application is not within the legislative authority of Parliament.

AMT/MRI submitted that the GO Transit Decision establishes that a railway undertaking is subject to the jurisdiction of the Parliament of Canada when the transport in which it is engaged takes place on a railway that is already within federal jurisdiction, even if that transport takes place within the borders of one province.

The Agency acknowledges that the facts in the GO Transit Decision are similar to those in the present case. That is, in both cases a commuter train operation within the borders of one province is being conducted on railway lines that belong to one or more federal railway companies.

However, the case before the Supreme Court of Canada in GO Transit arose from an appeal by the Province of Ontario against a declaration by the Board of Transport Commissioners that the tolls charged by GO Transit were subject to regulation under the then Railway Act, R.S.C., 1952, c. 234. The Supreme Court of Canada ruled on this appeal concluding that GO Transit was subject to the railway tariff provisions appearing in the Railway Act. In so doing, the GO Transit Decision only makes the provincial company subject to federal operating rules in respect of its physical operations when its transportation service is being carried out on the federal company's infrastructure. It did not support the proposition that the operation of a provincial railway work or undertaking on the property or infrastructure of a federal railway work or undertaking automatically makes the provincial railway a federal work or undertaking.

The Supreme Court of Canada stated in its decision that this particular finding was consistent with the principle that no railway could be operated with trains on the same line not governed by the same set of rules. Put another way, different operating rules should not apply to two separate operations that are being conducted over the same tracks at the same time. In the face of this potential duplication and conflict, the federal rules were found to apply.

This finding of the Supreme Court of Canada did not change the basically local nature of the transit operator's (GO Transit's) undertaking. The transit operator would remain provincial, that is, subject to the legislative jurisdiction of the Province for all matters other than those relating to its physical operations taking place on the federal carrier's infrastructure.

Applying the above, the Agency finds that in the present case there are two federal railway companies, CN and CP. As a commuter transit authority operating entirely within the borders of one province, AMT/MRI is not a federal railway undertaking even though, like GO Transit, it is operating on the infrastructure of a federal railway. While AMT/MRI, like GO Transit, may be subject to federal operating rules, such as those dealing with safety, in respect of its physical operations on the CN or CP trackage, this alone is not sufficient to make it a railway company subject to the legislative authority of Parliament.

The Agency acknowledges that there may be instances where an otherwise provincial railway company can become a federal work or undertaking when it operates on federal trackage. The jurisprudence on this point makes it clear, however, that something more than mere physical operating presence on the federal trackage is required. Typically, substantial integration between the carriers is required arising from such matters as financial, commercial or operational dependence as well as common management and control.

The Agency has examined the integration tests developed by the Supreme Court of Canada in Montcalm Construction v. Minimum Wage Commn., [1979] 1 S.C.R. 754, Northern Telecom Can. v. Communications Worker (No.1), [1980] 1 S.C.R. 115 and UTU v. Central Western Ry., [1990] 3 S.C.R. 1112. Further to this examination, the Agency finds that the AMT/MRI commuter train service here is operated independently of the CN and CP railway works or undertakings. Although part of the commuter train service operation is carried out on the CN and CP railway works or undertakings, and although cooperation is necessary among the three railway works or undertakings to ensure that their respective works or undertakings function properly, the Agency finds that each of those works or undertakings function independently of the others, in their own spheres of activity. In addition, it cannot be said that CN and CP are in some way, financially or otherwise, dependent on the commuter train service provided by AMT/MRI.

In its submission to the Agency, WCE argued that AMT/MRI has acceded to federal jurisdiction as it has applied for a certificate of fitness. Consistent with the above findings of the Agency, the Constitution Act, 1867 and the CTA provide the parameters under which a railway work or undertaking may be found to be within the legislative authority of Parliament. The mere fact that a provincial railway company like AMT/MRI applies for a certificate of fitness cannot change the local nature of the provincial railway. Section 87 of the CTA only permits the Agency to issue a certificate of fitness for the proposed construction or operation of a railway within the legislative authority of Parliament.

CONCLUSION

Based on the above findings, the Agency concludes that the railway that is the subject of AMT/MRI's application is not a railway within the legislative authority of Parliament and therefore is not eligible to receive a certificate of fitness. Accordingly, the application is hereby dismissed.