Agency Rulings

Decision No. 501-R-1994

July 28, 1994

IN THE MATTER OF an Agreement between Canadian Pacific Limited, The Dominion Atlantic Railway Company and The Windsor & Hantsport Railway Company, Limited, pursuant to section 158 of the National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), to convey to The Windsor & Hantsport Railway Company, Limited, the Canadian Pacific Limited Halifax Subdivision between mileage 0.0 (Windsor Junction) and mileage 52.9 (New Minas), including the Truro Spur, a 4.4-mile spur which connects to the Halifax Subdivision at mileage 31.6.

File No. T 6140/292

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INTRODUCTION

On February 11, 1994, Canadian Pacific Limited (hereinafter CP) and The Dominion Atlantic Railway Company (hereinafter the DAR) entered into an Asset Purchase Agreement (hereinafter the Agreement) with The Windsor & Hantsport Railway Company, Limited (hereinafter the W&H Railway) to convey to the W&H Railway the CP Halifax Subdivision between mileage 0.0 (Windsor Junction) and mileage 52.9 (New Minas), including the Truro Spur, a 4.4-mile spur which connects to the Halifax Subdivision at mileage 31.6. On February 15, 1994, the National Transportation Agency (hereinafter the Agency) received notice of the Agreement from CP, the DAR and the W&H Railway, pursuant to subsection 158(2) of the National Transportation Act, 1987 (hereinafter the NTA, 1987). A copy of the Agreement was filed with the Agency. CP has requested that the Agency maintain the confidentiality of "all provisions in the Agreement that pertain to the purchase price, the method of payment of the purchase price, revenues from miscellaneous agreements and leases in effect, and personal information respecting employees who have worked on the Line".

BACKGROUND

The Halifax Subdivision between mileage 0.0 and mileage 31.6 is the Windsor Branch of the Intercolonial Railway, which was leased to the DAR by the Crown pursuant to a 99-year lease dated January 1, 1914. The Halifax Subdivision between mileage 31.6 and mileage 32.16 is held by the DAR by an easement from the Crown dated March 14, 1984. The remainder of the Halifax Subdivision up to mileage 52.9, including the Truro Spur, is owned by the DAR. The DAR was leased to CP pursuant to a 999-year lease dated November 13, 1911. CP owns over 98 percent of the voting shares of the DAR.

Pursuant to the Agreement, the conveyance to the W&H Railway will occur in the following order:

1. CP will surrender its 999-year lease to the DAR with respect to the line being conveyed to the W&H Railway. Following CP's surrender of its leasehold interest, the DAR will have reacquired all of the interest in the line.
   
2. The DAR will then convey to the W&H Railway by deed that portion of the line which it holds in freehold, being the Truro Spur between mileage 0.0 and mileage 4.4 of the Halifax Subdivision and the portion of the line between mileage 32.16 and mileage 52.9 of the Halifax Subdivision.
   
3. The DAR will assign to the W&H Railway the causeway easement it holds from the Crown dated March 14, 1984 between mileage 31.6 and mileage 32.16.
   
4. The DAR will assign to the W&H Railway the 99-year lease it holds from the Crown dated January 1, 1914 between mileage 0.0 and mileage 31.6, of the Windsor Branch of the Intercolonial Railway.

PUBLIC NOTICE OF THE AGREEMENT

In accordance with the direction of the Agency of March 9, 1994, CP served copies of the public notice of the Agreement on interested parties on March 15, 1994 and published the notice in local area newspapers on April 27 and 29, 1994. The closing date for interventions was thirty days from the last date of publication of the notice.

Pursuant to the notice, interventions in support of the Agreement were filed with the Agency by the Minister of Transportation and Communications of the Province of Nova Scotia, Fundy Gypsum Company, the Canadian National Railway Company and Co-op Atlantic. One intervention opposing the approval of the Agreement was filed with the Agency by the National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (hereinafter CAW-Canada). CP replied to the intervention by CAW-Canada.

MATTERS TO BE CONSIDERED BY THE AGENCY

Pursuant to section 158 of the NTA, 1987, a federally-regulated railway company may convey a line of railway or segment thereof to another railway company of its choosing, under terms mutually agreed upon by both parties. The conveyance of a line of railway to another company pursuant to section 158 is deemed not to be an abandonment.

Subsection 158(3) of the NTA, 1987 states:

... the Agency shall ... approve the agreement for the conveyance unless the Agency determines that the conveyance would not be in the public interest or that the company to whom the line or segment is to be conveyed is not authorized to operate it.

Accordingly, pursuant to section 158 of the NTA, 1987, the Agency must take into consideration the public interest and the authority of the proposed acquirer to operate the line to be conveyed.

EVIDENCE AND FINDINGS

The Agency has considered all the material received and on file with the Agency and has determined that a public hearing is not necessary and that a decision can be rendered based on the information on file.

In its opposing intervention, CAW-Canada raised concerns with respect to issues which would impact on unionized employees. In its response, CP stated that the negotiations between CAW-Canada and CP with respect to benefits and options available to CAW-Canada members are not dependent on the provisions of the Agreement between CP and the W&H Railway. Furthermore, CAW-Canada employees are not being forced to accept employment with the W&H Railway and are free to choose to remain under the terms of the current collective agreement.

By letter dated June 30, 1994, the Province of Nova Scotia advised that the W&H Railway is a railway company under the laws of Nova Scotia and that it has authority to operate as a provincially-regulated railway.

The Agency has considered the opposition and finds that the terms of the Agreement do not appear to have any negative impact on unionized employees.

After consideration of all of the evidence before it, the Agency has not found sufficient evidence to conclude that the conveyance would not be in the public interest. In addition, the Agency is satisfied that the W&H Railway is authorized to operate as a railway company in the province of Nova Scotia.

CONCLUSION

Accordingly, the Agency concludes that the Agreement between Canadian Pacific Limited, The Dominion Atlantic Railway Company and The Windsor & Hantsport Railway Company, Limited to convey to The Windsor & Hantsport Railway Company, Limited, the Canadian Pacific Limited Halifax Subdivision between mileage 0.0 (Windsor Junction) and mileage 52.9 (New Minas), including the Truro Spur, a 4.4-mile spur which connects to the Halifax Subdivision at mileage 31.6, should be approved pursuant to subsection 158(3) of the NTA, 1987.

The Agreement is hereby approved.