Agency Rulings

Decision No. 570-R-1993

August 23, 1993

APPLICATION by Canadian Pacific Limited, pursuant to section 160 of the National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), for authority to abandon the operation of the Halifax Subdivision from mileage 52.9 to mileage 56.1, including the 4.6 mile Kentville Spur from mileage 56.1 Halifax Subdivision to the end of the track and the 2.3 mile Kingsport Spur from mileage 56.1 Halifax Subdivision to the end of the track, a total distance of 10.1 miles, in the province of Nova Scotia.

File No. T 6120/292

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HEARD in Saint John, New Brunswick between June 14 and June 23, 1993 and in Sherbrooke, Quebec on June 28 and 29, 1993.

BEFORE:

Gilles Rivard, Q.C. Chairman of the Hearing and Chairman of the National Transportation Agency

Keith Penner Member, National Transportation Agency

J.A. McGrath Member, National Transportation Agency

APPEARANCES:

Marie-Paule Scott, Q.C. Special Advisor to the Chairman

Alix Jenkins Counsel, National Transportation Agency

Louis Gautier

Forrest Hume Counsel, Canadian Pacific Limited

Phillip Huband

Richard La Rue

Peter MacNutt Representing the Attorney General of New Brunswick on behalf of

Michael Gormon the Province of New Brunswick

Donald Gillis Counsel, McCain Foods Limited

Hugh Flemming Solicitor, Saint John Port Corporation

Donald Gillis Counsel to Mr. Flemming

François Lemieux Counsel, The Irving Group of Companies and Georgia-Pacific Corporation

Richard Lande Counsel, Lantic Sugar Limited, Atlantic Pressure Treating Limited and EKA Nobel Incorporated

E.E. Wayne Mayor, City of Saint John, New Brunswick

Elizabeth Weir Leader, New Democratic Party of New Brunswick and MLA for Saint John South

Iain Angus MP, representing the federal riding of Thunder Bay-Atikokan

Robert Corbett MP, representing the federal riding of Fundy-Royal

Robert Storr McAdam Chamber of Commerce

J.S. Eichel United Transportation Union (Maine)

E.A. Phillips

Robert Steele MGR, Inc./DownEast Rail (Maine)

Sylvanus Doughty

David Kruschwitz Bangor and Aroostook Railroad

Peter Vuillemot Atlantic Provinces Transportation Commission

Blair McInnis Brotherhood of Maintenance of Way Employees

Peter Davidson

Romano Della Sera

George Love Brotherhood of Locomotive Engineers

Louis Doyle Ministère des Transports of the province of Quebec

Jacques Ruel

Ron Bennett United Transportation Union

Lawrence Chesser

Charles Dougherty

Bruce McFarlane Greenbelt Systems Co. Ltd.

C.E. Doherty Committee Against Abandonment

K.B. Barton

C.J. Williams

James K. Allen Public interest

H.S. Lafferty Public interest

T.G. O'Neill Public interest

INTRODUCTION

On November 17, 1992, Canadian Pacific Limited (hereinafter CP) filed with the National Transportation Agency (hereinafter the Agency) a notice of intent to apply for abandonment of the operation of the Halifax Subdivision from mileage 52.9 to mileage 56.1, including the 4.6 mile Kentville Spur from mileage 56.1 Halifax Subdivision to the end of the track and the 2.3 mile Kingsport Spur from mileage 56.1 Halifax Subdivision to the end of the track, a total distance of 10.1 miles, in the province of Nova Scotia. A map of the area, as filed by CP at the public hearing, is attached as Appendix 1.

Following the expiration of the ninety day (90) notice of intent period, CP, pursuant to section 160 of the National Transportation Act, 1987 (hereinafter the NTA, 1987), filed its application with the Agency on February 24, 1993.

A public hearing commenced on June 14, 1993 in Saint John, New Brunswick and concluded in Sherbrooke, Quebec, on June 29, 1993.

LEGISLATIVE PROVISIONS

In accordance with section 161 of the NTA, 1987, any person may oppose an application for the abandonment of the operation of a line by filing with the Agency, not more than sixty (60) days after the date of the notice given under subsection 160(5), a written statement setting forth the grounds upon which that person opposes the application. If no opposition is received, the Agency must order the operation of a line abandoned. In response to the present application, very little opposition was filed with the Agency.

Where an application is opposed, the Agency is required to determine the actual loss, if any, of the railway company attributable to the operation of the line in each of the prescribed financial years and give public notice of its determination as set out in section 163 of the NTA, 1987. On May 13, 1993, the Agency issued an interim determination of actual loss for the years 1989, 1990 and 1991, based on the information submitted by CP. The interim determination indicated that the CP operating costs exceeded its revenues earned by $210,446, $72,370 and $144,118 for the years 1989, 1990 and 1991 respectively.

The NTA, 1987 requires the Agency to determine whether the operation of a line is economic or uneconomic and, if uneconomic, whether there is a reasonable probability that it will become economic in the foreseeable future. Should the Agency find that the operation of a line is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future, subsection 165(1) of the NTA, 1987 requires the Agency to order its abandonment. If the Agency determines that there is a reasonable probability of its becoming economic in the foreseeable future, the Agency still must order the abandonment of the operation of the line unless it determines that the line is required in the public interest as set out in section 166 and as further defined in section 167 of the NTA, 1987.

EVIDENCE PRESENTED

CP's Evidence

The majority of CP's evidence with respect to this application was presented in its written application of February 24, 1993. CP testified at the public hearing that the portion under application for abandonment was the west end of the Halifax Subdivision between New Minas and Kentville, approximately 10 miles of trackage. It also indicated that its future plans included the sale of the balance of the line as a short-line operation and negotiations were currently under way to this effect.

CP submitted that the operation of the line incurred losses in 1992 of approximately $126,000 based on traffic volumes of 15 carloads. Four carloads were handled for the first three months of 1993.

Interveners' Evidence

Written submissions were also received from Transport 2000 Atlantic and the Town of Kentville, Nova Scotia. Transport 2000 Atlantic was opposed to the abandonment and submitted that the trackage to be abandoned under this application should be included as part of the trackage CP was attempting to sell to a short-line operator. Transport 2000 Atlantic indicated that the traffic of such companies as N.S. Grain Commission, Scotia Farm Supply, Fundy Fertilizer and the Great Valley Juice Company was significant in 1989 and 1990 and should therefore be included in the proposed sale of the line between New Minas and Windsor Junction. The Town of Kentville supported the abandonment of the rail lines within the boundaries of the town.

AGENCY FINDINGS

The Agency issued its interim actual loss determination on May 13, 1993 for the years 1989, 1990 and 1991. Since the issuance of this notice, CP has filed its claimed 1992 losses. The Agency did not hear any evidence which would indicate that a change in the interim actual loss determination was warranted. The Agency has made an adjustment to the 1991 interim determination and to the 1992 determination to reflect 1991 final approved unit costs and cost of capital rate. The effect of this adjustment is to decrease the actual losses being incurred. The final determination of the actual losses being incurred in the operation of the line for the years 1990, 1991 and 1992 is attached as Appendix 2.

Since opposition to the application has been submitted, the Agency must determine whether the operation of the line is economic or uneconomic. Train operations being conducted on the line are carried out by a way freight assignment on an "as and when required" basis. It operates normally once per week in each direction between Kentville and the Canadian National Railway Company interchange at Windsor Junction. The train speed on the Halifax Subdivision is 30 miles per hour; on the Kentville Spur 15 miles per hour; and on the Kingsport Spur 10 miles per hour. It appears that this level of service is sufficient for the carload volumes being offered. Actual losses in 1992 exceed $121,000 based on 15 carloads. This represents losses of approximately $11,980 per mile or $8,066 per carload. There are no known operating efficiencies which would improve the situation. The Agency therefore concludes that the operation of the line is uneconomic.

The Agency also concludes that there is no reasonable probability of the operation of the line becoming economic in the foreseeable future. Traffic volumes have declined since 1989 to present levels and none of the past or present rail users intervened in opposition to the proposed abandonment. The carload volumes to sustain an economic operation of the line have not been demonstrated.

Other matters

In so far as environmental issues are concerned, the Agency is subject to the Environmental Assessment and Review Process Guidelines Order, SOR/84-467 (hereinafter the EARP Guidelines Order). The Agency developed in cooperation with the Federal Environmental Assessment Review Office an Agency Exclusion List, pursuant to subsection 11(a) of the EARP Guidelines Order, identifying the types of proposals that would not produce any adverse environmental effects and that would, as a result, be automatically excluded from the Environmental Assessment Review Process. In subjecting this proposal under sections 162 and 166 and subsection 165(1) of the NTA, 1987 to an environmental screening pursuant to subsection 10(1) of the EARP Guidelines Order, the Agency determined that this proposal is of a type identified on the Agency Exclusion List, and, as such, the proposal may automatically proceed.

CONCLUSIONS

After consideration of all matters on file and evidence presented at the public hearing, the Agency, pursuant to sections 164 and 165 of the NTA, 1987, determines that the operation of the Halifax Subdivision from mileage 52.9 to mileage 56.1, including the 4.6 mile Kentville Spur from mileage 56.1 Halifax Subdivision to the end of the track and the 2.3 mile Kingsport Spur from mileage 56.1 Halifax Subdivision to the end of the track, is uneconomic and that there is no reasonable probability of its operation becoming economic in the foreseeable future. Therefore, the operation thereof should be ordered abandoned.

Section 168 of the NTA, 1987 provides that the Agency shall fix the date of abandonment of operations not less than thirty (30) days or more than one (1) year from the date of the order directing the abandonment of operations. Based on the evidence received, the Agency is of the view that no shippers will be adversely affected by the abandonment of operations and, therefore, it shall fix the abandonment date thirty (30) days from the date of the order giving effect to this Decision.