Agency Rulings

Decision No. 602-R-2006

October 31, 2006

APPLICATION by CSX Transportation, Inc. pursuant to paragraph 93(1)(c) of the Canada Transportation Act, S.C., 1996, c. 10, for a variance to Certificate of fitness No. 97004-1 to reflect a change in its Canadian railway operations in the provinces of Ontario and Quebec.

File No. R 8005/C3

On April 5, 2006, CSX Transportation, Inc. (hereinafter CSXT) filed with the Canadian Transportation Agency (hereinafter the Agency) the application set out in the title.

Pursuant to subsection 29(1) of the Canada Transportation Act (hereinafter 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, CSXT has agreed to an extension of the deadline until November 4, 2006.

Subsection 92(1) of the CTA states that 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.

Le 24 septembre 1999, l'Office a délivré le certificat d'aptitude n^o 97004-1 à CSXT afin de permettre l'exploitation des lignes de chemin de fer suivantes :

On September 24, 1999, the Agency issued Certificate of fitness No. 97004-1 to CSXT to permit the operation of lines of railway set out below:

1. Through a running rights agreement between CSX Transportation, Inc. and its wholly-owned subsidiary, the Lake Erie and Detroit River Railway Company, a line of railway in Canada from Blenheim to Sarnia, Ontario, on the Sarnia Subdivision, and from Blenheim to a point two miles east of Blenheim, on the Blenheim Subdivision.

2. Through an operating agreement between CSX Transportation, Inc. and its affiliate, the New York Central Lines LLC, a line of railway owned by New York Central Lines LLC's subsidiary St. Lawrence and Adirondack Railway Company, between the Canada/USA border near Fort Covington, New York and Valleyfield, Quebec and between Beauharnois and Adirondack Junction, Quebec; and through a lease agreement with the Canadian National Railway Company, a line of railway between Valleyfield and Beauharnois, Quebec.

Paragraph 93(1)(c) of the CTA provides that the Agency, upon application, may vary a certificate of fitness to reflect a change in railway operations or circumstances relating to those operations.

CSXT has applied to the Agency to vary its Certificate of fitness to reflect the transfer by way of long term lease of a line of railway. The line transferred is approximately 12 miles long commencing at the Chatham Station, mileage 18.30, located between Stanley Avenue and the Thames River Bridge, to the Blenheim Station, mileage 7.78, including the Blenheim Spur between mileage 73.00 and mileage 75.00, in the province of Ontario.

With respect to the adequacy of the insurance coverage, the Agency has reviewed the material filed and finds that there is adequate third party liability insurance coverage, including self- insurance, for CSXT's railway operations in the provinces of Ontario and Quebec. The Agency's review of CSXT's financial capacity to self-insure for the amount of self-insured retention was based on CSXT's financial statements and the revised indemnity agreement between CSXT and the St. Lawrence and Adirondack Railway Company.

Accordingly, pursuant to subsection 93(1)(c) of the CTA, the Agency will vary Certificate of fitness No. 97004-1 issued to CSXT to reflect a change in its railway operations by virtue of a running rights agreement between CSXT and its wholly-owned subsidiary, the Lake Erie and Detroit River Railway Company, a line of railway in Canada from Sarnia to Chatham, Ontario, on the Sarnia Subdivision.

Therefore, paragraph 1 of Certificate of fitness No. 97004-1 is hereby varied and shall read as follows:

1. Through a running rights agreement between CSX Transportation, Inc. and its wholly-owned subsidiary, the Lake Erie and Detroit River Railway Company, a line of railway in Canada from Sarnia to Chatham, Ontario, on the Sarnia Subdivision.

Certificate of fitness No. 97004-2 supersedes Certificate of fitness No. 97004-1 issued to CSXT on September 24, 1999.

Members

• Baljinder Gill
• Mary-Jane Bennett