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Agency Rulings
Order No. 1989-R-41
March 3, 1989
IN THE MATTER OF the application by Canadian Pacific Limited (hereinafter the Applicant), pursuant to section 160 of the National Transportation Act, 1987, S.C. 1987, c. 34 (hereinafter the NTA, 1987), for authority to abandon the operation of the Aroostook Subdivision between Aroostook (mileage 0.00) and the International Boundary (mileage 4.82) (hereinafter the branch line), a total distance of 4.82 miles, in the Province of New Brunswick.
File No. 39309.198
WHEREAS the application was received by the National Transportation Agency (hereinafter the Agency) on June 6, 1988;
WHEREAS notice of the application was given by the Applicant pursuant to subsection 160(5) of the NTA, 1987;
WHEREAS opposition to the proposed abandonment of the branch line has been received by the Agency within the period set out in section 161 of theNTA, 1987; and
WHEREAS no offer to purchase the branch line has been made pursuant to section 174 of the NTA, 1987 within the period prescribed in section 161 of the NTA, 1987.
UPON consideration of all material on file related to the subject application,
THE AGENCY HEREBY:
- Determines that a Public Hearing is not necessary and that the Decision can be made on the information on file.
- Determines that the branch line is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future.
THE AGENCY HEREBY ORDERS THAT:
- In compliance with subsection 165(1) of the NTA, 1987, the Applicant shall abandon the operation of the Aroostook Subdivision between Aroostook (M. 0.00) and the International Boundary (M. 4.82), a total distance of 4.82 miles in the Province of New Brunswick, sixty (60) days after the date of this Order.
- The Applicant shall advise the Agency in writing of the dates upon which:
i) the operation of the Aroostook Subdivision has been abandoned, and
ii) the trackage and other facilities were removed.
Reasons for this Order will follow under separate cover.
REASONS FOR ORDER NO. 1989-R-41 File No. 39309.198
IN THE MATTER OF the application by Canadian Pacific Limited for authority to abandon the operation of the Aroostook Subdivision from Aroostook (M. 0.00) to the International Boundary (M. 4.82), a total distance of 4.82 miles in the Province of New Brunswick.
HISTORY OF THE APPLICATION
On June 6, 1988, Canadian Pacific Limited (hereinafter CP) applied to the National Transportation Agency (hereinafter the Agency) pursuant to section 160 of theNational Transportation Act, 1987, S.C. 1987, c. 34, (hereinafter NTA, 1987) for authority to abandon the operation of the Aroostook Subdivision from Aroostook (M. 0.00) to the International Boundary (M. 4.82) in the Province of New Brunswick.
HISTORY OF THE LINE
The Aroostook Subdivision was constructed in 1876 by the New Brunswick Railway Company (hereinafter NBR). In July 1890, a lease was entered into between the NBR and the Canadian Pacific Railway Company. The terms of the lease state that the NBR leased to CP certain lines of railway in the Province of New Brunswick, including the Aroostook Subdivision.
There has been no service on the line for the last four years.
LOCATION OF THE LINE
The Aroostook Subdivision begins at Aroostook at Mileage 0.0 at the junction with CP's Shogomoc and Edmundston Subdivisions and extends westward 4.82 miles to the International Boundary. The stations located on the line are Aroostook (M. 0.0) and Tinker (M. 3.0). The line connects with the Aroostook Valley Railroad at Washburn Junction, Maine.
A map of the area is attached.
CONDITION OF THE TRACK
Overall, the track can be described as being in poor condition. The track consists of a mixture of 80, 85, and 100 pound rail on No. 2 softwood ties. Both the track and the ties, as well as the gravel ballast, are in poor condition. There is a speed restriction of 10 MPH in effect over the whole branch line.
CP has estimated that expenses of $137,300 would be necessary to restore the Aroostook Subdivision to appropriate operating condition.
DESCRIPTION OF SERVICE
At present there is no train service provided on the Aroostook Subdivision, and such has been the case for over four years. If railway service were required, it would be provided by a road switcher assignment operating from Aroostook.
CARLOAD TRAFFIC
No carload traffic has been handled on the line since 1984.
ACTUAL LOSSES
Where an application is opposed under section 161, the Agency in accordance with section 163 of the NTA, 1987 issues a statement of actual loss incurred in respect of the subject branch line operation. The determinations for 1985, 1986, and 1987 were based on a preliminary submission and indicate the continuing trend of actual losses incurred in the operation of this line.
The "Actual Losses" as determined by the Agency, pursuant to the provisions of the Railway Costing Regulations, SOR-80-940, and section 157 of theNTA, 1987 for the years 1985 through 1987 are shown in the following table:
| Year | Total Costs | Revenues | Actual Losses |
| $ | $ | $ | |
| 1985* | 73,250 | 70 | 73,180 |
| 1986* | 61,004 | 90 | 60,914 |
| 1987* | 60,131 | 90 | 60,041 |
*Based on preliminary submissions.
More detailed cost information was contained in the Statements of Actual Loss issued December 30, 1988.
ALTERNATIVE TRANSPORTATION FACILITIES
Alternative rail service is available in the area on CP's Shogomoc and Edmunston Subdivisions; however, CP has applied to the Agency for authority to abandon operations over portions of the Shogomoc Subdivision.
Highway No. 19 goes from a point just south of Aroostook to Fort Fairfield, Maine, a station on the American portion of the Subdivision. The Trans-Canada Highway crosses the line at approximately Mile 2. There is also a local road to the north of the Subdivision from Four Falls to the International Boundary.
SUMMARY OF SUBMISSIONS
CP submitted by way of their application that no traffic had been received or forwarded on this line during the period 1984 to 1987. If traffic were to be offered in the future, CP estimated that an expenditure of $137,300 would be required for restoration of the line to an appropriate operating condition.
Based on the written documentation received within the prescribed sixty day intervention period, it was CP's position that none of the opposition challenged its submission that the line was uneconomic or offered evidence of the line reasonably becoming economic in the foreseeable future.
INTERVENTIONS RECEIVED
On June 15, 1988, CP issued a notice advertising this application for abandonment, and soliciting interventions from the general public pursuant to section 161 of the NTA, 1987. There were 20 responses in opposition to the proposed abandonment resulting from this notice.
New Brunswick Railway Company
The law firm of Osler, Hoskin, and Harcourt, acting on behalf of NBR, maintained that the Agency had no jurisdiction regarding the abandonment application, as a lease that had been entered into between NBR and CP in 1890 stated that CP had a specific statutory obligation to operate this trackage because NBR was subject to such a statutory obligation. NBR maintained that the lease took precedence over the provisions of theNTA, 1987.
NBR also noted that since the Subdivision connects with a line in the United States, the line in question is not a branch line but is in fact a main line, and thus the application could not be made under section 160 of the NTA, 1987.
It was also pointed out that because this line, in combination with other current applications of NBR trackage under lease to CP, totalled 7% of all NBR route mileage, it exceeded the 4% limit set out in subsection 159(4) of the NTA, 1987.
NBR requested that, pursuant to paragraph 170(1)(b) of the NTA, 1987, the Agency take into consideration the whole branch line system from McAdam to Edmundston when deliberating with respect to this application.
A final NBR argument was that the abandonment would reduce competitive access to U.S. railways.
In conclusion, NBR requested that the Agency hold public hearings to enable persons to present their views on the proposed abandonment.
Mr. Deane Crabbe
Mr. Deane Crabbe, President of H.J. Crabbe & Sons Ltd., stated in his opposition that with a trucking monopoly, there would be an accelerated deterioration of the local road network as well as an increased danger for the public use of roads. Mr. Crabbe also noted that railways have showed a lack of will in competing with trucking in the area of transportation.
United Transportation Union
The United Transportation Union was opposed to the abandonment as some New Brunswick Companies could not afford trucking and therefore would lose outside market opportunities. It also submitted that local transportation costs would increase due to loss of rail competition. The Union also believed that hazardous materials would have to be trucked, while adding more trucks to an already poor highway system would cause great damage and deter tourist development.
McCain Foods Limited
Mr. D.M. Gillis, a solicitor representing McCain Foods Limited (hereinafter McCain), declared McCain's opposition to the application and pointed out that CP was contractually obligated to operate and maintain the line for 999 years according to the lease with NBR. McCain also questioned whether the actual losses put forward by CP in its application were correct and proper. McCain stated that the alternatives to the current rail service proposed by CP were not sufficient for its needs. In conclusion, McCain noted that if this and other applications for abandonment were approved, McCain would have to adjust its operations to compensate for the loss of transportation, and local unemployment would rise.
Mr. Eugene Brennan
Mr. Eugene Brennan, representing T.J. Brennan & Sons Ltd. of Bath, New Brunswick, opposed the application on the grounds that local industry would be left with trucking as the only means of transportation of goods. With the reliance on trucking, road deterioration and transportation prices would increase. Increased trucks travelling over the highways would also affect general public safety especially during the tourist season. Mr Brennan also submitted that during peak periods, there was an inadequate supply of trucks to meet everyone's requirements. Furthermore, springtime weight restrictions mean loads are reduced which contributes to a loss of flexibility. Mr. Brennan also indicated that he would be applying for financial assistance pursuant to section 175 of the NTA, 1987 should the application be approved, to improve their loading facilities.
The New Brunswick Brotherhood of Maintenance of Way Employees
The New Brunswick Brotherhood of Maintenance of Way Employees was in opposition to the application as abandonment would result: in lost opportunities for companies to compete outside the local area, loss of local railway jobs, higher costs to shippers due to loss of rail competition, and accelerated highway maintenance costs. They also were of the opinion that the track could be used as a corridor for traffic not originating or terminating on the line.
Maritime Lumber Limited
C.B. Ross, President of Maritime Lumber Limited, objected to the proposed abandonment and stated that his company required softwood lumber from British Columbia, and that the only viable method of transporting the wood is by rail. He deemed it vital that rail service be maintained to Woodstock, New Brunswick. On November 2, 1988, Maritime Lumber Limited withdrew its opposition to the application due to an agreement with CP to receive these cars on the CP Main Line at McAdam, New Brunswick.
Carleton Regional Development Commission
The Carleton Regional Development Commission opposed the abandonment because there would be loss of local railway-related jobs, increased transportation costs due to loss of rail competition, accelerated deterioration of existing highway structure, increased trucking would cause increased hazards to public use of highways, and insufficient supply of trucks during peak periods of demand.
Grand Falls Regional Development Commission
The Grand Falls Regional Development Commission opposed the application for abandonment by stating that without the competition to trucking now provided by rail transportation, costs would be pushed up, as would road maintenance costs. Furthermore, seasonal transportation demand peaks may not be able to be serviced solely by trucking firms. In conclusion, the Commission noted the loss of local railway jobs in an economy which is presently fragile at best.
Village of Canterbury
The Village of Canterbury opposed the proposed abandonment on the basis that many local jobs would be affected, and that the economic well-being of the communities involved would be severely compromised.
Village of Florenceville
The Village of Florenceville opposed the proposal for abandonment as there would be a loss of railway jobs, and elimination of a competitive factor which keeps transportation costs down. It also submitted that accelerated deterioration of local highways would occur and additional trucks would increase hazards to public use of highways. One other concern was that industries with peak periods of production may not get access to trucking.
Hartland Agromart Ltd.
Mr. David Young, Comptroller for Hartland Agromart Ltd., objected to the proposed abandonment by stating that freight rates would rise because trucking would hold a transportation monopoly in the area. These increased costs would give American businesses a cost advantage just as the Free Trade Agreement begins to take effect. Local farmers would also feel the effects of higher transportation costs. The government would be forced to spend money on roads, farm subsidies, and unemployment insurance. Mr. Young pointed out that in the past, CP had not marketed the area well enough to make the line economic. If the line were ordered abandoned, Hartland Agromart Ltd. would have to upgrade its facilities and unloading equipment which would cost them approximately $700,000 to $800,000. Lastly, it was pointed out that companies served with lines from the Canadian National Railway Company would be at a competitive advantage.
New Brunswick Federation of Labour
The New Brunswick Federation of Labour's (hereinafter NBFL) opposition was based on the concern that trucking firms would be left with a transportation monopoly. The results of this would be increased highway expenses faced by the government and higher transportation costs. As well, concern was expressed that there would be jobs lost directly through the railway, as well as from businesses in the area faced with higher transportation costs. They also submitted that a higher volume of dangerous products would have to be transported by road if the line were abandoned. In conclusion, the NBFL requested that public hearings be held on the matter.
Karnes Kitchen Ltd.
Pat Karnes, President of Karnes Kitchen Ltd., of Woodstock, New Brunswick, expressed his concern regarding the proposed abandonment of local railway lines, including the Aroostook Subdivision. He was concerned that there would be an increased volume of highway trailers on main highways in the area, loss of an alternate mode of transportation, and an increase in future transportation costs. If the line were abandoned, Mr. Karnes submitted that any future hope of attracting industry requiring rail service would be lost forever.
Village of Aroostook
Mr. Wayne Roach, Mayor of Aroostook, opposed the proposed abandonment by pointing out that CP was the only employer in his village and that the abandonments proposed for the area, including the Aroostook Subdivision, would result in a loss of forty permanent jobs and one million dollars in wages for the area. He indicated that higher haulage costs would result from the loss of rail competition, leaving a trucking monopoly and the increase in the number of trucks would accelerate the deterioration of local roads. Furthermore, Mr. Roach commented that during weight restriction periods, local trucking firms cannot provide adequate service to the local forestry and agricultural industries.
Town of St. Stephen
Mr. A.J. MacCready, Mayor of the Town of St. Stephen, situated 40 miles south of Woodstock, expressed his general concern about track abandonments which he felt were getting to be more and more prevalent. He noted that service provided in the southern part of New Brunswick appeared to be less than in other parts of the country. Lastly, he noted that abandonment in the area would be very detrimental to local businesses.
St. Anne-Nackawic Pulp and Paper Company Ltd.
D.B. Stephen, Vice President and General Manager of the St. Anne-Nackawic Pulp and Paper Company Ltd. stated that his company was opposed to the proposed abandonment. Mr. Stephen indicated that his company has always relied on the railway to transport its products to national and international markets. Furthermore, some of the materials that are used in the production process at the plant are primarily transported by rail and are hazardous materials and it would be impractical and in some instances impossible to transport them by alternate modes.
As the amount of dangerous goods transported increases, there could be an increased hazard to other users of the roads, as well as environmental concerns in the local agricultural community as most of the increase in transportation will be done in farming areas.
In conclusion, Mr. Stephen requested a public hearing be held to consider the proposed abandonments.
Anne-Marie Kilfoil
Anne-Marie Kilfoil, citizen of Bath, noted that she was opposed to all rail abandonments in the Province of New Brunswick, citing that a probable increase in road traffic would result.
Village of Perth-Andover
The Mayor and Council of the Village of Perth-Andover were opposed to the proposed abandonment. They were concerned that local future economic development would be hampered, and more abandonment proposals in the area would result if this proposal were approved. The Village also submitted that abandonment would increase unemployment, as CP is a major employer in the area. In addition, loss of rail service would cause higher freight costs due to the creation of a transportation monopoly, and increased deterioration of the local highway system. In closing, they indicated that inadequate trucking service is provided during spring weight restriction period.
Minister of Transportation of New Brunswick
The Honourable Sheldon Lee, Minister of Transportation for the Province of New Brunswick, filed an intervention opposing the proposed abandonment.
Mr. Lee noted his concern that this application, among others in the area, was the beginning of a process which would result in the total loss of CP service to shippers in the Saint John River Valley, and that such an occurrence would have a severe impact on the economy of the western section of the Province.
The Minister pointed out that certain industries and communities had voiced concerns to the Provincial Government regarding the proposed abandonment. Concerns included: loss of competitiveness versus areas served by rail; insufficient truck capacity in peak periods; lack of intermodal competition; loss of local railway jobs; and an overall restriction of future plant investment. In conclusion, Mr. Lee stated that the additional pressure on the Trans-Canada Highway would be unacceptable and requested that public hearings be held to obtain the views of all interested parties.
OTHER INTERVENTIONS
On December 30, 1988, the Agency published a Notice of Actual Losses of the line to try and determine whether anyone could provide the Agency with evidence that there was a reasonable probability of the branch line becoming economic in the future. An extension to the reply period was also authorized.
In response to this Notice, no submissions were received.
MATTERS CONSIDERED
Council for NBR in their submission had stated that the Agency had no jurisdiction to consider CP's application because of a lease agreement between NBR and CP. NBR also submitted that this line, in combination with the other applications exceeded the 4 percent limit as prescribed in subsection 159(4) of the NTA, 1987.
Upon examination of these concerns, the Agency is of the view that the fact that there is a long lease of the line is not of itself a bar to the granting of an abandonment application. Parliament has made provision for abandonment of operation upon application to and order of the Agency. The abandonment provisions of the NTA, 1987 are not subject to the lease and are not rendered ineffective or inoperative by it. Whatever may be the rights and obligations of the parties under the lease, inter partes, the lease is not a bar to the abandonment of the line. In the present instance CP has exercised its legal right to apply to the Agency for the abandonment of the line at issue.
With respect to the request by NBR that the Agency take the McAdam to Edmundston branch line system into consideration, the Agency has no evidence that there are active shippers on the Aroostook Subdivision nor are there through shipments using the Aroostook Subdivision. Therefore, there are no parties using that Subdivision who were affected directly by this application. On this basis, the Agency concludes there is no benefit to approving NBR's request.
With respect to the maximum amount of line which may be abandoned as per subsection 159(4) of the NTA, 1987, the Agency has determined that the operating company, that being CP, has the authority to apply for abandonment of its own operations of train services. The basis for calculating the 4 percent mileage ceiling is the sum of all eligible track over which CP operates over at the beginning of the year in which the application is settled. In this application, therefore, the branch line in question, on which CP has been authorized to operate train service, is included with all other eligible network mileage over which CP operates. Thus CP's application is not in contravention of the 4 percent ceiling.
While the Aroostook Subdivision physically connects with a U.S. railroad, no local or U.S. connecting traffic has moved over the line in the past four years. Rail shippers in the area will still have competitive access to U.S. railroads at other interchange points between CP and U.S. railroads, such as, at St. Léonard, New Brunswick, and Brownville Junction, Maine.
In respect of McCain's statement questioning whether the actual losses advanced by CP in its application were correct and proper, the Agency notes that no traffic has moved on the Subdivision in the past four years and no one provided the Agency evidence to show that there is a potential for the line to generate revenue. Even if CP's estimates of actual losses were excessive, there remains no evidence that CP's losses would be eliminated.
In respect of NBR's submission that the line is not a branch line, the Agency determines that as traffic on this line must move over more prominent trackage to reach the railway network of Canada this line is clearly a branch line.
FINDINGS
The Agency finds that adequate information and evidence has been submitted for it to determine that a public hearing is not necessary and that the Decision can be made on the information on file.
Section 164 of the NTA, 1987 requires the Agency to determine if the line is economic or uneconomic, and further whether there is a reasonable probability of the branch line becoming economic in the foreseeable future.
The Agency has determined on the basis of the evidence before it that the branch line is at present uneconomic. During the latest three years for which operational data are available, CP operated the Subdivision with actual losses of a significant magnitude. There is no evidence to indicate that this branch line can expect any growth in traffic, particularly to a level sufficient to make the branch line economic in the future. Further, the available information indicates that in the foreseeable future the Aroostook Subdivision will likely continue to incur losses.
As there are no known developments in the area which would possibly generate traffic on the branch line, the branch line has no possibility of becoming economic in the foreseeable future.
Accordingly, after considering all evidence before it, the Agency hereby determines that the line is uneconomic and that there is no reasonable probability of the line becoming economic in the foreseeable future.
Subsection 165(1) of the NTA, 1987, states in part:
"Where the Agency determines that a branch line or segment thereof is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future, the Agency shall... order that the operation of the branch line or segment be abandoned."
The Agency has made these determinations pursuant to subsection 165(1) of the NTA, 1987 and therefore concludes that the operation of the Aroostook Subdivision from Aroostook (M. 0.00) to the International Boundary (M. 4.82) should be abandoned.
As required under section 168 of the NTA, 1987, the Agency shall fix the date for abandonment of the operation of a branch line or segment. With respect to this application, the Agency determines that it would be in the public interest for the line to be abandoned sixty (60) days from the date of issue of Order No. 1989-R-41.