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Agency Rulings
Order No. 1989-R-91
May 12, 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 Tobique Subdivision between Perth Junction (mileage 0.00) and Plaster Rock (mileage 27.5) (hereinafter the branch line), a total distance of 27.5 miles, in the Province of New Brunswick.
File No. 39309.200
WHEREAS the application was received by the National Transportation Agency (hereinafter the Agency) on June 3, 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 Tobique Subdivision between Perth Junction (M. 0.00) and Plaster Rock (M. 27.5), a total distance of 27.5 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 Tobique 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-91 File No. 39309.200
May 31, 1989
IN THE MATTER OF the application by Canadian Pacific Limited for authority to abandon the operation of the Tobique Subdivision from Perth Junction (mileage 0.00) to Plaster Rock (mileage 27.5), a total distance of 27.5 miles, in the Province of New Brunswick.
File No. 39309.200
HISTORY OF THE APPLICATION
On June 3, 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 the NTA, 1987), for authority to abandon the operation of the Tobique Subdivision from Perth Junction (mileage 0.00) to Plaster Rock (mileage 27.5) (hereinafter the branch line), in the Province of New Brunswick.
HISTORY OF THE LINE
The Tobique Subdivision was built between 1891 and 1894 by the Tobique Valley Railway Company and has been leased by CP since 1897.
LOCATION OF THE LINE
The Tobique Subdivision is a dead end branch line located in the southwestern section of Victoria County in the Province of New Brunswick. It commences at Perth Junction (mileage 0.0) and runs along the south bank of the Tobique River terminating at Plaster Rock (mileage 27.5).
The stations located on the line are Tobique Narrows (mileage 4.0), Rowena (mileage 7.7), Currie (mileage 9.4), Red Rapids (mileage 13.7), Licford (mileage 14.5), Odell River (mileage 18.7), Beveridge (mileage 19.7), Arbuckle (mileage 26.6), and Plaster Rock (mileage 27.5).
A map of the area is attached.
CONDITION OF THE TRACK
The track consists of a mixture of 80, 85, and 100 pound rail on No. 2 softwood ties. The track ties and gravel ballast are in fair to good condition.
A speed restriction of 20 MPH is in effect, with a permanent slow order of 8 MPH from mileage 5.8 to mileage 6.7 and again from mileage 22.3 to mileage 22.5. There is also a permanent slow order at mileage 25.94 because of a half deck girder bridge which is in poor condition.
In early March 1987, a storm washed out a part of the neighboring Shogomoc Subdivision near Perth-Andover. The Tobique track was isolated as a result after handling only 997 of the anticipated 3,700 carloads of wood chips shipped out annually. The remaining traffic was diverted to trucking mode transport companies. Since that event and in spite of what was to be a temporary closure, the shipper found it to be more efficient to transport shipments of wood chips from Plaster Rock to Edmundston directly by truck. Consequently, the demand for rail service has almost disappeared.
CP estimates that $517,300 in restoration expenses would be incurred if events should occur which caused the traffic to reappear and to increase. This assumes, of course, that the operation was ordered continued but the $517,300 does not include the necessary repairs to the Shogomoc Subdivision in order to permit rail operations to resume on the Tobique Subdivision.
DESCRIPTION OF SERVICE
At present, rail service for shipments that have not been diverted to trucking companies since the storm damage to the Shogomoc Subdivision in 1987 is provided on an "as required" basis by a pick-up assignment operating out of Florenceville. This involves trucking the commodity between Tobique area stations and the rail loading facility at Florenceville located on that portion of CP's Shogomoc Subdivision which is operational.
CARLOAD TRAFFIC
Until 1987, the main carload traffic handled on the line was wood chips forwarded from Plaster Rock to Edmundston. These shipments are now transported by truck. Prior to the washout, shipments averaged 3,700 carloads annually. At present no rail carload traffic is using this branch line.
Statement of Traffic Handled
CP's Tobique Subdivision
Perth Junction (mileage 0.0) to Plaster Rock (mileage 27.5)
| 1985 | 1986 | 1987 | ||||
| In | Out | In | Out | In | Out | |
| Tobique Narrows | - | 23 | - | 15 | - | 5 |
| Rowena | - | - | - | - | - | - |
| Currie | - | - | - | - | - | - |
| Red Rapids | - | - | - | - | - | - |
| Licford | - | - | - | - | - | - |
| Odell River | - | - | - | - | - | - |
| Beveridge | - | - | - | - | - | - |
| Arbuckle | 2 | - | 2 | - | - | - |
| Plaster Rock | - | 3,746 2 | - | 3,855 | - | 92 |
| TOTAL | 2 | 3,769 | 2 | 3,870 | 0 | 997* |
* No traffic has been moved by rail since March, 1987 when train service was indefinitely suspended due to the washout of the bridges on the Shogomoc Subdivision.
ACTUAL LOSSES
Where an application is opposed under section 161 of the NTA, 1987, 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 that an actual loss was incurred in the operation of the line in each of these years.
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 | 2,355,107 | 1,953,749 | 401,358 |
| 1986 | 2,142,400 | 1,898,857 | 243,543 |
| 1987 | 544,959 | 502,220 | 42,739 |
More detailed cost information was contained in the Statements of Actual Loss issued December 30, 1988.
ALTERNATIVE TRANSPORTATION SERVICES
The Canadian National Railway Company (hereinafter CN) Napadogan Subdivision passes near Plaster Rock; however, traffic cannot be interchanged with CP as no junction exists.
Local Highways 390 and 109 run parallel to the Subdivision for its entire length. A number of highway transport companies serve the area in which the rail line is located.
SUMMARY OF INTERVENTIONS
CP submitted by way of its application that in the future, an expenditure of $517,300 would be required for restoration of the Tobique Subdivision to an appropriate operating condition, if traffic were to materialize on the Tobique Subdivision.
Based on the written documentation received within the prescribed sixty day intervention period, it was CP's position that the line was uneconomic and no one offered evidence of the line 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 21 responses in opposition to the proposed abandonment set out in this notice. This application was only one of five filed by CP on or about June 15 and affecting several portions of CP's operations in western New Brunswick. Interventions in opposition to this application, as well as the others, stressed public interest matters and reflected a concern that these applications may only be part of CP's longer term plans to abandon much of its operations in that area of the province. Specifically the main points of the intervenors can be summarized as follows:
Minister of Transportation of New Brunswick
The Honorable Sheldon Lee, Minister of Transportation for the Province of New Brunswick, opposed the 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 adverse impact on the economy of the western section of the province.
The Minister stated that many industries and communities had expressed concerns to the provincial government regarding the proposed abandonment. Some concerns were that areas no longer having rail service would lose a competitive edge. He also stated that during peak periods, there were an insufficient number of highway carriers available and lack of intermodal competition. Furthermore, abandonment would result in loss of local railway jobs, and an overall restriction of future plant investment.
In conclusion, Mr. Lee, stated that the additional pressure on the highway network would be unacceptable and requested that public hearings be held to obtain the views of all interested parties.
Mr. Deane Crabbe
Mr. Deane Crabbe, President of H.J. Crabbe & Sons Ltd., stated in his opposition that there would be an accelerated deterioration of the local road network as well as an increased danger for the public use of roads if the operation of the line was ordered abandoned. Mr. Crabbe also noted that the railway companies had showed no desire in competing with trucking in the area of transportation.
United Transportation Union
The United Transportation Union was in opposition to the application as there would be lost outside market opportunities, and higher costs for local transportation due to loss of rail competition. Their other concerns were that the track could be used as a corridor for overhead traffic, truck traffic would result in damage to local highways, and there would be loss of local railway jobs.
McCain Foods Limited
McCain Foods Limited, through their solicitor (hereinafter McCain) opposed the application and pointed out that CP was contractually obligated to maintain the line for 999 years according to the lease with the New Brunswick Railway Company. Although CP has proposed to McCain alternatives for serving McCain's transportation needs, 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. 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.
The New Brunswick Brotherhood of Maintenance of Way Employees
The New Brunswick Brotherhood of Maintenance of Way Employees was also in opposition to the application. If the line were ordered abandoned, the opportunities for companies to compete outside the local area would be lost, local railway jobs would diminish, higher costs to shippers due to loss of rail competition would result, and an increased use of public roads would cause accelerated road maintenance costs. It was indicated that 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 lumber 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 due to an agreement with CP to receive these cars on the CP main line at McAdam, New Brunswick.
Grand Falls Region Development Commission Inc.
The Grand Falls Region Development Commission Inc. indicated its opposition to 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. They also expressed that seasonal transportation demand peaks may not be able to be serviced solely by trucking firms. To conclude, the Commission noted the loss of local railway jobs in an economy which is presently fragile at best.
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 CN would be at a competitive advantage.
New Brunswick Federation of Labour
The New Brunswick Federation of Labour's 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, the concern was expressed that there would be jobs lost directly through the railway company, as well as from businesses in the area faced with higher transportation costs. Also, a potential route for exports was being lost. In conclusion, the New Brunswick Federation of Labour requested that public hearings be held on the matter.
Karnes Kitchen Ltd.
Pat Karnes, President of Karnes Kitchen Ltd., expressed his concern regarding the proposed abandonment of local railway lines, including the Tobique Subdivision. His main concerns were the increased volumes of highway trailers on main highways in the area, the loss of an alternate mode of transportation and the effects on transportation costs. The future of industries and communities along the line was a concern of his should the operation of the line be abandoned.
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 Tobique Subdivision, would result in a loss of forty permanent jobs and one million dollars in wages for the area. Higher haulage costs would result from the loss of rail competition, leaving a trucking monopoly. The increase in the number of trucks would accelerate the deterioration of local roads. 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, a community approximately 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. Furthermore, 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., declared his company's opposition to the proposed abandonment. Mr. Stephen stated that his company had always relied on the railway to transport its products to national and international markets. Furthermore, materials such as chlorine and sulphur-dioxide used at the plant are primarily transported by rail. He submitted that it would be impractical to use other transport modes for these products as rail is the most efficient means of transport in terms of costs and safety and that at present sulphur-dioxide is solely transported by rail in the Maritimes.
He also stated that 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 would be done in farming areas. Mr. Stephen concluded that a request for a public hearing be considered.
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 for the following reasons: local future economic development would be hampered; it was believed that more abandonment proposals in the area would result if this proposal were approved; it means a loss of local rail employment and higher freight costs due to the creation of a transportation monopoly; it will lead to increased deterioration of local highway system; and also trucking service would be inadequate during the spring weight restriction period.
Village of Plaster Rock
B. Wishart, Administrator of the Village of Plaster Rock, expressed the town's objection and stated the opinion that the Tobique Subdivision could, in the future, be an important industrial and tourist link to many provinces.
Other Public Interest Interveners
The Villages of Florenceville, Drummond and Canterbury and the Carleton Regional Development Commission Inc. opposed the application on public interest grounds.
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.
In response to this notice, 5 submissions were received, 4 were opposed to the abandonment.
Village of Perth-Andover
The Mayor and Council of the Village of Perth-Andover were opposed to the proposed abandonment of the line for the same reasons outlined in their submission in response to CP's Notice of Application.
Should the Tobique Subdivision be ordered abandoned, the Village of Perth-Andover is interested in obtaining the land. They wish to use the land for roadway access and utility services. These railway right of ways and adjacent property controlled by CP go through the Village of Perth-Andover, and would be of great and significant benefit to Perth-Andover and its citizens.
Various Insurers
Mr. D.T. Hashey, a solicitor for insurance companies who insure the New Brunswick Electric Power Commission, supports the abandonment application and asked for a public hearing. The Commission is a defendant in two lawsuits instituted by CP in the Province of New Brunswick. The lawsuits arose as a result of ice jams in the Saint John River and subsequent flooding in 1976, 1981 and 1987, which events allegedly caused damages to certain rail lines and bridges on such lines, operated by CP. The 1987 damage resulted in the closure of segments of the CP Shogomoc Subdivision. The cost to rebuild the Shogomoc lines and bridges has been estimated by CP to be in excess of $30,000,000.
William McIntyre
William McIntyre, citizen of New Brunswick, stated in his opposition that the Tobique Subdivision can reasonably expect to become economic in the foreseeable future and thus should not be abandoned. Acknowledging the considerable financial investment required by the Province to upgrade secondary roads from Plaster Rock to Edmundston, he suggested the alternative that the rail be acquired by the Provincial Government with the intent of leasing it to a railway company, not necessarily CP. The Provincial Government, and perhaps the Federal Government, should fund the replacement of the Perth-Andover bridge (at mileage 100.5). It was his belief that both the Shogomoc and Tobique Subdivisions could become profitable. Mr. McIntyre requested a public hearing to allow those opposed to present their cases.
Brotherhood of Maintenance of Way Employees
The New Brunswick Brotherhood of Maintenance of Way Employees wrote to the Agency in objection to the abandonment. Blair McInnis, the Chairman and Legislative Director, reiterated the reasons listed in his original submission and enumerated several others. The road conditions where areas are presently being served are mostly secondary roads not designed for present day heavy trucks. This would cause higher maintenance costs and increase dangerous commodity incidents on the highways not to mention numerous truck related incidents. Springtime weight restrictions would severely affect the number of trucks available. Tourism would suffer under this new onslaught since tourism affects a large part of the economy in New Brunswick. Effective January 1, 1989, the Province of New Brunswick increased fuel taxes to help offset higher road maintenance costs and this increase in taxes possibly would cause shippers to shift back to rail as a cheaper alternative. Also unemployment would set in, in the affected towns. Mr. McInnis stated that an overall view should be taken into consideration pertaining to the infrastructure of the rail system and road system in the area.
Grand Falls Region Development Commission Inc.
The Grand Falls Region Development Commission Inc. was opposed to the proposed abandonment application as it felt the Subdivision was required in the public interest. The earlier views they submitted had not changed.
MATTERS CONSIDERED AND FINDINGS
The Agency has determined that sufficient information has been submitted for the Agency to conclude that a public hearing is not necessary and a decision on the application can be made based on the information received and 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. Carloads of wood chips destined for Edmundston, which accounted for the vast majority of the traffic along the line, are now transported directly by truck via Highway 108 to the Trans-Canada Highway at Grand Falls and on to Edmundston. Even before the storm in March 1987, CP was incurring a substantial loss in the operation of the line. Further, the available information indicates that in the foreseeable future the Tobique Subdivision will likely continue to incur losses.
Several interveners made submissions in reply to the notice of application wherein they stated that they needed the rail service to ensure no outside market opportunities would be lost (per United Transportation Union), that the company "would have to adjust its operations to compensate for the loss of transportation, and local unemployment would rise" (McCain), that transportation costs would increase (E. Brennan, Hartland Agromart Ltd., Federation of Labour, and others) or that rail service was essential (D.B. Stephen, Villages of Aroostook and Perth-Andover, and others). However, the Agency notes that the vast majority of the rail shipments which moved over the Tobique Subdivision prior to the bridge at mileage 100.5 of the Shogomoc Subdivision being washed out in the spring of 1987 has now been diverted to highway transport and neither the shipper nor the applicant railway have given evidence that this traffic would revert to rail handling should the line be retained. Furthermore the Agency notes that those intervenors who are shippers are not located on the Tobique Subdivision and do not generate significant rail traffic on that subdivision. Their opposition to the abandonment of the subdivision (and to CP's associated application to abandon portions of the Shogomoc Subdivision) may be due to their concern that these applications are the first step in a process of abandonment of much, if not all, of CP's service in the Saint John River area of New Brunswick.
Also, it is noted that no person, particularly no shippers, responded to the Agency's notice of actual losses which called for the submission of evidence that the Tobique Subdivision could be made an economic operation in the foreseeable future, even on a hypothetical basis. In consequence, the Agency must conclude that the operation of train service on the branch line is not economically essential to users of transportation service.
Having received no documented evidence to the contrary and as there are no known developments in the area which would possibly generate an increased level of 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.
The Agency has made these determinations in accordance with subsection 165(1) of the NTA, 1987, and therefore concludes that the operation of the Tobique Subdivision from Perth Junction (mileage 0.00) to Plaster Rock (mileage 27.5) should be abandoned.
The NTA, 1987, under subsection 175(6), provides that where the Agency has ordered a branch line abandoned and one or more shippers have demonstrated to the Minister of Transport that they would suffer significant economic harm as a result of an abandonment, the Minister may enter into an agreement with the Provincial Government or municipality, or with regular shippers on the line, for payments of contributions to assist in the transition to improve transportation facilities.
No such shippers are situated on this branch line. The main on-line shipper found it to be more efficient to transport its commodities directly by truck. This was determined after operations on the Tobique Subdivision were curtailed in the spring of 1987 when a storm washed out two bridges on the adjacent Shogomoc Subdivision thereby effectively isolating the Tobique Subdivision from access to rail service.
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-91.