Order No. 2009-R-473

September 14, 2009

September 14, 2009

IN THE MATTER OF Certificate of fitness No. 02003-2 issued to Sydney Coal Railway Inc.

File No. R8005/S4


Logistec Corporation (Logistec) notified the Canadian Transportation Agency (Agency) that it has acquired from the Quebec Railway Corporation Inc. all of the issued and outstanding shares and inter-company debt of Sydney Coal Railway Inc. (SCR), holder of Certificate of fitness No. 02003-2.

The certificate of fitness issued to SCR permits it to operate a railway between the international pier on the waterfront in Sydney and the Lingan power generating plant, the rail lines through the coal storage facility at Victoria Junction, including the railway maintenance centre, and a portion of the Glace Bay rail line between the railway maintenance centre and the end of the Old Tank siding, Cape Breton Island, in the province of Nova Scotia.

Subsection 92(1) of the Canada Transportation Act, S.C., 1996, c. 10, as amended provides that the Agency will issue a certificate of fitness for the proposed construction or operation of a railway if the Agency is satisfied that there is adequate liability insurance coverage for the proposed construction or operation, as determined in accordance with the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337.

The liability insurance requirement is an ongoing requirement and the Agency must be satisfied that a company operating a railway under federal jurisdiction continues to have adequate third party liability insurance coverage.

The Agency finds that no variance to the certificate of fitness is required as there has been no change to the certificate of fitness as a result of the acquisition by Logistec of SCR. However, as a result of the liability insurance information filed with respect to this effected transaction, the Agency has reviewed SCR's third party liability insurance coverage to ensure that it remains adequate. The Agency has reviewed the information on file and has examined SCR's financial capability to self-insure for the amount of the self-insurance based on the financial statements of its parent company, Logistec, and the indemnity agreement entered into between both parties in respect of the amount of self-insurance.

Based on this review, the Agency is satisfied that there continues to be adequate third party liability insurance coverage, including self-insurance, for SCR's railway operation.

Nevertheless, SCR shall expediently notify the Agency, in writing, of any incidents which may result in claims against its insurance policies in excess of $250,000.

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