Decision No. 257-R-1996

April 30, 1996

April 30, 1996

APPLICATION by the Canadian National Railway Company 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 segment of the Newmarket Subdivision from Yellek (mileage 233.4) to Capreol (mileage 310.5), a total distance of 77.1 miles, in the province of Ontario.

File No. T 6115/564-4


BACKGROUND

By letter dated December 11, 1995, the Canadian National Railway Company (hereinafter CN) requested permission to file an application for the abandonment of the operation of its Newmarket Subdivision from Yellek (mileage 233.4) to Capreol (mileage 310.5) (hereinafter the branch line), without providing a notice of intent. This request was filed pursuant to subsection 160(3) of the National Transportation Act, 1987 (hereinafter the NTA, 1987). The National Transportation Agency (hereinafter the Agency) considered CN's request and, in light of the absence of originating and terminating traffic on the branch line, the amounts of actual loss CN stated it was incurring in operating the branch line and the availability of alternate routings for bridge traffic, the Agency granted leave to CN to file its abandonment application without providing a notice of intent.

On December 12, 1995, the Agency received CN's abandonment application. CN also filed an environmental impact assessment of its project to abandon the operation of the branch line pursuant to the Canadian Environmental Assessment Act, S.C. 1992, c. 37 (hereinafter the CEAA) and the Inclusion List Regulations.

A map of the area is attached as Appendix 1.

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 branch line by filing with the Agency, not more than sixty days after the date of the notice of application given under subsection 160(5) of the NTA, 1987, a written statement setting forth the grounds, related to the matters to be considered under section 167 of the NTA, 1987, on which that person opposes the application. If no opposition is received, the Agency must order the abandonment of the operation of the branch line. In the case at hand, one submission was received in response to the notice of application.

Where an application is opposed, the Agency is required to determine the amount of actual loss, if any, of the railway company attributable to the operation of a branch 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. Consequently, the Agency issued on April 10, 1996 an interim determination of the amount of actual loss attributable to the operation of the branch line during the years 1992, 1993 and 1994, based on information submitted by CN. No submissions were received by the Agency in response to this notice.

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

Since January 19, 1995, the Agency is also subject to the CEAA and is required, pursuant to subsection 18(1) of the CEAA, to assess the environmental effects of projects for the abandonment of the operation of railway lines before granting the authority to do so. Consequently, the Agency issued a notice and its preliminary environmental screening report on February 9, 1996.

EVIDENCE PRESENTED

CN

CN indicated in its abandonment application that the Newmarket Subdivision was constructed by the Canadian Northern Ontario Railway Company and was opened for traffic in 1915. This railway company amalgamated with CN in 1956. The Newmarket Subdivision commences at Parkdale (mileage 2.46) and extends northerly to North Bay via Barrie and Washago and then to Capreol. There is only one station affected by the proposed abandonment, i.e. the station located at Desaulniers (mileage 264.55). Freight service is provided on an "as and when required" basis, and VIA Rail Canada Inc. does not operate passenger-train services over the branch line.

In 1995, CN applied for the abandonment of the operation of the Newmarket Subdivision between Barrie (mileage 63.0) and Longford (mileage 93.0). The Agency authorized the abandonment of this segment effective September 21, 1996. CN indicated that should the proposed abandonment be approved, the remaining segments of the Newmarket Subdivision (between Toronto and Barrie and between Longford and Yellek) would be retained in service to accommodate existing carload freight customers.

According to CN, the condition of the track varies from fair to good and the condition of the 14 railway bridges located on the branch line varies from poor to fair. The track was rated as being able to handle 263,000 pounds with a maximum permissible train speed of 60 miles per hour. CN submitted that in order to maintain the existing track conditions and timetable speed over the next three years, it would have to spend approximately $5,892,200. The major part of this cost would be required to replace rails and track ties.

CN submitted that it had reviewed and analyzed the potential carload traffic from shippers which could have an impact on the economics of the railway line and concluded that there was no reasonable probability of the branch line becoming economic.

Intervention

Only one submission was received in response to the notice of application, i.e. from the Regional Municipality of Sudbury (hereinafter the Regional Municipality). The Regional Municipality was concerned over the effect of the changes to the railway traffic over the Bala Subdivision, should the abandonment of the branch line be approved. According to information received from CN, the Regional Municipality indicated that the abandonment would result in an increase of two to six trains per day along the Bala Subdivision from Toronto to Capreol. The Regional Municipality expressed the view that this additional traffic would increase the exposure index at various crossings along the Bala Subdivision which would mean that the crossings would require upgrading to meet the criteria set out under the Transport Canada Surface Road/Rail Grade Crossing Manual. One specific crossing referred to was the crossing of Regional Road 67 (Maley Drive). The Regional Municipality submitted that construction of a road overpass would be required and that the Regional Municipality did not have funding for such construction. Accordingly, the Sudbury Regional Public Works Committee passed a resolution which was ratified by the Regional Council objecting to the proposed abandonment given that it would have a major impact on the region, i.e. the need for a road overpass on Maley Drive.

AGENCY FINDINGS

Actual Losses

On April 10, 1996, the Agency issued an interim determination of the amount of actual loss incurred in the operation of the branch line during the years 1992, 1993 and 1994, based on information submitted by CN. No new evidence was presented in response to this notice which would suggest that the interim determination should be varied.

Therefore, in accordance with the provisions of the Railway Costing Regulations, SOR/80-310 and section 157 of the NTA, 1987, the final determination of the amounts of actual loss is as follows:

Year Total Costs$ Total Revenues$ Actual Loss$
1992 406,311 15,099 391,212
1993 1,173,490 14,439 1,159,051
1994 854,801 2,281 852,520

Economic Determinations

Current Operation

CARLOAD FREIGHT TRAFFIC BY STATION
Station 1992 1993 1994
Desaulniers (mileage 264.65) 9 4 0

Freight service is provided by CN on an "as required" basis. Minimal volumes of carload traffic have originated or terminated on the branch line during the prescribed financial years. The branch line was used to handle a significant amount of bridge traffic for CN; however, no traffic has transited the branch line since November 26, 1995. With originating and terminating traffic volumes being at such low levels, the revenues have not exceeded the costs incurred in operating the branch line. Consequently, the Agency concludes that the branch line is presently uneconomic.

Probability of the Branch Line Becoming Economic

No evidence was filed with the Agency by any current or potential users of the branch line suggesting that carload traffic could be available to CN if the operation of the branch line was maintained. CN indicated in its application that it had reviewed and analyzed the potential carload traffic from shippers which could possibly have an impact on the economics of the railway line and concluded that there was no reasonable probability of the branch line becoming economic.

After review of the evidence received and on file, the Agency concludes that there is no reasonable probability of the branch line becoming economic in the foreseeable future.

The sole intervention received on this application pertains to concerns over the effect of the changes to the railway traffic over the Bala Subdivision, should the abandonment of the branch line be approved, as it would require the construction of a road overpass on Maley Drive. While the Agency recognizes the concerns of the Regional Municipality, the Agency's legislative responsibilities with respect to this application is to determine from the evidence submitted whether there is a reasonable probability of the branch line becoming economic in the foreseeable future. The Regional Municipality did not address this issue.

ENVIRONMENTAL ASSESSMENT

Under subsection 18(1) of the CEAA, the Law List Regulations and the Inclusion List Regulations, the Agency must assess the environmental effects of projects for the abandonment of the operation of railway lines before granting the authority to do so. An environmental assessment must be conducted on any physical activity relating to the abandonment of freight operations on a railway line that requires an order under section 162, subsection 165(1) or section 166 of the NTA, 1987.

On February 9, 1996, the Agency issued a notice and its preliminary screening report pertaining to CN's abandonment project. In its preliminary screening report, the Agency found that no potentially adverse environmental effects which could arise as a result of the proposed abandonment were identified. No comments were received in response to the notice and report. CN defined the project as being the abandonment of the operation of the Newmarket Subdivision from Yellek (mileage 233.4) to Capreol (mileage 310.5). The Agency must determine if decommissioning the railway line, in this case, is within the scope of the environmental effects of the project, as set out by the CEAA. Subsections 16(1) and 16(3) of the CEAA give the Agency this discretion.

16.(1)Every screening ... shall include a consideration of the following factors:

(a) the environmental effects of the project, including the environmental effects of malfunctions or accidents that may occur in connection with the project and any cumulative environmental effects that are likely to result from the project in combination with other projects or activities that have been or will be carried out; ...

16.(3)The scope of the factors to be taken into consideration pursuant to paragraphs 16(1)(a), (b) ... shall be determined (a) by the responsible authority; ...

The Agency has determined that the decommissioning of the railway line is not in this case within the scope of the environmental effects to be considered for this project. The Agency has further considered its preliminary screening report and finds, pursuant to subsection 20(1) of the CEAA, that the project is not likely to cause significant adverse environmental effects and that, therefore, the project may proceed.

A copy of the Agency's final screening decision is attached as Appendix 2.

CONCLUSION

After consideration of all of the material received and on file, the Agency, pursuant to sections 164 and 165 of the NTA, 1987, determines that the branch line is presently uneconomic, that there is no reasonable probability of it becoming economic in the foreseeable future, and that its operation should therefore be ordered abandoned.

Section 168 of the NTA, 1987 provides that the Agency shall fix a date for the abandonment of the operation of a branch line that is not less than thirty (30) days or more than one (1) year from the date of the abandonment order. Accordingly, the Agency determines that the abandonment of the operation of the branch line shall take effect thirty (30) days from the date of the Order giving effect to this Decision.


Environmental Screening Decision

Project by the Canadian National Railway Company to abandon the operation of its Newmarket Subdivision from Yellek (mileage 233.4) to Capreol (mileage 310.5) in the province of Ontario

May 1996


1. Project Description

The Canadian National Railway Company (hereinafter CN) applied to the National Transportation Agency (hereinafter the Agency) for authority to abandon the operation of the segment of the Newmarket Subdivision from Yellek (mileage 233.4) to Capreol (mileage 310.5), a total distance of 77.1 miles, in the province of Ontario (hereinafter the branch line).

2. The Canadian Environmental Assessment Act (hereinafter the CEAA)

Under subsection 18(1) of the CEAA, the Law List Regulations and the Inclusion List Regulations, the Agency must assess the environmental effects of projects for the abandonment of the operation of railway lines before granting the authority to do so. An environmental assessment must be conducted on any physical activity relating to the abandonment of freight operations on a railway line that requires an order under section 162, subsection 165(1) or section 166 of the National Transportation Act, 1987.

3. Project Rationale

As no carload traffic has originated or terminated on the branch line since 1993, CN is of the view that continued operation of the branch line cannot be justified. Further, according to CN, the industries in the area of the branch line have been making use of trucking services to meet their transportation needs for a number of years.

4. Project Activity

Carload traffic on the branch line has declined from nine carloads in 1992 to four carloads in 1993. No traffic originated or terminated on the branch line in 1994. Should the Agency authorize the abandonment of the operation of the branch line, traffic will be shifted onto the highway network. No passenger-train services are operated by VIA Rail Canada Inc. over the branch line.

5. Existing Environment

No traffic has originated or terminated on the branch line since 1993. However, the branch line was used to handle bridge traffic. In 1992, 1993 and 1994, an estimated 53,628, 53,238 and 53,041 carloads of traffic were bridged over the branch line respectively. CN has decided to handle this bridge traffic by rerouting it on alternative railway lines. The area is also served by a number of provincial highways, including Provincial Highways 11, 17 and 539.

6. Proposed Mitigative Measures

According to CN, there are no predicted adverse effects from the proposed abandonment and, consequently, no mitigative measures are warranted. Moreover, the proposed abandonment would eliminate twenty grade crossings on the branch line.

7. Agency Decision

No potential adverse environmental effects which could arise as a result of the proposed abandonment were identified.
The Agency finds that CN has filed material which adequately describes the project, the existing environment and the potentially adverse environmental effects of the project.
The Agency has determined that the decommissioning of the railway line is not in this case within the scope of the environmental effects to be considered for this project.
The Agency has further considered its preliminary environmental screening report and all material received and on file and, pursuant to subsection 20(1) of the CEAA, determines that the project is not likely to cause significant environmental effects and that, therefore, the project may proceed.

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