Decision No. 210-R-2012

INTRODUCTION AND ISSUES

Application

[1] Mobility Ottawa-Outaouais: Systems & Enterprises Inc. (MOOSE) filed a complaint with the Canadian Transportation Agency (Agency) pursuant to Part III, Division V of the Canada Transportation Act (CTA) against the City of Ottawa (City). MOOSE requests the Agency to determine:

• that the Prince of Wales Bridge (Bridge) was in good condition when it was sold to the City in 2004, but is currently in a state of disrepair; and,
• that the City, by allowing the Bridge to decline into disrepair and by representing that it plans to convert the Bridge from a railway to a roadway, has discontinued a federal railway work without due process under Division V of the CTA.

[2] MOOSE requests the Agency to order the City to restore the Bridge.

Issues

[3] The Agency has determined that this complaint raises the following issues:

• Did the City, when it purchased the Bridge, acquire a railway line for continued operation?
• If the City acquired a railway line for continued operation, has the City discontinued operating the railway line?

Conclusion

[4] As indicated in the reasons that follow, the Agency finds that the City acquired the Bridge for continued operation. The Agency also finds that, for the purposes of the CTA, the City has not discontinued operating the railway line.

[5] The Agency orders the City to comply with section 141 of the CTA.

BACKGROUND

[6] MOOSE describes itself as a federally incorporated for-profit company that serves as a key member of a planned commercial consortium seeking to bring about and operate cost-effective, timely, comfortable and ecologically sound public transportation services throughout Canada’s National Capital Region.

[7] The City carrying on business as Capital Railway as per its Certificate of Fitness and subsequent variances, is a federally-regulated railway company operating the O-Train in Ottawa, Ontario. In Decision No. 745-R-2000, the Agency found that the City’s proposed operation of a railway in the provinces of Ontario and Quebec was within the legislative authority of Parliament. The Agency found that the City was eligible to be considered for a certificate of fitness. After reviewing the City’s application, the Agency issued a certificate of fitness.

[8] The Bridge is made up of two bridges that span the Ottawa River, connected by a railway line on the Lemieux Island, from Gatineau, Quebec to Ottawa, Ontario. The Bridge runs from the Lachute Subdivision in Quebec to the Ellwood Subdivision in Ottawa.

[9] In 2005, the City purchased the Bridge when it purchased the Canadian Pacific Railway Company (CP) corridor from the Quebec shore of the Bridge through to Leitrim Road, Ottawa.

POSITIONS OF THE PARTIES

Bridge acquired for continued operation

MOOSE

[10] MOOSE submits that neither CP nor the City have filed a plan to discontinue the railway across the Bridge.

[11] MOOSE indicates that when the City purchased the Bridge it was in operational condition, but required some routine maintenance.

The City

[12] The City denies that when it purchased the Bridge, it was in operational condition.

Discontinuance

MOOSE

[13] MOOSE claims that the City has discontinued operations by allowing the Bridge to fall into disrepair and by making representations and commitments to convert the railway bridge to a roadway.

[14] MOOSE submits that the City is in violation of subsections 141(1) and (2) of the CTA by failing to include the Bridge on its plan.

[15] MOOSE refers to a 2009 memorandum to the Mayor and Members of Council from the Director of Infrastructure Services Department that states that the Bridge is “out of service”, but not abandoned.

[16] MOOSE points out that in the City’s OC-Transpo, Capital Railway: Three-Year Plan 2010-2013 (plan), updated in January 2010, Schedule A does not list the Bridge among the Capital Railway assets or lines, which MOOSE contends indicates that the Bridge has been abandoned. MOOSE asserts that the map that makes up Schedule B of the plan, which shows annotated lines to indicate the City’s railway properties but does not include a line on the Bridge, indicates the City’s intention to discontinue use of the Bridge.

The City

[17] The City submits that at the time of the purchase it had no immediate plan or legal authority to operate trains across the Ottawa River. The City states that it has never obtained nor sought to obtain a certificate of fitness to authorize it to operate a railway line across the Bridge. The City also points out that the Certificate of Fitness issued, and later varied, by the Agency does not provide the City with the authority to operate a railway line across the Ottawa River, by way of the Bridge or any other means.

[18] The City submits that there are currently no railway operations on the Bridge such that it is not part of any railway line. The City states that it cannot take steps to discontinue a railway line that it does not operate. The City therefore claims that it is under no statutory obligation to include the Bridge in its plan.

[19] The City denies that the lack of an annotated line on the Bridge on Schedule B of the City’s plan indicates its intention to discontinue use of the Bridge.

[20] The City submits that it has at all times complied with the provisions of Division V of the CTA with respect to its ownership of the Bridge. The City claims that there is no requirement or obligation under the CTA to maintain the Bridge in a state of ready use for passenger rail service.

ANALYSIS AND FINDINGS

[21] In making its findings, the Agency has considered all of the evidence and arguments submitted by the parties during the pleadings.

Issue 1: Did the City, when it purchased the Bridge, acquire a railway line for continued operation?

Bridge acquired for continued operation

[22] MOOSE submits that CP never filed a plan to discontinue the operation of the railway line over the Bridge. The City did not file any submission indicating that the railway line over the Bridge was discontinued by CP prior to the sale. Accordingly, the Agency finds that CP did not discontinue the railway line over the Bridge prior to its sale to the City. For the purposes of brevity, the railway line over the Bridge shall be referred to as the “railway line”.

[23] Subsection 141(3) of the CTA states that a railway company may sell, lease or otherwise transfer its railway lines, or its operating interest in its lines, for continued operation. The City filed with the Agency the Agreement of Purchase and Sale of Railway for Continued Railway Operations between CP and the City, signed March 21, 2005. The Agreement includes the Ellwood and Prescott corridors, and the Bridge. The Agreement also includes the Vendor’s Conditions, which state: “Subject to the Purchaser executing an Acknowledgement and Undertaking, in a form satisfactory to the Vendor’s Solicitor, acting reasonably, acknowledging that the Lands, Fixtures and documents are being sold for continued railway operations.”

[24] The Agency finds that CP entered into the Agreement of Purchase and Sale of Railway for Continued Railway Operations with the City in accordance with subsection 141(3) of the CTA. That agreement was for the sale of railway lines, including the railway line across the Bridge, for continued operation. There is no evidence indicating that CP had discontinued operation of the railway line prior to the sale.

Issue 2: If the City acquired a railway line for continued operation, has the City discontinued operating the railway line?

[25] Having determined that the City acquired an operating railway line, the Agency must consider whether the City has complied with the discontinuance process requirements set out in Division V of the CTA.

Discontinuance

[26] The Agency is considering this complaint pursuant to Division V of the CTA. The Agency’s jurisdiction pursuant to Division V of the CTA is to determine whether the railway company has:

1. prepared and kept up to date a plan indicating its intentions for each of its railway lines; and,
2. complied with the steps described in Division V prior to discontinuing operations.

[27] Within Division V of the CTA, section 141 sets out the railway company’s requirements to maintain a plan that indicates its intentions for each of its railway lines. Section 142 states that a railway company must comply with the steps described in Division V before discontinuing operating a railway line, and that a railway company cannot take steps to discontinue operating a railway line before it has been indicated in its plan.

[28] Section 143 of the CTA states that the railway company must advertise the availability of the railway line for continued operation and its intention to discontinue operation if the line is not sold, leased or transferred. Section 144 of the CTA sets out that the railway company shall disclose the process it intends to use for receiving and evaluating offers and shall negotiate in good faith. Furthermore, on application by a party, the Agency may determine the net salvage value of the railway line. If it is the opinion that the railway company has removed any of the infrastructure associated with the line to reduce traffic on the line, the Agency may deduct from the net salvage value the amount that the Agency determines is the cost of replacing the removed infrastructure.

[29] Section 144.1 of the CTA sets out that if a railway line is sold, leased or transferred under subsection 143(1) and an agreement is in force between the railway company and a public passenger service provider in respect of the operation of service on the railway line, the rights and obligations under the agreement are transferred. Section 145 of the CTA states that the railway company shall offer to transfer all of its interest in the railway line to the governments and urban transit authorities for no more than the net salvage value.

[30] Section 146 of the CTA states that if a railway company has complied with sections 143 to 145, but an agreement for the sale, lease or transfer of the railway line is not entered into, the railway company may discontinue operating the line on providing notice to the Agency. After providing notice to the Agency, the railway company has no obligations under the CTA in respect of the operation of the railway line.

[31] The Agency finds that the City, since it took ownership of the railway line, has not discontinued operations.

[32] Section 141 of the CTA states that a railway company shall prepare and keep up to date a plan indicating for each of its railway lines whether it intends to continue to operate the line or whether, within the next three years, it intends to take steps to discontinue operating the line. The Agency finds that the railway line must be included in the railway company’s plan as either:

1. a railway line that it intends to continue to operate, or
2. a railway line that it intends to discontinue in the next three years.

[33] The City, being a federally-regulated railway company as set out in its current Certificate of Fitness, is within the jurisdiction of the CTA. The Bridge, being a railway line owned by a federally-regulated railway company, falls under the jurisdiction of the CTA.

[34] The City has not reflected the railway line on its plan. The Agency, pursuant to section 141 of the CTA, therefore finds that the railway line should be included in the City’s plan.

[35] MOOSE claims that because the City did not repair the railway line, it has fallen into a state of disrepair. MOOSE therefore maintains that the railway line has been discontinued without the City having gone through the discontinuance process.

[36] The discontinuance provisions of the CTA require a railway company to express in its plan, for each of its railway lines, whether it intends to either continue or discontinue operations. A railway company may discontinue operations of a railway line but it can only do so by first following the discontinuance process described in sections 141 to 146.5 of the CTA. The railway company cannot initiate steps to discontinue before the company’s intention to discontinue operations has been indicated in its plan for at least 12 months.

[37] If the City intends to discontinue operations, it must comply with the discontinuance process requirements, as set out in subsection 146(1) of the CTA. Until the railway line is discontinued, the City has obligations under the CTA in respect of the operation of the railway line.

[38] Further, if the City indicates on its plan its intention to continue operations of the railway line, the City continues to have obligations under the CTA in respect of the operation of the railway line. Where service is, in fact, provided to a shipper located on a railway line as a result of a business decision or as ordered by the Agency, the railway company may be required to take steps to ensure that the railway line complies with the applicable safety requirements.

[39] However, in the Agency’s opinion, the discontinuance provisions do not provide the Agency with the authority to oversee a railway company’s maintenance and safety practices to ascertain whether, with respect to a specific railway line, a de facto discontinuance has occurred. The Agency has neither the jurisdiction nor the expertise to determine whether a railway line complies with the requirements of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.).

[40] MOOSE claims that by representing to convert the railway line to a roadway, the railway line has been discontinued without the City having gone through the discontinuance process. However, what triggers the discontinuance process of the CTA is what is indicated by the railway company in its three-year plan in respect of the railway line. As set out in subsection 141(1) of the CTA, the City shall prepare and keep up to date a plan indicating for each of its railway lines whether it intends to continue to operate the line or whether, within the next three years, it intends to take steps to discontinue operating the line.

CONCLUSION

[41] In light of these findings, the Agency orders the City to comply with section 141 of the CTA within 90 days from the date of this Decision.