Decision No. 117-R-2011

April 13, 2011

File No. R8050/155-117.11

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Introduction and issues

Application

[1] Ville de Lac-Mégantic (City) applied to the Canadian Transportation Agency (Agency) for authority to construct a road crossing (level crossing) at rue de la Gare and mileage 117.11 Moosehead Subdivision of Montréal, Maine & Atlantic Canada Co. (MMAC) in the city of Lac-Mégantic, in the province of Quebec as shown on Drawing No. C120726-FE01-06 and subsequent modifications. The City has also applied for an apportionment of the construction and maintenance costs for the road crossing, as well as the installation and maintenance costs for the warning system (crossing signals, flashing lights and gates). In addition, the City requests authorization from the Agency to carry out the following related work (related work).

• Relocation of the main line by approximately five metres to the east - Drawing No. C120726-FE01-06, section LOT-2D-B, page 3 of 9, dated March 29, 2010;
• Relocation of the customs and storage switch further north to limit the number of tracks to be crossed at the level crossing to two - Drawing No. C127026-FE01-06, section LOT-2D-B, page 4 of 9, dated March 29, 2010; and,
• Construction of a third track - Drawing No. C120726-FE01-06, section LOT-2D-B, page 5 of 9, dated March 29, 2010.

Issues

1. Should the Agency authorize the construction of the proposed road crossing and the related work?
2. If so, how should the construction costs for the road crossing and the related work and the maintenance costs for the road crossing, as well as the installation and maintenance costs for the warning system be apportioned?

[2] As indicated in the reasons that follow, the Agency authorizes the construction of the road crossing and related work. In addition, the Agency determines that the City must pay all of the construction and maintenance costs for the crossing surface and approaches as well as the installation costs for the warning system. The Agency also determines that the costs associated with the maintenance of the warning system should be paid by the City at 80 percent and by MMAC at 20 percent. Further, the Agency authorizes the City to carry out, at its expense, the related work.

Environmental issue

[3] This application is being considered pursuant, among other things, to subsection 101(3) of the Canada Transportation Act (CTA), which triggers a need for an environmental assessment pursuant to paragraph 18(1)(a) of the Canadian Environmental Assessment Act, S.C., 1992, c. 37 (CEAA). However, as the City has obtained financial assistance under the Infrastructure Stimulus Fund for the work, it is exempt from the requirement to conduct an environmental assessment for the project.

Background

[4] The City has undertaken the construction of a sports centre that will include an arena, a semi-Olympic pool, a gymnasium, a multi-purpose room, a food service area and a bowling alley. This sports centre represents an important contribution to revitalizing the City's historic downtown area and is a crucial element of the City's strategy to preserve and develop local industries by ensuring the retention of skilled labour which increases the demand for top-quality urban recreational equipment and services.

[5] The application relates to the construction of a road crossing at rue de la Gare to provide access to the sports centre. The road crossing will be equipped with crossing signals, flashing lights, fences and gates. The maximum speed allowed on the main track is 16 km/hour while the maximum speed allowed on rue de la Gare is 50 km/hour.

[6] There is currently a private crossing that is essentially on the same location as the proposed road crossing. This private crossing is used by City representatives, service vehicles and MMAC clients going to the rail yard.

[7] After numerous discussions, the City and MMAC failed to agree on the terms for the construction of the road crossing and related work. As a result, the City submitted this application.

Site visit

[8] The Agency determined that a site visit was necessary to get an overview of the situation. This visit took place on December 7, 2010. Representatives of the City, MMAC and Transport Canada took part in this meeting.

[9] The minutes of December 23, 2010, which were prepared by the Agency staff, form part of the file in this matter.

Positions of the parties

Construction of the road crossing and the related work

[10] The City points out that traffic coming from Frontenac Street will turn onto rue de la Gare to access the proposed road crossing. The City states that it analyzed the possibility of relocating the road crossing further south. However, the elevation change is too substantial to construct the crossing at that location and comply with maximum approach slopes. The City indicates that the possibility of putting in place a tunnel or viaduct had been considered but the limitations of the site proved that such an option is technically unrealistic, mainly because of the substantial slope limitations. MMAC maintains that it had proposed building a viaduct under the railway southeast of the crossing, but the City refused because of the costs entailed by such a project.

[11] The City states that the maximum number of train movements over the crossing at rue de la Gare is estimated at 28 trains per day. The City adds that the anticipated cross product (the average daily number of trains multiplied by the average daily vehicular traffic) is 6,076 (28 x 217). MMAC maintains that the anticipated cross product is 70,000 (28 x 2,500).

[12] MMAC indicates that the proposed road crossing is problematic because it would cross MMAC's rail yard. MMAC states that the proposed road crossing is not acceptable because it would limit train movements and lead to a loss of space in the rail yard. MMAC maintains that if the construction of the road crossing were authorized, it would result in a loss of capacity of 1,117 feet of track within the yard and a further loss of 2,320 feet of eastern track. MMAC states that it does not want the potential for development and expansion of its railway operations to be limited.

[13] The City indicates that the conversion of the existing private crossing will involve the addition of a third storage track as part of the related work. According to the City, this will increase MMAC's storage and customs clearance capacity.

[14] In addition, the City states that although the proposed crossing would cross MMAC's rail yard, it would not cause any further problems than currently exist as there is already a private crossing at that location. Furthermore, the City argues that the application for a public road crossing in no way changes the actual rail car storage capacity, as the same clearance standards would apply as for the existing private crossing already at that location.

Cost apportionment

[15] The City will receive a grant from the federal government and the Quebec provincial government which will cover 80 percent of all costs. The City has to pay 20 percent of the remaining costs. Of this 20 percent, the City requests that the Agency order MMAC, because of safety benefits MMAC will gain at the new crossing, to pay 50 percent of the construction costs of the road crossing (including the installation of the warning system) and the related work and 100 percent of the maintenance costs for the warning system. The City, because of access and safety benefits that its citizens and the users of the sports centre will gain from the crossing, agrees to pay 50 percent of the construction costs associated with the crossing (including the installation of the warning system) and the related work and 100 percent of the costs associated with the crossing approaches. The City makes no submission with respect to the apportionment of costs for maintenance of the road crossing.

[16] MMAC opposes the City's application regarding the apportionment of the construction costs for the road crossing because, according to MMAC, it will gain no benefits from this road crossing and, if it is built, it will be for the sole benefit of the City, to the detriment of MMAC's operations. MMAC is also opposed to being made liable for the maintenance costs on the basis that it is the senior party, and as such it does not have to pay any costs associated with the construction of the road crossing and its eventual maintenance. MMAC adds that maintaining the status quo would suit its operations.

[17] MMAC contends that the junior party is the City and that consequently, it alone must assume all the costs of the construction and eventual maintenance of the road crossing.

[18] The City indicates that the proposed road crossing is not an application for a new crossing as the crossing already exists and that the issue before the Agency for authorization and cost apportionment is primarily related to making the crossing safer for the public. The City also contends that it is the senior party as it had the first right of passage.

[19] The City asserts that MMAC will benefit from the road crossing as this crossing would be safer not only for pedestrians, but also for the trucks associated with MMAC's rail operations.

[20] The City also indicates that it has acquired lots from the Canadian Pacific Railway Company (CP) which include rights of way to access CP's old lots from Frontenac Street. These rights of way are actually used as a private crossing at the same location as that covered in this application for a public road crossing.

[21] MMAC states that the location of the rights of way does not reflect the road crossing considered by the City. MMAC argues that the lot covered in this application is not burdened with any right of way in favour of the City.

[22] The City reiterates that although the location of the right of way was originally registered to cross through other lots, this right of way is, in fact, used on a lot in almost the same exact location as that covered in this application.

Analysis and findings

Legislation

[23] Subsections 101(3) and 101(4) of the CTA provide:

(3) If a person is unsuccessful in negotiating an agreement [...] the Agency may, on application, authorize the construction of a suitable road crossing, utility crossing or related work, or specifying who shall maintain the crossing.

(4) Section 16 of the Railway Safety Act applies if a person is unsuccessful in negotiating an agreement relating to the apportionment of the costs of constructing or maintaining the road crossing or utility crossing.

[24] Subsections 16(1) and (4) of the Railway Safety Act (RSA) state:

(1) The proponent of a railway work, and each beneficiary of the work, may refer the apportionment of liability for the construction, alteration, operational or maintenance costs of the work to the Agency for a determination if they cannot agree on the apportionment and if no recourse is available under Part III of the Canada Transportation Act or the Railway Relocation and Crossing Act. The referral may be made either before or after construction or alteration of the work begins.

[...]

(4) Where a matter is referred to the Agency under subsection (1), the Agency shall, having regard to any grant made under section 12 or 13 in respect of that matter, the relative benefits that each person who has, or who might have, referred the matter stands to gain from the work, and to any other factor that it considers relevant, determine the proportion of the liability for construction, alteration, operational and maintenance costs to be borne by each person, and that liability shall be apportioned accordingly.

1. Should the Agency authorize the construction of the proposed road crossing and the related work?

[25] Pursuant to subsection 101(3) of the CTA, the Agency can authorize the construction of a suitable crossing or related work. The Federal Court of Appeal, in Fafard v. Canadian National Railway Co., [2003] FCA 243 (Fafard), has determined that "A suitable crossing is a crossing that is adequate and appropriate for the purposes for which it was intended and installed."

[26] Issues related to the safety of the crossing, such as reduced visibility, synchronization between the control panel for the rail lights and the control panel for the traffic lights and a detailed safety assessment are within the jurisdiction of Transport Canada. Consequently, the Agency need not review these issues nor rule on them.

[27] Nevertheless, before deciding on the suitability of a road crossing, the Agency must consider safety, as the Federal Court of Appeal also determined, in Fafard, that the "concept of a ‘suitable crossing' shall include an element of safety."

[28] Accordingly, because the determination of a suitable crossing includes safety, and given both the City and MMAC raised the issue of safety at the crossing, the Agency requested Transport Canada, the authority on rail safety in Canada, to provide comments.

[29] In a letter dated November 30, 2010, Transport Canada indicates that if the road crossing complies with regulatory requirements, i.e., industry practice, guidelines, standards, rules and regulations, Transport Canada would have no concerns with the construction of the road crossing. Transport Canada adds that it did have concerns with the proposed crossing as originally presented by the City, but following discussions with the responsible engineering firm, the concerns were resolved. Accordingly, Transport Canada indicates that, subject to receipt of the notice of planned work, the proposed road crossing would appear to be satisfactory.

[30] Transport Canada, at the subsequent site visit, indicated that the road crossing, as it currently exists, is a private crossing used by a limited number of people, and its configuration is acceptable given its current use. However, the eventual use proposed by the City would make the road crossing public, and this change in use requested by the City means that the future road crossing would have to meet current standards.

[31] Consequently, the Agency has considered the safety aspect as directed by the Federal Court of Appeal, and based on Transport Canada's submission and considering revisions to plans are contemplated to accommodate Transport Canada's comments, the Agency determines that the proposed road crossing would meet the standards of a suitable crossing.

[32] MMAC proposes alternative solutions to the proposed crossing, such as a tunnel or viaduct, that it would like the Agency to consider. In Decision No. 688-R-2004, the Agency noted that one of the factors used to determine whether a grade separation is justified is the highway-railway traffic cross product. When the cross product is less than 200,000, a level road crossing generally suffices, provided it is equipped with adequate safeguards. In this case, the anticipated cross product does not justify the establishment of a grade separation at this location.

[33] In addition, the Agency accepts that the option of building a tunnel or viaduct is not possible, as the site limitations indicate that these options are technically unrealistic, mainly due to the substantial slope limitations.

[34] As to the potential negative impacts of a level road crossing on MMAC operations and the loss of storage space for rail cars, the Agency notes that a private crossing already exists at this location and, in order to offset the loss of storage space for rail cars on the tracks which would be removed, a new storage track is to be built west of the new road crossing. MMAC will accordingly maintain the same rail car storage capacity. Furthermore, it is acknowledged that the volume of road traffic on the road crossing will increase depending on activities at the sports centre but that is not anticipated to be of a lengthy duration at any given time.

[35] The Agency, therefore, concludes that the construction of the road crossing will not unduly hinder MMAC's operations to the point of justifying the Agency's refusal to authorize the construction of the proposed road crossing.

[36] Consequently, the Agency finds that a road crossing is necessary to provide access to the sports centre and, the Agency, pursuant to subsection 101(3) of the CTA, therefore authorizes the construction of a level road crossing and the related work at mileage 117.11 Moosehead Subdivision.

2) How should the construction costs for the road crossing and the related work and the maintenance costs for the road crossing, as well as the installation and maintenance costs for the warning system be apportioned?

[37] Subsection 101(4) of the CTA stipulates that section 16 of the RSA applies if the parties are unsuccessful in negotiating an agreement regarding the apportionment of construction and maintenance costs for a road crossing. When parties to a project cannot agree on the proportion of the construction, alteration, operational and maintenance costs of a road crossing to be borne by each, section 16 of the RSA allows the proponent or anyone who could benefit from the rail structure, once completed, to refer the matter to the Agency for decision. In this instance, the parties did not come to an agreement regarding the apportionment of costs for the proposed road crossing. Therefore, the Agency determines that this issue must be considered pursuant to subsection 101(4) of the CTA.

[38] Subsection 16(1) of the RSA states:

The proponent of a railway work, and each beneficiary of the work, may refer the apportionment of liability for the construction, alteration, operational or maintenance costs of the work to the Agency for a determination if they cannot agree on the apportionment and if no recourse is available under Part III of the Canada Transportation Act or the Railway Relocation and Crossing Act. The referral may be made either before or after construction or alteration of the work begins.

[39] As a result, the Agency has the authority to apportion costs for the proposed railway crossing, the related work and the warning system.

[40] The Agency has discretion to determine the costs to be paid by each party on a case by case basis. In Decision No. 517-R-2003, the Agency indicated the following:

The Agency must determine the proportion of the liability for construction, alteration, operational and maintenance costs to be borne by each party having regard to the relative benefits that each person stands to gain and any other factor that it considers relevant. While the need for the work may be a factor which the Agency considers relevant, subsection 16(4) of the RSA does not, contrary to CN's arguments, require the cost apportionment to be based on the party which created the need for the work. Similarly, the Agency notes the argument of the applicant that the junior-senior principle, which would assign all costs of widening and maintaining an existing crossing to the junior party, should apply. The junior-senior principle is one which the Agency and its predecessors have considered in the past and which was also included within the Railway-Highway Crossing at Grade Regulations (General Order No. E-4), promulgated under the former Railway Act. The Agency may consider this principle, and others, in this or future cases; however, the Agency considers each case on its own merits. [Emphasis added]

[41] After reviewing the arguments of the parties regarding their junior-senior standing with respect to the crossing at issue and the benefits of the project as a whole, the Agency is of the opinion that, taking into account the considerations set out below, it should not apply the junior-senior principle to determine the apportionment of costs for the construction and maintenance of the proposed road crossing and warning system. Rather, the Agency finds it appropriate, in this case, to give more weight to the respective benefits that the City and MMAC would gain from the road crossing and warning system and the fact that the City has initiated this application. In making this determination, the Agency also refers to and, in the circumstances, gives weight to the principle established in paragraph 33 of Decision No. 224-R-2009, namely: "The cost of any facilities or upgrades additional to the work required for the reconstruction should normally be paid by the party requesting the additional facilities or upgrades."

[42] In so exercising its discretion with respect to the apportionment of costs on the basis of respective benefits and the obligations of an initiating party, the Agency finds that the parties' submissions on rights of way are moot.

[43] The City's position is that both parties would benefit from the construction of the public road crossing.

[44] However, this is an exceptional situation. The City has undertaken the construction of a sports centre in a location which requires the reconstruction of a private crossing and the conversion of that private crossing into a public road crossing. The need for the proposed public road crossing is created by the need for the City to provide enhanced and safe access for its citizens to the sports centre.

[45] Accordingly, the Agency is of the opinion that the City will be the primary beneficiary from the improvements made to the road crossing located at mileage 117.11. Not only will the crossing provide for direct access to the new sports centre, the City and citizens accessing the sports centre will benefit, in terms of public safety, from the installation and use of the crossing warning system.

[46] On the other hand, the construction of a public crossing will not enable MMAC to serve more clients or improve its rail operations. The current private crossing meets MMAC's requirements and, in fact, MMAC has advised that it prefers the status quo. If the City had not proposed a change, there would have been no reason to make any changes to MMAC's infrastructure.

[47] The Agency finds that the City is the one that will accrue the primary benefit from the construction of a new public road crossing. This is the key factor in the allocation of costs in this case.

[48] Therefore, the Agency determines that the City is responsible for the construction costs of the road crossing and the related work and for the maintenance costs of the road crossing, as well as for the costs associated with the installation of the warning system.

[49] With respect to the maintenance of the warning system, however, the Agency is of the opinion that although the primary benefit of the warning system will accrue to the City, MMAC will also benefit from the enhanced safety that the warning system will provide. Accordingly, it is appropriate for MMAC to pay part of the maintenance costs of that warning system.

[50] Currently, MMAC pays for the maintenance of the existing private crossing. In 2009, according to MMAC, these maintenance costs amounted to $1,416. Based on the Guide to Railway Charges for Crossing Maintenance and Construction 2010, the annual maintenance costs for crossing warning systems with gates amount to $7,815.10.Twenty percent of this amount is $1,563.02, which is approximately the same as MMAC is currently paying for maintenance of the existing crossing.

[51] Consequently, the Agency finds that MMAC should be responsible for an amount equivalent to 20 percent of the warning system maintenance costs; i.e., an amount comparable to what it would have to pay for maintenance if the crossing remained private. The City shall be responsible for 80 percent of the warning system maintenance costs.

Conclusion

[52] The Agency authorizes the construction of a road crossing (level crossing) at rue de la Gare and mileage 117.11 Moosehead Subdivision in the city of Lac-Mégantic, and apportions the costs as follows:

• The City must pay 100 percent of the construction costs for the crossing surface and approaches and the installation costs for the warning system.
• The City must pay 100 percent of the costs associated with the future maintenance of the crossing surface and approaches.
• The costs associated with the future maintenance of the warning system must be paid by the City at 80 percent and by MMAC at 20 percent.

[53] The Agency also authorizes the City to carry out, at its expense, the related work.

Members

• Jean-Denis Pelletier, P. Eng.
• John Scott