Order No. 1989-R-42
March 3, 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 Houlton Subdivision between Debec Junction (mileage 0.00) and the International Boundary (mileage 5.0) (hereinafter the branch line), a total distance of 5.0 miles, in the Province of New Brunswick.
File No. 39309.90
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 Houlton Subdivision between Debec Junction (mileage 0.00) and the International Boundary (mileage 5.0), a total distance of 5.0 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 Houlton 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-42 File No. 39309.90
IN THE MATTER OF the application by Canadian Pacific Limited for authority to abandon the operation of the Houlton Subdivision from Debec Junction (M. 0.00) to the International Boundary (M. 5.0), a total distance of 5.0 miles in the Province of New Brunswick.
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 Houlton Subdivision from Debec Junction (M. 0.00) to the International Boundary (M. 5.0), in the Province of New Brunswick.
HISTORY OF THE LINE
The Subdivision was originally constructed by the Houlton Branch Railway Company in 1871; it was subsequently leased to the New Brunswick Railway Company (hereinafter NBR) in 1882. Under the terms of the lease, NBR was obliged to operate the railway for 999 years.
Eight years later, in July 1890, a second lease was entered into between NBR and the Canadian Pacific Railway Company. The terms of the lease state that NBR leased to the Canadian Pacific Railway Company certain lines of railway in the Province of New Brunswick, including the Houlton Subdivision. The term of the lease was for 999 years. The lease was confirmed by Parliament (S.C. 1891, c. 74).
There has been no service on the line for the last four years.
LOCATION OF THE LINE
The Houlton Subdivision begins at Debec Junction at Mileage 0.00 at the junction with CP's Shogomoc Subdivision and extends westward 5.0 miles to the International Boundary. The stations located on the line are Debec Junction (M. 0.0), Elmwood (M. 1.5), and Green Road (M. 4.9).
A map of the area is attached.
CONDITION OF THE TRACK
Overall, the track can be described as being in poor condition. The track consists of a mixture of 73, 75, 80, and 85 pound rail on No. 2 softwood ties. Both the track and the ties, as well as the ballast, are described as poor. There is a speed restriction of 10 MPH in effect over the whole branch line.
CP has estimated that expenses costing $125,400 would be necessary to restore the Houlton Subdivision to appropriate operating condition.
DESCRIPTION OF SERVICE
At present there is no train service provided on the Houlton Subdivision, and such has been the case for over four years. If railway service was required, it would be provided by a road switcher assignment operating from McAdam.
CARLOAD TRAFFIC
No carload traffic has been handled on the line since 1984.
ACTUAL LOSSES
Where an application is opposed under section 161, 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 the continuing trend of actual losses incurred in the operation of this line.
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* | 8,547 | 10 | 8,537 |
1986* | 6,024 | 10 | 6,014 |
1987* | 6,381 | 20 | 6,361 |
*Based on preliminary submissions.
More detailed cost information was contained in the Statements of Actual Loss issued December 30, 1988.
ALTERNATIVE TRANSPORTATION FACILITIES
Highway No. 540 crosses the line at approximately Mile 2. Highway No. 150 from Woodstock to the Boundary runs parallel to the Subdivision about five miles to the north. There are also local roads in the area of the Subdivision.
SUMMARY OF SUBMISSIONS
In CP's application, it was submitted that there was no traffic received or forwarded on this line during the period 1984 to 1987. If traffic were to be offered in the future, CP estimated that an expenditure of $125,400 would be required for restoration of the line to an appropriate operating condition.
Based on 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 that the line would become economic in the foreseeable future.
INTERVENTIONS RECEIVED
On June 15, 1988, CP issued a notice advertising this application for abandonment, for the purpose of soliciting interventions from the general public pursuant to section 161 of the NTA, 1987. There were 20 responses in opposition to the proposed abandonment resulting from this notice.
Minister of Transportation of New Brunswick
The Honourable Sheldon Lee, Minister of Transportation for the Province of New Brunswick, filed an intervention opposing the proposed abandonment.
Mr. Lee's main concern was 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. Such an occurrence would have a severe adverse impact on the economy of the western section of the Province.
The Minister also pointed out that certain industries and communities had voiced concerns to the provincial government regarding the proposed abandonment. The concerns expressed by these groups to the provincial government include loss of competitive edge vs. areas served by rail, insufficient truck capacity during peak periods, lack of intermodal competition, loss of local railway jobs, and an overall restriction of future plant investment.
Mr. Lee stated that the additional pressure on the Trans-Canada Highway would be unacceptable and requested that public hearings be held to obtain the views of all interested parties.
New Brunswick Railway Company
NBR, represented by the law firm of Osler, Hoskin, and Harcourt, maintained that the Agency had no jurisdiction regarding the abandonment application, citing a lease that had been entered into between NBR and CP in 1890 which states that CP was to maintain service for the duration of the lease. NBR maintained that the lease took precedence over the provisions of the NTA, 1987.
Since the Houlton Subdivision connects with a line in the United States, the line in question is not a branch line but is in fact a main line, and thus the application could not be made under section 160 of the NTA, 1987.
It was pointed out that because this line, in combination with other current applications, totaled 7% of all NBR route mileage, it exceeded the 4% limit set out in subsection 159(4) of the NTA, 1987.
Pursuant to paragraph 170(1)(b) of the NTA, 1987, the NBR requested that the Agency take into consideration the whole branch line system from McAdam to Edmundston when deliberating with respect to this application.
NBR's final argument was that the abandonment would reduce competitive access to U.S. railways.
To conclude, NBR requested that the Agency hold public hearings to enable persons to present their views on the proposed abandonment.
Mr. Deane Crabbe
Mr. Deane Crabbe, President of H.J. Crabbe & Sons Ltd., stated that he was opposed to the abandonment because with a trucking monopoly, there would be an accelerated deterioration of the local road network as well as an increased danger for the public use of roads. Mr. Crabbe also noted that railways had showed a lack of will in competing with trucking in the area of transportation.
United Transportation Union
The United Transportation Union was opposed to the application because some New Brunswick companies could not afford trucking and thus would lose outside market opportunities. They also indicated that higher costs for local transportation would result due to loss of rail competition. The Union believed that hazardous materials would have to be trucked, while adding more trucks to an already poor highway system would cause great damage and deter tourist development.
McCain Foods Limited
McCain Foods Limited (hereinafter McCain) was in opposition to the application pointing out that CP was contractually obligated to maintain the line for 999 years according to the lease with NBR. McCain also questioned whether the statement of actual losses put forward by CP in its application were attributable to the line in question. McCain stated that the alternatives to the current rail service proposed by CP were not sufficient for its needs. McCain concluded 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, of T.J. Brennan & Sons Ltd., opposed the application on the grounds that local industry would be left with trucking as the 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 opposed to the application. The abandonment would result in lost opportunities for companies to compete outside the local area, loss of local railway jobs, higher costs to shippers due to loss of rail competition, and accelerated highway maintenance costs. They also were of the opinion that the track could be used as a corridor for traffic not originating or terminating on the line.
Maritime Lumber Limited
On August 2, 1988, 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 the only viable method of transporting the wood is by rail. He deemed it vital that rail service be maintained to Woodstock, New Brunswick. On November 2, 1988, Maritime Lumber Limited withdrew their application due to an agreement with CP to receive these cars on the CP Main Line at McAdam, New Brunswick.
Carleton Regional Development Commission
The Carleton Regional Development Commission opposed the abandonment application on the grounds that: unemployment would set in due to loss of local railway-related jobs, transportation costs would increase due to loss of rail competition, accelerated deterioration of existing highway structures would occur, increased trucking would cause increased hazards to public use of highways, and there would be an insufficient supply of trucks during peak periods of demand.
Grand Falls Regional Development Commission
The Grand Falls Regional Development Commission opposed 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. Also, seasonal transportation demand peaks may not be able to be serviced solely by trucking firms. The Commission noted that there would be a loss of local railway jobs in an economy which is presently fragile at best.
Village of Canterbury
The Village of Canterbury opposed the proposed abandonment on the basis that many local jobs would be affected, and that the economic well-being of the communities involved would be severely compromised.
Village of Florenceville
The Village of Florenceville opposed the proposal for abandonment on the grounds that: there would be a loss of railway jobs, elimination of a competitive factor which keeps transportation costs down, accelerated deterioration of local highways, increased hazards to public use of highways, and industries with peak periods of production may not get access to trucking.
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 affects 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 their 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 the Canadian National Railway Company 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, as well from businesses in the area faced with higher transportation costs. Also, a potential route for exports was being lost. They concluded that public hearings should be held on the matter.
Karnes Kitchen Ltd.
Pat Karnes, President of Karnes Kitchen Ltd., of Woodstock, New Brunswick, expressed his concern regarding the proposed abandonment of local railway lines, including the Houlton Subdivision. Mr. Karnes main concerns were that there would be increased volumes of highway trailers on main highways in the area, loss of an alternate mode of transportation, an increase in transportation costs, and the future affect abandonment would have on industries and communities along the line.
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, 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 result in accelerated deterioration of local roads. During weight restriction periods, local trucking firms could not 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 located 40 miles south of Woodstock, expressed his general concern about track abandonments which he felt to be getting more and more prevalent. He commented that service provided in the southern part of New Brunswick appeared to be less than in other parts of the country. Lastly, 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, some of the materials that are used in the production process at the plant namely Bunker C, chlorine, anhydrous ammonia and sulphur dioxide are primarily transported by rail and it would be impractical and in some instances impossible to transport them by alternate modes.
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 communities where the majority of the transportation would be taking place.
Mr. Stephen requested a public hearing be considered for the proposed abandonments.
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 a probable increase in road traffic that would result.
Village of Perth-Andover
The Mayor and Council of the Village of Perth-Andover were opposed to the proposed abandonment for these 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; loss of local rail employment; higher freight costs due to the creation of a transportation monopoly; increased deterioration of local highway system; and there would be inadequate trucking service provided during the spring weight restriction period.
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.
An extension to the reply period was also authorized. In response to this notice, no submissions were received.
MATTERS CONSIDERED
Counsel for NBR in its submission had stated that the Agency had no jurisdiction to consider CP's application because of a lease agreement between the NBR and CP. The NBR also submitted that this line, in combination with the other applications, exceeded the 4 percent limit as prescribed in subsection 159(4) of the NTA, 1987.
Upon examination of these concerns, the Agency is of the view that the fact that there is a long lease of the line is not of itself a bar to the granting of an abandonment application. Parliament has made provision for abandonment of operation upon application to and order of the Agency. The abandonment provisions of the NTA, 1987 are not subject to the lease and are not rendered ineffective or inoperative by it. Whatever may be the rights and obligations of the parties under the lease, inter partes, the lease is not a bar to the abandonment of the line. In the present instance CP has exercised its legal right to apply to the Agency for the abandonment of the line at issue.
With respect to the maximum amount of line which may be abandoned as per subsection 159(4) of the NTA, 1987, the Agency has determined that the operating company, that being CP, has the authority to apply for abandonment of its own operation of train services. The 4 percent mileage ceiling rule applies to the sum of all eligible track which CP operates at the beginning of the year in which the Agency makes a determination on the application. CP's application is valid and does not contravene the 4 percent mileage ceiling provisions.
With respect to the NBR request that the Agency include neighboring network in its consideration of the application, the Agency concludes that this is not necessary. The Houlton Subdivision is a small, unused branch line which serves no through traffic, and therefore no shippers on neighboring branch lines. Thus, no benefit is to be gained in honoring that request.
Further, NBR in its submission states that the abandonment of the Houlton Subdivision would reduce competitive access to U.S. railways and that the Subdivision is not a branch line and rather a main line because it connects with a railway in the United States. The Houlton Subdivision does not connect with a U.S. railroad and therefore its abandonment will not reduce competitive access to U.S. railroads and it is clearly a branch line.
Regarding McCain's submission that the actual losses put forward by CP are questionable, the Agency notes that since no rail traffic has moved on the Subdivision in the past four years and no evidence was produced to show that there is a potential for the line to generate revenue, that even if it were proven CP's estimates of actual loss were excessive, CP's losses would not be totally eliminated.
FINDINGS
On the basis that adequate evidence and information have been submitted to the Agency, the Agency has determined that a public hearing is not necessary and that a Decision can be made on the information 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. There is no evidence to indicate that this branch line can expect any growth in traffic, particularly to a level sufficient to make the branch line economic in the future. Further, the available information indicates that in the foreseeable future, the Houlton Subdivision will likely continue to incur losses.
As there are no known developments in the area which would possibly generate 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.
Subsection 165(1) of the NTA, 1987, states in part:
"Where the Agency determines that a branch line or segment thereof is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future, the Agency shall... order that the operation of the branch line or segment be abandoned."
The Agency has made these determinations pursuant to subsection 165(1) of the NTA, 1987 and therefore concludes that the operation of the Houlton Subdivision from Debec Junction (M. 0.00) to the International Boundary (M. 5.0) should be abandoned.
As required under section 168 of the NTA, 1987, 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-42.
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