Order No. 1991-R-9

January 9, 1991

File No. T 6120/064

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WHEREAS the application was received by the National Transportation Agency (hereinafter the Agency) on June 6, 1990;

AND WHEREAS notice of the application was given by the applicant pursuant to subsection 160(5) of the NTA 1987;

AND WHEREAS opposition to the proposed abandonment of the operation of the branch line was received by the Agency within the period set out in section 161 of the NTA, 1987;

AND WHEREAS certain interveners argued that the applicant could not file the application for the abandonment of the branch line since it only leases the branch line from the New Brunswick Railway Company. The Agency notes, however, that pursuant to section 160 of the NTA, 1987, a railway company authorized to operate a branch line may make an application to the Agency for the abandonment of the operation of this branch line, and the Agency shall consider the application;

AND WHEREAS certain interveners argued that the applicant cannot abandon the operation of the branch line because of a statutory obligation binding the New Brunswick Railway Company and the Province of New Brunswick. The Agency is, however, of the opinion that this statutory obligation does not transfer to the applicant;

AND WHEREAS certain interveners asked that the Agency suspend its consideration of this application since an appeal has been filed with the Federal Court of Appeal against Agency Order No. 1989-R-90 dated May 12, 1989 and since that Order has been stayed preventing its execution. Pursuant to the NTA, 1987, the Agency is, however, required to render a decision in respect of this application;

AND WHEREAS certain interveners argued that abandonment of the branch line would isolate other railway lines and train services. The Agency finds, however, that the evidence submitted on train operations, track location and traffic regarding the branch line indicates that this branch line is independent of the branch lines involved in the Agency Order No. 1989-R-90 and of other branch lines operated by the applicant in the same region which are currently being considered under other abandonment applications filed with the Agency;

AND WHEREAS certain interveners claimed that the applicant understated its revenues by not reporting on company services traffic regarding the carriage of ties and timbers purchased by the applicant for its own use. The Agency, however, deems it appropriate to point out that revenues are not recovered for such purchases of materials for in-company use and further that, pursuant to paragraph 157(3)(a) of the NTA, 1987, neither the costs nor revenues, if any, associated with such traffic are allowable in a claim of actual loss. Therefore, the applicant correctly reported the revenues, traffic and costs of operating the branch line;

AND WHEREAS the Brotherhood of Maintenance of Way Employees argued that the applicant had inflated the maintenance material costs. The Agency has, however, verified that the applicant had correctly reported these costs;

AND WHEREAS the major rail user had in 1987 removed from rail mode the majority of its traffic (shipments of wood chip product from Plaster Rock), thereby drastically reducing traffic on the branch line, and the residual traffic has also declined significantly since 1989;

AND WHEREAS pursuant to section 163 of the NTA, 1987, the Agency made an interim determination of the actual loss incurred by the applicant in the operation of the branch line and caused such determination to be issued by notice dated October 25, 1990;

AND WHEREAS certain interveners suggested that the costs of operating the branch line should be based upon the costs of operations of Canadian Atlantic Railway rather than upon the costs of operations of the applicant. The Agency, however, deems it appropriate to point out that, wherever possible, all on-line and train services costs are in fact Canadian Atlantic Railway costs specific to the operation of the branch line. In addition, all costs have been approved as being in accordance with the regulations governing current costing methodology;

AND WHEREAS there was no evidence provided by any of the interveners or any shippers located on the branch line which indicated that the branch line could become economic;

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;

AND WHEREAS the final determination of the amounts of the actual loss incurred by the applicant in the operation of the branch line in each of the prescribed financial years reads as follows:

AND WHEREAS McCain Foods Limited, the New Brunswick Railway Company, The Brotherhood of Maintenance of Way Employees, the Ministry of Transport of the Province of New Brunswick and the Federation of Labour of the Province of New Brunswick requested that the Agency hold a public hearing on this application;

AND WHEREAS the Agency has considered the material received and on file related to the subject application.

THE AGENCY HEREBY:

1. Determines that a public hearing is not necessary and that the Decision can be made on the information on file.
2. Determines that the branch line is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future.

NOW THEREFORE IT IS ORDERED THAT:

In compliance with subsection 165(1) of the NTA, 1987, the applicant shall abandon the operation of the segement of the Edmundston Subdivision from a point in Edmundston (mileage 55.6) to mileage 56.1, a total distance of 0.5 miles, in the Province of New Brunswick thirty (30) days from the date of this Order.

THE AGENCY HEREBY REQUESTS THAT:

The applicant advise the undersigned in writing of the dates upon which:

i) the operation of the segment of the Edmundston Subdivision between mileages 55.6 and 56.1 has been abandoned, and

ii) the trackage and other facilities were removed.