Order No. 2015-R-140

[1] Arnaud Railway Company (ARC) is the holder of Certificate of Fitness No. 97002 (COF) issued by the Canadian Transportation Agency (Agency) pursuant to subsection 92(1) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA), which authorizes ARC to operate a railway line between Arnaud Junction and Pointe Noire, in the province of Quebec.

[2] Subsection 94(1) of the CTA provides that the holder of a certificate of fitness shall notify the Agency in writing without delay if the liability insurance coverage is cancelled or altered so that it may no longer be adequate or if the construction or operation has changed so that the liability insurance coverage may no longer be adequate.

[3] Subsection 94(2) of the CTA states that the Agency may suspend or cancel the certificate of fitness if it determines that the liability insurance coverage is no longer adequate.

[4] Agency records indicate that the third party liability insurance coverage has expired. Therefore, in Decision No. LET-R-36-2015 dated May 29, 2015, the Agency directed ARC to show cause why the Agency should not, pursuant to subsection 94(2) of the CTA, suspend or cancel ARC’s COF. The Agency also advised that the COF would be cancelled if ARC failed to demonstrate that it has adequate liability insurance coverage.

[5] On June 5, 2015, the Agency received two letters from Cliffs Québec Mine de Fer ULC (CQMDF). CQMDF did not specify its relationship with ARC or its authority to make submissions on its behalf. CQMDF did, however, file a certificate of insurance which specifies Cliffs Quebec Iron Mining Ltd. as the named insured and reflects that ARC’s third party liability insurance coverage is $2 million with no self‑insured retention amount.

[6] CQMDF asserts that the Agency “must consider the production stoppage of the Wabush and Bloom Lake mines which directly impacts the traffic on the Arnaud Railway. In the absence of mine production, traffic is very limited, if non-existent. Accordingly, the operating risks are currently very limited.”

[7] In Decision No. LET-R-41-2015 dated June 30, 2015, the Agency required ARC to provide, by July 7, 2015, the remaining information that the Agency requires to assess the adequacy of ARC’s third party liability insurance coverage.

[8] On July 7 and 9, 2015, ARC provided some of the requested information but there is still information required.

[9] On July 13, 2015, an ARC staff member contacted Agency staff and advised that the missing information would be provided by July 14, 2015. The Agency has not received this information.

[10] The Agency finds that the information relating to ARC’s operations is incomplete. Further, this information was provided by a company whose relationship to ARC is unknown. As a result, the Agency is unable to determine the nature and volume of operations and to assess the adequacy of the $2 million third party liability insurance coverage.

[11] Based on the information submitted, the Agency is not satisfied that ARC continues to maintain adequate liability insurance coverage for the rail operations authorized under its COF. Therefore, the Agency, pursuant to subsection 94(2) of the CTA, suspends the COF and orders ARC to immediately cease operations and to not resume operations until the Agency is satisfied that ARC meets the applicable insurance requirements.

[12] This Order shall be affixed to Certificate of Fitness No. 97002 and the suspension shall remain in effect until further order of the Agency.

[13] On June 18, 2015, the CTA was amended with respect to the liability and compensation regime for federally-regulated railway companies by establishing minimum insurance levels for railway companies. However, these new CTA provisions are not yet in force. ARC should be aware that once these provisions are in force, railway companies will need to obtain and maintain these new statutory minimum insurance levels.