Decision No. 221-R-1990

April 23, 1990

April 23, 1990

IN THE MATTER OF an application by the Canadian National Railway Company for authority to abandon the operation of a portion of the Meaford Subdivision, from a point near Barrie (mileage 1.09) to Collingwood (mileage 31.40), including the Penetang and Pretty River Spurs, in the Province of Ontario; and

IN THE MATTER OF motions filed by the Collingwood Rail Retainment Committee and the Town of Collingwood and by Canadian Mist Distillers Limited to compel production of certain documents by the Canadian National Railway Company.

File No. T 6115/538


BACKGROUND

On November 28, 1989, the Canadian National Railway Company (hereinafter CN) filed an application for authority to abandon the operation of a portion of the Meaford Subdivision and associated spur lines mentioned above. The Collingwood Rail Retainment Committee and the Town of Collingwood (hereinafter Collingwood) and the Canadian Mist Distillers Limited (hereinafter Canadian Mist) filed notices of motion, on January 23 and February 1, 1990, respectively, to compel production of certain documents by CN related to the calculation of actual losses as contained in CN's "Statement of Traffic, Revenues and Costs" dated November, 1989. On February 8, 1990, CN filed answers to the notices of motion opposing the requested production of documents.

The National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.) (hereinafter the NTA, 1987), provides that an abandonment application will be treated in several steps. An application may be opposed within sixty (60) days thereof on grounds related to the matters to be considered under section 167 of the NTA, 1987. In the absence of such opposition, the National Transportation Agency (hereinafter the Agency) shall order that the operation of the branch line be abandoned pursuant to section 162 of the NTA, 1987. If such an opposition is filed, the Agency shall then determine the amount of actual loss, if any, attributable to the branch line in each of the prescribed financial years and cause such public notice of the determination and of the principal factors applied in making the determination. In accordance with section 164 of the NTA, 1987, the Agency shall then determine whether the branch line is economic or uneconomic and whether there is a reasonable probability of its becoming economic in the foreseeable future, if it is uneconomic. In accordance with subsection 165(1) of the NTA, 1987, where the Agency determines that a branch line is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future, the Agency shall order the abandonment of the operation of the branch line. In accordance with section 166 of the NTA, 1987, where the Agency determines that a branch line is economic or that, although it is uneconomic, there is a reasonable probability of its becoming economic in the foreseeable future, the Agency shall order that the operation of the branch line be abandoned, unless it determines that the operation of the branch line is required in the public interest. In its determination of whether the operation of the branch line is required in the public interest, the Agency shall consider the factors provided for in section 167 of the NTA, 1987, one of which being the actual losses incurred in the operation of the branch line.

A number of interventions have been filed in opposition to CN's application including those of Collingwood and Canadian Mist. The Agency has yet to make its determination of the amount of actual loss and both of the above parties have requested the production of CN's costing documents at this time to enable them to make meaningful oppositions to the abandonment application. Collingwood requested that, in the event that its motion was granted in whole or in part, any actual loss determination made by the Agency before it has had a full and meaningful opportunity to make its submission thereto be expressly an interim determination. Both parties have indicated that they are prepared to sign undertakings that they will not reveal any confidential information which may be disclosed to them.

CN opposes the production of the documents on the grounds that they are not relevant nor needed by Collingwood or Canadian Mist in order to present meaningful oppositions to the abandonment application, that all of the documents requested are confidential, and that their disclosure would result in specific direct harm to CN.

ISSUES

In Decision No. 193-R-1988 dated August 1, 1988, the Agency set forth the relevant issues considered in dealing with a request for disclosure of detailed costing information by Bowater-Mersey Paper Company Ltd. (hereinafter Bowater) in respect of CN's application to abandon the operation of a portion of the Chester Subdivision. The two motions presently before the Agency raise similar issues to those raised by Bowater in its motion.

CN has claimed, pursuant to section 11 of the National Transportation Agency General Rules, SOR/88-23 (hereinafter the NTA General Rules), that all of the documents requested are confidential and that their disclosure would result in specific direct harm to CN.

Where such a claim for confidentiality under section 11 of the NTA General Rules has been made, the first issue the Agency has to determine is whether or not the documents sought are relevant. The Agency, in making this determination, will, among other matters, consider whether the Agency uses the documents in its determination of the amount of actual loss or in its other above-mentioned determinations in accordance with the NTA, 1987. In the case where the Agency determines that a document is not relevant to the matters at hand, it will not order its disclosure.

Where the Agency determines that a document is relevant, the second issue it has to determine is whether or not its disclosure would result in specific direct harm for the party making the claim for confidentiality. This latter determination relies on the party claiming confidentiality to submit, in accordance with the provisions of subsection 11.(2) of the NTA General Rules, details as to the nature and extent of the harm if a document were made public. The Agency must then determine whether specific direct harm is likely to result from disclosure of the document and, in the event that specific direct harm is shown, whether it is sufficient to outweigh the public interest in disclosing the document.

Subsection 11.(11) of the NTA General Rules states:

11.(11) Where the Agency is of the opinion that, based on all the material before it, a document is relevant to the proceeding in respect of which its disclosure is sought and no specific direct harm would be likely to result from disclosure, or any such specific direct harm shown is not sufficient to outweigh the public interest in disclosing the document, the Agency shall place the document on the public record.

Subsection 11.(13) of the NTA General Rules states:

11.(13) Where the Agency is of the opinion that, based on all the material before it, the specific direct harm likely to result from public disclosure of a document justifies a claim for confidentiality, the Agency may

(a) order that the document not be placed on the public record but be placed in a confidential file;

(b) order that an abridged version or part of the document be placed on the public record; or

(c) order that the document be disclosed at a hearing to be conducted in camera.

A document placed on the public record is accessible to anybody upon request; however, a document placed on a confidential file is not available to anyone outside the Agency unless it is ordered disclosed by the Agency. In the case of confidential information which has been ordered disclosed, the Agency may require that parties in receipt of such confidential information undertake not to disclose it.

FINDINGS

Collingwood and Canadian Mist have both requested the production of the following documents:

1. For the years 1986, 1987 and 1988, for the on-line portion of costs, all working papers for: (a) the amount of municipal taxes paid; (b) maintenance of way and structure costs, including, for the labour portion, the number of employees maintaining the Meaford Subdivision (from mileage 1.09 to mileage 31.40) in each year; (c) cost of capital on way and structures, specifying the cost of capital rate utilized in each year, whether such cost of capital is calculated on net book investment or net salvage value of the relevant assets and, if calculated on the net book value, with respect to each of the relevant property accounts, the net-to-gross ratios utilized in each year; (d) depreciation on way and structures; (e) the amount of crew wages, specifying for each year, whether crew wages are based upon the use of three or four man train crews or a mixture of both, a breakdown of costs of the fourth man, including employee benefits and overheads if such fourth man costs are included in whole or in part, such that it will be possible to identify the crew wages associated with the operation of the Meaford Subdivision had three man train crews been utilized in each year; (f) fuel; (g) service units and other specific cost items for Category 1.

The CN working papers for items a), c), d), and g) are considered relevant as the Agency uses them in making its determination of the amount of actual loss. The Agency is of the opinion that the nature and extent of the specific direct harm shown by CN is not sufficient to outweigh the public interest in disclosing the working papers for the above-indicated items and, therefore, the Agency orders CN to disclose the working papers for those items. The said documents will be placed on the public record.

With respect to item b), the Agency determines that the maintenance of way and structure costs are relevant and is of the opinion that the nature and extent of the specific direct harm shown by CN is not sufficient to outweigh the public interest in disclosing this information. However, the Agency does not consider the number of employees maintaining the Meaford Subdivision (from mileage 1.09 to mileage 31.40) in each year to be relevant to the proceedings. Therefore, the Agency orders CN to disclose only the working papers which support the maintenance of way and structure costs. These documents will be placed on the public record.

Insofar as item e) is concerned, the amount of on-line crew wages and the number of three and four man train crews utilized in the operation of trains on the subject portion of the Subdivision in each of the years 1986, 1987 and 1988 are considered by the Agency to be relevant. The Agency is of the opinion that the nature and extent of the specific direct harm shown by CN is not sufficient to outweigh the public interest in disclosing the working papers which support the amount claimed for on-line crew wages. Consequently, CN is ordered to provide these documents to the parties. These documents will be placed on the public record. However, the Agency does not consider that the parties have established the relevancy of such specifics as, the breakdown of costs of the fourth man, including employee benefits and overheads if such fourth man costs are included in whole or in part, such that it will be possible to identify the crew wages associated with the operation of the Meaford Subdivision had three man train crews been utilized in each year. Therefore, the Agency will not order CN to disclose this information.

With regard to item f), the Agency considers only the total amount of on-line fuel and the working papers which support that calculation to be relevant to the proceedings. The Agency is of the opinion that the nature and extent of the specific direct harm shown by CN is not sufficient to outweigh the public interest in disclosing this information. Therefore the Agency orders CN to disclose only the total amount of on-line fuel and the working papers which support that calculation. These documents will placed on the public record.

Furthermore, although the disclosure of detailed on-line unit cost information was not requested, the Agency is of the opinion that the disclosure of such information would likely cause CN specific direct harm and justifies treating such information confidentially. Therefore, the working papers and other documents ordered to be disclosed shall exclude unit costs.

2. For the years 1986, 1987 and 1988, for the off-line portion of costs, all working papers for: (a) service units and cost totals for Categories 2, 3 and 4 (excluding both unit costs and individual cost items); (b) crew wages, indicating whether off-line costs are based upon the use of three or four man train crews, or a mixture of both, a breakdown of the costs of the fourth man, including employee benefits and overheads such that it will be possible to identify the off-line crew costs associated with the Meaford Subdivision traffic based upon the use of three man train crews in each year.

The CN working papers for item a) are considered relevant as the Agency uses them in making its determination of the amount of actual loss. The Agency is of the opinion that CN has shown that specific direct harm is likely to result from public disclosure of these documents and justifies the claim for confidentiality. CN is ordered to provide these documents to the parties on condition that the parties undertake in writing to the Agency and CN that they will not disclose these documents. These documents will be placed on a confidential file.

The unit costs and the individual cost items under each category were explicitly not requested and therefore they will not be ordered disclosed.

With regard to item b), the CN working papers for total off-line crew wages and the proportion of the number of three and four man train crews utilized in the operation of CN's system network are considered relevant. The Agency is of the opinion that CN has shown that specific direct harm is likely to result from public disclosure of these documents and justifies the claim for confidentiality. CN is ordered to provide these documents exclusive of unit costs to the parties on condition that the parties undertake in writing to the Agency and CN that they will not disclose these documents. These documents will be place on a confidential file.

Insofar as number of three and four man train crews utilized in the operation of CN's system network is concerned, the Agency is of the opinion that the nature and extent of the specific direct harm shown by CN is not sufficient to outweigh the public interest in disclosing this information. Therefore, the Agency orders CN to disclose this information which will be placed on the public record.

However, the relevancy of the requested detailed breakdown of off-line crew wages has not been established and, therefore, the Agency will not order CN to disclose that information.

3. For the years 1986, 1987 and 1988, details of railway operations at and about Barrie, e.g. switching at Barrie, service on the Meaford Subdivision (from mileage 0.0 to mileage 1.09) and details and basis of any changes to those operations should the Meaford Subdivision be abandoned.

The Agency is of the view that the parties have not satisfactorily established the relevancy of these documents. Therefore, the Agency will not order CN to disclose this information.

4. Make up and base of the train crews used in train services on the Meaford Subdivision, including specifics of contractual commitments (mileage guarantees, etc.).

The Agency is of the view that the documents pertaining to the make up and base of the train crews used in train services on the portion of the Meaford Subdivision proposed to be abandoned are relevant to the proceedings as they relate to the development of on-line crew wages in the determination of the amount of actual loss for the years 1986, 1987 and 1988. The Agency is of the opinion that the nature and extent of the specific direct harm shown by CN is not sufficient to outweigh the public interest in disclosing this information. Therefore, the Agency orders CN to disclose this information to the parties. This information will be placed on the public record.

With respect to the specifics of contractual commitments (mileage guarantees, etc.), the Agency does not consider this information relevant and will not order CN to disclose it.

5. Make up, base and contractual commitments for train crews who would be used to provide train services on lines remaining in the Barrie area if the Meaford Subdivision was abandoned.

The Agency is of the view that the relevancy of this information has not been satisfactorily established by the parties. Therefore, the Agency will not order CN to disclose this information.

6. A recalculation based upon the 1989 operations, assuming such operations were conducted on a two rather than a five day per week basis and with three man train crews, both on-line and off-line.

This is essentially a request for CN to provide a 1989 statement of costs, revenues and traffic. The prescribed financial years, pursuant to section 163 of the NTA, 1987 and established in accordance with subsection 8(1) of the Agency's Railway Lines Abandonment Regulations, SOR/88-25, at the time the application was filed were 1986, 1987 and 1988. The information requested for the year 1989 has not as yet been filed by CN with the Agency.

In addition to the above six requests, Canadian Mist requested the production of the following documents:

7. For the years 1986, 1987, 1988 and 1989, documents relating to the apportionment of the joint through rate between CN and Conrail or other U.S. connecting railway companies for the movement of alcohol from Collingwood, Ontario to Louisville, Kentucky, in owner tank cars, having a capacity of not less than 2,000 gallon, in respect of all tariffs during these years.

The Agency is of the view that this information is relevant but that disclosure of CN revenue divisions on interline traffic is likely to result in specific direct harm to CN relative to its freight rate structure to other alcohol producers and to commercial relationships with U.S. rail carriers. Accordingly, the Agency will not order CN to disclose this information.

However, the Agency wishes to assure itself that the revenues generated from Canadian Mist's traffic on the Meaford Subdivision are attributed to the line by CN in a reasonable and accurate manner. Accordingly, appropriately qualified Agency staff will be directed to meet with CN to examine its records and such other confidential data such as specific tonnage routing, actual freight rate divisions for interline movements and any other relevant information necessary to assess CN freight revenues with respect to Canadian Mist's traffic on the Meaford Subdivision. Staff, with such assistance from CN as is necessary, will independently assess the appropriate freight revenues attributable to all traffic on the Meaford Subdivision, including that of Canadian Mist, for the years 1986, 1987 and 1988 and these findings will be reflected in the total revenue contained in the Agency's final determination of the amount of actual loss.

8. From mileage 0.00 to mileage 1.09 of the Meaford Subdivision, for the years 1986 to 1989 inclusively, the names of CN's freight customers, car loadings, tons, revenue and commodity for that portion of the Subdivision, as well as costs attributable thereto.

The Agency finds that this information is not relevant as it does not relate to the premise upon which the Notice of Motion is based which is the production of documents and answers to interrogatories related to the calculation of actual losses as contained in CN's "Statement of Traffic, Revenues and Costs" dated November, 1989. Therefore, the Agency will not order CN to disclose this information.

CONCLUSIONS

For the above-mentioned reasons, the Agency hereby orders CN to disclose the information, as previously indicated.

The documents that the Agency has ordered CN to disclose shall be submitted to Mr. Marshall Rothstein, Counsel for Collingwood, and to Mr. Francois Lemieux, Counsel for Canadian Mist, no later than two (2) weeks from the date of this Decision provided Messrs. Rothstein and Lemieux and their consultants, Messrs. James Barnum Best and Franklin John Trotter, respectively, have, by that date, filed with the Agency and copied to CN undertakings, in the form attached, that they will not disclose any of the documents identified above as requiring confidential treatment.

CN shall also file a copy of the disclosed information with the Agency.

The Agency is cognizant of the amount of work involved in the preparation of the package of documents to be disclosed for the three prescribed financial years. Therefore, the Agency encourages the parties to negotiate whether the disclosure of information in respect of only one of the three prescribed financial years would satisfy each of the interveners' requirements for such information.

There is one other matter that the Agency wishes to address in this Decision. CN's answer to the Notices of Motion raises the issue of the specific direct harm to CN which would occur by the disclosure of service units in conjunction with the Agency's standard statement of determined actual loss for the prescribed financial years which contains the individual cost items under Categories 1, 2, 3 and 4. CN contends that the disclosure of such information would permit the mathematical derivation of certain unit costs. Historically, unit costs have not been allowed to be publicly disclosed as their disclosure would cause specific direct harm to the railway company.

In Order No. 1989-R-56 dated March 22, 1989, the Agency dealt with a similar situation in respect of CN's application to abandon a portion of the Chester Subdivision concerning the disclosure of costing information and the format of its statement of the amount of actual loss pursuant to section 163 of the NTA, 1987. In recognition of the potential harm to CN, the Agency limited its statement of the amount of actual loss to show only the cost category totals, thereby eliminating the potential derivation of certain unit costs. In the case at bar, the Agency is proceeding in a similar manner.

Accordingly, the Agency will issue an interim determination of the amount of actual loss in an abridged format in the near future. The deadline date for the filing of submissions in response to the Notice of Actual Loss will be May 22, 1990.

Collingwood and Canadian Mist will have until May 22, 1990 to file their responses which shall be served on CN and copied to the Agency, after which the pleadings will close.

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