Decision No. 25-R-1989

January 23, 1989

File No. 39310.290

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HISTORY OF THE APPLICATION

The above-referenced application was made on November 13, 1987 to the Canadian Transport Commission (hereinafter the Commission).

As the Commission had not rendered a decision on the application before January 1, 1988, the date on which the National Transportation Act, 1987, S.C. 1987, c.34 (hereinafter the NTA, 1987) came into force, by virtue of subsection 160(7) of the NTA, 1987, the application must now be considered by the National Transportation Agency (hereinafter the Agency).

HISTORY OF THE LINE

In 1945 the Government of the United States of America constructed the Stephenville line to serve the former United States Air Force Base at Harmon. It was operated and maintained by the Americans until 1965 when the air force base was abandoned. Order in Council P.C. 1966-1054 authorized the transference of the property to the Newfoundland Government. By Order in Council P.C. 154-169, the Newfoundland Government transferred to the Harmon Corporation the area formerly known as the "Harmon Airforce Base" and the land which included the railway right-of-way. On August 5, 1971, the Harmon Corporation sold all material relevant to the use of the right-of-way to Her Majesty the Queen in Right of Canada.

LOCATION OF THE LINE

The Stephenville Subdivision commences at White's Road (M. 0.00) at the junction with the Port Aux Basques Subdivision and terminates at Stephenville (M.7.00). Stephenville is the only station on the branch line.

A map of the area is attached as Appendix "A".

CONDITION OF THE TRACK

The track can be described as being in fair to poor condition. There is a mixture of rail in fair to good condition; condition of ties, the line and surfacing are all fair to poor. Ballast is in poor condition. The two steel bridges located on this track are in good condition.

DESCRIPTION OF THE SERVICE

Up until July 1, 1987, train service was provided by road switcher operating from Corner Brook to Stephenville and return on an "as required" basis with a maximum of two trips per week. Since July 1, 1987, with the termination of the Gulf Rail Car Ferry service, all traffic has been containerized to Stephenville and there has been no use of the rail line since that time.

CARLOAD TRAFFIC

Until July 1, 1987, carload traffic handled on the branch line consisted mainly of wood pulp, oats, barley, and wheat. The following table provides traffic statistics from 1985 to 1987.

TRAFFIC SUMMARY

CN STEPHENVILLE SUBDIVISION
WHITE'S ROAD (M.0 00) TO STEPHENVILLE (M.7.00)
(in carloads) 

	1986 In	1986 Out	1987 In	1987 Out	1988 In	1988 Out
Stephenville	565	35	338	-	156	-
Jeffrey's	-	-	12	-	-	-
Port Aux Basques	29	-	5	-	5	-
Total (In/Out)	594	34	355	-	161	-
Year Total	629	629	355	355	161	161

ACTUAL LOSSES

Where an application is opposed under section 161, the Agency in accordance with section 163 of the NTA, 1987 issues a determination of the actual loss incurred in the branch line operation.

The "Actual Losses" as determined by the Agency, pursuant to the provisions of the Railway Costing Regulations and section 157 of the NTA, 1987 for the years 1985 through 1987 are shown in the following Table:

Year	Total Costs $	Revenues $	Losses $	Actual Carloads	Loss per Carload $
1985	1,501,970	1,537,077	(35,107)	629	(56)
1986	1,152,191	991,505	160,686	355	453
1987	604,816	496,668	108,148	161	672

ALTERNATIVE TRANSPORTATION SERVICES

The Stephenville Subdivision runs parallel to Highway Nos. 460 and 490 which have no restrictions except for normal temporary interruptions caused by snow conditions. According to the Public Utilities Motor Carriers Division of the Government of Newfoundland, there are at least 120 highway carriers licensed to serve the Province. Weight restrictions may apply during spring thaw.

Carload container service is also available via highway from Corner Brook for full load traffic.

The June 1988 Federal-Provincial agreement returning to the Province control of the rail lines owned by the Province and the subsequent discontinuance of the rail service on the Port aux Basques Subdivision of the Terra Transport network has resulted in there being no further alternative rail services available in this region.

SUMMARY OF SUBMISSIONS

Canadian National

Canadian National by way of their application submitted that abandonment would not affect current users as most had switched to container services. Canadian National stated that most of the rail traffic formerly handled to Stephenville would continue to be handled in container by rail to Corner Brook and from Corner Brook to Stephenville via highway. Outbound traffic would be handled by highway to Corner Brook for furtherance by rail in containers. They also added that numerous highway carriers were licensed to serve many points within Newfoundland and the mainland. Canadian National stated that with the discontinuance of the Gulf Rail Car Ferry Service effective July, 1, 1987, carload traffic to and from Newfoundland was terminated.

Interventions Received

Submissions were received from two parties in response to the Canadian National notification it had applied to abandon the branch line.

1. K. Aylward

In a telex of December 7, 1987 to the Commission, Mr. Kevin Aylward, M.H.A. of the Stephenville District expressed his concerns regarding the proposed abandonment. Mr. Aylward stated that rail service into the Port Harmon and Stephenville industrial area should be retained for future traffic. He submitted that commercial activity in the Port Harmon area had been increasing and proper service should be provided to these businesses.

In addition, he stated that an industrial park may be constructed in the region within the next couple of years. Mr. Aylward was also concerned that replacing the rail freight service with trucks moving containers by highway was not cost-effective and would further burden the two highway routes of the area.

2. P. Gillis

In a December 15, 1987 letter to Canadian National which was copied to the Commission, Mr. Peter Gillis, President of the Stephenville Chamber of Commerce also raised objections to the abandonment. Mr. Gillis submitted that abandonment would be a step backward in the Chamber's attempts to develop the Stephenville and Port au Port area. He stated that the area had been recently designated as a Community Futures Area, and interested parties were getting ready to develop ore deposits in the Port au Port Peninsula.

Other Interventions

On November 25, 1988, the Agency issued a Notice advertising the application and inviting submissions and calling specifically for information from anyone who could provide the Agency with evidence that there was reasonable probability of the branch line becoming economic in the foreseeable future or that the operation of the branch line was required in the public interest. No replies were received in response to this notice.

MATTERS CONSIDERED

Section 164 of the NTA, 1987, requires the Agency to determine first if the line is economic or uneconomic, and if uneconomic, whether there is a reasonable probability of the branch line becoming economic in the foreseeable future. If the Agency determines that there is no reasonable probability of the branch line becoming economic in the foreseeable future, it shall be ordered abandoned. If the Agency determines that the branch line has a reasonable probability of becoming economic in the foreseeable future, it still must be ordered abandoned unless it is found to be required in the public interest.

For the prescribed financial years of 1985 to 1987, the Agency has determined that actual losses were as follows:

Year	Actual Loss $
1985	(35,107)
1986	160,686
1987	108,148

This determination was made pursuant to section 163 of the NTA, 1987, and was issued with the November 25, 1988 Notice advertising the application.

The Agency has determined on the basis of the evidence before it that the branch line was uneconomic in the two latest prescribed financial years of 1986 and 1987. In 1985, revenues exceeded total costs placing the line in an economic position. With the cessation of the Gulf Rail Car Ferry Service in July, 1987, no further carload traffic can be handled, therefore it is the finding of the Agency that the Stephenville Subdivision is uneconomic.

As the rail car ferry no longer operates to Newfoundland, the Agency also determines that the line will continue to be uneconomic in the foreseeable future.

FINDINGS AND CONCLUSIONS

Subsection 165(1) of the NTA, 1987 states that where the Agency determines that the branch line 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 be abandoned.

As the Agency has made these determinations after considering all the evidence before it, the Agency concludes that the CN Stephenville Subdivision from Mile 0.00 to Mile 7.00 must be abandoned.

An Order will be issued accordingly.