Decision No. 25-R-2000

January 14, 2000

File No. 8150/W3-1

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COMPLAINT

On September 17, 1999, Dave Gyles (hereinafter the complainant) filed a complaint with the Canadian Transportation Agency (hereinafter the Agency) respecting the transfer of a portion of the White Pass & Yukon Route Railway, between mileages 110.5 and 112.0, by the British Yukon Railway Company (hereinafter BYR) to the Government of Yukon and the City of Whitehorse. The complainant alleges that BYR did not follow the abandonment provisions of the National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.) (hereinafter the NTA, 1987) and that British Yukon Railway Company Limited (hereinafter BYR Limited) did not follow the transfer and discontinuance provisions of the Canada Transportation Act, S.C., 1996, c.10 (hereinafter the CTA). The complainant requests clarification as to the status of the line of railway between mileages 110.5 and 112.0 and whether the City of Whitehorse has the right to remove the tracks in question.

BYR Limited, a continuance of BYR, filed its answer to the complaint on October 22, 1999. On November 1, 1999, the complainant replied to BYR Limited's answer.

On October 22, 1999, the Government of Yukon filed an intervention in support of the complainant with the Agency. No reply to the intervention was received by the Agency.

PRELIMINARY MATTER

On November 9, 1999, the City of Whitehorse requested that the Agency grant it intervener status in the matter. Pursuant to section 47 of the National Transportation Agency General Rules, SOR/88-23 (hereinafter the General Rules), the deadline to file an intervention was November 1, 1999. The City of Whitehorse argued in support of its late intervention that the ultimate decision of the Agency may have a significant impact on the City of Whitehorse. By letter dated November 10, 1999, the parties were requested to file their comments on the motion of granting intervener status to the City of Whitehorse.

The Agency considered the comments of the parties, including the objections by the complainant, and in its Decision No. LET-R-302-1999 dated November 19, 1999, the Agency granted the City of Whitehorse intervener status stating that denying the City of Whitehorse's motion may cause it prejudice whereas the complainant would suffer no prejudice. Accordingly, the City of Whitehorse was requested to file its intervention by November 24, 1999. The complainant was allowed until November 29, 1999 to file its reply.

The City of Whitehorse filed its intervention on November 24, 1999. The City of Whitehorse opposes the complaint and requested that the complaint be made in compliance with section 42 of the General Rules. It further requested the particulars and description of the land mentioned in paragraph 3 of the complaint and an extension of the time limit to address the factual accuracy of paragraph 6 of BYR Limited's answer. The complainant's reply was received on November 30, 1999. In its Decision No. LET-R-316-1999 dated December 3, 1999, the Agency ruled that the complaint was in compliance with section 42 of the General Rules and denied the request for additional particulars and a description of the land as it would not assist the Agency in its deliberation of the matter. The Agency also denied the City of Whitehorse's request for an extension of time.

ISSUES

The issues to be addressed are:

1. Whether BYR followed the abandonment provisions of the NTA, 1987 and whether BYR Limited followed the transfer and discontinuance provisions of the CTA.
2. The status of the line of railway between mileages 110.5 and 112.0 and whether the City of Whitehorse has the right to remove the tracks in question.

FACTS

BYR is a corporation incorporated by Special Act of the Parliament of Canada and continued under the Canada Business Corporations Act, R.S.C., 1985, c. C-44, as BYR Canada Limited. BYR Canada Limited was acquired in 1997 by BYR Limited, a corporation incorporated under the Canada Business Corporations Act. BYR Limited is the owner of the portion of the White Pass & Yukon Route Railway located in the Yukon Territory from the British Columbia/Yukon border to mileage 110.5. The balance of the White Pass & Yukon Route Railway is owned by Pacific and Arctic Railway and Navigation Company and British Columbia-Yukon Railway Company. BYR Limited has provided historical information on BYR transactions in order to assist the Agency in its investigation.

BYR passenger service ceased to operate in 1982 and was removed from the Passenger Train Service Order R-38000 by the National Transportation Agency (hereinafter the NTA) in 1990. Freight service ceased in the same year and no application to abandon the freight operation of the railway line was ever filed.

In 1987 and 1991, BYR sold waterfront lands in the City of Whitehorse to the Government of Yukon. As a precondition to the 1991 sale, the northern terminus of the railway had to be relocated from mileage 110.7 to mileage 110.5.

On June 21, 1991, the NTA issued Order No. 1991-R-337 pursuant to section 123 and all relevant sections of the Railway Act, R.S.C., 1985, c. R-3, approving the relocation of the northern terminus of BYR from mileage 110.7 to mileage 110.5.

In December 1994, BYR sold additional land to the City of Whitehorse.

All the lands sold to the Government of Yukon and the City of Whitehorse were located north of the relocated northern terminus of the railway, mileage 110.5.

As a result of the continuation of BYR as BYR Canada Limited pursuant to the provisions of the Canada Business Corporations Act and the proposed sale of BYR Canada Limited's rail operating assets to BYR Limited, the Agency, in its Decision No. 666-R-1997 dated November 25, 1997, issued a new certificate of fitness. On November 28, 1997, BYR Canada Limited transferred all of its rail assets to BYR Limited including all of its rail lines and all of its operating interest in such lines.

POSITIONS OF THE PARTIES

The complainant claims that BYR did not give public notice of its intention to relocate the northern terminus in any local newspapers. According to BYR Limited, pursuant to section 123 of the Railway Act, public notices were placed in the Whitehorse Star and the Yukon News newspapers in the month of May 1991 advising of its intention to sell the Whitehorse rail depot and the waterfront property to the Government of Yukon and relocate the northern terminus of the railway from mileage 110.7 to mileage 110.5. Copies of the public notices were included in BYR Limited's answer received by the Agency on October 22, 1999.

The complainant further asserts that the northern terminal was never relocated and no railway station was ever built once the NTA issued Order No. 1991-R-337 approving the relocation of the northern terminus of BYR from mileage 110.7 to mileage 110.5. BYR Limited submits that after the order was issued, the northern terminus was moved to mileage 110.5.

The complainant also states that BYR contravened the Railway Act and did not "do a division 5, 3 year plan under the National Transportation Act" when it sold the lands to the Government of Yukon and the City of Whitehorse. BYR Limited counters that BYR complied with the Railway Act as evidenced by the issuance of the order and that to its knowledge, the NTA, 1987 did not require a three year plan as this was a new requirement brought forward with the promulgation in 1996 of the CTA.

The complainant submits that once again the railway company did not follow the transfer and discontinuance process under Division V of the CTA when it failed to indicate on the three year plan its intention to sell in 1997-1998 certain lots to private investors. The complainant further submits that the railway company's three year plans dated July 6, 1998 and June 1, 1999 indicated an incorrect mileage of 112.0. BYR Limited submits that it cannot identify the lots being referred to in the complaint but states that perhaps the complainant is referring to the lands that were transferred from BYR to BYR Limited in November 1997. According to BYR Limited, after the transfer BYR did not own any remaining railway related lands south of the north terminus of the railway, and BYR Limited has not transferred any lands in the Whitehorse area.

In its answer, BYR Limited admits that the three year plans dated July 6, 1998 and June 1, 1999 do contain an error as pointed out by the complainant. Therefore, as a result of the NTA Order No. 1991-R-337 approving the relocation of the northern terminus, the references to mileage 112.0 should read mileage 110.5. Amended three year plans were enclosed with its answer received by the Agency on October 22, 1999.

ANALYSIS AND FINDINGS

In order to address this complaint it is necessary to divide it into three areas:

1. the relocation of the terminus from mileage 110.7 to mileage 110.5 and the sale of the existing railway depot and railway right of way beyond mileage 110.5 to the Government of Yukon in 1991;
2. the sale of additional railway right of way north of mileage 110.5 to the City of Whitehorse in 1994; and
3. compliance with the Division V of the CTA and the sale of railway right of way to private investors in 1997 and 1998.

Legislation

In order to consider these issues, the legislative provisions that were in place at the time each of the issues occurred should be addressed. The legislations in place in 1991 and 1994 were the NTA, 1987 and the Railway Act. As the NTA, 1987 only came into effect on January 1, 1988, it was relatively new legislation. The provisions of the NTA, 1987 that would impact on this complaint were abandonment of operation of railway lines pursuant to sections 159 to 173. The Railway Act, in part, also remained in force and the explicit provisions in this legislation were deviations, changes and removal under section 123 and discontinuance of passenger train services under sections 264 to 270.

The CTA came into force on July 1, 1996 and with it both the NTA, 1987 and most of the provisions of the Railway Act were rescinded. With the promulgation of the CTA, the process that railway companies must follow in transferring or discontinuing railway lines was revised. Sections 140 to 146 of Division V of the CTA provide a specific procedure that railway companies must undertake before transferring or discontinuing a line. A railway company may cease operations on a railway line after it has prepared and made publicly available a three year plan of its intentions either to retain, transfer or discontinue any rail segment of its rail line network. If a railway company plans to discontinue the operation of a line, it must advertise to prospective buyers that the line is available and that the railway company will discontinue the operation if it is not transferred. If there is no buyer or if the railway company cannot reach agreement with a buyer, it must offer the line to the appropriate levels of government at no more than net salvage value. If it is still not transferred, the line may be discontinued following notice to the Agency.

The relocation of the terminus from mileage 110.7 to mileage 110.5 and the sale of the existing railway depot and railway right of way beyond mileage 110.5 to the Government of Yukon in 1991

The Agency notes that in 1991, in order to sell the waterfront land to the Government of Yukon, BYR applied to the NTA pursuant to section 123 of the Railway Act to relocate the terminus of the line from mileage 110.7 to mileage 110.5. Section 123 of the Railway Act allowed a railway company to deviate, change or alter its railway upon deposit of a plan, profile, and book of reference, after four weeks public notice and upon approval of the NTA. Where a residential, commercial or public building was located within one thousand feet of the proposed deviation, change or alteration, the railway company had to give four weeks public notice prior to its application to the NTA in accordance with subsection 143(6) of the Railway Act. Prior to the application, BYR advertised for four weeks in May 1991, both its intention to relocate the northern terminus of its railway line from mileage 110.7 to mileage 110.5 and to sell its Whitehorse rail depot and waterfront property to the Government of Yukon. On June 21, 1991, the NTA granted the relocation of the northern terminus by Order No. 1991-R-337. In that order, the NTA specifically noted that sufficient public notice had been given and that it had received no objections to the relocation of the terminus.

In order to properly address the complainant's concern that the northern terminal was never relocated, the Agency is of the opinion that the terms "terminus" and "terminal" need to be defined. Terminus is the actual end of the railway line and does not mean the actual location of the depot or terminal. A terminal is facilities provided by a railway company at a terminus. Therefore, once the NTA issued its order approving the relocation of the terminus from mileage 110.7 to mileage 110.5, it effectively set the northern limit of the line at mileage 110.5. The fact that the actual depot or terminal was never moved to the new location is not relevant. The NTA's considerations to allow the relocation of the terminus would have addressed the availability of continued service to the City of Whitehorse. The relocation of the terminus would not have affected BYR's capability to provide the level of service it provided prior to the relocation.

The Agency notes that the White Pass & Yukon Route Time Table No. 161 effective May 23, 1989 indicates that the yard limit starts at mileage 110.0, thereby establishing for the purpose of railway operations that, with the exception of mainline track to mileage 110.5, any railway trackage beyond mileage 110.0 is considered as yard track or other trackage auxiliary to a line of railway. The Agency is therefore of the opinion that since the relocation of the northern terminus to mileage 110.5, all trackage beyond that point was considered auxiliary track or yard track and therefore pursuant to subsection 159(2) of the NTA, 1987 was not subject to the abandonment provisions.

With respect to the complainant's argument that BYR did not "do a division 5, 3 year plan under the National Transportation Act", the Agency interprets this as a reference to Division V of the CTA. The provisions of the NTA, 1987 did not have a requirement to maintain a three year plan. Division V and the provisions requiring a three year plan only came into place with the promulgation of the CTA in 1996.

The sale of additional railway right of way north of mileage 110.5 to the City of Whitehorse in 1994

With respect to the sale of land or railway right of way beyond mileage 110.5, the right of way beyond that point was either yard track or auxiliary trackage which pursuant to subsection 159(2) of the NTA, 1987 was excluded from the abandonment provisions. Therefore any sale of this right of way to the City of Whitehorse in 1994 would be a private business matter and outside of the NTA's jurisdiction.

Compliance with Division V of the CTA and the sale of railway right of way to private investors in 1997 and 1998

Division V of the CTA requires that a railway company maintain a plan indicating whether it intends to continue to operate the railway line or whether it intends to transfer or discontinue the line within three years. In its answer, BYR Limited filed a three year plan dated August 29, 1997 which reflected BYR's intention to sell all of its rail assets to BYR Limited. The sale was carried out on November 28, 1997.

The complainant notes, in his reply dated September 9, 1999, that the July 6, 1998 and June 1, 1999 three year plans indicate that BYR Limited intends to operate occasional work trains between the BC/Yukon border (mileage 52.58) and Whitehorse, Yukon (mileage 112.0). BYR Limited noted in its answer that these three year plans did contain an error in respect of the Whitehorse mileage and should have read mileage 110.5 instead of mileage 112.0. BYR Limited included with its answer revised 3 year plans.

As noted above, the CTA requires that a railway company maintain a plan indicating its intention in respect of its railway lines. BYR Limited indicated in the 1998 and 1999 three year plans its intention to continue to operate the railway line. BYR Limited should not have indicated mileage 112.0 in either of these 3 year plans because BYR received approval in 1991 from the NTA to relocate the northern terminus to mileage 110.5. During these proceedings, BYR correctly amended its three year plans to reflect the correct mileage for the railway line.

Railway land north of the terminus at mileage 110.5 would be subject to the legislative provisions of the CTA. However, as this land is north of the terminus, it would not be considered part of the railway line, but rather auxiliary or yard trackage. Section 140 of the CTA, like subsection 159(2) of the NTA, 1987 before it, excludes auxiliary and yard track from the transfer and discontinuance provisions. Therefore, the sale of the land to private investors in 1997 and 1998 or removal of trackage beyond mileage 110.5 would not fall under the jurisdiction of the Agency.

CONCLUSION

The Agency finds that BYR and BYR Limited complied with the relevant provisions of the Railway Act, the NTA, 1987 and the CTA and, therefore, hereby dismisses the complaint.

In light of the Agency's finding on the status of the railway line beyond mileage 110.5, the Agency is of the opinion that in respect of the CTA there is nothing that prevents the City of Whitehorse from removing the tracks in question.