Decision No. 274-R-2015

INTRODUCTION

[1] The City of Surrey (City) filed an application with the Canadian Transportation Agency (Agency) for authority to construct and maintain a utility crossing consisting of a storm sewer under and across the track of Southern Railway of British Columbia Limited (SRY) at mileage 3.78 of SRY’s Fraser Valley Subdivision, in the city of Surrey, in the province of British Columbia.

BACKGROUND

[2] The storm sewer crossing that is the subject of this application (storm sewer) will form part of the Delta Creek Diversion Project (Diversion Project) which is intended to divert peak rainfall event storm water from Delta Creek into Scott Creek to reduce erosion in the Delta Creek. Delta Creek runs closely adjacent to SRY’s railway track, and flows from south to north, more or less in the same direction as the railway line.

[3] In addition to the storm sewer crossing requested in this application, the City has also filed applications with the Agency for authority to construct and maintain another storm sewer crossing under and across the track of SRY at mileage 3.93, as well as a storm water diversion system under and adjacent to the track of SRY at mileage 3.95, within SRY’s Fraser Valley Subdivision in Surrey, all of which are part of the Diversion Project.

[4] The storm sewer will be constructed on, under, through and within 97 Avenue and 118B Street in Surrey. It is described as a 900-millimetre diameter, a 13.5-millimetre wall thickness welded steel pipe, as shown on the drawings dated November 26, 2014 attached as Schedules A and B to the application.

[5] Both parties agree that the storm sewer is a utility crossing as defined in section 100 of the Canada Transportation Act (CTA). Furthermore, no issues have been raised with respect to the location, design and method of construction of the proposed storm sewer crossing. The City states that the storm sewer will have no negative impact on SRY’s railway operations and railway line, and should have no negative impact going forward. Furthermore, the City submits that it will assume the construction and maintenance costs.

[6] The parties were unsuccessful in negotiating an agreement to construct the proposed utility crossing. The issues in contention are:

1. The duration of the utility crossing agreement;
2. Terms in the agreement regarding the removal or alteration of the storm sewer; and,
3. The imposition of liability, release and indemnity provisions.

[7] The City therefore seeks an order authorizing it to construct and maintain, at its expense, the storm sewer.

PRELIMINARY MATTER

[8] SRY, in its answer to the application, submits that the Agency should dismiss this storm sewer crossing application as well as the storm sewer crossing application at mileage 3.93 (storm sewer crossings) because, as summarized by SRY in its answer to the application:

1. Surrey has no need for the storm sewer crossings until arrangements for the use of BC Hydro lands for the storm water diversion structures are in place; and,
2. It is not possible to ensure that the terms and conditions of the storm sewer crossings are consistent with those respecting the storm water diversion structures.

[9] The City argues that subsection 101(3) of the CTA is “not a hearing of necessity” and, in any event, it has clearly demonstrated the necessity and purpose of the storm sewer and utility crossing contemplated by the application. The City asserts that whether it has obtained an approval or agreement from BC Hydro on a different crossing is irrelevant for the purposes of the Agency’s determination in the present matter.

[10] In a February 27, 2015 request to the Agency, SRY requests, among other things, that the three utility crossing applications be heard together for each of mileages 3.78, 3.93 and 3.95. In that submission, SRY states that:

Surrey will suffer no delay, cost or prejudice if SRY is not required to Answer the two storm sewer crossing applications until it is required to answer the diversion structures application. Surrey cannot proceed with the project until either it has an agreement with BC Hydro or an order is granted against BC Hydro on the diversion structures (assuming but not admitting that a binding order can be made by the Agency against BC Hydro).

[11] The Agency finds that the arguments in support of SRY’s request to dismiss the storm sewer applications as premature, as summarized by SRY at point a) of its answer to the application, are substantively the same as the above arguments supporting its request that the three applications be heard together; i.e., that without approval of the diversion structure application, the storm sewer crossings are unnecessary.

[12] The Agency, in its Decision No. LET-R-21-2015 dated April 8, 2015, dismissed SRY’s request to have the three applications heard together in the interest of an expeditious determination in dispute proceedings for the storm sewer applications, and based on several factors that distinguished the storm sewer applications from the diversion structures application. The Agency finds that these same considerations apply to SRY’s request that the storm sewer applications be dismissed as unnecessary.

[13] With respect to the arguments as summarized by SRY at point b) of its answer to the application, SRY also states, in part, that:

[…] the three components of the project, being the two storm sewer crossings and the storm water diversion structures, should be subject to identical terms and conditions respecting liability, alterations and termination. It is not possible to determine those terms while the possibility of Surrey’s use of BC Hydro lands remains unsettled.

[…]

To apply different terms to the proposed storm sewer crossings, than those which ultimately may be put in place respecting the proposed storm water diversion structures, is not justifiable or practical, and will inevitably lead to complications in assessing the responsibilities of the parties in the future […]

[14] The Agency finds that SRY has not demonstrated, on a balance of probabilities, that the sequence in which the Agency issues decisions on the three utility crossing applications (which together form the Diversion Project) will render impossible SRY’s wish to ensure that the “terms and conditions of the storm sewer crossings are consistent with those respecting the storm water diversion structures.” The Agency also finds that SRY has provided no evidence to support its position that the application of different terms to the crossings “is not justifiable or practical” nor why this would lead to “complications in assessing the responsibilities of the parties in the future.”

[15] In light of the foregoing, and in the interest of the expeditious determination of dispute proceedings for the storm sewer applications, the Agency dismisses SRY’s request.

ISSUES

1. Should the Agency authorize the construction and maintenance of the utility crossing?
2. If the Agency authorizes the crossing, what terms and conditions, if any, should be included?

THE LAW

Jurisdiction

[16] The Province of British Columbia (Province), by its Railway Safety Adopted Provisions Regulation, adopted sections 99 to 103 of the CTA, with the exception of subsection 101(4). Then, pursuant to section 157.1 of the CTA, the Province entered into an administrative agreement dated September 11, 2006, where the administration of these provisions has been delegated from the Province to the Agency (Agreement). As a result, disputes involving crossings of railways under the jurisdiction of the Province are adjudicated by the Agency.

[17] The railway line currently operated by SRY has been in continuous operation for railway purposes since 1911. It was previously operated for many years by British Columbia Hydro and Power Corporation (BC Hydro). SRY states that, in 1988, BC Hydro ceased to operate the railway and granted SRY a licence to use a portion of BC Hydroʼs lands for the purpose of SRY’s railway operations. BC Hydro apparently retained fee simple ownership of its lands between the Fraser River and Chilliwack on which the railway tracks now operated by SRY are located.

[18] SRY is a railway undertaking subject to the legislative jurisdiction of the Province and the Agency therefore has jurisdiction over SRY and over this application within the scope of the Agreement. Neither the city nor SRY dispute the jurisdiction of the Agency to determine this application.

Relevant statutory provision

[19] Subsection 101(3) of the CTA states:

If a person is unsuccessful in negotiating an agreement or amendment mentioned in subsection (1), the Agency may, on application, authorize the construction of a suitable road crossing, utility crossing or related work, or specifying who shall maintain the crossing.

ISSUE 1: SHOULD THE AGENCY AUTHORIZE THE CONSTRUCTION AND MAINTENANCE OF THE UTILITY CROSSING?

[20] The parties tried and were not successful in negotiating an agreement relating to the construction and maintenance of the utility crossing. Therefore, pursuant to subsection 101(3) of the CTA, the City seeks an order from the Agency to construct and maintain, at the City’s expense, the utility crossing that is the subject of this application.

[21] The Federal Court of Appeal, in Fafard v. Canadian National Railway Company, [2003] FCA 243, concluded that “[a] suitable crossing is a crossing that is adequate and appropriate for the purposes for which it was intended and installed.”

[22] The Agency notes the parties’ agreement and finds that this application is in relation to a utility crossing as defined in section 100 of the CTA.

[23] The Agency notes that the storm sewer is to be constructed within the road allowance of 118B Street, for which the City is senior, and furthermore, that the railway track crosses the road allowance at mileages 3.78 and 3.93.

[24] The purpose for which the utility crossing is intended is to divert peak rainfall event storm water from Delta Creek into Scott Creek, to reduce erosion in Delta Creek, which runs adjacent to the railway tracks.

[25] Detailed engineering drawings were submitted with the application. The Agency notes that there is no disagreement between the parties with respect to the location, design and method of construction of the utility crossing, or compliance with the applicable standards.

[26] SRY raises no engineering or safety concerns regarding the utility crossing, nor does it raise any concerns that the storm sewer will materially interfere with its operations.

[27] In light of the foregoing, the Agency finds that the storm sewer at mileage 3.78 of SRY’s Fraser Valley Subdivision is adequate and appropriate, and therefore suitable for the purposes for which it is intended. The Agency therefore authorizes the City to construct and maintain the utility crossing at its own expense.

[28] The Agency must next consider whether terms and conditions should be included with the Agency’s authorization.

ISSUE 2: WHAT TERMS AND CONDITIONS, IF ANY, SHOULD BE INCLUDED?

[29] With respect to the issues in contention, SRY submits that the City has offered no rationale to support its argument that those terms should be changed from those that the City was prepared to accept in the past. To support its position, SRY provides examples of agreements that SRY and its predecessor, BC Hydro, entered into in the past.

[30] The City maintains that any actual or alleged past agreements are irrelevant for the purpose of the Agency’s consideration of this application.

[31] The Agency notes, as mentioned above, that several agreements were negotiated earlier on between the parties, without the Agency’s intervention.

The duration of the utility crossing agreement

[32] The City is seeking a perpetual agreement with an indefinite term that may only be varied by order of the Agency or by agreement of both parties. The City submits that SRY is proposing that it may unilaterally terminate the agreement on three months’ notice. The City refers to Decision No. 151-R-2013, where the Agency found that, consistent with precedents, any decision authorizing the construction of a utility crossing remains in effect until the Agency rescinds or amends the decision.

[33] SRY argues that the Agency should not grant the crossing for an indefinite term. SRY claims that it would be inconsistent with past practices between the parties, entail future expense and uncertainty to the parties and would not address removal obligations in instances of abandoned railways or storm sewer crossings. SRY maintains that, at a minimum, the order should provide that, in the event that the crossing is abandoned by the City, the City shall restore the lands to their original state or such state as shall be agreeable to both parties, within 90 days, unless greater time is agreed to by both parties acting reasonably.

[34] In Decision No. 90-R-2007, the Agency found:

A decision issued by the Agency authorizing the construction of a utility crossing at a specific location remains in effect until such time as the decision is amended or rescinded by the Agency or its successor.

[35] Pursuant to section 32 of the CTA, the Agency has the discretion to review, rescind or vary any decision or order if there has been a change in the facts or circumstances pertaining to the decision or order.

[36] Consistent with the above, as well as with the most recent decision on this issue Decision No. 213-R-2015, the Agency finds that a decision authorizing a crossing remains in effect unless the decision is amended or rescinded by the Agency.

Terms in the agreement on the removal or alteration of the storm sewer

[37] The City submits that the removal and alteration provisions proposed by SRY are objectionable because, among other reasons, the City is not prepared to agree to remove or alter the storm sewer or restore the lands to its original condition at SRY’s sole discretion. The City is of the opinion that no terms regarding the removal or alteration of the storm sewer should be imposed on the City.

[38] SRY points out that the City has in the past accepted terms and conditions that recognize that SRY should be protected from the added expense that may be required to alter the storm sewer crossing due to reasonable railway requirements. SRY states that this is a financial risk to railway operations that would not exist but for the construction of the storm sewer crossing. SRY adds that leaving such determinations to future Agency decisions adds considerable expense and uncertainty that could be avoided by determining the matter now. SRY maintains that any Agency order should provide that the removal or alteration of the crossing for any reason should be at the expense of the City.

[39] The City submits that SRY provides no evidence that failing to address the issues of removal and alteration adds considerable expense and uncertainty. The City submits that these determinations are properly made in the context of an application to amend or vary an Agency order, and that such an approach is consistent with past Agency decisions.

[40] The Agency finds, consistent with its precedents (e.g. Decision No. 151-R-2013), that a decision authorizing the construction of a utility crossing at a specific location is final and binding on the parties, unless it is reviewed or rescinded by the Agency. As such, the Agency will not impose any terms and conditions respecting the removal or alteration of the storm sewer.

The imposition of liability, release and indemnity provisions

[41] The City submits that liability, release and indemnity provisions should not be imposed on it because the utility crossing occurs on the Highway Lands, which are owned by the City. Furthermore, the City submits that neither SRY nor BC Hydro have authority or approval to operate the railway line on and through the Highway Lands.

[42] The City states that if the Agency is inclined to impose liability, release and indemnity provisions, the City should be subject to those limitations and immunities available to it under any statute or common law, including, but not limited to, section 288 of the Local Government Act, R.S.B.C., 1996, c. 323, as amended, and in accordance with previous Agency decisions.

[43] SRY submits that recent Agency utility crossing decisions addressing liability contain language that closely follow the liability language contained in the repealed Pipe Crossings Under Railways (No. E-10) Regulations (Pipe Crossings Under Railway Regulations):

The municipality shall, at all times, indemnify the railway company across or along whose railways the utility crossing is constructed, from and against all loss, cost, damage, injury and expense to which that railway company may be put by reason of any injury to persons or damage to property caused by the design, construction, maintenance or operation of the utility crossing as well as against any damage or injury resulting from imprudence, neglect, want of skill of the employees or agents of the municipality in connection with the design, construction, maintenance or operation of the utility crossing unless the cause of such loss, cost, damage, injury or expense can be traced elsewhere.

[44] SRY maintains that any order issued by the Agency respecting liability between it and the City should contain the same terms as those which have been accepted by the City in the past. If, however, the Agency should prefer to adopt the language it has used in recent rulings, SRY submits that a modification of that language is necessary to address the issue of third party liability. In the latter instance, SRY requests that the wording “unless the cause of such loss, cost, damage, injury or expense can be traced elsewhere”, be replaced with “unless the cause of such loss, cost, damage, injury or expense can be traced to the railway.” SRY submits that the substituted wording would place the risk of liability for third party damage (for example, damage caused by sabotage by vandals to municipal infrastructure) with the infrastructure owner, except where the damage was caused by the railway company itself. SRY asserts that it should be protected from financial losses due to third party interference with the proposed utility crossing.

[45] SRY submits that the City’s position that no liability provisions be imposed due to SRY’s alleged lack of authority to cross the Highway Lands is irrelevant to the issue of the parties’ rights and obligations respecting the proposed storm sewer crossing. SRY points out that there is no Agency utility crossing precedent that determines liability based on ownership of the right‑of‑way.

[46] Regarding the City’s argument that it is entitled to the limitation of liability found in section 288 of the Local Government Act, SRY submits that there is limited jurisprudence available to assess the level of protection that section 288 of the Local Government Act may provide to a Municipality in the context of contractual or Agency-ordered indemnity. SRY argues that a Municipality should not be able to agree to indemnify a party for liability and then later, in connection with the enforcement of the indemnity, maintain that it was not obligated to pay by virtue of section 288 of the Local Government Act. SRY asserts that, in instances where the Agency has granted an indemnity, it is ultimately up to the courts of British Columbia to decide whether the City can benefit from section 288 of the Local Government Act.

[47] The City submits that SRY’s proposed modification to the Agency’s recent liability language is an attempt to unfairly shift all responsibility for liability to the City and has the City effectively be SRY’s insurer, protecting SRY from any loss, cost, damage, injury or expense caused by any third party. The City argues that not only would such a modification be outrageous, it would be unprecedented and against all principles of fairness. The City maintains that it is not for a Municipality to indemnify the owner or operator of a railway line for losses, costs or damages caused by other third parties, particularly when the City does not have absolute control and cannot prohibit all from entering or using highways.

[48] In response to SRY’s submissions concerning financial losses, the City proposes that if the Agency imposes an indemnity clause, it should be similar to that set out in the Canadian Radio‑television and Telecommunications Commission’s Telecom Decision CRTC 2013-618. That Decision states that neither party should be liable for various types of damages.

[49] With respect to SRY’s submission that there is limited jurisprudence available to assess any protection under section 288 of the Local Government Act, the City submits that as the Agency has acquired jurisdiction under provincial legislation, it is not open to the Agency to disregard provincial enactments. The City claims that the intent of the Local Government Act is clear regarding the immunity that municipalities are afforded.

[50] The City requests that if its protection under section 288 of the Local Government Act is not specifically acknowledged in the Agency’s order, there be nothing in the order which impinges on that protection.

[51] The Agency is of the opinion that liability for negligent acts by either party at railway or utility crossings ought to be determined by the civil courts in the province in which the crossing is situated. Therefore, consistent with its precedents (e.g. Decision No. 213-R-2015), the Agency will not impose any terms and conditions with respect to liability.

CONCLUSION

[52] For the reasons stated above, the Agency, pursuant to subsection 101(3) of the CTA, authorizes the City to construct and maintain, at the City’s expense, the utility crossing under SRY’s track at mileage 3.78 of the Fraser Valley Subdivision, in the city of Surrey, in the province of British Columbia, as shown on the Drawings dated November 26, 2014 and attached as Schedules A and B to the application.

[53] There will be no terms and conditions imposed with respect to the removal or alteration of the storm sewer; and liability.

[54] This Decision remains in effect unless it is amended or rescinded by the Agency.