Decision No. 316-R-2015

INTRODUCTION

[1] CSX Transportation Inc. (CSXT) and CSX Intermodal Terminals, Inc. (CSXIT) filed a joint application with the Canadian Transportation Agency (Agency) on October 15, 2014 to:

• Vary CSXT’s Certificate of Fitness No. 97004-03 to
• Include the rail operations in CSXIT’s Terminal; and,
• Reflect the sale of a portion of a railway line on the Sarnia Subdivision to the Municipality of Chatham‑Kent.
• Cancel CXSIT’s Certificate of Fitness No. 13001

[2] CSXT and CSXIT filed supplementary information on April 9 and 17, 2015 and September 18, 2015.

ISSUES

1. Should Certificate of Fitness No. 97004-03 be varied?
2. Should Certificate of Fitness No. 13001 be cancelled?

ANALYSIS AND FINDINGS

Should Certificate of Fitness No. 97004-03 be varied?

[3] CSXT applied for a variance to its Certificate of Fitness to:

1. Include the rail operations in CSXIT’s Terminal; specifically, CSX’s intermodal terminal rail operations, from mileages 1.00 to 1.93 of the Valleyfield Industrial Track of the Montreal Subdivision (new line of railway); and,
2. Reflect the sale of a portion of a railway line to the Municipality of Chatham-Kent.

[4] CSXT’s current Certificate of Fitness No. 97004-3 permits it:

1. To operate, through a running rights agreement between CSX Transportation, Inc. and its wholly-owned subsidiary, the Lake Erie and Detroit river Railway Company, a line of railway in Canada from Sarnia to Chatham, Ontario, of the Sarnia Subdivision.
2. To operate on a line of railway owned by its subsidiary St. Lawrence and Adirondack Railway Company, between the Canada/USA border near Fort Covington, New York and Valleyfield, Quebec and between Beauharnois and Adirondack Junction, Quebec, of the Montreal Subdivision; and to operate, through a lease agreement with the Canadian National Railway Company, a line of railway between Valleyfield and Beauharnois, Quebec.
3. To construct a line of railway between mileages 210.45 and 212.39 of the Montreal Subdivision and the Valleyfield Industrial Track, including the wye-track, between mileages 0.00 and 1.00, originating at mileage 210.81 of the Montreal Subdivision, in the area of Salaberry-de-Valleyfield, Quebec

[5] Subsection 92(1) of the Canada Transportation Act (CTA) provides that the Agency shall issue a certificate of fitness for the proposed construction or operation of a railway if the Agency is satisfied that there will be adequate liability insurance coverage for the proposed construction or operation, as determined in accordance with the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337.

[6] Subsection 93(1) of the CTA provides that the Agency may, on application, vary a certificate of fitness.

[7] The liability insurance requirement is an ongoing requirement and the Agency must be satisfied that a company constructing or operating a railway under federal jurisdiction continues to have adequate third party liability insurance coverage.

[8] With respect to the adequacy of the third party liability insurance coverage, the Agency has examined the relevant documents and financial statements. The Agency is satisfied that there is adequate third party liability insurance coverage, including self-insurance, for the operation of the new line of railway in addition to CSXT’s current railway operations set out in its existing Certificate of Fitness.

[9] Accordingly, the Agency, pursuant to subsection 93(1) of the CTA, varies Certificate of Fitness No. 97004-3 as follows:

1. To operate, through a running rights agreement between CSX Transportation, Inc. and its wholly-owned subsidiary, the Lake Erie and Detroit river Railway Company, a line of railway between mileages 44.6 and 71.5 of the Sarnia Subdivision, in the province of Ontario.
2. To operate on a line of railway owned by its subsidiary St. Lawrence and Adirondack Railway Company, between the Canada/USA border near Fort Covington, New York and Valleyfield, Quebec and between Beauharnois and Adirondack Junction, Quebec, of the Montreal Subdivision; and to operate, through a lease agreement with the Canadian National Railway Company, a line of railway between Valleyfield and Beauharnois, Quebec.
3. To operate a line of railway, within the intermodal terminal owned by the CSX Intermodal Terminals, Inc., on the Valleyfield Industrial Track, including the wye-track, between mileages 0.00 and 1.93, originating at mileage 210.81 of the Montreal Subdivision, in the area of Salaberry-de-Valleyfield, Quebec.

[10] Certificate of Fitness No. 97004-4 supersedes Certificate of Fitness No. 97004-3 issued to CSXT on March 8, 2013.

[11] 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. CSXT should be aware that once these provisions are in force, railway companies will need to obtain and maintain these new statutory minimum insurance levels.

Should Certificate of Fitness No. 13001 be cancelled?

[12] CSXIT applied to cancel its Certificate of Fitness. CSXIT advises that, following the construction of the Terminal, the railway operations at the Terminal will be carried out by CSXT. CSXIT points out that its insurance coverage will apply to CSXIT Terminal operations, and not to CSXT rail operations on the Terminal track.

[13] Certificate of Fitness No. 13001 permits the construction and operation of a rail intermodal terminal originating at mileage 1.00 to mileage 1.93 of the Valleyfield Industrial Track of the Montreal Subdivision, in the industrial park of the city of Salaberry-de-Valleyfield, in the province of Quebec.

[14] However, as a result of the changes described above, CSXIT is no longer eligible to hold a certificate of fitness as it will no longer operate a railway within the legislative authority of Parliament.

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

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

[17] The Agency notes that the CSX Intermodal Terminal opened in May 2015 and that its insurance coverage will only apply to terminal operations. The Agency has considered this matter and determines that the liability insurance coverage is no longer adequate. Accordingly, the Agency, pursuant to subsection 94(2) of the CTA cancels CSXIT’s Certificate of Fitness No. 13001.