Decision No. 40-R-2006

January 26, 2006

File No. R 8050/00

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APPLICATIONS

[1] On June 23, 2005, Manitoba Transportation and Government Services (hereinafter Manitoba Transportation) filed with the Canadian Transportation Agency (hereinafter the Agency) the application with respect to crossing maintenance charges by the Canadian Pacific Railway Company (hereinafter CP) at crossings on the Arborg Subdivision at mileages 11.70, 14.40, 18.01, 27.84, 37.84, 48.10, 55.75 and 73.88 as set out above.

[2] On July 6, 2005, CP filed its answer to the application and on July 20, 2005, Manitoba Transportation filed its reply. CP filed further comments on August 2, 2005.

[3] On August 16, 2005, Manitoba Transportation filed with the Agency a second application with respect to maintenance charges for crossings on CP's La Rivière Subdivision at mileages 79.91, 80.40, 85.77, 92.52, and 100.83 and for crossings on the Napinka Subdivision at mileages 8.94, 12.37, 35.50, 35.78 and 50.93 as set out in the title.

[4] In its Decision No. LET-R-249-2005 dated September 9, 2005, the Agency combined the two Manitoba Transportation applications and granted CP an opportunity to file an answer to Manitoba Transportation's application of August 16, 2005 and requested additional information from CP with respect to the work performed at the above-noted crossings.

[5] On October 14, 2005, CP requested an extension until October 21, 2005 to file an answer to Manitoba Transportation's application of August 16, 2005 and to reply to the Agency request for additional information of September 9, 2005. In its Decision No. LET-R-274-2005 dated October 18, 2005, the Agency granted CP the requested extension.

[6] On October 21, 2005, CP filed its answer to the August 16, 2005 application and submitted additional information as requested by the Agency on September 9, 2005.

[7] On November 1, 2005, Manitoba Transportation gave a verbal confirmation that it would not be filing a reply to CP's answer.

[8] On November 4, 2005, Transport Canada requested an extension until November 21, 2005 to file comments, as an interested party, to CP's answer. By Decision No. LET-R-296-2005 dated November 9, 2005, the Agency granted the requested extension and allowed a further 10 days for CP and Manitoba Transportation to file a reply. Transport Canada filed its comments on November 10, 2005. No further submissions were received.

[9] Pursuant to subsection 29(1) of the Canada Transportation Act (hereinafter the CTA), the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, the parties have agreed to an extension of the deadline until January 27, 2006.

BACKGROUND

[10] On June 14, 2002, the Minister of Transport, pursuant to paragraph 22(2)(a) of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.) [hereinafter the RSA], issued Exemption X 02-12 exempting CP from the requirements of subsection 19(1) of the Highway Crossings Protective Devices Regulations, General Order No. E-6 (hereinafter General Order No. E-6), which states:

All highway crossing protective devices shall be maintained by the company to operate as intended and shall be tested as follows: for all crossings protected by flashing light signals and bells, or by flashing light signals, bells and gates, the tests shall be made at least once in each calendar week.

[11] On June 9, 2003, CP served notice to Transport Canada and Manitoba Transportation that, due to the absence of traffic, it intended to discontinue the weekly tests of protective devices at eight crossings on the Arborg Subdivision between mileages 11.70 and 73.88.

[12] On June 19, 2003, Manitoba Transportation advised CP that it had no objections to the discontinuance of the weekly testing and requested that the charges for maintenance of the affected crossings be adjusted to reflect the reduced signal testing schedule.

[13] On November 10, 2003, CP issued a Daily Operating Bulletin stating that the conditions required by Exemption X 02-12 were in place between mileages 11.00 and 74.00 of the Arborg Subdivision and as such the company ceased performing weekly tests at the eight affected crossings.

[14] The costs of maintaining the protective devices at these eight crossings are required to be paid as follows: 50 percent by Manitoba Transportation and 50 percent by CP, as per orders issued by the Agency or its predecessors. Manitoba Transportation has withheld payments to CP relating to the maintenance of these eight crossings since January 2005.

[15] Manitoba Transportation is also the road authority at ten crossings on CP's Napinka and La Rivière Subdivisions in southern Manitoba. To date, CP has not served any notice to Transport Canada or Manitoba Transportation, pursuant to Exemption X 02-12, that it intends to discontinue weekly tests at any crossings on these two Subdivisions.

PRELIMINARY MATTER

[16] Although the supporting documents submitted by CP in response to Decision No. LET-R-249-2005 were received after the prescribed deadline, the Agency, pursuant to section 5 of the Canadian Transportation Agency General Rules, SOR/2005-35, accepts these documents as being relevant and necessary to its consideration of this matter.

ISSUE

[17] The issue to be addressed is whether Manitoba Transportation should obtain reduced charges for reduced crossing maintenance for specified crossings on CP's Arborg, La Rivière and Napinka Subdivisions.

POSITIONS OF THE PARTIES

Manitoba Transportation

[18] Manitoba Transportation states that it has requested an adjustment in the monthly invoicing for signal maintenance at eight crossings on the Arborg Subdivision and that CP has not responded to this request and is still billing the department for full maintenance costs at these crossings.

[19] Manitoba Transportation states that, to its knowledge, there have been no train movements past mileage 18.00 of the Arborg Subdivision for the past two years. Thus, a safety hazard has been created because drivers have become complacent at crossings and do not heed traffic control devices. Manitoba Transportation would like to have the signals covered and the cross bucks removed or covered at all crossings past mileage 18.00 and the maintenance charges therefor suspended. Furthermore, although there have been some trains moving through crossings located at mileages 11.70 and 14.40 of the Arborg Subdivision, Manitoba Transportation would like to have maintenance charges reduced to reflect the reduced maintenance at these locations also.

[20] Manitoba Transportation submitted a second application to examine the maintenance costs at another 10 signalized crossings located on the La Rivière Subdivision and the Napinka Subdivision. Manitoba Transportation referred to a newspaper article which stated that train movements over the two subdivisions have been non-existent since around the beginning of 2003. Manitoba Transportation states that it had been unaware of the inactivity on those lines.

[21] Manitoba Transportation requests that CP reduce its monthly maintenance fees retroactively to reflect the reduced maintenance of the signals and that effective August 1, 2005, all future maintenance fees be waived on signals where train movements have not occurred for an extended period of time and most likely would not occur in the future.

CP

[22] CP states that until a line of railway is officially discontinued pursuant to Division V of the CTA, the company continues to have level of service obligations pursuant to the CTA, which could require the railway company to provide service on this line at any time. As such, CP states that is must comply with the safety requirements at all crossings and ensure that all crossing warning systems are operating correctly until such time as the line is discontinued and CP is released from its legislative obligations.

[23] CP also states that the absence of train movements over an extended period of time on a line does not mean it can unilaterally terminate its maintenance and testing of the warning systems at the crossings along the line. Unless specific exemptions from these procedures are obtained from the Rail Safety Branch of Transport Canada, CP is still required to continue performing inspections, testing and maintenance at all crossings.

[24] CP states that it has an obligation to perform inspections and maintenance of crossing warning systems as set out in the signal manual of the American Railway Engineering and Maintenance-of-way Association (hereinafter AREMA) which Transport Canada mandates CP to use pursuant to General Order No. E-6. These provisions from the AREMA signal manual are set out in the CP Standard Practice Circular – S & C No. 9 Rules and Instructions for Maintenance, Inspections and Testing of Highway-Railway Grade Crossing Warning Systems – Canada (hereinafter the Standard Practice Circular – S & C No. 9).

[25] CP states that the Arborg Subdivision between mileages 10.70 and 75.10 is listed on its three year plan for discontinuance and that the 12 month mandatory listing period as per section 142 of the CTA expired on August 19, 2005. CP's intention has been to continue with the discontinuance process with an anticipated discontinuance date in December 2005. This would also result in the official closure of the crossings located along this line. CP also states that in November 2003, pursuant to Exemption X 02-12, the company ceased performing weekly tests of the protective devices at eight crossings along the Arborg Subdivision between mileages 11.00 and 74.00.

[26] CP states that a section of the Arborg Subdivision between mileages 10.70 and 17.20 is used to store freight cars surplus to its traffic needs and therefore, this requires train movements over the crossings at mileages 11.70 and 14.40. CP adds that Manitoba Transportation has withheld maintenance payments since January 2005.

[27] CP states that its rate of billing is prescribed by the Agency in Schedule A of the Guide to Railway Charges for Crossing Maintenance and Construction (hereinafter the Guide) and that these rates are derived from actual Class I railway costing data which is approved by the Agency. These rates are a national average and as such reflect a wide spectrum of observations where maintenance levels vary over a wide band of costs. CP states that if the Agency accepts Manitoba Transportation's request to reduce or eliminate its obligation to pay the average costs, the company would be in a shortfall position and that as long as CP must carry out its level of service obligations, it is entitled to compensation for crossing maintenance.

[28] However, CP recognizes that, in the case of the eight crossings on the Arborg Subdivision, there has been a cost savings in not performing the weekly tests and agrees to pass these cost savings on to Manitoba Transportation. CP has calculated its savings based on the Agency's Schedule A Directives, the predecessor of the Guide, for November and December 2003 and the Guide for 2004 and 2005. CP states that the weekly tests at this location are performed by track and roadway crew members and it has calculated the cost of the weekly tests based on their wage rates in the Guide.

[29] With respect to covering any signals, CP states that it is not within the Agency's jurisdiction to authorize that crossing signals be covered or removed and that this matter falls under the purview of Transport Canada's Rail Safety Branch pursuant to the RSA. CP states, however, that covering any signals before the line is officially discontinued would be tantamount to prematurely advising the public that the line is discontinued which would only further enhance complacency and promote a false sense of security at the crossings. Furthermore, this could promote trespassing on CP property if the public assumes the absence of trains. In each situation, CP could be held liable for any resulting incidents.

[30] With respect to the crossings on the La Rivière and Napinka Subdivisions, CP states that it has not yet contacted Transport Canada for exemptions to performing the weekly tests in these areas and as such, maintenance activities, including inspections and weekly tests are still performed at these crossings. CP states that it will continue to bill Manitoba Transportation at these locations until it no longer performs the required maintenance and any cost savings materialize.

Transport Canada

[31] Regarding signal maintenance activities, Transport Canada states that there are no specifically prescribed regulatory requirements at crossing warning systems and each railway company has developed a practice that includes the nature of tests to be conducted and their frequency. Transport Canada states that CP has developed its code of practice in its Standard Practice Circular – S & C No. 9. Transport Canada further states that the General Order No. E-6 reference to the American Association of Railroads (now AREMA) pertains to the applicable standards for the equipment to be used and not the maintenance frequency to be applied.

[32] Transport Canada states that the railway companies are responsible for establishing their own maintenance programs and they are free to use the provisions set forth in the AREMA or to use alternate provisions adapted to their situations. Furthermore, Transport Canada notes that the AREMA maintenance provisions apply only to systems in active service and that for signal systems not in active service or where there is no demand for services, there is currently no obligation to either maintain or suspend the signal maintenance program.

ANALYSIS AND FINDINGS

[33] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings with particular reference to both the type of maintenance performed and the charges therefor.

[34] Pursuant to section 16 of the RSA, in cases where the parties involved at a crossing are unsuccessful in negotiating an agreement relating to the apportionment of costs of railway works, either party may refer the matter to the Agency for a determination.

[35] In accordance with its mandate to apportion costs, the Agency and its predecessors have been developing rate schedules applicable to work performed by railway companies at crossings since 1935. Prior to 1992, a schedule of rates was attached to or referenced in each individual crossing order. In 1992, the National Transportation Agency of Canada produced the Schedule A Directives which included, among other things, a flat rate charge for regularly scheduled maintenance of specific types of crossing warning systems, developed from the system-wide average costs of CN and CP, the two Class I railway companies in Canada.

[36] In January 2004, the Schedule A Directives were replaced by the Guide, which is intended to assist railway companies and road authorities in determining, among other things, what allowable costs are incurred by railway companies through the delivery of their crossing signal maintenance program. The rates in the Guide are based on actual work performed by personnel of the railway companies and include a provision for the weekly tests of the crossing warning devices as performed by those personnel pursuant to subsection 19(1) of General Order No. E-6.

[37] With respect to the operation, maintenance and testing of such crossing warning devices, the Agency notes that General Order No. E-6, introduced in 1978, provides the regulations respecting the installation and testing of protective devices at highway crossings at grade. These regulations are currently still in effect.

[38] The Agency notes that subsection 19(1) of General Order No. E-6 prescribes that crossing warning devices must be tested at least once in each calendar week to ensure they remain in good working order and that the railway company is responsible to ensure that each warning system is maintained to function as intended. However, Transport Canada does not specifically prescribe the manner in which a railway company performs any other part of its crossing warning system maintenance program and to this end, each railway company has developed a practice that includes the nature and frequency of maintenance to be performed.

[39] Section 17 of General Order No. E-6 states that, "Signals, gates, operating mechanisms and control circuits shall be in accordance with A.A.R. [now AREMA] recommended practice." Transport Canada clarified that this section applies specifically to the standards for the equipment to be used and not the maintenance frequency to be applied, and that railway companies are responsible to establish their own maintenance program. In this case, CP has chosen to follow a maintenance program as set out in its own Standard Practice Circular – S & C No. 9 which was derived from the AREMA signal manual.

[40] Therefore, the Agency will base its apportionment of costs on the maintenance program in place at the time. The Agency notes that there may be different methods to ensure that crossings are safe and meet the requirements of the RSA. Should parties be concerned regarding the methods of ensuring that these crossings are safe, they may approach Transport Canada.

[41] With respect to the apportionment of costs, the Agency notes that the rates that CP billed Manitoba Transportation for the delivery of its maintenance program at the eight crossings in question on the Arborg Subdivision are in accordance with the rates in the Guide or Schedule A Directives in place at the time. The Agency further notes that on November 10, 2003, CP issued a Daily Operating Bulletin stating that the conditions required by Exemption X 02-12 were in place between mileages 11.00 and 74.00 of the Arborg Subdivision and as such the company ceased performing weekly tests required under subsection 19(1) of General Order No. E-6 at the eight affected crossings. However, CP has not completed the transfer and discontinuance process relating to this line as set out in Division V of the CTA and, as such, it has opted to fulfill the level of service obligations prescribed by the CTA and comply with its obligations under the RSA by retaining the warning systems in active service.

[42] The Agency further notes that CP acknowledged, in its October 24, 2005 submission, that the company has realized cost savings through the cessation of the weekly tests at the eight crossings on the Arborg Subdivision and the Agency is of the opinion that any cost savings actually realized by CP should be shared with the road authority, in this case Manitoba Transportation.

[43] CP confirmed that it was the track and roadway crews that previously performed the weekly tests at these locations and as such has calculated the cost savings based on track and roadway charges indicated in the Schedule A Directives and the Guide. CP set out the cost savings in Exhibit F of its October 24, 2005 submission which is summarized as follows:

1. For November and December 2003, the 1996 Schedule A Directives applied. The cost savings here were developed using 52 hours per year of work performed by track and roadway crews plus an associated vehicle cost.
2. For 2004 to present the rates in Schedule A of the Guide applied. The cost savings here were developed using 13 hours per year of work performed by track and roadway crews plus 13 hours of vehicle costs associated with the work.

[44] The Agency has reviewed CP's development of cost savings and is of the opinion that the methodology used is fair and appropriate and that the calculated cost savings should be shared with Manitoba Transportation.

[45] With respect to Manitoba Transportation's application dated August 16, 2005, the Agency notes that CP has indicated, in its October 24, 2005 submission, that it has not yet applied for an exemption from performing the weekly test at crossings on the La Rivière and Napinka Subdivisions, and, as such, it is still performing all testing and maintenance at these crossings. Therefore, the Agency is of the opinion that as CP still has obligations to be fulfilled under the CTA and the RSA, and has opted to comply with subsection 19(1) of General Order No. E-6 by continuing to perform the weekly tests, there are no cost savings realized at these crossings which can be passed on to the road authority.

[46] If the method of protecting these crossings is changed in the future and the parties cannot come to an agreement on the costs, either party may approach the Agency for a determination.

CONCLUSION

[47] In light of the above, the Agency is of the opinion that CP has benefited from a cost savings by not performing the weekly tests at the crossings at mileages 11.70, 14.40, 18.01, 27.84, 37.84, 48.10, 55.75 and 73.88 of the Arborg Subdivision since November 2003. Therefore, the Agency finds that the cost savings as set out in CP's Exhibit F of its October 24, 2005 submission appropriately reflects the savings realized at these crossings which should be shared with Manitoba Transportation.

[48] The costs of maintenance of all eight crossings shall be paid as follows: 50 percent by the railway company and 50 percent by the road authority. In addition, until CP gives notice pursuant to section 146 of the CTA that this line has been discontinued, all additional cost savings realised should be shared with Manitoba Transportation.

[49] The Agency also concludes that in respect of Manitoba Transportation's second application regarding crossings on CP's La Rivière and Napinka Subdivisions, there have been no cost savings realized at these crossings at this time that can be shared with Manitoba Transportation.

Members

• Mary-Jane Bennett
• Gilles Dufault
• Beaton Tulk