Decision No. 483-R-2005

July 28, 2005

File No. R8050/332-022.95

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APPLICATION

On March 30, 2005, Hydro-Québec TransÉnergie (hereinafter Hydro-Québec) filed with the Canadian Transportation Agency (hereinafter the Agency) the application set out in the title. Hydro-Québec also provided a copy of the proposed standard contract between itself and the Canadian National Railway Company (hereinafter CN).

Hydro-Québec indicates that it wished to begin construction work in May 2005. It was therefore asking the Agency to process the application in an expeditious manner. In its Decision No. LET-R-105-2005 dated April 7, 2005, the Agency, pursuant to section 5 of the Canadian Transportation Agency General Rules, SOR/2005-35, required CN to file its comments on the actual construction of the utility crossing within ten (10) days from the date of that Decision; Hydro-Québec was given five (5) days following receipt of CN's comments to file a reply. With respect to the issues in dispute, the Agency gave CN until May 6, 2005 to file an answer, and it granted Hydro-Québec ten (10) days following receipt of CN's answer to file a reply.

With respect to the actual construction of the utility crossing, CN submitted its comments on April 21, 2005 and Hydro-Québec filed a reply on April 27, 2005.

While CN's comments and the reply filed by Hydro-Québec were received after the prescribed deadlines, the Agency, in its Decision No. LET-R-158-2005 dated May 18, 2005, accepted them as being relevant and necessary to its consideration of the matter.

On May 6, 2005, CN filed its answer to the application and on May 9, 2005, Hydro-Québec filed its reply to CN's answer.

PRELIMINARY MATTER

In its Decision No. LET-R-158-2005, the Agency advised the parties that as there was agreement on the construction of the temporary utility crossing and on the use of flagmen while the work is under way, with associated costs, subsection 101(3) of the Canada Transportation Act (hereinafter the CTA) did not apply. Hydro-Québec may therefore proceed with the work, pursuant to subsection 101(1) of the CTA. In this regard, the parties may file a copy of their agreement with the Agency so that it can become an order of the Agency. Should there be a dispute about the content of the agreement, one of the parties could then refer the matter to the Agency for a determination.

ISSUES

The Agency must rule on the following three matters: payment to CN by Hydro-Québec of fees for reviewing the plans and annual fees; inclusion of a no-negligence clause releasing CN from its liabilities; the duration of the agreement and the length of notice that must be given if the utility crossing is to be relocated or modified.

POSITIONS OF THE PARTIES

CN wants Hydro-Québec to pay the engineering costs for reviewing the plans. Hydro-Québec objects and is asking that the Agency also consider this matter in the context of this Decision.

In its submission of May 6, 2005, CN addressed each of the questions in dispute raised by Hydro-Québec, and refers to the relevant provisions of the proposed standard contract as well as the applicable sections of the Hydro-Québec Act R.S.Q., c. H-5 (the statute incorporating Hydro-Québec). In this regard, CN points out that the terms governing Hydro-Québec under the proposed standard contract, as set out in the pertinent contractual provisions, are in fact based on the applicable section of that Act.

Moreover, with respect to the provisions for the relocation, removal or modification of Hydro-Québec's facilities in the event of repairs or improvements to the railway facilities mentioned in clause 6 of the proposed standard contract, CN argues that Hydro-Québec adds such clauses in its own contracts in order to be able to access the adjacent lands without notice or permission.

Hydro-Québec argues that the clauses which give it the right to access adjacent lands allow it to do so only to perform work on its own facilities when necessary, not to perform work on facilities that do not belong to it. Hydro-Québec adds that it is in full agreement with CN having access at all times to its own facilities in order to repair, modify or maintain them, but it does not agree to Hydro-Québec facilities being relocated or otherwise modified by CN once they have been erected.

Regarding Hydro-Québec's objections to clause 7 of the proposed standard contract, which provides for payment to CN of a lump sum in compensation for the crossing of its railway track, CN adds that as a private company accountable to its shareholders, CN should have the right to charge certain amounts, including costs for opening a file, performing administrative work, and checking plans for any installation above or below its tracks that might have an impact on rail infrastructure.

In this respect, Hydro-Québec states that it relies on the Agency to make that determination, but it refers the Agency to Order Nos.1998-R-591, 1998-R-592, 1998-R-593 and 1998-R-690 and notes that in each of these cases, the Agency decided not to allow the railway company in question any compensation in the form of annual or administrative fees because the company had not demonstrated that any real or appreciable damage had been caused to its lands.

With respect to Hydro-Québec's argument concerning clause 11 of the proposed standard contract (the no-negligence clause), namely that the railway right of way at this location does not belong to CN, the latter points out that it enjoys a lawful easement granted by Société du parc industriel du centre du Québec. CN argues that this in no way alters the provisions of the no-negligence clause because a utility company wishing to cross a railway is not necessarily seeking permission to cross the land on which the affected infrastructures are located but rather permission to cross over or under the tracks or other facilities, in order to preserve system integrity.

Hydro-Québec states that its position on this matter is unchanged, and it adds that CN, like any other business company, must accept liability for damages to the facilities of other entities if it is at fault.

ANALYSIS AND FINDINGS

In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.

Payment to CN by Hydro-Québec of fees for reviewing the plans and annual fees

Having considered the arguments of the parties, the Agency finds that in this case, compensation in the form of annual or administrative fees or fees for the consultants or contractors who review the documents is not warranted as no real or appreciable damage to the lands of the railway company has been demonstrated.

Inclusion of a no-negligence clause releasing CN from its liabilities

Concerning the need for a no-negligence clause, the Agency finds that this is a matter of liability and finds that such matters do not fall within its jurisdiction. Accordingly, the Agency will not rule on this issue.

Duration of the agreement and length of the notice to be given if the utility crossing is to be relocated or modified

The Agency notes that the parties are in agreement with respect to the terms and conditions for the construction of the utility crossing. The Agency further notes that such an agreement may be filed with the Agency pursuant to subsection 101(1) of the CTA in order that it becomes an order of the Agency.

Therefore, with respect to the issue of the length of notice, and the need for notice, when the utility crossing is to be relocated or modified, the Agency, following regulatory precedents, notes that a decision authorizing the construction of a utility crossing at a specific location or an order issued under subsection 101(1) of the CTA remains in effect until such time as the decision or order is amended or rescinded by the Agency. If there is no such decision or order, the parties, should there be a dispute at the time of relocation or modification, may file an application with the Agency. As such, the Agency finds that there is no need for a notice period to be ordered.

CONCLUSION

The Agency concludes that payment of fees for the review and approval of the plans and payment of annual fees are not justified in this case.