Decision No. 517-R-2005

August 15, 2005

File No. T 6210/864-1

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APPLICATION

[1] On November 1, 2004, the Burlington Northern and Santa Fe Railway Company (hereinafter BNSF) filed with the Canadian Transportation Agency (hereinafter the Agency) the application set out in the title.

[2] Comments on BNSF's application were filed by Western Pulp Limited (hereinafter Western Pulp) on November 24, 2004, by Pope and Talbot Limited (hereinafter Pope and Talbot) and Norske Skog Canada Limited (hereinafter NorskeCanada) on December 7, 2004, and by the Vancouver Port Authority, the Canadian National Railway Company (hereinafter CN) and Seaspan International Ltd. (hereinafter Seaspan) on December 9, 2004.

[3] On December 9, 2004, Seaspan requested an extension of the deadline to provide comments in order to make a more detailed and complete submission. In its Decision No. LET-R-349-2004 dated December 17, 2004, the Agency granted Seaspan until January 17, 2005 to file its comments on the application and BNSF ten (10) days from receipt of the comments to file its reply. Seaspan filed its comments on January 17, 2005 and on January 27, 2005 BNSF filed its reply.

[4] In its Decision No. LET-R-53-2005 dated February 11, 2005, the Agency directed BNSF to submit additional information within ten (10) days from the date of the Decision. BNSF filed the requested information on February 24, 2005.

[5] 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 August 15, 2005.

BACKGROUND

[6] The subject trackage starts from a point approximately seven metres north of the Heatley Diamond where it intersects with trackage of CN and the Canadian Pacific Railway Company (hereinafter CP) in the CP "West L" Yard in Vancouver. The trackage runs north for approximately 440 metres and terminates at the end of the barge slip at the waters of Burrard Inlet. There are three parallel tracks on the barge slip itself, which is a 119-feet long, 40-feet wide adjustable loading dock. Also included are tracks to the east of the barge slip which are identified by BNSF as storage tracks. The total amount of trackage included in this application, including the barge slip and storage tracks, is approximately 1890 metres.

[7] The subject trackage was constructed circa 1909 and is currently used to transfer rail cars on or off marine barges operated by Seaspan to and from customers on the coast of mainland British Columbia and Vancouver Island.

[8] The subject trackage carries and moves revenue traffic consisting of a mix of non-dangerous and dangerous goods, including pulp and paper; and chemicals such as hydrogen peroxide, methanol, sulphur dioxide, sulphuric acid and chlorine that are used in the pulp and paper industry.

[9] There is no passenger rail service on the subject trackage or on the marine barges.

PRELIMINARY MATTER

[10] Although the additional information submitted by BNSF in response to Decision No. LET-R-53-2005 was filed after the prescribed deadline, the Agency, pursuant to section 5 of the Canadian Transportation Agency General Rules, SOR/2005-35, accepts this submission as being relevant and necessary to its consideration of this matter.

ISSUE

[11] The issue to be addressed is whether the portion of the trackage referred to as the Burrard Inlet Barge Slip located in Vancouver, British Columbia, constitutes a yard track, siding, spur or other track auxiliary to a railway line, pursuant to subsection 140(2) of the CTA.

POSITIONS OF THE PARTIES

BNSF

[12] With respect to the operation of the subject trackage, BNSF states that it is currently used to transport its own customer freight as well as CN's freight to and from the end of the barge slip where it is transferred to or from Seaspan's barge operations. BNSF states that CN and shippers are charged published tariff rates for the rail freight traffic moving over the Burrard Inlet Barge Slip and that Seaspan delivers these freight cars via its barge operations pursuant to its own contractual arrangements with the shippers. BNSF estimates that rail traffic consists of approximately 11 trains per week with the average train size ranging between 10 and 25 cars.

[13] BNSF submits that the subject trackage has characteristics indicative of a spur rather than a line, including the fact that it is short in length; it is not directly connected to other BNSF trackage; operations on the line occur at low speed; there are no customer locations, station, or other facilities along the track; the trackage terminates at the end of the barge slip; the trackage has limited purpose use, being ancillary to rail barge traffic; it is not in general use in the true nature of the main line; and BNSF itself designates the line as a spur in its tariffs, tolls and other public documents.

[14] BNSF submits that although this is not an application to abandon the subject trackage, should operations to or from the barge slip cease to exist, alternative shipping routes are available via CP's Tilbury rail barge service and Fraser Surrey Dock trucking services.

[15] BNSF cites the case Re Canadian Transport Commission and Canadian Pacific Ltd. 79 D.L.R. (3d.)699 dated September 30, 1977 (hereinafter Re Canadian Transport Commission and Canadian Pacific Ltd.) which dealt with the abandonment of a rail barge service operating on Kootenay Lake, British Columbia. BNSF states that the Federal Court of Appeal held that Commission approval was not required for CP to abandon rail barge services on Kootenay Lake. BNSF submits that as the subject trackage in its application is auxiliary to and related to rail barge operations, it should be considered as "...other track auxiliary to a railway line..." for the purposes of paragraph 140(1)(b) of the CTA.

[16] BNSF indicates that the application is not to discontinue operating the subject trackage. BNSF refers to some of the comments provided by interested persons and submits that the subject trackage is still in use by shippers and others. BNSF submits, however, that such a factor is not relevant and not determinative when consideration is given to a determination under subsection 140(2) of the CTA. In BNSF's opinion, the CTA requires the characteristics of the particular track in question to be examined, placing the term "railway line" in juxtaposition with the phrase "... the yard track, siding or spur; or... other track auxiliary to a railway line...", in order to make a determination. BNSF states that for the purposes of the analysis, the track in question may or may not be in use or used in a particular manner. While historically the Agency and its predecessor have had regard to the "use" factor on occasion, BNSF submits that such a factor, generally and in these circumstances, should be given little weight and that had Parliament intended that the "use" of the track in question was a key to a determination under subsection 140(2) of the CTA, it would have said so.

[17] With respect to a number of comments that alluded to the fact that the subject trackage is physically connected to other track and is "linked" to a broad-based, continental, integral rail transportation system or network, BNSF indicates that all railway lines are connected and if "connection" was a factor, no track could ever be determined to be a "...yard track, siding or spur; or...other track auxiliary to a railway line...".

[18] BNSF cites one previous National Transportation Agency (hereinafter NTA) Decision and seven previous Agency Decisions (248-R-1992; 550-R-1999; 134-R-2000; 632-R-2000; 749-R-2000; 88-R-2001; 96-R-2001; and 217-R-2002) that outline the criteria considered or not considered by the NTA or the Agency when making a determination pursuant to subsection 140(2) of the CTA or subsection 157(4) of the National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.). BNSF submits that it is the particular characteristics of a particular track that form the basis of any Agency determination. Furthermore, BNSF states that subsection 140(2) of the CTA calls for a factual determination rather than consideration of transportation policy. As such, BNSF submits that discussion on any alternative facility or any current use of the subject trackage should not be given much weight by the Agency.

[19] BNSF submitted its latest timetable dated November 3, 2003, copies of the agreements that allow the company to operate on various trackage within the Burrard Inlet area, as well as several plans and diagrams clearly depicting the subject trackage and other BNSF operations in the area.

[20] BNSF states that its right to operate trains over CN's tracks arises through a series of historical documents, including an agreement dated February 13, 1946 wherein the Great Northern Railway Company (hereinafter GNR), a predecessor of BNSF, and the National Harbours Board granted each other various running and operating rights in the Vancouver Harbour area including the area around the subject trackage. These rights were retained in a subsequent agreement dated January 1, 1953 when CN became the successor to the National Harbours Board. All provisions were extended for 21 years in an October 15, 1965 agreement between GNR and CN. Furthermore, BNSF and CN signed an agreement dated November 1, 1992 extending the terms in the previous agreements for a further 21 years.

Seaspan

[21] Seaspan states that it is the owner and operator of marine barges that are used to transport rail cars loaded with chemicals from the subject trackage to seven coastal pulp and paper mills, and to return to the subject trackage with boxcars of finished products from the same mills.

[22] Seaspan states that before barges are loaded at the barge slip, it receives notification from shippers of the contents of each rail car (i.e., chemical types). Seaspan then notifies CP, CN and BNSF of the car line up for each barge, including loading time and date, which allows CP and CN to interchange the cars from their main storage yards to BNSF for delivery to the barge slip. Seaspan estimates that it operates between five and eight barge movements per week.

[23] According to Seaspan, in 2004, a total of 6447 loaded rail cars were received for shipment over the subject track and the barge slip, and as all these rail cars were also returned over the barge slip and subject tracks, the total number of cars moved over the Burrard Inlet Barge Slip in 2004 was 12,894. This averages approximately 248 cars per week.

[24] Seaspan submits that the subject trackage is not a spur line, but rather an actively used main line that forms part of a large distribution network for the aforementioned seven mills, each of which is dependent upon the BNSF line leading to the rail barge ramp. Seaspan also submits that the BNSF barge slip is the only such active facility on Burrard Inlet and that there are no available alternatives as suggested by BNSF.

[25] Seaspan, like BNSF, also cites the case Re Canadian Transport Commission and Canadian Pacific Ltd. Seaspan states that the issue in that case was whether the rail barge service constituted an operation of a line of railway. Seaspan submits that the Federal Court of Appeal held that the Kootenay Lake barge service itself was not part of a line of railway, the barge being a water means of conveyance. Seaspan further submits that the present case deals with the barge slip, which is a wharf and loading facility, and the track linking it to the CN/CP main lines and, as such, that case is not relevant to this case.

[26] To further support its position that the subject trackage forms part of a railway line as defined in the CTA and is not a yard track, siding, spur, or auxiliary trackage, Seaspan also cites the eight decisions referenced by BNSF as well as two others (488-R-1999 and 77-R-2003), the Federal Court of Appeal decision Canadian National Railway Co. v. Canada (Canadian Transportation Agency), (1999) F.C.J. No./1961 (F.C.A.) concerning "railway lines" and other track definitions. Seaspan indicates that the subject trackage has active revenue freight, connects and feeds traffic to the CN/CP main line for a number of shippers, is used for the transfer of freight cars to another carrier and is not used for the assembly of trains or operations.

Western Pulp

[27] Western Pulp states that it is a mill reliant on barge services to maintain supplies and submits that although the subject trackage is only 440 metres in length, it is a vital main supply line to the coastal pulp industry. Western Pulp adds that the shortness of the track is irrelevant when determining its significance and importance and that it is part of a main line. Any reclassification of the trackage could lead to cost increases and supply complications for Western Pulp.

Vancouver Port Authority

[28] The Vancouver Port Authority indicates that any alternatives to which BNSF referred in its submission would not likely be feasible or practical. It is the Vancouver Port Authority's understanding that CP's Tilbury Dock in the Fraser River area, referred to by BNSF as a possible alternative. In addition, the Fraser Surrey Dock truck/barge operations could not efficiently move the chemicals currently shipped over the subject trackage.

Pope and Talbot

[29] Pope and Talbot uses the barge service to receive chemicals and to ship finished products from its Harmac Pulp Mill located south of Nanaimo, on Vancouver Island. Pope and Talbot submits that BNSF's internal designation and physical description of the subject track misrepresents its importance and adds that the length, connection to other BNSF trackage and maximum allowable train speed in no way mitigate the importance of the track as an economically viable access to the North American rail system for shippers otherwise disconnected from the rail grid.

[30] Pope and Talbot further submits that while the specific section of physical track must, by definition, terminate at the end of the barge slip, the reality is that the track and the barge slip form an integral part of the rail network that simply has a section of moveable track in the form of a rail barge connecting numerous locations where more stationary tracks complete that network.

[31] Furthermore, Pope and Talbot is of the opinion that the alternatives suggested by BNSF are neither viable nor practical options for its operations as the physical layout of the other facilities are not compatible with those at the Harmac Pulp Mill.

NorskeCanada

[32] NorskeCanada states that it operates five mills on the south coast of British Columbia, at least two of which are serviced by and dependent upon Seaspan's barge service. NorskeCanada submits that the subject trackage forms an integral part of a multi-railway network that allows shippers to bring product from various locations to the Burrard Inlet shore and to the barge facilities on the waterfront.

[33] NorskeCanada also indicates that on BNSF's own evidence, the subject trackage is in active use by the pulp and paper industry and that this is not a case where customer usage has declined or customers have advised BNSF that they no longer require the service. Furthermore, NorskeCanada submits that the subject trackage is a frequently and continuously used integral part of the main rail line to and from its pulp and paper mills for inbound supplies and outbound products and that the alternative services referred to by BNSF would not be suitable to NorskeCanada's current operations.

[34] NorskeCanada submits that BNSF's claim regarding the case Re Canadian Transport Commission and Canadian Pacific Ltd. has no relevance to this application as it refers to the actual barge service but does not address the character of the tracks leading to the barge service.

[35] Furthermore, NorskeCanada submits that any future plans for the barge slip, as referenced in BNSF's application, are irrelevant to a determination under subsection 140(2) of the CTA.

CN

[36] CN states that in 2004, it delivered approximately 12 to 15 carloads a week or 650 carloads annually to BNSF at Vancouver for delivery to the barge operator over the subject trackage, a pattern and traffic level that has been relatively stable over the past few years.

[37] CN notes that in most, if not all, prior Agency determinations, a line that constituted a "spur" had only been used for local traffic and had not recently carried revenue traffic. In this case, CN submits that the line is carrying CN revenue traffic for which there is no alternative route.

[38] CN also notes that the case Re Canadian Transport Commission and Canadian Pacific Ltd. merely confirmed that a barge service did not constitute a railway subject to the abandonment provisions of the Railway Act as it then existed, but did not deal with the issue of the status of the tracks leading up to the barge service, as is the case in this application.

RELEVANT STATUTORY PROVISION

[39] Section 140 of the CTA states:

140. (1) In this Division, "railway line" includes a portion of a railway line, but does not include a yard track, siding or spur; or other track auxiliary to a railway line.

(2) The Agency may determine as a question of fact what constitutes a yard track, siding, spur or other track auxiliary to a railway line.

ANALYSIS AND FINDINGS

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

[41] The transfer and discontinuance process set out under sections 141 to 146 of the CTA applies to all railway lines held by railway companies under the legislative authority of Parliament. Within this process, a railway line excludes yard tracks, sidings, spurs or other track auxiliary to a railway line. Such trackage may therefore be discontinued without following the prescribed process. The Agency may, pursuant to subsection 140(2) of the CTA, determine as a question of fact that a particular trackage meets any of these descriptions. Pursuant to section 31 of the CTA, the finding or determination of the Agency on such a question of fact within its jurisdiction is binding and conclusive.

[42] As a preliminary matter, the Agency has considered the arguments with reference to the case Re Canadian Transport Commission and Canadian Pacific Ltd. The Agency notes that the question for the court was whether the barge service constituted a railway operation and did not consider the trackage or loading facilities leading to the barge service. Therefore, the Agency is of the opinion that that case is not relevant to this case.

[43] In making a determination pursuant to subsection 140(2) of the CTA, the Agency considers, among other things, evidence provided by the parties of record on the conditions and operation of the trackage concerned. Relevant factors used by the Agency and its predecessor in earlier determinations, such as those cited by both BNSF and Seaspan, to consider whether a line of railway constitutes trackage that would fall under paragraph 140(1)(a) or (b) of the CTA include, among other things: the history of the trackage; the physical characteristics of the trackage; whether the trackage connects at both ends or whether it is a dead-end stub where traffic does not continue beyond that point; what the interrelationship is with other trackage in the railway networks or with other railways; whether the trackage is used to carry local, bridge or feeder traffic (to or from a main line); and the present usage of the trackage, including volume and frequency of traffic and operations on the trackage.

[44] With respect to the nature, designation and operation of the subject trackage, the Agency notes that in BNSF's Timetable No. 2 Northwest Division dated November 5, 2003 (hereinafter the Timetable), the subject trackage is part of the Burrard Inlet Line (hereinafter the BI Line) which is jointly operated by CN and BNSF by virtue of an agreement. The BI Line connects with the BNSF New Westminster Subdivision on the main line, just south of CN's Vancouver Yard, and also connects that Subdivision with CN's Waterfront Yard. The Timetable also lists the BI Line as having an interlocked crossing at grade with the CP main track. The track condition is acceptable to train speed of a maximum of 8 miles per hour and all movements are controlled by CN Waterfront Traffic Controller, Lynn Creek. The total length of the BI Line is not listed in the Timetable. The subject trackage, referred to in BNSF's application as the Burrard Inlet Barge Slip, is not specifically identified as a separate entity from the BI Line in the Timetable. The subject trackage itself includes a single track that carries BNSF traffic to and from the New Westminster Yard and main line and CN traffic to and from the Glen Drive Yard; three tracks carrying this traffic onto the barge slip for the transfer to and from the barges; and a series of tracks used for the storage and preparation of the traffic to and from the barges.

[45] With respect to the usage of the subject trackage, the Agency notes that there is substantial active revenue freight traffic moving over it. In 2004, the barge service operated between five and eight barges a week, moving over 12,000 cars annually over the subject trackage and the Agency notes that many shippers, as well as CN, have indicated that they will continue to require the current rail service. The Agency further notes that none of the shippers are local to the line, but rather all of the traffic is loaded on or unloaded off the rail barges for service to and from customers with rail facilities on Vancouver Island and on the coastal mainland. Even though BNSF bills CN and shippers a general published tariff rate separate from any arrangement Seaspan has with its barge customers, the Agency notes that none of the traffic originates or terminates on the subject trackage; rather, all of it is through traffic.

[46] With respect to the arguments concerning whether viable alternatives exist for the movement of current traffic on the line, the Agency is of the opinion that such arguments are not relevant to the determination of the present character of the subject trackage. The availability, or lack thereof, of viable alternatives has no bearing on the character of the line in question at the time of determination. The question before the Agency is to determine the nature of the subject trackage; it is not to allow or approve any discontinuance of service that a railway company may wish to effect or to assess the economic impact of any such decision by a railway company.

[47] In summary, although the subject trackage is short in length and operated at slow speed and may have been designated by BNSF as a spur in its tariffs, tolls and other public documents, the Agency notes the following:

1. the subject trackage is an integral part of the Burrard Inlet Line that connects BNSF with CN, CP and the Seaspan barge service and is so reflected in the BNSF Timetable;
2. the subject trackage is necessary for the continuation of BNSF and CN or CP rail traffic to and from origins and destinations on Vancouver Island and the coastal mainland;
3. no local shippers exist and no traffic originates or terminates on the subject trackage itself;
4. all traffic is through traffic or feeder traffic to CN, CP and BNSF lines; and
5. the volume and frequency of through or feeder traffic on the subject trackage is substantial and there are numerous shippers.

[48] In light of the above, the Agency is of the opinion that the subject trackage has the characteristics of a branch line and not those of a yard track, siding, spur or other track auxiliary to a railway line.

CONCLUSION

[49] In light of the foregoing, the Agency has determined, pursuant to subsection 140(2) of the CTA, that the subject trackage, designated by BNSF as the Burrard Inlet Barge Slip, does not constitute a yard track, siding, spur, or other trackage auxiliary to a railway line. The subject trackage is a railway line for the purposes of Division V of the CTA.