Decision No. 561-R-2005

September 9, 2005

File Nos. R 8005/M5
R 8005/M6

Montreal, Maine & Atlantic Canada Co. (hereinafter MMAC) has applied to the Canadian Transportation Agency (hereinafter the Agency) for the variance set out in the title. The application was received on April 28, 2005.

Certificate of fitness No. 02004-2 dated August 7, 2003, permits Montreal, Maine & Atlantic Railway, Ltd. (hereinafter MMA) and its wholly-owned subsidiary MMAC to operate a railway in Canada, restricted to freight operations, as set out below:

1. MMA to operate a railway:
   • between the Canada/United States border at mileage 32.63 of the Newport Subdivision and the Canada/United States border at mileage 43.32 of the Newport Subdivision;
   • between the Canada/United States border near Saint-Léonard, New Brunswick and Saint-Léonard, New Brunswick;
2. MMAC to operate a railway:
   • between Saint-Jean, Quebec and Lennoxville, Quebec; between Ste-Rosalie, Quebec and Farnham, Quebec; between Farnham, Quebec and Stanbridge, Quebec; between Brookport at mileage 0.0 of the Newport Subdivision and the Canada/United States border at mileage 26.25 of the Newport Subdivision;
   • between Lennoxville, Quebec and the Canada/United States border near Boundary, Quebec; and
   • by virtue of an interchange agreement with the Canadian Pacific Railway Company, on the Canadian Pacific Railway Company's Adirondack Subdivision between Saint-Jean, Quebec and Saint-Luc Junction, Quebec.

Pursuant to paragraph 93(1)(c) of the Canada Transportation Act (hereinafter the CTA), the Agency may, on application, vary a certificate of fitness to reflect a change in railway operations or circumstances relating to those operations.

The Agency has considered the application and the material filed in support thereof and is satisfied that there is adequate third party liability insurance coverage, including self-insurance, to permit passenger operations over the lines of railway of MMAC.

The Agency's review of MMA and MMAC's financial capability to self-insure for the amount of self-insured retention was based on the consolidated financial statements of Montreal, Maine & Atlantic Corporation, the parent company, the financial statements of MMA and the indemnity agreement between MMA and MMAC.

Accordingly, pursuant to paragraph 93(1)(c) of the CTA, the Agency hereby varies Certificate of fitness No. 02004-2 dated August 7, 2003, to also include passenger operations.

Certificate of fitness No. 02004-3 supersedes Certificate of fitness No. 02004-2 issued to MMA and MMAC on August 7, 2003.

As the holders of a certificate of fitness, MMA and MMAC must notify the Agency in writing without delay if

1. the liability insurance coverage is cancelled or altered so that it may no longer be adequate; or
2. the construction or operation has changed so that the liability insurance coverage may no longer be adequate.

Further, in light of the indemnity agreement, MMA shall provide to the Agency a copy of the audited financial statements on an annual basis. Furthermore, MMA and MMAC shall continue to provide the Agency with their annual loss history.