Decision No. 661-R-1995

September 27, 1995

File No. T 6120/051

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BACKGROUND

On March 27, 1995, Canadian Pacific Limited (hereinafter CP) applied to the National Transportation Agency of Canada (hereinafter the Agency) for authority to abandon the operation of the Cornwall Subdivision from mileage 0.0 to mileage 27.4 (hereinafter the branch line), a total distance of 27.4 miles, in the provinces of Quebec and Ontario.

LEGISLATIVE PROVISIONS

In accordance with section 161 of the National Transportation Act, 1987 (hereinafter the NTA, 1987), any person may oppose an application for the abandonment of the operation of a branch line by filing with the Agency, not more than sixty (60) days after the notice of application, a written statement setting forth the grounds on which that person opposes the application. If no opposition is received, the Agency must order the abandonment of the operation of the branch line.

Where an application is opposed, the Agency is required to determine whether a branch line is economic or uneconomic and, if uneconomic, whether there is a reasonable probability of its becoming economic in the foreseeable future. Should the Agency find that a branch line is uneconomic and that there is no reasonable probability of its becoming economic in the foreseeable future, subsection 165(1) of the NTA, 1987 requires the Agency to order the abandonment of its operation.

If the Agency determines that a branch line is economic or that, although it is uneconomic, there is a reasonable probability of its becoming economic in the foreseeable future, the Agency must still order the abandonment of the operation of the branch line, unless it determines that its operation is required in the public interest, as set out in section 166 of the NTA, 1987 and as further defined in section 167 of the NTA, 1987.

LOCATION OF THE BRANCH LINE

The Cornwall Subdivision is 27.4 miles in length and runs from Soulanges (mileage 0.0), in the province of Quebec, to Cornwall (mileage 27.4), in the province of Ontario. At mileage 0.0, the Cornwall Subdivision connects with the Winchester Subdivision (at mileage 36.9), which runs from Montreal West, in the province of Quebec, to Smiths Falls, in the province of Ontario. The Cornwall Subdivision runs through the counties of Dundas, Stormont and Glengarry, in the province of Ontario, and the county of Soulanges, in the province of Quebec.

A map of the area is attached as Appendix 1.

CARLOAD TRAFFIC

Carload traffic handled on the branch line during the prescribed financial years of 1992, 1993 and 1994 is as follows:

CP Cornwall Subdivision

North Lancaster510740720

Stations	1992 In	1992 Out	1993 In	1993 Out	1994 In	1994 Out
Cornwall	642	38	552	18	328	50
Totals	731	731	644	644	450	450

EVIDENCE

Following the issuance of CP's notice of application, Wilfrid Major Ltd./Ltée (hereinafter Wilfrid Major) filed an intervention with the Agency opposing the granting of the proposed abandonment. Wilfrid Major estimated that by using rail service, rather than trucks, the company has earned savings of more than $75,000 per year. Wilfrid Major indicated that the company will lose these savings and may have to lay off employees should the branch line be abandoned.

Wilfrid Major further submitted that by modifying its transportation plans, it could have all of its traffic move on the branch line and, by doing so, it would receive approximately 110 to 125 carloads per year, instead of some 70 carloads.

Finally, Wilfrid Major also disputed the cost and revenue figures submitted by CP for the years 1991, 1992 and 1993. According to the company, since the volumes of traffic handled on the branch line remained constant during that period, CP's associated costs should have remained stable.

In reply, CP stated that its revenues and costs are developed according to the various regulations governing abandonment applications, and that they are subsequently verified by the Agency.

CP recognized that the traffic carried on the branch line could increase by some 50 carloads, but CP believes that an increase in traffic and rates would not significantly help to reduce its losses. CP added that rail rates charged at Cornwall cannot be increased to help offset the amounts of actual loss it incurs in providing the service without sustaining a loss of business to competitors, since customers at Cornwall are not captive to CP.

With respect to the cost and revenue figures disputed by Wilfrid Major, CP explained that the average cost per carload has not increased, but the nature of the traffic mix has changed and this has resulted in a lower revenue per carload. As a consequence, the net losses have increased.

With respect to Wilfrid Major's alternative transportation plans, CP suggested that the company consider the Green Valley station, located on the Winchester Subdivision, as a possible site for the transshipment of its traffic.

Wilfrid Major replied that amongst all of the disadvantages associated with using the Green Valley station for the transshipment of its traffic, the most important one is that the highway crossing to get to the siding is not a mainline crossing; therefore, no speed restrictions are imposed on trains. According to Wilfrid Major, it would be very unsafe to do a 90-degree turn to the right and then cross the tracks with a loaded truck.

In its reply, CP recognized the safety concern identified by Wilfrid Major and indicated that CP representatives will meet with Wilfrid Major to review other possible sites that would better serve the needs of this company.

FINDINGS

Upon review of all the material received and on file, the Agency determines that a public hearing is not necessary and that a decision can be rendered based on the information on file.

Actual losses

Where opposition to an abandonment application is received, section 163 of the NTA, 1987 requires the Agency to determine the amount of actual loss, if any, of the railway company attributable to the branch line in each of the prescribed financial years. The Agency must also give public notice of the determination made and of the principal factors applied in making that determination. Consequently, the Agency, on July 21, 1995, issued a notice of its interim determination of the amounts of actual loss incurred in 1992, 1993 and 1994, based on information submitted by CP. The Agency reserved the right to make a new determination of the amounts of actual loss after a review of the evidence filed by the interested parties.

Based on all of the evidence received and on file, the Agency has determined, in accordance with the provisions of the Railway Costing Regulations, SOR/80-310, and section 157 of the NTA, 1987, that the final determination of the amounts of actual loss is as follows:

Year	Total cost $	Revenues $	Actual Loss $
1992	1,755,612	1,575,533	180,079
1993	1,579,740	1,144,755	434,985
1994	1,304,728	930,486	374,242

A breakdown by major cost category of the principal factors applied in determining the amounts of actual loss is attached as Appendix 2.

Economic determination

Traffic handled on the branch line declined from 731 carloads in 1992 to 644 carloads in 1993 and to 450 carloads in 1994. As train service on the branch line is already provided at a minimal level and since there is no way to further reduce the costs while maintaining the service, the Agency concludes that the branch line is presently uneconomic.

Probability of the branch line becoming economic

The Agency has considered the evidence received in response to CP's notice of application dated March 27, 1995, and to the Agency's notice of interim determination of the amounts of actual loss dated July 21, 1995.

Wilfrid Major did indicate the possibility of an increase of its traffic on the branch line; however, the Agency is of the view that this potential traffic increase would not be sufficient to offset the losses incurred by CP in providing the service.

Therefore, after consideration of the present and potential traffic levels, the Agency concludes that there is no reasonable probability of the branch line becoming economic in the foreseeable future.

With respect to Wilfrid Major's concerns about the safety of the crossing at the Green Valley station, the Agency notes that CP has undertaken to find a solution to the shipper's problem. Should CP and Wilfrid Major be unable to reach an agreement, Transport Canada has the authority to inspect and require changes to crossings for safety purposes.

ENVIRONMENTAL ASSESSMENT

Under subsection 18(1) of the Canadian Environmental Assessment Act, S.C., 1992, c. 37 (hereinafter the CEAA), the Law List Regulations and the Inclusion List Regulations, the Agency must assess the environmental effects of projects for the abandonment of the operation of railway lines before granting the authority to do so. An environmental assessment must be conducted on any physical activity relating to the abandonment of freight operations on a railway line that requires an order under section 162, subsection 165(1) or section 166 of the NTA, 1987.

On July 21, 1995, the Agency issued its preliminary environmental screening report pertaining to CP's abandonment project. No potentially adverse environmental effects which could arise as a result of the proposed abandonment were identified.

Comments were received from Wilfrid Major with respect to the Agency's preliminary environmental screening report. In its submission, Wilfrid Major disputed CP's assumption that if the company used the Green Valley station for the transshipment of its traffic, it could use trucks with payload capacity of 22 tons. Wilfrid Major stated that the legal payload capacity on a standard ten-wheeler truck is between 15 and 15.5 metric tons.

CP replied that the payload capacity figure of 22 tons had been provided by the Ontario Ministry of Transportation as an average load for highway movement of grain in Ontario. Apparently, the Ontario grain industry utilizes semi-trailers which have a greater capacity than the ten-wheeler trucks identified by Wilfrid Major. CP concluded by reiterating that it has no control over how Wilfrid Major will have its commodities carried once the operation of the branch line is abandoned.

The Agency recognizes that the use of trucks with a lower payload capacity will have an effect on fuel consumption and air quality, but it is of the view that the implications are not significant.

The Agency has further considered its preliminary environmental screening report and all of the evidence received and on file and determines that, pursuant to subsection 20(1) of the CEAA, the project is not likely to cause significant adverse environmental effects and, therefore, may be carried out. The Agency's final environmental screening decision is attached as Appendix 3.

CONCLUSION

After consideration of all the evidence before it, the Agency determines that the branch line is presently uneconomic, that there is no reasonable probability of its becoming economic in the foreseeable future, and that, therefore, its operation shall be abandoned.

Section 168 of the NTA, 1987 provides that the Agency shall fix a date for the abandonment of the operation of a branch line that is not less than thirty (30) days or more than one (1) year from the date of the abandonment order. The Agency has determined that the operation of the branch line should be abandoned ninety (90) days from the date of the Order giving effect to this Decision.