Decision No. 709-R-2006

December 22, 2006

File Nos. R8050/117-065.99
R8050/117-069.93

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APPLICATIONS

[1] On July 24, 2006, ATCO Pipelines, a division of ATCO Gas and Pipelines Ltd. (hereinafter ATCO) filed with the Canadian Transportation Agency (hereinafter the Agency) the applications set out in the title.

[2] On August 31, 2006, the Canadian Pacific Railway Company (hereinafter CP) requested an extension until September 8, 2006 to file its answers to the applications, and on September 1, 2006, the request was granted. On September 8, 2006, CP filed its answers to the applications and on September 26, 2006, ATCO filed its replies.

[3] On October 3, 2006, Transport Canada was requested to submit comments on these applications, which were received on November 21, 2006.

[4] 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 December 22, 2006.

BACKGROUND

[5] On September 21, 2004, ATCO filed with the Agency an agreement dated June 30, 1951 entered into by the Canadian Western Natural Gas Company Limited (ATCO's predecessor) and CP regarding the construction and maintenance of a utility crossing under the right of way of CP between mileages 57.85 and 76.95 of the Laggan Subdivision in the province of Alberta. Pursuant to subsection 101(2) of the CTA, this agreement became an Order of the Agency (Order No. 2004-AGR-478) on November 16, 2004.

[6] The existing pipeline is a 168.3 mm natural gas pipeline which is buried three feet beneath the ground and is located approximately 24 metres from the centre line of CP's tracks and three metres inside CP's property line boundary.

[7] CP and ATCO have had ongoing negotiations regarding the construction, maintenance and operation of various above-ground valves, but they have been unable to reach an agreement for the proposed valves at mileages 65.99 and 69.93 of the Laggan Subdivision.

PRELIMINARY MATTER

[8] Although ATCO's replies were received after the prescribed deadline, the Agency, pursuant to section 5 of the Canadian Transportation Agency General Rules, SOR/2005-35, accepts them as being relevant and necessary to its consideration of this matter.

JURISDICTION

[9] Pursuant to section 101 of the CTA, in cases where the parties involved at a railway crossing are unsuccessful in negotiating an agreement, either party may refer the matter to the Agency for a determination. In this case, ATCO has applied for authorization of works related to a utility crossing; however, CP contends that the proposed works do not constitute crossings but, rather, mere encroachments on CP's right of way and, therefore, are not within the jurisdiction of the Agency.

[10] CP contends that the proposed above-ground valves are not utility crossings as contemplated by subsection 101(3) of the CTA and as defined in section 100 of the CTA, as the installations do not pass "over or under" a railway line. CP states that these are applications to locate certain above-ground valve infrastructure on CP's property adjacent to its railway line and that the above-ground valves are not attached to the utility crossings but, rather, to a pipeline that is a parallel underground installation.

[11] Transport Canada expresses the opinion, however, that the definition of a "utility crossing" pursuant to the RSA includes any pipeline that enters a railway right of way regardless of whether or not it crosses the tracks.

[12] As a preliminary matter, the Agency will consider the issue of whether the existing pipeline constitutes a crossing under the CTA and, as such, whether the Agency has jurisdiction to make a determination in this case.

[13] Section 100 of the CTA provides, in part, that:

"utility crossing" means the part of a utility line that passes over or under a railway line, and includes a structure supporting or protecting that part of the utility line or facilitating the crossing;

"utility line" means a wire, cable, pipeline or other like means of enabling the transmission of goods or energy or the provision of services.

[14] Section 101 of the CTA states, in part, that:

101.(1) An agreement, or an amendment to an agreement, relating to the construction, maintenance or apportionment of the costs of a road crossing or a utility crossing may be filed with the Agency.

...

(3) If a person is unsuccessful in negotiating an agreement or amendment mentioned in subsection (1), the Agency may, on application, authorize the construction of a suitable road crossing, utility crossing or related work, or specifying who shall maintain the crossing.

[15] Section 101 of the CTA is a continuation of section 326 of the Railway Act, R.S.C., 1985, c. 28 (3rd Supp.) which provided for regulatory authority to construct utility crossings "along or across a railway". This contrasts somewhat to the wording in section 100 of the CTA which speaks of a utility crossing being "over or under a railway line".

[16] The definition of a "utility crossing" was altered in section 100 of the CTA in 1996 to reflect the same definition set out in section 4 of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.) [hereinafter the RSA]. The focus of the RSA is that of safety and any different treatment under this law between those crossings which are parallel to a railway line and those which are at right angles to a railway line would be untenable as both types of crossings involve safety issues. The Agency finds that harmony between the RSA and the CTA supports an Agency mandate.

[17] The Agency finds that the alteration in wording has not changed its mandate to authorize construction of utility lines where the utility runs along and under the railway line. In support of this regulatory overview, the Agency has a dispute resolution mechanism for construction of encroachments on land of the railway company's right of way by utility lines. In this sense, the encroachment can arise in varying situations whether across, over, along or under the railway line. An examination of the intent of sections 100 and 101 of the CTA would support this finding.

[18] While the term "railway line" is not defined in the CTA, section 87 of the CTA states that a "railway" includes "branches, extensions, sidings, railway bridges, tunnels, stations, depots, wharfs, rolling stock, equipment, stores, or other things connected with the railway", all of which imply the inclusion of land that comprises the right of way, and not just steel rails, ties and the bed or ballast upon which it stands. The Agency finds guidance in the case Canadian National Railway Company vs. Canada (Canadian Transportation Agency), [1999] F.C.J. No. 1961. There, the Federal Court of Appeal ruled that a "railway line" includes the physical components which permit and facilitate the movement of locomotives and rolling stock and is not restricted to the railway track portion only.

[19] Bound by that Decision, the Agency finds that a "railway line" includes the railway right of way. Therefore, by definition, a utility crossing under section 100 of the CTA is intended to include encroachments on the land of the railway company's right of way by utility lines that run alongside the trackage. In other words, "railway line" is the tracks and supporting infrastructure which includes the contiguous land that fall within the railway right of way. In this case, the infrastructure contemplated by ATCO would be "over" the railway line within the meaning of section 100 of the CTA.

[20] In light of the above, the Agency has determined that it has jurisdiction under subsection 101(3) of the CTA to make a ruling on these applications. This jurisdiction extends to requests for utility easements over the right of way even where the requests include the construction, as here, of above-ground valves where the valves are works related to a utility crossing.

ENVIRONMENTAL ISSUE

[21] An application pursuant to subsection 101(3) of the CTA triggers a need for an environmental assessment pursuant to paragraph 18(1)(a) of the Canadian Environmental Assessment Act, S.C., 1992, c. 37 (hereinafter the CEAA). Therefore, the Agency will consider the environmental issue at this time.

[22] Pursuant to subsection 18(1) of the CEAA, the projects have been screened and a screening report has been prepared.

[23] ATCO submitted Environmental Assessment Information Reports that the company had produced outlining the risks associated with the physical structure of the above-ground valves.

[24] Pursuant to subsection 20(1) of the CEAA, after taking into consideration the screening report, the Agency has determined that the projects will not cause any significant adverse environmental effects.

[25] The Agency can therefore proceed with these applications pursuant to subsection 101(3) of the CTA.

ISSUES

[26] The issues to be addressed are whether the Agency, pursuant to subsection 101(3) of the CTA, should authorize the construction and maintenance of works related to suitable utility crossings, in this case above-ground valves, along CP's right of way on the Laggan Subdivision and whether, in any such authorization, it should provide a direction on the issues of duration, indemnification and annual compensation.

POSITIONS OF THE PARTIES

ATCO

[27] ATCO is applying for authorization to construct above-ground valves and protective pipe fences to enhance ATCO's ability to isolate its existing 168.3 mm natural gas pipeline from a location east of Canmore to Banff, Alberta. ATCO states that the proposed valves will enhance the safety of the existing pipeline system located within the CP right of way.

[28] ATCO accepts that the proposed above-ground valves do not fall within the purview of the original pipeline agreement (Order No. 2004-AGR-478) and that they require a separate approval from CP or the Agency.

[29] ATCO states that, in its view, the location and maintenance of the valves are not in dispute and requests that the Agency rule on the duration of an order and the issues related to indemnification and compensation. In this regard, ATCO points out that it will be fully responsible for all installation, maintenance and operation of the facilities and it will adhere to all safety, protocol and access requirements, as mandated by the RSA, the Canadian Standards Association Code (hereinafter the CSA Code), the Pipeline Act and any associated regulations, and the Alberta Energy Utilities Board.

[30] ATCO advises that the proposed above-ground valves will be located approximately 24 metres from the centre line of the railway tracks and that the portion of the railway right of way required for the above-ground valves is already being utilized for a pipeline and related infrastructure. ATCO contends that the risks associated with above-ground valves are not measurably different from any existing above or underground pipeline facilities. ATCO also advises that it will require access to the facilities at least once a year for maintenance.

[31] ATCO is willing to assume responsibility for all risks and damages (including appropriate insurance) associated with the construction, maintenance and operation of the proposed work and will indemnify CP from any such risks or damages, unless they are a result of CP's negligence.

[32] ATCO acknowledges that the Alberta Surface Rights Act has requirements for separate lease agreements for above-ground installations for pipelines. After a review of the annual rates that it pays for other above-ground valves, ATCO suggests that an annual fee of $325 would be reasonable.

CP

[33] CP maintains that the above-ground valves would eliminate CP's ability to utilize a portion of its right of way and that ATCO is attempting to expropriate the exclusive use of a portion of CP's right of way without paying any compensation. CP submits that there are significant risks and financial burdens involved with owning, maintaining and operating a railway and if ATCO requires the use of other third-party lands, it will have to pay reasonable compensation for the exclusive use of the lands and for surface access.

[34] CP is concerned with the safety matters regarding the construction and placement of above-ground valves on its operating right of way, particularly as they are connected to a gas line, as the risk to CP, its operating ability, its crews and the public is still unknown. According to CP, further environmental assessments are required prior to any authorization by the Agency.

[35] CP also disputes ATCO's statement that the location and maintenance of the valves are not in dispute and points out that no details regarding maintenance issues or the requirements related to the access to CP's operating right of way have been submitted to the Agency.

[36] CP asserts that it is fundamentally inequitable that a utility company should be permitted to expropriate the use of an operating rail corridor without at least: 1) assuming responsibility for all risks and damages, including insurance, however caused, associated with the construction, maintenance and operation of the proposed works; 2) indemnifying the railway company fully in respect thereof; 3) complying with CP's safety requirements; 4) undertaking to relocate or alter works in order to accommodate railway operational and long-range planning; and, 5) paying reasonable compensation.

Transport Canada

[37] Transport Canada states that while the CTA may provide a dispute resolution process to determine what constitutes a suitable road or utility crossing and to make decisions with respect to issues related to the construction, maintenance or apportionment of costs for a crossing, the RSA establishes authorities, responsibilities, time frames and a formal process for notice, identification and resolution of safety related concerns.

[38] Transport Canada submits that the definition of a "utility crossing" as it pertains to the RSA includes any pipeline that enters the railway right of way and as such, the proposed valves are considered a railway work which must comply with Transport Canada's Notice of Railway Works Regulations, SOR/91-103, pursuant to the RSA. Such notice of works must be provided to the railway company prior to commencing any work. At that time, Transport Canada could become involved to establish the protocols necessary to ensure safe railway operations.

ANALYSIS AND FINDINGS

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

[40] The Agency notes that the pipeline, constructed in 1951, constitutes a parallel crossing that already exists; that a service is already being provided through the operation of the existing pipeline; and that the above-ground valves are works related to the existing pipeline, but which fall outside of the purview of the existing agreement which became Agency Order No. 2004-AGR-478. The Agency accepts ATCO's proposal that it will be responsible for costs and work associated with the installation of the subject valves and all future maintenance.

[41] With respect to the issue related to the duration of an Agency order at a crossing, a decision issued by the Agency authorizing the construction of a utility crossing or related work at a specific location remains in effect until such time as the decision is amended or rescinded by the Agency or its successor.

[42] The Agency recognizes that CP may require the use of this portion of its land at some future time making this right of way a valuable commodity to CP and that CP's ability to use the land on which the above-ground valves are to be located may be impaired by the mere presence of the valves. However, the Agency can not rule on future possibilities but will provide determinations on such issues if and when such applications are received.

[43] The Agency also notes that ATCO advised that it is willing to assume responsibility for all risks and damages (including appropriate insurance) associated with the construction, maintenance and operation of the proposed work and to indemnify CP from any such risks or damages unless they are caused by CP's negligence. In this respect, CP has requested ATCO to assume responsibility for all risks and damages, including insurance, however caused. The Agency is of the opinion that individual liability resulting from future negligent acts by either party at a crossing should be determined by the civil courts in the province in which the crossing is situated.

[44] Similarly, the Agency notes that CP has requested compensation from ATCO for this incursion to its right of way. Given that the matter of compensation is still a subject of negotiation, the Agency is not in a position to dictate the amount of compensation at this time. However, the parties are encouraged to continue negotiations keeping in mind that should the parties not be able to reach an agreement on the suitable level of compensation, either party may apply to the Agency at that time for a determination.

[45] Furthermore, the Agency recognizes CP's concerns with respect to safety matters relating to the construction and placement of above-ground valves in its operating right of way, as well as ATCO's commitment to construct the above-ground valves according to all safety, protocol and access requirements as mandated by the RSA, the CSA code, the Pipeline Act and associated regulations, and the Alberta Energy Utilities Board.

[46] The Agency notes that the proposed valves would be considered a railway work which would be required to comply with Transport Canada's Notice of Railway Works Regulations pursuant to the RSA. Consequently, should any safety issues remain between the parties following a submission of any Notice of Railway Work, Transport Canada could become involved to establish the protocols necessary to ensure safe railway operations.

[47] As such, the Agency is of the opinion that the construction of the above-ground valves should be authorized to proceed at this time. Such authorization does not, however, relieve ATCO from complying with the RSA.

CONCLUSION

[48] In light of the above, the Agency hereby authorizes ATCO, at its own expense, to construct and maintain the subject works related to the utility crossing as identified above.

Members

• Baljinder Gill
• Mary-Jane Bennett