Decision No. 76-R-2016

INTRODUCTION

[1] On April 22, 2015, CP filed an application pursuant to subsection 101(3) of the CTA for authority to construct and maintain a utility crossing at mileage 6.84 of the Belle Plaine Spur, where CP will construct its railway line above and across a Mosaic Canada ULC (Mosaic) water pipeline.

BACKGROUND

[2] In 118-R-2015">Decision No. 118-R-2015, pursuant to subsection 98(2) of the CTA, the Agency authorized the construction of the Belle Plaine Spur to service the K+S Potash Canada GP Legacy Mine north of Belle Plaine, Saskatchewan. Part of the Belle Plaine Spur construction involves the crossing of Mosaic’s existing water pipeline, which services the Mosaic Belle Plaine Potash Mine.

[3] Following unsuccessful private negotiations between the parties over a crossing agreement, both Mosaic and CP agreed to participate in Agency-led mediation to resolve the dispute. On November 6, 2015, CP advised the Agency that mediation was unsuccessful and that it wished to re-commence the adjudication process. On November 24, 2015, the Agency advised CP that neither the application nor its letter provided sufficient information for the Agency to properly assess and rule on the issues to be resolved. In response, CP amended its application to make it complete. The Agency opened pleadings on December 29, 2015 and closed pleadings on January 25, 2016.

[4] In accordance with the Memorandum of Understanding (MOU) on coordination of efforts related to utility and private crossings between the Agency and Transport Canada (TC), the Agency provided a copy of the application to TC seeking comments respecting any safety concerns it may have with the proposed crossing as shown on the drawings provided in the application. TC submitted its comments on February 26, 2016.

[5] The parties agree on the location, construction and apportionment of the construction and future maintenance costs for the said crossing. The issues in dispute are:

• Indemnity
• Liability
• Routine and Emergency Access
• Environment
• Other Commercial Terms

PRELIMINARY MATTER

[6] CP is seeking an interim order compelling Mosaic to construct the necessary pipe protective measures and authorizing CP to construct the Belle Plaine Spur at and around the crossing.

[7] Considering that this Decision will address the issues raised above, the Agency finds that the issuance of an interim order is unnecessary.

ISSUES

1. Should the Agency authorize the construction and maintenance of the utility crossing?
2. If the Agency authorizes the construction of the utility crossing, what terms and conditions, if any, should be included?

THE LAW

[8] Subsection 101(3) of the CTA states:

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.

[9] The parties have been unsuccessful in negotiating an agreement pursuant to section 101 of the CTA and thus, CP has applied to the Agency for authority to construct and maintain the proposed utility crossing.

ISSUE 1: SHOULD THE AGENCY AUTHORIZE THE CONSTRUCTION AND MAINTENANCE OF THE UTILITY CROSSING?

[10] While the location of the pipeline and construction and future maintenance costs for the crossing are not matters in dispute, Mosaic submitted, in its pleadings related to CP’s interim order request, that the proposed angle at which the track would cross its pipeline would not meet the requirements of Transport Canada’s Standards Respecting Pipeline Crossings Under Railways (TC E‑10), while CP maintained that the proposed crossing does meet the requirements of TC E‑10 and that the angle referred to by Mosaic concerns oil and gas pipelines and not water pipelines.

POSITIONS OF THE PARTIES

CP

[11] CP states that the construction of the Belle Plaine Spur, which includes the crossing, is a federal undertaking and constitutes a work for the general advantage of Canada being essential for the continued operation and growth of the K+S Potash Canada GP Legacy Mine. CP submits that the purpose of the spur will allow K+S to transport potash to North American markets as well as distant and growing international markets in Asia and South America, and that transportation by rail is the only economical and efficient method to do so.

[12] CP submits that throughout the course of the informal negotiations, CP proposed that Mosaic would be responsible for the entirety of the crossing’s construction, including selecting and supervising their chosen contractor and determining all applicable construction methodology related to the crossing, while CP would fully reimburse Mosaic for all direct costs incurred in connection with the crossing’s construction, including the installation of pipe protective measures required due to the railway track construction as per TC E-10.

Drawings

[13] With its application, CP provided the following Drawings:

• Drawings 304888-SK-272, revision 0 and 304888-SK-392, revision 0 depicting Option 1 where a 59-m long section of the existing 500-mm diameter pipe will be covered with a 59-m long 710-mm diameter split casing if, upon digging, the contractor deems the pipe to be in good condition;

• Drawings 304888-SK-119, revision A and 304888-SK-118, revision B, depicting Option 2 where a 59-m long section of the existing 500-mm diameter pipe would be replaced with a new section covered with a 710-mm diameter casing installed at the same time if upon digging, the contractor deems the pipe to be in poor condition.

[14] CP maintains that the drawings are compliant with TC E-10.

Mosaic

[15] Mosaic submits that the safety and operation of Mosaic’s pipeline should be factors to be considered when the Agency is making its decision and that the decision should not be based solely on the safety and operation of the railway.

Transport Canada’s comments

[16] In a letter dated February 26, 2016, Transport Canada provided safety-related comments on the proposed crossing, stating that:

1. Documents must be approved by a professional engineer ensuring that the carrier pipes, casing pipes and joints conform to the applicable requirements of the American Railway Engineering and Maintenance of Way Association (AREMA) Manual, Chapter 1, Section 5.3 and comply with Canadian Standards Association (CSA) Standards, as referenced below:

1. Material is of sufficient strength to withstand internal pressure and external loading, as per the Standards Respecting Pipeline Crossings Under Railways, Section 6.1.b (p.7) http://www.tc.gc.ca/eng/railsafety/standards-tce10-236.htm
2. Material is properly connected at the joints and leakproof. Joints for carrier line pipes shall be leakproof, whether they are mechanical or welded, as per the Standards Respecting Pipeline Crossings Under Railways, Section 6.1.c (p.7) http://www. tc. gc.ca/eng/rail safety/standards-tce10-236.htm
3. For steel carrier or casing pipes, the least nominal wall thickness shall be in accordance with CSA Standard Z662-99, as reflected in the Standards Respecting Pipeline Crossings Under Railways, Section 5 (p. 2) http://www.tc.gc.ca/eng/railsafety/standards-tce10-236.htm

2. There was no documentation provided specifying the installation of Shut-Off Valves as per Section 5.3 of the AREMA Manual.

3. In the Norton Rose Fulbright [CP’s lawyer] letter dated November 6, 2015, CP proposed two options regarding Mosaic Canada ULC’s water line. One of the options is dependent on the condition of the existing line once CP starts digging:

Option 1:

Install a 59 meter long 710 mm diameter split casing around the existing 500 mm diameter water pipe under CP’s embankment. The casing would extend beyond the toe of the slope to a distance that is acceptable to Mosaic Canada ULC.

Option 1 drawings:

1. 304888-272 rev. 0, dated October 24, 2015; and,
2. 304888-392 rev. 0, dated October 24, 2015.

Option 2:

Due to the age of the existing water line, CP may opt to replace a portion of the existing pipe and replace it with a 59 meter long 500 mm diameter section of steel pipe covered with a 710 mm diameter casing, installed at the same time. The casing would not have to be a split casing as it could be installed around the new water line prior to connection to the existing line.

Option 2 drawings:

1. 304888-SK-119, rev. A, dated October 15, 2015; and,
2. 304888-SK-l 18, rev. B, dated October 15, 2015.

In Option 1, split casing must meet the requirement of the Standards Respecting Pipeline Crossings Under Railways, Section 6. TC would recommend Option 2 which is in compliance with the Standards Respecting Pipeline Crossings Under Railways.

ANALYSIS AND FINDINGS

[17] The Agency notes that the parties do not object to the location or the construction and future maintenance costs of the proposed crossing. Further, in Decision No. 118-R-2015, the Agency authorized the construction of the Belle Plaine Spur, which necessarily involves the crossing of the existing Mosaic water pipeline.

[18] Issues have been raised by Mosaic regarding the proposed crossing angle as shown on the Drawings as not meeting the requirements of TC E-10 although these remained unsubstantiated in the absence of a response to CP’s answer on the matter. Further, TC’s comments with respect to the safety of the proposed crossing did not address any concern related to the angle of crossing; however, TC did recommend that CP adopt its proposal as depicted in Option 2.

[19] Drawings 304888-SK-119, revision A and 304888-SK-118, revision B, depicting Option 2, are therefore deemed adequate for Agency purposes.

[20] The Agency must next consider whether terms and conditions should be included with the Agency’s authorization.

ISSUE 2: WHAT TERMS AND CONDITIONS, IF ANY, SHOULD BE INCLUDED IN THE DECISION?

[21] With respect to the terms and conditions of the crossing, the Agency notes that the following issues remain in dispute:

1. Indemnity
2. Liability
3. Routine and Emergency Access
4. Environment
5. Other Commercial Terms

1. Indemnity

CP’s position

[22] CP states that the indemnity clause contained in the crossing agreement, and as stated below, should be incorporated into any crossing order granted by the Agency, in accordance with the Agency’s prior decisions.

Railway’s Indemnity: The Railway shall save, indemnify, defend and hold harmless Mosaic, its officers, directors, employees and invitees from and against all claims, losses, damages, costs (including legal costs and solicitor client basis) expenses and liabilities in respect of:

1. bodily injury, including death of any Mosaic personnel working in the Crossing Area:
2. loss of or damage to Mosaic’s property whether owned, hired, or leased;

to the extent such liability arises from the Railway’s; (i) use of the Crossing Area: (ii) acts, omissions, negligence, gross negligence or willful misconduct in connection with the performance of any work on or affecting the Crossing Area; (iii) release of a Hazardous Substance in the Crossing Area; or (iv) a material breach of the Railway’s obligations under the Agreement which is not cured within 30 days of notice regarding such material breach.

Mosaic’s Indemnity: Mosaic shall save, indemnify, defend and hold harmless the Railway, its officers, directors, employees and invitees from and against all claims, losses, damages, costs (including legal costs and solicitor client basis) expenses and liabilities in respect of:

1. bodily injury, including death of any Railway personnel working in the Crossing Area:
2. loss of or damage to the Railway’s property whether owned, hired, or leased;

to the extent such liability arises from Mosaic’s; (i) use of the Crossing Area: (ii) acts, omissions, negligence, gross negligence or willful misconduct in connection with the performance of any work on or affecting the Crossing Area; (iii) release of a Hazardous Substance in the Crossing Area; or (iv) a material breach of Mosaic’s obligations under the Agreement which is not cured within 30 days of notice regarding such material breach.

Mosaic’s position

[23] Mosaic did not provide pleadings with respect to this issue.

Analysis

[24] With respect to indemnity, Mosaic did not comment in its answer, nor has it contested the indemnity clause submitted by CP. The Agency therefore sees no reason why the indemnity clause proposed by CP could not be incorporated in its decision. Consequently, the Agency incorporates in this Decision the Indemnity clause as proposed by CP.

2. Liability

CP’s position

[25] CP submits that Mosaic seeks a civil liability provision that would require CP to pay Mosaic 1 million dollars per day for each day Mosaic’s pipeline was rendered out of service by virtue of CP’s negligence, misconduct or direct action (daily million clause). CP rejected the premise of the daily million clause, which, rather than compensating Mosaic for any actual loss, instead guaranteed a 1 million dollars per day windfall to Mosaic in the event of a service interruption that it or its contractor caused. CP states that the Agency has no jurisdiction to include a daily million clause in any utility crossing order, stating that civil liability is a matter for the civil courts in the province in which the crossing is situated; and that Mosaic has insurance in place to deal with any losses associated with negligence by any party.

Mosaic’s position

[26] With respect to liability, Mosaic submits that the parties have had further discussions and continue to work on an amicable resolution of the issue.

Analysis

[27] It should be noted that in previous decisions, the Agency has been of the opinion that liability for negligent acts by either party at railway or utility crossings ought to be determined by the civil courts in the province in which the crossing is situated. Further, while Mosaic initially requested that a civil liability provision be included in the terms of the agreement (the daily million clause), CP later claimed that Mosaic provided CP with a draft agreement that included an amicable solution to the million dollar clause.

[28] Consistent with its precedents, the Agency will not impose any terms and conditions with respect to liability.

3. Routine and Emergency Maintenance Access

CP’s position

[29] With respect to routine and emergency maintenance access, CP argues that the land in which the crossing intersects with the Mosaic pipeline is owned by CP and the easement grants Mosaic broad rights. However, the easement is granted pursuant to the Land Titles Act (Saskatchewan), a provincial legislation. CP submits that based on the doctrine of federal paramountcy and interjurisdictional immunity, this provincial legislation is inapplicable in this case as the legislation conflicts with the Railway Safety Act, a federal legislation, with respect to ensuring the safety and operational integrity of the railway, and therefore, the federal legislation would be paramount.

[30] CP further submits that the pipeline will be underneath an operating railway. It adds that for the safety of all parties, it is reasonable for CP to require Mosaic to provide five business days’ notice prior to accessing the crossing area to perform routine maintenance, adding that Mosaic’s maintenance of the pipe at the crossing is very infrequent and scheduled weeks if not months in advance; and in the event that Mosaic requires emergency access, Mosaic is to call CP Police, for which CP provided a telephone number.

Mosaic’s position

[31] Mosaic argues that its pipeline has existed for a number of years, and that CP is now seeking to significantly limit Mosaic’s rights to perform routine and emergency maintenance on the pipeline.

[32] Mosaic submits that in contrast to CP’s position, it is of the view that the rights granted provincially and the rights granted federally can co-exist with respect to the crossing area, and that CP should be granted liberal access to the crossing area for maintenance purposes. However, Mosaic should also be granted liberal access to the crossing area for maintenance purposes given the nature of Mosaic’s operation and the potential impact of a pipeline failure that could result in the shutdown of the plant.

Analysis

[33] The Agency notes that access to the crossing area involves an aspect of safety to both parties’ infrastructure and that the lack of access in an emergency can have serious consequences to both parties. In A. Demers, Laprairie v. Grand Trunk Railway Co., (1920), 31 C.R.C. 297, on page 299, it is stated that:

In going through the territory of any village, town or city railways should not be an obstacle to the expansion of the residential districts on either side of the track, because such an expansion is to everybody’s advantage, railway companies included. The crossing over and under railway tracks of wires and pipes needed for the ever‑increasing forward movement, should be facilitated as far as possible.

It is true that the railway companies are the owners of their right of way; but if they have certain rights as proprietors, there are also certain duties incumbent upon them as such. For instance, they are bound to suffer all easements arising from the nature of things and the laying of the land such as arise from drainage, new road crossings, pipes for water or sewage, electrical installations, etc.

[34] In this case, CP will be the proponent of the crossing construction and as such has recognized the responsibility of both parties to co-exist at the crossing location. In line with this, CP has requested the following:

• Routine Maintenance: In the event that Mosaic requires access to the surface or subsurface of the spur or any railway property to maintain or repair the utility, Mosaic should provide CP with five days’ notice where possible or in the alternative, such access shall be coordinated with the railway company in accordance with Access Protocols by contacting the railway company’s operation centre at 1‑800-795-7851, and Mosaic shall be subject to the supervision of a representative of the railway company whose instructions shall be strictly followed.

• Emergency Access: In the event that Mosaic requires emergency access to the surface or subsurface of the spur or any railway property, Mosaic shall contact CP Police at 1‑800‑716-9132 (or such other contact number the railway company may publish from time to time).

[35] The Agency finds this proposal to be reasonable provided that CP ensures that access for emergency work will be allowed upon request. Consequently, the Agency incorporates in this Decision the Access for Routine and Emergency Maintenance clause as proposed by CP.

4. Environment

CP’s position

[36] CP does not believe that Mosaic’s vague and unidentified environmental concerns have merit as the existing pipeline carries water and the Belle Plaine Spur will be used to transport potash, an inert substance.

Mosaic’s position

[37] Mosaic did not provide pleadings with respect to this issue.

Analysis

[38] The Agency notes that on July 6, 2012, the former CEAA was replaced by the Canadian Environmental Assessment Act, 2012, S.C., 2012, c. 19, which no longer requires the Agency to conduct an environmental assessment for crossing applications prior to rendering a decision pursuant to subsection 101(3) of the CTA. Further, the Agency notes that while Mosaic has raised this issue, it has not provided any pleadings to substantiate its concerns. For these reasons, the Agency will not address this issue in this Decision.

5. Other Commercial Terms

CP’s position

[39] CP submits that Mosaic has not provided any information in its answer regarding this issue.

Mosaic’s position

[40] Mosaic did not provide pleadings with respect to this issue.

Analysis

[41] Mosaic has listed Other Commercial Terms as an outstanding issue requiring further discussion between the parties, but has not provided any pleadings to substantiate its concerns in this matter; therefore, there is no need to further consider this issue.

CONCLUSION

[42] Based on the above, the Agency, pursuant to subsection 101(3) of the CTA, authorizes the construction and maintenance of a utility crossing at mileage 6.84 of the Belle Plaine Spur, where the proposed track will be constructed across and over Mosaic’s water pipeline as shown on engineering Drawings 304888-SK-119, revision A and 304888-SK-118, revision B, submitted with the application, depicting Option 2 as proposed by CP and recommended by TC. Such authorization does not relieve CP from meeting the requirements of the Railway Safety Act, R.S.C., 1985, c.32 (4^th Supp.) and other relevant standards.

[43] With respect to Indemnity and Access for Routine and Emergency Maintenance, the parties must comply with the terms as described in the relevant sections above.

[44] Construction and future maintenance costs shall be apportioned as per the agreement between the parties; hence, Mosaic is ordered to undertake the pipe protective work as shown on the drawings submitted with the application.