Decision No. 9-R-2024

Summary

[1] GEXR filed an application with the Canadian Transportation Agency (Agency), pursuant to section 32 of the Canada Transportation Act (CTA), to rescind its CoF 98001-5, as well as all previous amendments and underlying decisions, on the basis of its assertion that GEXR is no longer a federal railway.

[2] The Agency finds that GEXR has not met the requirements under subsection 88(4) of the CTA to change GEXR’s status as a federal railway and the requirement to hold a valid CoF. Consequently, the Agency dismisses GEXR’s application.

Background

[3] GEXR was a provincial railway company, as it owned and operated railway lines located within the Province of Ontario (Original Lines) until 1998, when it entered into a 20-year lease agreement (Agreement) with the Canadian National Railway Company (CN), a federal railway company. Under this Agreement, GEXR operated on CN railway lines located in Ontario, over which VIA Rail Canada Inc. (VIA Rail) also operated and, thus, required a federal CoF to operate. GEXR’s original CoF 98001 was issued on November 13, 1998, pursuant to Decision 552-R-1998.

[4] On February 25, 2020, the Agency issued an amended CoF 98001-2, pursuant to Determination R-2020-35, based on the fact that GEXR’s railway freight operations had reverted to its Original Lines after the Agreement expired.

[5] GEXR’s ongoing freight operations remain within the Province of Ontario and are reflected in its current CoF 98001-5, issued on March 11, 2022.

Application

[6] On November 29, 2023, GEXR filed an application, pursuant to section 32 of the CTA, to rescind CoF 98001-5, as well as all previous CoF amendments (98001-1 through 98001‑5) and their underlying decisions, based on a change in the facts or circumstances in the nature of its operations.

Preliminary Matter

[7] GEXR’s current CoF 98001-5 is the only CoF currently in force. All previous CoF amendments have been superseded by subsequent amendments, and consequently, the Agency will limit the scope of its review under section 32 of the CTA to GEXR’s current CoF and its underlying Determination R-2022-27.

The Law

[8] Section 32 of the CTA states that the Agency may review, rescind or vary any decision or order made by it or may re-hear any application before deciding it if, in the opinion of the Agency, since the decision or order or the hearing of the application, there has been a change in the facts or circumstances pertaining to the decision, order or hearing.

[9] Subparagraph 90(1)(b)(ii) of the CTA provides that a person must hold a valid CoF in order to operate a railway that does not relate to a passenger rail service. In order for that requirement to apply, the railway must fall within the legislative authority of Parliament, as per section 88 of the CTA. A railway is within the legislative authority of Parliament if any of the following conditions are met:

1. the railway work or undertaking connects or crosses provincial borders;
2. a company operates a railway across international borders;
3. the work is declared to be for the general advantage of Canada;
4. the railway work is owned, controlled, leased or operated by a person who operates a railway within the legislative authority of Parliament; or
5. it is an integral part of an existing federal undertaking.

[10] Unless it falls within one of these categories, a railway company that operates entirely within a given province is considered a “local work” and is subject to provincial legislative authority.

[11] In accordance with subsection 88(3) of the CTA, a railway is declared to be a work for the general advantage of Canada if it is owned, controlled, leased or operated by a person who operates a federal railway. Subsection 88(4) of the CTA further states that this declaration ceases to have effect with respect to a railway, or a portion of it, if its operation is discontinued under Division V or is the subject of a transfer under that Division to a person that does not operate a federal railway.

GEXR’s position

[12] GEXR states that in 1998, it required a CoF under the CTA because it entered into an Agreement to operate CN railway lines between various points in Ontario, over which VIA Rail also operated at the time. GEXR argues that the presence of VIA Rail over the same CN rail lines operated by GEXR resulted in those railway lines being declared to be for the general advantage of Canada, which brought them under federal jurisdiction as long as VIA Rail operated over them.

[13] GEXR further states that its current operations are limited to the Province of Ontario, over GEXR’s Original Lines, and that it no longer operates on any railway lines also operated by VIA Rail. GEXR claims that, as a result, its railway line has ceased to meet the criteria under sections 88 and 90 of the CTA and, thus, no longer falls under federal jurisdiction, such that GEXR is not required to hold a CoF under the CTA.

[14] Consequently, GEXR submits that there has been a change in the facts or circumstances pertaining to the nature of its operations and requests that the CoFs be rescinded by the Agency pursuant to its authority under section 32.

Analysis

[15] The Agency must determine whether new facts or circumstances have impacted GEXR’s status as a federal railway and the requirement to hold a CoF under the CTA. GEXR has provided evidence that its freight operations have changed since its original CoF was issued in 1998, namely, that GEXR no longer operates on CN rail lines following the expiration of the Agreement in 2018.

[16] The Agency finds that it is not the presence of VIA Rail on the same CN railway lines operated by GEXR under the Agreement that brought GEXR under federal jurisdiction in 1998. Rather, GEXR’s Original Lines became subject to a declaration for the general advantage of Canada under subsection 88(3) of the CTA the moment that GEXR commenced operating a railway within the legislative authority of Parliament, namely, the CN lines governed by the Agreement.

[17] In accordance with the Constitution Act, 1867, this declaration resulted in the withdrawal of GEXR’s Original Lines from provincial jurisdiction and section 88 of the CTA sets out the specific conditions that must be met in order for that declaration to cease to have effect. Under subsection 88(4) of the CTA, a railway can only return to provincial jurisdiction by discontinuing those lines under Division V of the CTA or by transferring them under Division V to a person who does not operate a railway within the legislative authority of Parliament. GEXR has done neither of those things. Consequently, the Agency finds that a railway cannot revert to provincial jurisdiction only because the elements that initially brought it under federal jurisdiction no longer exist.

[18] GEXR has not met the requirements set out under subsection 88(4) of the CTA in order for the declaration to cease to have effect on its Original Lines. Accordingly, the fact that GEXR no longer operates on lines also operated by VIA Rail, or that GEXR ceased operations on CN rail lines once the Agreement expired, does not change the federal status of the Original Lines.

[19] The Agency recognizes that GEXR faces an unusual situation with regard to the circumstances that maintain its current railway operations under federal jurisdiction. However, the Agency must apply the law as Parliament wrote it and give effect to these provisions as they are worded in the CTA.

[20] In light of the above, the Agency finds that GEXR remains a railway within the legislative authority of Parliament. GEXR is required to hold a CoF under the CTA as the Original Lines governed by CoF 98001-5 remain a work for the general advantage of Canada.

[21] The Agency finds that that GEXR has not established that there has been a change in the facts or circumstances within the meaning of section 32 of the CTA that alters the federal status of GEXR. Moreover, GEXR’s current CoF 98001-5 accurately reflects its existing freight operations based on the information on file with the Agency.

Conclusion

[22] The Agency dismisses GEXR’s request to rescind GEXR’s CoF and its underlying determination pursuant to section 32 of the CTA.

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Legislation and Regulations referenced	Section, subsection, rule, schedule, etc.
Canada Transportation Act, SC 1996, c 10	32; 88; 90; 92
Constitution Act, 1867	91(29); 92(10)