Decision No. 93-R-1995

February 24, 1995

File No. R 8050/709-260.17

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BACKGROUND

On June 20, 1994, the City of Edmonton (hereinafter the City) applied to the National Transportation Agency (hereinafter the Agency) for the authorities set out in the title. The City also requested that the crossing order include the following terms:

1. That, except for the cost of rectification of damage caused by and not rectified by the City, no administrative, rental, processing or other fees or compensation shall be payable by the City to the Canadian National Railway Company (hereinafter CN) with respect to the construction, maintenance or operation of the crossing.
2. That the leave to cross be granted to the City in perpetuity or until relocation or removal is ordered by the Agency or its successors, any application for such order only to be made upon reasonable notice to the City.
3. That the provisions concerning the City's liability to CN in respect of this crossing be as set out in section 23 of the Pipe Crossings Under Railways Regulations, C.R.C., c. 1187 (hereinafter General Order No. E-10).

In its application, the City advised that it has been unable to negotiate a mutually acceptable agreement with CN as to the terms of this crossing. The City also advised that the fibre optic cable crossing was needed in order to replace the present cable that was deteriorating and to ensure the proper and safe conduct of its power operations.

By letter dated August 4, 1994, the City advised that construction to the north side of the CN track would be completed in the very near future and requested that an interim order be issued so that it may continue construction across the CN track.

By Order No. 1994-R-351 dated August 18, 1994, the Agency granted the request of the City for an interim order pursuant to section 40 of the National Transportation Act, 1987 pending the determination of the Agency on the issues of compensation, termination, relocation and liability provisions.

POSITION OF THE CITY

The City submits that the issues that it has been unable to resolve with CN is whether or not CN is entitled to compensation for the wire crossing, the terms of the wire crossing and the circumstances in which the City can be required to remove or relocate its installation. Also at issue is the type of liability provisions that is appropriate.

The City submits that the request by CN for annual compensation, rentals or administrative fees in this case is not justified and that the policy of the Agency and its predecessors has been not to require compensation in circumstances such as those of the crossing under consideration. The City cites the Reasons for Order No. 1989-R-296 (Interprovincial Pipeline Company) dated September 26, 1989 wherein the Agency held as follows:

In situations where a private crossing agreement is entered into by a landowner and a railway company, provision is often made for the payment by the licensee of compensation to the railway company in the form of annual or administrative fees. However, if the right to cross is established by the exercise of a statutory discretion, the policy of the Agency and its predecessors has been not to provide for compensation where a mere easement is created without any real or appreciable injury or damage to the railway company or its property;

The City also cites the Maritime Telegraph and Telephone Company v. Dominion Atlantic Ry. Co. and Baird v. Canadian Pacific Ry. Co. (1916), 20, C.R.C. 213 case in which Commissioner McLean stated, in regards to statutory pipeline crossings:

At best an easement is obtained, and the Board has refused to order any charge by way of compensation where a merely technical violation of property rights is involved.

In the same case, Chief Commissioner Sir Henry L. Drayton stated:

The practice of the Board has been to allow such crossings without compensation. . . . In the case of any real or appreciable injury or damage to the railway or to its property, the ordinary rule requiring compensation would of course apply.

In addition, the City notes that in the A. Demers, Laprairie v. Grand Trunk Railway Co. (1920), 31, C.R.C. 297 case, the deputy Chief Commissioner expanded the application of this policy by the following statement at page 299:

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.

The City submits that these principles should be applied to this application and that no form of compensation to CN is justified. The City further submits that the crossing in this instance will create a mere easement and will result in no damage or appreciable injury to CN, its operations or its property.

The City notes that none of the Regulations of the Agency provide for annual fees or fair market rentals or compensation for the granting of the crossing and installation. The City also notes that the terms of the CN agreement are such that CN was seeking compensation for the mere granting of the crossing. This compensation was sought in addition to any engineering, flagging, and signalling fees specific to each installation. It does not matter whether this compensation is described as an annual or rental fee of a set amount or as an unspecified administrative fee. Regardless of the description given, what CN has essentially required as a condition of its consent to this crossing is compensation for a mere easement.

The City states that the agreement proposed by CN provides for a 20-year term and also provides that CN may require the City to remove or relocate the facilities. The City is of the view that these provisions are not appropriate. The 20-year term is less than the practical life expectancy of a fibre optic cable which has a minimum life expectancy of 25 years. Moreover, the cost of replacing the fibre optic cable at the location of this crossing would be significantly less than the cost of reinstalling it at another location. The City requests that the right to cross be granted in perpetuity or until removal or relocation is ordered by the Agency or its successors.

With respect to the issues of termination and relocation, the City submits that it is not seeking to preclude a termination or relocation clause. The City is seeking a provision on this crossing that would allow CN to make an application for relocation or termination at any time on reasonable notice to the City. This provides a much better means of ensuring that CN's integrity of future passage is not jeopardized should site conditions require the removal or relocation of the cable. This ensures that the concerns of the City can be addressed if and when site conditions ever do change.

With respect to the issue of the liability provisions, the position of the City is that its liability in respect of this crossing should not exceed that provided for in General Order No. E-10 and in particular, section 23 which reads as follows:

Every owner of a pipe installed under a railway shall at all times indemnify the company that owns, operates or uses the railway against all loss, cost, damage, injury and expense to which the company may be put by reason of any injury to persons or damage to property caused by the pipe or by any oil, gas, water or other substance being carried, or by any works provided for in these Regulations, or by the imprudence, neglect or want of skill of the employees or agents of the person who owns the pipe in connection with the laying, maintenance, renewal, repair or removal of the pipe, or the use thereof.

POSITION OF CN

CN submits that the request of the City to be released of any administrative, rental and liability provisions is not acceptable and that any non-railway work conducted on railway property must be supervised by representatives of the railway company to ensure the safety of non-railway works and that of the crews and property. CN, as the affected party at the subject locations, maintains the right to compensation for any works over and above normal railway operations. Further, CN reserves the right to future protection of its interests as provided within the liability clauses of the crossing agreements.

CN is of the opinion that the City should not be granted special relief from the obligations of the standard pipe crossing agreement and that the relief sought by the City generally applies to lines which cross provincial borders, such as interprovincial pipelines.

CN submits that the objections of the City are probably not to the crossing agreement in its entirety, but rather to certain clauses of the agreement, and in particular, compensation, termination and relocation and liability provisions. As such, upon notification of the City's objection to the crossing agreement, CN revised the proposed agreement and approached the City with a master agreement which would cover this specific crossing.

With respect to the position of the City regarding the 20-year term of the crossing agreement, CN submits that in fact the railway company grants crossings in perpetuity. The 20-year term was proposed as a term during which both parties could review the terms and conditions of the agreement, if needed.

With respect to termination, CN adds that the agreement provides that the agreement be reviewed and if needed, renewed every 10 years. As with the original proposed agreement, the utility crossing is granted in perpetuity. CN submits that this ensures that abandoned utility crossings do not remain on railway property.

With respect to compensation, CN proposes in its revised agreement a one-time basic application fee which would cover the costs to review the application and plans by the respective departments, preparation of the agreement and insertion into a data base for future reference. CN submits that these steps are necessary to ensure that there are no conflicts with existing or proposed railway operations or those of any existing utilities in the area. CN is of the view that subsection 7(2) of the Wire Crossings and Proximities Regulations, C.R.C., c. 1195 (hereinafter General Order No. E-11) and subsection 22(2) of General Order No. E-10 provide for such compensation.

With respect to the matter of relocation or removal, CN states that as indicated in the agreement it would provide the City, under reasonable request from CN, with a notice of one and one-half years, except for emergency situations. The agreement also provides that CN will do its best to provide an acceptable alternate location, if required.

CN maintains that for its future integrity, especially if site conditions as a matter of safety require removal or relocation for safety reasons, the clauses pertaining to termination and relocation in the agreement are fair to both parties.

With respect to removal or alterations of crossings, CN maintains that section 8 of General Order No. E-11 and section 20 of General Order No. E-10 provide for such terms and can protect both parties.

With respect to the liability provisions, CN submits that the provisions requested in the agreement are within the provisions of section 9 of General Order No. E-11 and section 23 of General Order No. E-10 and are necessary for the protection of both parties.

CN maintains that the provisions of its master agreement are vested within General Order No. E-10 and General Order No. E-11 and CN is of the opinion that the relief sought by the City contravenes specific sections of these Regulations and that no relief from these obligations or changes to the Orders should be granted.

AGENCY FINDINGS AND CONSIDERATIONS

In this particular case, the Agency has been asked to make a determination on issues of compensation, termination, relocation and liability in respect of the construction of a fibre optic cable across and under the right-of-way of CN.

The Railway Act allows, in the case of wire crossings, an applicant and a railway company to agree upon the terms and conditions for a crossing following which it is merely necessary to adhere to the general regulations, plans or specifications adopted or approved by the Agency. However, where an agreement between the parties cannot be reached, provision has been made for an application to be filed with the Agency which may grant a right to cross subject to terms and conditions.

Subsection 326(1) of the Railway Act requires leave of the Agency for proposed works such as the construction or maintenance of lines, wires, other conductors or other structures or appliances for telegraphic or telephonic purposes, or for the conveyance of power or electricity for other purposes, along or across a railway, by any company other than the railway company owning or controlling the railway.

Subsection 326(5) of the Railway Act states that leave of the Agency under this section is not necessary when works have been or are to be constructed and maintained by consent and in accordance with any general orders, regulations, plans or specifications adopted or approved by the Agency for those purposes.

General Order No. E-11 is a regulation that applies to the construction and maintenance of lines, wires or other conductors for the transmission of electrical energy, or for communication purposes, for which leave of the Agency is required by virtue of section 326 of the Railway Act or which have been or are to be constructed or maintained by consent and in accordance with that regulation.

The Agency recognizes, as stated in Order No. 1989-R-296 dated September 26, 1989, that where private crossing agreements are entered into with a railway company, provision is often made for the payment by the licensee of compensation to the railway company in the form of annual or documentation fees. However, if the right to cross is established by the exercise of a statutory discretion, the policy of the Agency and its predecessors has been not to provide for compensation where a mere easement is created without any real or appreciable injury or damage to the railway company or its property.

The Agency has applied those principles to the facts of this case and sees no reason to deviate from these principles at this time. It has therefore determined that compensation in the form of either annual or documentation fees to the railway company is not warranted as no real or appreciable damage to the lands of the railway company has been demonstrated.

Insofar as provision for liability is concerned, the Agency subscribes to the view that liability for negligent acts which may possibly occur at crossings in the future ought to be determined by the civil courts in the province in which the crossing is situated. The Agency does not agree that a person for whose benefit a statutory right of crossing is established ought to be made responsible for the railway company's own negligence. In the case of a wire crossing, the City must comply with the provisions of General Order No. E-11 and, more specifically, section 9 of General Order No. E-11 which indemnifies CN against any loss or damage resulting from negligence of the City, or its employees and agents.

With respect to the matter of relocation or removal, the issuance of an order by the Agency authorizing the construction of the fibre optic cable crossing across and under the right-of-way of CN grants an easement at this location to the City until such time that the Order is amended or rescinded by the Agency.

An order to this effect will be issued.