Letter Decision No. CONF-11-2016

SUMMARY

[1] This decision considers three issues.

[2] The first issue is whether CN breached its level of service obligations with respect to EMI’s traffic. The Canadian Transportation Agency (Agency) finds that by not providing service to EMI at either RD-47 or [REDACTED], CN breached those obligations, and it orders CN to accommodate the receiving and loading of EMI’s traffic at either RD-47 or [REDACTED], with CN to choose between these locations.

[3] The second issue is whether the Agency should issue an order pursuant to the interswitching provisions. The Agency finds that both RD-47 and [REDACTED] satisfy the conditions for interswitching, and it orders CN to provide interswitching for EMI’s traffic at the Emerson-Noyes interchange.

[4] The third issue is whether the Agency should order CN to compensate EMI for its expenses, and if so, in what amount, and whether the Agency should award costs to either party. The Agency directs EMI to provide full documentation in support of the expenses for which it is requesting compensation. Once it has received that documentation and submissions from the parties, the Agency will make a decision on the amount of compensation, as well as each party’s request for costs.

BACKGROUND

[5] On July 29, 2015, EMI filed an application with the Agency against CN pursuant to sections 113 to 116 and 127 of the CTA.

[6] Following the exchange of pleadings, the Agency issued CONF-1-2016">Decision No. CONF-1-2016 (Decision), on March 4, 2016. In the Decision, the Agency found that CN has level of service obligations with respect to EMI’s traffic and that four locations (RD-47, [REDACTED], LE77 and transloading facilities in Winnipeg) constitutes “points of stopping established for that purpose” under to paragraph 113(1)(a) of the CTA.

[7] The Agency identified the three issues left to be determined and indicated that its decision on the first of these issues – whether CN has breached its level of service obligations with respect to EMI’s traffic – would be based on a consideration of three factors for each point of stopping:

1. Can adequate and suitable accommodation for the receiving and loading of EMI’s traffic be furnished at the point of stopping?
2. Is it reasonable, considering the operational constraints that may exist, for CN to furnish adequate and suitable accommodation for the receiving and loading of EMI’s traffic at the point of stopping?
3. What, if any, is EMI’s correlative obligation with respect to its traffic at the point of stopping?

[8] The parties were given an opportunity to file submissions on these factors with respect to each of the four locations identified by the Agency as points of stopping.

[9] On March 29, 2016, CN filed notice of its request for EMI to respond to written questions and to produce documents.

[10] On April, 7, 2016, in addition to filing its responses to CN’s written questions, EMI filed a request for an order granting EMI its expenses incurred as a result of CN’s failure to fulfill its level of service obligations since the Decision was issued, as well as an order granting EMI special costs.

PRELIMINARY MATTERS

[11] Before proceeding to analyse the three outstanding issues, the Agency will first address three issues on which the parties commented during the proceedings.

Expanding the application

[12] CN argues that the Agency should not have articulated a novel legal interpretation of the CTA with respect to points of stopping in an effort to provide alternative remedies to those chosen by EMI.

[13] The Agency notes that EMI’s application is not as narrow as CN claims. In its application, EMI outlined how CN denied its request for service at RD-47 as well as EMI’s subsequent request for service at [REDACTED] in the alternative. EMI requests that the Agency order service at RD-47 or “in the alternative [issue] an order that CN provide service to EMI in any manner that the Agency deemed expedient having regard to all proper interests.”

[14] Furthermore, the Agency notes that once it has found that a railway company has not fulfilled its level of service obligations, the Agency is not limited to considering only the remedies proposed in the application, but rather has the prerogative of canvassing a range of options in order to determine a remedy that is most reasonable for both parties.

Points of stopping on railway property

[15] CN maintains that there is no obligation under the CTA “for a railway company to construct or provide a private siding in the first instance” and that there is nothing under the level of service provisions, short of a private siding or spur, that would require a railway company “to simply provide access to its own private property for the purpose of receiving and loading traffic, particularly in the absence of a commercial agreement […]”.

[16] The Agency reminds CN that this issue was addressed in the Decision, where the Agency found that:

…a point of stopping, even on a railway company’s property, is not established by the railway company when it enters into an agreement that grants a party the right to access the railway company’s property. That is to say the obligation is not contractual in nature. When infrastructure exists on which trains can stop and have stopped, that location is a point of stopping pursuant to paragraph 113(1)(a) of the CTA.

[17] The CTA’s “level of service” provisions reflect the important role that railway companies and railway assets play in the Canadian economy. These provisions establish obligations that exist independent of any agreement between railway companies and their customers, and that may affect the use of the railway companies’ property. Accordingly, the Agency has the authority to order that “specific works be constructed or carried out,” “property be acquired” and “cars, motive power or other equipment be allotted, distributed, used or moved as specified by the Agency”.

[18] Railway companies’ freedom to make operational decisions in their own best interests is extensive, but does not extend to denying service to a shipper on the basis that they would have to do so on their own property or that the shipper does not maintain a facility with a physical connection to railway infrastructure.

Correlative obligation

[19] EMI submits that its correlative obligation is to deliver its product from its facility to the loading site and to load the traffic in a safe and timely manner.

[20] CN submits that various courts have determined that a shipper has a correlative obligation to provide reasonable access to its facility before a railway company must ship its traffic and that underlying these decisions is the assumption that a shipper will, in fact, have a facility which CN can access in the first instance. CN further argues that the correlative obligation contemplated in Patchett & Sons Ltd. v. Pacific Great Eastern Railway Co., [1959] S.C.R. 271 (Patchett) applies with equal strength to a shipper who has no private siding and has simply demanded the ability to drive up to a private rail yard and receive service, without being required to enter into any form of agreement setting out the parties’ respective rights and obligations.

[21] Typically, the level of service owed by a railway company to a shipper is assessed by the Agency in circumstances where the shipper accesses the railway company’s tracks at the shipper’s facility. In the present case, however, the shipper does not have a facility that connects to a railway line. For this reason, the specific “correlative obligation” contemplated in Patchett does not apply. That is not to say, however, that the shipper has no correlative obligation.

[22] The Agency agrees with EMI that its correlative obligation entails delivering its product from its facility to a “point of stopping established for that purpose” and loading its traffic in a safe and timely manner. In addition, a shipper must take into account the fact that the railway company has to manage a range of operational requirements and service obligations, beyond the service owed to that shipper; this is especially true in circumstances where the shipper has not invested in rail infrastructure on its own property and is requesting service on the railway company’s property. The Agency finds that the shipper’s correlative obligation therefore includes making a good-faith effort to work with the railway company on practical ways of meeting the shipper’s service requirements, including on where the railway company’s level of service obligations are to be met, and demonstrating a reasonable level of flexibility in this regard.

ISSUE 1: Did CN breach its level of service obligations with respect to EMI’s traffic?

[23] The Agency will now examine each of the four locations found to be points of stopping in the Decision, and consider the three factors in order to determine whether CN breached its level of service obligations with respect to EMI’s traffic.

1. RD-47

EMI’s position

[24] According to EMI, the road adjacent to RD-47 accommodates the type of trucks that EMI uses to deliver its traffic to that location and it allows EMI to load the maximum number of rail cars in the least amount of time. EMI argues that, of all the locations identified by the Agency, this is the least costly for EMI to load its traffic. EMI notes that RD-47, which is located in CN’s Emerson Yard (Yard), has the capacity for a [REDACTED]-car spot and is located within 5 km of EMI’s facility. EMI estimates its weekly demand for carloads in the next year to be [REDACTED] cars; requiring it to use RD-47 once or twice a week.

[25] EMI maintains that its correlative obligation with respect to its traffic at RD-47 is to deliver its product from its facility to the loading site at RD-47 and to load the traffic in a safe and timely manner.

CN’s position

[26] CN submits that there are a number of operational reasons why it is not reasonable for CN to provide service to EMI at RD-47.

[27] CN states that RD-47 is one of four tracks in its Yard and that CN’s operations within the yard are constrained on the west by a bridge crossing the Red River, on the east by a non-interlocking at-grade railway crossing, and on the south by the United States border crossing and by an at-grade road crossing.

[28] CN submits that EMI’s increased carload demand happened at the same time as a significant increase in train traffic in the Emerson area, which, in 2012, led it to review with EMI options to move EMI’s car loading activities out of CN’s Yard.

[29] CN argues that it requires the use of RD-47 for operational purposes and, thus, it cannot furnish suitable and adequate accommodation for the receiving and loading of EMI’s traffic at that location. CN submits that since 466-R-2013">Decision No. 466-R-2013 (Emerson Decision) [On December 19, 2013, in 466-R-2013">Decision No. 466-R-2013, the Agency found that, with respect to Richardson International Limited’s traffic originating at its Red River South elevator, the CN-BNSF interchange located at the border between Emerson, Manitoba and Noyes, Minnesota meets the conditions necessary for interswitching to be ordered.], the volume of interchange traffic between BNSF Railway Company (BNSF) and CN at the Emerson-Noyes interchange has increased. CN also refers to the fact that, in 2015, the interswitching limits were expanded from 30 km to 160 km. CN argues that both of these events resulted in an increase in operational demands on the Yard and surrounding area (Emerson Junction).

[30] CN provides a detailed description of its interchange activities with BNSF at the Emerson-Noyes interchange. CN asserts that it uses the tracks in the Yard when the amount of southbound interchange traffic transported by CN and arriving at Emerson exceeds the available standing capacity of the interchange tracks at Noyes. In these cases, CN submits that it places the excess traffic in hold status on its tracks north of the border in the Yard or on other CN tracks at Emerson Junction.

[31] CN claims that its traffic records indicate that the Yard and its tracks at Emerson Junction were used to hold southbound interchange cars in ten months of 2014. CN asserts that, for example, on every day over a period from late June to late October 2014, southbound cars were held either in the Yard or on tracks at Emerson Junction. CN also maintains that its traffic records indicate that RD-47 was used on several occasions during six different months of 2014 to hold southbound traffic of a variety of shippers other than EMI while on offer for interchange to the BNSF.

[32] CN maintains that the yard is of limited size with no room to add a track internally and there is no way to expand the size of the yard itself.

[33] CN claims that it would not be reasonable to require it to give up one of only four yard tracks at a critical interchange point for the loading and interswitching of only [REDACTED]. CN argues that “[i]t is not reasonable to require CN to give EMI property in RD-47 for the benefit of an American competitor that will not make any investments in Canada. The level of service provisions have not been developed to force railway companies to subsidize shippers’ operations, or those of other railway companies.”

[34] CN claims that, by law, EMI has an obligation to create and acquire any infrastructure to facilitate its own business or enter into a commercial arrangement in order to acquire a point of stopping under the CTA.

Findings and analysis

Factor 1: Can adequate and suitable accommodation for the receiving and loading of EMI’s traffic be furnished at the point of stopping?

[35] The Agency notes RD-47 has the capacity for a [REDACTED]-car spot and is located within 5 km of EMI’s facility. Furthermore, in the Decision the Agency noted that CN had been providing service at RD-47 to EMI for the receiving and loading of its traffic for 25 years, most recently in accordance with its Temporary Licence Agreement (TLA) with EMI.

[36] The Agency therefore finds that suitable and adequate accommodation for the receiving and loading of EMI’s traffic can be furnished at RD-47.

Factor 2: Is it reasonable, considering the operational constraints that may exist, for CN to furnish adequate and suitable accommodation for the receiving and loading of EMI’s traffic at the point of stopping?

[37] Although CN argues that it would be unreasonable for it to “give up one of only four yard tracks” for the loading of a [REDACTED] volume of traffic, the evidence does not show that EMI’s use of RD-47 once or twice a week to load [REDACTED] cars would require CN to “give up” this track. During the periods when EMI is not using RD-47 for the receiving and loading of its traffic, the track will be available to CN to use in order to meet its operational requirements; [REDACTED]. The Agency notes that EMI’s carload order data, which was filed by CN, shows that, on average, EMI ordered [REDACTED] cars per week during the 2010-2011, 2011-2012 and 2012-2013 crop years and [REDACTED] cars per week during the 2013-2014 crop year.

[38] CN has not established that its operations at RD-47 have changed in a way that would render the resumption of service to EMI at that location infeasible. The Agency therefore finds it reasonable for CN to accommodate the receiving and loading of EMI’s traffic at RD-47.

Factor 3: What, if any, is EMI’s correlative obligation with respect to its traffic at the point of stopping?

[39] EMI’s correlative obligation at RD-47 is to transport its product to the point of stopping, load its traffic in a safe and efficient manner, and appropriately coordinate those activities with CN. In addition, the Agency finds that, as EMI has made reasonable efforts to work with CN to date, it has met its correlative obligation, and is expected to continue to do so while receiving and loading its traffic on CN’s property.

2. [REDACTED]

EMI’s position

[40] EMI submits that [REDACTED] is a 20-car siding located 16 km from EMI’s facility.

[41] In its application, EMI provided correspondence from July 24, 2015, in which EMI requested that CN allow it to use [REDACTED] at [REDACTED], Manitoba to ship its traffic. In the correspondence, EMI acknowledged that the siding is being leased to [REDACTED], but that [REDACTED] has agreed to allow EMI to use the siding for the foreseeable future. EMI provided a copy of CN’s response dated July 28, 2015, where it stated, “…CN does not intend to provide consent to [REDACTED] for third party use of these assets” and asserting that, under the terms of its confidential agreement with [REDACTED], [REDACTED]could not unilaterally consent to let EMI use that siding.

[42] Finally, on July 29, 2015, EMI wrote to CN noting that there is another customer, [REDACTED], at the northern end of [REDACTED] and that there is room for [REDACTED] at an open siding on [REDACTED] between [REDACTED] and [REDACTED]. EMI then requested CN to allow EMI to transfer its lease from RD-47 to this open siding on [REDACTED].

[43] However, in its comments filed in response to the Decision, EMI argues that [REDACTED] does not provide adequate and suitable accommodation for its traffic because it is 16 km away from its facility and that the route from EMI’s facility to [REDACTED] is not capable of handling the heavy trucks that EMI requires to deliver its traffic to the siding because it is a soft gravel road that is susceptible to flooding and frost boils. EMI also contends that, due to other shippers being served there, [REDACTED] may be prone to congestion. EMI acknowledges, however, that the track is capable of accommodating heavy traffic.

[44] EMI submits that, if the access road were to be improved to accommodate heavy trucks, its correlative obligation with respect to its traffic at [REDACTED] would be to deliver its product from its facility to the loading site at [REDACTED] and to load the traffic in a safe and timely manner.

CN’s position

[45] According to CN, [REDACTED] is not appropriate for EMI’s traffic. In response to EMI’s application, CN stated that neither of EMI’s requests to use [REDACTED] was acceptable and that these requests do not reflect a bona fide attempt by EMI to reach a commercially acceptable solution. CN submits that the proper course for a shipper would be to approach CN to inquire as to whether it has capacity for loading at [REDACTED]; instead, EMI circumvented the process by approaching CN’s customer and asking its approval to use CN’s railway. According to CN, that is not a decision for [REDACTED] to make as it is not responsible for the proper operation of the track or the service obligations in the area; this is why CN’s agreement with [REDACTED] includes third party usage restrictions. CN argues that the arrangement proposed by EMI with [REDACTED] was not acceptable in light of CN’s operational needs and the potential impacts on other traffic. Furthermore, CN submits that the alternative proposal by EMI to use the open siding at [REDACTED] suffers from the same shortcoming because EMI would be [REDACTED]. In addition, CN contends that there are road crossings in that area that render the location unsuitable for increased switching activities.

Findings and analysis

Factor 1: Can adequate and suitable accommodation for the receiving and loading of EMI’s traffic be furnished at the point of stopping?

[46] The Agency notes that [REDACTED] is a 20-car siding located 16 km from EMI’s facility and that CN provides service to [REDACTED] shippers at this location, which demonstrates that CN is capable of providing adequate and suitable accommodation for a shipper’s traffic. Although CN raised concerns about road crossings near [REDACTED] in its answer to EMI’s application, the Agency notes that in its response to the Decision, CN did not provide any further arguments or evidence in support of this earlier raised concern that would enable the Agency to properly assess its position.

[47] The Agency therefore finds that suitable and adequate accommodation for the receiving and loading of EMI’s traffic can be furnished at [REDACTED].

Factor 2: Is it reasonable, considering the operational constraints that may exist, for CN to furnish adequate and suitable accommodation for the receiving and loading of EMI’s traffic at the point of stopping?

[48] Both parties argued that there may be operational constraints at this location in the form of congestion, given the other [REDACTED] shippers that are present there. However, the Agency notes that this concern was not expressed by either EMI, in its July 24 and 29, 2015 requests to CN, or by CN in its initial response to EMI’s request. Furthermore, despite both EMI’s and CN’s knowledge of the site and the shippers involved, neither party produced evidence to substantiate its arguments that the site is congested to the point that service could not be provided to accommodate EMI’s traffic.

[49] The Agency finds EMI’s assertion that the route between its facility and [REDACTED] is unsatisfactory to be vague and lacking in evidentiary substantiation. Moreover, EMI has not established that this issue falls within CN’s control and the Agency’s jurisdiction.

[50] The Agency therefore finds it reasonable for CN to furnish adequate and suitable accommodation for the receiving and loading of EMI’s traffic at [REDACTED] and will not order any action in response to EMI’s request that CN be directed “to resolve any difficulties” along the route in question.

Factor 3: What, if any, is EMI’s correlative obligation with respect to its traffic at the point of stopping?

[51] EMI’s correlative obligation at [REDACTED] is to transport its product to the point of stopping, load its traffic in a safe and efficient manner, and appropriately coordinate those activities with CN. In addition, the Agency finds that as EMI has made reasonable efforts to work with CN to date, it has met its correlative obligation, and is expected to continue to do so while receiving and loading its traffic on CN’s property.

3. LE77

EMI’s position

[52] EMI states that LE77 is located at Emerson Junction, on the east side of the mainline, south of Post Road, approximately 14 km from EMI’s facility. EMI contends that adequate and suitable accommodation for the receiving and loading of EMI’s traffic cannot be furnished at LE77 as it is currently being dismantled by CN.

[53] EMI submits that the siding was of poor quality as it consisted of 80 lb. rail which is insufficient to handle heavy rail traffic. EMI argues that this rail would have to be replaced by at least 115 lb. rail in order to be capable of receiving EMI’s traffic. In addition, EMI maintains that significant upgrading would have to be done to the road leading up to the loading site, as the existing road is not suitable for heavy truck traffic. However, EMI argues that it is within the power of the Agency, pursuant to section 116 of the CTA, to require CN to take action at its own cost to resolve any difficulties that currently make using track LE77 unreasonable.

CN’s position

[54] CN agrees with EMI that it is neither possible nor reasonable for it to provide adequate and suitable accommodation for the receiving and loading of EMI’s traffic at LE77.

Findings and analysis

Factor 1: Can adequate and suitable accommodation for the receiving and loading of EMI’s traffic be furnished at the point of stopping?

[55] In the Decision, the Agency found, pursuant to section 113 of the CTA, that LE77 is a point of stopping. However, EMI submits that LE77 is being dismantled and this was not disputed by CN.

[56] The Agency therefore finds that, as it is being dismantled, adequate and suitable accommodation for the receiving and loading of EMI’s traffic cannot be furnished at LE77. Notwithstanding, the Agency also finds that, based on the quality of the rail at LE77, this location could not provide adequate and suitable accommodation for the receiving and loading of EMI’s traffic.

[57] Based on the above findings, the Agency will not consider Factors 2 and 3 with respect to this location.

4. Transloading facilities in Winnipeg

EMI’s position

[58] EMI submits that the transloading facilities in Winnipeg do not provide adequate and suitable accommodation for its traffic. According to EMI, the [REDACTED] facility is not capable of transloading EMI’s traffic. With respect to the [REDACTED]’s transloading facility, EMI argues that it is not reasonable for CN to furnish adequate and suitable accommodation at that location because EMI’s facility is over 120 km away and the cost to transport its traffic to this site, and associated transloading fees, are prohibitive. EMI submits that the trucking charges from Emerson to [REDACTED] are approximately $[REDACTED]/tonne and that the transloading fees are $[REDACTED]/tonne, which results in a cost of approximately $[REDACTED] per month.  

[59] EMI states that its correlative obligation with respect to its traffic at the transloading facilities in Winnipeg, if it were feasible, would be to deliver its product from its facility at Emerson, MB to the loading site and to load the traffic in a safe and timely manner.

CN’s position

[60] CN submits that EMI is currently using [REDACTED]’s transloading facility and, therefore, adequate and suitable accommodation can be provided by CN at that facility. CN argues that the extra costs that EMI incurs by transloading at that facility result from its own decision to not locate its facility on a railway line. CN states that it is reasonable for it to provide service to EMI at [REDACTED].

Findings and analysis

Factor 1: Can adequate and suitable accommodation for the receiving and loading of EMI’s traffic be furnished at the point of stopping?

[61] The Agency notes that EMI has incurred significant costs since the expiry of the TLA to use [REDACTED]’s transloading facility. Specifically, EMI has incurred costs for both trucking and transloading, where:

1. EMI trucks its product from Emerson to [REDACTED];
2. [REDACTED] transloads EMI’s product into BNSF’s cars at its transloading facility;
3. CN picks up the loaded cars at [REDACTED]’s transloading facility;
4. CN performs interswitching services for BNSF at the Fort Rouge interchange in Winnipeg; and,
5. CN performs haulage services to Noyes for interchange to BNSF.

[62] The Agency finds that requiring EMI to truck its traffic to [REDACTED] to then be transported by rail back to the Emerson area is not reasonable and does not provide a practical solution to EMI’s service requirements, particularly in light of the substantial costs of doing so and the availability of more proximate locations at [REDACTED] and RD-47.

[63] The Agency therefore finds that adequate and suitable accommodation for the receiving and loading of EMI’s traffic cannot be furnished at a transloading facility in Winnipeg. Consequently, the Agency will not consider Factors 2 and 3 with respect to this location.

Conclusion

[64] Based on the above, the Agency finds that CN’s failure to furnish adequate and suitable accommodations for EMI’s traffic by refusing to allow EMI to receive and load its traffic at either RD-47 or [REDACTED] is a breach of its level of service obligations with respect to EMI’s traffic.

[65] The Agency notes that both [REDACTED] and RD-47 are located in Emerson, [REDACTED] being 12 km from EMI’s facility and RD-47 being 5 km away. Furthermore, the capacity available at [REDACTED], based on EMI using the unleased portion of the track, is an [REDACTED]-car spot, and at RD-47, it is a [REDACTED]-car spot. While EMI’s stated preference is that it would like to receive service at RD-47, it proposed [REDACTED] to CN as an alternative to RD-47.

[66] Furthermore, the Agency is aware that providing service at either of these locations could require CN to adjust its operations relationship with other shippers and to balance its competing obligations. The Agency finds it appropriate, in the circumstances of this case, to allow CN to determine which of the two locations it will use to satisfy its service obligations to EMI.

ISSUE 2: Should the Agency issue an order pursuant to the interswitching provisions?

[67] In its application, EMI included in its list of requested relief an order “requiring CN to interswitch rail cars received in interchange from [BNSF] between the interchange at Emerson, MB and siding RD-47.” EMI also seeks a declaration, pursuant to subsection 127(2) of the CTA, that CN fulfill its statutory obligation to deliver interswitched BNSF cars to RD-47 or to a feasible alternative site reasonably close to Emerson.

[68] EMI states that the Federal Court of Appeal upheld the Emerson Decision where the Agency found that the Yard is an interchange for the purposes of regulated interswitching, i.e the Emerson-Noyes interchange; thus, CN is required to interswitch EMI’s traffic with BNSF.

[69] According to CN, it is complying with its interswitching obligations as it is currently accommodating EMI’s interchange traffic from Winnipeg. Since August 7, 2015, CN has placed BNSF rail cars for loading and received EMI’s traffic loaded into BNSF rail cars at the [REDACTED] transloading facility in Winnipeg, and interswitched this traffic with BNSF at the Fort Rouge interchange. CN argues that there is no allegation or any evidence that CN is not carrying or interswitching EMI’s traffic.

[70] Section 127 of the CTA states:

[…]

(2) The Agency may order the railway companies to provide reasonable facilities for the convenient interswitching of traffic in both directions at an interchange between the lines of either railway and those of other railway companies connecting with them.

[…]

(3) If the point of origin or destination of a continuous movement of traffic is within a radius of 30 km, or a prescribed greater distance, of an interchange, a railway company shall not transfer the traffic at the interchange except in accordance with the regulations.

[71] Section 111 defines “interswitch” as follows: “to transfer traffic from the lines of one railway company to the lines of another railway company in accordance with regulations made under section 128.”

[72] In the Emerson Decision, the Agency found, with respect to Richardson International Limited’s request for interswitching with BNSF at the Emerson-Noyes interchange, that the conditions for interswitching to be ordered were met; that is, a railway line of one railway company connects with a railway line of another railway company, there is a place where rail cars may be stored, and the shipper is located within one of the prescribed zones from an interchange.

[73] As the Agency has already addressed criteria 1 and 2 in the Emerson Decision, the remaining issue for the Agency to consider is whether criterion 3 is satisfied with respect to EMI’s traffic.

[74] As RD-47 is located within the Yard and the Yard is the Emerson side of the Emerson-Noyes interchange, the Agency finds that the Emerson-Noyes interchange is within the prescribed interswitching zone.

[75] In absence of information on the record on the distance of [REDACTED] from the Yard, the Agency notes that [REDACTED] it is located 16 km away from EMI’s facility, which is 8 km away from the Yard, and thus is well within the prescribed interswitching zone, being a radius of 160 km.

[76] Therefore, the Agency finds that both RD-47 and [REDACTED] satisfy the conditions for interswitching.

ISSUE 3: WHETHER THE AGENCY SHOULD ORDER CN TO COMPENSATE EMI FOR ITS EXPENSES, AND IF SO, IN WHAT AMOUNT, AND WHETHER THE AGENCY SHOULD AWARD COSTS TO EITHER PARTY?

EMI’s position

[77] EMI requests an order granting it its expenses incurred as a result of CN’s failure to fulfill its service obligations since March 4, 2016 (the date of the Decision). According to EMI, “every month that CN refuses to service EMI at RD-47, [it] costs EMI $[REDACTED]” to truck its product to [REDACTED].

[78] In its reply to CN’s answer to its application, EMI filed invoices for both the trucking to and transloading at [REDACTED]. In addition, in its comments in response to the Decision, EMI provided additional data on its trucking costs and invoices for transloading at [REDACTED].

CN’s position

[79] CN submits that it would be unfair for it to have to respond to EMI’s request for expenses as “the precise nature of a breach must be determined before the expenses flowing from it can be assessed,” and, in this specific case, the expenses will vary depending on the location.

[80] CN claims that EMI’s request for expenses appears to be a request for damages. CN points to the Agency finding in 2015-07-10">Letter Decision No. 2015-07-10 (EMI Decision) that the scope of expenses is narrower than damages and assets that the Agency does not have jurisdiction to award damages.

Findings and analysis

[81] Paragraph 116(4)(c.1) of the CTA sets out that if the Agency determines that a company is not fulfilling any of its service obligations, the Agency may:

[82] …order the company to compensate any person adversely affected for any expenses that they incurred as a result of the company’s failure to fulfill its service obligations…

[83] In the EMI Decision, the Agency stated in paragraph 90 that:

…the expenses which the Agency may compensate for are those which are out of pocket, that is to say, an expenditure that results from a breach in the railway company’s level of service. By this interpretation, the Agency finds that lost revenue is not an expense. Lost revenue is just that, the loss of potential revenue from customers that could have potentially been served had the railway company fulfilled its level of service obligations. The loss of revenue is, as CN submits, damage and not an expense.

[84] Prior to July 31, 2015, EMI trucked its product to RD-47; however, in response to CN’s refusal to provide service at either RD-47 or [REDACTED], which the Agency has found to be a breach of CN’s level of service obligations, EMI has been trucking its product to and transloading it at [REDACTED]. The expenses being claimed by EMI are the expenses resulting from the trucking of its product to and its transloading at [REDACTED].

[85] The Agency must therefore consider whether, given that it has found that CN breached its level of service obligations with respect to EMI’s traffic, it should order CN to compensate EMI for any expenses that it incurred as a result of that breach, pursuant to paragraph 116(4)(c.1) of the CTA.

[86] However, the Agency recognizes that when it was receiving and loading its traffic at RD-47, EMI incurred costs to truck its product from its facility to RD-47; therefore, based on EMI’s request for expenses related to the trucking of its product to and its transloading at [REDACTED], the expenses for which EMI may be entitled to compensation are properly represented by the difference between:

1. the costs EMI would have incurred to truck its product to and transload it at either RD-47 or [REDACTED]; and,
2. the costs it incurred to truck to and transload its product at [REDACTED].

[87] The Agency will also consider submissions from the parties on what expenses the Agency should include in relation to an order for CN to compensate EMI. Therefore, the Agency directs EMI to provide full documentation in support of the compensation for expenses it is requesting, from March 4, 2016 to the date CN resumes service to EMI (supporting documentation).

[88] As part of its supporting documentation, EMI should submit a copy of its invoices for both the trucking of its product to and its transloading at [REDACTED] during this period, as well as any other relevant documents. In addition, for the Agency to determine the costs EMI would have incurred to truck its product from its facility to either of RD-47 or [REDACTED], the Agency directs EMI to provide the following:

1. an independent, itemized estimate or quote from a trucking company for costs to truck its product from its facility to both RD-47 and [REDACTED] from March 4, 2016 to the date CN resumes service to EMI;
2. an independent, itemized estimate for the costs that would have been incurred by EMI for the transloading of its product at RD-47 or [REDACTED] from March 4, 2016 to the date CN resumes service to EMI; and,
3. copies of the invoices for the trucking of its product from its facility to RD-47 and an itemized list of costs for the transloading of its product at RD-47 for the entire year prior to July 31, 2016.

[89] Once the pleadings are complete, the Agency will consider the evidence on file and issue a ruling on EMI’s request for compensation for expenses, following which the Agency will seek submissions from the parties in support of their requests for costs.

ORDER

ISSUE 1

1. Pursuant to subsection 116(4) of the CTA, the Agency orders CN to furnish adequate and suitable accommodations for the receiving and loading of EMI’s traffic at either RD-47 or [REDACTED], with CN to choose between these locations.

2. The Agency orders CN to resume service to EMI within 30 days of the date of this decision.

ISSUE 2

3. The Agency orders CN to provide interswitching for EMI’s traffic at the Emerson-Noyes interchange, in accordance with the Railway Interswitching Regulations, SOR/88-41 (Interswitching Regulations).

ISSUE 3

4. The Agency provides EMI until 5:00 p.m. Gatineau local time on the fifteenth business day after CN resumes service to EMI to file with the Agency the information set out above and provide a copy to CN. CN will then have until 5:00 p.m. Gatineau local time on the tenth business day after the date of receipt of EMI’s submissions and supporting documentation to file a response and provide a copy to EMI. Finally, EMI will have until 5:00 p.m. Gatineau local time on the fifth business day after the date of receipt of CN’s response to file a reply and provide a copy to CN. A reply must not raise issues or arguments that are not addressed in the response or introduce new evidence unless a request has been made under section 34 of the Canadian Transportation Agency Rules (Dispute Proceedings and Certain Rules Applicable to All Proceedings), SOR/2014-104 and that request has been granted by the Agency.

This is a public redacted version of Confidential Decision No. CONF-11-2016 that issued on August 26, 2016 which cannot be made publicly available.