Determination No. R-2020-186

[1] On May 28, 2020, in accordance with the requirements of paragraph 94(a) of the Canada Transportation Act, SC 1996, c 10 (CTA), the COF Holders, through their parent company Skagway Port and Rail, Inc. (SPRI), notified the Canadian Transportation Agency (Agency) that they intended to reduce their third-party liability insurance coverage and increase the amount of self-insurance on the basis of a significant change in the current operation of the COF Holder’s railway. On June 15, 2020, they confirmed that such a reduction had occurred.

[2] Certificate of Fitness No. 97023-1 authorizes the COF Holders “to operate a railway between White Pass Summit, British Columbia, and Whitehorse, Yukon Territory.” The COF Holders operate passenger rail services and do not carry or host any freight traffic.

[3] Paragraph 93.1(1)(a) of the CTA states that the holder of a certificate of fitness shall maintain at all times, if the certificate was issued under paragraph 92(1)(a), adequate liability insurance coverage, as determined in accordance with the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337(Regulations), for the operation or construction of the railway for which the certificate was issued.

[4] The COF Holders submit that they significantly rely on passenger ridership arriving or departing Skagway, Alaska, USA, via cruise ships. Due to the global COVID-19 pandemic and the resulting cancellation of cruise ships, the COF Holders have cancelled most passenger train excursions and reduced the amount of their liability insurance coverage.

[5] In light of the reduced liability insurance coverage, the Agency must determine whether the COF Holders continue to maintain adequate liability insurance, which includes self-insurance, for the operation of their railway.

[6] Section 94.1 of the CTA provides the Agency with the authority to determine whether a holder of a certificate of fitness complies with subsection 93.1(1) of the CTA.

[7] The Agency notes that a certificate of fitness holder’s ongoing responsibility is to ensure that it has adequate liability coverage, as determined in accordance with the Regulations, for the operation or construction of the railway for which the certificate of fitness was issued. After considering the submissions filed by the COF Holders and in light of the significantly reduced ridership levels provided for 2020, the Agency determines that the COF Holders’ current liability insurance is adequate for the current operation of their railway.

[8] The Agency is also satisfied that the COF Holders have the financial capability to sustain the amount of their self-insurance. The Agency notes that there is an indemnity agreement in force between SPRI and the COF Holders under which SPRI has agreed to indemnify them up to the maximum amount of SPRI’s self-insurance. The Agency is satisfied that SPRI has the financial capability to satisfy this obligation.

[9] The Agency reminds the COF Holders that they are required to notify the Agency in writing without delay if there are any further changes to their operation that may affect the liability insurance coverage.

[10] The Agency may undertake enforcement action, including administrative monetary penalties or the suspension or cancellation of a certificate of fitness, if a certificate of fitness holder does not comply with the third-party liability insurance requirements provided by paragraph 93.1(1)(a) of the CTA or the obligation to notify the Agency of any alterations to its liability insurance coverage, as per paragraph 94(a) of the CTA.

DETERMINATION

[11] In light of the above, the Agency determines that the COF Holders have adequate liability insurance for the current operation of their railway as required by subsection 93.1(1) of the CTA.