Determination No. R-2021-36
APPLICATION by Canadian Pacific Railway Company (CP), pursuant to section 93 of the Canada Transportation Act, SC 1996, c 10 (CTA), to vary its Certificate of Fitness No. 96001-4 and to cancel Certificate of Fitness No. 14001-2 issued to Central Maine & Québec Railway Canada Inc. (CMQ).
CP applied to the Canadian Transportation Agency (Agency) to vary its Certificate of Fitness No. 96001-4 to add the railway line of CMQ, and consequently to cancel Certificate of Fitness No. 14001-2 issued to CMQ to reflect:
- that on December 30, 2019, CP acquired all of the issued and outstanding shares of CMQ, and that CMQ became a wholly owned subsidiary of CP; and
- that CP acquired control of CMQ by cumulative effects and that CMQ's operations are now fully integrated into CP's existing network.
Prior to CP's acquisition of CMQ, both CP and CMQ were each railway companies within the legislative authority of Parliament by virtue of paragraph 88(2)(a) of the CTA.
Certificate of fitness No. 96001-4 permits CP and all its subsidiaries, associated or affiliated railway companies as set out in the Appendix, to operate or construct railways in Canada.
Certificate of Fitness No. 14001-2 permits CMQ to operate a railway line in Canada:
- between Brookport, Quebec, at mileage 0.0 of the Newport Subdivision and the Canada/USA border at mileage 26.25 of the Newport Subdivision, and between the Canada/USA border at mileage 32.63 of the Newport Subdivision and the Canada/USA border at mileage 43.32 of the Newport Subdivision;
- between Brookport and St-Jean, Quebec, of the Adirondack Subdivision;
- between Mégantic, Quebec, and Brookport of the Sherbrooke Subdivision;
- between Farnham and Ste Rosalie, Quebec, of the St Guillaume Subdivision;
- between Farnham and Stanbridge, Quebec, of the Stanbridge Subdivision; and
- between Mégantic and the Canada/USA border near Boundary, Quebec, of the Moosehead Subdivision.
Certificate of Fitness No. 14001-2 also permits CMQ to operate passenger trains between Sherbrooke, Quebec, at or near mileage 68.5 of the Sherbrooke Subdivision and Bromont, Quebec, at or near mileage 114.2 of the Sherbrooke Subdivision.
Paragraph 93(1)(b) of the CTA allows the Agency to, on application, vary a certificate of fitness to add a line to the certificate.
In Decision No. LET-R-178-2006, the Agency stated that, for a railway operation to qualify as a railway operation for which a certificate of fitness is required within the meaning of the CTA, the Agency must decide whether the railway operation in question is distinct from another, such that it requires a separate certificate of fitness, or is integrated with it, such that it can be covered under the other railway company's certificate of fitness. In addition, paragraph 92(1)(b) of the CTA provides that the Agency shall issue a certificate of fitness for the proposed operation of a railway that does not relate to a passenger rail service only if the Agency is satisfied that there will be, for the proposed operation, the applicable minimum liability insurance coverage, which includes any self-insurance, as set out in Schedule IV of the CTA.
With respect to the issue of whether the railway operations of CP and CMQ are distinct or integrated, it is noted that the term "operate" is defined at section 87 of the CTA to include "any act necessary for the maintenance of the railway or the operation of a train" and has a very broad application that is not limited to the movement of the rolling stock on the tracks.
CP has submitted evidence that it has adopted all of the serving stations of CMQ and that all shipments on CMQ's network are subject to CP's tariffs for supplemental services, fuel and environmental surcharges, with the exception of where there is a confidential contract with a customer. Members of CP's management have been appointed as officers of CMQ as evidenced in the Resolution of the Directors of CMQ dated August 25, 2020. An amended service agreement, effective as of September 1, 2020, provides that CP offers a host of services to CMQ, including engineering services, mechanical services, and sales and marketing services.
With respect to the liability insurance, in its annual certificate of compliance filed on July 31, 2020, CP declares that it complies with the minimum liability insurance coverage requirement set out in Item 4 of Schedule IV of the CTA (i.e., CAD 1B per occurrence), which covers the named insureds on its certificate of fitness, including CMQ. In addition, based on CP's submissions and an analysis of its latest financial information, the Agency is satisfied that CP is able to pay the amount of its self-insurance (USD 107.5M per occurrence).
Further, on January 29, 2021, the Agency directed CP to provide confirmation that its corporate structure and that of CMQ, and that the agreement in place between them, do not, and will not, in any manner, affect the availability of CP's full insurance coverage in the event of an incident involving CMQ's assets or operations. CP provided this confirmation on February 9, 2021.
Based on the above, the Agency finds that, because CMQ's operations are well integrated with CP's works and undertakings and the minimum liability insurance requirements are met, CP's application to have CMQ covered by CP's certificate of fitness should be granted.
Accordingly, the Agency, pursuant to paragraph 93(1)(b) of the CTA, varies CP's certificate of fitness to add the railway line of CMQ.
In light of the above, Certificate of Fitness No. 96001-5 supersedes Certificate of Fitness No. 96001-4, and the Agency cancels CMQ's Certificates of Fitness No. 14001-2.
Member(s)
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