Determination No. R-2024-175

Determination

[1] Based on the information presented, the Canadian Transportation Agency (Agency) determines that as of the substantial completion date, Capital Railway maintains adequate liability insurance coverage to meet the requirement for the activities specified in the Certificate of Fitness (CoF) 00002-5 as required by subsection 93.1(1) of the Canada Transportation Act, SC 1996, c 10 (CTA).

Background

[2] On August 24, 2023, in compliance with paragraph 94(a) of the CTA, Capital Railway notified the Agency of its intention to alter its third party liability insurance coverage on the substantial completion date of the O-Train Trillium Line south extension project (Trillium Line) when major activities relating to the construction of the Trillium Line will be completed.

[3] CoF 00002-5 authorizes Capital Railway to conduct construction, testing and commissioning for the Trillium Line. Under paragraph 93.1(1)(a) of the CTA, CoF holders must maintain adequate liability insurance coverage, as determined by the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337. The liability insurance coverage requirement is an ongoing requirement and the Agency must be satisfied that a federally regulated railway company that operates a passenger rail service or proposes construction of a railway has adequate liability insurance coverage, including self-insurance.

[4] Capital Railway has proposed to reduce the Trillium Line’s third party liability insurance coverage in accordance with the provisions of its project agreement with TransitNEXT General Partnership (TransitNEXT) as of the substantial completion date. In this situation, section 94.1 of the CTA provides the Agency with the authority to determine whether a CoF holder continues to meet the requirements of section 93.1 of the CTA.

Analysis

[5] After reviewing Capital Railway’s submissions, the Agency has determined that it is satisfied that there will be adequate liability insurance coverage for the proposed construction, testing, and commissioning activities, as the insurance coverage aligns with the consideration of the progress on the construction of the project at the substantial completion date of the Trillium Line and the risks associated with the remaining activities. The Agency has also assessed the financial capability of Capital Railway and SNC-Lavalin Group Inc., the parent company of TransitNEXT, to sustain its self-insurance levels. Based on the analysis of the financial statements submitted by Capital Railway and SNC-Lavalin Group Inc., the Agency considers that these two entities can sustain their proposed respective self-insurance amounts.

[6] With CoF 00002-5, Capital Railway is permitted to proceed with the remaining construction activities, including testing, and commissioning of the Trillium Line. However, passenger transport — whether for paying or non-paying passengers — is currently prohibited. This restriction will remain until the Agency confirms that Capital Railway’s third party liability insurance coverage meets adequacy requirements for rail operations and has granted a CoF variance to that effect.

[7] Non-compliance with the third party liability insurance coverage requirements under paragraph 93.1(1)(a), including engagement in activities that exceed the scope of CoF 00002-5, may result in enforcement actions, including administrative monetary penalties or the suspension or revocation of the CoF. Capital Railway is also obligated to notify the Agency of any changes to the liability insurance coverage as required by paragraph 94(a) of the CTA.