Decision No. 101-R-2017

SUMMARY

[1] On April 7, 2017, Rogers filed an application with the Canadian Transportation Agency (Agency) for authority to construct and maintain a new utility crossing and to maintain two existing utility crossings under the right of way and track of the Orangeville Brampton Railway (OBR) owned by ORDC and operated by Cando.

[2] Rogers is requesting that the Agency authorize:

• the construction of a utility crossing at mileage 6.63 of the OBR Owen Sound Subdivision, under the level crossing at McLaughlin Road (McLaughlin Road Crossing), south of Queen Street West, in the city of Brampton, Ontario; and,
• the maintenance of two existing utility crossings, described as cable conduit, located at mileage 20.07 of the Owen Sound Subdivision.

[3] ORDC disputes Rogers’ crossing proposal application for the McLaughlin Road Crossing, and argues that it was not made aware of the existing crossings matter, which it maintains was not properly raised. ORDC requests that should the McLaughlin Road Crossing be approved, the terms should be as per the crossing agreement prepared by ORDC. With respect to the existing crossings, ORDC requests that the expansion of these crossings not be approved.

[4] The Agency will address the following issues:

1. Should the Agency authorize the construction and maintenance of the proposed utility crossing and the maintenance of the two existing utility crossings?
2. If so, should the Agency impose the fees requested by ORDC?

[5] For the reasons set out below, the Agency authorizes Rogers, without the payment of any fees to ORDC, to construct and maintain, at Rogers’ own expense, the McLaughlin Road Crossing, and to carry on the continued maintenance of the existing utility crossings. Furthermore, Rogers will engage directly, at its own expense, with the company that will provide the flagging services, both for the coordination of the timing of the service and for the invoicing.

BACKGROUND

[6] On December 20, 2016, Rogers filed an application with the Agency for authority to construct a new utility crossing and to maintain two existing utility crossings under the right of way and track of the OBR.

[7] By virtue of a July 8, 1996 agreement made pursuant to section 157.1 of the CTA between the Minister of Transport of Canada and the Province of Ontario Agreement between Canada and the Province of Ontario (Agreement), the Agency provides regulatory and administrative services respecting railway crossings in relation to shortline railways designated in Schedule A of the Agreement. Schedule A does not list the OBR as a designated shortline railway, but Cando is listed as one such designated shortline railway.

[8] By letter dated January 16, 2017, Agency staff informed Rogers that the OBR is not a railway company under federal jurisdiction, and that the OBR is not a shortline railway designated in Schedule A of the Agreement. Accordingly, Rogers’ application could not be considered.

[9] On April 7, 2017, Rogers filed an application for authority to construct and maintain a new utility crossing and to maintain two existing utility crossings under the right of way and track of the OBR, owned by ORDC and operated by Cando.

[10] On May 30, 2017, the Agency, in Decision No. LET-R-22-2017, sought comments pertaining to the proper respondent to Rogers’ application. Rogers and ORDC filed comments.

[11] The relationship between ORDC and Cando is defined in a “Tripartite Agreement” entered into by the Town of Orangeville (later assigned to ORDC), Cando, and the Orangeville-Brampton Rail Access Group (OBRAG). The Tripartite Agreement assigns and defines the various roles and responsibilities in the administration, operation, and maintenance of the OBR. ORDC is the legal and beneficial owner of the OBR.

[12] ORDC defines Cando’s responsibilities to include the operation of the shortline railway on the OBR and the provision of applicable insurance, while OBRAG’s responsibilities pursuant to the Tripartite Agreement are defined as the repair, maintenance, improvement, and management of the OBR.

[13] On July 6, 2017, the Agency, in Decision No. LET-R-37-2017, found that ORDC and Cando were the proper respondents and opened pleadings on Rogers’ application against ORDC and Cando.

[14] On July 27, 2017, ORDC filed its answer to Rogers’ application. On August 3, 2017, Rogers filed its reply to ORDC’s answer.

[15] The McLaughlin Road Crossing involves the placement of a 432-count fibre optic cable and a 168.3-mm steel casing pipe, with a 144.3-mm HDPE underground conduit under the railway line. The conduit will be installed through directional boring.

[16] The maintenance of the existing crossings involves the installation of additional fibres through the existing crossings. According to Rogers, there is no proposed change to the ductwork as was approved by ORDC in 2004.

[17] The existing crossings were governed by a crossing agreement dated July 27, 2004 between ORDC and Rogers which has now expired (2004 crossing agreement). Both parties acknowledge this fact.

THE LAW

[18] Subsection 101 (3) of the CTA states:

If a person is unsuccessful in negotiating an agreement or amendment mentioned in subsection (1), the Agency may, on application, authorize the construction of a suitable road crossing, utility crossing or related work, or specifying who shall maintain the crossing.

SHOULD THE AGENCY AUTHORIZE THE CONSTRUCTION AND MAINTENANCE OF THE PROPOSED UTILITY CROSSING AND THE MAINTENANCE OF TWO EXISTING UTILITY CROSSINGS?

POSITIONS OF THE PARTIES

Rogers’ position

[19] Rogers argues that its ability to serve its customers is jeopardized by its inability to construct the McLaughlin Road Crossing and to use the existing crossings.

[20] Rogers states that the disputed issues are the fees payable for the McLaughlin Road Crossing and for the maintenance work for the existing crossings. Rogers further states that it is not aware of any disagreement concerning the design, location, or method of construction or maintenance of the McLaughlin Road Crossing or the existing crossings.

[21] According to Rogers, ORDC refuses to discuss the matter of the existing crossings unless and until Rogers can agree to ORDC’s requirements in respect of the McLaughlin Road Crossing.

ORDC’s position

[22] When Rogers’ McLaughlin Road Crossing proposal was received by ORDC, it had to be sent to a third party for a review of the drawings and for the preparation of an agreement. As per the Tripartite Agreement, ORDC circulated the crossing proposal to Cando and OBRAG for their consideration of safety or operational provisions.

[23] ORDC disagrees with Rogers’ statement that it is “not aware of any disagreement concerning the design, location, or method of construction or maintenance of the McLaughlin Road Crossing or the existing crossings”.

[24] ORDC disputes the completeness of the crossing proposal application for the McLaughlin Road Crossing and also argues that it was not made aware of the existing crossing matters.

Findings of facts

[25] The parties have not been able to reach an agreement with respects to the McLaughlin Road Crossing and the existing crossings.

[26] In light of the fact that ORDC had the crossing agreement prepared and reviewed and that the dispute relates to fees payable by Rogers, the Agency considers that the location, design and method of construction regarding the McLaughlin Road Crossing are not in dispute.

[27] With respect to the existing crossings request for which ORDC claims not to have been made aware before the filing of the current application, the Agency refers to its staff’s letter dated January 16, 2017, which subject line refers to the existing crossings, and which was addressed to the same law firm representing ORDC in the current case. The Agency notes that the existing crossings have not been removed and that only the terms of the 2004 crossing agreement have expired. ORDC had to be aware.

ANALYSIS AND FINDINGS

[28] In this case, the parties have been unsuccessful in negotiating an agreement pursuant to section 101 of the CTA and thus, Rogers has applied to the Agency for authority to construct and maintain the proposed utility crossing and to maintain the two existing utility crossings.

[29] The Federal Court of Appeal, in Fafard v. Canadian National Railway Company, [2003] FCA 243, concluded that “[a] suitable crossing is a crossing that is adequate and appropriate for the purposes for which it was intended and installed”.

[30] The purpose for which the crossings are intended is to meet Rogers’ need to make service improvements by laying additional cable for the existing crossings and the construction of the new McLaughlin Road Crossing.

[31] The Agency notes that the existing crossings have been in existence at the location since 2004 and that the proposed maintenance of the existing crossings, as described by Rogers, will not change the purpose of the crossings.

[32] In light of the foregoing, the Agency finds that the McLaughlin Road Crossing and the existing crossings are adequate and appropriate, and therefore suitable for the purpose for which they are intended. The Agency therefore authorizes Rogers to construct and maintain the McLaughlin Road Crossing and authorizes the maintenance of the existing crossings.

[33] The Agency must next consider whether the requested fees should be included with the crossing authorization.

IF SO, SHOULD THE AGENCY IMPOSE THE FEES REQUESTED BY ORDC?

POSITIONS OF THE PARTIES

Rogers’ position

[34] Rogers submits that it was informed by ORDC that it has to enter into a crossing agreement. ORDC prepared a draft crossing agreement for the McLaughlin Road Crossing whereby Rogers disputes the five-year crossing fees ($15,000), the application fee ($1,500) and a flagging fee of $95 per hour (for a minimum of 4 hours per day) and a 16 percent administration fee.

[35] Rogers argues that the proposed fees requested by ORDC are unreasonable and inconsistent with Agency decisions. Rogers states that the fees are “contrary to the CTA’s longstanding policy regarding utility crossings”. Rogers refers specifically to Decision No. 93-R-1995, where the Agency’s aforementioned policy is described.

[36] According to Rogers, the Agency has authorized the construction of utility crossings without the payment of application fees where no damage to the railway company or its land has been demonstrated. As such, it refers to Decision No. 432-R-2009, Decision No. 66-R-2011, Decision No. 90‑R‑2007, Decision No. 440-R-2004, and Decision No. 401-R-2001 concerning the Agency’s policy regarding the application of fees.

[37] In relation to the existing crossings, Rogers submits that the 2004 crossing agreement provided for the payment of a one-time, 10-year lease fee of $1,000. Rogers is of the opinion that ORDC intends to require payment of the same crossing fees for the McLaughlin Road Crossing as it would for the existing crossings, which is a $15,000 five-year crossing fee for each existing crossing.

[38] Rogers submits that the McLaughlin Road Crossing will not interfere or cause injury or damage to the property of Cando, or to its operations or the associated railway tracks and land.

[39] Rogers further submits that the continued maintenance of the existing crossings will not interfere or cause injury or damage to the property of Cando, or to its operations, or to the associated railway tracks or land.

[40] Rogers is of the view that, for the reasons stated above, no application, crossing, or administration fees should be payable for either the McLaughlin Road Crossing or the existing crossings.

[41] Accordingly, Rogers requests that the Agency authorize the construction and maintenance of the McLaughlin Road Crossing and the maintenance of the existing crossings at Rogers’ expense and without the payment of any fees (other than the $95 per hour flagging fees) –upon these services being required and solely for the period required. Furthermore, Rogers requests that the Agency order the construction and maintenance of the McLaughlin Road Crossing and the continued maintenance of the existing crossings subject to the terms established by the Agency.

[42] In its reply, Rogers submits that ORDC did not provide reasons or evidence that would support the Agency’s departure from its precedents, or that would support the Agency’s refusal to grant Rogers’ application, at Rogers’ expense, and without payment of the requested fees.

[43] Rogers disagrees with ORDC’s argument that the Agency should depart from its precedents on the basis that it “creates unfairness to railway companies that are expending money to accommodate crossings” as, according to Rogers, ORDC failed to submit supporting evidence of additional costs that have been or will be incurred.

[44] Further, Rogers submits that ORDC has not provided evidence supporting the various amounts that it claims for the application fee, specifically with regard to the costs to review drawings or legal fees to prepare a crossing agreement. Rogers adds that ORDC also failed to provide evidence of costs related to the flagging requirements.

[45] Rogers offers to engage directly with the company that will provide the flagging services, both for the coordination of the timing of the service and for the invoicing.

[46] Rogers understands that the crossing fee is comprised of ORDC’s inspection costs and property tax obligations. Rogers submits that ORDC performs inspections not having regard to utility crossings, and that it failed to identify how inspection costs due to possible ground settlement or to Rogers’ crossing presence will impact ORDC. As well, Rogers is of the view that ORDC’s tax obligations are not influenced by the presence of its crossings.

ORDC

[47] ORDC disputes the completeness of the crossing proposal application for the McLaughlin Road Crossing as it claims that it has not received the stamped engineer’s drawings that it requested.

[48] ORDC argues that it was not made aware of Rogers’ proposed expansion to the existing crossings. ORDC submits that the matter was not properly raised because the related drawings were not provided until the filing of the application; as ORDC had not received the drawings, it was thereby prevented from undertaking an appropriate review. Moreover, ORDC denies having refused to discuss the existing crossings matter until such time as an agreement could be reached on the McLaughlin Road Crossing.

[49] ORDC is of the view that every crossing agreement is unique, so the imposition of an application fee is reasonable as costs are incurred for the preparation of the crossing agreement and for the review of the application and related drawings. ORDC explains that it does not employ staff with railway knowledge, or legal counsel.

[50] ORDC argues that because it will incur fees, it is reasonable that these be paid by the applicant for the crossings. ORDC explains that an administration fee for flagging is intended to cover the time and efforts of OBRAG to coordinate the flagging, including time to prepare and process invoices to the company providing the flagging services, as well as the company performing the actual work for which the flagging is required.

[51] In addition, ORDC submits that an inspection will be required following the installation of proposed fibre optic cable. ORDC alleges that underground installations have been known to occasionally cause ground settlement that may affect the railway, and it refers to one such incident in 2016. ORDC adds that the inspection serves to detect ground settlement and that it considers it reasonable that the applicant cover the cost of the inspection of the railway. ORDC states that ground settlement is a known risk and refers to Decision No. 66-R-2011.

[52] According to ORDC, it will also incur other costs such as administrative costs to keep a record of approved crossings up-to-date, and property taxes. ORDC indicates that property tax liability should be incurred by Rogers because, as the crossing is permanent, it is reasonable that a portion of the burden be borne by Rogers. According to ORDC, if the crossing was on private property, there would be a reasonable expectation for the land owner to be compensated.

[53] ORDC indicates that section 101 of the CTA is silent on the payment of fees for utility crossings. It refers to section 16 of the Railway Safety Act where, according to ORDC, inspection costs would form part of maintenance costs and as such, it should be incurred, in part, by Rogers in light of it occupying OBR railway lands.

[54] ORDC points out that the policy in Decision No. 93-R-1995 is 22 years old and does not, in its view, reflect today’s complexity of operating a railway. Specifically, ORDC states that “that policy in Decision No. 93-R-1995 does not give regard to administrative fees incurred (engineering and legal) as a result of - and at the request of - Rogers’ crossing proposal.”

[55] ORDC argues that the policy seems to require injury or damage to occur rather than just the risk of said injury to occur. ORDC considers this illogical or unreasonable as a crossing would not be approved if there were a real or appreciable injury or damage; and that the policy is silent with respect to the expenses incurred by the railway company on account of assessing the utility proposal.

[56] ORDC submits that it is appropriate for the Agency to depart from the policy because it deems it unfair to railway companies that are forced to incur expenses to allow for a crossing that only serves to grow the applicant’s business. According to ORDC, it will derive no benefits from the crossing.

[57] ORDC requests that, should the McLaughlin Road Crossing be approved, the terms, as specified in the crossing agreement prepared by ORDC, be applied to Rogers. With regard to the existing crossings, ORDC requests that the Agency not approve the requested maintenance work as Rogers did not make mention of any such authorization until it filed its crossing construction application with the Agency.

ANALYSIS AND FINDINGS

[58] Pursuant to section 15 of the Shortline Railway Act, 1995, S.O., 1995, c. 2, and the Agreement, the Province of Ontario authorized the Agency to administer the terms and conditions of the CTA applicable to federally-regulated railway crossings in relation to designated shortline railway companies within the legislative authority of the Province of Ontario. Cando is listed in Schedule A of the Agreement as one of the designated shortline railways.

[59] In respect of the 2004 crossing agreement, in Decision No. 65-R-2005, the Agency indicated that “if it is found that the original agreement or parts thereof are no longer in effect and that the parties cannot agree on their replacement, the Agency may exercise its discretion pursuant to section 101 of the CTA”. The Agency therefore finds that as both parties recognize that the crossing agreement has expired, it may exercise its discretion as there is no longer a valid and binding agreement upon the parties pertaining to the existing crossings.

[60] ORDC is requesting fees in the amount of $16,500 plus a 16 percent mark-up for flagging fees at $95 per hour. The requested fees consist of an application fee, five-year crossing fees, and a flagging fee.

[61] Rogers submits that no fees are required as according to it, the requested fees are unreasonable and inconsistent with past Agency decisions. Rogers refers to the National Transportation Agency (NTA) of Canada, the Agency’s predecessor, Decision No. 93-R-1995 and numerous other precedents where the Agency authorized the construction and maintenance of utility crossings without ordering any compensation to the railway company.

[62] In Decision No. 93-R-1995, the NTA recognized, as stated in Order No. 1989-R-296, 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.

[63] In that same decision, the NTA recognized that often, when utility companies and railway companies enter into individual or master agreements, the railway company is compensated for a crossing of its right of way. When parties negotiate in good faith, agreements can usually be reached to the mutual benefit of both parties; the railway company benefits by receiving compensation for the utility crossing and both parties save substantial time and expenses.

[64] However, when an individual agreement cannot be reached and an application is made to the Agency, the Agency’s practice has been not to require any compensation in cases where no damage to the railway company or its land has been demonstrated. The Agency notes that ORDC has not provided supporting evidence demonstrating adverse impact on the railway company.

[65] The Agency further notes that these principles have been applied consistently by the Agency and its predecessors in rendering decisions concerning compensation for utility crossings. The Agency finds that, as there is nothing in this application that would set it apart from previous applications, there is no reason to deviate from these principles.

[66] ORDC claims that it does not have the expertise to address issues of an administrative nature, such as the review and preparation of draft crossing agreements, as well as issues of a technical nature, for which it must refer to the service of a third party. In Decision No. 66-R-2011, the Agency stated:

The Agency finds that KPR has failed to provide evidence substantiating any administrative or safety issues or real or appreciable damage it might suffer as a result of the proposed crossing. Accordingly, the Agency finds that compensation in the form of fees payable to KPR is not warranted.

[67] The Agency considers that the principle enunciated above is valid in the current instance and notes that ORDC failed to provide evidence substantiating any real or appreciable damage that it may suffer from the crossings from an administrative or safety perspective.

[68] Therefore, in applying past principles to the facts of this case, the Agency determines that, as there is no evidence that there will be any real or appreciable damage to ORDC’s land and to the operation of Cando’s railway as a result of the construction and maintenance of the McLaughlin Road Crossing and the continued maintenance of the existing crossings, compensation in the form of fees to ORDC is not warranted.

[69] The Agency notes Rogers’s agreement that the McLaughlin Road Crossing be authorized at its expense, as well as with respect to the continued maintenance of the existing crossings without the payment of any fees (other than the $95 per hour flagging fees) upon these services being required and solely for the period required.

[70] The Agency notes that Rogers will engage directly with the company that will provide the flagging services, both for the coordination of the timing of the service and for the invoicing.

[71] With respect to the fact that ORDC is the land owner of the land and railway infrastructure, while Cando is the designated shortline railway company as per the Agreement, the Agency considers that the same principle as found in Decision No. 113-R-2016 is applicable to this case. In that Decision, the Agency stated:

Section 100 of the CTA defines a “utility crossing” as “the part of a utility line that passes over or under a railway line” [emphasis added]. The Agency therefore has jurisdiction to authorize the construction of a suitable utility crossing that can, by this very definition, pass under the railway line. The Agency is of the opinion that this provides the Agency with express statutory jurisdiction over both the railway line (railway infrastructure) and the land that necessarily supports that railway infrastructure. This jurisdiction over the crossing is therefore express and irrespective of the ownership of the land. Even if the Agency were to find that this jurisdiction is not expressly stated in these provisions, it would be by necessary implication to protect the integrity of the statutory scheme that governs railway crossing disputes. The Agency’s order authorizing the crossing would necessarily extend to the owner of the land even if the owner is not a railway company or not otherwise subject to Agency jurisdiction.

CONCLUSION

[72] In light of this principle and for the reasons noted above, the Agency, pursuant to subsection 101(3) of the CTA, authorizes Rogers, without the payment of any fees to ORDC and at its own expense, to: to:

• construct and maintain a utility crossing at mileage 6.63 of the OBR’s Owen Sound Subdivision, under the level crossing at McLaughlin Road, south of Queen Street West, in the city of Brampton, Ontario; and,
• carry out the continued maintenance of the existing crossings, described as cable conduit, located at mileage 20.07 of the Owen Sound Subdivision.

[73] In addition, Rogers will engage directly at its own expense with the company that is to provide the flagging services, both for the coordination of the timing of the service and for the invoicing.