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Decision No. 103-R-2000

With Decision no. 703-R-2000

February 15, 2000

IN THE MATTER OF a complaint filed by the Mayor of Stenen, Saskatchewan, pursuant to section 116 of the Canada Transportation Act, S.C., 1996, c. 10, alleging that the Canadian National Railway Company failed to fulfil its common carrier obligations to provide adequate and suitable accommodation for the receiving and delivery of traffic by dismantling its siding in the village of Stenen.

File No. T7375-3/99-11

On October 18, 1999, the Mayor of Stenen (hereinafter the complainant), on behalf of the Village of Stenen and the Committee to Save the Stenen Elevator, filed with the Canadian Transportation Agency (hereinafter the Agency) the complaint set out in the title. Specifically, the complainant requested that the Agency issue an order directing the Canadian National Railway Company (hereinafter CN) to immediately restore the siding located in the village of Stenen in an operational mode.

The complainant also requested that the Agency issue an order, pursuant to section 25.1 of the Canada Transportation Act (hereinafter the CTA), awarding costs in this proceeding against CN. The complainant further requested that CN be assessed damage costs to compensate for expenses incurred to retain legal and financial consultants during the negotiations with CN concerning the acquisition of the rail siding as well as additional transportation costs resulting from the necessity to ship the grain through other facilities. The complainant also requested that CN be assessed punitive damages to ensure that it will make some reasonable attempt to negotiate in good faith in the future with producers.

CN filed its answer to the complaint on December 15, 1999 and the complainant filed his reply on December 24, 1999.

The issues to be addressed are whether CN meets its common carrier obligations as set out in sections 113 to 115 of the CTA; and whether costs should be awarded to the complainant as reimbursement for the costs incurred as a result of the removal of the siding.

The complainant has been negotiating with CN since 1998 to lease or purchase property and the rail siding in the village. The property is currently under lease to the Saskatchewan Wheat Pool (hereinafter the SWP). The grain elevator situated on the property is owned by the SWP and has been closed and delicensed since 1998. The complainant has been concurrently negotiating with the SWP to purchase the elevator.

The complainant submits that on October 12, 1999, while negotiations were ongoing for the lease or purchase of the siding, CN removed the siding. The complainant states that local producers had committed to transport over 60,000 bushels of grain through the site once negotiations were concluded. He also submits that negotiations regarding the elevator were essentially concluded, but the transfer of the elevator was predicated on the complainant securing the lease site from CN. The complainant claims that local grain producers wish to utilize the most cost effective means of moving their grain to export position and if the siding is not replaced, they will have lost that opportunity.

CN admits that the siding was removed in error and that it advised the complainant on October 14, 1999 that the siding would be replaced, which occurred on or about the week of October 25, 1999.

Furthermore, CN states that Stenen is not a recognized producer car loading site and that the Canadian Grain Commission has not designated any producer cars for loading. CN indicates that a number of public sites for the loading of producer cars exist in the immediate area surrounding Stenen, the closest being Sturgis, located 7.2 miles (11.6 kilometres) from Stenen.

The complainant maintains that only a portion of the siding has been replaced. It states that the east switch and some track have not been replaced. It claims that the switch is laying in the ditch north of the siding and that numerous ties were damaged during removal/re-spiking. The complainant submits that nearby facilities are unable to handle its grain due to the reluctance of the grain companies to spot cars at non-concrete terminals.

In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.

Sections 113 to 115 of the CTA set out the statutory service obligations of federally-regulated railway companies and include the services that a railway company must provide to accommodate traffic. Section 116 of the CTA confers upon the Agency the authority to investigate a level of service complaint.

It has been established in a number of decisions by the predecessor of the Agency, the National Transportation Agency, that the statutory service obligations of a rail transport carrier are not absolute but are in fact tempered by the test of reasonableness in all circumstances.

Section 113 of the CTA deals with what is generally referred to as the common carrier obligations. Pursuant to that section, a railway company must provide adequate and suitable accommodation for the receiving and loading of traffic offered for carriage. In the present case, the siding is subject to a private agreement between CN and the SWP. The evidence submitted by the parties indicates that the siding is owned by CN and is currently under lease to the SWP. The service obligations of CN at Stenen are thus limited to the traffic offered for carriage by the SWP. The grain elevator, adjacent to the siding in Stenen, is currently owned by the SWP and was delicensed by the Canadian Grain Commission during 1998, at the SWP's request. The evidence submitted by the parties demonstrates that the SWP has ceased operations in Stenen and does not require rail service at this shipping point. The evidence also demonstrates that no grain has been shipped from Stenen since 1998. Given the private agreement between CN and the SWP which confers to the SWP the exclusive use of the siding at Stenen, CN cannot be found to have breached its common carrier obligations at the siding as it was under no obligation to provide service to the complainant within the meaning of section 113 of the CTA.

Furthermore, as Stenen is not designated as a producer car loading site, it appears highly unlikely that traffic will move from this site until a new lease/purchase agreement is struck between CN and the complainant, or some other party. The service obligations which CN has in respect of the SWP at Stenen cannot be extended to the complainant or any other shipper unless an agreement is reached with CN for the use of the siding. The Agency notes that CN had the legal right to abandon service on the siding and to dismantle it. Pursuant to subsection 140(1) of the CTA, railway companies are exempted from the statutory requirements associated with the discontinuance of the operation of a line when they intend to abandon auxiliary trackage, such as sidings, spurs or yard tracks.

The Agency has been provided with substantial information relating to the as yet unsuccessful commercial negotiations between the parties with respect to the purchase or lease of the siding and accompanying property. The Agency notes that, by letter dated October 12, 1999, the complainant has accepted one of the options proposed by CN for the lease of the siding in Stenen. However, the evidence demonstrates that this proposal did not progress into a formal agreement for the use of the siding. This is a matter which is outside the Agency's purview.

With respect to the grain traffic proposed for carriage by the complainant, the Agency examined alternative shipping points in the vicinity of Stenen and notes, according to the evidence filed by CN, that Sturgis, located 11.6 kilometres from Stenen, would offer adequate facilities to handle the traffic of the complainant. Guided by the test of reasonableness, the Agency determines that CN would be fulfilling its obligations to provide adequate and suitable accommodation for the receiving and loading of traffic by handling such traffic at the Sturgis facility. Accordingly, the Agency must conclude that CN did not breach its common carrier obligations, as set out in section 113 of the CTA.

With respect to the request by the complainant that costs be awarded in this proceeding against CN, the Agency has considered the matter and concludes that the circumstances do not warrant an award of costs under section 25.1 of the CTA. With respect to the request that general damages and punitive damages be awarded, the Agency has no jurisdiction to award such damages.

In light of the foregoing, the Agency finds that CN did not breach its common carrier obligations to provide adequate and suitable accommodation for the receiving and delivery of traffic as it was under no obligation to accommodate the traffic of the complainant at its siding in Stenen at the time the siding was removed. Therefore, the Agency hereby dismisses the complaint. Furthermore, the Agency denies the request made by the complainant for the awarding of costs or damages in this proceeding against CN.