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Interlocutory Decisions : 2001

2001-03-16

LET-R-128-2001

File No. T7475/01-2

This is in reference to the above-noted application filed by the Hudson Bay Railway Company (HBRC) on February 27, 2001. In its application, HBRC requests two Canadian Transportation Agency (Agency) orders. First, HBRC asks the Agency for what may be termed a "running rights" order. That is, HBRC requests an Agency order granting it the right to run and operate on and over specified lines of the Canadian National Railway Company (CN), and to use the whole or any portion of the right of way, tracks, terminal, stations or stations ground, interchanges and facilities located on or used in conjunction with the said railway lines. HBRC is making this application for the express purpose of soliciting and carrying the freight of shippers served by the said railway lines. The Agency shall immediately proceed with this particular application as one which is filed pursuant to subsections 138(1) and (2) of the Canada Transportation Act (CTA).

Secondly, HBRC has also requested that the Agency, by order, vary HBRC's Certificate of Fitness in accordance with the desired running rights. The Agency will not hear this part of HBRC's application as it is premature. The need to vary HBRC's Certificate of Fitness will arise if and when a running rights order is issued by the Agency. It would be premature to hear and determine the adequacy of HBRC's insurance coverage as in the end, the modification to its Certificate of Fitness may not be needed. It would also not be appropriate for the Agency to speculate on insurance matters at this time in advance of knowing, for example, exactly where HBRC will operate, how it will operate, and what commodities it may carry. All of these matters will only be determined following the Agency's decision on whether the running rights request should be granted.

In addition, any award of running rights will also be subject to compensation costs which HBRC would have to pay. The amount of any such compensation may have a bearing upon matters such as HBRC's self-insured retention levels, which are critical components of the Agency's consideration of whether there is adequate third party liability insurance for a proposed railway operation. HBRC will have the right to file an application with the Agency for a varied certificate of fitness if and when this becomes necessary.

The Agency acknowledges that one of the fundamental issues raised in this application relates to the scope of section 138 of the CTA . In this respect, the Agency anticipates arguments to the effect that this provision is narrow in scope and can only support requests for what are essentially limited "transit" rights. This interpretation suggests that the section does not allow for a broad running rights request with traffic solicitation rights, such as the instant application. On the other hand, others may argue that the scope of this section is broad and can indeed support such an application.

The Agency's determination of this issue will have potentially far-reaching impacts that go beyond this particular application. For this reason, prior to making its decision, the Agency intends to solicit comments from industry participants. Accordingly, notice of this question is being given by sending a copy of this Decision to those who are identified in the attached mailing list.

Persons, including HBRC and CN, who wish to comment on the scope of section 138 of the CTA and particularly, whether the HBRC application legally fits within its ambit, may file a written submission with the Agency by no later than April 2, 2001. CN as respondent herein shall have an opportunity to file an answer by no later than April 5, 2001, and HBRC as applicant shall have until April 9, 2001 to file a reply.

The Agency has also received a second running rights application from the Ferroequus Railway Company. This application raises the same issue of scope and it shall be dealt with separately, in a similar manner.

The Agency acknowledges that one possible outcome of a preliminary ruling on the scope of section 138 of the CTA, is a decision that precludes further proceedings on the merits of this application. Nevertheless, the Agency cannot prejudge this issue and hereby directs an information demand to HBRC which is set out fully in Appendix 1.

Pursuant to subsection 18(1) of the National Transportation Agency General Rules (General Rules), the Agency hereby directs HBRC to respond to the questions hereto attached, providing where appropriate, written evidence in support of its responses on or before March 30, 2001. Further, and in accordance with subsection 18(2) of the General Rules, the Agency directs HBRC, at the same time, to provide a copy of its responses to CN. CN shall then have an opportunity to use this information as part of any answer it may file with the Agency pursuant to section 46 of the General Rules.

CN's deadline for filing its answer to HBRC's original application has been identified as March 29, 2001. In light of this Agency Decision to deal only with HRBC's request for a running rights order at this time and, given the additional disclosure which is to be provided to CN by HBRC as a result of the Agency questions, CN is hereby given until April 6, 2001 to file its answer.

In light of the new deadline for the filing of CN's answer, HBRC is now to provide its reply to CN's answer on or before April 16, 2001.

It is anticipated that third parties may also seek intervener status in these proceedings for the purpose of filing a submission on the merits of HBRC's application. As with the above-noted scope issue, the Agency shall provide notice of this merits issue to industry participant. Copies of the full public record in these proceedings shall be made available upon request for the purpose of assisting in the preparation of intervener submissions.

Intervener submissions on the merits of this application, (as apart from the scope issue), shall be filed with the Agency by no later than April 23, 2001. HBRC and CN shall then have until April 30, 2001 to file their responses to any submissions so filed that are adverse in interest.

Pursuant to section 11 of the General Rules, any document filed with the Agency in a proceeding is public unless the person filing the document makes a claim for confidentiality. Where any party asserts a claim of confidentiality in respect of any document to be filed with the Agency, they are hereby directed to file an abridged public version of that document. The abridgment shall, at a minimum, disclose all non-confidential information and identify the general nature of the information which is claimed as being confidential.

Any assertion of confidentiality shall specify why any particular information is claimed as confidential and shall identify any specific direct harm which would be likely to result from public disclosure. Further, claimants are also directed to indicate whether, or to what extent, any specific direct harm so shown is or is not sufficient to outweigh the public interest having the document disclosed publicly.

In the event that there is a request for public disclosure of information claimed as being confidential, those requesting disclosure shall specify the reasons for their request, including the relevance of the document or information to the proceeding and the public interest in its disclosure in the context of the Agency's regulatory responsibilities. Any material in support of the reasons for public disclosure must also be filed. Participants asserting a claim of confidentiality shall then have an opportunity to file a reply following which the Agency shall rule on the request.

As set out more fully above:

1. Interveners as well as HBRC and CN, shall have until April 2, 2001, to file a submission on the scope issue. CN shall have until April 5 , 2001 to file an answer to any submissions so filed that are adverse in interest and HBRC shall have until April 9, 2001 to file a reply.
2. HBRC shall have until March 30, 2001 to file its responses to the Agency's questions, providing copies of its answers to CN at the time of filing.
3. CN shall have until April 6, 2001 to file its answer to HBRC's application for running rights. HBRC shall, in turn, have until April 17, 2001 to file its reply to CN's answer.
4. Interveners shall have until April 23, 2001 to file submissions on the merits of HBRC's application. HBRC and CN shall then have until April 30, 2001 to file their responses to submissions so filed that are adverse in interest.

Adherence to these filing deadlines is critical and the granting of any extensions shall be on an exceptional basis only.

Parties are encouraged to file, with their written submissions and documents, an electronic version of said material on 3.5 inch IBM compatible floppy diskettes in, or convertible by and into, WordPerfect 9.0 format.

The Agency anticipates ruling on the scope issue by mid-April, 2001 and hereby advises, depending upon the outcome of any scope decision, that it may convene a public hearing on the merits of HBRC's application. It is to be expected that at such a hearing HBRC, CN and other participants may present their submissions orally, along with supporting evidence and oral argument. A notice of time and place for any hearing as well as procedural directions and hearing Terms of Reference will be issued in the event that a hearing is called.

Provide the definition of public interest used to support the application for running rights. Indicate and provide substantiating information on how increased competition, shortline operations, competitive freight rates, international trade, rail service will be affected if the relief sought is granted and how these factors impact on the public interest. Indicate how the railway operations of HBR, if the relief sought is granted, affect the operations of other railway companies promoting the public interest.

Substantiate the demand from shippers on the railway lines contained in your application for competition or for their products to be routed to an alternate port. Provide analysis and information relating to and substantiating the ability of communities to attract industry, expand services, increase employment and enhance the quality of inhabitants if running rights are granted. Provide a detailed explanation, with supporting evidence, of how communities served by lines contained in your application will be retained if running rights are granted.

Provide HBRC's business plan, all pro forma financial information, all operating plans and any contingency plans relating to the proposed railway operation. Provide all information supporting any projections in the above requested documentation. Provide a detailed explanation of how the operation will be compatible with the existing service on the line.

Provide HBRC's proposed freight rates with supporting costing details by major cost category (i.e. labour, capital and other operating costs).