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Interlocutory Decisions : 2001

2001-11-09

LET-R-443-2001

File No. T7475/01-3

This is in reference to the above-noted complaint filed by Ferroequus Railway Company Limited (FE) on October 30, 2001. In its application, FE is applying to the Canadian Transportation Agency (the Agency) pursuant to subsections 138(1) and (2) of the Canada Transportation Act (CTA), for an order granting it the right to run and operate its trains on and over specified lines of the Canadian National Railway Company (CN) between Lloydminster, Saskatchewan and Prince Rupert, British Columbia and between Camrose, Alberta and Prince Rupert, British Columbia. FE is also applying to the Agency, pursuant to subsection 93(2) of the CTA, for an order varying FE's certificate of fitness in accordance with the rights granted.

This is also in reference to CN's letter of November 6, 2001 in which CN requests the Agency to direct FE to provide information relating to the nature of the transit rights required, the description or identification of the trackage and interchange facilities from which FE intends to access CN's trackage at Camrose or Lloydminster and to the interchange facilities which would be used to proceed to final destination. CN submits that until such time as this information is provided, the Agency should stay the proceedings and relieve CN of its obligation to provide an answer within 30 days of service of the application.

Running rights application

The Agency will proceed with FE's application for running rights. Pursuant to subsection 18(1) of the National Transportation Agency General Rules (General Rules), the Agency hereby directs FE to respond to the questions attached hereto, providing where appropriate, written evidence in support of its responses on or before November 26, 2001. Where a claim of confidentiality in respect of any document to be filed with the Agency is asserted, FE is directed to file an abridged public version of that document which 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 clearly the reason any particular information is claimed as confidential and shall identify any specific direct harm which would likely result from public disclosure. The claim of confidentiality shall also indicate whether, or to what extent, any specific direct harm so shown is or is not sufficient to outweigh the public interest in having the document disclosed publicly.

The Agency further directs FE, pursuant to subsection 18(2) of the General Rules, to provide a copy of its responses to CN. CN shall then have an opportunity to use this information as part of its answer which shall be filed with the Agency, with a copy to FE, on or before December 27, 2001. FE shall then have until January 7, 2002 to file a reply to CN's answer.

The Agency reserves the right to direct further interrogatories to FE should the Agency deem it necessary.

Variance of FE certificate of fitness

FE has requested that the Agency, by order, vary FE's certificate of fitness in accordance with the desired running rights. The Agency finds that it would be premature for the Agency to hear argument on the variance of FE's Certificate of Fitness as, in the end, such order may not need to be issued. Notwithstanding this, it would be inappropriate for the Agency to speculate on insurance matters in advance of knowing the exact nature of any rights granted.

For the above reasons, FE's request for an order varying its certificate of fitness shall be held in abeyance pending the Agency's resolution of the running rights application.

CN's motion to stay the proceedings

The Agency notes that the reasons in support of CN's motion to stay the Agency proceedings is that information is missing or has not been divulged by FE in its application for running rights. Given that the Agency's interrogatories directed to FE include, among others matters, the issues raised by CN in its letter of November 6, 2001, the Agency is holding CN's motion in abeyance until such time as FE, as directed above, provides its answers to the Agency's interrogatories.

Other matters

FE and CN are requested to file, with their paper documents, an electronic copy of their material on a 3.5 inch IBM compatible floppy diskette (in, or convertible by and into, WordPerfect 9.0 format).

APPENDIX 1

Question 1.

The Agency requests that FE describe the nature of the transit rights referred to in paragraphs 4 and 5 of the application.

Question 2.

The Agency requests that FE state the duration of the running rights order it seeks.

Question 3.

The Agency requests that FE define the public interest as it relates to its application for running rights under subsection 138(1) of the Canada Transportation Act.

Question 4.

The Agency requests that FE provide the Agency with a copy of its pro-forma financial statement as well as its business plan which shall include the following information:

a) Markets and Service:

• The total number of kilometres FE intends to operate;

• For the grains to be offered by the Canadian Wheat Board (CWB) at Lloydminster, Saskatchewan and Camrose, Alberta, provide an estimate of the annual volumes for each of the first three years of operation;

• For grains to be offered by CWB at Lloydminster, Saskatchewan and Camrose, Alberta respectively, indicate:

• the routing of traffic from origin,
• the proposed frequency and timing of the service (including seasonal variations),
• size of train consists to be operated,
• expected average train length,
• the location of train crew assignment,
• fuelling requirements,
• switching requirements in CN yards,
• a description of the work to be carried out including expected turn around times.

• Does FE intend to expand its market base beyond CWB grains. If so, indicate:

• the type of commodities and an estimate of the annual volumes per commodity for each of the first three years of operation,
• whether any of these commodities are classified as dangerous goods and,
• whether FE proposes to operate a passenger-train service.

b) Equipment and Personnel

• a description of the rail equipment currently owned by FE including locomotives and other rolling stock including type, tare weight, capacity, length and age;

• a description of the rail equipment currently leased by FE, including locomotives and other rolling stock. For locomotives include horsepower, age and weight. For rolling stock, include type, tare weight, capacity, length and age;

• details of any plans by FE to purchase or lease rail equipment including for each equipment type, the intended transaction (purchase or lease), number to be purchased or leased, and the horsepower (locomotives) or tare weight and carrying capacity (freight cars) of the equipment;

• with respect to the proposed grain operations, describe the role FE will play in securing car supply within the evolving car allocation regime which involves grain shippers, the CWB, CN and the Canadian Pacific Railway Company;

• whether FE has entered into discussions with the federal and provincial governments and the CWB concerning the apportionment of government-owned hopper cars for grain operations and if so, the nature and outcome of such discussions;

• a description of how maintenance of railway equipment will be undertaken including details of the qualifications of maintenance personnel;

• a description of rail equipment maintenance facilities owned by FE including, for each such facility, details on the location, size in square metres, and maintenance equipment contained therein;

• whether FE owns or proposes to construct or lease infrastructure at the Camrose, Alberta and Lloydminster, Saskatchewan interchanges.

• a description of the railway company's trackage and interchange facilities from which FE intends to access CN's trackage at Camrose, Alberta or Lloydminster, Saskatchewan;

• the number and qualification of employees FE intends to employ to carry out the proposed operation including a breakdown of the number employed in management, customer service, train crew and equipment maintenance and other staff;

• a description of crew change points;

• a description of arrangements FE has made or proposes for clearing derailed cars and setting off bad orders;

• a description of the plans for interaction between FE trains and CN's trains including a description of how FE trains will be integrated into CN's schedules and how train priority issues will be handled and;

• whether FE anticipates interchanging traffic with other railway companies and, if so, include a list of any interchange arrangements.

Question 5.

How does FE propose to deal with adjustments in service frequencies on the host railway lines in response to increases or decreases in the amount of traffic offered to FE?

Question 6.

Provide FE's proposed freight rates with supporting costing details by major cost category (i.e. labour, capital and other operating costs) which will substantiate FE's view that it is a lower cost operator compared to CN.

Question 7.

Indicate whether FE has commitments with the CWB, grain shippers or other shippers regarding the further use of the Port of Prince Rupert, British Columbia and, if so, provide any documents in this respect.

Question 8.

Describe how FE's proposed operation will impact on the grain handling network at the Port of Vancouver, British Columbia.