CTA Home : Frequently Asked Questions : Rail Transportation

Frequently Asked Questions

1. What is the cost of capital?
2. How does the Agency calculate a cost of capital rate for railway transportation?
3. When may parties request mediation from the Agency?
4. If I am interested in the mediation process, how do I access the service?
5. What documentation is required if parties agree to mediation?
6. Who selects the mediator?
7. What happens if the case is not settled through mediation?
8. What is a federal railway company?
9. Some of my neighbours have free private railway crossings. Can I get one?
10. How will I know if a railway is discontinuing its operations on a line?
11. How do railways discontinue branch lines?
12. Are there any historical Agency Decisions regarding running rights applications?
13. Is public interest a factor in the Agency's consideration of running rights applications?
14. What is the definition of "shipper"?
15. When can Final Offer Arbitration (FOA) be used?
16. How does an FOA proceeding commence?
17. What must be included in submissions for FOA?
18. Is every FOA submission referred to an arbitrator?
19. What does the arbitrator consider when conducting the arbitration?
20. What conditions govern the arbitrator's decision?
21. Who is responsible for the costs of the arbitration proceeding?
22. What is a competitive line(CLR) rate based on?
23. Who sets the Competitive Line Rate (CLR)?
24. What determines the point of interchange?
25. Can a Competitive Line Rate (CLR) be established for all rail traffic?
26. What role does the Agency play if the shipper and local carrier do not agree on a Competitive Line Rate (CLR)?
27. For how long is a Competitive Line Rate (CLR) effective and is it published anywhere?
28. How do I contact the railways to obtain information with respect to tariffs?
29. How do I know when rates will change?
30. Who is responsible for publication of a joint rate?
31. What if one carrier refuses to move traffic on a continuous route?
32. How does a person go about filing a formal complaint with the Agency?
33. What information must be included in the application?
34. What are the time frames relative to the processing of an application?
35. Is the decision of the Agency binding on the parties?
36. Where can I find further information or clarification of procedures for filing a rail complaint?

Q1. What is the cost of capital?

A1. The cost of capital is the return on investment that investors require when providing funds for capital investments. The Act and applicable regulations recognize it as an established cost of railway operations.

Q2. How does the Agency calculate a cost of capital rate for railway transportation?

A2. The railway company is required to submit financial information and statements to the Agency. From these statements, the net rail investment, the capital structure and the cost of financing can be determined.

Q3. When may parties request mediation from the Agency?

A3. Parties may seek mediation without an application or case before the Agency. There may be circumstances where parties are in negotiations and would like to have mediation before formally submitting an application to the Agency. Or the Agency may also be requested to mediate after an application or case is before the Agency.

Q4. If I am interested in the mediation process, how do I access the service?

A4. A party must request, in writing, mediation of a case. A "Request for Mediation" is available on the Agency's web site. The request should be addressed to the Agency and should state the parties involved and the nature of the dispute. The request will be assessed against established criteria to determine whether mediation is an applicable method of dispute resolution for a particular case. If the case/application is before the Agency, then both parties should submit a joint request for mediation to the Secretary of the Agency stating the nature of the dispute and also indicate their mutual agreement to extend the statutory deadline.

Q5. What documentation is required if parties agree to mediation?

A5. Parties must sign the "Agreement to Mediate", which is available on the Agency's web site. The Agreement contains various clauses including a clause dealing with confidentiality. The parties must also disclose and exchange all relevant information and documentation with the mediator and other parties.

Q6. Who selects the mediator?

A6. The Chairman of the Agency, or designate, will select and appoint a Member or Agency staff that has been trained in the techniques of mediation as the mediator for the file.

Q7. What happens if the case is not settled through mediation?

A7. If a settlement is not reached, the parties may refer the case back to the Agency for a ruling. Information disclosed during the course of the mediation sessions remains confidential. In addition, Agency Members and/or staff that formed part of the mediation team will not take part in the traditional proceedings.

Q8. What is a federal railway company?

A8. A federal railway company is one that holds a valid certificate of fitness. Generally, a railway is considered to be "within the legislative authority of Parliament" if it meets one or more of the following criteria:

• crosses provincial borders or international borders;

• has been declared by Parliament to be for the general advantage of Canada;

• is owned, controlled, leased or operated by a person who operates a railway within the legislative authority of Parliament; or

• is an integral part of an existing federal railway.

Q9. Some of my neighbours have free private railway crossings. Can I get one?

A9. A private railway crossing may be obtained in one of three ways. First, pursuant to section 102 of the Canada Transportation Act, a landowner has the right to a suitable crossing, constructed and maintained at railway expense, if the land that he now owns was at one time divided by the construction of a railway line. If the parties disagree, the Agency can determine whether such a right exists and what constitutes a suitable crossing. Secondly, a landowner and a railway may enter into a private agreement which contains the terms and conditions that are agreeable to both parties. Such agreements are outside Agency jurisdiction. Finally, if a right to a crossing at railway expense does not exist and the landowner and railway cannot agree on a private agreement, then the Agency may order the railway to construct a suitable crossing, with the landowner responsible for the costs.

Q10. How will I know if a railway is discontinuing its operations on a line?

A10. Each federal railway company must prepare and keep up-to-date a plan that indicates which of its lines it intends to continue to operate and which it intends to discontinue within the next three years. A railway company is not required to indicate whether it intends to transfer a line for continued operations. A line must be listed for discontinuance for at least one year before operations can be discontinued. The railway company is required to make its three-year plan available for public inspection at designated offices. If a railway company's plan is not available on its web site you may wish to contact its offices directly.

Q11. How do railways discontinue branch lines?

A11. In June 2000, the Transfer and Discontinuance process was amended with the passage of Bill C-34. The steps that a railway company is required to follow to discontinue operations on a line include: notice in the three-year plan, public advertisement, negotiations with interest parties, offer to governments and a discontinuance notice (with possible compensation). See the Agency's brochure Transfer and Discontinuance of Railway Operations and Railway Track Determinations for a complete description of the new process.

Q12. Are there any historical Agency Decisions regarding running rights applications?

A12. The National Transportation Agency (NTA) [predecessor to the Agency] received three requests for running rights in the years 1988-1996. Two were rejected on jurisdictional grounds, while the third was withdrawn before the NTA made a determination.

Since the enactment of the Canada Transportation Act (CTA) in 1996, the Canadian Transportation Agency (the Agency) has decided three applications for running rights. The Agency found in the first two applications that section 138 did not permit it to grant a running right to a railway company that was seeking traffic solicitation rights along the lines of the host railway company. As these applications were dismissed on jurisdictional grounds, the merits or public interest components were never examined.

In examining the merits of the third application, the Agency found that a statutory running right is an exceptional remedy that requires actual evidence of market abuse or failure before an application under section138 of the CTA may be granted. In this application, the Agency found that the applicant had not established the existence of a rate or service problem in the relevant markets, nor that running rights would alleviate any lack of adequate and effective competition. As such the Agency denied the application.

Q13. Is public interest a factor in the Agency's consideration of running rights applications?

A13. Under existing legislation the Agency is required to weigh the public interest in running rights cases. While the term public interest is not defined in the legislation, it is conventionally regarded as being the National Transportation Policy. This policy, which appears at the beginning of the Canada Transportation Act, in section 5, advocates a balancing of various matters that together are designed to maintain and foster an effective, efficient, and safe national transportation system.

Q14. What is the definition of "shipper"?

A14. "Shipper' is defined in section 6 of the Canada Transportation Act as "a person who sends or receives goods by means of a carrier or intends to do so." In turn, a "carrier" is defined as "a person who is engaged in the transport of goods or passengers by any means of transport under the legislative authority of Parliament."

Q15. When can Final Offer Arbitration (FOA) be used?

A15. FOA can be used to settle rate and service disputes relating to:

• movements of goods by railway (movements of containers and trailers on flat cars are not eligible for FOA unless the containers arrive by water at a port in Canada served by only one railway company to move on by rail, or arrive by rail at such a port in Canada for further movement by water).

• rates for a railway company's services to a designated commuter rail authority or a passenger railway;

• movements of goods by water needed to maintain or develop permanent settlements for northern marine resupply purposes; or

• domestic movements of goods by air to which Part II of the Act applies.

No party to a confidential contract is entitled to submit a matter governed by the contract to the Agency for FOA without the consent of all parties to the contract.

Q16. How does an FOA proceeding commence?

A16. The carrier must receive written notice of a shipper's intention to submit a matter to the Agency for FOA at least five days prior to the shipper doing so.

• Within ten days of submitting the issue to the Agency, the shipper and the carrier make their final offers, including the proposed rates.

• Within five days of receiving the final offers, the Agency must refer the matter to the arbitrator or arbitration panel. The arbitrator and parties decide how to conduct the arbitration proceedings.

• If the parties cannot agree, the Agency will provide the rules of procedure. The Agency can also provide administrative, technical or legal assistance if requested by the arbitrator.

Q17. What must be included in submissions for FOA?

A17. A shipper's submission for FOA must include:

• the final offer of the shipper to the carrier, excluding any dollar amounts;

• an agreement by the shipper to abide by the arbitrator's decision;

• an agreement by the shipper to pay half of the arbitration costs (the carrier is responsible for the other half);

• if possible, the name of the arbitrator agreed to by both parties to conduct the arbitration. If the arbitration is to be conducted by a panel of arbitrators, the name of the arbitrator chosen by the shipper and the name of the arbitrator chosen by the carrier.

Q18. Is every FOA submission referred to an arbitrator?

A18. Not necessarily. Often, a submission will raise questions regarding the availability of FOA to solve the dispute. The Agency must decide on these questions and, depending on the timing, such rulings may mean that an arbitrator's decision is set aside. If the arbitrator's decision is pending, the process may continue subject to terms or conditions. A listing of issues determined by the Agency during FOA are available on the Agency's web site.

Q19. What does the arbitrator consider when conducting the arbitration?

A19. The arbitrator must consider information the carrier and the shipper provide in addition to any other information he or she may request. Unless the parties agree otherwise, the arbitrator must also consider whether the shipper could use any other competitive means of transportation.

Q20. What conditions govern the arbitrator's decision?

A20. The arbitrator must choose either the final offer of the shipper or the final offer of the carrier. The decision will remain in effect for one year, provided the parties did not previously agree on a lesser period.

• The rates and/or conditions of the movements contained in the selected offer may be published in a public tariff or included in a confidential contract, as agreed on by the parties.

• On the request of the parties within 30 days of the arbitrator's decision, or 7 days under the summary process, the arbitrator shall provide written reasons. Unless the parties agree otherwise, the arbitrator's decision is final and binding on the parties and retroactive to the date of the shipper's initial submission to the Agency. The parties must promptly pay any monies or interest owed as a result of the arbitration.

Q21. Who is responsible for the costs of the arbitration proceeding?

A21. The shipper and the carrier share the costs of FOA equally. Arbitrators may establish their own fee structures, although the Agency may, in some circumstances, fix arbitrator costs. The parties also share the Agency's cost of providing administrative, technical and legal assistance requested by the arbitrator or arbitration panel.

Q22. What is a competitive line rate (CLR) based on?

A22. A CLR is based on applicable interswitching rates and the local railway revenue information derived in competitive situations.

Q23. Who sets the Competitive Line Rate (CLR)?

A23. Upon request by the shipper, the local carrier serving the shipper at the point of origin or destination, as the case may be, shall establish a CLR applicable to the movement of the traffic between the point of origin or destination and the nearest interchange with a connecting carrier.

Q24. What determines the point of interchange?

A24. The nearest interchange is the one nearest the point of origin or destination, whichever is served exclusively by the local carrier, and in the reasonable direction of the movement of the traffic from the point of origin to the point of destination on the continuous route designated by the shipper, unless the local carrier can demonstrate that the interchange cannot be used for engineering reasons.

Q25. Can a Competitive Line Rate (CLR) be established for all rail traffic?

A25. No, a CLR cannot be established for the movement of trailers on flat cars, containers on flat cars or less than carload traffic, unless they arrive at a port in Canada by water for movement by rail or by rail for movement by water.

Q26. What role does the Agency play if the shipper and local carrier do not agree on a Competitive Line Rate (CLR)?

A26. Upon application by a shipper, the Agency shall, within 45 days thereafter, establish any of the following matters:

• the amount of the CLR;

• the designation of the continuous route;

• the designation of the nearest interchange; and

• the manner in which the local carrier shall fulfil its service obligations.

Q27. For how long is a Competitive Line Rate (CLR) effective and is it published anywhere?

A27. If a CLR is established by the Agency, it has effect for one year after its effective date, or for any other period that the shipper and the local carrier agree on. A CLR must be set out in a tariff or confidential contract.

Q28. How do I contact the railways to obtain information with respect to tariffs?

A28. Canada's two major railway companies may be reached at the following mailing and Web addresses:

Canadian National Railway Company
935 de la Gauchetière Street West
Montréal, Québec
H3B 2M9
www.cn.ca

Canadian Pacific Railway
Suite 500
401 9th Avenue SW
Calgary, Alberta
T2P 4Z4
www.cpr.ca

Q29. How do I know when rates will change?

A29. A railway company that proposes to increase a rate in a tariff for the movement of traffic shall publish a notice of the increase at least 20 days before its effective date.

Q30. Who is responsible for publication of a joint rate?

A30. If a joint tariff or rate is agreed on or determined by the Agency, responsibility for publication of the tariff or rate rests with the railway company operating the railway line on which the movement of the traffic originates.

Q31. What if one carrier refuses to move traffic on a continuous route?

A31. No railway company shall, by combination, contract or agreement, express or implied, or by any other means, prevent traffic from being moved on a continuous route from the point of origin to the point of destination. In the event of such an occurrence, a shipper may file a level of service complaint with the Agency.

Q32. How does a person go about filing a formal complaint with the Agency?

A32. An application to the Agency shall be submitted in the form of a letter, facsimile or similar form by the applicant or duly authorized agent or solicitor acting for the applicant.

You may write or fax us your complaint at:

The Secretary
Canadian Transportation Agency
Ottawa ON
K1A ON9

Fax: (819) 997-6727

Q33. What information must be included in the application?

A33. The application should contain a clear and concise statement of the facts, the grounds for the application, the section of the Act under which the application is made, and the nature of the relief applied for.

• The application should be endorsed with the full name, address and telephone number of the applicant or the duly authorized agent or solicitor acting for the applicant.

• A copy of the application must be served on the respondent at the time the application is filed with the Agency.

Q34. What are the time frames relative to the processing of an application?

A34. A respondent who intends to oppose an application shall, within 30 days after receiving the application, file with the Agency the respondent's answer to the application, and simultaneously serve a copy of its answer on the applicant.

• The answer shall be endorsed with the full name, address and telephone number of the respondent or the duly authorized agent or solicitor acting for the respondent.

• An applicant may, within 10 days after receiving a copy of an answer, file a reply with the Agency, and simultaneously serve a copy of the reply on the respondent.

• Pleadings in respect of an application shall then close.

• The Agency shall issue its decision with respect to an application within 120 days after receiving the application, unless the parties agree to an extension.

Q35. Is the decision of the Agency binding on the parties?

A35. Yes, the Parliament of Canada has empowered the Agency with all the rights and privileges that are vested in a superior court. Accordingly, the Agency may grant the relief sought, in whole or in part, and has all the powers that the Federal Court has to award costs in any proceeding before it.

Q36. Where can I find further information or clarification of procedures for filing a rail complaint?

A36. For more detailed information on the complaint process and the Agency's responsibilities regarding rail complaints, please refer to What you need to know and more particularly the section titled Relevant Sections of the Agency's General Rules.