Decision No. 245-R-2012

June 22, 2012

APPLICATION by the Eastern Maine Railway Company, pursuant to section 93 of the Canada Transportation Act, S.C., 1996, c. 10, as amended, to vary Certificate of Fitness No. 97024.

File No.: 
R8005/E2

The Eastern Maine Railway Company (EMR) applied to the Canadian Transportation Agency (Agency) for a variance to its certificate of fitness to reflect a change in railway operations in relation to two transactions:

  1. the proposed operation of the railway between Baileyville, Maine, United States of America to St. Stephen, New Brunswick (the “Baileyville-St. Stephen” line) as acquired by Woodland Rail, LLC; and
  2. the proposed acquisition by EMR of the line of railway, located between a point near Madawaska, Maine, United States of America, and a point near Saint-Léonard, New Brunswick (the “Madawaska-Saint-Léonard line”).

Certificate of Fitness No. 97024 permits EMR to operate a line of railway in Canada, by virtue of a running rights agreement with the New Brunswick Southern Railway Company, from approximately mileage 5.61 Mattawamkeag Subdivision, at the Maine‑New Brunswick border, near Vanceboro, Maine, to mileage 0.0 Mattawamkeag Subdivision, at McAdam, New Brunswick.

EMR states that as a result of the sale of the Baileyville-St. Stephen line, EMR will, through a trackage rights agreement and a maintenance and dispatch agreement with Woodland Rail, LLC, as well as a rail transportation agreement with Woodland Pulp, LLC, operate a line of railway between St. Stephen, New Brunswick and the state of Maine. These agreements will come into effect at a later date once the conditions specified in those agreements have been met.

By way of a separate transaction, EMR will acquire and operate the Madawaska‑Saint‑Léonard line of railway from Montreal, Maine & Atlantic Railway, Ltd.

Copies of all the agreements relevant to this application were filed in confidence as part of the application.

Subsection 92(1) of the Canada Transportation Act (CTA) states that the Agency shall issue a certificate of fitness for the proposed construction or operation of a railway if the Agency is satisfied that there will be adequate liability insurance coverage for the proposed construction or operation, as determined in accordance with the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337.

Paragraph 93(1)(c) of the CTA provides that the Agency may, on application, vary a certificate of fitness to reflect a change in railway operations or circumstances relating to those operations.

The liability insurance requirement is an ongoing requirement and the Agency must be satisfied that a company operating a railway under federal jurisdiction continues to have adequate third party liability insurance coverage.

With respect to the adequacy of the third party liability insurance coverage, the Agency has reviewed the information on file and has examined EMR’s financial capability to self-insure for the amount of the self-insurance based on its financial statements.

Based on this review, the Agency is satisfied that there continues to be adequate third party liability insurance coverage, including self-insurance, for EMR’s railway operations.

Accordingly, the Agency, pursuant to paragraph 93(1)(c) of the CTA, varies Certificate of Fitness No. 97024, to reflect these changes in railway operations or circumstances as follows:

  1. Through a running rights agreement with the New Brunswick Southern Railway Company, a line of railway from approximately mileage 5.61 Mattawamkeag Subdivision, at the Maine-New Brunswick border, near Vanceboro, Maine, to mileage 0.0 Mattawamkeag Subdivision, at McAdam, New Brunswick;
  2. Through a trackage rights agreement and a maintenance and dispatch agreement with Woodland Rail, LLC, as well as a rail transportation agreement with Woodland Pulp, LLC, a line of railway between St. Stephen, New Brunswick and the state of Maine; and/or
  3. Between the Canada/United States of America border near Saint‑Léonard, New Brunswick and Saint-Léonard, New Brunswick.

Paragraph 28(1)(b) of the CTA states that the Agency may in any order direct that the order or a portion or provision of it shall come into force on the happening of any contingency, event or condition specified in the order.

In light of the fact that the various agreements under which EMR will acquire the rights to operate the Baileyville‑St. Stephen line and the Madawaska-Saint-Léonard line will come into effect at a future date, the Agency, pursuant to paragraph 28(1)(b) of the CTA, directs that the variances of the Certificate of Fitness shall come into force as follows:

  1. With respect to the Baileyville‑St. Stephen line, on the effective date of the trackage rights agreement between EMR and Woodland Rail, LLC.
  2. With respect to the Madawaska‑Saint-Léonard line, on the close of the sale of the line to EMR.

EMR shall notify the Agency of the effective date of the trackage agreement and the effective closing date of the sale of the Madawaska-Saint-Léonard line, at which time the Agency will issue the varied certificates of fitness.

Certificate of Fitness No. 97024 issued to EMR will be superseded by the varied certificates on the effective date of the agreements.

Member(s)

  • Jean-Denis Pelletier, P.Eng.
  • Raymon J. Kaduck