| Saskatchewan RMs Take a
Beating From Transportation Agency
Although it may seem as if the prairie branch line rail network has
been completely skeletonized by the major railways, the job is not yet
truly complete. CP still has 911 kilometres of track on its Three-Year
Plan for abandonment in the prairie provinces, and CN has 613 kilometres.
Nor does this rule out further abandonments by the major carriers. At
least one major railway has stated that there are still too many grain
elevator points and by extension, too many rail lines.
When the railways seek to abandon track, there is a formal process laid
out in the Canada Transportation Act. At one time, prior to the passage of
this act, the Transportation Agency had to take public interest into
account in deciding whether or not to allow an abandonment. That idea was
vanquished some time ago. The railways merely have to follow a prescribed
procedure, and cannot be prevented from abandoning track, no matter what
the government may think. It isn't exactly what the country's founding
fathers had in mind when they granted the original railway charters.
The only defence of the public interest left in federal rail
legislation is the stipulation that a railway must offer a line for sale
to various levels of government before it can rip it out of the ground. Of
course, this wouldn't mean much if the railway could charge whatever price
it wanted. The rules say that the price will be the net salvage value of
the track - the amount of money the railway would get by selling the
materials less the cost of tearing out those materials. If the parties
can't agree on that amount, the Canadian Transportation Agency (CTA) will
decide.
Until recently, the Agency has been fairly reasonable in these
determinations. Neither party usually got what it wanted completely. But
two recent net salvage value determinations on Saskatchewan branch lines
seem to indicate the tide has turned in the railways' favour. The new
Members of the Agency, freshly appointed by the Harper government, gave
the railways a huge and questionable bonus in these recent rulings.
The bonus revolves around a section of the Canada Transportation Act
that requires the railways to pay to municipal governments, on
abandonment, an amount equal to $30,000 per mile, for each mile of rail
line that runs through the municipality. This provision only applies to
grain dependent branch lines in western Canada. The rationale for this was
to compensate municipalities for road costs they would incur when rail
service ended.
It would seem this condition imposes quite an obligation on the
railways. Prior to the recent run-up in commodity markets, including
steel, a railway would likely have ended up in a negative position when it
abandoned track. This makes it all the more odd that this provision in the
act was, if memory serves me correctly, first proposed by CP.
The fact is, CP was quite clever in suggesting it. Municipalities have
been fighting with each other ever since the act came into effect. While
one municipality may want to buy the track to operate a short line,
another will see only the short-term prospect of hundreds of thousands of
dollars of revenue.
Given this provision, it would seem logical that the net value of the
track would include consideration for the $30,000 a mile. It the railway
abandons the track, it can sell the materials but must take the payment to
municipalities out of that money. There is no way around this.
Salvaging the track includes a compensation cost to the municipalities.
At least that is what seems logical. Unfortunately for farmers on the
Radville and Bromhead branch lines, Harper's appointees to the Agency
don't appear to see it that way. If CP sells to the RM's in question, it
gets to have its cake and eat it too. The RMs pay the full price and lose
the benefit of $30,000 per mile. And if they want to start a short line,
they are still at the mercy of CP as to all and any conditions the line
would run under.
To top it off, the Agency also ruled against the RMs where their
reclamation bylaws were concerned. Having seen the condition of many
abandoned branch lines, some municipalities enacted bylaws requiring the
railways to clean up abandoned railway sites. The RMs in this case felt
the amount of such a clean up should be deducted from the salvage value.
Again the Agency ruled in CP's favour on this.
The resulting purchase prices for these branch lines are exceedingly
high. It is possible that the Agency's rulings might fit the letter of the
law as laid out in the act, but they violate any sense of natural justice.
There is one last recourse in this case. The rulings can be appealed to
the federal court of Canada. A successful appeal would have implications
far beyond the two branch lines in question, and extend to the other 1300
kilometres on the railways' plans for discontinuance.
Given the cost of such an appeal, and the wide implications, the
government of Saskatchewan should consider funding it. For a province
swimming in oil money, it would be a small amount. For some beleaguered
RMs, it would be a godsend.
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