Family Farmers:
Ph: 306-323-2137
Click to email

Download Spybot Here

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.