Discontinuance of Rail Lines

Res #: 24-05M
Number: 24
Year: 2005
Midterm: Yes
Expired: Yes
Responses Received: No
Departments: Transport Canada

Resolution No. 24-05M

WHEREAS, Section 146 of the Canadian Transportation Act states that a railway company may discontinue operating a rail line on providing notice thereof to the Agency; and

WHEREAS, municipalities are to be paid three annual payments of $10,000 for each mile of rail line or portion in the municipality or district once discontinuance notice is filed; and

WHEREAS, municipalities affected are counting on this payment to provide for impact of loss of infrastructure within the regions of abandonment; and

WHEREAS, there is no statutory time frame for the railway company to file discontinuance with the Canadian Transportation Agency which triggers payment to municipalities experiencing discontinuance and may result in the rail way company practicing dilatory business patterns which strongly affect municipal regions;

THEREFORE BE IT RESOLVED, that SARM request support from SUMA, FCM and the Provincial Government for support to lobby the Federal Government for a required time frame of no more than ninety days that a railway must file discontinuance notice with the Canadian Transportation Agency for section 146.1 of the Canadian Transportation Act to be effectual for municipalities involved.

Response from Honourable Jean-C. Lapierre, P.C., M.P, Minister of Transport:

I have noted the details of Resolution No. 24. The line transfer and discontinuance provisions of the Canada Transportation Act outline the process that a federal railway must follow before it can discontinue service on a line. The process is aimed at encouraging the commercial transfer of lines to other operators for a continued operation. In the even that the line is not transferred commercially, the railway must offer to sell it to governments at net salvage value. This provides an opportunity for governments to acquire the line for continues rail operations or other purposes if it is in the public interest. If there is no commercial or government interest in the rail line, the railway can proceed to discontinue service and must provide notice to the Agency to complete the formal process. There is no time frame for the railway to give its notice to the Agency, since it is in the railway's interest to complete the process by providing the notice. Providing the notice terminates the railway's obligation under the Act, permits it to salvage the assets, and allows it to reduce its costs and risks by transferring the land.

In the long run, this is more cost-effective for the railway than foregoing the notice in order to avoid the three annual $10,000 per mile payments for grain- dependent branch lines.