Date: 20100621
Docket:
A-199-09
Citation: 2010 FCA 166
CORAM: SEXTON
J.A.
PELLETIER J.A.
TRUDEL
J.A.
BETWEEN:
CANADIAN
NATIONAL RAILWAY COMPANY
Appellant
and
CANADIAN TRANSPORTATION AGENCY,
BURLINGTON NORTHERN SANTA FE RAILWAY
COMPANY
PATERSON GRAIN, CANADIAN WHEAT BOARD and
MINISTER OF INFRASTRUCTURE AND
TRANSPORTATION
FOR THE GOVERNMENT OF MANITOBA and
ATTORNEY
GENERAL OF CANADA
Respondents
REASONS FOR
JUDGMENT
PELLETIER
J.A.
INTRODUCTION
[1]
Canadian
National Railway Company (CN) brings this appeal of a decision of the Canadian
Transportation Agency (the CTA) dated February 6, 2009, reported as Decision
no. 35-R-2009, (the Decision) which held that CN’s Fort Rouge yards constituted
an interchange within the meaning of section 111 of the Canada
Transportation Act, S.C. 1996 c. 10, (the Act). The effect of that
designation is that the exchange of traffic between CN and Burlington Northern
Santa Fe Railway Company (BNSF) at that location constitutes interswitching
within the meaning of section 111 of the Act. As a result, BNSF is entitled to
have CN haul BNSF’S traffic to its (BNSF’s) customer Patterson Grain at
regulated rates rather than at the commercial rate which would otherwise apply.
[2]
The
dispute between the two railway companies arises because of changes which CN
made to its facilities in the Winnipeg area. Pursuant to
agreements negotiated between their predecessors in 1912 (the Running Rights
Agreement) and in 1913 (the Transfer Track Agreement) (collectively, the
Agreements), CN and BNSF exchanged traffic on two tracks located in CN’s F Yard.
In 2003, CN reconfigured its tracks in the Winnipeg area with the result that
the traffic which had formerly been exchanged at F Yard was now exchanged at
CN’s Fort
Rouge yard,
located 560 metres further down the line. This means that BNSF must travel 1.91
miles over CN’s track (via running rights) to access the Fort Rouge Yards.
[3]
While
BNSF had previously paid CN at regulated rates for hauling its traffic to its
customers (including Patterson Grain) located within 30 km of F Yard at the
regulated rate, CN attempted to negotiate a commercial rate with BNSF for
hauling its traffic from the Fort Rouge Yard. When the parties were unable to
agree, CN applied to the CTA for a determination that the exchange of traffic
between the two companies at the Fort Rouge Yard did not constitute
interswitching, within the meaning of section 127 of the Act, a determination
which required a prior decision as to whether an interchange exists at the Fort
Rouge Yard. The CTA held that there is an interchange and that the exchange of
traffic at the Fort Rouge Yard constitutes interswitching. CN appeals that
decision on the ground that the CTA erred in law by misinterpreting the
statutory definition of interchange, erred in law in finding that BNSF had an
ownership interest in CN’s Fort Rouge Yard and, lastly, erred in law in finding
that CN was a “local carrier” for the purposes of section 127 of the Act.
THE CTA’S DECISION
[4]
After
reviewing the facts and the various parties’ submissions, the CTA set out the
applicable statutory provisions, which I reproduce below:
|
“interchange”
means a place where the line of one railway company connects with the line of
another railway company and where loaded or empty cars may be stored until
delivered or received by the other railway company;
“interswitch”
means to transfer traffic from the lines of one railway company to the lines
of another railway company in accordance with regulations made under section
128;
127. (1) If a railway line of one
railway company connects with a railway line of another railway company, an
application for an interswitching order may be made to the Agency by either
company, by a municipal government or by any other interested person.
|
« lieu
de correspondance » Lieu où la ligne d’une compagnie de chemin de fer
est raccordée avec celle d’une autre compagnie de chemin de fer et où des
wagons chargés ou vides peuvent être garés jusqu’à livraison ou réception par
cette autre compagnie.
« interconnexion »
Le transfert du trafic des lignes d’une compagnie de chemin de fer à celles
d’une autre compagnie de chemin de fer conformément aux règlements
d’application de l’article 128.
127. (1) Si une ligne d’une
compagnie de chemin de fer est raccordée à la ligne d’une autre compagnie de
chemin de fer, l’une ou l’autre de ces compagnies, une administration municipale
ou tout intéressé peut demander à l’Office d’ordonner l’interconnexion.
|
[5]
After
referring to the national transportation policy, as enunciated at section 5 of
the Act, the CTA reviewed the factual and legislative context of the
interswitching provisions of the Act. It concluded that review as follows:
[63]
Interswitching of traffic between railway companies has existed in Canada since
the early 1900's. The concept of interswitching was introduced to limit the
proliferation of railway lines in urban areas serving manufacturing-based
industries. However, limiting the number of railway lines in an area could
create a monopolistic service and rate situation. The ability to exchange or
interswitch traffic with another railway company or companies within certain
limits was seen as a means to reduce exclusive control over traffic.
[64] The
interswitching provisions of the CTA today are meant to provide shippers with
greater access to competitive services at known prices to alternate rail
carriers within interswitching limits. An interpretation of the relevant
legislation should support this objective.
Decision 35-R-2009
at paragraphs 63 and 64.
[6]
The
CTA then considered the threshold question of whether there was an interchange
at the Fort Rouge Yards. It noted CN’s argument that the definition of
interchange had two criteria which must exist at the same place, that is, there
must be an interconnection of two railway lines and there must be a capacity to
receive and store cars of either line until they are picked up by the other railway.
Since the place where CN’s and BNSF’s lines interconnected was 1.9 miles from
the place where cars were stored until picked up by the other railway, CN
argued that there was no interchange.
[7]
The
CTA rejected CN’s argument, finding that the word “place” is a broad term which
may cover an area which includes a place where the lines of two railways
interconnect and a place where cars may be stored until retrieved. The CTA
found that both elements did not have to exist at exactly the same point on the
map. It noted that no two yards or track configurations are precisely the same
so that “it may be virtually impossible to have facilities in place for the
storage of rail cars at the connecting point of two railway lines.”: Decision
35-R-2009 at paragraph 77.
[8]
The
CTA noted that the change in circumstances giving rise to the application, that
is, the fact that BNSF must now travel a greater distance over CN’s track to
reach the storage yard, was the result of CN’s decision to move the location of
the storage yard.
[9]
On
the issue of interswitching, the CTA noted that the statutory definition
requires that traffic be transferred from the lines of one railway to the lines
of the other. Since the Fort Rouge Yards are, on the face of it, entirely CN
track, the issue was whether there was in fact a transfer to the lines of
another railway.
[10]
The
CTA addressed this question by referring to the terms of the 1913 Transfer
Track Agreement which is binding on both CN and BNSF. [While the Agreement,
drafted before either CN or BNSF came into existence, refers to their
predecessor companies, for the sake of simplicity, I will treat the Agreement
as referring to the parties to the dispute before us.] The CTA noted that the
Agreement contemplated the construction of two lines of track at CN’s F Yard,
one for the delivery of CN traffic to BNSF, and one for the delivery of BNSF
traffic to CN. The Agreement provides that, upon completion of construction of
the two tracks, BNSF would pay CN one half the cost of construction. BNSF also
agreed to reimburse CN for one half the cost of the maintenance of the two
lines. In addition, BNSF agreed to pay CN annually a sum equal to one half of
the rental value of the land on which the tracks were constructed. Upon the
termination of the Agreement, BNSF was entitled to one half of the material
used in the construction of the tracks or to an amount equal to the depreciated
value of those materials.
[11]
The
Agreement also provided that CN could, at any time, change or alter the
location or construction of the transfer tracks providing it did so at its own
expense and that the new facilities were equally convenient for BNSF.
[12]
The
CTA concluded that the “operating environment” which existed at CN’s F Yard was
maintained at CN’s Fort Rouge Yard. It held that the Transfer Track Agreement
gave BNSF an ownership interest in the transfer track. The CTA referred to one
of its prior decisions, the CNCP Ottawa Valley partnership decision (Decision
no 798-R-1993) as authority for the proposition that where a jointly owned
railway line crossed any other line, including the lines of one of the joint
owners, and a place for the storage of cars existed at that location, the
requirements for an interchange were met. This decision supported the CTA in
its conclusion that, in the present case, BNSF had a sufficient ownership
interest in the transfer track at the Fort Rouge Yard to have a line of railway
for the purposes of the interswitching provisions of the Act.
[13]
The
CTA also referred to another of its prior decisions on which CN relied in
support of its position, the Celgar case, Decision no. 439-R-1989, in
which a shipper asked for a determination that its facilities at Kraft, B.C.,
be deemed to be within the interswitching radius of the interchange at Nelson,
B.C, located 45.1 track miles away. BNSF’s line connected with Canadian Pacific
Railway’s (CP) line at Troup Junction, some 8.9 miles from Nelson. BNSF
accessed Nelson over CP’s track pursuant to a running rights agreement. BNSF
and CP had exchanged cars at Nelson for a considerable period; in fact, CP
publications had listed Nelson as an interchange point.
[14]
The
CTA found that there was no interchange at Nelson because there was no
connection of the lines to two railways at that location. The connection was at
Troup Junction but there were no facilities for the storage and exchange of
cars at that location and while there were such facilities at Nelson, there was
no connection of the lines of one railway with those of another. In the result,
there was no interchange at Nelson, and therefore, no possibility of deeming
the shipper’s facilities within the statutory radius.
[15]
The
CTA distinguished the Celgar case on the basis of the proximity of the
connection point and the yards in this case (1.9 miles) as opposed to the
greater distance in issue in Celgar, namely 8.9 miles. It noted, as it
had earlier, that the legislation did not require the connecting lines and the
storage yard to be in exactly the same place.
[16]
CN
raised a final argument before the CTA, namely that in order for interswitching
to occur, it (CN) must be a local carrier as defined in the Act. CN took the
position that it was not a local carrier because it could not access Patterson
Grain by operating exclusively on its own lines. It had to use CP’s line for a
part of the trip which meant that it did not have a “continuous route” to the
Patterson facility. The CTA disposed of this argument by pointing out that
while the definition of local carrier is significant for the competitive line
rate provisions of the Act, it has no application to the interswitching
provisions which deal with a different problem.
[17]
In
the end, the CTA found that there is an interchange between CN and BNSF since
there is a place where the two railway lines connect and where loaded or empty
railway cars may be stored until delivered or received. In addition, the CTA
found that the provisions of the 1913 Transfer Track Agreement establish that
BNSF has a line of railway for the purposes of the interswitching provisions of
the Act. As a result, the CTA held that the activities between BNSF and CN in
the area of Portage Junction (initially F Yard, now Fort Rouge Yard)
constitutes interswitching for the purposes of section 127 of the Act.
STATEMENT OF ISSUES
[18]
As
indicated earlier, CN challenges the CTA’s determination with respect to the
presence of an interchange. It also challenges the CTA’s determination that
BNSF has a line of railway at the Fort Rouge Yards so that interswitching can
take place between lines of railway. Finally, it challenges the CTA’s
conclusion that the fact that CN is not a local carrier with respect to the
Patterson Grain is irrelevant for purposes of determining if interswitching
occurs at the Fort Rouge Yards.
ANALYSIS
The standard of review
[19]
CN argued
that this statutory appeal raises issues of law and jurisdiction which must be
decided on a standard of correctness. It relied upon a passage in the Decision
which described the interpretation of section 127 of the Act as a “process of
statutory interpretation of a jurisdictional provision in the Agency’s
constituting statute…”: see Decision at paragraph 51. I do not agree.
[20]
It
is generally accepted that a specialized tribunal interpreting its home
legislation is entitled to a degree of deference: Dunsmuir v. New
Brunswick,
[2008] 1 S.C.R. 190, at paragraph 54. With respect to the CTA, the Supreme
Court has held that it is entitled to deference when applying the provisions of
the Act, even when the issue is one which is not limited to the field of
transportation, such as human rights.
98
…The Canada Transportation Act is highly specialized
regulatory legislation with a strong policy focus. The scheme and object of the
Act are the oxygen the Agency breathes. When interpreting the Act, including its
human rights components, the Agency is expected to bring its transportation
policy knowledge and experience to bear on its interpretations of its assigned
statutory mandate: Pushpanathan, at para. 26
….
100
The Agency is responsible for interpreting its own legislation, including what
that statutory responsibility includes. The Agency made a decision with many
component parts, each of which fell squarely and inextricably within its
expertise and mandate. It was therefore entitled to a single, deferential
standard of review.
Council of Canadians with
disabilities v. Via Rail Canada Inc., 2007 SCC 15,
[2007] 1 S.C.R. 650, at paragraph 98 and 100
[21]
While
questions of vires continue to attract the correctness standard (see Dunsmuir,
supra, at paragraph 59), there is nothing in this problem which raises an issue
of vires. The CTA is entitled to interpret and apply the definitions of
interchange and interswitching, and so long as its interpretation is
reasonable, this Court will not intervene. The CTA’s characterization of the
issue as jurisdictional is no more binding on this Court than would be its
refusal to recognize as such an issue of vires. The appropriate standard
of review is reasonableness.
Is there an interchange?
[22]
CN argued
that there could only be an interchange if the connection between two railway
lines and the storage area where cars could be stored until delivered or
retrieved were at the same place. In this case, the two places were some 1.9
miles apart.
[23]
In CN’s
view, an interchange exists where the storage area is accessible by each
railway on its own track and the connection between the lines is at the storage
area itself. While this may well be one type of interchange, perhaps the ideal
type, it is by no means exhaustive of the possibilities. The CTA recognized
this when it wrote of the variety of railway yard configurations. As the CTA
noted, all that the Act requires is that the two elements be found at a place. How
that place is defined is a matter for the CTA.
[24]
CN argues
that the CTA’s decision in this case is inconsistent with its decision in the Celgar
case discussed above. I agree that there is no difference in kind between the
two decisions, but only differences in degree. Two elements separated by a
distance of 1.9 miles may be considered as one place while two elements
separated by 8.9 miles may not be considered as one place. These are precisely
the kinds of distinctions which the CTA is in the best position to make and it
is not for this Court to interfere.
[25]
CN argues
that this is not the only issue with the Celgar decision. CN says that
the Celgar case decided that running rights could not create a
connection between two lines of railway. That issue arose because the
connection between CP and BNSF was at Troup Junction. In order to get to
Nelson, BNSF had to invoke running rights on CP’s track. The CTA’s reference to
running rights was in the context of pointing out that there was no place of
connection at Nelson, only at Troup Junction. In this case, the place of
connection and the place of storage are located at a place in which the two
elements are separated by 1.9 miles. The fact that, within that place, BNSF
exercises running rights over CN’s track is immaterial.
Does BNSF have a line of railway
at the Fort Rouge Yards?
[26]
CN challenges
the CTA’s conclusion that BNSF has a sufficient ownership interest in the Fort
Rouge Yard by virtue of the 1913 Transfer Track Agreement to have a line of
railway at that place so that interswitching can take place. Interswitching, it
will be recalled, consists in the transfer of traffic from one line of railway
to another. If BNSF has no line of railway at the Fort Rouge Yards,
interswitching cannot take place.
[27]
CN
criticizes the CTA’s conclusion that an agreement drafted in 1913, before the
Fort Rouge Yard existed, is capable of creating an ownership interest in that
land. According to CN, the Transfer Track Agreement is nothing more than a cost
sharing agreement and did not, either directly or indirectly, confer upon BNSF
an interest in the land owned by CN.
[28]
I agree
with CN that the Transfer Track Agreement did not create any ownership interest
in land in the nature of an estate in fee simple. But it is clear that the Agreement
did recognize BNSF’s right to the use of designated land for designated
purposes and stipulated that CN could only alter those rights by providing a
place where those rights could continue to be exercised. The CTA did not have
to decide the status of those rights under Manitoba’s land law so that its use of the
expression “ownership interest” is perhaps gratuitous. What the CTA did have to
decide was whether BNSF’s rights with respect to the F Yard and, by extension,
the Fort Rouge Yard pursuant to the Transfer Track Agreement were such as to
allow it to treat portions of those yards as part of BNSF’s line of railway. It
decided that it did.
[29]
In coming
to that conclusion, the CTA referred to its earlier decision in the CNCP
Ottawa Valley Partnership case. CN argues that the CTA was bound to find
that BNSF had an ownership interest in the Fort Rouge Yard so as to satisfy the
test it had set out in that case. But when one reads the extracts of that
decision upon which the CTA relied, it is clear that the decision was not meant
to be exhaustive of all possibilities. In particular, the following passage is
instructive:
The
Agency is satisfied that the ownership interest that each Partner has in the
Partnership Line is sufficient to conclude that each Partner has a “line of
railway” …
As
each Partner has a “line of railway”, it is the opinion of the Agency that
interchanges will exist wherever a storage facility for cars exists on the
Partnership Line. Even though there is physically only one line of railway, it
is the ownership interest which, in the Agency’s view, is determinative of the
existence of an interchange in this case…
Decision
at paragraph 101.
[30]
CN reads
this passage as saying that only an ownership interest will do, and as a
result, the CTA searched to find an ownership interest where there was none in
order to support the conclusion it sought. In my view, it is possible to read
this passage as simply indicating that there can be different lines of railway
even where there is only one physical track, depending upon the interests which
the parties have in that track. In this case, the Transfer Track Agreement
clearly gave BNSF something more than running rights on CN’s track. It had a
right to the use of certain facilities for the purpose of transferring traffic
back and forth with CN. That right was not bound to a particular piece of land
but it was bound to BNSF’s convenience in doing business with CN. The CTA found
that these rights were sufficient to find that BNSF had a line of railway in
the Fort Rouge Yard. I cannot say that such a conclusion cannot be supported or
that it is outside the range of possible, acceptable outcomes: Dunsmuir,
at paragraph 47.
[31]
This is
precisely the kind of determinations which the CTA is equipped to make by
virtue of its institutional expertise in railways and railway operations. We
ought not to substitute our view for the CTA’s in a matter which is so close to
its core expertise.
Is CN a local carrier with
respect to traffic to Patterson Grain?
[32]
CN argued
that the scheme of the Act contemplated that before interswitching could take
place, CN would have to be in a position to deliver traffic to Patterson
entirely over its own lines. As CN could only get to Patterson’s facilities by
exercising running rights over track belonging to CP, it argued that
interswitching could not occur.
[33]
In my view,
the Board dealt fully with this argument in its reasons and I have nothing to
add to what the Board said.
CONCLUSION
[34]
In my
view, the CTA’s reasoning in disposing of the application before it satisfied
the Supreme Court’s test of justification, transparency and intelligibility: Dunsmuir,
paragraph 47. As a result, I would not intervene. I would dismiss the appeal
with costs to BNSF and one set of costs to Paterson Grain and the Canadian
Wheat Board.
"J.D.
Denis Pelletier"
“I
agree.
J.
Edgar Sexton J.A.”
“I
agree.
Johanne
Trudel J.A.”
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