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Leasing a Loophole

by on September 15, 2010

Woodstock, Ontario is a city that values its character. With its tree-lined streets, century-old homes, and abundant parkland, Woodstock promotes itself as being “The Friendly City”.

However, Brian Bickley and some of his neighbours have found that the conduct of one of Woodstock’s local corporate entities to be anything but congenial.

Plagued by what he believed to be unreasonable noise and vibration emanating from Canadian Pacific Railway’s Woodstock Yard operations, and after exhausting all collaborative measures available to him, Bickley filed a formal complaint with The Canadian Transportation Agency, in which it was anticipated that the Agency would render a formal public decision concerning the dispute.

According to Bickley, some of the residents being negatively impacted by CP Rail’s operations live a mere 50’ to 75’ away from rail operations, which could carry on throughout the night, all in the absence of noise mitigation.

One of the aspects of the railway noise and vibration dispute resolution process increasingly of concern is the fact that provincial railways are exempt from the jurisdiction of The Canadian Transportation Agency under section 87 of The Canada Transportation Act.

A point –and a loophole – not lost on CP Rail.

CP Rail found itself confronted with the very real possibility of a public ruling being issued about its operations in around Woodstock and its St. Thomas Subdivision, and perhaps, not a favourable one.

While pleadings were being exchanged and considered about the merits of Mr. Bickley’s complaint, CP Rail quietly entered into a lease agreement with Ontario Southland Railway, a provincial shortline railway company, transferring its operating interests at the centre of the Bickley complaint into the control of a provincial railway company, exempt from Agency authority.

CP Rail then sent a letter, (dated December 23, 2009) notifying The Canadian Transportation Agency of the lease transaction, and requested that the case be dismissed; the Agency no longer held jurisdiction in the matter.

The Agency then issued Decision 248-R-2010, acknowledging that it could not proceed further with consideration of the complaint.

Brian Bickley notes that CP Rail has since continued to maintain a presence in the Woodstock yard, keeping its locomotives on site, despite the lease to OSR.

Bickley says CP Rail’s actions in transferring the area under dispute to a provincially-regulated railway “destroyed our procedure” in resolving the railway noise and vibration problems by the circumvention of provisions in the Canada Transportation Act that were set into place to help communities such as Woodstock.

However, we don’t think that this is the end of the issue.

We found this interesting explanation concerning the differences between federal and provincial railways, on one province’s government website:

“Federal railways are subject to federal jurisdiction (the Canada Transportation Act and the Railway Safety Act), are inspected by federal inspectors and are not subject to any provincial laws or regulations. To become a federal railway the owners must apply to the Canadian Transportation Agency and meet the required criteria.”

Provincial railways do not meet the criteria for becoming federal railways (or they would have to register as federal). They are subject to all provincial and municipal laws and regulations and are authorized, supervised and inspected by the province.”

If all municipal laws apply, would this not include the area’s local noise regulations?

An interesting thought indeed.

© Copyright 2010

  1. RailandReason Site Admin Note: Refer to the post A Matter of Confidence for a comment from Mr. Jeff Willsie.

  2. Stephen C. Host permalink

    Loophole? Perhaps, but the lease was not done to avoid a complaint. In the 1997-1999 Canadian Pacific Three Year rail network plan, CPR planned to transfer or discontinue the St. Thomas subdivision to a new shortline operator. This has been in the works for many years, and the evidence of shortline transfer to other operators throughout Canada should help the body of evidence that proves there was plenty of forewarning — it is merely a coincidence this occured at the same time as a complaint.

    – Stephen C. Host
    Guelph, Ontario

    • trainjane permalink

      “Loophole? Perhaps”

      It’s now been weeks since our original posts, “Leasing a Loophole” and “This Blog Needs the Railway Point of View” were posted.

      And yet, despite the considerable amount of time that has passed, and posts that have been received, this response is the closest thing we have to an answer to any of the questions that we have raised through these referenced posts.

      We’ve heard everything from guesstimating our out-of-pocket costs to maintain this blog, to discussions about old girlfriends with cheap rent, to the cost of welded tracks, reducing wear and tear on Mennonite buggy wheels, to using nuclear power plants to electrify railways…but nothing that addresses the core issue.

      That issue is, in the midst of the investigation of a complaint concerning railway noise and vibration, that CP Rail leased out the disputed area to provincial railway, Ontario Southland Railway, headed by a former CPR employee, and stymied the dispute resolution process for a resident asserting his rights under provisions contained in The Canada Transportation Act.

      If anything, Mr. Holt, your knowledge as a rail historian, although appreciated, only intensifies the controversy surrounding the timing of the deal, and of the lease itself.

      You reference CP’s 1997-1999 three-year Rail Network Plan that mentions CP’s plan to transfer or discontinue the track in question.

      Over a decade later, CP found itself the subject of a citizen’s noise and vibration complaint.

      Rather than telling the Canadian Transportation Agency – and the complainant for that matter – that the process was going to be a waste of time, given their intention conceived years ago to rid themselves of that track, CP launched an elaborate defence against the Bickley claim, and apparently didn’t mention anything about the transfer and lease.

      Then, with a ruling – possibly against them – imminent at the 11th hour, CP “coincidentally” – suddenly – selects that exact time to actually proceed with the lease after many, many years, and put the brakes on the complaint by wasting no time in contacting the CTA and having the ruling quashed…

      That’s coincidence?

  3. Stephen C. Host permalink

    TrainJane, to understand the reasons and timing of the lease you would require a basic knowledge of local industry happenings to get it, and here, for your benefit is the high level, economic viewpoint:

    a) The St. Thomas subdivision was considered for transfer/discontinuance in the mid 1990’s due to lack of traffic west of Ingersoll. Then the Magna (Formet) plant opened in St. Thomas and entered into an agreement with the CPR to short haul truck frames to Oshawa, avoiding sending this traffic on the 401. This just in time traffic lasted until the Automotive troubles in 2007. This traffic was lucrative for the CPR and they abandoned plans to get out of running the line, until..

    b) By the time the recent financial crisis was at the apex the writing was on the wall and the GM Oshawa truck plant was on the chopping block. CPR discontinued dedicated train service and transferred the traffic to regular freight trains that only ran as far as Woodstock. This cut the number of trains on the line in half.

    c) By early to mid 2009 the truck plant closed, which ended the remainder of the truck frame traffic. Now the railway line was back in the same boat it was in the mid 1990’s — why would CPR want to keep a branchline when they have gone to great lengths to get rid of all low volume branch lines in decade(s) prior? The timing for the OSR lease was not due to a noise complaint, it was due to a drastic change in business and profitability. You cannot in good faith negotiate a lease in a very short period of time… considering the lawyers involved, what you state is a circumstance only.

    • trainjane permalink

      We appreciate your explanation and knowledge of the economic factors in this issue.

      However, the fact remains that CP was in the midst of what could have possibly turned out to be the first ruling against a rail company’s noise and vibration, if found to be unreasonable, under Amendments set into place under The Canada Transportation Act.

      This could have very well have turned out to be a major landmark ruling in Canada, affecting many communities and quite possibly, railways.

      There has been a real lack of anything close to transparency in how this matter was handled. A citizen’s rights were bypassed here as a result; whether of not one agrees with Mr. Bickley or not, he had a right to have his claim examined. That right was bypassed by way of CP Rail entering into a lease with Ontario Southland Railway, and a such a time when a ruling was imminent. This is no small matter.

      There has been nothing resembling good will extended to Mr. Bickley as a result of this loss, save for a chorus of railway interests taunting him in a chorus, reciting “Move!” to a person to whom his recourse in law was sidestepped.

      It’s our opinion that all doubt and controversy could be easily overcome in this matter by OSR voluntarily continuing with the process of asking the Canadian Transportation Agency to informally issue an opinion on the matter. This would establish, once and for all, the merit that the complaint may or may not have. Remember, The Agency must weigh the complaint against the railway’s operational requirements. Doesn’t that seem fair? Wouldn’t that be the way to put this issue to rest?

      OSR has ignored this suggestion, and the entire matter is, quite frankly, unresolved.

      Are you are that citizens waited 7 years for this legislation to get passed?

      Many communities received little in the way of cooperation from railway companies prior to this legislation being passed, so it is alarming when a jurisdictional loophole is blown open upon on the eve of a complaint such as Bickley’s being made into a public decision.

  4. Stephen C. Host permalink

    Jane, I respectfully submit the following evidence against the conspiracy theory of the lease:

    a) CPR intended to discontinue the St. Thomas subdivision in the 1990’s — but the Magna plant (Formet) which located in St. Thomas was a game changer. They won a contract to haul Truck frames from the St. Thomas facility to the GM Oshawa truck plant, in a “just in time” fashion. This traffic proved to be quite lucrative for the CPR and the St. Thomas subdivision.

    b) The automotive and economic crisis of 2005-2009 proved to be the game changer for this line — this traffic steadily declined until by 2008 it was no longer feasible to run a dedicated just in time train to Oshawa. CPR cut service back on this train but continued to haul frame traffic, in a slower fashion until early to mid 2009

    c) By mid 2009 this traffic was over as the GM Oshawa truck plant was closed.

    It takes years to announce and close an assembly facility, as well, CPR has no interest in operating a branchline. When the line was “just in time” the St. Thomas subdivision was operated as a “mainline” as the traffic levels warranted it.

    You can bet a dollar the lease or its timing was not due to a ‘noise complaint’, it is pure and simple economics.

    Now the lawyers over at the CPR may be utilizing the timing for some other legal purpose, but that is a whole other matter.

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