Guidelines Respecting Net Salvage Value Determination Applications

Part 1 – Introduction

1.1 Context of the Guidelines

The Canada Transportation Act (Act) provides a framework for railway companies under federal jurisdiction to transfer or discontinue railway lines provided certain procedures are followed.

The Act also sets out a process that must be followed by federal railway companies before certain urban railway sidings and spurs located in a metropolitan area or within the territory served by any urban transit authority ("siding or spur in metropolitan area") can be dismantled.

The list of federal railway companies can be found at the Agency website.

Part III, Division V of the Act, sections 140-146 outlines these processes. At certain points during these legislated processes, the Canadian Transportation Agency can be called upon to determine the net salvage value (NSV)of the relevant railway assets, with a view to facilitating their orderly transfer.

The term "net salvage value" is not defined in the Act. Its meaning and interpretation have been defined and refined over time by Agency decisions. Various Agency decisions refer to NSV as "… the market value of an asset less the costs associated with its disposal. These costs can include, but are not limited to, sales commission, track removal, disposal and environmental remediation." Agency NSV determinations have also taken into account the value of any interest in leases and agreements that are expected to survive the transfer of the railway line, siding or spur.

These Guidelines explain:

  • the Agency's legislative mandate and administrative obligations;
  • under what circumstances an Agency determination of NSV can be made;
  • what is meant by NSV;
  • what the determination process involves;
  • the roles and responsibilities of the parties involved in an NSV application;
  • the processing of different types of applications;
  • the nature of the information required by the Agency to make a determination of NSV; and
  • how the Agency has ruled on certain issues that have arisen in previous NSV applications.

In the event of a conflict between these Guidelines and the Act, the Act prevails.

1.2 Purpose of the Guidelines

These Guidelines are designed to inform and assist parties who are or could become involved in an NSV application, namely:

  • federal railway companies;
  • parties interested in entering into commercial negotiations with a federal railway company for the acquisition for continued operations of a railway line undergoing discontinuance; and
  • federal, provincial, district or municipal governments (governments) and urban transit authorities seeking to acquire from a federal railway company a railway line undergoing discontinuance, or certain sidings or spurs prior to dismantling.

1.3 Roadmap to the Guidelines

There are several different points during the transfer and discontinuance process when applications for NSV can be made. You should establish how your specific situation fits within the legislative scheme and take full advantage of these Guidelines. For this purpose, you should familiarize yourself with the overall transfer and discontinuance process, which is set out in Part III, Division V of the Act.

Section 1.4 below provides a brief overview of the main legislative steps. It is not a complete depiction of all of the elements of the transfer and discontinuance process. Rather, it is meant to assist you in identifying the points in the legislative scheme where an NSV determination can be requested from the Agency.

First, determine whether the railway asset that you are considering is:

a railway line undergoing discontinuance; or

a siding or spur in a metropolitan area or within the territory served by any public transit authority (siding or spur in metropolitan area) to be dismantled (other than a siding within a railway right of way).

Then review section 1.4 in that context.

Second, consider the legislative provisions that are applicable to your circumstances. There are five distinct legislative provisions that provide for the Agency to determine the NSV on application. There are important differences between them that should be understood. Three can be triggered during the discontinuance of a railway line and two prior to the dismantling of a siding or spur in a metropolitan area. (Note that one NSV legislative provision can be triggered during both the discontinuance of a railway line or prior to the dismantling of a siding or spur in a metropolitan area). These are also highlighted in section 1.4.

Third, consider the availability of options to a formal NSV determination. These should be considered when a railway company and a party who has expressed an interest in purchasing a railway line have not been able to independently negotiate a value acceptable to both parties with respect to the sale price for the transfer of railway assets undergoing discontinuance. Section 1.5 of the Guidelines explains these options.

Fourth, consider that under certain of the legislative provisions governing NSV, applicants are required to reimburse the Agency its costs. In addition, the Act might require certain costs to be either incurred by the parties or reimbursed to the Agency. The requirements in this respect are explained in sections 1.6 and 1.7, respectively.

After having considered each of these points, you may decide to submit an application for an Agency determination of NSV. If so, Part 2 of these Guidelines:

  • explains the process to be followed;
  • describes the general approach for the processing of an application; and
  • provides a summary of some Agency precedents dealing with various aspects of determining NSV.

Finally, Part 3 and the Appendices to these Guidelines provide additional information that may be of interest, including:

  • appeal alternatives following an Agency decision;
  • additional procedural provisions on issues of a more legal nature; and
  • a list of past Agency NSV decisions under the Act.

1.4 NSV determinations and the transfer and discontinuance process – the formal route

NSV determinations are made in the context of the Transfer and Discontinuance Process set out in Part III Division V of the Act.

This section provides general information on the most common steps of the railway transfer and discontinuance process and how NSV determinations fit within that process.

Certain scenarios and considerations (e.g. grain-dependent branch lines, leased lines being returned to the railway, etc.) are not addressed below. Parties interested in obtaining more information on these matters can find additional information on the Agency's Web site.

The legislative process differs somewhat depending on whether the asset under consideration is:

Further details are provided below.

1.4.1 Railway line

Railway Three-Year Plan

A railway company must prepare and keep up to date a plan indicating for each of its railway lines whether it intends to continue to operate the line or whether, within the next three years, it intends to take steps to discontinue operating the line. The railway company must make the plan available for public inspection. It must also notify the Minister of Transport, Infrastructure and Communities, the Agency, and affected governments and urban transit authorities of any change to the plan, within 10 days of making the change.

The railway company cannot proceed with the discontinuance of a railway line until its intention to do so has been indicated in its Three-Year Plan for at least 12 months.

Transfer for Continued Operation

After the appropriate 12-month notice has been given and prior to discontinuing a railway line, a railway company must first offer to sell, lease or otherwise transfer the line for continued operation by advertising the availability of the railway line for continued operation and the railway company's intention to discontinue operating the railway line if it is not transferred.

A railway company must allow:

  • a minimum of 60 days for parties to express their interest; and
  • following that initial period to express an interest, if an interested party comes forward, the parties have up to six months to reach an agreement and complete the transfer.

During this six-month period, the railway company and any interested parties are free to negotiate the terms and conditions for the transfer of the assets, including an acceptable sale price. These negotiations must be carried out in good faith by both parties. The Agency may take measuresNote 1, should it find on complaint that a party is not negotiating in good faith.

In addition, to assist their negotiations, any party to the negotiation can apply to the Agency under subsection 144(3.1) of the Act to determine the NSV of the railway line. The NSV calculated by the Agency under subsection 144(3.1) is not binding on the parties. In applications of this type, the applicant must reimburse the Agency's costs associated with the NSV determination.

Parties considering making application under this provision should note that, pursuant to the Act, neither the Agency nor the parties on consent can extend the six-month negotiating period set out in subsection 144(4). Accordingly, parties considering seeking the Agency's determination of NSV should apply as early as possible in the six-month period in order to provide the Agency with as much time as possible to make its determination.

Failure to submit an application early in the fixed six-month negotiating period may result in the Agency not being able to determine the NSV of the railway line prior to the expiry of that periodNote 2.

Railway company's offer to governments/urban transit authorities

Where no party has made its interest known to the railway company, or if no agreement with an interested party is reached within the required time, or if an agreement is reached but the transfer is not completed in accordance with the agreement, the railway company must then simultaneously offer to transfer all of its interest in the railway line to the parties listed below (each having, in turn, a stated period for accepting the offer):

  • the federal Minister of Transport, Infrastructure and Communities under certain circumstancesNote 3;
  • the minister responsible for transportation matters in the government of each province through which the railway line passes;
  • the chairperson of every urban transit authority through whose territory the railway line passes; and
  • the clerk or other senior administrative officer of every municipal or district government through whose territory the railway line passes.

The railway company must offer the railway line for not more than its NSV and to be used for any purposeNote 4.

These governments and authorities each have 30 days, after the expiry of the 30 days of the party listed prior to them, to accept the railway company's offer.

Options for a government or urban transit authority in the 30-day period during which the offer can be accepted 

A government or urban transit authority can accept the railway company's offer, in which case the railway company and that party have 90 days after the acceptance of the offer to agree on the NSV. If they cannot agree, either party may apply to the Agency to determine the NSV of the railway line to be used for any purpose under subsection 145(5) of the Act. Because the parties at this point have agreed to the transfer of the assets, this NSV determination by the Agency is binding on the parties. That is, while they can continue to negotiate and agree to a different value, the railway company cannot refuse to sell the property nor can the interested purchaser refuse to buy it for the NSV determined by the Agency. For applications made under this provision, the applicant is not responsible to reimburse the Agency's costs associated with the applicationNote 5.

Alternatively, during that 30-day period and prior to accepting the railway company's offer, a government or transit authority may apply to the Agency for a determination of the NSV of the railway line under section 146.3 of the Act. Upon receiving the Agency's NSV determination, a party to whom the line was offered may choose whether to accept the offer within 30 days of being notified of the NSV by the AgencyNote 6. For applications made under this provision, the applicant must reimburse the Agency's costs associated with the application.

Notice of discontinuance

If the railway company has complied with the prescribed discontinuance process but an agreement for the sale, lease or other transfer of the railway line is not entered into through the process, the railway company may discontinue operating the line, on providing notice to the Agency.

1.4.2 Siding or spur in a metropolitan area

The dismantling process for sidings or spurs in a metropolitan area is similar to that for the discontinuance of railway lines, but there are a few important differences. Note that the legislative scheme applies not only to a spur or siding in a metropolitan area that a railway company plans to dismantle, but also to:

  • a right of way where the siding or spur has been dismantled that a railway company plans to sell, lease or otherwise transfer; and
  • passenger railway stations in Canada that a railway company plans to sell, lease or otherwise transfer or dismantle.

All references hereafter to sidings or spurs in a metropolitan area apply to the latter.

List of sidings or spurs to be dismantled

A railway company must keep an up-to-date-list of sidings or spurs in metropolitan areas that it plans to dismantle and discontinue using for railway operations. The railway company must publish the list on its Internet site. It must also notify the Minister of Transport, the Agency and affected governments and urban transit authorities of any change, within 10 days of making the change.

The railway company cannot take further steps to dismantle a railway siding or spur in a metropolitan area until its intention to do so has been indicated on its list for at least 12 months.

Railway company's offer to governments/urban transit authorities

After placing a siding or spur in a metropolitan area on its list, for the required 12-month period, and prior to dismantling it, a railway company must simultaneously offer to transfer all of its interest in the siding or spur for not more than its NSV to the parties below (each having, in turn, a stated period for accepting the offer):

  • the federal Minister of Transport, Infrastructure and Communities;
  • the minister responsible for transportation matters in the government of the province in which the siding or spur is located;
  • the chairperson of the urban transit authority in whose territory the siding or spur is located; and
  • the clerk or other senior administrative officer of the municipal or district government in which the siding or spur is located.

These governments and authorities each have 30 days, after the expiry of the 30 days of the party listed prior to them, to accept the offer.

After the railway company's offer is made

If a party accepts the offer, the railway company and that party have 90 days after the acceptance of the offer to agree on the NSV. If they cannot agree, either party may apply to the Agency to determine the NSV under subsection 146.2(7) of the Act. This NSV determined by the Agency is binding on the parties. That is, while they can continue to negotiate and agree to a different value, the railway company cannot refuse to sell the property nor can the interested purchaser refuse to buy it for the NSV determined by the Agency. For applications made under this provision, the applicant is not responsible to reimburse the Agency's costs associated with the applicationNote 7.

Alternatively, prior to accepting the railway company's offer, a party may apply to the Agency, under section 146.3 of the Act, for a determination of the NSV of the siding or spur in a metropolitan area. Upon receiving the Agency's NSV determination, a party to whom the siding or spur in a metropolitan area was offered may choose not to proceed with the acceptance of the offerNote 8. For applications made under this provision, the applicant is responsible for reimbursing the Agency's costs associated with the application.

Notice to the Agency

If the railway company has complied with the prescribed dismantling process but an agreement for the sale, lease or other transfer of the siding or spur in metropolitan area is not entered into, the railway company may dismantle the siding or spur, on providing notice to the Agency.

1.4.3 Summary of the transfer and discontinuance processes

To summarize, within the overall scheme of Part III, Division V of the Act, three circumstances arise with respect to railway lines and two arise with respect to sidings and spurs where the Agency can be asked to determine the NSV, as reflected in the following table.

Table 1: Summary of NSV application types
Legislative reference (Canadian Transportation Act)Transfer for what purposeWho may applyRequirement for railway company offer to be accepted (Y/N)Agency's costs reimbursedAgency NSV binding
Railway line
Subsection 144(3.1) Continued operation Any party interested in acquiring the railway line for continued operation/ Railway company No Yes No
Subsection 145(5) For any purpose Governments and Urban Transit Authorities / Railway company Yes No Yes
Subsection 146.3 For any purpose Governments and Urban Transit Authorities / Railway company No Yes NoNote 9
Siding or spur in metropolitan area
Subsection 146.2(7) Unspecified Governments and Urban Transit Authorities / Railway company Yes No Yes
Section 146.3 Unspecified Governments and Urban Transit Authorities / Railway company No Yes NoNote 10

The following two diagrams (one for railway lines and the other for sidings/spurs in metropolitan areas) depict in a schematic way how the NSV application options fit within the overall legislative scheme.

Process for the transfer or discontinuance of a railway line

Download PDF version of Chart 1

Fig 1 - Process for transfer/discontinuance of railway, text version available via the link below.
Figure 1 - Text version: Process of the transfer or discontinuance of a railway line

Process for the dismantling of a siding or spur in a metropolitan area (including railway station with the modifications that are required) 

Download PDF version of Chart 2

Figure 2 - Process for dismantling a siding or spur, text version available via the link below.
Figure 2 - Text version: Process for the dismantling of a siding or spur in a metropolitan area

1.5 Establishing NSV – the informal route

If a railway company and an eligible buyer are not able to independently negotiate a sale price for the transfer of railway assets undergoing discontinuance that is acceptable to both parties, in addition to the Agency's formal NSV process, there are informal alternatives for establishing NSV that should be considered.

Staff estimate of the NSV of track assets (when NSV application is not before the Agency)

At the joint request of a railway company and a potential buyer, the Agency may arrange for its staff to prepare an estimate of the NSV of track assets comprising a railway line or siding or spur, under a cost reimbursement contract. One of the advantages of this option, which is meant to assist parties during their negotiations, is that it can provide the parties with an indication of the value of the assets under consideration very early in the discontinuance process. Requests can be made anytime subsequent to a railway line being listed for discontinuance on a railway company's Three-Year Plan, or a spur/siding in a metropolitan area being listed for dismantling.

A staff estimate of the NSV of track assets will not be made available if there is a formal application for an NSV determination of the same railway assets before the Agency. If a staff estimate is in progress, it is immediately discontinued upon the Agency's receipt of an application for a formal NSV determination with respect to the same railway assets.

A staff estimate of NSV may be provided after having considered the circumstances on a case-by-case basis, subject to the availability of Agency staff. It is also important to note that such an estimate:

  • does not typically include an assessment of the value of the land, the interest in leases and agreements expected to survive the transfer, or of any environmental measures that might possibly be applicable in the context of NSV;
  • does not constitute a formal NSV as per the Act; and
  • does not bind the Agency or fetter its discretion with respect to a subsequent and formal NSV determination with respect to the same railway assets under the Act.

This alternative results in a confidential report to the parties providing a staff estimate of the NSV of the track assets under consideration, with any limitations that might be applicable under the contract. This information, made available to the parties at their joint request and for their joint benefit, has no legal effect and no bearing in any formal determinations before the Agency.

Mediation (when an NSV application is before the Agency)

After a formal NSV request has been filed with the Agency, another alternative for resolving a disagreement in respect of the value of the assets is Agency mediation. This alternative can be initiated at any time during the NSV determination process. Pursuant to section 36.1 of the Act, mediation is available for issues under the Agency's jurisdiction, on request and at no cost to the parties. Agency mediation is voluntary, that is, both parties must agree to participate.

Mediation is an informal process in which an Agency appointed mediator helps parties work together to address and resolve the issues in dispute. The flexibility of the mediation process enables parties to collaboratively develop creative solutions that meet their needs and which might not be available through the formal determination process.

In the context of establishing an NSV, Agency mediation does not involve the provision of expert advice on NSV matters by the mediator. In accordance with the Act, mediation shall be completed within 30 days after the matter is referred to mediation (or a longer time period if agreed to by the parties). Mediation has the effect of suspending the NSV proceeding before the Agency for the duration of the mediation. It does not affect the statutory timelines under subsection 144(4).

Any person interested in finding out more about these options should contact the Agency (see section 3.6 of these Guidelines).

1.6 Reimbursement of Agency's costs

Applicants must reimburse the Agency's costs when they file an application for an NSV determination under:

  • subsection 144(3.1) (during the negotiation period between an interested person and a railway company for a transfer for continued operation); and
  • section 146.3 (prior to a government or urban transit authority in receipt of an offer accepting that offer).

These costs will include the sum of $10,000, plus disbursements for work performed by or services contracted for the Agency. Payment for disbursements shall be at a level that constitutes full reimbursement to the Agency for:

  • travel, accommodation and living expenses for Agency staff during the physical inspection of the railway line, should it be necessary;
  • meetings required from time to time as part of the assessment, including any reporting of the Agency's findings; and
  • any other out-of-pocket expenses incurred in the performance of the Agency's work.

1.7 Payment and reconciliation of costs for information required by the Agency

Regardless of the section of the Act under which an application is filed, the Agency has the authority to require the parties to provide whatever additional information it deems necessary. This could include, for example, professional land appraisals, environmental site assessments and/or remediation valuations.

Who will pay the costs of obtaining information required by the Agency?

For applications for which the applicant is responsible under the Act to reimburse the Agency's costs (i.e., those made under either subsection 144(3.1) or 146.3(1) of the Act), all costs associated with obtaining this information, such as fees and expenses payable to commercial land appraiser(s) and environmental engineering consultant(s), will be included in the amount the Agency is to be reimbursed by the applicant.

For applications made under either subsection 145(5) or 146.2(7) of the Act (after a government or urban transit authority in receipt of a railway company's offer has accepted that offer), all costs associated with obtaining this information will be borne equally by all parties to the determination. The parties may agree as to which party will be responsible for paying such costs as they are incurred. However, failing an agreement between the parties, the Agency will make this determination. If as a result of this determination, the costs to be incurred by each party need to be equalized, this matter will be dealt with in the Agency's final NSV determination.

Part 2 – NSV applications

2.1 Processing of applications

Agency staff will respond to requests for information on procedures, relevant legislation or precedents from any party considering involvement in the transfer and discontinuance process. If assistance is needed in reaching a railway company, Agency staff can provide contact names and numbers.

In all NSV determination cases, the Agency provides each party with the opportunity to file submissions and supporting information regarding the value of the railway line, siding or spur under consideration.

2.1.1 Standard intake process for NSV applications

The standard intake process for NSV applications described below applies to all NSV applications, except those filed under subsection 144(3.1) of the Act, i.e. transfer for continued railway operations. That process is described below in subsection 2.1.3. The standard intake process also applies, with any modifications that are necessary, to NSV applications of passenger railway stations in Canada that a railway company plans to sell, lease or otherwise transfer or dismantle, as stated in section 146.5.

Table 2: Standard intake process for NSV applications
StepDaysTotal # of Business Days
Application for NSV Determination submitted. Starts the process 1
Agency acknowledgement and submission instructions issued to parties. 5 business days after Agency's receipt of application 6
Submissions of value and supporting information due from parties. 25 business days after Agency instructions issued 31
Reply to other party's submission of value and supporting information filed. 10 business days after Submissions filed 41

The process for determining an NSV is initiated by filing an application for an NSV determination.

Following receipt of the initial application, the Agency will issue a letter setting out the process to be followed and any specific conditions (reimbursement of costs, etc.) that might be applicable to the application.

This letter will also instruct each party to, typically within 25 business days, submit and copy to the other party their submissions of value and supporting information. In general,this includes the party's estimate of NSV, as well as any supporting information identified in section 2.2.

Once both parties have filed their submissions of value and supporting information, they will then have 10 business days to file a reply to the other party's submissions of value and supporting information.

2.1.2 Site inspection and statement of track materials

Concurrent with the intake process, Agency staff will arrange for a site inspection of the railway line, siding or spur, or passenger railway station to:

  • examine its physical characteristics;
  • better understand the issues of the case, and,
  • assess the type, quantity and quality of the assets to be evaluated.

Typically, representatives of the party interested in acquiring the asset (railway line, siding or spur, or railway passenger station) and the railway company also attend this site inspection. It should be noted that seasonal and weather conditions may affect access to the site and the timing of the site visit.

After the site visit, Agency staff issue the findings of the site inspection in a Statement of Track Materials (or other evaluation report in the case of a railway passenger station), which is provided to both parties for comment. Parties are usually given 5 business days to file their comments on this Statement. Once finalized, the Statement of Track Materials (or other evaluation report in the case of a railway passenger station) forms the basis of the market survey conducted by the Agency, which is used to develop the market value of the track materials.

2.1.3 Process for applications filed under subsection 144(3.1) of the Act

For NSV applications filed under subsection 144(3.1), the Act specifies a fixed time constraint that must be respected. Specifically, the Act gives any interested person six months to reach an agreement with the railway companyNote 11. Given this time constraint, it is necessary to tailor a process on a case-by-case basis for such applications, including timelines and the nature of the Agency determination, based on the applicable circumstances.

The scope of any such NSV determination could be limited by the Agency's inability, within the legislated time constraint, to:

  • assess environmental remediation costs;
  • obtain timely independent land appraisal expertise; and
  • inspect the site (seasonal or weather conditions).

Any party seeking the Agency's determination of NSV under subsection 144(3.1) should apply as early as possible in the six-month period in order to provide the Agency with as much time as possible to make its determination.

Failure to submit an application very early in this fixed six-month negotiating period may result in the Agency not being able to determine the NSV of the railway line prior to the expiry of that period.

2.2 Information required

The following information is required for the Agency to process an NSV application.

The application for NSV determination should include the following items:

  1. the name and full contact information of the organization (or organizations if the application is made jointly) applying for an NSV determination;
  2. the identification of the railway line or siding or spur in a metropolitan area for which an NSV determination is sought;
  3. the subsection of the Act under which the request is made; and
  4. if the application is made under subsections 144(3.1) or 146.3(1), an acknowledgement that the applicant(s) will reimburse the Agency's costs for rendering an NSV determination.

The submission of value and supporting information should include the party's opinion of the value of the railway line, or siding or spur and any factors or issues the party considers relevant to the determination. It should also include the following elements, as available or applicable:

  1. a copy of the offer and, if applicable, acceptance;
  2. all relevant correspondence between the parties;
  3. copies of appraisal reports for track materials, land and buildings for passenger railway stations, including:
    1. a complete asset listing;
    2. market value assessments for each asset, including assets valued at scrap values or that can only be re-deployed for internal use;
    3. asset disposal cost assessment;
    4. value assessments for real property forming the railway line, or siding or spur in a metropolitan area, including across-the fence land evaluation and/or other evaluation approaches and justification of any land premium assembly or discount factors to be applied to gross valuation; and
    5. environmental site assessments and remediation valuation (e.g. Phase 1 environmental site assessment);
  4. information on any leases or agreements (for utility corridors, etc.) expected to survive a transfer;
  5. titles and legal descriptions for each parcel of land included in the right of way; and
  6. maps showing the location of the railway line and land boundaries.

All documents filed with the Agency become part of the public record and may be made available for public viewing. If a party believes any portion of the material to be confidential in nature, they may request that it be kept confidential and the Agency will rule on that request (see Appendix A for further details).

2.3 Timeline for issuing a decision

Acknowledging the provisions in subsection 29.(1) of the Act, the Agency strives to issue a determination of NSV as expeditiously as possible.  This will depend in part on the number and complexity of the issues raised by the parties, or the requirement for third party expertise, such as independent land appraisers or environmental consultants.

2.4 Considerations relevant to the Agency's determination of NSV

This section provides information on the Agency's established methodology for making NSV determinations, as well as on certain specific issues the Agency has addressed in past decisions.

Any descriptions that follow of certain findings extracted from previous Agency decisions are provided for convenience only. Agency decisions are non-binding on future panel decisions and while they may provide guidance, they are in no way intended to limit or fetter the Agency in future NSV determinations.

While the Agency has adopted a general approach for making NSV determinations, its decisions in this respect are made on a case-by-case basis, taking into account the specific circumstances and facts of each application.

2.4.1 General approach

As previously mentioned, the Agency has defined NSV as "… the market value of an asset less the costs associated with its disposal. These costs can include, but are not limited to, sales commission, excavation, disposal and environmental remediation." NSV determinations also take into account the value of any interests in leases and agreements that are expected to survive the transfer of the railway line.

Accordingly, determining the NSV of railway assets takes several value determinations into consideration, including the value of the:

  • physical assets (track, ties, etc.);
  • cost of removal and salvage;
  • land comprising the railway line, siding or spur;
  • impact of any environmental restoration costs; and
  • leases or agreements that are expected to survive the transfer.

To assess the NSV of the physical assets, the Agency first determines the gross salvage value of the track assets. It does so by ascertaining the individual quantities of each type of track material, classifying these quantities by quality (either scrap or reusable categories), and then applying the market value, by quality, to the corresponding quantity of each type of asset. Market value takes the parties estimates into consideration as well as estimates from various market sources, such as federally-regulated railway companies, short-line railway companies, rail and other track material manufacturers and rail salvaging companies in Canada and sometimes the United States.

The costs of removal and salvaging of the track and other materials, based on estimates established from the same market sources described above, are subtracted from the gross salvage value to arrive at the NSV of the track and other track materials.

The determination of the land value includes an assessment of the land comprising the right of way, accompanying yards and spur tracks and land supporting buildings and sheds, etc. The land value is generally determined by evaluating the submissions and supporting information submitted by the parties. In some cases, the Agency may require that an independent accredited land appraiser provide an opinion on the submissions of the parties or conduct an assessment.

The determination of the impact of any environmental restoration costs on NSV depends on whether contamination has been identified, its type and extent, the risk of off-site contamination and varying regulatory requirements for differing land uses. In order to arrive at this estimate, a Phase 1 environmental site assessment (ESA), and possibly a Phase 2 and 3 ESA, may be required.

The final element in the valuation exercise is the Agency's consideration of any effect, financial or otherwise, resulting from any leases or agreements expected to survive the transfer.

2.4.2 Other matters/issues that have been given consideration

The Agency has made a number of rulings with respect to various issues related to NSV determinations. A list of previous Agency NSV decisions under the Act is presented in Appendix B of these Guidelines. These decisions can be found, in full, under Rulings on the Agency's Web site at www.cta.gc.ca. Although concise summaries of specific issues addressed in previous NSV decisions have been included below, parties should read the full decisions to assist them in determining the relevance of these decisions to their particular case.

Valid application under section 145 of the Act
Decision No. 545-R-1999, under Preliminary Matters

The Agency determined that under section 145 of the Act, one party does not require the consent of the other party to apply for an NSV determination and that an application is properly before the Agency if the parties have failed to reach an agreement on the NSV within ninety days after the acceptance of the offer.

The Agency determined that section 145 of the Act establishes two pre-conditions that must be met:

  1. the offer of the railway company must have been accepted; and
  2. the parties must have failed to reach an agreement on the NSV within 90 days of acceptance of the offer.

The Agency refused a request from the municipalities to consider CN's application to be invalid on the grounds that CN had not acquired the consent of the other parties or had not negotiated with them prior to filing its application. In making this ruling the Agency noted that with the above-noted conditions being met the application was properly before the Agency.

Identity of the applicant(s) under section 145 of the Act
Decision No. 687-R-1999, under Agency Finding and Analysis

The Agency determined that NSV applications filed by a purchaser pursuant to section 145 of the Act must include all parties who have accepted a railway company's offer. It found that the failure to include all purchasers as applicants in a proceeding under subsection 145(5) of the Act directly or even indirectly through an agent, might lead to possible fairness and evidentiary problems, and that such a failure would be more than a defect of form.

Interest to be transferred under section 145 of the Act
Decision No. 530-R-1998, under Interests included in the Application

The Agency considered the nature of the interest in the railway line to be transferred under section 145 of the Act. It determined that certain rail segments had to be included, either because they were included in the railway company's offer, which was accepted by the other party, or because they were integral to the rail service under consideration. The Agency concluded that a railway segment might have to be included, even if it was not included in the railway company's offer. It recognized that adding railway lines subsequent to the offer can present undue hardship to proposed purchasers by way of creating uncertainty as to the interest that is included in the transfer. However, when the railway lines which are subsequently added are functionally connected to the railway lines in the offer and when they do not represent a disproportionate addition, there should be some scope for them to be added.

The Agency recommended that all railway companies who propose to transfer railway lines pursuant to section 145 of the Act should exercise due diligence in ensuring that the nature and extent of all their interests are represented in their offers to transfer railway lines to governments, rather than subsequently revising or amending the offer due to omissions – inadvertent or otherwise.

Decision No. 542-R-2000, under Issues in the Determination of Net Salvage Value

The Agency determined that the railway line that is being offered under the discontinuance process must generally be fully specified at the start of the process. It concluded that the interest that is advertised under section 143 should, absent agreement of the parties, be held constant to the end of the discontinuance process. A railway company could still revise its interest, but absent an agreement between the parties, it would have to restart the discontinuance process. The Agency found that allowing railway companies to do so without agreement would present undue hardship to potential purchasers by way of creating uncertainty as to the interest that is included in the transfer.

Decision No. 357-R-2007, paragraphs 17-19

The Agency reiterated that once a railway line has been identified in the three-year plan, the same railway line should be offered throughout the steps of the transfer and discontinuance process, being of the opinion that changing the mileage points or portions of the railway line during the process frustrates the intent of the Act. Noting that in this case, the railway company indicated its intention to discontinue a railway line with mileage points that differed from those mileage points advertised pursuant to section 143 for sale, lease or transfer for continued operations, the Agency found that the railway line identified in the three-year plan was not consistent with the railway line that was offered for sale, lease or transfer. In view of this inconsistency the Agency found that the railway company had failed to comply with the transfer and discontinuance process set out in Part III, Division V of the Act and that the Municipality's interest in acquiring the railway line had been affected by the changes to the description of the railway line.

The Agency further noted that, in addition to being intended to provide a more commercially oriented process for railway companies to sell or lease surplus railway lines to new operators, rather than discontinue service, the transfer and discontinuance process set out in the Act is also intended to allow parties to consider operating a short line railway over the line and shippers on the line to make alternate arrangements in the event it is discontinued, and to provide levels of government an opportunity to decide whether to purchase the line. The Agency observed that as the process provides time frames for interested parties to review their options, these plans can be hampered when the substance of the railway line offered changes. Therefore, the Agency viewed inconsistencies or changes in the characterization of the railway line during the process as contraventions to the intent of Parliament and the existing legislation.

Decision No. LET-R-62-2012, under Issue 2 - Agency analysis and finding

Responding to a railway company's request that three specific parcels of land characterized by the railway company as non-railway line lands be excluded from the NSV determination, the Agency determined that its statutory duty to determine the NSV extends only to assets that constitute a railway line within the meaning of the CTA. The three parcels of land that the railway company sought to exclude were vacant lands, contiguous to, but not forming part of, the right of way. They contained no track infrastructure and they were not necessary for the operation of the railway or used by the railway company for that purpose.  Therefore, the Agency found the parcels of lands were non-railway lands.  It further found that to require the railway company to include these parcels in the statutory transfer, against the railway company's expressed desire to exclude them, would exceed the Agency's jurisdiction. The Agency also noted that by excluding the three parcels from the discontinuance process, the railway line would not be shortened or segmented, and that the exclusion of these sites did not create any inconsistencies with respect to how the line has been described by the railway company throughout the various steps of the transfer and discontinuance process.

Leased line being returned to a railway
Decision No. 296-R-2011, paragraphs 16-19

The Agency determined that when a railway line or operating interest in a railway line returns to the railway company that transferred it, and the railway company, having at that time, pursuant to subsection 146.01(1) of the Act, the option to resume operations or proceed with the portion of the transfer and discontinuance process set out in sections 143 to 145 of the Act, chooses the latter, it is not required to first comply with section 141(1) of the Act in respect of that line and list it on its three year plan.

The Agency found that section 141 of the Act clearly imposes the listing obligation on a railway company with respect to railway lines that it is operating. Further, the Agency found that subsections 141(3) and 146(2) of the Act permit a railway company to transfer a railway line for continued operation at any time, whether or not the transfer occurred as a result of the process provided for in sections 141 to 145 of the Act. Subsection 146(2) of the Act provides that once a railway line is transferred, the railway company has no obligations under the Act in respect of the operation of the railway line as and from the date of the transfer.

Impact of Rehabilitation Agreements
Decision No. 33-R-2000, Section V

The Agency determined that the assets funded under Rehabilitation Agreements entered into by the federal government and railway companies between 1977 and 1990 shall be included in an NSV determination by the Agency.

Moment of the NSV determination
Decision No. 542-R-2000, under Agency's Methodology used to Value Track Assets

The Agency determined that an NSV determination will be based on asset values at a point in time subsequent to when an application is received and will reflect values that it considers better approximate in time the actual transfer date of the railway line in question. It determined that the Agency's legal obligation to determine NSV does not begin until the moment of the application and disregarded the argument that the NSV ought to be determined as at the time of offer to governments. On this point, the Agency noted Decision No. 545-R-1999, which stated that there was nothing preventing the parties from revising their initial offers when making an application to the Agency. It also disregarded the argument that a railway company could have received a specific amount for the railway line if it had not to follow the discontinuance process and that it should be compensated for that amount. The Agency noted that railway companies must abide by the discontinuance provisions enacted by Parliament and that, in conducting its valuation, the Agency cannot assume that these provisions do not exist.Decision No. LET R-75-2008, paragraph 16

The Agency noted that it has been its practice to assess values or costs based upon best evidence. It stated that the Agency has consistently researched and established the market value for each component of the track structure subsequent to confirming the quantity and condition of the assets, and nearer to the end of the statutory process than to the beginning. The Agency's ultimate determination incorporates values that more closely approximate those at the actual transfer date of the railway line in question.

Decision No. 260-R-2012, under Relevant time frame for asset valuations, Agency analysis, paragraph 73-76

In this case, the Agency found that the track asset valuations submitted by the parties were dated and could not be considered to reasonably reflect current market conditions. The Agency noted that, under normal circumstances, it would assess values or costs based upon best evidence by considering the respective valuations and evidence submitted by both parties. However, given the significant interval in this case between when the parties developed their estimates and the time the transfer could be expected to be completed, such an approach was not considered appropriate or applicable.

Fixed timeline of subsection 144(4), negotiations for continued operation
2008 FCA 199, paragraphs 49-50

The Federal Court of Appeal (FCA) ruled that the Agency does not have the authority, even if the parties consent, to change the timelines set out in subsection 144(4) (i.e., six-month negotiating period for transfer for continued operation). The FCA ruling indicates that Part III, Division V of the Act is a complete code that operates according to set timelines and that the right to acquire the line at its NSV which accrues to the relevant public bodies by the operation of subsection 145(1) at that juncture, eliminates the possibility that the parties on consent, or the Agency by order could extend the six-month statutory period.

Terms and conditions of sales
Decision No. 542-R-2000, under Environmental Indemnity

With respect to a request that a railway company be ordered to provide an environmental indemnity to the buyer, the Agency found that it was not its task in determining the NSV to introduce new terms and conditions to the offer and acceptance of the offer, which is the responsibility of the parties to the transaction. However, the Agency stated that it can value the impact such terms would have on the NSV.

Decision No. LET-R-124-2008, under 2. Land registration and conveyance issues, and 4. Request to impose traffic exchange conditions as part of NSV proceeding

The Agency denied a request from a municipality to order a railway company to survey and convert the land involved in the discontinuance to Land Titles Qualified, pursuant to the Ontario Land Titles Act. The Agency determined that matters of conveyance such as this are elements of the sales transaction that fall outside the purview of the Agency in an NSV determination.

For the same reason, the Agency denied a request to impose traffic exchange conditions as part of an NSV determination.  The Agency noted that it was not within the Agency's jurisdiction to impose such conditions on a sale and that, except for the determination of the NSV of the line, the terms and conditions of the sale transaction were beyond the Agency's mandate.  The Agency also noted that any parties unable to negotiate satisfactory traffic exchange agreements with any federal railway companies could file an application to the Agency under section 127 of the Act.

Initial offer by the railway company
Decision No. 545-R-1999, under Change in net salvage value

The Agency ruled that parties are not bound by their initial offer price under subsection 145(1). It noted that to hold the parties to their original positions and to require them to justify the reasons for their departure from their original positions is not an obligation imposed by the law and would only be cause for the parties to assume extreme positions in their initial discussions and diminish the possibilities of ever reaching agreement.

Transfer of assets to be used for any purpose
Decision No. 542-R-2000, under Agency's Methodology used to Value Track Assets

When establishing the NSV for a railway line "to be used for any purpose," as is the case under section 145 or section 146.3 of the Act, the Agency indicated that it cannot consider a specific end use for the right of way when determining value, that is the valuation cannot presume that the lands will be dedicated to an ongoing railway operation or as a linear park or as a continuing transportation corridor.

The Agency rejected the notion that it was bound to accept the value established by a railway company or any other party. The Agency's task, it indicated, was to establish the value of the railway company's interest, not to determine the value of the interest to the railway company or from the perspective of a government. The approach taken by the Agency in conducting market research and determining the value of assets by averaging the relevant quotations received for the assets is consistent with the Agency's task of determining NSV as defined by subsection 145(5) of the Act.

Track assets
Decision No. 530-R-1998, under Value of Track Assets and Rail

The Agency determined that market value is the preferred method to use in the valuation of track assets. It noted that it would rely first on market value but when sufficient market value evidence is not available, it may use specific costs in specified conditions or lastly system wide averaged or allocated costs.

In determining the value of scrap and reusable rail, the Agency reflected market conditions, which were assessed by obtaining quotations from a number of market sources. The Agency noted that this approach would provide a representative value of these assets upon disposal and that the disposal assumption would not permit an inclusion of cost of capital or opportunity costs for these assets.

Decision No. 175-R-1999, under Definition of Net Salvage Value

The Agency stressed that the use of a costing approach would only be acceptable in the absence of direct evidence on "value."

Decision No. 542-R-2000, under Agency's Methodology used to Value Track Assets

The Agency recognized that any market research survey will offer a range of quotations reflecting geographic, demand, and supply factors, and accommodated the wide variation in quotations by removing the most extreme quotations from market sources and then taking an average of the valuations received from the other market sources, as well as those from the parties to the proceedings. The Agency concluded that it can accept values submitted by the parties if there is adequate evidence supporting these values and if they are on the same basis as quotations obtained by the Agency. The Agency also concluded that quotations obtained on an FOB (free on board) purchaser basis assessed the real value of the assets when the transportation costs that would be incurred by the seller were accounted for separately in the calculation of the salvaging costs, as further discussed below.

Removal, salvaging and transportation:
Decision No. LET-R-75-2008, paragraph 45

The Agency noted that to establish the cost of removal and salvaging, it considers that:

  • the structures will be left in place;
  • the public crossings will be resurfaced to put them back in their original condition;
  • the steel track materials will be assessed on the basis of either being sent for disposal to a scrap yard or shipped/sold for reuse elsewhere; and
  • cross, switch and bridge ties will be considered to be sold for reuse as second-hand track material or disposed of in a licensed disposal site.

The Agency determined that transportation costs would be factored into the salvage and disposal costs if the track material, including the cross and switch ties, could not be disposed of locally.

Decision No. 542-R-2000, under Cost of Removal and Salvaging and Agency's Methodology used to Value Track Assets

The Agency noted that the circumstances surrounding each NSV determination are different. It further noted that this is especially true of salvaging costs where the physical characteristics of each subdivision have an impact on costs.

As the Agency valued rail assets on an FOB purchaser basis, it considered transportation costs to be relevant to an NSV determination. When these costs were not included in quotations for salvaging costs received through market surveys, the Agency relied on an estimate of the cost to transport, on a per mile basis, one ton of track material, which was then applied to the tonnage of material on the track, and the distance to the nearby market where the materials could be sold.

Decision No. 530-R-1998, under Cost of Removal and Salvaging

Considered relevant to a determination of NSV, the Agency included a cost for the environmentally sound disposal of scrap ties.

Bridges and culverts
Decision No. LET-R-74-2008, paragraph 75

In assigning a zero salvage value to bridges, the Agency noted that the removal of railway bridges is not required by federal law upon discontinuance of a railway line, the subsequent use of a railway line for which the Agency determines NSV may include rail and non-rail transportation use, and the cost associated with dismantling railway bridges is uncertain as the state of these assets at the time of transfer and the time of dismantling is likely to change.

Decision No. 175-R-1999, under Culverts

Regarding the removal of culverts, the Agency noted that the removal of a large functioning culvert would affect long-established drainage patterns.

Decision No. 545-R-1999, under Trestle bridges and culverts

The Agency noted that although culverts are not normally backfilled when a railway line is abandoned, in circumstances where a culvert was not functional and caused water to flow outside the normal channel, resulting in damage to adjacent landowners, it would need to be removed.

Land valuation
Decision No. 467-R-1996, under Does net salvage value of the branch line include land?

Issued under the former National Transportation Act, 1987, the Agency found land to be an integral component of the assets to be considered and valued in an NSV determination.

Under the Act, the Agency has remained consistent with this finding. It has adopted a number of approaches for evaluating land value, depending on the specifics of each case and the characteristics of each railway line, including reliance on tax records, the value of the adjacent properties (referred to as the across-the fence value) with and without discount factors, the value of the land as an industrial corridor, etc.

Decision No. 530-R-1998, under Discount Factor – Agency Finding

In determining on a case-by-case basis whether a negative or positive discount factor is applicable, the Agency considered the nature of the abutting property, the relative willingness of the abutting property owners to purchase additional land, the probability of delays and difficulty in selling the line and the functional obsolescence of the railway corridor.

Decision No. 542-R-2000, under Land Valuation – Agency Finding

The Agency found that while it had relied on tax records as a basis for estimating the gross value of the land in previous determination, these assessments can at times be based on limited market activity. It noted that the determination of actual market value through an examination of recent sales and other available relevant market information is preferable.

Decision No. 260-R-2012, paragraphs 154 and 155

The Agency acknowledged that an examination of the ‘highest and best use' of a property is a critical step a land appraiser takes in assessing the value of a property and that it provides a focus for the choice of an appropriate land valuation methodology.  The Agency also indicated that in its view it is entirely consistent, in establishing the highest and best use, to first acknowledge the current industrial use of the land, and then determine on a parcel by parcel basis what the land is worth given the adjacent land uses, applying discount factors where appropriate. Further, the Agency found that it was not reasonable to assume an industrial use to be the highest and best use when there was no indication of a market demand for the rail corridor to be used for industrial purposes. In addition, the Agency commented that the methodology for determining the across-the-fence value of lands abutting the railway lands must be based on the actual use of those abutting properties and not a fictitious industrial use.

Environmental remediation

The Agency has examined the environmental conditions present in every NSV application it has undertaken.

Decision No. 530-R-1998, under Environmental Indemnity – Agency Finding

The Agency recognized that, when applicable, the cost of environmental remediation should be a factor in its determination of NSV.

Order No. 1999-R-420

Based on its consideration of a Phase 1 ESA, the Agency determined that there was a need for further examination and required a railway company to produce more detailed information on specific areas of concern.

Decision No. LET-R-74-2008, paragraphs 80-81

The Agency noted that a railway company's submission of a Phase 1 ESA is in keeping with environmental best practice and assists a prospective purchaser to gain an understanding of the environmental state of the property it is interested in acquiring.

The Agency also noted that it recognizes that the cost of environmental remediation can be significant; depending on the type of contamination, its extent, the risk of off-site contamination and varying regulatory requirements for differing land uses.

Decision No. LET-R-124-2008

Based on its consideration of a Phase 1 ESA, the Agency determined that in this case there was a need for further examination and required that a Phase 2 ESA be undertaken.

Decision No. LET-R-62-2012, under Issue 1 - Land use standards applied in the Phase 2 ESA

The Agency accepted the use of industrial land use standards applied in the Phase 2 ESA conducted in relation to this NSV determination. The Agency found that, in determining NSV, it is relevant to take into account the measures a railway company would take to maximize the residual value it could expect to attain for the track assets and the railway lands if unable to transfer the railway line. The Agency also found that this does not extend to any consideration, in the event a transfer does occur, of what a purchaser may subsequently choose to use the property for, or of any costs a purchaser may incur to repurpose the asset. The Agency reasoned that a railway company would not take this factor into account in order to maximize the residual value of its defunct asset, and it would not be an operation required to be performed in relation to the presumed discontinuance and dismantling of the railway line. The Agency found that costs for environmental remediation measures in excess of what would be required for the lands to meet the environmental standards of its existing land use classification at the time of liquidation, or transfer as the case may be, are not relevant to the NSV of the line.

Decision No. 260-R-2012, under Agency analysis and Agency finding – environmental issue 1, paragraphs 191-198

In determining the environmental costs for soil impairments on the railway line that were of on-site origins, the Agency determined that it would recognize the costs associated with implementing a risk-based approach rather than a remedial approach. The Agency acknowledged that there were impairments exceeding the provincial standards for industrial land and recognized that these impairments could be addressed by either remediating the land or adopting a risk-based approach.  The Agency noted that neither of these approaches were required to be implemented as a result of the presumed discontinuance and dismantling of the line.  It also noted that an NSV is intended to represent the fair market value of assets. The Agency concluded that the costs of the full remediation option would exceed any reasonable assessment of the land value in an unimpaired state and would thus be disproportionate. It reasoned that a prudent property owner would not undertake such an investment without clear regulatory impetus, as there would be no likelihood of a return on investment. However, the Agency also considered that, even in the absence of any regulatory obligation to bring the land to standard, the uncertainty surrounding potential liabilities that could arise from the presence of unmanaged impairments could negatively impact an owner's ability to finance or sell a property and ultimately the value of the land. It thus determined that the costs associated with implementing a risk-based approach to dealing with the soil impairments were applicable to the NSV and found that the costs for the most commercially prudent, reasonable and cost effective risk management controls and/or measures were appropriate.

Decision No. 260-R-2012, under Agency analysis and Agency finding – environmental issue 2, paragraphs 208-214

The Agency examined the applicability of environmental costs for groundwater and soil impairments whose origins remained inconclusively attributed after the conduct of a Phase 2 ESA. It determined that although the costs of a risk-based approach for impairments that have been established to be solely of on-site origin were applicable to the NSV, the same was not the case for impairments originating off-site or whose sole origin has not been conclusively established to be on the railway property. The Agency stated that, as a principle, a railway company should not bear the costs for the risk management of environmental impairments in relation to third parties' activities taking place on properties outside the railway line. It considered that environmental impairments originating from off-site sources are a question of third parties' liability, and are not for the Agency to determine as part of an NSV. It stated that any forays into the complex area of third-party environmental liability, the application of the concept of "polluter pays" or any associated avenues of redress properly fall under the purview of other tribunals and courts. The Agency found it inappropriate to apply a reduction to the NSV for the risk management of impairments originating from off-site, when redress could subsequently be sought from a responsible third party.  It also found it impossible to speculate on which claims would not be successful for their inclusion into an NSV determination, as it would amount to forecasting the outcome of potential claims that are not before the Agency and on which it has no jurisdiction.

Decision No. 260-R-2012, under Agency analysis and Agency finding - environmental issue 3a), paragraphs 223-227

In this situation where additional information beyond that obtained in a Phase 2 ESA was required, the Agency found that the NSV should reflect the cost of the expertise required to gather the additional information necessary to determine environmental costs, provided that the additional assessment is performed by a single expert on behalf of both parties and, further, that any such costs will be equalized between the parties by the Agency.  However, the Agency also found that expert fees incurred individually by a party constitute a cost borne by that party to participate in an Agency administrative proceeding and found risk assessment costs so incurred inapplicable to the NSV.

Decision No. 260-R-2012, under Agency analysis and Agency finding – environmental issue 3b), paragraphs 228-237

In determining the extent to which the environmental risk management costs would be applied in this NSV, the Agency found that these costs would not exceed the land value as determined by the Agency. The Agency noted that it has consistently determined the overall NSV of a line by assessing the market value for individual components of the line, from which are deducted the costs associated with each such component to arrive at a net value for each component, the sum of which results in the overall NSV. This methodology does not apply the gross total of all costs against the gross total value of the line assets. Noting that the cost associated with the environmental condition of the land is a factor directly linked to, and netted against, the land component, the Agency concluded that if the environmental costs exceed the value of the land component of a line, such costs should not be carried over and applied against the value of other components of the line. The Agency noted that this is consistent with a landowner liquidating an obsolete property who has alternatives, which include selling the land in its "as is" state, possibly discounting the price to at or near zero, or, if faced with offers which impose costs over and above the value of the land, retaining ownership of the land. The Agency indicated that this reasoning was applicable in this case, where there was no obligation for either party to take full remedial measures, but it may not be in situations where an obligation to remediate or risk-manage a property exists.

Interests in lease agreements

The Agency has found in numerous instances that interests and obligations resulting from a lease or agreement can impact the calculation of NSV, depending on the nature of the lease or agreement.

Decision No. 530-R-1998, under Interest in Leases and Agreements

The Agency determined that when the railway line is evaluated for any purpose, only the obligations and agreements that would remain after the track has been lifted and land sold should be accounted for in the determination. In considering the net benefit (net costs) of any agreement that would persist, the Agency discounts the future stream of net benefits (net costs) over an appropriate time period, using an appropriate rate of return.

Municipal reclamation by-laws
Decision No. 445-R-2000, under Conclusion

In respect of an application under section 145 of the Act, the Agency ruled that the municipal reclamation by-laws referred to by the respondents should not be factored into the NSV.

Decision No. LET-R-74-2008, paragraphs 63-64

The Agency determined in respect of an application under section 146.3 of the Act that the municipal reclamation by-laws at issue do not apply to a sale, lease or other transfer of a railway line by a railway company pursuant to section 145 of the Act, and did not include reclamation costs in its determination of NSV.

2010 FCA 80, paragraphs 49-54

The FCA upheld the decision of the Agency referenced above, that the municipal reclamation by-laws at issue do not apply to a sale, lease or other transfer of a railway line by a railway company pursuant to section 145 of the Act.

Levelling of the right of way
Decision No. 463-R-2010, paragraph 58

In response to a direction of the FCA (2010 FCA 80), the Agency further considered whether, regardless of the applicability of municipal by-laws, the levelling of the right of way might be a possible consequence of the presumed dismantling of a railway line that should be taken into account in an NSV determination.

The Agency determined that, in general terms, the costs associated with the levelling of the right of way are not relevant to the determination of an NSV pursuant to section 145 of the Act. On the other hand, the Agency concluded that, insofar as the levelling of the surface of the rail bed is a reasonable cost related to dismantling a railway line, it is already included in the removal, salvage and transportation costs that form part of an NSV determination.

Grain-dependent branch line payments
Decision No. LET-R-74-2008, paragraphs 90-92

The Agency ruled that the grain-dependent branch line payments set out under section 146.1 of the Act (i.e., $10,000 per year for three years for each mile of line, payable to the municipalities through which the discontinued grain-dependent branch line passes) will not be considered in an NSV determination. The Agency noted that the payments become applicable only upon a notice of discontinuance being issued and that no notice of discontinuance would be issued if a railway line is transferred for continued operation (section 143 of the Act) or for any purpose (section 145 of the Act).

2010 FCA 80, paragraphs 32-34

The FCA upheld the decision of the Agency.

Request to review an NSV determination, pursuant to section 32 of the Act
Decision No. 463-R-2010, paragraph 18

The Agency considered a request made pursuant to section 32 of the Act that it review an NSV determination made in relation to an application under section 146.3 of the Act. Parties requested that the Agency vary its earlier determination to reflect the current market price for scrap rail based on the requesting parties' perception that the market price had changed over the course of an FCA appeal process. The Agency denied the request and commented that the Agency "researches and determines a market value for each of the components of a railway line, which, once decided, cannot be changed except for exceptional circumstances outside the control of the parties. In this instance, if the Agency were to acknowledge that the passage of time associated with a legal challenge was sufficient cause for the Agency to revisit the market values of track materials laid out in a final decision, it could induce a climate in which parties might attempt to use litigation and section 32 of the Act as a means to capture the benefit of market price changes. That would be contrary to the intent of Part III, Division V of the Act for a timely and orderly transfer or discontinuance process for railway lines."

Part 3 – General information

3.1 Withdrawal of an application

An applicant may withdraw an application at any time before an Agency determination is issued. If an application has been made jointly, all applicants must withdraw the application for it to be considered withdrawn. Appendix A to these Guidelines provides further details in this regard.

3.2 Procedural provisions for the processing of applications for NSV Determinations

The Canadian Transportation Agency General Rules are not applicable to NSV proceedings. Parties should refer to these Guidelines, including Appendix A, which contains supplemental provisions applying to all proceedings of the Agency related to NSV applications. For example, all information filed with the Agency is normally placed on the public record. However, Appendix A provides for a procedure to be followed for filing information with a claim for confidentiality, as well as for requesting disclosure of such information.

3.3 Appeal and review of Agency decisions

Should a party disagree with an Agency NSV decision, there are two alternatives for contesting the decision:

  1. Under section 41 of the Act, a party can apply to the Federal Court of Appeal within 30 days of the issuance of an Agency decision for leave to appeal the decision on a question of law or jurisdiction; and
  2. Under section 40 of the Act, a party can petition the Governor in Council to vary or rescind any decision made by the Agency.

In addition, under section 32 of the Act, the Agency may review, rescind or vary any decision made by it if, in its opinion, there has been a change in the facts or circumstances pertaining to the decision since it was made. The review contemplated by section 32 of the Act is not an open-ended authority for the Agency to review its decisions. The Agency's jurisdiction under this section is limited and only arises if there has been a change in the facts or circumstances pertaining to the decision since its issuance. The Agency must first determine whether there has been a change in the facts or circumstances pertaining to the decision sufficient to trigger a review and, if so, then determine whether the new facts or circumstances warrant a review, rescission or variance of the decision.

3.4 Official languages

Written information may be submitted to the Agency in either English or French.

3.5 Agency Web site

The Agency's Web site www.cta.gc.ca contains information related to the Agency's legislative mandate with respect to rail transportation, including NSV determinations and the transfer and discontinuance process, as well as a link to the Act.

Agency NSV determinations are listed by year and by month in the "Rulings – Lists and Search" section. For ease of reference, the determinations are numbered chronologically and are identified by the letter R (e.g. Decision No. 385-R-2008). Alternatively, an Agency Decision can be found by using the "Search" function, by entering key words related to the determination (e.g. name of applicant or net salvage or the location of the line).

3.6 Agency contact information

Any written information submitted with respect to the Agency's consideration of an NSV application must be sent to the Agency.

By mail
Secretary
Canadian Transportation Agency
Ottawa, Ontario
K1A 0N9
By fax
819-997-6727
By e-mail
secretaire-secretary@otc-cta.gc.ca
By courier
Secretary
Canadian Transportation Agency
15 Eddy Street
17th Floor, Mailroom
Gatineau, Quebec
J8X 4B3

For further information:

Canadian Transportation Agency
Ottawa, ON  K1A 0N9

Telephone:
1-888-222-2592
TTY:
1-800-669-5575
Facsimile:
819-997-6727
E-mail:
info@otc-cta.gc.ca
Web site:
www.cta.gc.ca

Appendix A – Supplemental provisions for the processing of applications for NSV determinations

These provisions apply in respect of all proceedings before the Agency related to applications for NSV determinations under subsections 144(3.1), 145(5), 146.2(7) or 146.3 of the Canada Transportation Act (Act). In particular, the Guidelines and this Appendix contain the procedures applicable to these proceedings and the Canadian Transportation Agency General Rules (General Rules) are not applicable to these proceedings.

1. Discretionary powers

  1. The Agency shall exercise all discretion under the Guidelines and in these Supplemental provisions (Provisions) in a fair and expeditious manner.
  2. The Agency may, with or without notice:
    1. do whatever is necessary to deal with anything that is not covered by the Guidelines or these Provisions; or
    2. do anything prescribed in the Guidelines or in these Provisions on its own, even if the Guidelines or these Provisions state that a party must make a request to the Agency.
  3. In any NSV proceeding, the Agency may dispense with or vary any of the provisions of the Guidelines or these Provisions. In particular, failing to follow a requirement of the Guidelines or these Provisions does not, of itself, make an NSV application invalid, and the Agency may make all necessary amendments or grant other relief on any terms that it deems appropriate or dispense with compliance with any provision of the Guidelines or these Provisions at any time.
  4. In any NSV proceeding, the Agency may extend or abridge the time limits set by the Guidelines or these Provisions, or otherwise set by the Agency

2. Filing of documents

  1. A document shall be filed with the Agency by forwarding it in compliance with this section to the Agency's contact information as noted in paragraph 3.6 of the Guidelines.
  2. Documents shall be filed or served by means of written communication, or by electronic means if the Agency or the person served has the necessary facilities for receiving documents in that manner.
  3. A document filed or served by electronic means shall include the following information:
    1. the name, address and telephone and fax numbers of the person filing or serving the document;
    2. the date and time of the transmission; and
    3. if the document is served or filed by fax, the total number of pages transmitted, including the cover page and the name and telephone number of a contact person who may be reached if problems occur in the transmission of the document.
  4. If a person files or serves a document by electronic means, the Agency may require the person to also file with the Agency the original document.
  5. The filing or service of any document occurs when the document is received by the Agency or the person to be served, except where the document is received by the Agency or person to be served on a Saturday, a Sunday, a statutory holiday or after 5:00 p.m. local time of the sender, on a business day, in which case the document will be deemed to be received on the next business day.
  6. The Agency may require any person who serves or files a document to provide the Agency with proof of its service or filing that identifies the document and the person served and establishes, to the satisfaction of the Agency, the manner and time of service or filing.

3. Affidavit

  1. The Agency may require the whole or any part of a document filed with it to be verified by affidavit.
  2. If an affidavit is made on belief, the grounds on which the belief is based shall be set out in the affidavit.
  3. Where the Agency has required that a document be verified by affidavit and the party does not comply with this section within the time established by the Agency for this, the Agency may strike out any document or part of it that has not been verified.

4. Confidentiality

  1. The Agency shall place on its public record any document filed with it in respect of any proceeding unless the person filing the document makes a claim for confidentiality in compliance with this section and that claim is accepted by the Agency.
  2. No person shall refuse to file a document on the basis of a claim for confidentiality alone.
  3. A person making a claim for confidentiality shall file:
    1. one version of the document from which the confidential information has been deleted, whether or not an objection has been made under paragraph (4)(b); and
    2. one version of the document that contains the confidential information marked "contains confidential information" on the top of each page and that identifies the portions that have been deleted from the version of the document referred to in paragraph (3)(a).
  4. A person making a claim for confidentiality shall indicate:
    1. the reasons for the claim, including, if any specific direct harm is asserted, the nature and extent of the harm that would likely result to the person making the claim for confidentiality if the document were disclosed; and
    2. whether the person objects to having a version of the document from which the confidential information has been removed placed on the public record and, if so, shall state the reasons for objecting.
  5. The Agency shall place a document in respect of which a claim for confidentiality has been made on the public record if the Agency finds that the document is relevant to the proceeding and that no specific direct harm would likely result from its disclosure or that any demonstrated specific direct harm is not sufficient to outweigh the public interest in having it disclosed.
  6. If the Agency determines that a document in respect of which a claim for confidentiality has been made is not relevant to a proceeding, it will not form part of the record and the Agency will return the document.
  7. If the Agency determines that a document in respect of which a claim for confidentiality has been made is relevant to a proceeding and that the specific direct harm likely to result from its disclosure justifies a claim for confidentiality, the Agency may:
    1. order that the document not be placed on the public record but that it be kept confidential;
    2. order that a version or a part of the document from which the confidential information has been removed be placed on the public record;
    3. order that the document or any part of it be provided to the parties to the proceeding, or only to their solicitors, and that the document not be placed on the public record; or
    4. make any other order that it considers appropriate.

5. Direction to produce

  1. The Agency may:
    1. require that a party provide any additional information, particulars or documents that the Agency considers necessary;
    2. require that, subject to an Agency determination of confidentiality, any information, particulars or documents obtained under paragraph (1)(a) be made available for inspection by, or be provided to, any other party to the proceeding; and
    3. stay the application until the information, particulars or documents are filed with the Agency and until the Agency determines that the information, particulars or documents so filed constitute a reasonable response to the Agency's direction.

6. Formulation of issues

  1. The Agency may formulate the issues to be considered in any NSV proceeding or direct the parties to propose the issues for its consideration if:
    1. the documents filed do not sufficiently raise or disclose the issues;
    2. the formulation would assist the Agency in the proceeding; or
    3. the formulation would assist the parties to participate more effectively in the proceeding.

7. Preliminary issue

  1. If the Agency determines that an issue should be decided before continuing an NSV proceeding, or if a party requests it, the Agency may direct that the issue be decided in any manner that it considers appropriate.
  2. The Agency may, pending its decision on the issue, stay the whole or any part of the proceeding.

8. Hearing

  1. The Agency will generally make its determinations based on the written pleadings. In exceptional cases, the Agency may find it necessary to convene an oral hearing to further its investigation in an application and, in that case, specific procedures for the conduct of oral hearings will be established and applied by the Agency.

9. Extending or abridging time limits

  1. Time limits set by the Agency for the submission of material can be extended or abridged by the Agency at the request of any of the parties. The party making the request must justify why it cannot or should not comply with these time limits. In considering such requests, the Agency is mindful of the purpose of and the time restrictions imposed by the Act, the need to process its business in a timely way, and the impacts of granting or not granting such request on the parties.

10. Withdrawal

  1. A party may, on notice filed with the Agency, withdraw an application or other pleading, or discontinue participation in a proceeding, at any time before its final NSV determination.
  2. The party shall serve a copy of the notice of withdrawal or discontinuance on the other parties.
  3. On receipt of a notice of withdrawal or discontinuance, the Agency may fix any terms and conditions, including costs, to the withdrawal or discontinuance that it considers appropriate.

Appendix B – Agency decisions pertaining to Net Salvage Value determinations

Updated as of July 2012

The following is a list of Agency NSV determinations issued under the Act. These determinations can be found on the Agency's Web site at www.cta.gc.ca under "Agency Rulings."

You may also obtain a copy of the decisions by contacting the Agency:

Tel:
1-888-222-2592
TTY:
1-800-669-5575
Fax:
819-997-6727
E-mail:
info@otc-cta.gc.ca

It should be noted that the Agency is not bound by its previous decisions and makes its determinations on a case by case basis in consideration of the specific facts and evidence of each case. Accordingly, these decisions are not determinative of issues in current cases before the Agency.

Decision No. 530-R-1998

Application by the St. Lawrence & Hudson Railway Company Limited, pursuant to subsection 145(5) of the Canada Transportation Act, for a determination of the net salvage value of the Goderich Subdivision between mileage 31.75 and mileage 34.9, the trackage to the Canadian National Railway Company interchange and the Canadian Pacific Railway Company's [St. Lawrence & Hudson Railway Company Limited] interest in the trackage located in the Guelph Industrial Park (hereinafter the railway line), in the city of Guelph, in the province of Ontario. Issued October 30, 1998.

Decision No. 175-R-1999

Application by the City of Prince Albert and the Rural Municipalities of Prince Albert No. 461 and Birch Hills No. 460, pursuant to subsection 145(5) of the Canada Transportation Act, for a determination of the net salvage value of the Canadian National Railway Company's Tisdale Subdivision between mileage 136.2 and mileage 157.6, in the province of Saskatchewan. Issued April 16, 1999.

Decision No. 545-R-1999

Application by the Canadian National Railway Company, pursuant to subsection 145(5) of the Canada Transportation Act, S.C. 1996, c. 10, for a determination of the net salvage value of the Canadian National Railway Company's Arborfield Subdivision between mileage 0.00 and mileage 19.4, in the province of Saskatchewan. Issued September 17, 1999, with Order No. 1999-R-420.

Decision No. 687-R-1999

Applicationby the Corporation of the Town of Orangeville for a determination of the NSV of a portion of the St. Lawrence & Hudson Railway Company Limited Owen Sound Subdivision between mileages 2.4 and 36.7. Issued December 9, 1999.

Decision No. 33-R-2000

Applicationby the Canadian National Railway Company for a determination of the net salvage value of a line of railway on the Cudworth Subdivision in the province of Saskatchewan; and an application by seven rural municipal governments in the province of Saskatchewan for a preliminary ruling that the value of assets acquired under the various Rehabilitation Agreements be excluded from net salvage value determinations; and a hearing held in Saskatoon, Saskatchewan, from November 15 to November 19, 1999. Issued January 19, 2000. Note that this Decision is related to Decision Nos. 445-R-2000 and 542-R-2000.

Decision No. 150-R-2000

Applicationby the Canadian National Railway Company, pursuant to subsection 145(5) of the Canada Transportation Act, for a determination of net salvage value of its Arborfield Subdivision between mileage 0.00 and mileage 19.4, in the province of Saskatchewan. Issued March 7, 2000. Note that this Decision is related to Decision No. 545-R-1999.

Decision No. 445-R-2000

In the matter of section 145 of the Canada Transportation Act, , and a determination by the Canadian Transportation Agency regarding the impact of municipal reclamation by-laws on the net salvage value of Canadian National Railway Company lands and other assets or interests in its Cudworth Subdivision in the province of Saskatchewan which have been offered for sale to governments. Issued June 30, 2000.

Decision No. 542-R-2000

Applicationby the Canadian National Railway Company, pursuant to subsection 145(5) of the Canada Transportation Act, for a determination of net salvage value of the Canadian National Railway Company's Cudworth Subdivision, from mileage 38.8 to mileage 84.6, in the province of Saskatchewan. Issued August 17, 2000.

Decision No. 357-R-2007

In the matter of the complaint filed by the Municipality of Greenstone concerning the requirements set out in Part III, Division V of the Canada Transportation Act, S.C., 1996, c. 10, relating to the sale, lease and transfer by the Canadian National Railway Company of the Kinghorn Subdivision, in the province of Ontario. Issued July 13, 2007.

Decision No. LET-R-74-2008

Application by the Town of Bengough and the Rural Municipality of Bengough, Saskatchewan pursuant to section 146.3 of the Canada Transportation Act (Act). Issued April 30, 2008.

Decision No. LET-R-75-2008

Application by the Rural Municipality of Souris Valley No. 7, Saskatchewan pursuant to section 146.3 of the Canada Transportation Act (Act). Issued April 30, 2008.

Decision No. 378-R-2008

In the matter of Decision No. LET-R-74-2008 dated April 30, 2008 - Application by the Town of Bengough and the Rural Municipality of Bengough No. 40, Saskatchewan, pursuant to section 146.3 of the Canada Transportation Act, as amended. Issued July 21, 2008.

Decision No. 385-R-2008

In the matter of Decision No. LET-R-75-2008 dated April 30, 2008 - Application by the Rural Municipality of Souris Valley No. 7, Saskatchewan, pursuant to section 146.3 of the Canada Transportation Act, , as amended. Issued July 24, 2008.

Decision No. 463-R-2010

In the matter of RECONSIDERATION of Decision Nos. LET-R-74-2008 and LET-R-75-2008 dated April 30, 2008 and Decision No. 378-R-2008 dated July 21, 2008 and Decision No. 385-R-2008 dated July 24, 2008. Issued November 5, 2010.

Decision No. 296-R-2011

In the matter of the complaint filed by Transport Action Ontario concerning the discontinuance of railway operations on the Chalk River Subdivision between mileages 0.5 and 115.3 and on the North Bay Subdivision between mileages 0.0 and 70.0 in the province of Ontario. Issued August 5, 2011.

Decision No. 260-R-2012

In the matter of APPLICATIONS by the Municipality of Chatham-Kent and by CSX Transportation Inc., pursuant to subsection 145(5) of the Canada Transportation Act, S.C., 1996, c. 10, as amended. Issued June 29, 2012.

Appendix C – Relevant legislation

Part III Division V of the Canada Transportation Act

Transferring and Discontinuing the Operation of Railway Lines

Definition of "railway line"

140. (1) In this Division, "railway line" includes a portion of a railway line, but does not include

  1. a yard track, siding or spur; or
  2. other track auxiliary to a railway line.
Determination

(2) The Agency may determine as a question of fact what constitutes a yard track, siding, spur or other track auxiliary to a railway line.

Three-year plan

141. (1) A railway company shall prepare and keep up to date a plan indicating for each of its railway lines whether it intends to continue to operate the line or whether, within the next three years, it intends to take steps to discontinue operating the line.

Public availability of plan

(2) The railway company shall make the plan available for public inspection in offices of the company that it designates for that purpose.

Notification of changes

(2.1) Whenever the railway company makes a change to the plan, it shall notify the following of the change within 10 days after the change:

  1. the Minister;
  2. the Agency;
  3. the minister responsible for transportation matters in the government of each province through which the railway line passes;
  4. the chairperson of every urban transit authority through whose territory the railway line passes; and
  5. the clerk or other senior administrative officer of every municipal or district government through which the railway line passes.
When sale, etc., permitted

(3) Subject to section 144.1, a railway company may sell, lease or otherwise transfer its railway lines, or its operating interest in its lines, for continued operation.

Continued operation of a portion of a line

(4) A railway company that sells, leases or otherwise transfers a portion of a grain-dependent branch line listed in Schedule I, or its operating interest in such a portion, to a person who intends to operate the portion shall continue to operate the remaining portion for three years, unless the Minister determines that it is not in the public interest for the company to do so.
1996, c. 10, s. 141; 2000, c. 16, s. 5; 2007, c. 19, s. 35.

Compliance with steps for discontinuance

142. (1) A railway company shall comply with the steps described in this Division before discontinuing operating a railway line.

Limitation

(2) A railway company shall not take steps to discontinue operating a railway line before the company's intention to discontinue operating the line has been indicated in its plan for at least 12 months.

Community-based groups

(3) Subsection (2) does not apply and a railway company shall without delay take the steps described in section 143 if

  1. the federal government, a provincial, municipal or district government or a community-based group endorsed in writing by such a government has written to the company to express an interest in acquiring all or a portion of a grain-dependent branch line that is listed in Schedule I for the purpose of continuing to operate that line or portion of a line; and
  2. that line or portion of a line is indicated on the company's plan as being a line or a portion of a line that the company intends to take steps to discontinue operating.

1996, c. 10, s. 142; 2000, c. 16, s. 6.

Advertisement of availability of railway line for continued rail operations

143. (1) The railway company shall advertise the availability of the railway line, or any operating interest that the company has in it, for sale, lease or other transfer for continued operation and its intention to discontinue operating the line if it is not transferred.

Content of advertisement

(2) The advertisement must include a description of the railway line and how it or the operating interest is to be transferred, whether by sale, lease or otherwise, and an outline of the steps that must be taken before the operation of the line may be discontinued, including

  1. a statement that the advertisement is directed to persons interested in buying, leasing or otherwise acquiring the railway line, or the railway company's operating interest in it, for the purpose of continuing railway operations; and
  2. the date by which interested persons must make their interest known in writing to the company, but that date must be at least sixty days after the first publication of the advertisement.
Disclosure of agreement with public passenger service provider

(3) The advertisement must also disclose the existence of any agreement between the railway company and a public passenger service provider in respect of the operation of a passenger rail service on the railway line.

(4) [Repealed, 2007, c. 19, s. 36]
1996, c. 10, s. 143; 2007, c. 19, s. 36.

Disclosure of process

144. (1) The railway company shall disclose the process it intends to follow for receiving and evaluating offers to each interested person who makes their interest known in accordance with the advertisement.

(2) [Repealed, 2007, c. 19, s. 37]

Negotiation in good faith

(3) The railway company shall negotiate with an interested person in good faith and in accordance with the process it discloses and the interested person shall negotiate with the company in good faith.

Net salvage value

(3.1) The Agency may, on application by a party to a negotiation, determine the net salvage value of the railway line and may, if it is of the opinion that the railway company has removed any of the infrastructure associated with the line in order to reduce traffic on the line, deduct from the net salvage value the amount that the Agency determines is the cost of replacing the removed infrastructure. The party who made the application shall reimburse the Agency its costs associated with the application.

Time limit for agreement

(4) The railway company has six months to reach an agreement after the final date stated in the advertisement for persons to make their interest known.

Decision to continue operating a railway line

(5) If an agreement is not reached within the six months, the railway company may decide to continue operating the railway line, in which case it is not required to comply with section 145, but shall amend its plan to reflect its decision.

Remedy if bad faith by a railway company

(6) If, on complaint in writing by the interested person, the Agency finds that the railway company is not negotiating in good faith and the Agency considers that a sale, lease or other transfer of the railway line, or the company's operating interest in the line, to the interested person for continued operation would be commercially fair and reasonable to the parties, the Agency may order the railway company to enter into an agreement with the interested person to effect the transfer and with respect to operating arrangements for the interchange of traffic, subject to the terms and conditions, including consideration, specified by the Agency.

Remedy if bad faith by an interested person

(7) If, on complaint in writing by the railway company, the Agency finds that the interested person is not negotiating in good faith, the Agency may order that the railway company is no longer required to negotiate with the person.
1996, c. 10, s. 144; 2000, c. 16, s. 7; 2007, c. 19, s. 37.

Rights and obligations under passenger service agreements continued

144.1 (1) If a railway line, or a railway company's operating interest in a railway line, is sold, leased or otherwise transferred under subsection 141(3) or as the result of an advertisement under subsection 143(1) and, before the day such advertisement was made, an agreement was in force between the railway company and a public passenger service provider in respect of the operation of a passenger rail service on the railway line, the rights and obligations of the railway company under the agreement in respect of the operation of that service on that line vest, as of the day the transfer takes place, in the person or entity to which the railway line, or the operating interest, is transferred, unless the public passenger service provider indicates otherwise before that day.

Declaration that line is for general advantage of Canada

(2) Whenever a railway company's rights and obligations under an agreement with VIA Rail Canada Inc. are vested in another person or entity by subsection (1), the portion of the railway line to which the agreement relates is hereby declared, as of the day the transfer takes place, to be a work for the general advantage of Canada.

Duration of declaration

(3) The declaration referred to in subsection (2) ceases to have effect if

  1. VIA Rail Canada Inc. ceases to operate a passenger rail service on the portion of railway line to which the declaration relates; or
  2. the operation of the railway line is discontinued.

2007, c. 19, s. 38.

Offer to governments

145. (1) The railway company shall offer to transfer all of its interest in the railway line to the governments and urban transit authorities mentioned in this section for not more than its net salvage value to be used for any purpose if

  1. no person makes their interest known to the railway company, or no agreement with an interested person is reached, within the required time; or
  2. an agreement is reached within the required time, but the transfer is not completed in accordance with the agreement.
Which governments receive offer

(2) After the requirement to make the offer arises, the railway company shall send it simultaneously

  1. to the Minister if the railway line passes through
    1. more than one province or outside Canada,
    2. land that is or was a reserve, as defined in subsection 2(1) of the Indian Act,
    3. land that is the subject of an agreement entered into by the railway company and the Minister for the settlement of aboriginal land claims, or
    4. a metropolitan area;
  2. to the minister responsible for transportation matters in the government of each province through which the railway line passes;
  3. to the chairperson of every urban transit authority through whose territory the railway line passes; and
  4. to the clerk or other senior administrative officer of every municipal or district government through whose territory the railway line passes.
Time limits for acceptance

(3) Subject to subsection 146.3(3), after the offer is received

  1. by the Minister, the Government of Canada may accept it within thirty days;
  2. by a provincial minister, the government of the province may accept it within thirty days, unless the offer is received by the Minister, in which case the government of each province may accept it within an additional thirty days after the end of the period mentioned in paragraph (a)if it is not accepted under that paragraph;
    1. (b.1)by an urban transit authority, it may accept it within an additional 30 days after the end of the period or periods for acceptance under paragraphs and (b), if it is not accepted under those paragraphs; and
  3. by a municipal or district government, it may accept it within an additional 30 days after the end of the period or periods for acceptance under paragraphs (a), (b) and (b.1), if it is not accepted under those paragraphs.
Communication and notice of acceptance

(4) Once a government or an urban transit authority communicates its written acceptance of the offer to the railway company, the right of any other government or urban transit authority to accept the offer is extinguished, and the railway company must notify the other governments and urban transit authorities of the acceptance.

Net salvage value

(5) If a government or an urban transit authority accepts the offer, but cannot agree with the railway company on the net salvage value within 90 days after the acceptance, the Agency may, on the application of the government or urban transit authority or the railway company, determine the net salvage value.
1996, c. 10, s. 145; 2007, c. 19, s. 39.

Discontinuation

146. (1) If a railway company has complied with the process set out in sections 143 to 145, but an agreement for the sale, lease or other transfer of the railway line or an interest in it is not entered into through that process, the railway company may discontinue operating the line on providing notice of the discontinuance to the Agency. After providing the notice, the railway company has no obligations under this Act in respect of the operation of the railway line and has no obligations with respect to any operations by any public passenger service provider over the railway line.

No obligation

(2) If the railway line, or any interest of the railway company in it, is sold, leased or otherwise transferred by an agreement entered into through the process set out in sections 143 to 145 or otherwise, the railway company that conveyed the railway line has no obligations under this Act in respect of the operation of the railway line as and from the date the sale, lease or other transfer was completed and has no obligations with respect to any operations by any public passenger service provider over the railway line as and from that date.
1996, c. 10, s. 146; 2007, c. 19, s. 40.

Obligation following return

146.01 (1) If, by reason of the instrument or act by which a railway line or an operating interest in a railway line is transferred through the process set out in sections 143 to 145 or otherwise, the railway line or operating interest in the railway line returns to the railway company that transferred it, the railway company shall, within 60 days after the day on which the return takes place, resume operations of the line or follow the process set out in sections 143 to 145.

No condition or obligation

(2) If a railway line or operating interest in a railway line returns to a railway company that transferred it and the company decides to follow the process set out in sections 143 to 145 in respect of the railway line or operating interest, the company is not subject to subsection 142(2) in respect of the railway line or operating interest and has no obligations under this Act in respect of the operation of the railway line.
2008, c. 5, s. 4.

Exception

146.02 Despite section 146.01, if a railway line or operating interest in a railway line returns to a railway company referred to in that section and, before the day on which the return takes place, an agreement was in force between the person or entity that owned the railway line or had the operating interest in the railway line immediately before the return and a public passenger service provider as defined in section 87 in respect of the operation of a passenger rail service on that railway line, then, unless the public passenger service provider indicates otherwise before that day, the rights and obligations of the person or entity under the agreement in respect of the operation of that service on that line vest, as of that day, in the railway company and the railway company shall resume operations of the railway line.
2008, c. 5, s. 8.

Compensation

146.1 (1) A railway company that discontinues operating a grain-dependent branch line listed in Schedule I, or a portion of one, that is in a municipality or district shall, commencing on the date on which notice was provided under subsection 146(1), make three annual payments to the municipality or district in the amount equal to $10,000 for each mile of the line or portion in the municipality or district.

Compensation

(2) If a railway company to which subsection 146.01(1) applies does not resume operations on a grain-dependent branch line listed in Schedule I within the period provided for in that subsection and does not enter into an agreement for the sale, lease or other transfer of that railway line, or applicable interest in that railway line, after following the process set out in sections 143 to 145, the railway company shall, beginning on the day after the last day on which its offer could have been accepted under section 145, make the annual payments referred to in subsection (1).
2000, c. 16, s. 8; 2007, c. 19, s. 41(F); 2008, c. 5, s. 5.

List of metropolitan sidings and spurs to be dismantled

146.2 (1) A railway company shall prepare and keep up to date a list of its sidings and spurs that it plans to dismantle and that are located in metropolitan areas or within the territory served by any urban transit authority, except for sidings and spurs located on a railway right-of-way that will continue to be used for railway operations subsequent to their dismantlement.

Publication of list and notification of changes

(2) The railway company shall publish the list on its Internet site and, whenever it makes a change to the list, it shall notify the following of the change within 10 days after the change:

  1. the Minister;
  2. the Agency;
  3. the minister responsible for transportation matters in the government of the province in which the siding or spur that is the subject of the change is located;
  4. the chairperson of the urban transit authority in whose territory the siding or spur that is the subject of the change is located; and
  5. the clerk or other senior administrative officer of the municipal or district government in which the siding or spur that is the subject of the change is located.
Limitation

(3) A railway company shall not take steps to dismantle a siding or a spur until at least 12 months have elapsed since the siding or spur was added to the list.

Offer to governments

(4) Before dismantling a siding or a spur that has been on the list for at least 12 months, a railway company shall send simultaneously to each of the following an offer to transfer all of its interest in the siding or spur for not more than its net salvage value:

  1. the Minister;
  2. the minister responsible for transportation matters in the government of the province in which the siding or spur is located;
  3. the chairperson of the urban transit authority in whose territory the siding or spur is located; and
  4. the clerk or other senior administrative officer of the municipal or district government in which the siding or spur is located.
Time limits for acceptance

(5) Subject to subsection 146.3(3), after the offer is received

  1. by the Minister, the Government of Canada may accept it within 30 days;
  2. by the provincial minister, the government of the province may accept it within an additional 30 days after the end of the period mentioned in paragraph (a) if it is not accepted under that paragraph;
  3. by the chairperson of an urban transit authority, that authority may accept it within an additional 30 days after the end of the periods for acceptance under paragraphs (a) and (b), if it is not accepted under those paragraphs; and
  4. by the clerk or other senior administrative officer of a municipal or district government, that government may accept it within an additional 30 days after the end of the periods for acceptance under paragraphs (a), (b) and (c), if it is not accepted under those paragraphs.
Communication and notice of acceptance

(6) Once a government or an urban transit authority communicates its written acceptance of the offer to the railway company, the right of any other government or urban transit authority to accept the offer is extinguished, and the railway company shall notify the other governments and urban transit authorities of the acceptance.

Net salvage value

(7) If a government or an urban transit authority accepts the offer, but cannot agree with the railway company on the net salvage value within 90 days after the acceptance, the Agency may, on the application of the government, the urban transit authority or the railway company, determine the net salvage value.

Dismantling permitted

(8) If the offer is not accepted, the railway company may dismantle the siding or spur on providing notice to the Agency.
2007, c. 19, s. 42.

Determination of net salvage value before expiry of time to accept offer

146.3 (1) A person to whom a railway line is offered under section 145, or to whom a siding or spur is offered under section 146.2, may apply to the Agency for a determination of the net salvage value of the railway line, siding or spur, as the case may be, at any time before the expiry of the period available to the person to accept the offer.

Notification of application

(2) The applicant shall without delay provide a copy of the application to the railway company, and the railway company shall without delay notify every other person to whom the offer was made and whose time to accept the offer has not expired that an application for a determination of the net salvage value was made.

Effect of application

(3) If an application is made under subsection (1), the time available to the applicant to accept the offer expires on the day that is 30 days after the day the Agency notifies the applicant of its determination of the net salvage value and the 30-day period for each other person to accept the offer is calculated on the expiry of the period available to the applicant to accept the offer.

Costs

(4) The applicant shall reimburse the Agency's costs associated with the application.
2007, c. 19, s. 42.

Railway rights of way

146.4 Sections 146.2 and 146.3 apply, with any modifications that are necessary, to railway rights-of-way, that are located in metropolitan areas or within the territory served by any urban transit authority and in respect of which the sidings and spurs have been dismantled, that a railway company plans to sell, lease or otherwise transfer.
2007, c. 19, s. 42.

Passenger railway stations

146.5 Sections 146.2 and 146.3 apply, with any modifications that are necessary, to passenger railway stations in Canada that a railway company plans to sell, lease or otherwise transfer or dismantle.
2007, c. 19, s. 42.

Notes

Note 1

Under subsections 144(6) and 144(7), the Agency may order a railway company to enter into an agreement with the interested person or that the railway company is no longer required to negotiate with the interested person.

Return to reference 1

Note 2

It should be noted that since the enactment of the Act, the Agency has not had occasion to rule on an NSV application for assets being transferred in the context of section 144 for "continued railway operation." (In one instance, a decision was issued, but the Agency was subsequently found to have lost jurisdiction and, therefore, that decision has no precedential value).

Return to reference 2

Note 3

Under the Act, this notification must be given if the railway line passes through:

  1. more than one province or outside Canada;
  2. land that is or was a reserve;
  3. land that is the subject of an agreement entered into by the railway company and the Minister for the settlement of aboriginal land claims; or
  4. a metropolitan area.

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Note 4

Section 2.4.2 of these Guidelines provides further information on the concept of "any purpose."

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Note 5

However, it should be noted that where the Agency determines that it does not have adequate, reliable evidence to make a fully informed decision, it has the authority to require the parties to provide whatever additional information, such as professional land appraisals or environmental site assessments, it deems necessary. All costs for obtaining such information, determined by the Agency as necessary for the net salvage value determination, will be paid for by the parties (see section 1.7).

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Note 6

The NSV determined in section 146.3 is, by itself, a non-binding value, because the offer for the transfer of the line has not been accepted. When a government accepts an offer, subsequent to a net salvage value determined under subsection 146.3(1), and in accordance with the time lines specified in subsection 146.3(3) of the Act, the NSV determined under section 146.3 becomes determinative of the NSV under section 145, barring any particularly significant change in facts in the interim.

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Note 7

However, it should be noted that where the Agency determines that it does not have adequate, reliable evidence to make a fully informed decision, it has the authority to require the parties to provide whatever additional information, such as professional land appraisals or environmental site assessments it deems necessary. All costs for obtaining such information, determined by the Agency as necessary for the net salvage value determination, will be paid for by the parties. (see section 1.7)

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Note 8

An NSV determined under section 146.3 of the Act is, by itself, a non-binding value, because the offer for the transfer of the line has not been accepted. When a government accepts an offer, subsequent to a net salvage value determined under subsection 146.3(1), and in accordance with the time lines specified in subsection 146.3(3), the NSV determination made pursuant to section 146.3 becomes determinative of the NSV under section 146.2(7) of the Act, barring any particularly significant change in facts in the interim.

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Note 9

An NSV determined under section 146.3 of the Act is, by itself, a non-binding value, because the offer for the transfer of the line has not been accepted. When a government accepts an offer, subsequent to an NSV determined under subsection 146.3(1), and in accordance with the time lines specified in subsection 146.3(3), the NSV determined under section 146.3 becomes determinative of the NSV under section 145(5) of the Act, barring any particularly significant change in facts in the interim.

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Note 10

An NSV determined under section 146.3 of the Act is, by itself, a non-binding value, because the offer for the transfer of the line has not been accepted. When a government accepts an offer, subsequent to an NSV determined under subsection 146.3(1), and in accordance with the time lines specified in subsection 146.3(3), the NSV determined under section 146.3 becomes determinative of the NSV under section 146.2(7) of the Act, barring any particularly significant change in facts in the interim.

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Note 11

This period is calculated from the last date provided in the advertisement offering the railway assets for persons to make their interest known.

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