VIA and CN in Federal Court - The Facts, Part 3

As I continue to garner (and generate posts here!) more public documents from the Federal Court case, I've been sharing their contents and how they comprised the application for judicial review. Having not been heard, due to CN's motion to strike, the case has been taken to the Quebec Superior Court while Transport Canada (TC) digests CN's submitted grade crossing protection data. On December 10, 2024 Ministerial Order MO 24-01 required CN to supply Transport Canada with information pertaining to approximately 300 crossings within 30 days. CN submitted data pursuant to this order by January 9, 2025. Watch for an upcoming post profiling the Ministerial Order.

The initial "facts" from this Federal Court case has now grown into a series of at least four posts:

• VIA and CN in Federal Court - The Facts, Part 1
• VIA and CN in Federal Court - The Facts, Part 2
• VIA and CN in Federal Court - The Facts, Part 3 (you're reading it!
• CN-VIA Train Service Agreements

In this post, you'll find these gems that I've recently gleaned from the following chronological submissions to the Court:

• Record of the Attorney-General of Canada (AGC) in response to CN
• VIA's response to CN's Motion to Strike
• VIA's application to the Canadian Transportation Agency
• CN's answer to VIA to the Canadian Transportation Agency

Although in a previous post profiling CN-VIA Train Service Agreement (TSA) I suggested the TSA may be the grounds upon which the judge based her decision, it now appears to me that the AGC submission re: jurisdiction may have been what led to the Court not hearing VIA's application for judicial review. The AGC material was submitted on January 23, 2025 slightly less than one month before VIA's application was to be heard in Federal Court in Montreal.

RECORD OF THE ATTORNEY-GENERAL OF CANADA (AGC) IN RESPONSE TO CN'S JURISDICTION MOTION PER FEDERAL COURT RULE 365

The AGC included 291 pages of material in its submission to the Court. An overview of the AGC's position:

1. CN says VIA is not a federal board, commission or other tribunal.

2. The AGC agrees that VIA's application is not in the Court's jurisdiction and should be struck.

3. CN's decision is a purely contractual matter not within the Court's jurisdiction.

4. Since the application was filed by VIA, the Minister ordered CN to provide data as above, ensuring compliance with regulatory requirements, and to ascertain whether it's an active safety issue.

The AGC contends that VIA's application fails. CN's decision is not a state action, and therefore is not subject to judicial review. CN issued the Crossing Supplement to exercise its authority over VIA to direct it to take certain safety measures on CN property. This authorization is sourced in its contract with VIA, an act of private law, not of the Parliament. Any remedies VIA has against CN are private law remedies.

Submissions by the AGC:

VIA's application cannot succeed because it fails to state a cognizable administrative law claim. Does the power exercised by the decision-maker find its source in Federal law? CN does not have power to make binding rules of public law. This role is delegated to the Minister, by Parliament. As such, the Crossing Supplement is not part of federal law and the application fails.

A company can make internal safety rules and instructions. Grade Crossing Regulations set out, among other things, minimum sensor requirements to ensure Advance Warning Devices are properly triggered. A company cannot suggest approval of its own rules for crossings, though it can formulate rules re: how railway equipment is operated as it traverses a crossing work. 

The Minister must not approve railways' rules, to give them the force of public law. CN cannot unilaterally issue Crossing Supplement as public law. It must be submitted to the Minister. CN did not do this, therefore the Crossing Supplement is not a rule under the RSA.

CN's authority to issue Crossing Supplement(s) is its contract with VIA.

Also of note, Administrative Monetary Penalties (AMP) regulations in Sec. 40.1 of the Railway Safety Act (RSA) create a penalty scheme to promote compliance with the RSA. AMP designates certain rules like the CROR that contraventions of which may be regarded as violation under the AMP scheme. A safety issue identified by the Minister must be named a violation of the RSA to be sanctioned by AMP.

The Minister's Role in Rail Safety:

Contractual relations between railways occur within a regulated rail safety environment. A railway's adoption of internal safety requirements and its application of those requirements to contracting parties does not supersede, override or fulfill the Minister's role.

The Minister has a wide range of power sufficient to allow the Minister to address and resolve CN and VIA's safety concerns.

Under Section 32.01 Safe Railway Operations the minister could order CN to stop requiring VIA to obey the Crossing Supplement. Conversely, the Minister could order VIA to follow the Crossing Supplement procedures.

If the Minister issues such an order, it could be challenged at the Transportation Appeal Tribunal of Canada, a specialized administrative tribunal. The order can be reviewed by a single member, thence a three-member Tribunal. Their decision is then judicially reviewable by the Federal Court. 

Therefore, the Judicial Review process should have been addressed by the Minister.

TC enacted the Ministerial Order in direct response to VIA's allegation that CN's grade crossing warning system sensors do not meet minimum requirements. TC is analyzing CN's data.

Therefore it is respectfully submitted that: the Court should strike VIA's application.

VIA'S RESPONSE TO CN'S MOTION TO STRIKE

VIA submitted 1,615 pages to the court supporting its response. As with previous submissions, many of these seem redundant but serve as background: Canadian Railway Operating Rules, CN's Crossing Supplements, and legal precedent cases. Reiterating CN's grounds for its Motion to Strike: 

• Their claim that CN is not a "federal board, commission or other tribunal" as required to be included by Section 18 of the Federal Courts Act. A claim that the Court lacks the jurisdiction to hear the Application. The Train Services Agreement (TSA) between CN and VIA gives CN control over the movement of VIA's passenger trains providing CN with absolute discretion, including CN's ability to make private arrangements and issue General Bulletin Orders (GBO's).

• VIA Loss-Of-Shunt (LOS): VIA's application arises from the LOS phenomenon, which CN has studied for more than ten years in the US. CN is aware that the Ventures are at an increased risk of LOS since they are lighter and shorter trains than VIA's Legacy (LRC and HEP) trains. 

On January 31, 2025 VIA's Director, Network Operations & Railway Safety Governance – Railway Operations Nicholas Panetta made an affidavit in VIA's case as part of VIA's response to CN's motion to strike, with the following dates:

• June 2, 2023 VIA applied to CTA
• June 21, 2023 CN proposed VIA sign the ninth amendment to the CN-VIA TSA
• June 23, 2023 VIA wrote to preserve the TSA in a standstill agreement - unsigned by CN.
• June 26, 2023 CN wrote to VIA with revised standstill agreement called CN's Status Quo Agreement - unsigned by CN.
• June 27, 2023 VIA signed and returned the Status Quo Agreement - unsigned by CN.

VIA uses the Guelph Sub without a contract after CN took it back from GEXR.

VIA's APPLICATION TO THE CTA

June 2, 2023: VIA contended that the close integration between CN and VIA ceased a long time ago:

• CN has a quasi-monopolistic position over VIA. CN's revenue is 38 times higher than VIA's ($15B to $0.4B, respectively).
• Fees that VIA pays to CN are less than 1% of CN's revenue.
• VIA is not one of CN's top 100 customers.
• There is significant friction between VIA and CN in the Corridor.
• There is no set of defined rules for VIA's right to make punctual ad hoc changes such as adding frequencies or operating special trains.
• CN simply refuses all changes with no explanation or justification.

VIA also contends that due to this strained relationship, CN refuses to share its track quality data with VIA. In January, 2023 VIA operated an ENSCO sensor-equipped locomotive and gathered data on multiple locations on CN's Kingston Sub. Those with high vertical acceleration:

Both types of sudden movement can injure passengers and/or VIA employees. CN's track quality is not conducive to safe, efficient operation of VIA's trains.

CN adopted Precision Scheduled Railroading circa 2003 under CEO Hunter Harrison. The aim was to transport the same or more freight with fewer cars, locomotives and staff required, with longer, slower, heavier trains, all to improve CN's operating ratio (89 in 1995; 69 by 2003; 60 in 2022). Before, CN operated 5,000-foot trains with 6,000-foot sidings, now 10-14,000-foot trains with lower Horsepower Per Ton. 

New Train Service Agreement (TSA) negotiations began on August 4, 2021.

CN's ANSWER TO VIA'S APPLICATION TO THE CTA

April 19, 2024: VIA's High Frequency Rail plans are not yet committed-to, therefore CN's freight capacity should not be decreased by imposing VIA's perceived needs solely on CN. Until dedicated Corridor trackage for passenger trains is a reality, CN contends that:

• VIA's proposed TSA would an impose an 'expropriation' of CN's assets for the benefit of VIA passenger service to the detriment of CN's freight service.
• "CN and VIA continue to work collaboratively" i.e. for scheduling and "this process works".
• The CTA should decline to impose VIA's Proposed TSA.
• "Each additional passenger train layers a relatively unchangeable schedule that CN must then accommodate its freight around."
• Passenger trains require Class 5 track, while CN's infrastructure is mostly Class 3, with some portions of Class 4.
• The burden of accommodating VIA services places CN at a competitive disadvantage to CP and other competitors.
• "VIA chooses to run its services almost entirely on CN's infrastructure" and "CN has worn the albatross of accommodating the overwhelming majority of VIA's services."

As an example of how VIA's operations cause operational problems, CN blames the track arrangement at VIA's Brockville station for a 2% reduction in its OTP:

CN referred to VIA's daily reports that describe and allocate responsibility for delays. A sample report shows VIA apparently acknowledging delay to its train is due to equipment issue for VIA No 37 on 2024-04-03:

One of the first friction points between CN and VIA in its negotiations was new schedules proposed by VIA for Peak Season/Holiday Extra trains as part of VIA's 'Seasonal Changes' process (below. With known frequency that would create "additional blocks of time during which no freight trains can be launched", CN contended that these proposed operations could also lead to a higher chance of VIA-VIA conflicts, such as VIA Nos 63/53 that depart Kingston six minutes apart towards Toronto.

CN also noted that:

• VIA also has to get approval from Metrolinx to depart Toronto Union Station.
• VIA's own 2022 annual report showing load factor of only 61% the same as September, 2023.
• VIA should not be granted blanket priority over CN freight trains. Shippers might sue, and CN could use $1B annually.
• CN schedules its trains around VIA's train schedules. VIA trains overtake CN trains 20-40 times per day on the Kingston Sub. 
• CN disputes Via's ENSCO limited data.

CN also said that VIA's proposals for the TSA are outside its jurisdiction to impose governance provisions therein "that give VIA extensive oversight of and involvement in, CN's own governance and operations".

CN argued against VIA's allegation that CN 'simply refused' all requests, saying it has "delivered presentations in response to VIA's formal requests for changes", and that "VIA wants a seat at the decision-making table...so that it can oversee, monitor and regulate CN...for the benefit of VIA."

CN requested that the CTA impose CN's Proposed TSA for five years.

I'll continue to post submissions to the Federal Court case, now moribund, as they become publicly-available.

Running extra...

You'll see a prominent dual-flags sidebar item to visibly indicate my dedication to the many American readers of Trackside Treasure. Issuing blanket statements about ALL Canadians or ALL Americans is not realistic to me, and something I will not engage in. There are lots of Americans who did NOT vote for the current administration, and there are lots of other Americans who did and are likely now regretting their votes. Politics is a dirty business and this is a train blog.

That doesn't mean I didn't watch the swearing-in of Canada's 24th Prime Minister and his hand-picked cabinet. This is an essential part of our Constitutional Monarchy. Unlike the under-qualified, downright un-qualified in some cases, political loyalists and cronies chosen to head Federal departments in the American system, our Ministers are elected Members of Parliament and therefore enjoy the trust reposed in them by their ridings' electorate, not only a patronage president surrounding himself with yes-men and yes-women, at least one of the latter from the world of WWF! And I don't mean the World Wildlife Fund! Canadian Cabinet ministers reflect Canada. And a really shiny table! I said, this is a train blog!

This week, NATO's SecGen visited the Oval Office. That mantel looks like it could collapse under the weight of those symmetrical kabenchkes. The fireplace surround has weird gold flourishes on it and even the handles of the fireplace tools are golden, though never used because there's never a fire lit. Once a symbol of class and American soft power, the Oval Office now resembles a cross between a Vegas bathroom and an Egyptian pharaoh's tomb. A cross of crassness and classless. Psychologists say displays of gold are visible symbols of wealth, but subliminally reveal tendencies toward greed and excess. But I mean it, this is a train blog!