Trains Don’t Run, But the Bills Still Come

The only thing more expensive than running a railway, apparently, is not running a railway.

That’s the justification offered by Genesee & Wyoming (G&W) — owners of the Cape Breton & Central Nova Scotia Railway (CBNS) and its all-but-defunct Sydney Subdivision — for the high fees they charge landowners needing to run pipelines or fiber optic cable or telephone lines across or under their tracks.

I asked G&W vice president of corporate communications Michael Williams how the company could justify continuing to charge such high fees for an inactive railway. This is what he said:

…the fees cover the significant activities and expenses, described in detail below, that are incurred regardless of whether trains are running:

While many of the agreements do cover important safety concerns related to third-party use of railroad property near active rail lines, much of the railroad’s liability, and thus need for an agreement, comes solely from its ownership of the land. Whether or not trains are running, there is potential for liability anytime a person is granted permission to enter the property of another.

While the railroad does not actively seek users of its right of way, there is an understanding that from time to time, utilities or neighbors will have a reasonable need to utilize or cross the railroad property. Therefore, Genesee & Wyoming Railroad Services employs full-time staff to accommodate these requests, and the fees derived therefrom offset some of the costs involved with review, preparation and maintenance of the agreements.

Shorter version: we need to charge high application fees to pay for the people who review the applications. (I would be very curious to know how many people G&W actually employs to review these applications and how much they are paid.)

Here’s how Williams explains each of the charges:

Utility Crossing Agreement Processing

Application Fee for a utility crossing is $1,000. This covers document preparation, internal reviews, insurance review, legal review, business approvals and input into railroad document retention systems.

[“Input into railroad document retention systems?” Is that communications-speak for “filing?” Are they trying to make filing sound more important—and expensive—by calling it “input into railroad document retention systems?” That is such a gift to people like me.]

Engineering review fee for a utility crossing is $1,500. This covers review of new uses, sometimes including multiple revisions, by the engineering department to verify the installation plans submitted conform to CBNS and Transport Canada engineering standards.

Contractor’s Right of Entry fee for a utility crossing is $1,500. This covers activities similar to the application fee and includes contractor’s 60-day access to the railroad’s property to perform the installation of the utility.

Private Road Crossings Application fee for the private road crossing is $1,000. This covers activities similar to the application fee for utilities. Note that this fee is not collected from the applicant until a crossing has been approved due to there being a good chance that a new road crossing application could be denied. Additional fees to cover an engineering assessment and materials needed for the crossing vary based on the specific project and are likewise not charged until the crossing is approved.

The fees above, other than the private road crossing application fee, are all non-refundable. Expedited processing (1-2 weeks as opposed to 6-8 weeks) of any of these applications costs an additional $1,750. So, the total for each utility crossing is $4,000 — $5,750 if you want it processed quickly.

And here’s the best part: the railway charges separately for each utility.

Coaxial cables, copper telephone wires, electrical distribution and transmission lines? $4,000.

Pipelines that go over, under and on railroad property [and] may include natural gas, petroleum, water and sewer? $4,000.

Fiber optic wire lines and cable crossings that go over, under and on railroad property? $4,000.

That’s how Cape Bretoners like Mike Johnson end up with bills like this:

 

Note there is one $4,000 charge for NS Power’s railway application fee and the promise of a second for Bell Aliant’s. In all, $8,000 to G&W for allowing this work to be done along its inactive railway. The first charge represents 32% of the overall bill for the work.

 

What Would the UARB Do?

Johnson is the new head of the unfortunately named Cape Breton Railway Victims Association (I’m not even kidding when I say that the first time I heard it, I assumed it advocated on behalf of people who’d been hit by trains).

The group, made up of people G&W would no doubt call its Cape Breton “neighbors,” argues the utility crossing fees violate the Railways Act, in particular, the $300 cap on crossing fees set by the Nova Scotia Utility and Review Board (UARB).

But UARB executive director Paul Allen begs to differ. In an email to The Spectator, Allen explained that the board’s powers are set out in the Private Railway Crossing Fees Regulations made under the Railways Act. Those regulations define a crossing fee as: “the annual fee [emphasis his] charged by a railway company in respect of a private crossing.”

The regulations state:

Despite any agreement, a railway company must not charge a person a crossing fee of more than $300, other than with the approval of the Board under Section 4.

But, says Allen:

The Act and Regulations are silent on development fees [emphasis mine] to create the crossing in the first instance.

I’ve stressed the word “development fees,” because it’s not a term used by G&W. I made the mistake of asking Williams about “development fees” in my first approach to him and he said:

…the railroad does not charge development fees. Perhaps such fees were charged prior to G&W’s acquisition of the company in 2012.

G&W charges utility crossing fees, private crossing fees and annual license fees, not development fees. It seems to me the UARB and the railway and our local politicians should at least be speaking the same language on this.

That said, Allen’s point stands: the Railways Act is silent on utility crossing fees.

 

What Does CN Do?

G&W is not, of course, the only railway to charge for utility crossings, so I thought it would be interesting to compare their charges to those of Canadian National (CN).

According to the CN website, the railway’s charges for “utility installations” in Eastern Canada look like this:

Utility	Application Fee	Additional Reviews Fee	Electrical Consultant Fee	Copies of Plan to be Submitted
Communication Cable	$795.00 (GST included)	$159.00 (GST included)	Possibly	6
Gas/Oil Pipeline	$950.00 (+HST)	$159.00 (GST included)	No	6
Water Pipeline	$950.00 (+HST)	$159.00 (GST included)	No	3
Sanitary Pipeline	$950.00 (+HST)	$159.00 (GST included)	No	3
Power Line	$950.00 (+HST)	$159.00 (GST included)	Possibly	6

Note: I ran the $950 fee through Revenue Canada’s HST calculator for Nova Scotia and the result was $1,092.50.

The “Additional Reviews Fee” is what you pay if your original application is missing any documentation necessitating a second (or third, or, if I were doing it, probably a fourth) review.

If Johnson were doing the work he’s doing along a CN track and were charged for two utility installations, he’d pay $2,185. (That’s assuming he’s an organized man who did not forget to submit any documents and it was not necessary to call in an electrical consultant).

To have water, sewer, cable and power hooked up would cost $4,072.50 — that is, roughly the price of one utility crossing with G&W.

The kicker? Were Johnson living along a CN line, he’d presumably be living along an active railway.

 

Letter vs Spirit

The Nova Scotia government empowered the UARB to cap annual rail license fees and the UARB did so, at $300 per year, to ensure property owners along rail lines do not have to pay unfairly high fees.

That being the case, could not the Private Railway Crossing Fees Regulations be amended to cap utility crossing fees too? Or to state that multiple crossings constructed at the same time should not entail multiple fees?

The answer is, of course they could — amending regulations is one of the things legislators do.

Legislators could even draft separate fee structures for active versus non-active railways, so that someone doing construction along an inactive rail line would pay less than someone doing that same work along an active line.

Speaking of which , I asked Williams if G&W planned to abandon the St. Peter’s to Sydney line and he said:

The railroad continues to evaluate various scenarios on the Sydney Subdivision, on which no decision or next steps have been finalized. There has been no consideration of abandoning the economically viable segment of the CBNS (Hopewell Subdivision) that continues to serve customers.

But he also acknowledged the line had been damaged by the recent rainstorm:

A full assessment of the storm damage was conducted last week. When the report is complete, the railroad will determine its available options and develop a schedule to proceed with repairs based on safety assessment.

Personally, I wish we were taking a serious look at rail as an alternative to crazy plans to twin highways and charge tolls to accommodate more cars and trucks (and if you’re about to tell me that rebuilding the rail line would be prohibitively expensive, all I can say is, have you priced a mile of highway lately? More to the point, have you priced a mile of public-private-partnership highway lately?)

But whatever the future of Cape Breton’s railway, it seems unfair to ask those living along it to pay to keep the dream alive. Given the line is inactive, given the CBNS fees are so much higher than CN’s and given the UARB already regulates annual crossing fees, it seems there is room for the provincial government to step in and set new regulations. Certainly, it was willing to step in — to the tune of $3 million a year — to assist the rail operator.

I’d actually input that into my personal document retention system under “no-brainer.”

 

 

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