Municipality to appeal cost of rail purchase

In May of 2006, CSX Transportation notified the Municipality of Chatham-Kent that it intended to discontinue rail service from Wallaceburg to Chatham.

The Canada Transportation Act requires a railway company to give notice to all levels of government of the intention to discontinue a railway line. Any government may indicate a desire to purchase the railway line.

In an effort to protect the jobs and the interests of businesses that are located on the rail line, the Municipality of Chatham-Kent agreed to purchase the rail line. The rail line is considered a critical asset for future economic development opportunities.

Pursuant to the Canada Transportation Act, the Canadian Transportation Agency (CTA) has the responsibility to determine the purchase price of the rail line based on net salvage value of the rail line.  The net salvage value includes the value of the underlying land and the assets on the land, such as the steel rails.

The Canadian Transportation Agency issued a decision on the net salvage value of the rail line. The CTA in its June 29, 2012, decision determined a preliminary value of $6,282,152. The CTA has yet to determine the remediation costs Chatham-Kent will be credited to offset environmental remediation that will be required along the 26.2 mile rail line.

“The decision by the Canadian Transportation Agency is very disappointing. The value placed upon the rail line far exceeds the value considered appropriate by either Chatham-Kent or CSX in their filings. In short, we strongly disagree with the decision issued by the CTA. We will take immediate steps to appeal this decision,” said Chatham-Kent’s Chief Administrative Officer, Don Shropshire.

Council has decided to proceed on a number of fronts to address the matter, including seeking leave to appeal to the Federal Court of Appeal.

Furthermore, Council has instructed administration to negotiate with interested stakeholders to develop other options regarding the ultimate use of the rail line and underlying property.

“We continue to work with stakeholders to keep the line functional,” said Mayor Randy Hope. “Companies currently rely on this rail line to operate their businesses and we also understand the impact it could have on future economic development in Chatham-Kent, that is why we have been exploring all options to keep it running,” he added. “This rail line supports Chatham-Kent’s largest economic driver – agriculture. The decision in 2006 to acquire the rail line was made to support the agricultural community and to provide logistic options to companies that are looking at Chatham-Kent for future investment.”