North Dakota Law Review Volume 55 Number 1 Article 3 1979 VIA Rail - A Canadian Amtrak William E. Thoms Follow this and additional works at: https://commons.und.edu/ndlr Part of the Law Commons Recommended Citation Thoms, William E. (1979) "VIA Rail - A Canadian Amtrak," North Dakota Law Review: Vol. 55 : No. 1 , Article 3. Available at: https://commons.und.edu/ndlr/vol55/iss1/3 This Article is brought to you for free and open access by the School of Law at UND Scholarly Commons. It has been accepted for inclusion in North Dakota Law Review by an authorized editor of UND Scholarly Commons. For more information, please contact [email protected]. VIA RAIL-A CANADIAN AMTRAK? William E. Thoms* VIA - one of those fortunate words that reads the same back- wards and upside down, in English or in French - has been ap- pearing on the sides of Canadian passenger trains within the last two years. The blue and gold color scheme is intended to signify the transfer of railroad passenger service to Via Rail Canada, Inc., a Crown corporation. Whether this is a form of nationalization, a cover for the Canadian railways to exit the passenger business, or a northern Amtrak remains to be seen. I. THE NORTHERN RAILS BEFORE VIA Railroad service in Canada has traditionally been a middle ground between nationalized and private enterprise. The largest system in the country is the 25,000-mile Canadian National Railways, a government-owned entity formed in 1919 to take over the properties of several insolvent private carriers.1 The second largest railway is the 16,500 mile Canadian Pacific Railway, a privately-owned corporation and Canada's first transcontinental railroad, completed in 1885.2 The two companies have dominated Canadian transportation for the last sixty years, competing on end- to-end transcontinental routes as well as operating telegraph lines, hotels, airlines, bus and truck services and even ocean liners. The competition of the private carrier with the public transcontinental railway has been constant and nationwide. Canadians are fond of saying that the CN keeps the CP honest, and the CP keeps the CN efficient. In contrast to the United States, which has over one hundred separate railroad companies, Canada has always dealt with two transcontinentals plus a few regional carriers. Otherwise, operating conditions are very similar to those in the United States. The same track gauge and type of equipment is used in each country; there is *Associate Professor of Law. University of North Dakota. The author wishes to express his ap- preciation to Joyce Hagen, Transportation Law Fellow. Upper Great Plains Transportation In- stitute, for research assistance and colaboration. 1.P. DORIN. THE CA-NADIAN NATIONAi. R A Y'.S' S TORY 9-I I (1975). 2. P. DORIN. CN\.ADIAN PACIFIC RAIiLWAY 13 (1974). NORTH DAKOTA LAW REVIEW interchange of equipment between the two nations; and railroad employees in the United States and Canada belong to the same unions. The Canadian railroads have competed both in freight and in passenger service. Like their American counterparts, they were required to maintain certain unprofitable services in the public in- terest, and were rquired to seek regulatory approval from the Canadian Transport Commission before dropping any trains. 3 As in the United States, passenger train service has been historically less profitable than freight operations, and there has been a con- 4 siderable cutback in passenger service in the last ten years. Canadian passenger trains, as well as mixed trains, have sur- vived longer than their American counterparts because much of the territory served by these trains is lightly developed, without parallelling highways. There are many Canadian communities inaccessible by road which are only served by train, snowmobile or bush plane. Severe winters often make other modes unreliable, which means trains are needed for standby travel. Thus, a larger percentage of the Canadian rail network is open to passenger travel than is available south of the 49th parallel. 5 As of 1977, the following carriers operated passenger trains in 6 Canada: Carrier Provinces Ownership Canadian National All except Prince Edward Island Federal Government Canadian Pacific All except Nfld., P.E.I. N. S. Private Dominion Atlantic Nova Scotia Canadian Pacific Esquimault and British Columbia Canadian Pacific Nanaimo Toronto, Hamilton Ontario CP-Conrail and Buffalo Govt. of Ontario Transit Ontaio Province of Ontario Ontario Northland Ontario Province of Ontario Algoma Central Ontario Private British Columbia British Columbia Province of B.C. Greater Winnipeg Manitoba City of Winnipeg Water Dist. Northern Alberta Alberta CN-CP Quebec, North Shore Quebec, Newfoundland Private and Labrador Grand Falls Central Newfoundland Private White Pass and Yukon British Columbia, Yukon Terr. Private Conrail Ontario U. S. Amtrak Quebec, Ontario, B.C. U. S. Canada and Gulf Quebec Canadian National Terminal :3.Mcl.aren. The Passen er Train .Vationaliatio, PrW(ss. 10 \\'. OT. \R Tn .. R E\. I110 q 71 5 1P.DoRIN. TiIE C \N\DI \\ N.\TION.\ R.- II \''S"STIORN ;It 2 . \V. Tios.s. TR.VELERSAND TONN\CE 42 (1975). 6. OFFICIAL RALWAY GUIDE (passenger traveled). (Nov. 1977). CANADIAN AMTRAK? Intercity passenger service has been dominated by the two transcontinental railways, and it is their service that Via Rail is designed to replace. 1.1. THE NATIONAL TRANSPORTATION ACT OF 1967 The Canadian Transportation Commission was created as an amalgam of several pre-existing agencies by the National Tran- sportation Act, signed into law by the Governor-General of Canada on February 9, 1967. 7 The law provides for a procedure for sub- sidizing money-losing passenger runs, but requires the railroad to first seek discontinuance of the service. If the CTC finds that the service is required, it can order continuation of the train, with a subsidy from the general treasury. 8 Prior to institution of the VIA scheme, a Canadian railroad desiring to discontinue a passenger train must have placed a notice to that effect, along with a statement of the cost and revenues at- tributable to that service. The Railway Transport Committee of the CTC then conducted an investigation to determine the true costs of the service. If the Commission found an actual loss, it could order hearings at which all protestants might be heard, but if it found that there was no actual loss, the action would be dismissed. In determining whether an uneconomic service should be discontinued, the Commission shall consider the following statutory criteria and other matters which are relevant to the public interest: (1) actual loss (2) alternative transportation available (3) effect on other passenger carriers (4) probable future transportation needs of the area If the Commission feels that a service should be discontinued, it shall order discontinuance at any time from 30 days to one year after the date of the order. If the Commission determines that the operation of such a train is required, the Commission shall so or- der, and thereafter may review the discontinuance at intervals not exceeding five years from the date of the original application or from the last consideration thereof.9 When an uneconomic train is being operated by a railway pur- suant to an order of the Commission, the carrier may file a claim for reimbursement and be paid up to 80 percent of the loss as cer- 7. Naunina ITransportation Ac, Can. Stat. 1966-67 Ch. )9. 8. W. TtIOmS. RFPRIEVE FOR THE IRON HORSE 30-32 (1973). 9. National Transportaion Act. Can. Stai. 1966-67 Ch. 69 § 314 1. NORTH DAKOTA LAW REVIEW tified by the Commission. These provisions apply only to intercity service, and are not applicable to commuter trains. 10 Experience under the Canadian Act has shown that the Com- mission has required the continuation of one daily transcontinental train on the Canadian National and the Canadian Pacific as well as socially necessary daily or tri-weekly branchline trains in back- woods areas where alternate transportation is nonexistent. Service in Ontario and Quebec has been expanded, so that schedule frequency is excelled in North America only by the U. S. Northeast Corridor. The National Transportation Act is a product of two con- flicting policies concerning railroad passenger transportation. The origin of the act is found in the report of the McPherson Com- mission of 1961-62.1' That Royal Commission favored a gradual deregulation of surface transportation in Canada and the sub- stitution of a policy of intermodal competition. The McPherson report recommended a gradual phaseout of uneconomic passenger train service, with a transitional period over which the railways could discontinue these uneconomic services by application to a regulatory agency. The subsidies for economic services were viewed as merely retarding a rationalization process which might be so abrupt as to cause economic maladjustments. At the end of this period, passenger trains would operate at a profit or not at all. 12 When the Act emerged from Parliament, however, there was a slight change in emphasis, inasmuch as the objectives of the Act are to "protect the interests of the users of transportation and to main- tain the economic well-being and growth of Canada."' 3 Although the Act favors the principle of competition, it goes on to say that "each mode of transport, so far as practicable, receives com- pensation for the resources, facilities and services that it is required to provide as an imposed public duty.' 1 4 Furthermore, although the Railway Transport Committee of the Canadian Transport Commission is set up to protect the public interest and save essen- tial rail services, by recourse to subsidy if necessary, the regulatory techniques to be used in discontinuing passenger services are taken entirely from the McPherson reports,' 5 which envisioned such steps 1M.