Province agrees to subsidize some operational costs to maintain Cape Breton rail

This file photo from 2015 shows one of the last trains to operate on the Genesee & Wyoming line in Cape Breton. Under a new preservation agreement, the existing rail line between St. Peter's Junction, near Port Hawkesbury, and Sydney will be maintained.

By Nancy King | Cape Breton Post | 1 September 2017

SYDNEY, N.S. — The province has reached an agreement with the Cape Breton and Central Nova Scotia Railway Ltd. that will see the Cape Breton portion of the railway preserved for a period in exchange for the province reimbursing operational expenses.But while the year-long agreement was announced Friday, it was back-dated to March, Minister of Business Geoff MacLellan said in an interview. The deal may be renewed with the approval of Treasury Board.“It’s incumbent on me, and we’ve asked for this, that I go back to Treasury Board to explain the relationship, to explain the details of the investment, to explain the total expenditures that have been made,” MacLellan said, adding they didn’t want to start with a two- or three-year dealUnder the preservation agreement, the existing rail line between St. Peter's Junction, near Port Hawkesbury, and Sydney will be maintained. The company agreed to not apply to abandon the line and the province will reimburse what it described in a news release as valid expenses up to $60,000 a month.

Repairs or improvements to the line won’t be reimbursed. Expenses directly attributed to the line such as salaries, insurance, security and building maintenance will be eligible.

MacLellan said the deal had been in the works for about a year. While parent company Genesee & Wyoming had threatened to apply to abandon the line and tear up the tracks, which haven’t seen any rail traffic since late 2015, he said when talk about potential for a container terminal at the port of Sydney began growing, the company decided to change tacks.

“They had the opportunity to file for abandonment, they didn’t do that, and then simultaneously the discussions around the port of Sydney and the potential of a container port development really ratcheted up and became serious,” MacLellan said. “At that point, Genesee & Wyoming switched strategies and they wanted to talk about keeping the tracks on the ground and being a potential partner, should Sydney materialize.”

At that point, the company approached the province to discuss assistance for short-term operational costs.

“Obviously, when you’re looking at attracting global shipper, global construction companies, global operators for a port of this magnitude, you’re losing any potential if you don’t have a rail line,” MacLellan said. “For us, we get the certainty that the rail will be there.”

Darrin McLean, co-chair of the Scotia Rail Development Society said, without knowing many details about the agreement, it appeared to be good news.

“The board’s mandate is to see to the preservation of the rail infrastructure and rail service on Cape Breton Island, so anything that contributes to that certainly is a positive thing,” he said.

Also Friday, the Port of Sydney Development Corp. announced that work has started on an analysis of the rail line and a cost estimate to improve the line so that it can accommodate double-stacked container traffic.

The work will be done by consultant Hatch, with the first phase budgeted at just over $80,000, plus expenses. Marlene Usher said the cost will come out of the port’s budget, saying funding applications to the Atlantic Canada Opportunities Agency and the province were turned down.

A previous CANRAIL study by the province set the cost at more than $30 million over five years to bring the Sydney subdivision up to standard.

When MacLellan served as minister for Transportation and Infrastructure Renewal, the province brought in tighter regulations around the issue of rail abandonment.

MacLellan said the rail company will have to demonstrate through invoices the amount spent and that it supported the Cape Breton section of the line, based on its current status.

“They can’t do something over and above that they weren’t going to do, if they’re going to do new things they have to do it themselves,” MacLellan said.

“There’s no blank cheque on that $60,000,” MacLellan said.

The section of the rail line between St. Peter's Junction and Truro is not affected by the agreement.

"We are pleased to work with the government of Nova Scotia to allow economic development initiatives like the proposed container terminal unfold," Louis Gravel, president of Cape Breton and Central Nova Scotia Railway, said in a news release. "We would like nothing more than to one day see a thriving operating railway between Port Hawkesbury and Sydney."

An official with the rail company did not return a phone message left Friday.

Break-even volume for the Sydney subdivision is 10,000 return carloads per year. By 2015, the track was seeing fewer than 500 carloads per year.

The province previously subsidized operational costs up to $ 2million a year when the line was operating.

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