CN Rail enlisting help from New Brunswick, other partners to develop agreement to preserve rail freight service in northern New Brunswick in face of declining traffic volumes, need for rail infrastructure upgrades

FREDERICTON, New Brunswick , August 30, 2012 (press release) – CN has signalled its intention to enlist the help of partners like the Province of New Brunswick in the development of an agreement that would preserve rail freight service in northern New Brunswick , in the face of declining traffic volumes and the need for significant investment in the rail infrastructure.

Freight rail traffic volumes on most of CN's Newcastle Subdivision, specifically a 139-mile long stretch of track between Irvco (20 miles west of Bathurst NB) and Catamount (just west of Moncton NB) have been declining steadily since CN re-acquired the line in 2008. The line now requires investments of up to $50 million to maintain service. Current volumes over the line do not justify that level of investment by CN.

CN has therefore decided to place the 139-mile-long section of the Newcastle Subdivision between Catamount and the Irvco, into the federally-regulated Canada Transportation Act (CTA) rail line discontinuance process.

CN will work in good faith with stakeholders and interested parties to find a way to preserve rail service. Critical factors will include shippers' willingness to put more traffic on the line, and the willingness of governments to partner in funding major capital upgrades needed to retain the line's ability to efficiently handle freight traffic.

"For many months, we have been in discussions with customers and the government of New Brunswick on the challenges facing the Newcastle Subdivision," said Sean Finn , CN Executive Vice-President Corporate Services. "Our joint goal has been to find ways to increase freight volumes on the rail network, but these efforts have not succeeded. The CTA discontinuance process puts in play a process and a timeline to bring interested parties together to find ways to preserve rail service where possible."

That process is now underway. CN and the Province of New Brunswick will begin work on an agreement with the view of preserving the segments of the line that offer potential growth opportunities. The Province has identified potential business opportunities on northern and southern segments of the Newcastle Subdivision which it believes warrant keeping the line in operation, and has therefore agreed to work with CN to prepare a detailed funding proposal for consideration by partners that would ensure the necessary maintenance and upgrades are made to keep the line in service.

CN will continue to cover operating losses over the term of the agreement. CN will also ensure that passenger rail service between Montreal and Moncton and beyond can be maintained, either on this or other CN rail corridors.

The two segments that offer growth opportunities run between Irvco and Nepisguit Junction (just east of Bathurst) in the north, and between Catamount and Nelson Junction (east side of Miramichi River, near Miramichi NB) in the south.

"We are prepared to work together with CN and other partners to find innovative solutions that will keep this line in service," said Claude Williams , New Brunswick's Minister of Transportation and Infrastructure. "Ensuring the appropriate infrastructure is in place for current and future industries in Northern New Brunswick is an important part our government's commitment to strengthening our regions, and building a strong and prosperous province."

Under the federally-regulated CTA discontinuance process, the earliest that any segment of the Newcastle Subdivision can be discontinued is March 2014 . This allows ample time and opportunity to strike strategic industrial rail and passenger partnerships, and to develop and implement solutions.

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