End Of The Line For E&N ?

Esquimalt & Nanaimo Rail De-Railed

Poorly Managed Over The Years

The Esquimalt & Nanaimo Railway has a long and interesting history on Vancouver Island from the days it was an absolute necessity as a link which moved the rich coal deposits from beneath Vancouver Island to the markets where it heated houses and drove the machines of industry. To the present when it's value as a people and cargo mover seems to have come to the end of the line. Even if the senior governments digs into the taxpayer's purse and comes up with another $15 million to repair the neglected railroad, there is little sound business projections that would indicate it would ever be anything but a tax-supported relic of the past.

Why the line has been allowed to degenerate into it's current state of disrepair is just another question to be answered someday by all levels of government responsible to see that the rail companies which have made considerable fortunes from the line, kept up their end of the bargains, and kept the line in good repair.

According to historic information available online the original E&N Railway was built by Robert Dunsmuir and was incorporated in 1883. The original railway was constructed by granting massive land grants to the rail company which consisted of 25 - 33% of Vancouver Island. The original railway extended was 72 miles long but later was extended to go from Wellington (North Nanaimo area) to downtown Nanaimo covering a total of 77 miles.

By 1905 the E&N railway which is described as a money stricken railway was taken over by Canadian Pacific as part of a deal with the premier of BC, James Dunsmuir when the rail company needed permission to build a line through southeast BC. At that time CP agreed to the terms and the railway and the land grants were transfered to CP from the Dunsmuirs. (It would be interesting to see if all of the original land remained with the transfered company or if some was transfered to the Dunsmuirs).

It was Canadian Pacific who extended the railway to cover the areas north of Nanaimo it has served to the present time. By 1925 the E&N reached its financial peak and has been in steady decline from that time. In the 1960's Canadian Pacific became CP Rail and at that time they petitioned to end the passenger service. A rail inspector was sent to investigate and was appalled at the condition of the E&N and ordered the company to improve the service. In 1979 VIA Rail took over the line and ran the passenger service for sometime.

The 1980's saw traffic on the line (passenger & freight). Passenger traffic had spiked in the summer of 1986 but fell off again later. In 1996 E& N Railfreight was formed from the E&N Railway. In 1998 Canadian Pacific negotiated with Rail America. In 1999 E&N Railfreight was taken over by Esquimalt and Nanaimo Railway Company (1998) Ltd. At the time this was heralded as a new era for the railway on Vancouver Island. A management restructure and agressive marketing were said to paint a bright picture for the long term future of the railway. At this time it was still part of CP Rail. That was 1999 and it would seem that the committment by CP Rail to grow the business was a good sounding public relations effort, when in reality the company assets were allowed to simply fall apart, as witnessed by the current state of the line.

Enter the Island Corridor Foundation

According to the foundations website:

The Island Corridor Foundation is a non-profit society incorporated in 2003 under Part II of the Canada Corporations Act, and registered as a charity under the Income Tax Act in December 2004.  It is a partnership between First Nations and local Governments along the historic E & N corridor.  The Board is composed of 12 Directors-5 from First Nations and 5 from Regional Districts, as well as 2 at-large members.  As a registered charity, it was able to provide a charitable tax receipt to Canadian Pacific Railway and RailAmerica to enable them to donate their corridor assets.

In 1998, CPR sold the middle part of the corridor to Rail America.  When Rail America’s largest customer decided to discontinue using rail freight in 2001, Rail America announced its intention to shut down rail service, sell its assets and leave the Island.  Vancouver Island was again faced with the prospect of losing rail service and having the property sold off in parcels to private interests.

We have negotiated an agreement with CPR in which they agreed to donate their assets in the corridor, including track, gravel, rails, trestles, ties, culverts, the land comprising the right of way and 6 railway stations.

In addition, they have agreed to turn over the non-rail revenue generated by leases and encroachments on the line.  They will also make a sizable donation to the Foundation.
We have also negotiated an agreement with Rail America in which they donated their portion of the corridor to the Foundation, including track, ties, gravel, culverts, trestles and the right of way.
We have successfully negotiated an agreement with Southern Railway, a highly respected short rail operator, to take over rail operations on the Island as of July 1, 2006.  VIA Rail will continue to provide passenger service.

A page on the ICF website presents property opportunities along the Island Corridor:

Property Opportunities on the Island Corridor

A thriving rail corridor means green transportation for business and tourism as well as for commuters and local passengers.
Interested in establishing your business by the corridor? For information about leasing and property opportunities along the Island Corridor contact property manager Dick Wright at dickwright@shaw.ca or ICF executive director Graham Bruce at granneke@shaw.ca.

Current State of E&N Railway 

The operators of the E&N Dayliner passenger service has been suspended due to the poor condition of the railway. It seems for the time being it is OK to continue to haul freight but the line is unsafe for passenger travel.

The ICF has applied to senior government for a $15 million grant to repair the failing infrastructure on the rail line which would seem to have come as a huge surprise to the operators of the line, which have not been running it for that long. Surely in 2003 when they relieved CP Rail, which has considerably deep pockets, from their obligations to maintain the line they must have realized what kind of an expense they would be up against. If they didn't, why not?

In July 2010 a study was completed and released by Transportation and Infrastructure Minister Shirley Bond which in part stated:

"The study evaluated the cost to improve major sections of the line to support specific markets, as well as considering a full-corridor upgrade. It concluded current volumes of freight and passengers do not support significant infrastructure investment at this time."

The study also concluded:

"The E&N Rail Line Study will assist the ICF with its business planning. The study concludes the future success of the E&N rail line is dependent on a number of factors, including:

• Increased population growth and transit-oriented development near the E&N corridor.
• Increased industrial and commercial development along the E&N rail corridor that would benefit from rail.
• Improved economic conditions, particularly in forestry, mining and tourism.
• Transit service improvements and connections in communities near the E&N rail line."

  Questions For Island Corridor Foundation

What plans did you have in place when you relieved CP Rail of their obligations to maintain the railway on Vancouver Island. Was there ever a business plan in place to support a plan which took both CP Rail and American Rail off the hook to maintain the line ?

Surely the Foundation knew how badly maintained the rail line was, and the future costs to bring it back to a safe level for continued service. If not, why not?

What has changed with the operation of the E&N by ICF since July 2010, when the Province concluded that current volumes of passengers and freight do not support significant infrastructure investment ?

Have ANY of the factors determined to be necessary for the success of this line been met?

Will this railway ever be anything but another black hole to consume taxpayer's dollars?

Is there a business plan in place now that would support a bond issue to finance the rail line?

If the rail line eventually has to fold, which likely it should have in the 1940's with all land assets reverting to the Crown, who will benefit for the considerable tracts of land along the corridor?

Comment:
It would seem over the years, that many operators of this line have likely gained considerably from the massive land grants that have accompanied the agreements which allowed companies to operate the rail line. It is questionable, if the current foundation will ever be able to have this rail line turn a profit and it will likely always depend on the charity of the taxpayers. If for a host of reasons, the public thinks that is a good idea, there needs to be some serious oversight over the ICF and how they plan " TO RUN A RAILROAD".