Federal Court of Appeal ruling allows massive CN Rail hub to proceed

MONTREAL — The Federal Court of Appeal has dismissed a challenge to the construction of a massive rail-and-truck hub in the Greater Toronto Area, allowing the project to proceed.

In a unanimous ruling Friday, a three-judge panel found that a decision by the federal government to let Canadian National Railway Co. build the terminal despite “significant adverse environmental effects” was reasonable.

The $250-million project aims to double CN’s existing line of tracks in Milton, Ont., and construct a hub for containers to be transferred between trucks and trains.

The court case pitted CN and the government against Halton Region and its four municipalities as well as the Halton Region Conservation Authority.

In March, a Federal Court decision scuppered the green light given by the government in January 2021 and sent the project back to Ottawa for reconsideration — a ruling that has now been overturned.

The lower court decision highlighted health concerns around air quality, noting the 800 diesel-powered trucks that would make daily round trips to the hub. Four freight trains hauled by locomotives that also run on diesel — the fuel contains toxic pollutants, the judgment noted — would also steam through the terminal each day.

On Friday, the appeal court found the government approved the undertaking — with more than 300 conditions attached — after giving due consideration to protecting human health, in line with environmental legislation.

Justice Monica Biringer said the Federal Court adopted a “formalistic … line-by-line” approach to determine whether then-environment minister Jonathan Wilkinson took all adverse effects into account. Instead, it should have mulled the question from a more rounded perspective, she said.

The lower court had ruled that cabinet failed to “meaningfully grapple” with the project’s harmful effect on human health, particularly through its impact on air quality. But on Friday, the judges deemed that conclusion “unreasonable.”

Milton Mayor Gordon Krantz said he was “disappointed” with the ruling.

“This decision doesn’t change the fact that what CN is proposing is in the wrong place,” he said in a statement that stressed the project’s health implications.

He also claimed the undertaking will cost the town and Halton Region more than $70 million in prospective revenue from development charges as well as $7.4 million per year in non-residential taxes — “meaning local property taxes will need to increase.”

“Development charges and non-residential property taxes are paid on the buildings constructed, and CN are planning very little building construction,” said Milton spokesman Andy Scott of the 1.6-square-kilometre site. The project will create only 130 jobs, he added.

CN said the logistics hub underwent a rigorous environmental review process to ensure it meets high standards.

“With 325 conditions in place, CN is committed to upholding these, as they are critical to protecting both the community and the environment and making this is a state-of-the-art facility,” said spokeswoman Ashley Michnowski.

By reducing the number of trucks on the road, the terminal will also reduce emissions, she said.

CN has stressed that the Greater Toronto and Hamilton Area comprises one of the fastest-growing regions in the country, upping the need for freight service.

The Montreal-based railway first submitted its proposal in 2015, triggering an environmental assessment.

The project would include a railway yard with more than 20 kilometres of fresh track as well as large cranes for moving shipping containers.

Earlier this year, a separate Federal Court of Appeal ruling issued a stay of a lower court decision that had halted construction, pending the appeal that wrapped up on Friday.

Justice George Locke wrote in May that while a halt to work would have no effect on CN’s long-term viability, any delay is “detrimental to the public interest.”

Some community members felt differently.

“It’s going to be a nightmare,” said Milton resident Lorna Mackie in a phone interview. “All these trucks are diesel.

“There’s all kinds of houses within a block away. There’s all kinds of schools,” she said, pointing to congestion and traffic snarls as other issues.

“You’re going to have these great big trucks going by schools where kids are crossing the street.”

Mackie said she and her husband John plan to move out of the area in the next few years, largely in response to the rail hub.

“We won’t stay,” she said. “It’s already congested and we’re getting frustrated with the traffic already.”

Halton Region said it is “considering legal options” and encouraged residents to contact their local member of parliament.

“We remain committed to protecting the health of our community from the significant effects of the project and are deeply concerned that the federal cabinet has approved this project,” said spokeswoman Lindsay Di Tomasso.

This report by The Canadian Press was first published Oct. 7, 2024.

Companies in this story: (TSX:CNR)

Christopher Reynolds, The Canadian Press