3. Lac-Mégantic Rail Bypass

LOCATION:               Lac-Mégantic and Municipalities of Frontenac and Nantes

ISSUE/SOURCE:      Lac-Mégantic Rail Bypass Project update

DATE:                                    May 2025 

SUGGESTED RESPONSES

• The Government of Canada continues to work closely with its partners to complete the Lac-Mégantic rail bypass project as quickly as possible, while minimizing the project's impact on affected communities and ensuring the best possible integration.

• A series of public consultations were completed from November 18 to December 27, 2024, on environmental documents required for the Canadian Transportation Agency application. The consultations were centered on the Groundwater and Potable Water Well Monitoring Plan, the Wetlands Monitoring Plan, and the updated Hydrogeology Report.   

• The majority of the Canadian Transportation Agency application is in final form. A key last step includes a consultation on the Environmental Effects Evaluation until June 30, 2025, a Canadian Pacific Kansas City-led document summarizing the environmental studies, mitigations, and residual environmental impacts. 

• Construction of the bypass will begin once all regulatory approvals have been obtained, including from the Canadian Transportation Agency.

IF PRESSED

• The project has $204.9 million (M) in available funding for 2025/2026 to continue planned project deliverables such as securing the required regulatory approvals and remaining activities to enable the beginning of construction. 

BACKGROUND INFORMATION

• The Project consists of building a new 12.5 kilometers rail corridor going around the Lac-Mégantic downtown area. The proposed Bypass project will significantly reduce the number of residences located close to the new rail track (from 258 to 18 within a 100 meter right of way). The Project’s main objective is to help the Lac-Mégantic community to move forward and mitigate the traumatic effects associated with the accident.
• Transport Canada is working with Canadian Pacific Kansas City to seek the required regulatory approval from the Canadian Transportation Agency for the project.
• The Government of Canada took physical possession of the bypass land required for the project on August 1, 2023, through the expropriation process. An offer for a fair compensation package was sent to all landowners entitled to compensation. 
• On May 8, 2024, Transport Canada was informed that the Court dismissed the applicants’ request for judicial review, and no appeals were filed, effectively ending the expropriation litigation over the land required for bypass construction.

Provincial-Federal Contribution Agreement

• On May 11, 2018, the former Prime Minister of Canada and the former Premier of Québec, announced the Lac-Mégantic Bypass Project, which was estimated to cost $133 million dollars at the time. It was to be jointly funded by the federal government (60%) and the province (40%).
• On December 20, 2022, the former Prime Minister of Canada and Premier of Québec met and agreed that both governments will increase their funding for the construction of the Lac-Mégantic Rail Bypass, to the same ratios as initially announced in 2018.
• On July 22, 2024, Transport Canada and the Province of Québec signed the contribution agreement outlining the details of the province’s contribution towards the project (60% from the federal government and 40% from the province).  

Other Contribution Agreements

• On October 6, 2023, the Government of Canada announced progress on the Lac-Mégantic Rail Bypass project, including the signing of two essential agreements to launch the first calls for tender.
• A contribution agreement was signed between the federal government and the City of Lac-Mégantic to allow the City of Lac-Mégantic to relocate and reconstruct its municipal infrastructure.
  • The aqueduct relocation work began in Lac-Mégantic on November 4, 2024, and was completed on December 14, 2024. The last steps, mostly related to landscaping, will be completed in the fall of 2025.   

• The Government of Canada also signed a contribution agreement with Central Maine & Quebec Railway Inc., a subsidiary of Canadian Pacific Kansas City, for the construction of the bypass project. The agreement outlines the terms and fundamental principles under which the railway operator will carry out the project. It will also enable the launch of the tendering process to contract a firm to carry out the work.

Project Funding

• As part of the 2022 federal budget, $237.2M was allocated to Transport Canada over five years for the construction of the Lac-Mégantic rail bypass.   

• Of the $204.9M available in the 2025/2026 Fiscal Year, $178.3M can go towards construction costs while $26.6M can go towards other operating costs such as environmental mitigation measures. This amount may be reprofiled to future years based on project needs.