Agriculture Committee on April 7th, 2014

[The Chair, Conservative, Bev Shipley]

I need someone to move that subamendment in terms of the two.

Mr. Watson.

[Jeff Watson, Conservative, Essex, ON]

So moved, Mr. Chair.

[The Chair, Conservative, Bev Shipley]

We agree with the subamendment on the amendment. For the French section, can we have a show of hands regarding the subamendment please?

(Subamendment agreed to)

Now we're on the amendment.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

You're saying that the subamendment was passed and now we are on to the amendment? Okay.

Mr. Chair, I've moved this forward, because this amendment would provide tools for producers when railway companies breach their service obligations. This tool would continue to improve the efficiency, reliability, and predictability of the supply chain.

It's important, because it allows for direct compensation for shippers who enter service-level agreements. This is something that many shippers from all commodities have asked for. In fact, Mr. Chair, this goes beyond reciprocal penalties that some have called for. For instance, if a shipper is out of pocket, the Canada Transportation Agency can, as I just read:

order the company to compensate any person adversely affected for any expenses that they incurred as a result of the company's failure to fulfill its service obligations.

Basically this would include something like demurrage.

The second part of the clause is just as important, because it allows compensation to be paid within a commercial contract. Therefore, this will encourage the shippers and the railways to come to the table and set their own reciprocal penalties if that is their desire.

Subclause 2 is the repeal mechanism that works with the sunset clause at the end of the bill.

Mr. Chair, this is a market-based solution for getting service-level agreements with teeth. I think this is something that the committee certainly heard much about from witnesses.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Lemieux.

Mr. Eyking, please.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thanks, Mr. Chair.

On the outside, this looks good, but maybe the parliamentary secretary.... Let's talk about an example. Let's talk about a farmer whose grain was supposed to be moved last December. Now it's the middle of January and he's lost $100,000.

First of all, what expenses would be included in this? There's another thing. Let's go through it. Now, how would a producer.... What process would be taking place? How would they have access to this? Also, what about timelines? Would they get paid in 30 days? If it was noted that they had lost $100,000, would they get paid in 30 days? Would they have to go through some sort of regulatory process that could take six years?

I'd like the parliamentary secretary to give an example of a farmer. We know many of them across this country who have lost hundreds of thousands of dollars. Let's say one stepped up to the plate now and said that he still has grain and he could have got way more for it last November. He wouldn't have had to store it, and now he's sitting with it and he's losing its value, so what does he do?

Let's go. Am I going to be assured that I'm going to have money in 30 days if I can show my receipts that I've lost money and I have expenses? Give us an example of the expenses that will be eligible and the process for what the farmer does. Do they just pick up the phone and ask somebody to come to their office?

The other thing is timelines. We know that the government has crop insurance and various programs out there, and there are timelines for when you get paid. We just hope that we don't have some bureaucratic system here that the farmer can't have access to and where he has to wait forever for the money while the banks are waiting for that farmer to pay his bills. Maybe can you give us an example of the farmer who lost $100,000 over the last couple of months?

[The Chair, Conservative, Bev Shipley]

The next on the list I have is Mr. Allen. I'm sure somebody will get back to you.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

I think fundamentally I don't disagree with the proposed amendment from the parliamentary secretary. The only piece—and I don't know whether the parliamentary secretary would entertain a subamendment or not, but I'll look to see how he feels about it—is the second bracket, where it says, “(2) Paragraph 116(4)(c.1) of the Act is repealed.” That actually talks about the sunset provisions. Clearly what it would do is sunset this piece.

I think what we're trying to suggest to the government is that we understand overall there's a sunset provision for sure, not that we necessarily agree with that either, but if this is left in place without a sunset provision, the message it sends is that there will be something in place. I'm sure the government will tell me that they intend to put something new in place, but if it doesn't get there in time, we at least have this. That's why I would suggest to them that if they were willing to perhaps negate that, not suggesting that....

We like the spirit and the intent of what the suggestion of the amendment is, so I don't know whether the other side is willing to do that or not, but I'll see how they feel about it, Mr. Chair.

[The Chair, Conservative, Bev Shipley]

I think maybe you'll hear.

I'm going first of all to Mr. Dreeshen.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you, Mr. Chair.

I just have to go back to this. I will try to state it as clearly as I can. When someone suggests that you've lost $100,000, if you have made a contract for a $10 canola that you should have delivered in November but isn't delivered until March, you still get your $10 for your contract. You haven't lost a cent. It's the storage and everything else. That is the point. As for what might have happened to the market in the meantime, it might have gone down and there might have been spreads as far as the basis is concerned if you were selling other grain, but not that which you have marketed.

When we continually say that on the contract side it was lost, that isn't accurate. If you want to say that for the grain you have left in your bin, the grain that you could have contracted, there's been a change as far as the market is concerned, and you're being squeezed by the basis, I agree. But until you sell it, that hasn't taken place, so when we say that the contracts are going to be an issue in this case, it isn't accurate.

Thank you, Mr. Chair.

[The Chair, Conservative, Bev Shipley]

Our next speaker is Mr. Watson, please.

[Jeff Watson, Conservative, Essex, ON]

Thanks, Mr. Chair.

I think the member opposite is confusing a couple of things here. The amendment, as I understand it, isn't about a retroactive situation. This is about putting in place a regulatory framework or mechanism of compensation, the intention of which is to compel shippers into a service-level agreement, or to strengthen their...because they get, by Bill C-52, the ability to request a service-level agreement. This will provide the additional backstop behind it, or the teeth behind it, that will hopefully get the rail companies to agree on mutual penalties within a service-level agreement. If not, then shippers can go to the Canadian Transportation Agency for that particular remedy.

So this is to enhance the process, I think, that was established in Bill C-52. It's not dealing with whether producers lost anything with respect to the situation at the moment. This is about whether or not service-level agreements going forward have some strength to them, or the means of compelling or persuading the rail companies to sort of see the light with respect to how they structure the service-level agreements. If they don't, then they will compensate.

[The Chair, Conservative, Bev Shipley]

Mr. Eyking.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I'm still looking for the answer to my question, because it's all about expenses. Whether it's demurrages or whether you've had to keep the grain dry, what are your costs? What are the costs to the farmer? What are the expenses that will be covered? That mechanism is very important. It's very important for a farmer to know, if he or she has done wrong, that they will be....

If some system is going to come in very quickly and assess their situation within so many days, and if it's assessed that they have acquired these expenses, then when will they get paid? Has somebody gone through the system? I think we need to know right now. On the outside I think it's good, but let's get into the details a bit about the expenses. What are the expenses that a farmer will incur, and what are the losses that will be eligible?

[The Chair, Conservative, Bev Shipley]

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thanks, Mr. Chair.

I think what I want to highlight is that this amendment deals with service-level agreements. SLAs generally exist between, for example, elevators and rail companies based on service. That's what we're talking about.

The other thing I would point out is that service-level agreements are dealt with already in the Canada Transportation Act. This particular act here, Bill C-30, is not trying to reinvent SLAs and the way in which they're handled or arbitrated. That's already within the Canada Transportation Act. What this is doing, though, is it's responding to the witnesses, who we all heard from, who said that when it came to service-level agreements, they wanted teeth in those SLAs. That is what this is delivering.

You were asking for an example, so let's take demurrage. A grain shipper contracts with the rail company, has a service-level agreement with the rail company, the SLA is not respected by the rail company, and there are demurrage fees. That would normally be paid by the grain shipper, but now the rail company actually has a role to play in compensating the grain shipper for that, through the SLA. If there's a breakdown, then there's an arbitration process that's already in place for SLAs.

The thing I would point out is that this amendment is strongly supported by shippers from all commodities. It's also my understanding that the Coalition of Rail Shippers supports this.

So this type of an amendment has very strong support.

[The Chair, Conservative, Bev Shipley]

Mr. Eyking, and then we'll wrap up.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Just to follow up, I can see where you're going with this. In terms of the demurrage rate, for example, let's say the farmer takes the hit on that and it's assessed quickly, we hope. Somebody's got to take the money from the railroads or whoever has done the farmer wrong. The money has to come from somewhere to be given to somebody within 30 days.

Is that what you're saying, that they will take it and say, okay, the railroads have done wrong, or the grain company or whoever has done wrong, and that will be determined? What's the mechanism for taking the money from one hand and giving it to somebody? Or will the government end up paying for the farmer's losses?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Chair, let me ask our witnesses. I've tried to explain it as best I can. It doesn't seem to have been understood.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Well—

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

I'll ask our witnesses to come at it from their perspective. Perhaps the way they explain it might shed some light on it for you, Mr. Eyking.

[Alain Langlois, Senior Legal Counsel, Transport, Legal Services, Department of Justice]

Sure. I'd be happy to.

Under the current legislation, there is a remedy in legislation that's called “level of service”. Every shipper that ships any products, any commodities, and who feels that the railway has not complied with its level-of-service obligation as stated in the act can complain to the agency. The agency currently has broad powers for the remedy in the act.

The power that it doesn't currently have is to order the railway to pay compensation to the shipper, so that is what this amendment does. It covers not only shippers that are party to an SLA but any shippers that don't have a contract. It uses the existing remedy to resolve level-of-service complaints to allow the agency to order compensation in favour of the shippers.

A question was asked about timelines. The legislation forces the agency to make a ruling within 120 days, and the agency would set out in the order the timelines for the railway to actually pay the shippers.

[The Chair, Conservative, Bev Shipley]

Mr. Eyking, do you have a quick question for the witness?

[Mark Eyking, Liberal, Sydney—Victoria, NS]

In the bill it states that they “may” pay, but it doesn't say that they're obligated to or that it's mandatory. Are you saying that...?

[Alain Langlois]

It's just that you have to show that there has been a loss.