Bill C-52 (Historical)

Fair Rail Freight Service Act

An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration)

This enactment amends the Canada Transportation Act to require a railway company, on a shipper’s request, to make the shipper an offer to enter into a contract respecting the manner in which the railway company must fulfil its service obligations to the shipper. It also creates an arbitration process to establish the terms of such a contract if the shipper and the railway company are unable to agree on them. The enactment also amends provisions related to air transportation to streamline internal processes and certain administrative provisions of that Act.

[Ian May, Chair, Western Canadian Shippers' Coalition]

Thank you, Chairman Miller.

I, too, am grateful for the opportunity to speak with this group. We're also grateful for the government's efforts in bringing this bill forward.

I want to give you perhaps a different perspective on the bill, because it will be one that comes from a group of shippers that probably makes greater use of the shipper protection mechanisms contained in the act, and I would think probably more than all other associations combined, although this is a guess because a lot of these are confidential. We have had some rather extensive and, in some cases, unfortunate experiences with them.

The WCSC members are bulk commodity shippers for whom rail freight service is one of the most important components of their business. They're typically captive to one railway or the other and collectively spend in excess of $2 billion annually on rail freight, or about $5.5 million a day.

In evaluating the potential of Bill C-52 to correct what Minister Lebel identified to this committee as the imbalance in the relationship between shippers and railways, it's prudent to examine the current regulatory provisions to discover where they fell short in this regard and in order to help assure the success of this new remedy.

To do so, we must look at sections 113 to 116 of the current version of the Canada Transportation Act. I believe they've been distributed to the members. These sections are subtitled “Level of Services”. They have been part of the rail legislation for years and set out the service rail freight shippers are entitled to and the service obligations the railways must meet.

For example, paragraph 113(1)(a) says that a railway company shall “furnish...adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage on the railway”. Paragraph 113(1)(d) says that it shall “furnish and use all proper appliances, accommodation and means necessary for receiving, loading, carrying, unloading and delivering the traffic”.

While section 113 sets out the service requirements, it is section 116 that demonstrates how seriously Parliament took the delivery of adequate and suitable service. It gives the Canada Transportation Agency real authority, as follows:

If the agency determines that company is not fulfilling any of its service obligations, the Agency may

(a) order that

(i) specific works be constructed or carried out,

(ii) property be acquired,

(iii) cars, motive power or other equipment be allotted, distributed, used or moved as specified by the Agency, or

(iv) any specified steps, systems or methods be taken or followed by the company;

This is on behalf of the railway. The railway has to do all of this stuff. Those are steps, systems, and methods specified by the agency: considerable authority.

However, the conclusions of the rail freight service review panel have taught us that even legislation as clearly drafted and long-standing as this may not protect against railway market dominance. The question is why, and will the provisions of Bill C-52 as drafted provide a better opportunity for balanced relations and the consequential commercial solutions we all prefer?

In order to make that determination, one must first understand the world in which rail freight shippers operate. Taken as a group, they comprise a significant economic force and are perhaps the critical economic driver of the Canadian economy.

A 2009 study provided by the University of Toronto's Rotman School of Management revealed that just four commodity groups—oilseed and grain farming, coal mining, lumber manufacture, and pulp and paper products manufacturing—outperform our national railways by ratios of 6:1 up to 8:1 in contributions to gross domestic product, wages, jobs, and federal taxes paid.

In short, these shippers are the backbone of the Canadian economy, but without reliable and adequate rail freight service, they cannot hope to achieve their full economic potential.

The operative phrase here is “taken as a group”. Commercial interactions between shippers and railways take place on a one-to-one basis where the collective might of the shipper community is irrelevant. In fact, according to a report produced by Quorum for the rail freight service review, there are just over 5,000 shippers using CN and CP for rail freight service transportation, and 4,239 of them are listed as “small” or “very small” in the report. That is a substantial number of jobs and businesses to put through a process wherein they are significantly overmatched.

Bluntly put, a shipper needs proper rail freight service far more than a railway needs to provide it. Railways use an operating model that subordinates the needs of the customer to those of the carrier and its shareholders. Railways defend their right to do so expertly, vigorously, and relentlessly. Rather than honour the spirit of the law, railways have chosen to honour the letter of the law.

They have dedicated legal experts who, in the event of a service complaint, question everything from jurisdiction to administrative fairness, and failing an acceptable result from the agency, make full use of the Federal Court of Appeal and the Supreme Court of Canada in pursuing a favourable outcome. They are experienced and tenacious even with seemingly unimportant issues because they recognize the value of precedent. They are fully aware that victory in a small proceeding may well establish a principle that could lead to victory when much more is on the line.

For their part, shippers use the complaint process as a last resort. Service level complaints are not part of their core business and their knowledge and expertise usually ends with their own operations. They lack the information to comment on railway operational claims, and the process of acquiring experts to assist in that area is time-consuming and costly. Discussions with the agency reveal a certain level of frustrations over the manner in which shippers typically present their cases compared to the railways. Railways are well-prepared and much better acquainted with the process whereas, for the reasons previously mentioned, shippers, particularly smaller ones, are not. Since agency decisions must be based on the evidence presented, typically such decisions favour railways.

All this is to point out that the railway market dominance does not end with commercial negotiations. It pervades the long-standing service complaint mechanism as well. It's for that reason that we have recommended changes to section 115 of the act.

Here's one of our concerns. The current version ofC-52 provides a new opportunity for railways to avoid providing shippers with the service they require, one not previously seen in rail freight legislation. Proposed paragraph 169.37(d) instructs the arbitrator to “have regard to the railway company's service obligations under section 113 to other shippers”. In effect this gives the railway a get-out-of-jail free card when it comes to providing service, which could have unintended consequences for the growth of the Canadian economy, jobs, and our international trade aspiration.

Let me give you an example. Imagine a branch line with four distinct forest product shippers on it. Let's say we have a wood pellet plant, an OSB plant, a plywood plant, and a sawmill. Service has traditionally been provided by a 120-car train set on a three-times-per-week basis. While 120 cars aren't enough to handle all of the demand within the timeframe that each of the facilities requires, over the course of a year the railway manages by shorting one of its customers one week and another the next and so on. It's not great, but at least it's reliable. Service level complaints have been unsuccessful because all the shippers are being treated equally.

Now something good happens. The sawmill has expanded its international market and doubles its orders. Instead of needing 40 cars it needs 80. This doesn't work for the railway because in order to handle the extra shipments they would have to run two smaller trainsets of 80 cars each. It's still profitable but not as good as the 120 car-set, which maximizes asset utilization.

The railway's response to the request for additional cars is “We can give you 20”, which means that the other three shippers on the line will have to take a reduction. Or, the railways may offer to provide the additional cars but at a cost that significantly exceeds the current rate being paid for the original 40 cars.

This particular section of the proposed bill actually turns the current level of service provisions against improved service for the shipper, which is not exactly the recipe for economic growth that Canadians are expecting.

When the government asked for input on the establishment of rail freight service and rail freight service level agreement legislation, shippers responded that they needed a process that was simple, quick, effect and affordable. In terms of the speed of the process you have heard that it will take 45 days. While the proposed language calls for the arbitrator to render a decision within that time, the process actually begins with the shipper requesting that the railway make an offer to enter into an SLA. From that day the railway has 30 days to respond. When you add 45 days and another 20 days that the arbitrator may ask for, you can be into a three-month process before you know it.

In conclusion, we offer these brief comments on Bill C-52 to help ensure that it will accomplish its intended purpose, that of mitigating railway market dominance. We believe that the six amendments put forward by the coalition of rail shippers will assist in that pursuit. This bill brings to light an important issue for Canadian rail freight shippers and opens the door for further improvements during the 2015 statutory review of the Canada Transportation Act.

Thank you for your attention.

[Catherine Cobden, Executive Vice-President, Forest Products Association of Canada]

Thank you very much. I'm happy to be here.

I very much appreciate the committee's efforts to review this bill. As Bob Ballantyne has already stated, we, as shippers, remain united in the need for this legislation. I'm here today representing forest product shippers from coast to coast. My remarks will not be association-speak, but will actually be direct feedback from the shippers we represent.

I would like to point out that with me today is a shipper, Mr. Brian Mcgurk. He is with Resolute Forest Products. He leads their shipping from coast to coast and also happens to be the chair of the Forest Products Association's transportation committee.

We also have with us, Allan Foran, from Aikins, MacAulay & Thorvaldson. He is our legal counsel, and I offer his assistance to you if there are any legal points of clarification that you might benefit from.

On behalf of the members of the Forest Products Association of Canada, our 230,000 employees, and the 200 rural communities we represent, I would like to thank the government for the work it has done to date to prepare Bill C-52. This bill does move us forward and will give us more leverage on the day it is passed than what we currently have. We do have a few simple suggestions that are of critical importance for improving the practicality of the bill and to assure that the regulatory burden is minimized.

Before I get into those specifics, I will share with you some insights on how forest product shippers experience the world to help you appreciate why this is such a critical area to get right. FPAC member companies represent a significant slice of the rural economy. We also represent a significant slice of the railways business. We estimate that to be about 20%. While we are rurally based in our manufacturing, we serve a very wide global marketplace. Over 85% of our products from these small northern towns are shipped all over the world and into a demanding global marketplace. Whether we're shipping to China, Europe, or the U.S., we require timely, predictable, and cost-effective transportation systems to meet the needs of these discerning global customers.

I would also say that we believe in a free market economy. However, it is unfortunate that we routinely experience the challenge of living with a key component of our business, the railway transportation system, that is not free market-based. Indeed, addressing the imbalance of market power that the railways currently enjoy remains the final frontier—if you're a Trekkie—of opening up Canada to the world economy.

It is with this backdrop that FPAC applauds the intent of Bill C-52. You have taken action to enhance the effectiveness, efficiency, and reliability of rail freight supply to address the current imbalance we face in the rail system.

Minister Lebel's testimony on February 12th went further in outlining the critical intent, when he urged this committee to understand why this legislation is vital. My colleague Bob Ballantyne has already read the quote, and I'll just borrow from the very beginning of it, where Minister Lebel said, “We are not dealing with the normal free market”.

FPAC member companies fully agree with the intent of creating the conditions to allow for successful commercial relations. Obviously, that's what we agree with, and this would normally be possible in a free market condition. Ideally, we'll never have to use this legislation.

I want to point out that our bona fides on this point is very strong. In fact, we had tried to broker our own commercial deal with one of the railways on this very topic prior to this regulatory endeavour, and we failed miserably. Having led the exercise on behalf of FPAC member companies, I can say from personal experience that the shipper community does not have any other option than a strong piece of legislation being available to us to bring the discussions with the railways into better commercial balance.

Again, we fully support the intent of the bill, and in the spirit of ensuring the objectives of this bill are indeed fulfilled, forest product shippers make three important recommendations for your consideration.

Recommendation number one is that you delete all references to the word “operational”. Simply remove this one word. This will ensure that we do not undermine the objective of rebalancing commercial relations. By referencing operational data, you create the unintended consequences of adding costs, creating an information imbalance, and diminishing the intent and power of the legislation.

Recommendation number two that you delete all references to statutory obligations to other shippers and third parties. Removing this reference will ensure that we don't dilute the arbitration away from the true objective, which is addressing the inadequate service experienced by the shipper.

Recommendation number three is that you insert a new stand-alone section that would define adequate, suitable accommodation and service obligations. This one should be easy. All parties in previous processes, such as the rail freight service review and the Dinning process, were in full agreement as to the elements that defined service obligations. We argue that if this is not clearly spelled out in the legislation, we run the risk of cumbersome legal proceedings defining and eroding the intent and nature of this bill. I happen to put my faith in this committee over the lawyers in this regard.

A detailed description of these three changes has been circulated for all of you. I'm just glossing over them, but hopefully I've given you enough of a description so you can appreciate what they intend.

In conclusion, as Canadian companies aim to secure their place as the preferred supplier to the world, we must have an efficient, reliable, and effective rail system. The committee's undertaking on this legislation is therefore critical.

FPAC members appreciate your attention to these matters. We request your support for these adjustments to ensure that the bill is a workable success. Thank you for your attention.

[Wade Sobkowich, Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association]

We're thankful to the government for making rail service a top priority on its legislative agenda. The entire shipping community has been through a multitude of processes leading up to Bill C-52, which started in 2006 and which, we hope, will finally result in the necessary backstop for balanced accountability.

In order to ensure that it does not render the legislation ineffectual for or detrimental to shippers, Bill C-52 requires six sets of amendments. We cannot overstate the importance of all six. I should add that they complete the modernization required to ensure that the service pie grows in size rather than it only being divided differently. Without all of them it's possible that rather than facilitating the predicted growth in our economy, the bill might have the unintended effect of potentially constraining that growth.

Others will speak to items 1, 2, 4, 5, and 6, although l'd be pleased to respond to any questions. l'm choosing to focus my comments on item number 3 from the CRS package that I believe everybody has. It's about the need for an expedient mechanism for a shipper to be awarded liquidated damages for service failures.

This particular amendment speaks to a void in the draft version of Bill C-52 that affects smaller shippers. My perspective is that of a grain shipper. I'm a member of the CRS, but I'm with the Western Grain Elevator Association. In this regard, we speak about all grain elevators as smaller shippers since each elevator location essentially acts as a small location shipper. The best way to illustrate the problem we're trying to rectify with amendment number 3 is with an example. So here it goes in two minutes.

Typically, the time allotted for loading a unit train of grain is 24 hours. If we fail to perform, the consequences are set out in a railway tariff. We don't object to this discipline. For example, if a grain shipper is anticipating the arrival of a unit train at an elevator location on a Tuesday, normally the elevator will shut off receiving from farmers when they are loading so they can dedicate staff to loading the train. Twenty-four hours means that with about a hundred cars, it takes about 14 minutes per car to load, so the company has to be very efficient.

When the train doesn't arrive on the day the railway says it's supposed to, we're faced with added costs of labour and overtime costs on a weekend. And if the train doesn't show up on a weekend, now we've paid time and a half. Inbound loads from farmers have to be rescheduled, which causes significant problems at the farm level, and there's a danger of congesting deliveries. If the train doesn't show up for three days, now we've shut that elevator down for three days. In some cases the elevator is full and can't accept any more deliveries. When cars don't show up, those farmers have to be turned away, and that disrupts the system.

When the train moves to a terminal elevator later than expected, it is very likely that it will arrive on top of other shipments. Rail car bunching occurs, which leads to longer unloading times, exposing companies to railcar demurrage. If terminals are waiting for those cars, they are exposed to vessel demurrage, which is extremely expensive. Or perhaps the vessel has sailed, and now the terminal has to sit on this inventory. It would not be unreasonable to assume that the added costs to the shipper in this example could be $50,000. Under Bill C-52 the railways are not required to compensate shippers for any portion of these losses, and this gap is what we're trying to address to the best of our abilities to make sure that this legislation fulfills its intentions.

We propose a modification to 169.31(1)(b) to allow the shipper, at its option, to submit to the agency for arbitration terms governing whether or not a service failure has occurred and the manner in which damages are to be assessed and paid to the shipper for losses resulting from such a failure.The practical use of a service level agreement is severely limited if obtaining a remedy resulting from a breach requires the shipper to commence proceedings before the agency and/or court, or to rely on the proposed AMPs system. It's not practical for shippers to always undertake costly and lengthy agency and/or court proceedings.

Allowing dispute resolution mechanisms to be included in an arbitrated SLA will enhance railway responsiveness to service problems that arise once an SLA is established. The concept of balanced accountability between shippers and rail carriers can be achieved if mechanisms for compensation to shippers for railway failures can be determined in a simple and expedient fashion.

[Robert Ballantyne, Chairman, Coalition of Rail Shippers]

Thank you very much. I will share some of my time with Wade Sobkowich. We're certainly pleased to have the opportunity to bring the shipper perspective on Bill C-52 to this committee.

The 16 member associations of the CRS account for a substantial portion of the rail freight customer base, and the member companies in those associations are estimated to provide more than 80% of the Canadian revenues of CN and CP.

All 16 CRS member associations support the six proposed adjustments to Bill C-52 that we bring to the committee.

Bill C-52 is the government's response to the longstanding service problems that were identified and quantified by the independent rail freight service review panel and its consultants. The NRG Research Group, in its independent survey, found that only 17% of respondents rated their satisfaction with railway service at a 6 or a 7, based on a scale of 1 to 7 in which 7 meant “very satisfied”. They also reported that 62% of shippers reported that they had suffered financial consequences as a result of poor performance.

The fundamental underlying problem is one of market dominance. The rail freight market is not a normally functioning competitive market; it is dominated by the sellers. The rail freight service review recognized this, with the panel stating the following on page 41 of its final report:

This railway market power results in an imbalance in the commercial relationships between the railways and other stakeholders.

In his testimony before this committee on February 12, Minister Lebel referenced the above conclusion and stated:

It is essential for the committee to understand why this legislation is necessary. We are not dealing with the normal free market. The reality is that many shippers have limited choices when it comes to shipping their products. It is therefore necessary to use the law to give shippers more leverage to negotiate service agreements with the railways.

The behaviour of monopoly businesses has been well understood since the 19th century, and many of the lessons learned were from the behaviour of 19th-century railways. Canadian law has acknowledged this dominance for over a hundred years.

In this connection, the abuse of dominance provisions of the Competition Act—that is, sections 78 and 79 of that act—are certainly of interest.

The Competition Bureau's guidelines—and I stress that they don't govern the railway industry, but they're certainly instructive—or the bureau's general approach in evaluating allegations of abuse of dominance is as follows:

A market share of less than 35 percent will generally not give rise to concerns of market power or dominance.

A market share of 35 percent or more will generally prompt further examination.

In the case of a group of firms alleged to be jointly dominant, a combined market share equal to or exceeding 60 percent will generally prompt further examination.

In the case of the rail freight market, CN and CP together control 97% of the market by revenue. The issue of competition from other modes is a factor often raised. While in some instances there may be truck and marine competitive options, the reality is that moving to other modes in most cases is not practical, in any reasonable scenario.

There has been discussion that "commercial solutions are the preferred solutions", by government and other stakeholders. Throughout the service review and the follow-on initiatives, the shippers have stated a preference for solutions that would be "commercial", but a necessary prerequisite is that there be a normally functioning competitive market in which there is a reasonable balance between the buyers and sellers. Wherever there is no such balance, the only recourse for the disadvantaged parties is to look for a legislative framework that acts as a surrogate for normal competition.

The minister and his staff have outlined to you the structure and provisions of Bill C-52, which are designed to influence the behaviour of railways in a manner that would be comparable to there being effective competition. The CRS has noted that Bill C-52 in its operation will break new ground, with little relevant jurisprudence or experience available to the agency or arbitrators. The CRS believes the bill can be strengthened in a way that will minimize uncertainty, give more explicit guidance to arbitrators, and limit the opportunity for railways to mount legal challenges designed to either frustrate the intent of Parliament, delay decisions, and lead shippers both large and small into expensive legal battles.

The CRS has six recommendations, which I will very briefly introduce. These have been given to the committee and will be discussed by my colleagues in more detail. They are as follows:

The first one is to spell out that the service obligation is intended to meet the needs of the shipper, and then name the specific obligations.

The second one is to allow the arbitrator to rule on the whole contract between parties and not just the operational parts; that is, service is somewhat differentiated from just the operational parts.

The third is to make clear that dispute resolution terms, including damages, may be included in a contract by an arbitrator in order to reduce subsequent costs and delay in dealing with problems.

Number four is to remove a loophole whereby the railway can impose an unspecified charge against a single shipper without recourse.

Number five is to make clear that the shipper can decide which issues will be arbitrated.

Sixth is to remove undue precedence given to the railways' network obligations over and above the service obligations to the shipper.

With that, I would like to turn over the rest of my time to my colleague, Mr. Sobkowich.

[Ralph Goodale, Liberal, Wascana, SK]

Thank you very much, Mr. Chairman.

To pursue some of these issues a little more closely, I'll start with, again, the issue of the confidential contracts that may be in existence already, but of course by their very nature they're confidential, so no one knows for sure. If you were to look at proposed paragraph 169.31(3)(a), this is in the section that refers to those contracts and prohibits an application for arbitration while they're in existence.

I think it would be of some comfort to the committee if the department could consult a bit more extensively with both the railways and the shippers' coalition to give us a better feel for how many of these existing arrangements there are. Is it 8 or 10? Is it 200? How many are there? How many are beyond the timeframe that the minister referred to of just a year or two? Is there anyone out there who runs for 5 years, or for 10 years, for example? If the department had some statistics around that, I think it would give us more comfort as to how big a loophole that is in terms of access to arbitration. I wonder if the department could take a look at that.

Second, I'd be interested in your comments on the implications of this legislation for short-line rail operators. Is there anything in this bill that directly or indirectly has an impact for those typically farmer-owned or community-owned organizations that are running short-line rail systems, or are they completely exempt and unaffected by anything that is contained in Bill C-52?

Third, I wonder if you could give us a little help in understanding the new proposed subsection that appears on page 12 of the bill for section 177, which is the section that actually deals with the penalties. It talks in terms of “The Agency may, by regulation...designate” certain things as triggering penalties, and the penalties “shall not be more than $100,000”. I would like to know more about what actually triggers a penalty here and who decides.

If you have a commercial contract and one party is unhappy with the other side, typically they sue and present their case in court, but for these penalties, who will actually make the decision that a violation or, in the language of that section, a “contravention” has occurred? How does that contravention come to the attention of the decision-maker? Is it up to one side or the other to complain to the CTA, and then the CTA will decide whether or not there's been a contravention, and if so, what will be the level of penalty? Will it be not more than $100,000? I think we need a little more clarity around how those penalties work.

My fourth question, which I'll ask and then wait for answers to all of them, is that, since this is brand new legislation dealing with an area that has been a minefield of complaints for quite a few years, would it be a good idea to say that the department would, in two, three, or five years, review the practical impact of this legislation to identify whether or not the arbitration systems are working?

For example, is it just a backdrop and commercial arrangements are being worked out and nobody really has to have recourse to the legislation? Is it working out in the way that it was intended? Are shippers finding the arbitration process accessible if they need it, or are there financial or administrative barriers that are getting in the way? Would it be a good idea to have in the law a provision whereby the practical experience here gets reviewed a few years down the road to see if it's working out in the way the government intends?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

All of the stakeholders have been involved in this process for years. We saw the reaction of these stakeholders after we announced Bill C-52. We proposed the bill to let them have the space to have a commercial agreement. That's what they wanted. We will let them have these kinds of agreements. The arbitration will be there if they are unable to have it.

We're sure that's the right tool now to support the Canadian economy.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I'm too efficient here, I guess.

The last thing I want to touch on I briefly touched on in my last question. I sense from reading some of the documentation that's gone on over the years, there's been a lot of consultation with all stakeholders going through this process and coming up with Bill C-52. Minister, could you touch on how much consultation was held and how deep that consultation has been? It might be interesting for the committee to hear that.

[Denis Lebel, Conservative, Minister of Transport]

Thank you very much, Mr. Chair.

Members of the committee, I am very happy and honoured to be here with you.

Mr. Chair, thank you for having me here today to speak about Bill C-52, the Fair Rail Freight Service Act.

I am joined by Annette Gibbons, director general, surface transportation policy, and Alain Langlois, senior legal counsel, modal transportation law, with Transport Canada.

Bill C-52 is a very important milestone for our rail industry. This legislation will help ensure that railways and shippers work together to accomplish a shared goal to improve rail freight service in Canada. It will help shippers expand their growth and their businesses, while ensuring that the railways can manage an efficient rail shipping network for everyone.

As this committee knows, rail shipping is extremely important to our country's economy. Some 70% of our surface freight moves by rail. A strong and effective railway-shipper relationship is essential, which is why our government committed to table this important legislation. It will support job creation, economic growth, and long-term prosperity in Canada.

I won't dwell too long on the road that led us to where we are today, but I think it's important nonetheless to touch on it briefly.

In 2008, our government created an independent committee to review the rail freight services in Canada. The committee carried out an in-depth study on rail freight transport. It concluded that there was an imbalanced relationship between the shippers and the railways, and that the situation needed to be rectified by leveraging the shippers' influence.

The committee recommended using service contracts as a commercial tool in order to provide a clear framework and a better predictability and reliability of freight services. In March 2011, our government accepted this commercial approach put forward by the committee. We also made a commitment to table Bill C-52 to ensure that Canada has the rail system that it needs to support a strong economy.

Most importantly, I'm confident this bill will pave the way for better commercial relationships between railways and shippers, which is ultimately the best outcome for everyone.

It is essential for the committee to understand why this legislation is necessary. We are not dealing with the normal free market. The reality is that many shippers have limited choices when it comes to shipping their products. It is therefore necessary to use the law to give shippers more leverage to negotiate service agreements with the railways.

The intent is to create the conditions that will allow for successful commercial negotiations that would normally be possible in a free market. Ideally the legislation will never have to be used.

Bill C-52 was developed in close consultation with both shippers and railways. We consulted widely and listened carefully to the input we received. Multiple sectors, including forestry, agriculture, mining, and energy, came forward to offer their views, as did the railways.

It was important to take the necessary time to carefully consider all of these complex issues and to develop intelligent and responsible legislation.

Most fundamentally, Bill C-52 creates a strong incentive for shippers and railways to negotiate service agreements commercially. It gives shippers the statutory right to a service agreement with the railways, and it will require a railway to make an offer to a shipper within 30 days of receiving a request for a service agreement.

Should contract negotiations fail, shippers could turn to the Canadian Transportation Agency to request that an arbitrator impose one. The agency is a regulatory body renowned for its expertise. The agency already manages several other arbitration and dispute resolution processes.

In order to access arbitration, the shipper needs to demonstrate that he or she made the necessary efforts to come to an agreement and that a notice was served to the railway company 15 days before the request for arbitration.

While this is a low threshold to trigger arbitration, it does require the parties to attempt to negotiate an agreement on their own before going to the agents. The shipper will be in the driver's seat. He gets to trigger arbitration, identify the type of service desired, and frame the issues to be addressed in front of the arbitrator. Both the shipper and the railway will then provide submissions to the arbitrator with their views on what the agreement should include.

Through an interest-based process, the arbitrator will have to consider the interests of both parties when establishing an agreement that is commercially fair and reasonable. The arbitrator will have to consider the shipper's transportation requirements as well as the railway's obligation to serve all shippers. The arbitrator will have the flexibility to determine what service elements are fair and reasonable in the particular circumstances of each case. There is no one-size-fits-all solution to these issues because every shipper is different.

It is essential that the arbitrator have enough flexibility to establish an agreement that makes sense for each unique situation. The arbitration process will benefit shippers because it will be fast, only 45 days, and the imposed contract will be binding and non-appealable.

To enforce these arbitrated service agreements, Bill C-52 sets out administrative monetary penalties. If the agency confirms that a railway company violated the arbitrated service agreement, it could fine the company a maximum of $100,000 per violation. This threshold is four times higher than the other existing penalties. The penalty would be applied to each violation. Therefore, if there are multiple violations of the arbitrated service agreement, the cumulative fine could reach hundreds of thousands of dollars.

This is a considerable monetary penalty for railway companies who do not respect their commitments. What I am proposing is different from the penalty system that the shippers put forward. They asked the government to give the arbitrator the power to establish a penalty system within the service agreement, therefore allowing them to be compensated later if the railway company didn't provide the services promised.

We studied this proposal very closely, but it entailed significant legal issues which made it inapplicable.

First, punitive penalties are not enforceable in commercial contracts. It would simply be unprecedented to have a regulatory agency impose pre-established penalties. Regulatory agencies address breaches of legislation after they take place, not before.

Second, such a penalty regime would disadvantage shippers by limiting their right to sue the railway in court for real damages after a service breach.

Finally, it would be an enormously complex and time-consuming task for an arbitrator to predetermine a penalty for every different kind of service failure before it happened.

For all these reasons, I'm proposing administrative monetary penalties because they will achieve the same outcome for shippers: a strong financial consequence to ensure railways are held accountable without creating unnecessary legal risk. The penalty regime will be fast, efficient, and inexpensive for shippers. I fully expect that the railways will want to avoid these penalties, so they will respect the imposed terms of service.

Now I would like to address certain points that were raised during the debate at second reading.

Some people fear that once this legislation is adopted, shippers who already have an agreement with a railway company will not be able to use arbitration before this contract is enforced.

Shippers and railway companies have entered into these agreements voluntarily, based on certain commercial expectations. Therefore it would be unfair to change the rules of the game for agreements that have already been signed. These agreements will eventually expire, and at that point, the shippers will be able to use arbitration if necessary, as laid out in Bill C-52.

Moreover, in regards to the transportation of goods to the U.S.A., Bill C-52 would cover the Canadian portion of shipments to the U.S.A. However, it would not seek to broaden the agency's jurisdiction in order to cover railway activities in the United States.

We have a different railway regulatory system than the United States. Expanding the scope of Canadian laws to include the United States would cause problems and compromise Canada-U.S. relations. Furthermore, American carriers operating in Canada would strongly oppose such an idea. Essentially, we must respect American jurisdiction just as the United States respects ours.

I've also heard concerns that there is no commercial dispute resolution mechanism established in Bill C-52.

By definition, you cannot use legislation to impose a commercial process. This bill outlines an arbitration process to resolve disputes once commercial options have failed. What the parties agree to do commercially is entirely up to them. Nothing in the bill prevents them from coming up with their own commercial dispute resolution process.

Shippers are also concerned that it may be too costly for them to use the arbitration process. This bill limits the costs that the government can control. The arbitration process has been limited to 45 days, in part to keep costs down. For the other costs, shippers may wish to enlist lawyers and experts to assist them in the arbitration process, but they control the use of such services.

It is also important to highlight that nothing in the bill diminishes the existing common carrier obligation that railways have had for over 100 years under section 113 of the act. The new arbitration process that will be established by Bill C-52 complements the existing provisions in the act.

In conclusion, when we made a commitment to table this bill, we clearly indicated that its emphasis would be on the service. The shippers supported this approach, and when it was being drafted, they did not ask for the rates to be included. The legislation lays out other measures that allow shippers to address rates and fees if the shippers believe that they are unfair.

Bill C-52 is complementary to other remedies. All of the measures in the bill will offer shippers the clarity, predictability and reliability that they need to succeed. That is what they have told us.

To quote the position of the Coalition of Rail Shippers, “Bill C-52 meets the fundamental requests of railway customers for commercial agreements.” Similarly, Pulse Canada, which represents pulse farmers, notes that the legislation will help them ensure that they are “seen in markets around the world to be reliable, consistent suppliers”.

We must act so that our rail freight system is well positioned to support economic growth, resource development, and our government's ambitious domestic and international trade agenda. We need Bill C-52 to ensure more predictable service to shippers, who help fuel our economy, farmers, who sell grain on the international markets, lumber mills, looking to expand sales overseas, and mineral producers, who ship products such as potash and coal.

Railways and shippers depend on each other to succeed. Since the rail freight service review has been launched, we have seen improvements in rail service in Canada. I commend the railways for working with shippers to negotiate for more service contracts. This bill is about solidifying and building upon those important gains.

Mr. Chair, for generations, agriculture and natural resources have created jobs and growth throughout Canada. To harness this potential and build for future growth, we need a strong rail freight system. I call all members of Parliament to support Bill C-52 without delay, so that these proposed measures will help achieve that goal.

I thank you and the committee for your time this afternoon.

Mr. Chair, thank you for your attention. My team and I will be pleased to answer any questions from the committee members.

Thank you very much, Mr. Chair.

Fair Rail Freight Service Act

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I thank my hon. colleague for this very relevant question. She explained the situation very well in her preamble.

And that is why I would like to come back to the national transportation strategy proposed by my hon. colleague, our transport critic, in her bill.

I hope the Conservatives will have a look at it, because what we really need is a comprehensive vision—one that involves investing in infrastructure and investing in our economy, especially our regional economies. This vision involves protecting the environment and protecting our roads, which would be better for everyone if they were in better shape.

Indeed, my hon. colleague painted a clear picture of the situation. Bill C-52 is merely a drop in the bucket in terms of this problem. A much more comprehensive, more overall vision is needed.

We in the NDP have a vision that includes the economy, the environment and a national transportation strategy.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I would like to thank my colleague from Vaudreuil-Soulanges for his very relevant question.

As I mentioned in my speech, that aspect is missing from the bill. It is another example of how the Conservatives failed with this bill. We will support it, but unfortunately, certain aspects of it need to be improved, including fees. That is problematic.

If we want to encourage the use of the railways and if we want farmers in a given region to be able to use them, fees needs to be affordable and accessible. If fees are made more affordable and if heavy trucks are pulled off our roads, we will improve our roads, our economy and our environment.

Railways are the way of the future. I believe that Bill C-52 is a step in the right direction, but it is not enough. Unfortunately, the Conservatives do not have the courage to finish the job concerning fees.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I am pleased to speak today to Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration).

I will say right away that we will support this bill at second reading, even though it is flawed.

Some 80% of rail freight service customers, that is to say shippers, are not satisfied with those services. They asked the government to take action and to introduce legislation compelling CN and CP to enter into service agreements with them.

As I mentioned, this bill is a first step, but it is not a panacea, on the contrary. Shippers are having trouble getting fair and reliable rail freight services. Some of them cannot even sign contracts with major railway companies, which experience significant delays or do not have enough cars at their disposal.

The Conservatives finally introduced this bill to address some of those problems after the NDP critic tabled her bill introducing the rail customer protection act last spring.

The NDP transport critic did a very good job on railways. She is also working very hard on public transit and has suggested that we have a national public transit strategy. The Conservatives should entertain that strategy, but they are unfortunately still turning a deaf ear. It would be good if they listened to all these good ideas on public transit.

As I mentioned earlier in asking my honourable colleague from Manicouagan a question, the railway is Canada's raison d'être. It is a historic and essential factor for Canada. The level of service has been declining for some time now. The government has stopped investing in infrastructure, and legislation does not have enough teeth to force businesses to invest in that infrastructure.

Consequently, we are using the roads and trucking far too much, when we could be using the railway. The benefit of doing so would be considerable, not only for our roads, which are being damaged, but also for the environment because the railway is a very environmentally friendly mode of transportation.

Bill C-52 is a first step in the right direction, but it is far from perfect, since major demands by shippers have gone unheeded. Its ambiguous wording, for example, creates potential loopholes. The NDP will seek amendments at the committee review stage to prevent any abuses of market power by requiring that service agreements be reached and putting in place conflict resolution processes.

Rail freight services are currently of poor quality, and this is costly for the Canadian economy. In fact, it costs hundreds of millions of dollars every year. Many industries in Canada have to deal with rotten crops, work stoppages at plants and in mines and missing freight on a daily basis. Poor rail services hurt Canadian shippers and undermine our global competitiveness, in addition to costing jobs.

We should rely much more on the railway, but in order to rely on it, it has to be efficient and first-class, so that businesses and SMEs use it more and more. In my region of greater Drummondville, the railway is an important industrial element, but it is not used as much as it could be. If we had a railway that was more efficient, more available and more reliable, and on which we could rely, I am sure that businesses in my region would use it more. This would be a win-win situation on all levels: our competitiveness, our economy and our environment.

The Conservatives have not provided enough money for our infrastructures. Because of this, we now have a huge quality deficit, and one example of it is the poor condition of our network of railway tracks.

In addition, the Conservatives’ bill is very weak in that its safeguards do not cover existing contracts between shippers and railway companies, and it provides only a limited arbitration process in cases where negotiations on a new contract break down. Furthermore, we need to have a more global vision, as I mentioned earlier.

Railway transportation is the backbone of Canada’s economy, as 70% of our goods are shipped by rail. It is therefore essential that railway services be advantageous both for shippers and for our railway companies. The high cost of railway services also has a negative impact on Canadian shippers. Bill C-52 explicitly excludes the issue of rates, ignoring the demands of certain shippers’ associations.

We should not forget Canada’s trade deficit, which continues to escalate. According to Statistics Canada, our trade deficit reached $2 billion in November 2012. This is clear evidence of the Conservatives’ failure. Not only does the Conservative government have the highest budget deficit in Canada’s history, but in addition, our trade deficit is clear proof of its failure across the board.

The fact that it ignored railway transportation is just more evidence of its economic failure. As I mentioned, 70% of our freight is shipped by rail. We must give much greater consideration to railway infrastructures and take a more global viewpoint. Not only was Canada built by the railway, which has quite a history in Canada, but in addition, the railway is clearly the way of the future. All modern societies are investing in railways. All societies that have a long-term vision are investing in the railway infrastructure.

We have been asking for a long time for a national public transit strategy that would include the railways. Unfortunately, once again, the Conservative government has failed. This is a very serious matter.

I am now going to digress from talking about Bill C-52 to make a brief aside. Recently, the environment commissioner issued his latest report. I would like to thank Mr. Vaughan for all the work he has done. In his latest report, he has done an excellent job for Canada and the environment. In the report, he mentions the annual financial support, in hundreds of millions of dollars, nearly $1 billion in total, that the Conservative government continues giving to coal, oil and natural gas, even though the money could be put toward a national transportation policy. This is very important. We think of public transit, but we should also be thinking about freight transportation. They go hand in hand. We will have to revisit this notion.

Everything is interrelated. Transportation is related to the environment and to our economy. It is all part of the same thing. Unfortunately, as we have shown, the Conservative government has the largest budget deficit in Canada’s history, as well as a trade deficit that reached $2 billion last November, according to Statistics Canada. In addition, there has been a lack of investment in infrastructures. I would like to add that 80% of shippers are unhappy with the services provided by our railway system.

This is clear evidence that the Conservatives have failed. The NDP must absolutely take their place so that we can implement a national transportation strategy. This will help the economy, the environment and transportation overall.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I am pleased to have 10 minutes to talk to the House about my party's viewpoints and my own on Bill C-52, which I have here in my hands. This government bill amends the Canada Transportation Act.

I would like to preface my remarks with a comment on the atmosphere here this morning. We are talking about and debating a government bill, but none of the MPs who have agreed to debate this bill in the House belong to the governing party. There are three possible reasons for that, reasons that may be unknown to members of the public, who I hope are listening on CPAC.

It may be a strategic move to put a lot of pressure on the opposition members, forcing them to work hard in the hope that they will exhaust their resources. But I have news for the government: we have many very young MPs who can work very hard for long hours. If that is its tactic, perhaps it should think of a new one.

If that is not the case, then it might be something that worries me a little more: contempt for the parties affected by its own bill, perhaps even contempt for the work of parliamentarians. We belong to a Parliament. When we are here on the Hill, we are paid very well to do our jobs as parliamentarians.

The government introduced a bill of major importance to the Canadian economy, but its members could not even be bothered to stand up in the House to explain their government's position. That reminds me of the time a few years ago during an interview while Parliament was prorogued when the current Prime Minister—only for another two years—came right out and said that he thought shutting down Parliament would be better for the economy. He was quite serious when he said that.

After considering all the possibilities, we think we have the answer. We see this as a very clear demonstration of the utter contempt this government has for our parliamentary duties. All modern legislation has regulations. Many members of the current government seem to live in a fantasy world of libertarianism. We sometimes wonder if it should not be called the conservative libertarian party of Canada, whose answer to everything would be the invisible hand of the market.

In good legislation, there is no place for that kind of fantasy. Furthermore, I challenge any one of my colleagues across the floor to name a single piece of legislation, from anywhere in the world, that has followed that logic through to its conclusion and has been beneficial for the people. It simply does not exist.

Modern legislation needs to strike a balance among people—the buyer and seller, those who need a service and those who provide that service.

There are near monopolies or duopolies, as in the case of credit cards and rail freight transportation. There are just a few huge companies that provide a service to thousands of users. It is impossible to think that, within such a completely unbalanced framework, the invisible hand of the market can balance everything. That is impossible.

That is why it is our duty as parliamentarians to ensure balance and some degree of fairness, and to promote commerce not just for a small number of huge companies, but for all Canadian companies.

Let us come back to the bill before us today, Bill C-52.

I would like to point out that my party and I will be supporting Bill C-52, despite its many weaknesses. We will do so mostly to address the needs of this country's rural areas. But this bill is merely half a step, and not quite in the right direction.

However, out of respect for people in rural areas, who really need to have their processed goods and raw materials shipped efficiently, even a small, flawed, sideways, ill-conceived step is better than nothing. Therefore, we will be supporting this bill.

I was saying earlier that we are dealing with a duopoly that has created a ridiculous situation: 70% of our primary processed materials, our natural resources, are shipped by rail by two companies. Eighty per cent of shippers are dissatisfied. It is impossible that 80% of the country's entrepreneurs have suddenly caught the “complaints” bug for no reason. We have to think of the consequences of this situation.

At present, some shippers are unable to enter into reliable and clear agreements that would allow them to provide services themselves to other companies, even internationally, with reliable transportation.

Shippers that have an agreement regularly have to deal with delays that are so long they result in catastrophic scenarios where assembly lines in Canada are slowed down. I will say it again because it is such a big problem: time and again assembly lines are slowed down. It is not because people are not qualified or are not willing to work. It is because they are waiting for parts that have been delayed by an inadequate rail transportation system. This represents tens, if not hundreds of millions of dollars in lost efficiency.

For other shippers, it is a question of the lack of availability. For example, a certain tonnage of materials could be shipped to China, but shippers are unable to sell their products. It is not for lack of supply or because they cannot meet demand. It is because the link between Fermont and China is slowed down by poor rail service. How do you put a price tag on such losses in a global economy?

I would like to point out a fairly disturbing aspect of the Conservative's approach to the economy. They spend a lot of time botching free trade agreements. They have been signing agreements with many countries as quickly as possible, even if the agreement is flawed and provides for much less than what Canada could require. The Conservatives are focusing on quantity.

Meanwhile, they are not making the necessary efforts to ensure that Canadian companies remain competitive. Some ways of achieving this would be through decent transportation, a credit card system that does not charge exorbitant fees, and a research and development program. Although our Canadian entrepreneurs have a great deal of expertise, we must make their job easier so that they are able to be competitive.

The government has not managed to do that, but it is rushing to open markets left and right by signing agreements that are all too often flawed.

To summarize, the Conservatives do not care about keeping companies competitive. We should not be surprised to see an increase in our trade deficit, which recently reached $2 billion.

The bill is flawed and was introduced only because one of our colleagues, who introduced a bill on the protection of railway customers, exerted a lot of pressure. Her bill was clearly worded and truly designed to help those experiencing this problem.

As I mentioned earlier, the bill is weak, particularly when it comes to the arbitration process, because it puts the burden of proof solely on shippers.

One of the clauses of the bill says that both parties must consent to arbitration. As a result, if a large company says that it does not want arbitration, the case will end up in court. My colleague from Côte-Nord can attest to this. An SME could, once again, end up in court with a mega-corporation. We know how these types of situations turn out.

We will support this bill, but we hope that it will be improved by the standing committee.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, before being interrupted by question period, I was talking about elements that destabilize economic activity in certain industries.

Unfortunately for the industries, they are not compensated by the parties responsible for these disturbances. We are talking here about hundreds of millions of dollars every year. Seventy per cent of our goods are shipped by rail. Considering the $2 billion trade deficit and fierce international competition, we cannot afford to opt for the status quo or for a half measure like the one proposed in Bill C-52. This situation, unfortunately, gives a trade advantage to our competitors around the world. They have the capacity to deliver their goods more rapidly and more punctually, despite the fact that our Canadian products often have a shorter distance to cover.

Unfortunately, for too long now, the government has not wanted to act. The Conservatives have been waiting since 2007 to introduce this bill, and when we take a look at their inaction and the cutbacks they have made over the past few years, we may conclude that they do not understand how important our railway system is.

On our side of the House, through the bill introduced by my colleague from Trinity—Spadina, we have conveyed the shippers’ demands in an attempt to restore the balance in their relationship with the railways. Canada needs a national transportation strategy.

Greater use of rail transportation would have a positive impact on the quality of our environment and would help reduce greenhouse gas emissions significantly. Unfortunately, when shippers cannot obtain services from our only two rail service providers, they will rely even more heavily on trucking, which will have a negative effect on our economic activity from an environmental point of view. We sense a lack of commitment by the Conservatives to our railway network, as evidenced by the lack of investment in railway infrastructures.

We must therefore restore the balance between the railway companies and shippers. Our position is a simple one: we are on the side of businesses and exporters, and we are determined that they should receive the railway services they deserve and that they need. As usual, this government is on the side of big businesses that have a near-monopoly and is not interested in protecting SMEs through a bill that would have given them a leg up in international markets. If the government ultimately gives in, it will be attributable primarily to co-operation among the various industrial associations that banded together to advocate for legislative changes to the Canada Transportation Act.

Therefore, I would ask the government to work with us when the bill is being considered in committee. The competitiveness of our companies and our SMEs depends on an efficient rail transportation system. Canada’s economic vitality also depends on it. Our businesses need good services in order to make investments and create jobs. We will therefore support this bill. We ask that the government co-operate with opposition MPs to improve the bill and contribute to Canada’s solid economic growth.

The House resumed consideration of the motion that Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration), be read the second time and referred to a committee.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I am very pleased to speak today about a bill to improve the rail transportation system.

On this beautiful snowy day, we are getting back to rail transportation. It is probably the means of transportation that is least affected by the bad weather we are having today.

As I said, I am pleased to speak today about a bill to improve our rail transportation system. I will be clear from the outset: we will support this bill in order to send it to committee.

We will also support it because the majority of shippers are mostly or partially satisfied with it. We are going to respect their position and support this bill.

There is something that sets us apart from the other parties recognized in this House: we listen carefully to the opinions and needs of Canadians and our country's businesses.

We consult them because we want to know what their needs are. That way, we can develop good public policies. We are not jamming measures down the throats of Canadians and businesses. At times, the party in power takes steps and imposes measures that no one wants.

However, my colleagues and I strongly believe that this bill must be amended since it does not fully meet its objective. The best that can be said for this bill is that it is only a half measure.

Many of the demands of shippers were not included in the bill. What is more, the wording is very ambiguous. Some provisions must be examined more thoroughly in committee because they could potentially create loopholes.

The scope of Bill C-52 is also limited since it will cover only new agreements and, unfortunately, will not apply to existing agreements. That is a bit ridiculous. The bill is supposed to help shippers but, in reality, it applies to only a small number of them. Those who already have an agreement will be left to fend for themselves and will be at the mercy of the large CP and CN rail companies.

Shippers will have to make do with low quality services until their contract ends.

How can the Minister of Transport believe that this is a good bill that meets the needs of all shippers if it targets only a small fraction of existing agreements?

Certain shippers wanted to tackle the issue of tariffs during the legislative process, but the Conservatives made it clear that they would not address that issue until the next legislative review of the Canada Transportation Act in 2014-15.

In most regions of the country, shippers have no other choice than to use CN and CP. Canada's rail transportation market is basically a quasi-monopoly. Having the dominant position in the market allows the rail companies to charge often exorbitant prices, and shippers are put in a position where they have no choice but to accept the price charged by the rail company. That is what happens when this type of market is not regulated enough.

The goal in committee will be to seek amendments that prevent potential abuse of power by requiring service level agreements between shippers and rail companies.

We also need to establish dispute resolution processes. This bill offers only a limited arbitration process. It is available only for shippers who are in the midst of negotiating new contracts. It will not apply to existing agreements.

Instead of offering fast, reliable dispute resolution for all shippers, as we are asking for, the bill is limited to a small group of shippers. The proposed arbitration process may be too costly for many shippers. The burden of proof may be unfair if they have to prove that they are in need of services from the railway.

We would also like to see tougher penalties included in the agreements in relation to service levels, in order to compensate shippers for service disruptions, damage and loss of productivity.

As it stands now, the bill provides for penalties of up to $100,000, which would be paid to the federal government rather than to shippers. Since shippers must cover their losses, this would obviously impact the price they charge consumers. We lose on two fronts, because it hurts consumer prices, and it makes Canadian businesses less competitive and less productive in international markets. Considering that CN made about $2.7 billion in profit in 2012, penalties need to be higher to really act as a deterrent.

Let us be very clear: 80% of rail freight customers are currently unhappy with the rail service. They are victims of the near monopoly held by railway companies.

That near monopoly impacts sectors like agriculture, mining, forestry and auto manufacturing. Missing rail cars and other disruptive events result in rotting crops, service disruptions and delays. There is no compensation for all the forest, mining and manufacturing products that are wasted this way, many of which are actually intended for export.

A number of factors disrupt economic activity in these sectors and impede Canada's economic prosperity. These resources and products are largely intended for export. Unfortunately for these industries, those who cause disruptions pay no compensation.

I will continue...