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.

Fair Rail Freight Service Act

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I would like to put on record what works well when we let the industry work with the railways. Canpotex, which I mentioned earlier, is a shipper of potash and it recently signed 10-year agreements with CP Rail, CN Rail and UP Rail, which is Union Pacific. The agreements secured transportation for increasing export volumes with long-term customers in approximately 30 countries, a reliable and properly maintained railcar fleet that was essential. These were partnerships. These types of partnerships helped them achieve present and future logistic goals.

That suggests to me that if we work with the industry and perhaps have good legislation in place that is not too intrusive, the industry will take care of itself. I might add, being that the member got a little carried away on the environment, Canpotex also contemplated building a new greenfield terminal on B.C.'s west coast of Prince Rupert. If we let the industry work and we work well with the industry, I think—

[The Acting Speaker, Bruce Stanton]

Order, please. The hon. member for Drummond.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I wanted to say that the shippers, of course, are happy that someone is finally trying to meet their needs and that the first steps have been taken. Unfortunately, as I mentioned, there were six proposals that were not answered and were simply dismissed. I cannot explain that.

I must also mention something very technical, as my colleague called it. Arbitration can pose a problem since it is only available for shippers who are negotiating new contracts. Consequently, shippers will have no right to arbitration for their older contracts. That was one of the proposals that was made and rejected so brusquely.

A number of proposals of that kind were made and, instead of providing rapid, reliable assistance to all shippers through a conflict resolution process, Bill C-52 provides a limited arbitration procedure only for a small group of shippers. That is a good example of a situation the Conservative government has not been able to address, and it explains why the bill is unsatisfactory.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I would like to thank my colleague very much.

He raised an interesting point in his speech, and that is that the Conservatives rejected all the proposed amendments and improvements, as they almost always do, yet those amendments did not come from us; they came from experts. They know a lot more about the subject than all the members here. I find it incomprehensible. Perhaps it is the arrogance of a majority government to reject all options, all information and all science, almost all the time, and this time, too.

That is why this bill is supported by New Democrats, but with some hesitation. The chance to improve an industry like this one comes around once a decade or so. Making such a tiny effort is not good for the public or for the economy.

Why does the government continually reject the opinions of experts and testimony by people who know the industry very well, instead of listening to a member of Parliament with a Conservative ideology?

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I thank my colleague who, in passing, does an excellent job as leader in the House of Commons.

The same thing can be said for the Standing Committee on Environment and Sustainable Development, on which I serve. Experts put forward recommendations and, unfortunately, most of the time, they are not followed.

For weeks, for months, it has been recommended that we carry out a study on combatting climate change. Climate change is a top priority for all Canadians and for the people of Drummond, who raise the issue with me every day, yet the Conservatives flatly refuse to conduct a study on combatting climate change in the Standing Committee on Environment and Sustainable Development.

The same thing occurred here regarding Bill C-52. Experts who know what they are talking about, who are well versed in what is really needed, proposed six reasonable recommendations, yet because of a deliberate, ideological, head-in-the-sand attitude, or plain arrogance, perhaps, as my colleague so astutely pointed out, the expert recommendations unfortunately fell on deaf ears.

We are going to vote in favour of the bill because it at long last addresses needs that have been evident for years, yet this is not enough. Once again, the Conservatives have missed a golden opportunity to do something positive.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Speaker, I am very pleased to rise this evening to speak to Bill C-52, the fair rail freight service act. The bill would amend the Canada Transportation Act to improve the reliability and predictability of rail freight service in Canada.

From the birth of our nation at Confederation to the present, railways have played a very critical and significant role in the forming of our great country. However, the world has changed over this period. Revolutionized by changing technology, the globe has been made smaller by faster, more efficient means of transportation and communication.

At the same time, the fundamentals of our economy have stayed the same. We are a trading nation and we need a transportation system to move our products to market. Nowadays shippers have a range of choices: air, rail, truck, marine when they transport their products to market. Shippers make business decisions regarding how best to transport their goods to market and the quality of service is a key component of this.

The “just in time” world has changed customers' expectations of service, making them demand greater precision and reliability. The fierce competition of the global economy combined with Canada's size and proximity to markets increases the pressure on service as we compete to sell to the world. Each mode works to respond to these demands. In our diverse economy, a shipper's transportation requirements depend on what he or she needs to move and the best mode of transport to get it there.

For example, pharmaceutical companies rely on air cargo to move medicines around the globe quickly and under controlled conditions. Retailers rely on trucks to move food and consumer goods from distribution centres to stores to serve shoppers. Of course our natural resource sector and manufacturing sector rely on rail to move raw materials and finished goods such as automobiles to market.

Our Conservative government has an interest in how the entire transportation system functions in support of the country's trade. Economic growth remains this government's top priority. This is demonstrated by our transportation and trade corridor initiatives that promote the efficiency and effectiveness of the system as a whole to bolster international trade.

To keep our transportation system as competitive as possible, we work with other levels of government and multiple stakeholders to ensure that we have appropriate policies and programs in place. Effective rail policy and legislation is a core element of our Conservative government's approach to ensuring the transportation system remains prepared to support our trade agenda.

Rail plays a prominent role in our economic success because it creates efficiencies by its economies of scale. It offers a means to transport bulk commodities and heavy goods over long distances at a relatively low cost. Because of this, rail has remained a critical part of our economic success and our ability to trade, especially as we promote our responsible resource agenda. This is why our government has made rail freight service a priority and has brought forward Bill C-52.

The Canada Transportation Act contains measures that contribute to the productive functioning of a rail-based supply chain and shippers' ability to obtain the rail service that they require.

The Canada Transportation Act provides a series of provisions that shippers can use to address rate and service issues. To start, if a shipper feels that a railway's rate is too high, the shipper can challenge the rate through the final offer arbitration provision of the Canada Transportation Act. Both the shipper and the railway present their cases before an arbitrator, and the arbitrator selects one of the offers to establish the rate.

In addition to the rate or the price for moving traffic, a shipper may feel that the railway's charges for additional services, such as the cleaning of cars, are too high. Through another provision in the Canada Transportation Act, the shipper can complain about such extra or ancillary charges to the Canadian Transportation Agency. If the agency finds the charges are unreasonable, the agency may establish new charges.

Finally, if a shipper feels that the railway has not been fulfilling its obligation to provide suitable and adequate service, the shipper can seek redress under the level of service complaint provision. The agency would investigate the complaint and determine whether the railway has fulfilled its obligations. The agency has broad powers to order corrective measures if it determines that the railway is not fulfilling its obligations.

The Canada Transportation Act clearly provides shippers with a suite of measures to help them manage their commercial relationship with the railways.

Bill C-52 would constitute a new provision on service to assist shippers. The new provision provided in the fair rail freight service act is an additional measure that would complement the existing suite of provisions under the Canada Transportation Act, some of which I have just described. The bill's goal is to provide shippers with the right to a service agreement and a process to establish one in the event that commercial negotiations fail.

Increasing the clarity and reliability of rail freight service is important to shippers. Shippers told us they would like to have a comprehensive service agreement in place in order to plan their business. Bill C-52 would provide this by giving the arbitrator the ability to impose detailed elements of service. Specifically, an arbitrator could establish operational terms that railways and shippers must follow to move traffic. This could include commercial or communication protocols, with internal escalation procedures and performance standards and metrics as appropriate. Operational plans to address potential service failures could include recovery plans to address how to recover from a force majeure, and finally, there could be the provision of incidental services by the railway and whether the railway can charge for the operational terms and incidental services that the railway is required to provide.

The new service arbitration provision would provide shippers with a fast 45-day process to have the terms of the rail freight service established if they cannot negotiate them commercially.

Bill C-52 would create a new enforcement mechanism to hold railways accountable for providing the imposed service. Administrative penalties of up to $100,000 for violation could be issued to a railway company if the agency confirms a breach of an obligation in an imposed service contract.

Bill C-52 would provide shippers with a powerful new tool to strengthen rail freight service, in addition to the existing provisions. Shippers would still retain the right to use any of the other measures in the act, which shippers told us was very important.

Shippers have supported the introduction of the bill as critical to addressing rail freight service issues and improving their leverage with the railways.

In conclusion, throughout the history of this great country, freight rail transportation has played a vital role in developing our economy. Many shippers rely on rail to get their products to market efficiently, predictably and at competitive costs. When they have challenges with their rail service or with rates, they can use existing measures in the Canada Transportation Act.

The fair rail freight service act, Bill C-52, responds to shippers' needs for better rail freight service. In a fast, powerful and effective manner, our government has made this a priority. I hope that all members join me in supporting the bill.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, I am delighted to stand up and ask a question after the fine speech that was just provided.

In my community, certainly the forestry and mining companies have come to me and talked about some of the challenges they have in terms of moving forward and having the security of knowing that their products can get to market.

I would like to hear how the bill would be of great benefit to our natural resource companies, our mining and forestry companies.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Speaker, my colleague has really hit the nail on the head. As you know, Mr. Speaker, our government's number one priority is jobs and economic growth. That is what is at the foundation of Bill C-52. It is to help support Canada's economy, to support our important resource centre, particularly in the western parts of our country, and to ensure that our resource industries, our small and medium-sized businesses, can get their products to market.

We are a trading nation. It is absolutely critical that businesses can rely on transportation networks, in this case our rail networks in the country, to sell their products, to get their products to market and to do that efficiently and effectively. That is exactly what this legislation will do.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, the member opposite just said something that grates on me. In fact, I find it insulting to shippers, who are also business people. The member wants to strengthen economic efficiency, yet in committee, members are not given the opportunity to improve the bill by making amendments. Thus, for the 37th time, a gag order is being imposed. Members do not have the opportunity to discuss issues in a normal, democratic fashion.

The bills being discussed in the House are full of flaws. In fact, one of the many shortcomings that members have been discussing today is the fact that the maximum penalty for rail companies is $100,000. This $100,000 should be given to shippers to compensate them for lost productivity, delays and damage caused to harvests and products. However, in actual fact, this $100,000 goes directly to the federal government. That is not effective. The money is not going to the right place and, what is more, the fine is not even an effective deterrent. For example, in 2012, CN posted a $2.7 billion profit.

How can a bill that is replete with deficiencies benefit the economy and business people?

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Speaker, I want to thank this colleague and others who are part of the NDP caucus for their support of this legislation. Even the NDP recognizes that this legislation is important to Canada's economy and to our resource-based industries across this country.

I am not a member of the transport committee. I cannot speak to exactly the process that occurred at committee. What I can tell members is that the consultation process with stakeholders for this particular piece of legislation was extremely extensive, over a multi-year period. Stakeholders, industry, and the freight industry, are particularly pleased with this piece of legislation.

We look forward to the opportunity of moving it forward. That includes the important component of administrative monetary penalties. With this piece of legislation, like any other mechanism through federal legislation, administrative monetary penalties are paid to the Crown.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I rise today in support of Bill C-52, the fair rail freight service act. The purpose of this bill would be to amend the Canada Transportation Act in order to improve the reliability and predictability of rail freight service in Canada.

Over the past years, Canada's economy has managed to thrive amid a turbulent global economic downturn. Our success is in great part due to our Conservative government's focus on strengthening our economy. Bill C-52 would greatly improve Canada's rail freight service and consequently contribute to protecting and fostering the growth of our economy.

A great number of Canadian businesses, from grain and forest products to coal and chemical products, use rail services to ship their goods across the country or around the world. The range of sectors that rely on rail is reflected in the range of witnesses who testified on this bill at the Standing Committee on Transportation, Infrastructure and Communities. As my colleague, the hon. Minister of Agriculture and Agri-Food, said, “This bill is good news for Canada's farmers as it will help ensure all shippers are treated fairly by the railroads”.

Now let me explain how we reached the step of introducing this great legislation, and why all members of this Parliament should support it.

The years prior to 2008 were a time of unprecedented growth. Increased trade with Asia contributed to capacity constraints in the transportation system. In 2008, the government launched the rail freight service review to look into issues of rail service reliability that were brought to our attention by stakeholders. As part of the review, the government appointed an independent panel of three eminent persons to develop commercial and, if required, regulatory solutions to improve supply chain reliability. During the review, the panel held broad consultations with 85 shippers, railways and other stakeholders, and received over 141 written submissions. In December 2010, the panel submitted its final report to the government. It recommended several measures to improve rail service.

For example, the panel recommended the use of service agreements to define the commercial relationship between a shipper and a railway. It also recommended having a facilitator work with industry to develop a commercial dispute resolution process.

Our Conservative government agreed with the review's commercial approach and carefully reviewed the panel's recommendations. In March 2011, in a response to the panel, we announced a number of measures that we would undertake to improve the efficiency, effectiveness and reliability of the rail-based supply chain. Our commitment goes beyond the panel's specific recommendations in order to benefit the entire rail-based supply chain. Let me quickly go over the government's response.

The first measure we implemented was a facilitation process to develop a template of what service agreements could look like in a commercial dispute resolution process between shippers and railway companies. On October 31, 2011, the government appointed an independent facilitator, Mr. Jim Dinning, to work with shippers and railways. In his final report to the minister, Mr. Dinning provided clear direction for both shippers and rail companies, moving forward. This included a template service agreement and a streamlined dispute resolution process for parties to use in their commercial negotiations. This government believes this process served its intended scope and purpose. We successfully brought shippers and railway companies to the table to jointly pursue practical solutions that reflect their needs and the reality of their day-to-day business together.

To support these commercial tools, our Conservative government committed to tabling this bill that would also give shippers a right to a service agreement with the railways, and provide a process to establish an agreement should commercial negotiations fail. Bill C-52, the fair rail freight service act, would do just that. It would give shippers a right to service agreements with the railway companies, and would outline a low-cost, timely and efficient arbitration process to establish such agreements, if shippers and railway companies cannot agree commercially of course.

This legislation would align well with what the review panel recommended in its final report. As shippers told the Standing Committee on Transportation, Infrastructure and Communities, this piece of legislation would serve as a strong backstop to commercial negotiations.

First and foremost, the new provisions would create a strong incentive for the parties to negotiate service agreements commercially and to use legislation only as a backstop if commercial discussions fail. This reflects the panel's focus on commercial approaches to addressing service issues. If parties cannot negotiate an agreement commercially, the new provision outlines an arbitration process under the auspices of the Canadian Transportation Agency, which shippers would access to establish one.

The new provision prescribes service elements at a high level. Framing the provision broadly gives shippers the flexibility to ask for what is important to them, such as the number of cars needed for a shipment. This is in line with the approach suggested by the panel. It would also give the arbitrator the flexibility to tailor the service agreements to each case. If appropriate, the arbitrator could impose elements such as performance standards and communication protocols.

The new service arbitration process to establish an agreement would be fast, matching the 45-day process the panel proposed, although it could be extended by 20 days at the discretion of the arbitrator in some of the more complex cases. The arbitrator's decision on service would be final, binding, confidential and non-appealable. All told, this is a strong new provision that would improve rail service and make it more predictable and reliable.

Shippers echoed this sentiment during the hearings held at the Standing Committee on Transportation, Infrastructure and Communities and said that the new provision would enhance their leverage to negotiate commercially with railways.

To quote the testimony of the Canadian Propane Association on the bill at the standing committee, “...it contains all the mechanisms...we requested some years ago: a right to a level of service agreement, an arbitration process, and administrative monetary penalties”.

While introducing this legislation is a key component of our Conservative government's response to the rail freight service review, it is not the final piece. In collaboration with Agriculture and Agri-Food Canada, Transport Canada is currently leading an in-depth analysis of the grain transportation supply chain to focus on issues that affect that sector and help identify potential solutions.

Finally, we are also committed to establishing an industry round table covering commodity sectors in the near future. The commodity supply chain table would provide a forum for commodity exporters, railways and other members of the commodity supply chains to address issues that affect commodity freight systems. This would be an excellent venue for all players in commodity supply chains to work together to improve the reliability and competitiveness of Canada's export market.

As members can see, our Conservative government is well on its way to fulfilling its commitment to help ensure that Canada has the rail system it needs to support a strong economy and our domestic and international trade.

Bill C-52 is a comprehensive package that supports the government's focus on economic growth, job creation and prosperity for Canadians. We are working to benefit the entire rail transportation system. As shippers and railways move forward in defining their bilateral relationships through service agreements, and as stakeholders come together under the commodity supply chain table, it will be important for parties to work collaboratively to improve the efficiency, effectiveness and reliability of the entire rail-based supply chain.

In closing, I strongly encourage all members of the House, from all sides, to vote in favour of this very important legislation.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I live in a region and represent a place that relies heavily on our ability to move product to market. I am talking about a lot of small lumber towns, small cattle operations and farmers of various sorts.

What we have found over the years is that the smaller they are, the more mistreated they are by the large rail companies. I know that the view is shared across both sides of the House that small operators, whatever the industry, have tended to get short shrift as CN, in particular, and CP and others have become more interested in the big fish in the market and less interested in those small operators that actually built up the company from day one.

We had some improvements and amendments to make to the dispute resolution mechanism, based not on our own particular views but on the testimony we heard from those very same shippers. There are concerns that the arbitration method and the fines that are to be levied are not of enough consequence for the company to actually change its behaviour and its ways, particularly because these companies are so massive. I am talking about the rail companies that turn such extraordinary profits. There is not the motivation to actually correct the behaviour and change basic business practices.

We only get to do this once every so often. It is not very frequent that the House is seized with changing and improving our rail system. While the NDP members are supporting this bill, our lament is that the government did not listen to any of the amendments that came forward. It did not listen to any of the advice that came forward from some of those very shippers it now claims to defend.

It is a curiosity to me that the government was so intransigent over evidence brought before the committee. Why go through the exercise if it is not willing to listen to the facts?

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, as we have heard over the many hours we have discussed this piece of legislation, both in committee, from a wide variety of witnesses from different industries across the country who appeared before us, and in the last five hours or so of debate in the House, this is a bill that was widely consulted on.

Views were heard from the people who are actually affected on a daily basis. Yes, we heard from the railway system. Yes, we heard from shippers from across this country. We put together a piece of legislation that we believe encompasses the key points that will help get product to market, including product in the hon. member's riding, in a much faster, more efficient, more accountable way.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Mr. Speaker, the Conservatives often say that they are there to help the country prosper and stand up for businesses.

However, can the hon. Conservative member tell me why they are standing up for businesses that abuse their market power? Why are they not standing up for farmers and forestry and mining communities in Canada?

It seems to me that the Conservatives should be on the other side. It is obvious that the NDP supports the people in the second group.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, it is perplexing to hear a question like that from the hon. member, but I will endeavour to respond to it by simply saying this. We have put through a number of measures and a large number of pieces of legislation that address the needs and requirements of small, medium and large businesses in this country. We know, at the end of the day, that it creates jobs, growth and prosperity. It puts money in the pockets of everyday Canadians.

I would, for once, love to see the hon. member opposite support and vote in favour of some of this very important legislation rather than give me his party's talking points. Of course, part of the democratic process of the House is to oppose. However, to oppose for the simple reason of opposition is certainly not helpful. We will all be here at the stroke of midnight a few minutes from now, because we care about Canadians, and we care about putting in important pieces of legislation like this one that will benefit families from coast to coast to coast in this nation.