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.

Transport, Infrastructure and Communities

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, today I have the honour to present, in both official languages, the eighth report of the standing committee on Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration).

[Annette Gibbons]

I can only speak to the purpose of this new measure in Bill C-52, which is to provide an extra tool for shippers beyond the tools that currently exist in the act for shippers to be able to seek the level of service they would like to have from the railway.

[Annette Gibbons]

The act doesn't deal with giving the shipper any particular remedy in terms of seeking that kind of a damage. What it does do is give the shipper a remedy to complain to the agency—that's already in the act—about the service they are receiving and to have the agency adjudicate a decision, which can include ordering the railway to do certain things.

The act includes a remedy on final offer arbitration for shippers who are concerned with rates or other conditions of carriage. The act provides a remedy for shippers to complain about and seek a difference in fees that are charged by railways. Under this new legislative provision in Bill C-52, there now is an opportunity for a shipper to seek sort of a proactive setting out of the entire service relationship as it would like to see it with the railway.

Those are the key remedies. There are many others, but those are the key remedies that are there for a shipper to be able to seek assistance if the commercial relationship is not proceeding the way they would like it to.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

With respect to a breach of a service level agreement, currently the situation is that the courts can, in a commercial-to-commercial agreement...right? You go to the courts for remedy and presumably they are to enforce penalties that are agreed upon, or a mechanism that is agreed upon, in an agreement. That right is not removed from the shipper, with Bill C-52, they can still do that. The addition is the administrative monetary penalty. That would be for breach per service level agreement of up to $100,000. There are obviously dozens and dozens or more service level agreements so multiple breaches, if you will, of up to $100,000 are a new feature that could be applied in the event that rail companies are not acting in good faith. Is that correct? So there is significant deterrent value to the addition of the administrative monetary penalty.

Returning to the Coalition of Rail Shippers presentation for just a moment, I want to probe a couple of things here.

The second issue they raised is around operational term instead of term and they said that the expression “operational term” eliminates the shipper's ability to address non-rated items in or missing from a confidential contract or tariff such as force majeure.

What is a force majeure clause, for my own understanding, first of all? Are the shippers accurate in saying these clauses could not be included unless the bill is amended?

[The Chair, Conservative, Larry Miller]

I'll call this meeting to order, pursuant to the order of reference of Friday, February 8 of 2013, Bill C-52, An Act to amend the Canada Transportation Act (administration, air and railway transportation and arbitration). We do have witnesses here, I believe just to answer questions if necessary: Ms. Crook, Ms. Gibbons, and Mr. Langlois.

With that, we're going to be going through clause-by-clause. I might as well note it now because it will come up: for a lot of the amendments, the same amendment wording was put forth by both the NDP and the Liberals. The order that they will be dealt with, of course, is the order that they came in. I know in a number of cases, the NDP had theirs in ahead of Mr. Goodale.

I understand, Mr. Goodale, you had a concern with that, but that's the way it is. I think you understand that.

Ms. Morin.

[Denis Lebel, Conservative, Minister of Transport]

Thank you very much, Mr. Chair.

Mr. Chair, thank you for the invitation to meet with the committee today to address our main estimates, and update the committee on the transport, infrastructure and communities portfolio.

As you mentioned, I am joined by my colleague, the Honourable Steven Fletcher, Ms. Lemay from Infrastructure Canada, and Mr. Lévesque. Many members of our team are here, as well, sitting behind us. They are a skilled group that does great work at the Department of Transport.

I wish to thank the committee for its input over the past year relating to various issues, and I look forward to continuing our collaboration.

The main estimates we are addressing today will allow our portfolio to continue to address transportation- and infrastructure-related matters and services.

This work includes new regulations and legislation, projects to improve our transportation networks and our infrastructure, and programs that ensure the safety and security of transportation in Canada.

I've said it before, but it bears repeating: Canada needs safe and efficient transportation to achieve our government's goals of promoting growth, creating jobs, and supporting the long-term prosperity of Canadians. The economy is our priority, and we remain focused on it.

Given the important role that transportation plays in driving and attracting international trade, it is essential to ensure our economic competitiveness in the world. The funding we seek through the main estimates will help us to achieve this goal.

Mr. Chair, I know the committee is now very familiar with Bill C-52, the fair rail freight service act, as you are currently studying this important piece of legislation. I would like to thank all members of this committee for your work on this bill over the past number of weeks. Bill C-52 is a very important bill for our government because it strongly supports our economic agenda by ensuring that Canada's rail freight transportation system is well-positioned to support future economic growth, particularly in the resource development and commodity export sectors.

As you know, Bill C-52 will amend the Canada Transportation Act to create a backstop that will support commercial negotiations between shippers and railways with respect to service. This will enhance the reliability and predictability of our entire supply chain. The bill gives shippers the right to a service-level agreement with the railways that will define the terms of service a railway will follow to move shippers' goods. If a shipper is unable to negotiate a service contract with the railway commercially, it will be able to trigger a fast and flexible arbitration process through the Canadian Transportation Agency to have a service contract imposed. The bill also provides a strong new enforcement tool, an administrative monetary penalty of up to $100,000 to hold the railways accountable for their service obligations.

It is important to note that almost everyone agrees that since our government started looking into this issue back in 2008, the quality of rail freight service in Canada has improved. Bill C-52 is about solidifying and building upon these important gains. As a backstop, it will ensure that shippers have the leverage they need to negotiate service contracts with the railways. The goal is not to replace commercial negotiations; it is to provide the remedy for shippers in the event that commercial negotiations are not successful.

As we draft the bill, we worked very hard to listen carefully to the views of all stakeholders on what is a very complex issue. We have truthfully considered their proposals and we have tabled a bill that strikes the right balance for the entire Canadian economy. That's always been our goal, and I believe we have achieved it.

As I have heard support from all parties around this table for Bill C-52, I encourage this committee to proceed quickly with the conclusion of your study and refer it back to the House of Commons.

Moving on to another legislative initiative, this week we announced two significant measures to ensure that Canada has a world-class tanker safety regime through our safeguarding Canada's seas and skies act.

First, we have introduced legislation to amend the Canada Shipping Act of 2001. Some of the amendments would require certain facilities to submit plans for pollution prevention, emergencies, or any proposed major expansion or conversions to the Minister of Transport, and to empower Transport Canada inspectors to direct facility operators to demonstrate their compliance.

Second, I'm appointing an expert panel to review Canada's current tanker safety system, led by Captain Gordon Houston, former president and CEO of the Vancouver Fraser Port Authority. The panel will review Canada's oil spill preparedness, examine our capacity to respond to spills, and develop a plan for future response.

Finally, while the panel will develop a plan for the future, there are other steps we are taking to strengthen our tanker safety system. We are increasing the number of tanker inspections and aerial surveillance. We are investing in research on marine transportation risks of oil sands products. We are assessing our laws and regulations regarding marine spill liability. And we are engaging communities and first nations on their local emergency response plans.

The Safeguarding Canada's Seas and Skies Act is a good bill, and I am confident it will receive support from all members of Parliament.

Moving on from sea to surface, when I appeared before this committee last November, I noted that plans were proceeding to build a new bridge over the St. Lawrence, in Montreal. With some 60 million vehicles and $20 billion worth of international trade crossing it annually, this bridge is important to both Montreal and the country.

What I can confirm at this time is that the environmental assessment will be completed by the end of 2013 or early 2014. This year, we will move ahead on property and public utilities work to begin building the Nuns' Island temporary causeway, which we will need in order to construct the new bridge.

We're also working on the Detroit River international crossing. With more than 8,000 trucks per day, the region's Ambassador Bridge is already the busiest land border crossing between Canada and the U.S. The new crossing will provide much-needed border-crossing capacity to handle the anticipated growth in commercial and traveller traffic.

To begin implementation of the project over the next year, Transport Canada will establish the Canadian crossing authority. The department will also start property acquisition in the United States and complete property transactions in Canada. We will begin to reallocate utilities and prepare the Canadian site around the crossing for construction.

Investing in Canada's infrastructure is also a key element of the Government of Canada's plan to create jobs, growth and long-term prosperity for Canadians.

Since 2006, we have made unprecedented investments in thousands of infrastructure projects across the country, despite the systematic objections of the opposition parties. The biggest source of support for these investments has been the Building Canada Fund, which we established in 2007. While most of this fund has been committed to projects, it is important to remember that this funding will continue to flow beyond 2014, as construction continues on major projects we are supporting across the country.

In addition, we doubled the Gas Tax Fund, at $2 billion a year, and in 2011, we made it a permanent source of funding for municipalities. Thanks to our government, communities across Canada will be able to count on stable, predictable funding for their infrastructure needs.

In terms of other infrastructure funding, we are now looking to the future. But we are aware that any decisions must be made in the context of the Government of Canada's current fiscal situation and the capacity of Canadian taxpayers.

We have accomplished much through our investments in infrastructure projects across the country.

For example, residents in Nipigon, Ontario, recently celebrated the completion of upgrades to their wastewater treatment centre. In Pictou County, Nova Scotia, residents are taking opportunities to get fit and stay active thanks to the recent completion of the Pictou County Wellness Centre. And working together with the Government of Alberta, we have completed 12 important highway infrastructure initiatives that will support economic growth across the province.

Beyond local investments, we fund transportation infrastructure that contributes to trade and economic growth in Canada through our Asia-Pacific Gateway and Trade Corridor Initiative. By ensuring that trade supply chains can move people and goods efficiently, safely and securely between Canada and the rest of the world, we are improving incoming and outgoing North American trade, as well as our competitive advantage in global markets.

Since 2007, we have announced 39 strategic infrastructure investments in nine provinces under the $2.1 billion gateways and border crossings fund. This includes important initiatives in Atlantic, continental, and Asia-Pacific gateways.

We will continue to advance our gateway and corridor initiatives in partnership with other governments and stakeholders to improve our transportation system's ability to support international trade.

Unlike the opposition parties, we are focused on the economy.

You will note that these estimates indicate that planned operating expenditures for Transport Canada have decreased from 2011-12 to 2012-13. This reduction is mostly the result of savings announced in Budget 2012 and reflects measures the department is implementing to deliver more efficiently on its mandate.

Let me make something very clear. Transport Canada will continue to regulate, inspect, and oversee Canada's world-class transportation system, and it has taken measures to ensure that its core services remain properly funded and aligned with departmental priorities. These adjustments will not compromise the safety or security of travellers using any modes of transportation in Canada.

Transportation safety and security will remain a core part of Transport Canada's mandate. Canada has one of the safest transportation systems in the world, and the facts demonstrate it. The number of aviation accidents has decreased by 25% since 2000, while air travel has increased significantly.

And since 2007, the number of rail accidents has decreased by 23% and derailments by 37%. Transport Canada continues to emphasize the central importance of safety and security across all modes and to clarify the need for industry to create a culture of safety across air, marine and rail modes of transportation in Canada.

With these main estimates, we are moving forward with planned reductions in spending from our 2013 expenditures. But we will continue to ensure that the Canadian transportation system remains safe and secure, efficient, and environmentally responsible.

Over the past year, the departments under my portfolio have changed to meet the reductions announced in Budget 2012. We are working to modernize our programs and improve the efficiency of our workforce. Our employees take this challenge seriously and will strive to build greater innovation, efficiency and accountability in the portfolio.

That concludes my remarks.

I will now invite Minister Fletcher to speak to you regarding our portfolio's crown corporations.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Thank you.

I'll start with a question for Mr. Edwards, if you don't mind.

We're seeing greater and greater integration of the North American rail network. There seems to be a consensus, which was mentioned by at least some of you, that exports will increase over time. Seeing as exports will increase, presumably some of that will be coming from the United States.

What is the impact on Bill C-52 as far as the...or what kind of impact will it have on Canadian shippers that more traffic will be coming from the United States on our rail network? What kind of impact do you think that might have?

[Greg Stewart]

No. I think Bill C-52 adequately addresses the concerns that shippers had due to the past performance of the railways. Regardless, though, I think service-level agreements need to be the priority. Commercial arrangements that encourage further understanding of each other's businesses, collaboration, and working together on innovation will only benefit both parties.

[Jeff Watson, Conservative, Essex, ON]

Fair enough.

Mr. Stewart, with you being a shipper, your perspective with respect to Bill C-52.... I just want to be clear about this, because you mentioned a preference I think that you would have service-level agreements or the current system. Are you suggesting that Bill C-52 is not something you'd like to see? I just want to be clear about that. Your position is a little fuzzy to me.

[Jeff Watson, Conservative, Essex, ON]

You are aware, however, that Bill C-52 does explicitly require that the arbitrator consider the effect on network operations for other rail carriers in the determination of their agreement. I think shippers didn't want to see that articulated. Although it's sometimes considered in arbitration, Bill C-52 specifically includes that requirement.

So I'm not sure I agree that I foresee an inefficiency being created with respect to arbitration.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing before the committee, dealing, of course, with Bill C-52. Five minutes won't be a lot of time to ask questions and obtain answers. I'll try to be brief, and I hope you can be brief in your responses.

Everyone has noted that there's success in service-level agreements since the rail freight service review was initiated. Can you very succinctly characterize what the relationship was like before? Was there any difficulty in negotiating or fulfilling service-level agreements prior to the rail freight service review?

We'll start with you, Mr. Mayer, and then maybe go to Mr. Xotta after that, and we'll kind of work our way through.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Mr. Chair.

My thanks to all the guests who are here with us this afternoon.

Since I only have five short minutes, I will direct my questions to the port authority representatives.

When I read the Dinning report, among others, I felt that you had used some rather harsh words. Here's a quote from the report to give us a little background:

Port authorities reported that poor cooperation between railways and other stakeholders limits system efficiencies. All groups indicate there are no effective means to hold the railways to account...

What I have been hearing from the beginning of the hearings is that, since the bill was introduced, a number of improvements have apparently been made. I am not sure if they happened miraculously, but there have apparently been some.

My first question for you is a preamble to my second question. Do you think those improvements are temporary or do you really feel that there has been a lasting change in your relationships, even though Bill C-52 has not become law yet? If possible, could you give me a specific example?

You can answer in the same order as you gave your presentations, starting with Mr. Mayer.

[George Malec]

I would have to say that's a very concise response from my colleague.

We are conscious of the fact that this bill has been driven, obviously, by a need generated, let's say, eight to ten years ago, from shipper dissatisfaction. At this point we've seen great forward thinking and progress in terms of the commercial arrangements between shippers, port authorities, terminal operators, and the railways.

Having said that, this is an ongoing process, and we do think there is a rationale underlying Bill C-52. We do agree with the fact that we have to be very careful before we move to prescriptive solutions because of the complexity of the supply chain and the fact that these have to be very balanced. It's not just about the railway; there are all sorts of obligations on each party in the supply chain.

[Andrew Mayer]

I think we need to accept the fact that in some circumstances it won't be possible for a party to actually, in good faith, negotiate an agreement. In that sense, Bill C-52 does suggest a mechanism for resolving that impasse.

I think what's missing is an interim step to facilitate a mediated resolution of a dispute without recourse to arbitration. Arbitration really should be a last resort. If there is going to be arbitration, it should be as I suggested, something that contemplates the interests of all users of the supply chain.

[Denis Coderre, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Thank you, gentlemen.

My question will be for Mr. Stewart and Mr. Edwards. Because that's the reason we have Bill C-52, do you believe the law would give shippers more leverage to negotiate service agreements? You could have the railways saying they don't need that and some of the ports saying, well, they already have the commercial agreements, so why bother? From a shipper's point of view, what would you think?

I'll ask Mr. Edwards first.