Bill C-49 (Historical)

Transportation Modernization Act

An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts

This enactment amends the Canada Transportation Act in respect of air transportation and railway transportation.
With respect to air transportation, it amends the Canada Transportation Act to require the Canadian Transportation Agency to make regulations establishing a new air passenger rights regime and to authorize the Governor in Council to make regulations requiring air carriers and other persons providing services in relation to air transportation to report on different aspects of their performance with respect to passenger experience or quality of service. It amends the definition of Canadian in that Act in order to raise the threshold of voting interests in an air carrier that may be owned and controlled by non-Canadians while retaining its Canadian status, while also establishing specific limits related to such interests. It also amends that Act to create a new process for the review and authorization of arrangements involving two or more transportation undertakings providing air services to take into account considerations respecting competition and broader considerations respecting public interest.
With respect to railway transportation, it amends the Act to, among other things,
(a) provide that the Canadian Transportation Agency will offer information and informal dispute resolution services;
(b) expand the Governor in Council’s powers to make regulations requiring major railway companies to provide to the Minister of Transport and the Agency information relating to rates, service and performance;
(c) repeal provisions of the Act dealing with insolvent railway companies in order to allow the laws of general application respecting bankruptcy and insolvency to apply to those companies;
(d) clarify the factors that must be applied in determining whether railway companies are fulfilling their service obligations;
(e) shorten the period within which a level of service complaint is to be adjudicated by the Agency;
(f) enable shippers to obtain terms in their contracts dealing with amounts to be paid in relation to a failure to comply with conditions related to railway companies’ service obligations;
(g) require the Agency to set the interswitching rate annually;
(h) create a new remedy for shippers who have access to the lines of only one railway company at the point of origin or destination of the movement of traffic in circumstances where interswitching is not available;
(i) change the process for the transfer and discontinuance of railway lines to, among other things, require railway companies to make certain information available to the Minister and the public and establish a remedy for non-compliance with the process;
(j) change provisions respecting the maximum revenue entitlement for the movement of Western grain and require certain railway companies to provide to the Minister and the public information respecting the movement of grain; and
(k) change provisions respecting the final offer arbitration process by, among other things, increasing the maximum amount for the summary process to $2 million and by making a decision of an arbitrator applicable for a period requested by the shipper of up to two years.
It amends the CN Commercialization Act to increase the maximum proportion of voting shares of the Canadian National Railway Company that can be held by any one person to 25%.
It amends the Railway Safety Act to prohibit a railway company from operating railway equipment and a local railway company from operating railway equipment on a railway unless the equipment is fitted with the prescribed recording instruments and the company, in the prescribed manner and circumstances, records the prescribed information using those instruments, collects the information that it records and preserves the information that it collects. This enactment also specifies the circumstances in which the prescribed information that is recorded can be used and communicated by companies, the Minister of Transport and railway safety inspectors.
It amends the Canadian Transportation Accident Investigation and Safety Board Act to allow the use or communication of an on-board recording, as defined in subsection 28(1) of that Act, if that use or communication is expressly authorized under the Aeronautics Act, the National Energy Board Act, the Railway Safety Act or the Canada Shipping Act, 2001.
It amends the Canadian Air Transport Security Authority Act to authorize the Canadian Air Transport Security Authority to enter into agreements for the delivery of screening services on a cost-recovery basis.
It amends the Coasting Trade Act to enable repositioning of empty containers by ships registered in any register. These amendments are conditional on Bill C-30, introduced in the 1st session of the 42nd Parliament and entitled the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, receiving royal assent and sections 91 to 94 of that Act coming into force.
It amends the Canada Marine Act to permit port authorities and their wholly-owned subsidiaries to receive loans and loan guarantees from the Canada Infrastructure Bank. These amendments are conditional on Bill C-44, introduced in the 1st session of the 42nd Parliament and entitled the Budget Implementation Act, 2017, No. 1, receiving royal assent.
Finally, it makes related and consequential amendments to the Bankruptcy and Insolvency Act, the Competition Act, the Companies’ Creditors Arrangement Act, the Air Canada Public Participation Act, the Budget Implementation Act, 2009 and the Fair Rail for Grain Farmers Act.

[Bob Masterson]

From our perspective, short-line railways are very important, and we've stressed that their importance has been underplayed in the transportation 2030 agenda. Many of our producers carry product on that crucial first mile, and more important, when you're trying to reach a forest products mill in northern Saskatchewan, you're on the short-line for the last mile as well.

The short-lines are essential, and this is true beyond the provisions of Bill C-49. We've argued in past submissions to the finance committee that, because short-lines play such an important role in the manufacturing sector, we ought to consider putting some of the investment incentives we use for manufacturing into the short-line railways. Perhaps the tools we use to stimulate investment and growth could be applied to make sure those short-lines are on a sustainable financial footing. We should bear in mind that when these short-lines fail it's devastating for our members, our customers, and for many communities.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I'll preface my questions by stating that on Monday we had a strong theme of safety and passenger rights. Yesterday we had a strong theme of safety and business practice, which ultimately lends itself to safety. Today we're hearing about service levels to the customer.

As I said yesterday, a lot of what we're discussing regarding safety has to do with business practice. How do we lend ourselves to the broader transportation strategy of Bill C-49, building in a better business practice, a better level of service, and being able to bring our product to market, nationally and internationally?

I want to drill down a bit. In my former life at the municipal level we were all about these issues. We considered how to apply ourselves, our daily business at city hall, so as to allow business to be in a more effective and friendly environment. That's what I see here. One of the things we did back then, which I can see happening now on a national level, was to sometimes enter into the business world, not as a government but as a partner. Back then we entered into a partnership with a short-line railway because the class 1s abandoned us. To keep what happened in nearby jurisdictions from happening in ours, we bought a railway, which we ran and operated. We brought a short-line operator on board to make sure the companies that depended on those railways continued to be healthy and got the service they needed.

I want this to be a dialogue like we had back then, the same kind of dialogue here in Ottawa. Business often finds itself abandoned by the traditional transportation services. That could be on the water, the railways, the roads, or in the air. It could have to do with the government or the private sector. One example is short-lines. We all know this service attaches itself directly to business and provides a link to a broader transportation network. Often the future of business depends on that link and that network.

My question to you is twofold. First, can the product be moved by truck or other method of transport? I think I got that answer earlier when you said no. We know that some companies ended up closing because those lines were abandoned and nobody picked up the ball with a short-line operator.

Second, Bill C-49 addresses the broader transportation network and the broader transportation strategy. Do you, being in the business every day, have any recommendations on how this bill could give short-line operators a mechanism that would allow them to pick up on these abandoned lines so that local economies are not hurt and local communities remain healthy?

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

Thank you.

I still have one minute left.

I will quickly put a question to Mr. Nielsen.

I think you mentioned that soybeans were left off the schedule and should be included on the list. That is an anomaly, and I agree with you that soybeans should be in the schedule.

Should Bill C-49 provide a review mechanism for products on the lists, since we know that agriculture changes quickly? Eating habits change and industry habits change, as well. The market changes, and we can understand that a farmer may decide to change what they grow even though that involves high costs. Should there be a mechanism to review the list regularly?

[Cam Dahl]

Just quickly, I'm not a transportation lawyer, so I'm not going to say that the amendments in Bill C-49 are perfect, but the bill does propose to tighten up or better quantify the definition of “adequate and suitable”. “Adequate and suitable” really is how the railways are held to account. Bringing in that broader definition does help improve accountability.

Is that the perfect definition? Probably not, when lawyers give us different legal texts, perhaps, but it is a significant improvement over what is in the current Canada Transportation Act.

[Bob Masterson]

This is a great question to turn over to Ms. Edwards. She is an expert not only on Bill C-49 but also on all matters on dangerous goods.

Kara, are you comfortable with that?

[Bob Masterson]

I think the first answer is, yes, we do believe that the provisions of Bill C-49 will make a more balanced and competitive rail freight environment, but we have to remember the word “balanced” is important. We're not just saying that as a means to keep the peace. Our competitive position depends on the railways also being competitive and profitable. No one's here to punish them, but it hasn't been a balanced relationship up until now. We believe the provisions in this bill will create a more balanced relationship that will allow all of us to have commercial success and to grow our businesses in the future.

To your second question, of course, it depends, and unlike perhaps the agricultural community, with large volumes in a fairly tight geographic boundary, our industry is spread coast to coast and it really depends on the individual circumstances of individual producers in a very heterogenous sector. That said, there have been people who took good advantage of the earlier provisions and did quite well. They were pleased with it. That's one of the reasons why in the consultations as a sector we asked for something that was permanent, something that was available to all sectors, and something that truly provided relief for the opportunity for competitive commercial discussions between service providers on an ongoing permanent basis.

I hope that helps. Thank you.

[Cam Dahl]

I'll give just a quick response to both of those questions. Yes, Bill C-49 will improve the competitive balance when it is passed, which is why, on balance, we are asking that the legislation be brought to royal assent as quickly as possible. This bill will improve railway accountability, will improve transparency, and will move us closer to what we would have if market competitive conditions existed.

That being said, the extended interswitching was used. It was extensively used by the grain industry and it was an effective tool. Given our desire to have Bill C-49 in law as quickly as possible, our approach to you today has been to offer some amendments to the long-haul interswitching. That would make those provisions more effective.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

I want to thank each one of you for joining us today. I do appreciate your attendance.

As you pointed out, Mr. Nielsen, we know that the timing of these hearings doesn't dovetail very well with our agricultural community, but as it has been pointed out, this is important work that needs to be done. Your testimony here today is crucial in providing the committee with the information needed to ensure that the right balance is struck in addressing the underlying issues that exist in our transportation system. But we know that this is not the first time that your input has been solicited to aid parliamentarians in our deliberations on how to structure legislation that ensures market access and an efficient means of transportation for our shippers and producers.

Every witness so far has testified that there needs to be some changes to this legislation, and all have identified issues with the provisions around long-haul interswitching. Because I have such a limited amount of time to ask each of you questions, I have two questions that I would like each of you to answer.

Does Bill C-49 enhance competition in rail service, and, on balance, do you prefer the extended interswitching at 160 kilometres, as previously outlined in the Fair Rail for Grain Farmers Act, or do you prefer the LHI provisions in this bill? I'll have each one of you answer those questions.

[Jeff Nielsen]

Thank you, Madam Chair, and committee members.

Thank you for the opportunity to provide comments on this important bill. Grain Growers of Canada represents 50,000 grain, pulse, corn, oilseed, and soybean farmers from across Canada. We have members from the Atlantic provinces to the Peace Country of British Columbia. We are the only national farmer-run group representing all the grains that are exported around the world. Given our dependence on export markets, farmers like myself are highly dependent on a reliable, competitive rail system.

I run a family-owned, incorporated grain farm in south central Alberta near Olds. I grow wheat, malt barley, and canola. Right now, we're in the middle of the harvest. Luckily, we had rain today and I got the day off and I came here. It is important for me to come here personally to speak as a farmer on my thoughts about Bill C-49.

We greatly appreciate the work this committee has done in the past, including the excellent study on the former Fair Rail for Grain Farmers Act, and the recommendations made to the government. As Cam mentioned, the Barton report brought to light how important agriculture is, how the government views the goals, and how agriculture can grow to $75 billion in exports by 2025. We're thankful the government has that recognition and had the Barton report presented to Parliament.

The Grain Growers of Canada welcomed the announcement of this new legislation back in December, and we are hopeful for third reading of this bill and royal assent as soon as possible to avoid any of the handling issues with this year's crop, as we are heading well into fall now and winter is on its way. My entire crop is shipped by rail. I need a rail system that will not only perform for me but for our customers. These customers, we know, can go elsewhere. It is imperative that Canada has a rail system that is effective and responsive to get our crops to export position.

With that, I see opportunities within Bill C-49 to look at the ability to hold railways financially accountable for service provided. I want to give an example of how this would work for my farm.

Currently, there's no avenue to penalize the railroads for poor service. This lack of accountability impacts all players in the supply chain and, ultimately, farmers. I market my crops throughout the year when I see best-price opportunities for my farm and for my financial needs. Let's say I decided to sell 200 metric tons of canola in February because I saw a price signal there, and also in February I have an input bill that my farm needs to pay. It is not that I like choosing February, because it's minus-20 and I might need to shovel snow, but I'm quite willing to haul grain any time of year when I have signed contracts.

Here comes February. It's cold, it's snowy, and I'm out there ready to haul grain. The auger's in the bin, and I get loaded up and the elevator calls me that the train's not here. It has been put off for a few weeks. Then I call again and find the train has been put off for another few weeks. Now it's late April, and I'm getting my machinery ready to seed next year's crop. I have delayed paying my farm account, because I hadn't had the grain sales that I thought I had contracted for in February.

It has had a great effect on me personally and on my farm. My grain company has been affected, too. They had sales booked for that canola for an offshore customer. That canola did not reach port in time and those ships may have had to wait in Vancouver harbour for a lengthy period of time. That costs money too. It's called demurrage, which sooner or later will be passed back to me as a producer.

On the flip side, my grain company is fined by railroads if a train is not loaded within a set period of time, yet my grain company cannot fine the railroads for not supplying the train on time as scheduled. I've seen cars sit there for well over a week after they've been filled, yet there's no penalty issued to the rail companies then. That delay in moving that train for that week also delays the next train from coming in, which starts a snowball effect of delays.

We are all very familiar with the mess that happened in the winter of 2013-14. As a grain producer, I experienced it in many ways. I believe I lost marketing opportunities since I could not sell into certain markets because there were no opportunities for grain to be delivered. We saw contracts that were set for December and not delivered until well into the spring. That, of course, affected farmers' financial cycles as far as paying their bills and such. We saw customers, and I'll point to oats here specifically, who lost business. Those customers in the U.S. who wanted Canadian oats went to Scandinavia to fill their needs.

As I mentioned before, our customers have other choices. If we continue to allow the railroads to provide irregular, spotty service, we will lose those customers forever. Winter on the Prairies happens. Sometimes it's more severe than others, but it happens every year.

One of the other provisions we welcome in Bill C-49 is the increased requirement for reporting and railway contingency planning. It is hoped that our rail companies will quickly adopt and publish sound contingency plans to demonstrate that they have the capacity to get our products to wherever on time.

In the fall of 2013, farmers, grain companies, and Stats Canada knew that we were going into a large crop, which as Cam has pointed out, is now the norm. We are producing more grain continually, yet our rail companies, in the fall of 2013, were not ready. Winter hit and things literally went off the rails.

Data collection is another key point. It is important that we have a complete dataset. I commend the work of the Agriculture Transportation Coalition and Quorum Group for the information they provide, which has filled in significant gaps and helped us work with railroads to hold them more accountable in the last couple of years.

In Bill C-49, we also appreciate the ability of the Canadian Transportation Agency to play a larger role in areas such as improved dispute resolution. We see increased clarity of railway responsibility in the act when it comes to the definition of adequate and suitable service. One of the clear benefits I see of these two items is a much-needed assurance to me, as a producer, that if there are issues, they will be identified and hopefully dealt with prior to any severe impacts and the potential loss of sales or customers.

Grain Growers of Canada has a few recommendations we feel will strengthen the bill. I reiterate that it is critical that we have this legislation passed as soon as possible to ensure the smooth movement of this year's crop.

Grain farmers support maintaining the current maximum revenue entitlement, MRE, with the adjustments for capital spending, as proposed in Bill C-49. The MRE is working well at this time, and changing it slightly to recognize and incorporate the investments made by each railroad should encourage more investment and will gain infrastructure for the future as a result. The point there is our hopper car fleet, I believe. As we know, it's aging badly.

One glaring omission of grains under the MRE is soybeans. On behalf of our members, we ask that soybeans be included as one of the crops under the MRE's schedule II. Soybean acreage is increasing year over year in the prairie provinces, and naturally, those products are shipped by rail. This update reflects the current needs of an industry that were not anticipated at the time the MRE was set. This truly will be a modernization of the act. Once Bill C-49 is fully in effect, and we've seen the proposed improvements, a comprehensive review of the MRE can be undertaken, but not before.

I would like to quickly speak to long-haul interswitching. In the previous Fair Rail for Grain Farmers Act, we saw interswitching increased to 160 kilometres. This provided a very useful tool for our grain companies to obtain more competitive terms of service.

To illustrate how important interswitching is, I draw your attention once again to oats. Oats are a corridor-specific commodity being used by major processors in the U.S., and they need to get to the buyer in a regular, timely fashion. Many customers were lost as a result of the 2013 winter crisis, and the industry is still trying to get those markets back. The extended interswitching provision has helped many oat growers. Given the usefulness of that tool, we, as the Grain Growers of Canada, are concerned that the long-haul provisions set out in Bill C-49 may not be as effective or address some of the needs of all our producers.

We ask that you review the attachment to our submission for the recommendations from the newly reinvigorated crop logistics working group, of which I am a member. The group has proposed amendments to the long-haul provisions that we believe will ensure the security and market reliability the previous extended interswitching provided. Already this year we are seeing increased demand in the U.S. for some of our crops due to the poor quality in the U.S., and it must go by rail.

Grain producers are working hard to provide the world with top-quality grain, oilseeds, pulses, and corn. We believe strongly that the goals set out for increased exports are achievable and we are ready to work with the government to meet those goals. However, we need this legislation to pass as soon as possible to ensure that we can rely on the grain-handling system to get our products to export position.

I thank you for the time.

[Bob Masterson]

Thank you again, Madam Chair.

It is an honour to be among the witnesses to appear before this committee as it conducts this very important business on the review of Bill C-49, the transportation modernization act. In our brief time with you today, we want to share three key messages on behalf of Canada's chemistry sector. These are included in the brief before the committee, which provides additional details on our thoughts on Bill C-49.

Briefly, here are our three comments. First, it's important that you recognize that the chemistry industry plays an important role in the Canadian economy, and efficient and competitive rail transportation is critical to our business success. The second key point I wish to emphasize is that we enthusiastically applaud the work of Minister Garneau and his department. They've listened, and both the transportation 2030 agenda and Bill C-49 are highly responsive to the long-standing concerns expressed by our industry regarding Canada's freight rail system. Finally, while we do want to see Bill C-49 advance promptly, and we do not wish to introduce any new measures, we do believe that some amendments are necessary to ensure that the provisions of the act will indeed meet their intended objectives.

Let me begin by providing you with information about our sector, to underscore how important Bill C-49 is to the growth prospects of our industry. Canada's chemistry industry is vital to the Canadian economy. We are the third-largest manufacturing sector, with over $53 billion in annual shipments. Nearly 73% of that is exported, making us the second-largest manufacturing exporter in the country.

Like many people in the country, you probably don't give much thought to the role of chemicals in the economy, but it's important to note that 95% of all manufactured goods are directly touched by the business of chemistry. That includes all the key sectors of the Canadian economy: energy, transportation, agri-food, forestry, mining, and metals. Likewise, the goods the industry produces are also critical to communities and to quality of life for Canadians. This does include some dangerous goods: products such as chlorine, used to purify drinking water; and sulphuric acid, used in the manufacture of agricultural fertilizers.

Equally important, chemistry is a growing sector, both globally and within North America. During the past five years, more than 300 global-scale chemistry investments, with a book value of more than $230 billion Canadian, have been announced in the United States alone. Unfortunately, Canada has missed out on much of that initial wave of investment, but there are some promising prospects for capturing a share of the next wave of investments.

More than three-quarters of the chemistry industry's annual shipments in Canada move by rail. That accounts for 14%, or nearly one-seventh, of all freight volumes in the country. This makes rail costs and service two of the most important factors when investors are deciding whether to locate a next new facility or expand operations in Canada—or not. This makes a well-functioning and competitive rail freight market vital to the competitiveness of our industry and its investment prospects.

As mentioned earlier, we wish to stress that we applaud the government's efforts and are supportive of the rail freight measures to advance “a long-term agenda for a more transparent, balanced, and efficient rail system that reliably moves our goods to global markets”, as outlined in transportation 2030. Regarding Bill C-49, we believe the government has struck a balance between the needs and concerns of both shippers and rail carriers. We also believe the provisions of the bill are highly responsive to the concerns we have shared during consultations both with the Emerson panel, and more recently, with Minister Garneau leading up to the publication of transportation 2030.

Specifically, Bill C-49 addresses the important issues of data transparency and timeliness, market power, shippers' rights, reciprocity, fairer rates, and extended interswitching. The bill also proposes important measures to incorporate best available safety technologies by incorporating in-cab video and data gathering systems that have been used for many years in other transportation industries.

Taken together, the package of measures in Bill C-49 has the potential to make a meaningful contribution to a more balanced relationship between shippers and carriers, where the realities of today's transportation system mean a normal market environment cannot exist. Therefore, we believe that Bill C-49 presents a rare instance where our sector welcomes government involvement in creating market conditions.

The key word I want to stress in what I've just said, however, is the “potential”. Again, we do believe Bill C-49 is responsive to shippers' needs, we do believe it makes an important effort to establish a more balanced relationship between shippers and carriers in an otherwise non-competitive marketplace, and we are not here today to propose a suite of additional measures for your consideration.

Nevertheless, we are concerned that specific measures outlined and described in the bill may not achieve the desired outcomes. Specifically, with respect to the data transparency provisions in the bill, we would strongly recommend that these provisions include commodity-specific information on rates, volumes, and level of service that would support investment decisions and assessment of fair and adequate service. In this regard, we also recommend that the availability of information to shippers be expedited by establishing a firm early timeline for the implementation of the regulations.

On a closely related note, we recommend that the act include specific requirements for railways to provide the highest level of service that can be reasonably provided. We see ambiguity in the current language that stops short of equating “adequate and suitable” with the highest reasonable level of rail service. This should be clarified for all parties.

With respect to the Canadian Transportation Agency's powers and informal resolution process, we recommend that the agency's powers be increased, providing it with the ability to independently investigate issues on its own initiative and ensure informal resolutions are implemented and effective, and that policy-makers and stakeholders are then able to measure and analyze the broader trends in freight rail performance.

Finally, and perhaps most importantly to us, the intent of the long-haul interswitching provisions in the bill are most welcome. As noted in the government's own discussion paper, the previous competitive line rate measures were little used and provided no appreciable contribution to establishing a more balanced environment between shippers and carriers. We are, however, concerned that the range of limitations and specific exclusions on long-haul interswitching in the bill will likewise lead to its underuse and ineffectiveness. Many of our members are captive shippers. For many, trucking is not an option. For over 50% of our members, trucking becomes economically unviable at a distance of 500 kilometres. As such, we recommend the elimination of those limitations specifically related to toxic-by-inhalation products, to traffic originating within 30 kilometres of the interchange, and to exclusions pertaining to high-volume corridors.

Madam Chair, in my brief time with you, I'll stop here and welcome any questions you may have. Thank you again for the opportunity to speak to you today.

[Cam Dahl]

Certainly.

On behalf of Cereals Canada, I want to thank the committee for the invitation to appear before you today. It's not usual for a committee to be holding hearings like these when Parliament is not sitting, and it's definitely not usual for a committee to be holding marathon sessions such as you have been holding. We recognize this and thank you for the high priority you are placing on this legislation. It is absolutely critical for Canada's agriculture sector.

As I mentioned, Cereals Canada is a national value chain organization. Our membership comprises three pillars: farmers, shippers, and processors in crop development and seed companies. Our board has representation from all three of these groups. All parts of the value chain look for transportation reform as a key requirement for the success of our sector.

Canada exports more than 20 million tonnes of cereal grains every year, worth about $10 billion. Virtually all of this grain moves to export position by rail. The profitability of every part of the Canadian agriculture value chain depends on the critical rail link to our markets.

Agriculture has a strong growth potential. The Barton report indicated that Canada has the potential to become the world's second-largest agriculture and agri-food exporter in just a few short years. The report set a target of $75 billion in exports in 2025. This is up from $55 billion in 2015. Modernized transportation legislation is critical if Canada is to meet this growing demand and maintain our reputation as a reliable supplier.

Agriculture is not just about exports. The industry employs Canadians. One in eight jobs in Canada depends on agriculture. Our ability to meet these growth targets and our ability to increase the number of Canadians employed by the sector depend upon moving production to market in a timely manner. I want to stress this next point: “timely manner” must be defined by the international marketplace. We will not achieve these goals if transportation providers limit our ability to satisfy world demand.

These are the implications of Bill C-49, which is before you today. The first message I want to deliver on Bill C-49 is to quickly return this bill to the House for third reading. The bill will help introduce better commercial accountability into the grain transportation system, it will help improve grain-movement planning, and it will improve transparency and reporting.

I do not want to leave the impression that the grain sector has received all that it requested in this bill. There are provisions that the industry had requested: continuation of the extended interswitching provisions from the Fair Rail for Grain Farmers Act is an example of provisions that have not been brought into the legislation. However, no piece of legislation is perfect, and we believe that the bill should proceed. Cereals Canada has some suggestions for technical amendments to Bill C-49, which are outlined in detail at the end of the written brief you have received.

I want to touch briefly on why we're here and why we have the need for legislation.

Flaws in the grain handling and transportation system were highlighted in 2013 and 2014 when the system suffered a significant breakdown. The systemic failure impacted the entire value chain and damaged Canada's brand and reputation as a reliable supplier of agriculture products. This resulted in lost sales and it resulted in decreases in price. The crisis cost farmers, grain-handling firms, exporters, Canadian value-added processing, and ultimately the Canadian economy.

This was not the first time the transportation system failed one of Canada's largest sectors. This is clearly demonstrated by the multiple past reviews and commissions, such as the studies conducted by the late Justice Estey and by Arthur Kroeger and the report from the senior executive officers, and the list goes on. It is a long list of reports on grain transportation. History shows that if the underlying structural issues are not addressed, transportation failures will recur. Canadian agriculture and the Canadian economy cannot afford to let this happen again.

Railway monopolistic power is a key reason the grain transportation environment does not function to maximize the profitability of the entire value chain. Virtually all shippers are served by one carrier and are subject to monopolistic pricing and service strategies. Therefore, the government has a critical role to play in establishing a regulatory structure that strikes a measured and appropriate competitive balance.

I stress the word competitive. System reform will be successful only if the legislated and regulatory structure for grain transportation is adjusted so that it mimics the conditions of a competitive environment.

It is worth noting that the record size of the 2013 crop, over 70 million tonnes in western Canada, is often cited by the critics of reform as the cause of the breakdown in 2013 and 2014. However, this level of production is not an anomaly. Rather, it is the new normal. Grain production in Canada continues to grow, as does world demand.

This year, 2017, I'm sure many of you have heard—and Ms. Block is in the affected part of the province—there was a drought in many parts of Saskatchewan, yet western Canada is still going to produce one of the largest crops we have ever seen. We expect it to be between 63 million and 65 million tonnes. We have to be able to meet growing demand with growing supply.

I'm not going to go into the details of our amendments; you have them. But in summary, Bill C-49 will move us towards a more accountable and reliable grain-handling and transportation system. This is good news for everybody involved, including our customers.

The grain, oilseed, and special crops industries have been united in their call for measures that will help ensure accountability in the performance of the railways. Bill C-49 will help correct the imbalance in market power between the railways and captive shippers.

The legislation includes the following key positive elements: tools that will allow shippers to hold railways financially accountable for their service performance; improved processes for the Canadian Transportation Agency if issues do arise; clarification of the railway responsibility in the Canada Transportation Act by better defining “adequate and suitable” service; and increased requirements for reporting and railway contingency planning.

If passed, Bill C-49 will help balance railway market power and will help mimic what would happen if we had open competition. This is good economic and public policy.

While the most important part of the railway legislation is the increase in railway accountability, all of these provisions are important. Improving CTA processes is important to ensure that problems are caught and addressed before they snowball into major failures. Together with clarification of the meaning of “adequate and suitable”, this will help ensure that the Canadian transportation system meets the expectations of our customers both within Canada and internationally.

No piece of legislation is perfect, and Bill C-49 is no exception. Cereals Canada has presented a number of technical amendments. The adoption of these amendments should not significantly delay the passage of the bill, and the adoption of these amendments will significantly improve the transparency of the legislation. These are the first four amendments in our brief. They will also help align North American regulations between Canada and the U.S.

The amendments will also help to improve operational planning, as stated in the fifth amendment in our brief. It will also help give improved access to competitive tools to help improve the imbalance in market power. These are the last three amendments.

I welcome any of your questions on my verbal remarks or on the more detailed brief that has been circulated.

[Bob Masterson, President and Chief Executive Officer, Chemistry Industry Association of Canada]

Yes. Thank you, Madam Chair.

I'm Bob Masterson, president and CEO of the Chemistry Industry Association of Canada. I'm joined today by Ms. Kara Edwards who is our transportation specialist and an expert in all matters related to Bill C-49.

Thank you.

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling to order the meeting of the Standing Committee on Transport, Infrastructure and Communities, pursuant to the order of reference on Monday, June 19, 2017, to study Bill C-49, an act to amend the Canada Transportation Act and other acts respecting transportation and to make related and consequential amendments to other acts.

I welcome our witnesses who are here to help us get through Bill C-49 and let us know what your thoughts are. I'll open it up by everybody introducing themselves.

Cereals Canada, would you like to start?

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Benson.

Thank you to all the witnesses.

I think you can see by the questioning that we all care very much about Bill C-49. More importantly, we care about doing the right thing.

I thank you for sharing your thoughts with us. The committee will continue to grapple with this as parliamentarians always trying to do the right thing.

I move adjournment for today.

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

Thank you all the same for making that distinction. We've gone from one step to a big step. I imagine we're ahead.

I'll now go back to Mr. Hackl and Mr. Benson.

As far as the recordings are concerned, which have created quite an uproar, I think we agree. The TSB asks for access to the recordings to conduct its investigations, and you are prepared to give them, as long as the recordings remain confidential. I think we agree on that. That said, it is a post-accident measure. You have given me a glimmer of hope as to possible measures to counter fatigue.

I would like to address one last point with you. For decades, Canada's rail industry has relied on a visual signal system to control traffic over a significant portion of the network. It has also been more than 15 years since the TSB has steadily emphasized the need for additional physical defence. We are talking here about alarms. It even asks that the train be automatically stopped if the driver misses a signal, for instance. Bill C-49 says nothing about all of these measures. In my opinion, these are genuine rail safety measures, since they allow pre-accident response, not post-accident analysis.

Where do you stand on these measures? I would like to hear your views on establishing additional physical defences on locomotives.