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.

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

Could you give us a concrete example of an aspect that you would like to see better defined in Bill C-49?

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I just have a few questions with respect to your comments about life cycle of railways, but I'm going to take it a step further. I'm going to refer to the life cycle of all transportation-related infrastructure, whether waterways, railways, roads, or airports, etc.

Currently there is a strategy that the minister has established, and this legislation, Bill C-49, will complement that strategy when we get it. With that there is going to be—I spoke about this with other witnesses—a need for infrastructure investments as it relates to life cycle, replacement maintenance, and ultimately replacement of those assets 30, 40, 50, 60 years down the road.

My question for you as engineers, as folks who are part of transportation-related systems, is do you find that the life cycle is actually being abided by? Are the strategies and asset management plans being put in place? That's my first question.

My second question is, are those asset management plans actually being financed?

[Martin Shields, Conservative, Bow River, AB]

Thank you.

Mr. Orb, in regard to Bill C-49 I think I heard some concerns and some positives. If you had your choice, what would be the most positive thing you see out of this and what would be the change you would like to see happen?

[Sean Fraser, Liberal, Central Nova, NS]

Oh, great. I'll shift to Mr. Bell, please.

You mentioned, I think quite appropriately, that prevention is probably a better way to go than merely reacting to incidents and accidents as they may occur. I completely agree. I'm wondering if you think that the prevention mechanism being considered in Bill C-49 is okay. Is it okay to allow a random snapshot in time to see how things are going? Do you need to be able to have the full body of video? Do you think the proposed mechanism is an appropriate way?

[Sean Fraser, Liberal, Central Nova, NS]

On the issue of reciprocal penalties, I need another point of clarification. You expressed I think some general support for some of the items in Bill C-49, but on this issue you think it comes up short. I'm looking at clause 23 of the proposed bill. It seems to me that this is addressing the reciprocal penalties portion, where it empowers the agency to order a company “to compensate any person adversely affected for any expenses that they incurred as a result of the company's failure to fulfil its service obligations”.

Is it that this doesn't apply as a reciprocal penalty or that it doesn't go far enough? Or is it that you think there should be some further guidelines?

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

In your opening remarks—tell me if I'm reflecting your comments correctly—I did not sense a great deal of excitement for Bill C-49. You seem to have trouble measuring the impact of some of the provisions and determining whether they are true solutions.

Let me give you a few examples of what I heard. I understood that the reciprocal penalties process should be better explained. My understanding is that you don't think the provisions in Bill C-49 are sufficient. You are saying that interswitching might be useful, but you don't seem sure that it is the solution.

Do you have some more specific solutions that you would like us to recommend to the government?

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

Thank you, Madam Chair.

My thanks to all three of you for being here with us.

I have questions for each of you and my first question is for Mr. Orb.

Before even talking about Bill C-49, I would like to point something out. It is almost the middle of September and a number of the provisions in Bill C-30 sunsetted on August 1. Without even knowing what will happen in a few months, are the measures that have not been renewed and that sunsetted on August 1 causing problems for exporters?

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Orb, I'm going to ask this question a few times unless some of my colleagues beat me to it in any given round. One thing that is a question in Bill C-49 is the development of a definition for “adequate and suitable” service. When you're speaking with your networks, what do they think about that? Can you give us any directions as to the sort of things we would ask government to think about when coming up with the definition?

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

Thank you.

I'm going to completely change my track of questioning and ask some questions of you, Mr. Orb. Welcome. It's good to see you here. Thank you for taking the time to come to Ottawa to share your thoughts with us.

I noted that in your statement you talked about a number of measures in Bill C-49, but specifically I want to ask you about reciprocal penalties, because you made a comment that SARM was disappointed that these penalties were not officially mentioned in the legislation. I'm going to ask you to expand on that and to then perhaps tell us what your thoughts are in regard to the long-haul interswitching measure in Bill C-49

Thanks.

[Jeanette Southwood, Vice-President, Strategy and Partnerships, Engineers Canada]

Thank you for the opportunity to be here today, Madam Chair. I'm very pleased to discuss Engineers Canada's stance on Bill C-49, the Transportation Modernization Act.

My name is Jeanette Southwood. In my previous role as principal at a global engineering firm, I was global sustainable cities leader and Canadian urban development and infrastructure leader. My team focused on areas that included supply chain, business continuity, and climate adaptation, urban intensification and restoration, and the strategic integration of cutting-edge global innovation and knowledge into solutions for private and public clients. Our portfolio included rail.

I am currently the vice-president of strategy and partnerships at Engineers Canada based here in Ottawa. Engineers Canada is the national organization that represents the 12 provincial and territorial associations that regulate the practice of engineering in Canada and licenses the country's more than 290,000 professional engineers. Together we work to advance the profession in the public interest.

With the entire Transportation Modernization Act open for public review and consultation, Engineers Canada's testimony today pertains directly to section 11 of the Railway Safety Act, specifically in relation to the design, build, and maintenance stages of railway work in Canada, and we have three recommendations in particular that I'd like to touch on in my remarks today.

The first recommendation is that the engineering principles in section 11 of the Railway Safety Act be further defined. The second is that professional engineers be involved in the entire life cycle of railways' infrastructure. The third is that climate vulnerability assessments be carried out on Canada's rail infrastructure and that Canada's rail infrastructure be adapted to a changing climate.

First, regarding engineering principles, in Canada engineering is regulated under provincial and territorial law by the 12 engineering regulators. The regulators are entrusted to hold engineers accountable for practising in a professional, ethical, and competent manner and in compliance with the applicable provincial or territorial engineering act, code of ethics, or legal framework in place. Technical provincial and professional standards of conduct are set, revised, maintained, and enforced by regulators who are all professional engineers in their jurisdiction.

By virtue of being a regulated professional, professional engineers are required to work with the public interest in mind and to uphold public safety. For this reason, Engineers Canada strongly supports and encourages the direct involvement of professional engineers in the design, construction, maintenance, evaluation, use, and alteration of all engineering work related to railways in Canada, not only to increase transparency and public confidence towards a safe and well regulated rail system, but also to uphold public safety and accountability on all railway work.

It is vital that the federal government incorporate professional engineers through the entire life cycle of a rail project, and not just in the final approval of rail work. Engineers Canada encourages the federal government to put measures in place to ensure that this is the case. It is equally important that it be professional engineers who take on the responsibility of overseeing and maintaining the standards and regulations set out by the federal government.

Currently the Railway Safety Act outlines that companies are obligated to report on the qualifications and licences of safety personnel. However, ambiguity and the possibility of misinterpretation are evident in section 11 of the Railway Safety Act, specifically in regard to the definition of engineering roles and engineering principles. The act states:

All work relating to railway works—including, but not limited to, design, construction, evaluation, maintenance and alteration—must be done in accordance with sound engineering principles.

The ambiguity around the term “engineering principles” creates space for misinterpretation and a potential situation where public safety is compromised. The act should specify that where engineering principles are to be applied, they must be applied by a professional engineer. Federal public servants who are tasked with overseeing the engineering work referred to in section 11 must also be professional engineers. Communities are better protected by the consistent application of safety and siting procedures where professional engineers are involved in decisions.

Our second recommendation is regarding the life cycle of railways' infrastructure. Involving professional engineers in the life cycle of rail projects will not only ensure that they are carried out with public safety top of mind, but engineers are also well equipped to design, build, and manage resilient rail infrastructure.

Canada's railway infrastructure is an integral enabler of Canada's growing economy, as we've heard from the two speakers who preceded me, providing services to more than 10,000 commercial and industrial customers each year, moving about four million carloads of freight across the country and into the U.S., and getting approximately 70 million people in Montreal, the GTA, and Vancouver alone to work each year. This vast integrated network needs to operate with efficiency and public safety in mind, both of which require a high level of reliable service.

Finally, I'll turn to our recommendation regarding climate vulnerability. Resilient infrastructure is the driving force behind productive societies, stable industries, and increased public confidence in civil infrastructure. However, Canada's infrastructure report card noted that much of Canada's current infrastructure is vulnerable to the effects of extreme weather, which is becoming increasingly frequent and severe. Vulnerable rail infrastructure presents a risk not only to public safety but also to the productivity of Canadian individuals and businesses and of the country's economy. Without the consistent application of climate vulnerability assessments to inform rail design, public confidence and trust in rail infrastructure will be fragile.

For example, floods and historic record water flows severely damaged Churchill, Manitoba's Hudson Bay Railway tracks on May 23, 2017, just a few short months ago. This major flood severely damaged five bridges, washed away 19 sections of track bed, and required that 30 bridges and 600 culverts be checked for structural integrity. This specific rail line transports food, supplies, and people to the remote community of Churchill, Manitoba, a community frequently visited by tourists during the summer months. With severe damage to the Hudson Bay Railway, service disruptions have now caused goods, services, and people to arrive by air transportation, an expensive mode of transportation to the northern community. The catastrophic damage to the rail line will take months to repair, causing major service disruptions to both individual and business productivity, as well as decreased public confidence in rail infrastructure.

Climate vulnerability assessments provide early awareness to planners regarding the potential impacts that extreme weather events could have on both public and private infrastructure in communities across Canada. Professional engineers in Canada are leaders in adaptation and are ready to work collaboratively with the federal government to provide unbiased and transparent advice to safeguard rail infrastructure from the devastating effects of climate changes. Engineers Canada, in conjunction with Natural Resources Canada, has developed a climate risk assessment tool that greatly enhances the resilience of infrastructure, increases public confidence in rail infrastructure, and decreases the severity of climate change impacts on individual and business productivity.

The public infrastructure engineering vulnerability committee protocol, also known as PIEVC, gives engineers, geoscientists, infrastructure owners, and managers a tool to design and construct rail infrastructure that will withstand today's rapidly changing climate. The protocol has been applied to a wide range of infrastructure systems more than 40 times in Canada, including with Metrolinx, and three times internationally. Engineers Canada encourages the federal government to invest in early assessment and prevention tools, such as the PIEVC protocol, to be a condition for funding approvals, accepting environmental impact assessments, and approving designs for rail infrastructure projects that involve rehabilitation, repurposing, maintaining, and decommissioning existing rail infrastructure. This investment will contribute to maintaining levels of service, safeguarding the environment, strengthening individual and business productivity, and upholding public safety.

Madam Chair, thank you for allowing Engineers Canada to present to the committee today on this important issue. We hope the committee will recognize that professional engineers play an integral role in Canada's transportation infrastructure and that our profession is ready and willing to ensure that Canada's railway system is resilient and safe and continues to be an enabler of Canada's economy.

[Ray Orb, President, Saskatchewan Association of Rural Municipalities]

Yes. Thank you.

Good evening. Thank you for the opportunity to address the committee tonight. I am pleased to be here today.

My name is Ray Orb, and I'm the president of the Saskatchewan Association of Rural Municipalities, or SARM.

SARM represents all 296 rural municipalities in Saskatchewan. Our members are home to a major agriculture sector. Saskatchewan represents nearly 40% of Canada's farmable land. This has allowed Saskatchewan to become the world's largest exporter of lentils, dried peas, mustard, flaxseed, and canola.

In 2016 Saskatchewan exported $14.4 billion worth of agrifood products. For a landlocked province like Saskatchewan, getting these products to market requires an efficient and effective world-class rail transportation system. That is why I'm appreciative of today's opportunity to talk about Bill C-49 since SARM members and the agriculture sector rely so heavily on the transportation system.

SARM has been an advocate for increased data reporting. More data means that better decisions may be made by producers and others in the supply chain. In SARM's view, railways should be required to produce plans that detail how they will deal with demands resulting from the upcoming crop year. This should include railways' contingency plans for larger yields and how they will deal with the cold winter months in the Prairies—that is, the equipment and the number of crews that will be needed, for example.

SARM is pleased to see that Bill C-49 includes an expansion of the Governor in Council's powers to make regulations requiring major railway companies to provide information regarding rates, service, and performance to the Minister of Transport. Enhancing data requirements and making more information available to those in the supply chain is not an immediate resolution to transportation issues, but it is a crucial piece of the solution.

Another advocacy point for SARM has been the need for reciprocal penalties. Holding railways and others in the supply chain to account is important as producers are the ones who ultimately lose out when levels of service are not met.

It appears that Bill C-49 will 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. Clarification for producers on how this will function is required. It would be beneficial for all parties involved if the Canadian Transportation Agency would provide further clarification on the issue, such as guidelines or best practices for reciprocal penalties.

SARM is disappointed that reciprocal penalties are not officially mentioned in the legislation. Should an impasse occur between the shipper and the carrier regarding reciprocal penalties, will the CTA intervene? Further clarification on the informal dispute resolution services is required. While there appear to be more details to sort out regarding reciprocal penalties, SARM is happy to see that reciprocal penalties will be allowable.

SARM also welcomes the amendment on the informal dispute resolution services. Providing cost-efficient, effective, and timely dispute resolution services is imperative for producers. Once the harvest is completed, producers must get their products to market in a timely manner to fulfill their contract obligations. Disputes should be resolved as quickly as possible so that producers won't face any additional penalties or unnecessary delays.

Long-haul interswitching may also be a positive new provision for producers. SARM supported the increased interswitching distances in the Fair Rail for Grain Farmers Act. It was hoped that extended interswitching from that act would be made permanent. While the extended radius will benefit more producers who are eligible, they must still negotiate with carriers before applying for long-haul interswitching. It remains to be seen whether this new provision is the long-term solution needed.

The retention of the maximum revenue entitlement, or MRE, is appreciated by SARM and its members. SARM members oppose the elimination of the MRE. This provision protects producers from excessive freight rates, ensures the movement of grain, and allows railways to reinvest in the rail network. Rather than eliminating the MRE, SARM members have passed a resolution requesting that the MRE formula be reviewed as soon as possible. SARM hopes that the changes to the MRE will continue to ensure railway accountability and transparency while still protecting producers from high freight rates.

Overall, Bill C-49 appears to address many of the concerns facing producers. The CTA review provided the agriculture sector with many opportunities to provide feedback and SARM is appreciative of this. SARM will continue to provide comments and feedback at every opportunity and looks forward to continuing to work with the federal government and all agriculture stakeholders to advance the sector.

Thank you again for the opportunity to speak to you today.

[The Chair, Liberal, Judy Sgro]

I call the meeting on our study of Bill C-49 back to order.

Welcome to the witnesses we have with us now. They are Jeanette Southwood, vice-president, strategy and partnerships, Engineers Canada, from the city of North York; and Ray Orb, president of the Saskatchewan Association of Rural Municipalities.

We know you very well. We have a member on this committee who reminds us constantly about Saskatchewan. We're really happy to have you with us here, as well.

Of course, we also have George Bell from Metrolinx.

Welcome to all of you.

Mr. Orb, do you want to start?

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Hardie.

Mr. Emerson, Mr. Streiner, and Mr. Al-Katib, thank you so much. You can see by the interesting questions that your comments are greatly appreciated.

I think Bill C-49 reflects a lot of the work that you've already done, Mr. Emerson.

So thank you all very much. Thank you very much for being here.

For the committee, I will suspend for now.

[Scott Streiner]

At the moment, the legislation, including the act as it would be amended by Bill C-49 , does not give us the authority to go and set standards for or investigate other players in the air travel supply chain. Under the legislation, we are to focus on the airlines and their tariffs. That said, we recognize—and we saw some of this in the testimony at the Air Transat hearing—that there are multiple players and that sometimes events involve more than the airlines. So even in the absence of the authority to make regulations or to adjudicate complaints with respect to other players, to the extent that our assistance could be helpful in facilitating smoother, more fluid, more effective working relationships between the different players, we are more than happy to play that role.

[Scott Streiner]

No, we currently have the ability to look at tariffs. If we get a complaint, for example, about an incident, we can look at whether the airline applied its tariff, but we can also look at whether or not the terms of the tariff are reasonable. Under Bill C-49, we'll be making regulations that establish minimum standards for things like flight delays and lost baggage, and those minimum standards will be deemed to be part of the tariff unless the tariff provides for better compensation than is in the regulations.