Agriculture Committee on Oct. 22nd, 2009

[Sean Finn]

Let me be clear. The notice is for 60 days, but we never said that we would just give the notice and then disappear; we wanted to speak to the communities. So, in the weeks before and after the notice that we gave, we met 100 different municipalities, mayors and general managers, to discuss the issues. The communities were not just informed through a simple notice; we communicated with them in order to explain that their line had not been used for three years and that it was our intention to give notice and to no longer use it. It is not up to me to comment on the legislation as it stands today. We complied with it, and we even went beyond it. It is important to us to ensure that the communities understand what we are doing. We did not just put notices in newspapers. It is up to legislators to decide whether that notice period should be longer.

You have to understand that the situation is somewhat different in urban areas. The lines are often longer and they can therefore be used for commuter trains or other services. In this case, the only use for the line is to serve wheat producers. There is no other use. The legislator can decide whether 60 days are sufficient or not, but rest assured that the notice is not the only thing we do. We took appropriate steps to communicate with communities; they were told what was happening, even though, after 60 days, we could have just delisted them.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

So all you have to do is inform the Department of Transport that you are going to be closing the stations.

[Sean Finn]

No, we have to publish a notice in the newspapers in that station's area. That is quite important. After that, we proceed with the closure.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Do you request authorization from the Department of Transport that is then obliged to grant it?

[Sean Finn]

We inform the department.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Bellavance. Your time has expired.

Thank you, Mr. Finn.

Mr. Atamanenko, you have seven minutes.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thanks to all of you for being here.

I have a question for CN. All 53 sites that are scheduled for closing are currently maintained. Does this mean that in the winter all the rails are plowed and they're ready to go or is it just at certain times of year? Could you explain that, please?

[Jean-Jacques Ruest]

They're in service, so it's whatever is required to keep them in service. Even though they're not being used, they're in active service. Therefore, we need to be safe. We need to inspect the switches. We need to inspect the track. If there is maintenance required on the switch, we would do it. If we need to plow the track, we would do that.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

According to my rough calculations, if we say that it costs $10,000 to maintain a site, we're looking at around $500,000.

[Jean-Jacques Ruest]

That would supply about 53.

[Sean Finn]

Again, I want to be clear that this is not purely an economic analysis. It's also a question of risk mitigation and risk management. We're talking about a switch on the main line serving a branch line that in some cases has not had a car on it for over three years. You can imagine this in the dead of winter; it's very clear. If it snows on the Prairies and trains go over the switch, snow gets caught in the switch. Then the day gets a bit warmer but freezes overnight and you're stuck with a switch that has ice in it. It has to be inspected and maintained.

A good railway will tell you that any switch on a main line has to be maintained at such a level that we don't have derailments. There's always a risk of derailments, and the more switches you have, especially for ones not being used, the higher the risks are.

Our job is not just to ascertain the cost of keeping those branch lines open. Our job is also mitigating our risks of an unfortunate derailment that would put down the railway, not just for that branch line, but for all of our customers, and unfortunately impact a community negatively in the case of a derailment over a switch.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

It sounds as if the decision basically is one on paper, where, obviously, if cars aren't being loaded, the sites aren't needed. Yet the argument is that there's a slow increase in cars and we have to look at the future, because once a site is delisted, you can't reactivate it. That's my understanding.

My other question is a practical one. Let's say there are 39 stations that have loaded no cars for the past three years. If Cam or somebody else suddenly wanted to use one of these sites in the next week, would he have access? What's the procedure? Is it automatic that if a farmer wants one of these sites now it's just a matter of ordering the car? Then the car will be there and he can bring his auger with him and make his inspection. Or are there some complications?

I'm asking because, Cam, you mentioned that groups tried to enter into commercial agreements but were met with some antagonism and a lack of cooperation. I want to see if in fact it's now a smooth system for even these sites that are potentially going to be delisted.

[Sean Finn]

You have the statistics in front of you. I'll touch on the first point. There are currently 123 operating producer sites on CN lines in western Canada and about the same amount for CP. So there are about 250 sites across western Canada and about a 50-kilometre spread from where they used to be.

Of the 53 sites we identified in the course of the summer that we wanted to have delisted, 40 were published in the appropriate newspapers, and we proceeded to speak to mayors, reeves, and directors of those cities or municipalities to say that we wanted to delist those 40 sites. The other 13, unfortunately, were listed in the wrong newspapers, and therefore those sites remain listed today.

We decided in September, after a meeting with the minister, to say that we understand the concern, so those 13 sites remain listed today. It's possible for a producer to order cars today and have them delivered today to serve those 13 sites.

The other 40 sites, after 60 days, were delisted. They're no longer on the website. You cannot order cars. We undertook not to impact infrastructures in any way, i.e., to leave the track there and continue to maintain the track and access to those branch lines to allow us to enter into discussions with producers or any third party who wishes us to reconsider our decision on those 40 sites. Currently they are not listed. You cannot order cars.

We are actively hoping to sit down with any producer car person in western Canada who says regarding a site that they wish to look to the next two or three years and arrive at an agreement with CN to ensure that they deliver cars. We'd be happy, if that were the case, at a certain level, to re-list that site on our website and also make service available on that site.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you.

Cam or Larry, do you have a comment?

[Cam Goff]

When I first heard about all these sites being closed, I talked to councillors and mayors of towns at these affected producer car sites. In one case, the reeve and the council knew of the site being closed and had written to CN, but CN said, no, it was going to be closed. In the other case, the mayor of the town the site was located in was not aware these were being closed. A councillor for the site where the location was being delisted was also not aware and he was a producer car loader.

Certainly the consultations that CN undertook must have been very spotty. As I say, just from my personal experience, I know of one case where they did and of one case where they didn't. In general, if a site is listed and a producer orders a railcar, CN is obligated to spot it, but these 40 that they said they delisted, of course, they're out of the system--for good.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

So basically the reason now for keeping these 53 sites open is for the future, according to farmers, the Wheat Board, and other farm organizations. Because if they're shut down now, that's it, and also, it's because of the volume, which is increasing. Is that correct?

[Cam Goff]

That is basically correct, except that some of those sites have been used. Allan, Saskatchewan, is a site that they are closing down. My brothers and I loaded two producer cars full of barley there two years ago. I think Allan has seen 16 cars in the last three years. Some of these sites that CN is delisting have had what I would consider to be a good amount of producer cars loaded.

I made a phone call to CN to find out at the beginning of this what their ideas were. They told me that they considered a commercial agreement to be $2,000 annually for the rental of the land, if you will, and then $8 per foot for the track. Any farmer who wants to load one or two cars a year is not going to pay $2,000 a year to CN plus $8 a foot for the track, because it just makes no economic sense.

These sites have to be located close to where the farmer has to haul from or they become useless. You can't haul long distances with the smaller trucks that most farmers can use in these cases. If you have to be hauling 20 or 30 miles, you can't do it penalty-free in the timeframe of eight hours. You just do not have the time to do all that work within eight hours.

[The Chair, Conservative, Larry Miller]

Thank you.

Your time has expired, Mr. Atamanenko.

We now have with us Kristine Burr and Peter Lavallée from the Department of Transport.

Thank you very much for joining us. Unless you have a presentation, we'll just keep going and open it up for questions. What would you like to do?

[Kristine Burr, Assistant Deputy Minister, Policy Group, Department of Transport]

I'm happy to speak to the committee, Mr. Chair, but I'm also very comfortable if you wish to continue with your questions.

[The Chair, Conservative, Larry Miller]

Is if fine with committee members to continue with questions?

Thank you.

Mr. Hoback, you have seven minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

Thanks to all of you for coming out today. I really want you to understand how important this is to our government. There are a lot of questions and concerns at the farm gate on this issue.

Cam, I appreciate your working with me in the past on this topic and I look forward to working with you on stuff like this in the future.

I have many concerns, but unfortunately I only have seven minutes.

You talk about the lack of use, about how you're abandoning because of lack of use, yet I have a rail line from Tisdale to Hudson Bay that you haven't used in probably 10 years. It's a nice parking lot, yet you won't put that line up for abandonment.

So I kind of look at that and you seem a little disingenuous when you say you're abandoning these lines due to lack of use. Yet there is a line that would actually add a tremendous amount of value to the farmers in that region if you would use it, but you won't use it and you won't put it up for abandonment. Can you explain how you can justify abandoning all of these lines if you have a line there that should be used, that could save farmers a lot of money, and that's not being used? I have a concern there. I have a question about that.

The other concern I have is that if you go to the town of Tisdale, we have Northern Steel utilizing that spur. They're not a grain producer. They're a manufacturer. They use it for bringing in steel. How have you consulted with them?

Like Cam said, when I talked to the town of Tisdale, they said nobody consulted them, so I'd like to have a list of who you talked to. You said that you've talked to all of these RMs and communities. Can you provide that list to the committee, please?

I'd also like to take Wayne's question, the one on the spurs and the costs, one step further. You said that you inspect the switches every week so you must have documentation to prove that you did that. Can you give us four or five samples of the documentation on that to show to us that you are spending that kind of money on inspecting those spurs?

I'm going to dive a little bit more into the deal with the short lines and subsidization that you do for inland terminals. You'll do a 100-car spot on an inland terminal, whether it's farmer-owned or a grain terminal, but when it comes to a short line, you won't offer that same benefit. Why is that? There are a lot of things you could do to expand producer car loading incentives, but you've gone the other way. You've actually created more incentive so that farmers don't utilize producer cars. You've gone the other way instead of utilizing the lines that are there.

I have another concern that we are going to abandon all of these lines and then, all of a sudden, that incentives that we have given to the grain companies, the farmers, and the terminals are going to disappear also. So then there is no competition there.

I've given you about five or six questions--and maybe this is more of a lecture--but guys, I'm not comfortable here. The other thing I want to point out is that we have to stay until January, but we expect results.

The minister said to me that he expects some sort of process to be put in place and that you're going to work with the farmers, the Wheat Board, grain companies, and whoever is utilizing these lines. Have you thought of what that process is going to be and how you're going to interact with farmers and different groups?

Maybe I'll start with that question, Mr. Ruest. Have you thought about that process and what that process will be?

[Jean-Jacques Ruest]

Today there are very few users, if any, for these 53 sites, and being on the commercial side, we need to engage with customers. It's really the lack of customers that brought us to the decision that these sites have not been used a for long time. It's hard for us to say who might be using them. We're looking for those folks. So if somebody wants to step forward and say, “I want to use that site, I want to lease it, and I'm going to use it to ship grain”, we're in the business of moving freight, and we'll happily do that.

[Randy Hoback, Conservative, Prince Albert, SK]

So what's the process for somebody to do that? Is it just to contact CN?

[Jean-Jacques Ruest]

They can call CN. There's a number--

[Randy Hoback, Conservative, Prince Albert, SK]

What time period do they have to create a business plan, to talk to the community members to see if there's support for doing that? Do you have that lined up in your process?