Agriculture Committee on March 31st, 2014

[Voices]

Oh, oh!

[Scott Streiner]

It goes to an earlier round of questioning.

[Malcolm Allen, NDP, Welland, ON]

Or 148....

[Scott Streiner]

It seems highly precise.

Again, the choice of 160 was ultimately a policy decision. But there was, I think, a desire when we were looking at the interest switching provisions and at extending them for a period of two years, extending the limits to ensure maximum opportunity for competition and for additional railway service to come into support grain farmers on the Prairies.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I get that, but why 160 exactly? How did you get to that number? I know the reason that you were expanding it, but why 160 and not 150?

[Scott Streiner]

Probably the best way of explaining the impact of 160 as opposed to the other number is to provide you with a map which shows the difference between 130 and 160 and shows how you get full coverage across the Prairies. I think some of the members may already have it.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Is that available?

[Scott Streiner]

We can certainly provide a copy of that map to the committee.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Madam Brosseau, for your questions.

We'll now go to Mr. Watson, for five minutes, please.

[Jeff Watson, Conservative, Essex, ON]

Chair, interswitching sounds...[Inaudible—Editor...]cabotage for the airlines.

Officials, thank you for appearing this afternoon.

I'll start first of all with what was Bill C-52, the Fair Rail Freight Service Act. I try not to say that too quickly because I can't say it five times fast.

Bill C-52 in part attempted to address the issue of service level agreements which are voluntary, as you know, by making some improvements. The first was the creation, if you will, of administrative monetary penalties which would be imposed, if I recall correctly, by the Canadian Transportation Agency after arbitration. It would be per violation. That was some attempt to establish the punitive measures for breach of obligations for services.

Is that a fair representation of what was done with Bill C-52?

[Scott Streiner]

There's just maybe a nuance. The service level agreements as you note are voluntary in the sense that the two parties are invited to negotiate them on a commercial basis. But it's important to note that the Fair Rail Freight Service Act and the changes to the CTA provide the shipper with the option to have a service level agreement, SLA, arbitrated if they can't negotiate one. So in that sense they're not fully voluntary. The railway can have an SLA imposed upon it through the arbitration process if a shipper and a railway aren't able to reach one through a negotiation.

The administrative monetary penalties, AMPs, that can be imposed by the CTA for non-compliance, are an attempt to focus the mind of railways and ensure that they will in fact comply with the obligations set out in the SLA.

[Jeff Watson, Conservative, Essex, ON]

One of the issues raised by the opposition and certainly raised also by shippers during the discussion on Bill C-52, and we're hearing it raised again here in the discussion of Bill C-30, relates to punitive damages, liquidated damages, compensation for shippers. If I understand the opposition, and I'll try to frame this appropriately what I think I'm hearing, they're suggesting to make service level agreements mandatory, define their operational elements in the Canada Transportation Act, and add a penalty regime. It's essentially the resurrection, if you will, of the arguments made on Bill C-52. There were a number of persuasive arguments on why that was somewhat difficult. It certainly wasn't simple, and it may have some unintended consequences.

First of all, is there any other commercial regime for addressing commercial contracts where in fact liquidated damages are set out beforehand in a piece of legislation? We're dealing with commercial contracts here.

[Scott Streiner]

There is not another regime where liquidated damages are set by an arbitrator in advance as part of an arbitrated agreement.

[Jeff Watson, Conservative, Essex, ON]

That's correct.

Were one to be imposed, a regime of penalities in this regard, could that disadvantage shippers by limiting their right to sue the railway in court for any damages after a breach has been confirmed?

[Scott Streiner]

That concern was expressed by the government at the time that Bill C-52 was being considered, that paradoxically perhaps these sorts of penalties through arbitration might work against shippers in getting full compensation for liquidated damages.

[Jeff Watson, Conservative, Essex, ON]

There was another issue raised, and I'll take this from the railway's perspective. In the case of a service level agreement, is it possible that railway companies could be penalized for poor performance or failure to meet obligations by other elements of the supply chain, say, the performance of a terminal hampering the railway's ability to meet its particular commitment? Is that a concern?

[Scott Streiner]

That's a concern that's been expressed by the railways around a hypothetical provision of this sort, yes.

[The Chair, Conservative, Bev Shipley]

A very short question.

[Jeff Watson, Conservative, Essex, ON]

Instead of asking a very short question, I'll just conclude with a comment, Mr. Chair.

Deferral of this to a regulatory environment, the Canadian Transportation Agency, probably not only on an ancillary basis is good, but it will prove what we already know. It's not simple to do this, though it may be popular. I look forward to the results of that particular exercise.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Watson.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

If the committee consents, I have a nice coloured picture of a map. It's only in one language, so I'd need the consent of the committee to table it, but if you'd like to see it now, I can table it and then you can have a look at the different interswitching distances.

[The Chair, Conservative, Bev Shipley]

It may just help show—

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

It will be sent to the clerk for distribution once it's translated.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Is that available online?