Agriculture Committee on April 13th, 2016

[Lenore Duff]

The minimum grain volumes were put in place to expedite the transportation of grain to the ports. There was a record crop, 30% higher than average, and a particularly cold winter that year, which resulted in trains having to run at reduced speeds and with shorter consists, so volume requirements were put in place to have the railways ensure that they were moving the crop to market.

Extended interswitching distances for all commodities across the three prairie provinces, given the huge crop and the backlog of grain, was designed to allow for increased competition. Shippers would be able to access other railways to move the grain, essentially.

Defining operational terms in service level agreements was getting clarity on the terms that are subject to arbitration in a service level agreement, such that it would encourage the use of those service level agreements that came into force in the rail freight service review the year before, I believe it was, which were being underutilized.

The compensation provisions that allowed shippers to claim compensation for levels of service failures were again in relation to complaints about the railways not meeting service obligation and that these failures were costing shippers money and that they should be compensated for them. Railways were allowed to have in their contracts and in their dealings with the shippers the ability to charge penalties for cars being released late; this would provide shippers with the ability to claim for out-of-pocket expenses caused by the cars arriving to them late and for their having staff there whom they had to pay and who were there essentially for nothing.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

You said “all commodities” across the prairies, but you mean grain commodities, right?

[Lenore Duff]

No. I mean all commodities—

[Alaina Lockhart, Liberal, Fundy Royal, NB]

All commodities? Okay.

[Lenore Duff]

—in the three prairie provinces.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

That's potash and that kind of thing?

[Lenore Duff]

Yes, everything.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

All right.

At the time, how was Bill C-30 received by agriculture? Were they pleased with the outcomes at that time?

[Lenore Duff]

I think so.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

At this point, now that we're reviewing, we've said that we've talked to stakeholders and that sort of thing. Are we at the same point in time? This had very specific things that they addressed. Have we overcome some of these challenges? Are we satisfied? Are you getting that kind of feedback from the industry or are there still provisions they're looking for?

[Lenore Duff]

I think it would be fair to say that there are still provisions they're looking for.

But with respect to what the volume requirements were designed to do, which was move a bumper crop, I think that was accomplished. Within the normal parameters that we track, the system returned to normal operations within just over a year. That was the expectation, and that indeed happened.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

The provisions were to address a short-term situation. In the meantime, are there other things that have happened to modernize the transport system and decrease the risks addressed by these provisions originally?

[Lenore Duff]

I think the system grows and changes. It is a commercial system, and the various parties make investments in the system in order to improve. Railways make investments to improve their business, and shippers make improvements.

Shawn did mention a couple of those things, just as examples of how the business is healthy and a lot of investments are being made in the industry. It's a good indication that it's healthy and profitable. Pointing to specific investments that we have a metric on for how it has improved probably would be something that the companies making those investments would be better placed to answer.

[Shawn Tupper]

One of things that I think we've learned is the importance of understanding the entirety of the system and the interconnectivity of that system.

In the last 8 or 10 years, Canada has made real progress with our gateways and corridors program, because it was actually an articulation of looking at the transportation system as a whole and understanding those pressure points as we look at where things cross from rail to trucks, or from trucks to rail and then onto a ship. That is I think where the report gives us that leverage to again think about what our 2.0 is going to be with respect to how we understand trade corridors in the country, and [Inaudible—Editor]

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Tupper.

We'll move on to Mr. Shipley for six minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman. I may split my time with Mr. Warkentin if I run out of questions.

To start, I have some comments. Most of my questions would go to the policy people, actually, but those aren't for you.

I'll go back a bit just so the committee really understands the significance of the Fair Rail for Grain Farmers Act. When that came in, there were more issues than just the significant issues around getting grain from the farms, from those that had specific grains. Some grains would move, but specific ones that were sold couldn't get moved. As a committee, we also wanted to make sure that this was not just about farmers tramping on top of other shippers, because we had also forestry, mining, minerals, energy, and the fertilizer industry.

In terms of the grain farmers act, it was brought in with the co-operation of and full consultation with other shippers. It was interesting, and obviously we learned a number of things, one being that it wasn't just about grain. This act came forward with a lot of discussion, particularly at the agriculture committee, about how we were going to improve the Grain Act.

When I look at the sunset clauses from that time that are set out here, I see that they're almost here right now. July isn't very far away. It seems like it's a long way when it's -20°, but it's not very far away in terms of how acts and legislation take place. If we were to let that sunset.... I caution our committee on this, and I submit to the government that this cannot happen. These sunsets cannot be left out there and not be acted upon. It will take us back to where we were before the grain farmers act. The reason it had some timing in it is that the Transportation Act review was needed, and it was agreed on by the committee that we needed that to take us to this point.

I'm looking at a question that I might ask you, though. Those were my comments. I know that all of us, just from the comments that have been made around the table, know the significance of making this protection be put back in place. Many of us have listened to many of the producers who are raising four or five major issues with the report, and I think this committee needs to be able to come alongside and reinforce the support that they are talking to us about.

One of the things—and it's likely just because I don't understand all of it—is that one of the recommendations is to redefine “producer car shippers” as just “shippers”. I'm wondering what that means in terms of the change in rights that would come with taking away “producer car shippers” and making those rights the same rights that “shippers” have. Help me with that.

[Lenore Duff]

I guess I would say—and it's specific language in this recommendation—that from our perspective, producer car shippers and shippers would typically be treated the same under the Transportation Act, but it is a legal question. It's to ensure that producer car shippers are defined as “shippers” under the act. Under the act, shippers are the entity that has access to the protections of the remedies under the act.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

That's right. Then obviously letting these things lapse also would bring back the lack of protection of the producer shippers on the penalty issue.

I'm going to turn it over to my colleague.

[The Chair, Liberal, Pat Finnigan]

You have a minute.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Okay.

I'll continue on that. This has always been a challenge for those who load producers cars: finding out who has the authority or who has the rights. Is it the person who ordered the cars or is it in fact the shipper, that being the farmer?

The solution obviously would be that the farmer or the group of producers that is shipping would be empowered to have all the rights and responsibilities of a full shipper at the table. Explained in the recommendation is that possibility. Is that your interpretation?

[Lenore Duff]

That's my interpretation of the recommendation: that there is concern that producer car shippers are not able to access the provisions of the act as shippers, and that this needs to be clarified. Yes.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Yes. There's a great amount of frustration not only in terms of the rights, but in terms of the communication. So often, those who are actually doing the shipping aren't empowered to know the information as to why cars are showing up late and why cars may or may not show up at all. That has been a massive frustration. Anything we can do to empower shippers as farmers, as producers, as they come together and load producer cars is absolutely essential.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Warkentin.

We will move to Mr. Longfield for six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks for the details and the conversation. As I mentioned earlier, before we were sitting formally, I'm originally from Winnipeg. I did work on the hydraulics in Prince Rupert and in Thunder Bay on the terminals. When I saw hydraulic problems, I wanted to get in there to change their oil or to do something else.

Looking at the terminals and our capacities, through climate change, the Great Lakes levels are dropping, and we have partial shipments going through the Seaway now, with ships that are not able to take full loads from Thunder Bay. I know from the report that most of our grain goes to the western terminals, but let's look at Ontario.

Guelph has the Guelph Junction Railway, one of three federally chartered railways in Canada. They are CN, CP, and the Guelph Junction Railway. We have 37 kilometres of track between the two major rail services in Canada, and we have the Port of Hamilton and the port in Toronto.

I'm not wanting to put alarm bells on, but what if climate change continues in the direction that we're seeing? Have you looked at the risk analysis on the rail system going to the port of Thunder Bay versus using rails going further east and possibly using some of our infrastructure in eastern Canada?

[Shawn Tupper]

You're picking up on my last comment with respect to getting to our 2.0 in terms of looking at where we go in our next rendition of the gateways and corridors program. I think that's exactly where we need to go, and that's why I think the data component is going to be critical in moving forward.

It's really about understanding what capacity we have in the system, where it's at, and looking at utilization rates, and then making sure that we're investing in those corridors in ways that allow us to get.... If you're in the middle of the country, all you care about is getting your goods to market, and we have to figure out the most efficient ways of doing that. That's where I think the data and the investment are going to be critical, and that's why the minister certainly has charged the department to start developing that advice.

As we move forward, I think a critical component of the consultations will be to really understand what that capacity is, where it exists, and how we can make the best investments to ensure that we're thinking down the road and that we have a bit of a vision of what those pressures are going to be in the future.