Transport Committee on Feb. 12th, 2013

[The Chair, Conservative, Larry Miller]

We'll now turn it over to Ms. Morin. You have five minutes.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Thank you.

Thank you for being with us, Minister.

I'm happy to note that you want the bill to be as good as it can be. At the same time, it appears to me that it does not allow the smallest businesses, such as family farm cooperatives, to access negotiations for service contracts with CN and CP. It seems to me that this is still reserved for large companies that can secure the best services.

I'm sure you will tell me that they can go to arbitration, but this costs money. It would be yet another expenditure for small businesses. How will this bill protect the smallest clients, family businesses?

I have another question. I was surprised earlier. My colleague asked you how long the contracts that have been signed would last and you said that they were private contracts. However, when my Liberal colleague asked you, you said these were one- to two-year contracts. I am a little bit confused. I would like to know whether these are private contracts or whether you have this information.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

I did say that this was information I received. Your question is very relevant and I thank you for asking it. Ms. Gibbons, who is in contact with these people on a daily basis, will provide you with this information.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

That's fine.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

Ms. Gibbons will not provide information on any particular contract, but she does have discussions with various partners who have signed contracts, and she was told that they were one- or two-year contracts. I personally have not seen any contracts.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

I understand.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

I am not aware of any particular commercial agreement. The information is accurate, right, Ms. Gibbons?

[Annette Gibbons]

Yes, that's right. Railway companies have told us that these agreements usually span one or two years.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Thank you.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

Every time an organization or business puts in a request, rail companies will have to work on a possible agreement. The bill does not mention the size of the business. It could be an agricultural cooperative in my region or in your region. It says that if a business wants to sign a commercial agreement with a rail company serving the region, whether that means shortlines or anything else that falls under federal jurisdiction, the rail companies have to respond to the business's request.

The way you asked the question is interesting. Commercial agreement requests from very small businesses may not be the same as those from a business that exports tonnes and tonnes of products outside Canada. That is why the bill does not impose a one-size-fits-all solution to commercial agreement requests. We are giving trade partners leeway to conclude agreements that meet their needs. We are also giving leeway for arbitration, even though we hope it will not be needed, so that everything can be analyzed based on criteria that will give businesses and rail companies the opportunity to come to an agreement.

[The Chair, Conservative, Larry Miller]

Mr. Sullivan.

[Mike Sullivan, NDP, York South—Weston, ON]

I'm going to continue Madame Morin's time.

Mr. Minister, I have two questions.

Regarding small versus large, a small business will be less able to afford the costs of the arbitration process, which can be quite large. Each arbitrator in Ontario charges $4,000 to $5,000 per day for services. If you have a hearing that lasts even part of that 45 to 65 days, it can run up quite quickly into $100,000 or more, not counting the small business's own legal bills. A small business will have a much more difficult time going up against a multi-billion dollar corporation like CN and CP, and there is no assistance in this bill for those individuals.

I'm asking two things. Would you consider assistance, and perhaps you'd consider the use of the administrative monetary penalties as a kick-start to an arbitration regime, which would help small businesses? So if you have to collect, and perhaps there's a kick-start to start it, that money doesn't just go into general revenue; it actually helps with the process.

The other question, if I may, is whether or not your ministry is considering helping Canadian Pacific with its plans to build a tunnel across the Detroit River, between Detroit and Windsor. As you have helped with the bridge, will you be helping with the tunnel?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

We think we have to let the private companies manage their own business. We'll follow what will happen with CP about that, but that's their business choice. We'll see what will happen with that.

For the size of companies, no companies want to start the process to have an agreement with a railway only for it to be finished by an arbitrator. For sure the small companies, small organizations, will express their needs, but at the beginning they will not want to go in front of an arbitrator and have to wait 45 days to have an agreement. We think these kinds of companies will have their requests, but they will know the capacity they have to manage this kind of agreement.

For sure when it is big companies, it will not be the same kind of discussion, but they will let free enterprise make their choice. That's free market. We know what I have said there. Sometimes some companies worry about the delivery of their service, sometimes it's only one. That's why we want to have an agreement. But at least we will let companies discuss together, organizations discuss together. We expect they will not have problems doing that. Then we can decide what will happen.

[The Chair, Conservative, Larry Miller]

Thank you.

We will now move to Mr. Holder for five minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I would like to thank our guests for being here today.

Minister, it's a pleasure to have you here at committee. You indicated that as the fourth minister dealing with this issue, it's finally being dealt with, and I applaud you and your staff for moving it to this point.

I would imagine that the railways and shippers have known that this was coming to this point of fruition. I'd like to get a sense from you whether you have any feeling for what the current relationship is between the railways and shippers. Obviously this has happened historically because of what were perceived as significant problems, but I'd like to get a sense from you. Do you have a feel today, with this legislation pending, for what the current relationship is? In other words, are we getting better? Are they getting better in terms of their interactions with each other? Is there more frequency of offering service agreements? Do you have a feel for that at this stage?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

Yes, for sure in the past we started this process because they were having problems. Since we started this process, as we said before, we know the railways have really improved their service and have agreements now with many companies.

Since we have announced this new bill, the reactions on both sides have been very good. We're very confident that it will be very helpful to have these agreements. We know sometimes there's a monopoly in certain parts of the country. It will really help to have this kind of agreement which the shippers have wanted for so many years.

[Ed Holder, Conservative, London West, ON]

I'd like to ask a question but perhaps in a little bit of a different way. We've heard, through various questions asked of you, about the railways' obligations to the shippers, and I guess I'd like to ask it the other way. Does this confer any obligations on shippers to the railways? Is there something that shippers are being asked to do, notwithstanding historical challenges that have been there? I'd like to get a feel for that.

Perhaps you or your staff could help us with that.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

As we know, when an agreement is signed, they have to respect what they have signed, but I will ask Annette to respond that.

[Annette Gibbons]

The only obligations on the shipper will be operational matters. For example, for the railway to deliver cars to the shipper, the shipper has to be there and ready to load those cars. The shipper would need to have a crew there.

If the shipper is asking for certain service elements in a service agreement, the bill says that the arbitrator can look at whether there are operational requirements that the shipper has to follow, and put those in the agreement as well.

[Ed Holder, Conservative, London West, ON]

Let me build on that.

If for any reason a shipper does not fulfill a requirement that is part of the service agreement, let's say—I'll speculate here—they take too long to load a car, or whatever it might be that delays a process, would that be deemed a punitive damage that would be potentially awarded by an arbitrator? How would that be perceived if the shipper were at fault?

I'm just trying to get a balanced sense of how this works.

[Annette Gibbons]

The bill does not contemplate any particular consequences for the shipper in the arbitrated service agreement. If the railway is dissatisfied with the way the shipper is respecting the agreement, then that would be something the railway could address on its own. For example, if it were something very egregious, it could use the courts to sue the shipper.

[Ed Holder, Conservative, London West, ON]

So it's much the same way outside of arbitration. If the shipper felt they had some claim, they would go outside of the arbitration arrangement. To be clear again, the arbitration amount is not a punitive issue, it's simply.... From the standpoint of damages, it's not a damages issue.

[Annette Gibbons]

No, it's not damages.

[Ed Holder, Conservative, London West, ON]

It's a compliance issue.

[Annette Gibbons]

It's compliance.