Transport Committee on April 23rd, 2015

[Phil Benson]

It is consistent. We had several briefings on it, Mr. Mai, and I thank you very much for the question. It is consistent with what we were told; however, the rationale behind it wasn't given. The idea that this would make difficulties in making studies and having to look at scientists was raised. We did ask to talk to their legal people to see what the problem was between Gazette, parts I and II. Of course, we were told that was not possible.

The huge concern from the TCRC, the Teamsters Canada Rail Conference, who can't be here today because they're in executive board meetings, was the deletion of the running trades specifically spelled out. They feel that in the new Gazette II it leaves a possibility—because of the varied wording, which I have but won't get into—which could actually mean that the people who really require the fatigue management system to be in place may in fact be excluded.

We were told we were wrong. We will see what happens going forward, but our concerns are such that it is why we're asking for an amendment in the clarification. Fatigue management has to be dealt with. This committee has dealt with it and studies have dealt with it. People know we have to solve that problem in the rail industry. As we said about the act, we probably trust the rail companies less than the government does. That is clear by this act.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Quickly, regarding the 1-800 number, I think you've mentioned this before.

Can you tell us what has been done since you first raised the issue? Why it hasn't gone forward?

[Phil Benson]

Are you talking about fatigue management?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

No, the 1-800 number.

[Phil Benson]

The 1-800 number was placed within the safety management system, so we have the absurdity in the language that says that the company must have a non-punitive reporting system, and they must have this 1-800 number, basically to the ministry, so it makes no sense to have it within the safety management system. It should be something the minister does.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

My next question goes to Mr. Berthiaume.

You mentioned the impact it could have on your company. What exactly are you proposing? Could something in the bill be changed that would consider the risks that your company is taking, for example, risks that you feel are lower than for other companies?

[Terry Berthiaume]

One possibility would be exempting us from this regulation in the same way we've been exempted from the interswitching regulation in recognition of the very unique characteristics of our company. The fact is that we don't operate on main lines. We operate over very short distances at very slow speeds. Our maximum speed is 10 kilometres per hour. For these reasons, I think there's justification to exempt us from those regulations. We would continue with insurance limits of $25 million, which we have been carrying for many years and for which there have been no claims at all—zero claims. I've been there 34 years and we have had no claims paid by our insurers.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Maybe I'll ask Mr. Bourque a question. Do you know if there are other companies in the same situation? Or is Mr. Berthiaume's company very different?

[Michael Bourque]

Yes, it's precisely the point. His company is very different.

But there are other consequences for other short-line railways. I think the important point that was made was that not all short lines are created equal. They're all different. For that reason, there are some unintended impacts that result from the legislation.

I'll give you one example. Let's say a short line takes out $25 million in insurance, which it's required to do because it typically doesn't move any crude or any toxic inhalants, really, but it might move the odd carload of diesel or something else. Let's say that then one day it's asked to move a carload of crude oil. Under its common carrier obligation, it must move that one carload of crude, and it must go from $25 million in insurance to $100 million in insurance.

The profile of that company may be such that it is a very safe company, operating on very flat land, with an extremely good safety record, modern infrastructure, and so on. Yet it must purchase $75 million in additional insurance or it has to violate its licence and its common carrier obligation to say no to the customer.

These are the kinds of unintended consequences that I think warrant language that is a little bit more nuanced, so that each short-line railway can be examined on its own merits. Perhaps that's something that could be done by regulation, something that could be done by the agency, but clearly, in stark terms, it causes significant unintended consequences.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

I am thinking about the public’s reaction. We saw what happened at Lac-Mégantic: a company with insufficient resources for the situation. I kind of understand the difficulty that Mr. Berthiaume’s company is going through. I also think that it may well affect other small, local railway companies. If you have any concrete proposals for changes, could you send them to the committee so that we can look at them?

My last question, because I don't have much time, is for you, Mr. Benson. I think you mentioned section 21, where the Railway Association can actually come up and make recommendations or actually suggest changes to the law. What is your position? Is it because it's allowing only one group to propose changes? If the bill were amended to allow all parts of the industry to make proposed changes, would that be satisfactory?

[Phil Benson]

I hadn't thought of it that way. I'd prefer to eliminate it entirely. In other areas of transportation, everybody has an opportunity to bring it to the committee. I think it's improper for one group, or any group, to go directly to the minister. The frustration I have in dealing with Transport is that quite often the response is, “We'll just call over to the RAC and ask them to write a rule.” This is absolute silliness in the modern world.

A company's bottom line is to make money. The government's job is peace, order, and good government. This mixes the two. It assumes that somehow a company is going to have the best interests of the Canadian public in mind. That's your job. This is these people's job.

Eliminate it. Or if not, if you like it, then add on to it and say that Teamsters Canada can do the same. I'm sure that will fly.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. McGuinty, you have seven minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Mr. Chair.

I must say, Mr. Chair, that the minister was here an hour ago or less, and I think she repeated three times that there was extensive stakeholder outreach on this bill. It's really hard to square her claim of extensive stakeholder outreach when we have senior labour and a large railway company represented, along with the insurance sector, a short-line railway, and the Railway Association of Canada, all saying that there are serious problems with this bill.

I'm not sure where the minister was consulting, or with whom, but it's a little bit rich to come to this committee now, Mr. Chair, when we have very few meetings scheduled to deal with the bill, and to hear the depth of concern on this bill. I think what it's telling us is that this thing was cobbled together on an urgent basis, pre-election and post-budget, even though there was an 11% cut to the department of $202 million. They have come here to the committee and have brought us this bill, speeding it through, and we have the industry sector telling us, with labour, there are serious flaws in this bill.

Each of you said that there are unintended consequences, that there are distributive effects, and that it's about reducing underwriting uncertainty. It went on and on. Maybe I will ask you this: were any of you consulted on this bill? Did any of you sit down with the drafters inside Transport Canada and actually get asked what your core concerns were before this was cobbled together?

Mr. Benson, very quickly, please, and then we'll just go down the line.

[Phil Benson]

As far as I know, not at all.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Taylor.

[Robert Taylor]

There was a consultation process that Transport Canada led, which we provided written comments to. Obviously we don't sit down with the drafters of legislation. I think our concerns relate to some of the drafting, but we did provide written input into the department in terms of modernizing this regime.

[David McGuinty, Liberal, Ottawa South, ON]

So you raised the question of $250 million, for example, as quantum. Did you get an answer to that?

[Robert Taylor]

That was one item we would have liked.

[David McGuinty, Liberal, Ottawa South, ON]

Did you get an answer?

[Robert Taylor]

We got an answer when we saw the legislation.

[David McGuinty, Liberal, Ottawa South, ON]

I see. Okay.

Mr. Beardsley.

[James Beardsley]

Marsh Canada was consulted by the CTA at some early point in the process, but prior to the drafting of any draft legislation. For part of my questions to them with regard to some of the concerns we've raised today, the answer I got was that it was not made available to them. They were talking about the overall insurance market today, which, as I alluded to earlier, is really quite robust. What we're trying to do is really offer up some recommendations to make sure that the bill, when passed, is going to be sustainable from an insurance standpoint, even looking at all of the what-if situations that could come down the pike.

[David McGuinty, Liberal, Ottawa South, ON]

Yes. It's unfortunate that you're having to do it here now. If they had been listening, maybe some of those concerns would have been addressed in the legislation.

Mr. Berthiaume, I want to pick up on my colleague's questioning. I want to learn more about the short-line challenge. Perhaps you can extrapolate a bit. I know it's hard because you're with one company, but just give us a better idea. They clearly weren't thinking through the ramifications here on short line. We know that the costs around Mégantic, even though the minister's refusing to tell us, are somewhere between $450 million and $600 million and counting. We know that they would have been significantly higher had there not been a layer of natural clay below the substrata and the soil in Lac-Mégantic. Had there not been this layer of clay, most of this oil would have seeped into the aquifers, and the cost would have been way over $1 billion to clean it up.

Leaving that aside as one incident, and just in helping us design our way forward, tell us more about the specificity you'd like to see built into this bill, so we can get this balance proper between your company and, for example, CP.

[Terry Berthiaume]

First of all, as I said earlier, there's no comparison between us and even other short lines, let alone a comparison between Essex Terminal Railway and main-line carriers. We operate under totally different circumstances, and our risk is entirely different. The fact that in 34 years our insurers have not paid one claim says something about the risk associated with our business, yet suddenly we'll be forced to increase our insurance coverage from $25 million to $100 million simply because we carry more than 40,000 tonnes of dangerous goods. We carry those goods about four kilometres during daylight hours at very slow speeds. The cost of that insurance will be somewhere between $75,000 and $100,000.

As the minister alluded to earlier, we can't pass that through to our customers, unlike the main-line carriers, so we have to find a way to deal with those costs. We are operating under very depressed conditions. We've lost half of our customer base. For us to try to absorb that cost at the volumes that we're doing right now is just impossible. We wouldn't be viable.

How do we deal with this? Does it cost jobs? Do we put fewer ties in every year? Where do we find the money to pay for this? Also, why do we have to? We've proven that we have sufficient insurance to cover the risk of our operation.

[David McGuinty, Liberal, Ottawa South, ON]

Another thing that jumps out is that one constituent said to me that this bill appears to be all about fossil fuels. I want to get a better sense of your perspective on this. There are many dangerous goods being transported. In the hierarchy of risk, as I think Mr. Bourque alluded to earlier in one of his answers, we have a number of different products that are risky.

In the insurance sector, Mr. Beardsley—perhaps this is for Ms. Gardiner, but I don't know—what would be the most dangerous in terms of the hierarchy here, and is it being addressed properly in Bill C-52?