Transport Committee on Sept. 12th, 2017

[Brad Johnston]

That's a great question.

Let's start with time, time for, in our case, a train to go from an origin to a destination and to return. We measure that in hours. The quantity is moot.

There is time over a particular subdivision. When we talk about granularity, to us that means not measuring things in terms of the system-wide averages. In our particular case, from southeast B.C. to Vancouver, that's not that useful to us. In fact, it's not useful at all. We would want to know, for our specific good, the time, the quantity, the availability of locomotives, the availability of cars. Gosh, why locomotives? What is the redundant capacity? We don't plan to 100% perfection, so what's available to us, should we need it? What's the contingent capacity on cars? Are there some available? Are they all being utilized? We go into a great deal of detail on that in our submission. There is time across a particular subdivision.

When we talk about the issue of congestion for someone like Teck, we could aggregate it, but we want to know what's moving in the corridor in which our goods are travelling. You could aggregate the rest of the traffic. You could do it by car type. You could do it by length of train, and so on. But when our particular good now merges with the other goods, how are they behaving in conjunction with each other? We do that. How it's happening in January might be different from how it happens in August. There's a seasonality to it too.

There's labour capacity. How many additional crews do you have? You have to measure, on a very granular basis, the supply chain in order to understand whether you have adequate capacity—that's the denominator—and what's actually moving—that's the numerator.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

The example was given of the reporting requirements in the United States by Canadian railways operating down there. To your knowledge, are those requirements sufficient to meet what you would like to see in Canada?

[Brad Johnston]

No, they're not. The main reason for that is that what's supplied in the United States under the waybill system is a sample. It's not a complete reporting on the actual material movements. As I said, in 2017 with data capabilities and transmission, there's no need for any restrictions on data. All the data created in Canada in a year for all our railways we could store on a laptop that we could buy at Best Buy. Data storage is fantastic compared to what it was 30 years ago.

The waybill itself is a satisfactory record. It includes subdivision information. It includes interchanges. It includes what we call the “STCC” codes, the material, itself. But you need to report all of them. You give it to the reporting agency, which then collates it and publishes it.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Is everybody all right and satisfied?

Thank you very much to the witnesses. We appreciate your coming.

We are going to suspend until the next panel. The next panel will start at 5:30. I've cut half an hour off your dinner time so that we can move along a little bit faster.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

[The Chair, Liberal, Judy Sgro]

All right.

[The Chair, Liberal, Judy Sgro]

We're reconvening for our last session of the day. As the witnesses know, this is our second full day of hearings. We have two more days to go. We welcome you all here this evening for our final panel. We look forward to hearing your comments.

We'd like to start with Pulse Canada. Introduce yourselves, please.

[Greg Northey, Director, Industry Relations, Pulse Canada]

Thank you, Madam Chair and members of the committee, for the opportunity to discuss Bill C-49 with you.

Pulse Canada appreciates your focus on this bill and your efforts to expedite the study prior to the return of Parliament. We submitted a brief to you, and I will touch on a few of the recommendations contained within it.

Pulse Canada is a national industry association that represents over 35,000 growers and 130 processors and exporters of peas, lentils, beans, chickpeas, and specialty crops like canary, sunflower, and mustard seeds. Since 1996 Canadian pulse and specialty crop production has quadrupled, and Canada is now the world's largest producer and exporter of peas and lentils, accounting for one-third of global trade. The value of the industry's exports exceeded $4 billion in 2016.

The market for pulse and specialty crops is highly competitive, and maintaining and growing Canada's market share in over 140 countries that the sector ships to is a top priority for the industry. Pulse and specialty crops are the most multimodal grain crops in western Canada; 40% of our sector's exports through Vancouver are containerized. Efficiently managing the logistics in these supply chains drives the competitiveness of our sector. As such, predictable and reliable rail service is central to ensuring this competitiveness and economic growth.

It is through this lens that Pulse Canada has assessed Bill C-49. Will it deliver improved service, increase rail capacity and competitive freight rates to the small and medium-sized shippers that constitute much of the pulse and specialty crops sector? Pulse Canada believes that Bill C-49 has the potential to deliver these outcomes, but we would like to offer some recommendations to ensure that the bill delivers the results that government intended, that shippers need, and that the overall Canadian economy expects.

Increased competition is the most effective way to deliver improved service capacity and rates, and this is where the proposed long-haul interswitching rate regime holds the most potential. The competitive forces that extended interswitching delivered to the rail market as a result of Bill C-30 were directly beneficial to pulse and specialty crop shippers, and the sector would like to see the long-haul interswitching deliver the same results.

You have heard significant and detailed recommendations on how to improve LHIR today. So I would only like to reiterate one point: excluding large groups of shippers from accessing the provision or limiting a shipper's access to the nearest rail competitor when the next competitor may offer the best combination of service, price, and routing, significantly decreases the potential impact of this provision. For LHIR to work as intended, by letting market forces and competition prevail—a point shippers and railways agree on—it should not be artificially limited through a list of exclusions that cuts out huge swaths of the economy. These exclusions should be removed to allow shippers and railways to operate under LHIR in as competitive an environment as possible. This will bring maximum benefit to shippers, railways, and the Canadian economy. This would also help reduce the differences in interpretation and intents as well as the expected legal challenges that will plague decisions with this remedy for years to come.

I will now focus on provisions of the bill that are intended to help increase supply chain transparency. Creating a competitive environment with balanced commercial relationships requires a transparent freight rail system so that all involved can make commercial decisions based on timely and accurate information. To achieve this, the bill proposes two significant new data regulations and a transitional provision that would require railways to provide service and performance data based on the model used by the U.S. Surface Transportation Board. This is a good start. However, Bill C-49 proposes that this data will not be available to the commercial market until a full year after royal assent. When the data does become available, the bill allows a three-week lag between collection and publication of this data.

In the U.S. case, the railways and regulator began publication of this data within three months after it was ordered, and it was available publicly one week after the railways provided it to the regulator. With a concerted effort by shippers, governments, and railways, and an amendment to Bill C-49, Pulse Canada believes Canada can match, at minimum, the timelines set in the United States and fulfill the intention of Bill C-49 to provide timely data to the commercial market.

As recommended by the committee in your report on Bill C-30 in December, Bill C-49 has introduced a significant new requirement for the railways to provide confidential, commercial, and proprietary data to the Canadian Transportation Agency.

As you identified, this data is important, as it would permit the agency to more effectively identify and investigate issues in the rail system and exercise its authority to issue orders to railway companies. This is the point that Scott Streiner identified yesterday as an important issue, and it's one that Pulse Canada believes in as well. However, Bill C-49 limits the use of this data by explicitly specifying that it can only be used by the agency to calculate long-haul interswitching rates. Requiring this data from railways, but narrowing its application, severely limits the impact of this new regulatory provision and does not fully achieve the intent for the data to support the agency's delivery of its statutory responsibilities. Equally important, this data could be used to fully measure the impact of Bill C-49 and allow for evidence-based assessments as the bill is implemented.

To conclude, I'd like to address the proposed changes in Bill C-49 that will remove containerized grain from the maximum revenue entitlement. Pulse Canada understands that the government's intent with respect to this policy change is to incent innovation in the container supply chain, increase container capacity, and improve levels of service. These are valuable outcomes, and we must collectively ensure they are achieved, as removing this traffic from the MRE could potentially negatively impact the Canadian pulse and special crop sectors' international competitiveness. The focus, then, must be to ensure that other provisions in Bill C-49 set the necessary conditions for this change to the MRE to be a success and to truly result in more service and capacity. The data recommendations I discussed earlier will help ensure that everyone can measure the policy outcome, but Pulse Canada has recommendations on other provisions within the bill that will ensure that the remedy suite available to shippers in the event of service failure or costing disputes is functional.

First, the reciprocal penalty provision and the accompanying dispute resolution process introduced for service level agreements is a valuable change that will establish commercial accountability between shippers and railways. We applaud the government for introducing this. To ensure that it functions effectively, Pulse Canada asked the committee to consider clarifying that the intent of these penalties is to be sufficient to encourage commercial accountability and performance while recognizing the differences in economic power of small shippers compared with that of the railways.

Second, for small and medium-sized shippers and containerized shippers no longer shipping under the MRE, it will be essential that the general strengthening of the agency's information and dispute resolution services introduced in this bill, Bill C-49, is effective. The agency having the ability to attempt to resolve an issue a shipper may have with the railway company in an informal manner provides shippers with a less confrontational, more cost-effective and timely way to resolve service issues without having to bring a formal level of service complaint to the agency. These are barriers facing shippers when considering accessing agency provisions, and this is why the agency has stated they will increase outreach to shippers. It has nothing to do with the agency “drumming up business”.

To fully realize the potential of this provision, Pulse Canada requests the committee to consider clarifying what it means for the agency to take action on informal resolution. Our view is that taking action can include a wide variety of activities, including such things as questioning, site visits, requesting information, investigating, etc. Clarity on this issue would help during the implementation of this bill. Ultimately, however, Pulse Canada views agency own-motion powers, which has been discussed at length today, as the most efficient and effective way to address disputes and network issues and strongly urges the government to consider the agency's request to be granted these powers.

Finally, I'd like to briefly touch on a provision in Bill C-49 that is specifically focused on the grain sector. The requirement in clause 42 of the bill that railways self-assess their ability to move grain during a upcoming grain year and identify the steps they will take to enable grain to move can be an extremely powerful provision that can establish the basis for measuring railway activities against their plan both during and at the end of the grain year. To strengthen this provision and ensure it delivers the intended outcome, Pulse Canada offers recommendations in our brief to enhance that section to clearly set the parameters for the type of information railway companies must provide. For the pulse and special crops sector, better defining these parameters provides an additional platform for the monitoring and assessment of the impact of the decision to remove containerized grain from the MRE.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Northey.

Now we go to the Teamsters Canada Rail Conference, Mr. Hackl and Phil Benson. Of course, Phil is well known to many of us on the Hill here.

Welcome to both of you.

[Phil Benson, Lobbyist, Teamsters Canada]

Thank you.

I'm Phil Benson, a lobbyist with Teamsters Canada. With me is brother Roland Hackl, the vice-president of the Teamsters Canada Rail Conference, who will be making our presentation today.

[Roland Hackl, Vice-President, Teamsters Canada Rail Conference]

Thank you, Madam Chair.

As vice-president, I represent members on every freight, commuter and passenger railway in this country. Prior to that, however, some 29 years ago, I was hired as a brakeman at CN Rail. I'm a qualified conductor and locomotive engineer, so I have spent a significant portion of my life cooped up in an 8' by 10' control cab of a locomotive, so I am very familiar with the conditions we're talking about with respect to live video and voice recording.

Bill C-49 would provide for potential relaxations of various pieces of legislation that cause extreme concern to Teamsters Rail. We believe that Bill C-49 would compromise our membership's privacy for what can be stated as questionable safety and public benefits. For example, many of you will recall that a few months ago there was a derailment in north Toronto. A locomotive consist crossed over into a train. There was little damage but a lot of publicity; it was in a very populated area. Immediately following that, senior management from CP Rail, who owned the equipment and the track, came out on record saying that live video and voice recording would have prevented the accident. That's impossible. Live video and voice recording is to be reviewed after the fact, so unless these employers are suggesting monitoring live video and voice at the time it happens, there is no prevention possible. It's a tool, at best, for studying incidents after the fact.

The TSB currently has access to LVVR equipment, so for the past several years both major freight carriers and VIA Rail have been receiving locomotives fully equipped with LVVR equipment. This is live equipment. It is recording to date. In the event of an accident or incident, current legislation provides the TSB with full access to the information or data collected through this process.

The proposed legislation would allow employer or third-party access to LVVR, and we believe that would create a chilling effect on communications within a locomotive. It's a 10' by 8' space, where a person is sitting for 10, 12, 14, or 16 hours, communicating with a fellow employee during that period of time, talking about a lot of things. The concern we have is with the the chilling effect—which has been discovered and was referred to by Parliament some time ago as a culture of fear—that was instilled and fostered and nurtured first by the management of CN Rail. That management all moved to CP Rail. The same type of effect is in place now, especially when I hear CP Rail speaking about using this type of information for disciplinary processes. And that's no secret to us, because they have approached the union to say, “We want to use this for discipline. We want to be able to discipline based on monitoring this equipment.”

We believe that open communication between the employees in the cab, much like that between a co-pilot and pilot in an aircraft, is essential to the safe operation of this equipment. If you stifle that for fear of employers reviewing video recording at their leisure for the sole purpose of disciplining an individual, whether or not something has happened, it's going to create a problem with open communications on a locomotive. The private information will no longer be private. People talk about a lot of things in the course of their daily work. This is a locomotive engineer and conductor's office for 10 or 12 hours a day, sometimes longer, and there are a lot of things discussed. Some of it is relevant to railway operations. Some of it is only the conversation that every one of us has with co-workers during the course of our day. Should employers have access to that for any reason?

We think the bill in its present form is contrary to our rights as Canadians. To exempt 16,000 railroaders from PIPEDA, we believe is not appropriate, and this legislation would call for a specific exemption for the purpose of our employers, the people who have been found to foster a culture of fear, to watch. We have a problem with that.

We think the bill is overly vague in how private information is accessed, collected, and used. What third parties are we talking about? What is the purpose of a third party looking at this information?

As you've heard earlier, at least from CP Rail, the LVVR recordings could be used for a disciplinary investigation and proceedings against employees. The employers already have significant means at their disposal to track. There are forward facing cameras called Silent Witness. These face outside a locomotive and track crossings. There are audio recordings of what's going on outside of the locomotive. In the event of a crossing accident, that information is used. There is a locomotive event recorder, commonly called a black box, that records all of the mechanical functions.

There are Wi-Tronix that track the speed and can be utilized to track cellular use. They will send an alarm to the employer to say when something is wrong. Currently, if a train stops in an emergency brake application, an alarm goes off, triggered by the Wi-Tronix, to tell the employer so. With the existing equipment, the employer can then remotely review the forward-facing camera. That exists today. That's what they're using today, without having the invasive technology that puts a camera squarely in my face for 10 or 12 hours, recording absolutely everything I do.

We believe the bill is contrary to the TSB recommendations in its report on the LVVR. The original TSB recommendations call for non-punitive, non-disciplinary, privileged recording of information. We're fine with that, and we're fine with the TSB having access to this information. There is no apparent limit to what data can be collected. We talked about safety-beneficial uses. It's a very vague term. What is a safety-beneficial use? As it stands right now, a recording is running, 24 hours a day, seven days a week. The TSB has full access to that today. Should an employer have access to that information as well?

Many levels of the legal system, including arbitration, judicial review, court of appeals, and all the way to the Supreme Court, have upheld our existing rights to privacy. This bill would exempt us from those rights. With respect to that, there are multiple cases. I brought two with me. Unfortunately, they're only available in English. In one case, an employer thought it necessary to purchase a camera from a local shop and to install it in a clock in the booking-in facility, where employees report for work, to surreptitiously monitor crews. The employer portrayed this as a rogue manager taking this action on his own, but what we have to keep in mind is that the actions of that rogue manager were defended by a multinational corporation to arbitration. Had those actions been upheld, that would be the law in Canada today.

With the other federal employer, we had an incident where there was some suspicion on the part of a manager that an employee was fraudulently claiming benefits from workers' compensation. The manager took it upon himself to retain a private investigator based on a hunch. There was no proof, no data. The video tape was entered into an investigation, and a manager testified that on the Monday following a hockey tournament, the manager became aware of this. I have to ask what this manager knew on the Friday such that he took it upon himself to hire private surveillance to surreptitiously monitor an employee, when he didn't become aware of the fact until Monday. Again, that is what the employers are doing today with the equipment they have at their disposal. Again, the company portrayed it as a rogue manager taking the law into his own hands, but a multinational corporation defended that to the point of arbitration, and again, had we not been successful at arbitration, that would be the law today.

We believe further that this bill is contrary to section 8 of the Charter of Rights and Freedoms, either because the state is allowing the collection of this private information without proper safeguards, or by virtue of allowing employers to collect this private information without proper safeguards. We do not believe there is an attempt to balance the safety benefits with the rights of employees to privacy, as protected by law.

[The Chair, Liberal, Judy Sgro]

Mr. Hackl, I'm going to have to stop you there. I hope you don't have too much more to say.

[Roland Hackl]

Did I hit 10 minutes already? I'm sorry.

[The Chair, Liberal, Judy Sgro]

Yes, you did. It's almost 11 minutes, and I let you go a little bit further.

[Roland Hackl]

Okay.

[The Chair, Liberal, Judy Sgro]

Maybe you could try to get those last comments in through your answers to questions from the committee. Otherwise, it takes away from the committee's ability to ask you the questions they want to ask.

[Roland Hackl]

I'm here for your questions, to help.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

From Fertilizer Canada, we have Mr. Graham and Mr. MacKay.

[Clyde Graham, Senior Vice-President, Fertilizer Canada]

Good evening, Madam Chair and members of the committee.

Thank you for inviting Fertilizer Canada to speak with you today in relation to your study on the transportation modernization act. We are pleased to appear before you to provide the committee with information about our mandate, as well as to present our recommendations to help enhance the legislation's goal of furthering competition in the freight rail sector.

I will start with introductions. I am Clyde Graham, senior vice-president of Fertilizer Canada. I am joined by Ian MacKay, our legal adviser on rail issues.

Fertilizer Canada represents the manufacturers and wholesale and retail distributors of potash, nitrogen, phosphate and sulphur fertilizer, and related products. Collectively, our members employ more than 12,000 Canadians and contribute over $12 billion annually to the Canadian economy through advanced manufacturing, mining, and distribution facilities.

Our association, which includes companies such as PotashCorp, Koch Fertilizer Canada, the Mosaic Company, CF Industries, Agrium, and Yara Canada, amongst many more, is committed to the fertilizer sector's continued growth through innovative research, programming and advocacy.

Canada is one the world's leading producers of fertilizer. It is our products that help farmers produce bountiful, sustainable food in Canada and the United States and in more than 70 countries worldwide. We therefore play a crucial role in Canada's agrifood industry, an innovative industry identified by the Prime Minister's advisory council on economic growth.

To meet the demand of the world's farmers, we rely heavily on the railway system to move our products along our trade and transportation corridors to national, North American, and international markets. Fertilizer Canada is a proud partner of the Canadian rail system, and our reliance on rail is so extensive that our membership comprises one of the largest customer groups by volume for both CN and CP.

As key stakeholders, we are encouraged to be working with the government, which has demonstrated a commitment to modernizing Canada's transportation system and capacity. We commend the legislation's objectives regarding freight rail, and we are supportive of many of the proposed changes, including those clarifying third party liability, reinforcing rail safety, promoting competitiveness, and increasing data transparency.

In an increasingly globalized world, we appreciate the government's recognition that a nuanced approach to freight rail is necessary to meet the needs of the Canadian economy. We make our following recommendations understanding that the freight rail system should evolve to ensure that management of Canadian railways does not impair Canadian jobs, trade, or healthy competition.

I would like to begin by discussing the exclusions for long-haul interswitching.

Measures proposed in the legislation that would exclude certain materials and certain regions from accessing the benefits of long-haul interswitching are a serious concern for our members. Canada has long adhered to the common carrier principle as a foundation of our economy. This principle prevents shipping companies from discriminating against a particular type of good. It is what has kept the Canadian economy in motion despite our vast distances. Amending the legislation to exclude certain materials and regions from long-haul interswitching will have the negative effect of eroding the common carrier principle—a concerning precedent for all Canadians.

As most of our members operate in communities and regions captive to rail, denying access to long-haul interswitching based solely on their location increases their costs of doing business. From a safety perspective, I would also like to draw attention to measures excluding toxic inhalation hazard materials from long-haul interswitching. One such material, anhydrous ammonia, is a key building block of nitrogen fertilizer, and it is used extensively in Canada for direct application into the soil to grow healthy crops across Canada. It's a vital fertilizer for many farmers.

To date, there is no evidence to suggest that this material is not safely and securely transported by rail. Our members take transportation of their material seriously.

In support of that record, I'll add the following. Our members use purpose-built railcars for safe handling of ammonia. Our members invest significantly in the insurance coverage and safety measures necessary to safeguard the transportation of our products. Our members already pay significantly higher freight rates to transport dangerous material, and our association proactively develops safety codes and educational resources for our supply chain and for first responders to support the safe handling of fertilizer.

Tragedies such as Lac-Mégantic must never happen again. However, having said that, it is critical that we approach the transportation of dangerous goods through responsible, evidence-based policy decisions.

I reiterate that there are not and have not been any safety reasons to discriminate against the shipment of TIH material, such as ammonia, by long-haul interswitching. Our members already pay premium rates, which compensate the railways for their liability in handling it. When it comes to hauling ammonia, the rates are four to five times the rates we pay for other kinds of fertilizer. Any long-haul interswitching rate established by the agency will reflect this and adequately compensate the railways.

I would also like to briefly present two other recommendations relating to changes to extended interswitching and interchanges.

First, we caution against the provisions that would allow rail companies to remove interchanges from service simply by giving notice. We are concerned that the amendments strip the Canadian Transportation Agency of its authority to reinstate interchanges and strengthen the existing power imbalance between shippers and our railway companies. In the past, railways have denied that interchanges exist to avoid having to turn traffic over to connecting railways. We recommend this provision be removed from Bill C-49 to prevent inadvertent harm to captive shippers in the future.

Second, Fertilizer Canada and its members are disappointed in the government's decision to sunset extended interswitching up to 160 kilometres. I think you've heard this over and over again. We have found 160-kilometre interswitching has strengthened competition over greater distances, as Transport Canada has confirmed. Since western Canada's freight rail landscape has not changed in any fundamental manner since 160-kilometre interswitching regulations were introduced in 2014, we are disappointed by the government's decision to sunset extended interswitching.

The Canadian fertilizer sector is a proud partner of Canada's rail system. It is a system that works for all Canadian industries. It's a team approach to moving goods within Canada and to export markets. Together, we support Canada's global competitiveness in the agrifood sector through trade and transportation. Our $12 billion industry and our 12,000 jobs depend on a healthy, modernized, competitive rail system to survive and to thrive. Ensuring that our products are delivered to farmers safely and securely in places such as Niagara, the prairie grain fields, or the B.C. interior is of paramount importance to us, and we have a long proud record of success in that regard.

We are very supportive of much of what this bill proposes and commend its intentions. The captive shippers, who are on one rail line and captive to that railway, need to benefit from our national railway infrastructure. It's great to see the government act to support them. We do believe that more can be done, though, which is why we strongly encourage the members of the committee to consider our recommendations. We believe they can improve Bill C-49 through a considered, evidence-based policy approach.

Thank you. That's the end of our presentation. Ian and I will be happy to answer any questions that you have.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Graham.

We'll move on to questions, starting with Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair, and thank you to our witnesses for joining us today. I do appreciate the testimony you have provided.

As you noted, Mr. Graham, there's a recurring theme that we are hearing throughout the testimony that I would highlight that. Many witnesses appreciate much of what's in this bill, but they have concerns around certain provisions, one of them being the long-haul interswitching.

You mentioned the measures to exclude the movement of toxic inhalation hazard material and I think that was raised with me in a meeting that we would have had. I'm wondering if you can comment on what the rationale may be. Have you been provided with any rationale for why this exclusion has been made in this act?

[Clyde Graham]

We have not been given any persuasive rationale by the government, and it appears from our point of view to have been an arbitrary decision. There's no safety reason to do this, and I don't know why our products would be discriminated on that basis.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

You also commented on the common carrier obligations, or the common carrier principle, and the concern that this is foundational to the business that you do. Does your organization have any concern that it is somewhat of a slippery slope if this exclusion is made for long-haul interswitching? Could one assume that down the road these obligations will perhaps not be met?

[Clyde Graham]

That's what our brief says. We believe that this is a dangerous precedent. It could be applied to other aspects of the movement of our products, particularly ammonia, by rail. We don't think the railways should be allowed to pick and choose what they move. That's not their job. Their job is to move it safely.