Transport Committee on Sept. 12th, 2017

[Janet Drysdale]

While the existing exclusions included in the bill we think are very important and need to be maintained, they do not address the issue of U.S. reciprocity in the three prairie provinces. To the point made earlier by my colleague at CP, there is still an opportunity for railroads to come into those three prairie provinces and to take business away from the Canadian rail network. I want to make the point that if a shipper wants to ship to the U.S., we do that day in and day out, and we're prepared to continue to do that, but the rate we do that at should be commercially negotiated with BN in the very same way we negotiate with BN, for example, when we want to access a customer in Chicago. It's this notion of disparity between the two regulatory regimes that concerns us, and the fact that we're giving an unfair advantage to U.S. railways to come in and take Canadian traffic at a prescribed regulated rate, when we don't have the same right to do so in the United States.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Okay.

Do you feel that you were adequately consulted on the minister's transportation 2030 strategy and in regard to Bill C-49?

[Janet Drysdale]

We certainly participated extensively in the consultation process. Clearly, we're dissatisfied with some of the outcomes that remain in the existing bill.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you.

I'll ask the same question to CP.

[Jeff Ellis]

Similarly, we participated, and we respect the process and the fact that we were consulted. Nonetheless, we do have the issues we've set out.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

Gentlemen, madam, welcome. Thank you for joining us.

I would like to start with a question for all the witnesses about safety.

I certainly heard your comments about the importance you place on audio and video recorders. However, my gut asks whether a voice and video recorder is going to help the TSB draw any conclusions on an unfortunate event that has already happened. I was rather looking to find out about the measures you plan to implement, or that Bill C-49 should implement, in order to prevent accidents.

As Mr. Ellis said, we know that most incidents are linked to human factors.

There are two major questions about the frequency with which the human factor is at play in accidents. First, there is the level of fatigue of locomotive operators. Then there are the repeated demands from the TSB pointing to the need to instal additional means of physical defence. This can mean alarms. or even technological mechanisms that can make a train stop when the driver has missed a warning he should have noticed. It seems repetitive.

In the major companies, what measures are in place, first to achieve better management of fatigue, and second to move towards these means of physical defence?

Perhaps, Mr. Ellis can start, but I invite everyone to respond.

[Sean Finn]

Well, maybe I can start.

There are two things. For the industry, and for CN, safety is clearly an essential value. We cannot be successful in our industry without safe practices. Without them, it is impossible to succeed.

You can ask my colleague, Michael Farkouh, a vice-president involved in operations, to explain a little about how it works, what measures are in place so that we always feel comfortable with safety matters and that we always have the assurance that safety is a daily value for all our employees.

[Michael Farkouh, Vice-President, Eastern Region, Canadian National Railway Company]

To address the question with regard to the locomotive voice and video recording as well as fatigue, our pursuit, of course, is always to reduce any accidents and injuries and to prevent them. Prevention is one of the key elements that we focus in on. When we are looking at our safety management system, we are always building on lines of defence. When we address locomotive voice and video recording, this is a tool that complements our efforts to further reduce that.

Earlier we talked about privacy. We don't take that lightly. We want to be very pinpointed from a risk assessment base as to how best we should use—

[Robert Aubin, NDP, Trois-Rivières, QC]

Allow me to interrupt you. I certainly heard your remarks about the recorders. Now I would like you to tell us about driver fatigue and the means of physical defence.

[Michael Farkouh]

With regard to fatigue, it's definitely an area that we are actively working on very closely with our unions. It's not so much fatigue but the healthy rest of individuals.

When we look at safety, we're not necessarily looking at the situation that has arisen but at how to prevent the situation from occurring. When we get to fatigue, it's really about addressing proper scheduling. It's addressing healthy sleep habits. It's an education process. As well, at work, when the individual is already fatigued, we have to look prior to that, and that's what we are currently doing and we are working very closely with our unions. We are not necessarily having to wait for regulations. We are really trying to address these issues as we see there's a level of importance to doing so. We're working closely with our unions on that.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

Mr. Ellis, do you have anything to add about fatigue and the means of physical defence?

[Jeff Ellis]

Yes, I understood your question completely, but I will answer in English, if I may.

With regard to fatigue, we take fatigue quite seriously. Our company has been advocating, for example, for a 12-hour maximum workday, as opposed to the current 18 hours. We hope that's going to be a change that will come into effect eventually.

In the meantime, as my colleague Sean said, we're working closely with the unions, because some of the issues around rest are tied up in collective agreements. But we don't dismiss the fatigue issue at all.

That said, it's one lever among several that we need to pull. In our view, LVVR is a critical tool and it has been proven in other realms in transport that it is extremely effective, particularly when you can have proactive use respecting privacy. We have absolute respect for privacy, Canadian privacy laws, and we think that we can address it in a balanced manner that balances risk with privacy protection.

[Robert Aubin, NDP, Trois-Rivières, QC]

You did not talk about physical means of defence. Is that because providing additional tools is not part of your short-term or medium-term plans?

[Sean Finn]

At the moment, for example, we are conducting a pilot project with our employees. They are wearing a gadget like a Fitbit, which allows us to find out about their daily habits, when they are both working and resting. It is allowing us to get baseline information that we can rely on. Fatigue is not just a subjective concept; it’s also a scientific one.

I think that is a good example. It’s not a question of regulations, but of pilot projects to which our unions are contributing. Through them, we want to be able to observe the balance between the requirements at work and the practices at rest. Thanks to that physical application, we can jointly determine what can be done so that drivers are more rested when they arrive. We can also determine which habits in their lives mean that they are less rested than they should be when they get to work.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Aubin.

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I'm going to dig a bit deeper for you folks and give you an opportunity to explain how Bill C-49 can actually become an enabler for you versus a disabler and, with that said, enable you to basically recognize the returns established by your strategic business plans.

My question to all of you—and I'm going to give you the time to answer this in depth—is to explain how Bill C-49 can in fact contribute to satisfying the established objectives that you've recognized for your strategic and/or business plans and how it can become an enabler for your organization to then execute those action plans that are contained within your business plan.

[Janet Drysdale]

I'll jump in on that one. In fact, our biggest concern regarding Bill C-49 is that it does just the opposite. One of the greatest challenges we're facing as we look ahead to increasing Canada's trade, export-import activity, is that we need investment in the Canadian rail system that underpins Canada's economy. In order to earn that investment, first of all, we need to ensure that we protect the existing traffic on Canadian rail lines and that we don't give the U.S. an unfair opportunity to come in and take the traffic and increase the density on their rail lines so they can then reinvest it in the U.S. network.

We are a highly capital-intensive business. We spend about 50% of our operating income every year in the context of ongoing maintenance and capital improvements to the physical infrastructure. Our biggest concern about Bill C-49 is the ability to continue to earn an adequate return in order to be able to make those investments that we require to keep the system robust.

At CN we have a particular concern about our remote branch-line networks, as I mentioned, which typically have a lower density of freight, and I think you've heard Michael Bourque speak about some of the challenges that short lines face. The reality is that rail is not particularly competitive when you're talking about distances under 500 miles. A piece of legislation that forces us to have these short-haul movements actually impairs our ability to earn an adequate return on a given movement, which we need to actually reinvest, particularly in those branch lines.

We've seen this happen before. We've had cases where we've actually had to abandon some of our networks in the more remote regions of Canada. Basically what ends up happening is that it encourages more trucking: the truckers have to step in and bring the truck to the more densely populated mainline network of railway. That's not good for our climate change agenda and it's not good for Canadian shippers. These are our concerns about Bill C-49, that in fact it makes it ever more difficult for us to achieve our business plan and to be able to earn those returns that we need in order to reinvest in our infrastructure.

[Jeff Ellis]

I'll refer the question to my colleague James Clements.

[James Clements]

I'm going to make a couple of comments. We have five pillars around our business plan, on what Bill C-49 does to help us enable our business plan.

Around safety, we would agree that the LVVR amendments, as proposed, are ones that would allow us to move forward and improve the safety. That's the first focus of our organization in anything we do, to operate safely in the communities we serve across the country.

We always talk about providing service as one of the core components of our business plan. We haven't had much commentary around the level of service amendment that has been proposed. One area that we would comment on around this is that we run a network. When we think about providing service, we're providing that service on a network basis and we have to juggle all the push and tug of what every individual shipper would like with the realities of serving everybody across that network. We think there needs to be some consideration in the regulation or the bill around looking at the entire impact of a service agreement or a service arbitration award on the network itself, not just on an individual shipper, because if you give the priority to one shipper, it could subordinate everybody else and have negative repercussions. That would be one additional comment I would make.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'd like to go back to Ms. Drysdale with respect to the branch lines.

You mentioned abandoning the branch lines because of the fact that it's just not feasible for you. Is there dialogue happening with the short-line operators that may be in the areas, or a short-line operator, to actually take on some of these branch lines, therefore creating some more revenue for you to offset the revenues that you need for your asset management plan?

[Janet Drysdale]

I think our experience with short lines has shown us that if it's not economically viable for us to operate, the likelihood that it's economically viable for a short line is very unlikely. It's not a matter of having a short-line operator come in to operate in those remote regions. The base level of traffic won't be there for them either.

Our experience with some of the short lines is that, over time, they haven't had enough capital in order to reinvest in their network. Certainly in the U.S. we see the same situation, but the U.S. regulatory framework gives them some different incentives and things such as accelerated depreciation, or even government grants, to help them make investments in their network. We don't have that in Canada.

In the context of a line being viable, if it's not viable for us, it's not going to be viable for a short line. In the context of short-haul moves, it would be more likely that the shippers would have to relocate, go out of business, or use trucking in order to get to the nearest major rail location.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Hardie.

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

I wanted to start with Canadian Pacific. This has to do with the LVVRs. I'm looking at your letter. There are a couple of comments in it that I would like you to comment on for me. One line is: “It is simply unjustifiable to tolerate unsafe behaviour by a crew operating a locomotive, without taking appropriate corrective measures.” If I were one of your bargaining unit members, I would take that as a threat.

Can you comment on that?