Transport Committee on Oct. 3rd, 2017

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

I am not sure I grasped the question correctly, but I will say that the objective of the amendment is to harmonize the possibilities, the rules that apply to short-haul interswitching and to long-haul interswitching. The same obligations have to apply. With class 1 rail carriers, for example, there would be a need to provide suitable facilities. That would work both for short-haul and long-haul interswitching.

[Alain Langlois]

The rules on short-haul interswitching, which appear in section 127 of the act, will continue to apply to traffic transferring between a shortline to a class 1 railway. The provisions of the act that deal with short-haul interswitching will continue to apply for that kind of movement. If the distance is over 30 km, as already provided for in the act, ultimately, as Ms. Jones has pointed out, long-haul interswitching will not be possible if the railway is not a class 1.

[The Chair, Liberal, Judy Sgro]

Are there further questions or discussion on amendment NDP-4?

(Amendment negatived [See Minutes of Proceedings])

On amendment CPC-14, for the information of the committee, again our great minds are working alike. Amendment NDP-5 is identical to CPC-14.

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

Madam Chair, again, I would point out that numerous witnesses provided testimony to the committee and made this recommendation to us. To quote what we heard:

[W]e are also very concerned about the ability of the longhaul interswitch provision to address shipper concerns over ratesetting. In other words, the way that Bill C-49 is currently written, it places a floor on LHI rates, indicating that a rate cannot be less than the average of per-tonne kilometre revenue of comparable traffic. The bill needs language that gives the CTA the ability to consider commercially comparable competitive rates when determining the interswitching rates.

They recommended:

The CTA should also give regard to the actual cost to move the shipment, not what the railways have managed to charge in the past when monopolistic powers were at play.

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Aubin.

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

Thank you, Madam Chair.

First, I would like to reassure the chair that Ms. Block and I have not been consulting each other. However, it is clear that we have heard the same witnesses. If two parties often come to the same conclusions without consulting each other, it is probably because there was a broad consensus among the witnesses.

I have to say that I am a little disappointed to see the speed with which the amendments are being rejected given that, in my opinion, there seemed to be a broad consensus about them.

My hope is that, on this side of the table, we will be able to succeed where success was not possible before.

We have a duopoly situation. So, if we compare the previous prices and we are not able to include them in the range of competitive prices, there is no point to the process. The goal of the amendment is to make sure that the items being compared can also be based on a competitive measure.

[The Chair, Liberal, Judy Sgro]

Are there any further comments?

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

I appreciate where you're both coming from.

One of the things I really struggled with was trying to comprehend how LHI is going to create a competitive rate when you're dealing with pseudo-competition realistically.

One of the things that stuck out for me from the testimony we heard was that right now, Canada has maybe the most competitive shipping rates worldwide. I don't know if we had explicit testimony that considered every single country, but we're certainly among them.

I remember there was a witness, I believe from Teck Resources, who explained that some of these bigger captive shippers are operating in more or less a competitive circumstance when they have a lot of bargaining power at the table. I forget the gentleman's name, but he explained that when we compare the rates they were getting, despite the fact that they were captive to the rates they were getting in competitive U.S. markets, they were pretty much on par.

I'm very concerned about upsetting the balance that has been struck in long-haul interswitching. I see certain measures being proposed in the amendments that could cause the railways to not be economic. I think we have a lot of measures for shippers that I'm very, very happy about, but if the railways aren't thriving as well, the whole system could collapse on itself.

I'm hypersensitive to measures that will in a major way change the balance that has been struck through the consultation process that, frankly, a lot of witnesses said was quite good. I'm very hesitant about these very major amendments to the long-haul interswitching system.

[The Chair, Liberal, Judy Sgro]

Mr. Hardie.

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

The interswitching regime that was brought forward in the Fair Rail for Grain Farmers Act provided for interswitching rates to be set. They weren't subject to any kind of commercial test.

In this case, and maybe this is something that staff can speak to, it says, “determine the rate by having regard to the revenue per 5 tonne kilometre for the movement by the local carrier of comparable traffic in respect of which no long-haul interswitching rate applies.”

First of all, “having regard to” suggests that there is some subjectivity there. Maybe you could explain what that leeway might be. Second, why would you look at the rates in areas where there were no long-haul interswitching rates available to use as a comparison?

[Helena Borges]

Sure. I can add clarification there.

The legislation provides that the agency will set the rate based on comparable traffic, as you mentioned. Proposed subsection 135(3) actually lists the factors the agency can use to determine comparable traffic. That traffic wouldn't necessarily have an LHI rate. It would be traffic that moves similar kind of traffic a similar distance, under similar conditions. It would be commercially based traffic, or traffic that is moving right now without being subject to any remedy at all.

When the agency sets the traffic, it does two things, what we call a blended rate. The first 30 kilometres will be a cost-based rate, equivalent to the regular interswitching, the 30-kilometre interswitching. That's regulated. By nature, that will be a very low rate. The rest of the rate will be based on this comparable traffic, which will be taking into account other traffic that moves. It's really trying to get a sense of what other kinds of traffic move a similar distance with a similar kind of handling and all that. That will determine how the agency sets the rate.

They have quite a bit of discretion in terms of how they build the comparable traffic, but the factors for them to take into account are listed on page 26 of the bill.

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

I don't have that in front of me right now, but I can look at it later.

If you're looking at rates for comparable traffic, would that then include rates that were arrived at competitively, if you like, in the exclusion corridors?

[Helena Borges]

Correct.

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

Okay.

[The Chair, Liberal, Judy Sgro]

Is there any further discussion on amendment CPC-14?

(Amendment negatived [See Minutes of Proceedings])

Ms. Block, you have passed an amendment to the clerk. I guess we'll call it “CPC-17”, or put it at the end.

Could we possibly hand it out so that members can look at it in advance?

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

Yes, absolutely, so long as they're not confused that we're doing it right now.

[The Chair, Liberal, Judy Sgro]

No. Right now we're going to amendment CPC-15.

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

Thank you.

I think the rationale for this amendment is very similar to the rationale I provided for the previous amendment, as we are changing the wording from “revenue” per tonne to “cost” per tonne.

[The Chair, Liberal, Judy Sgro]

By the way, amendment NDP-6 is identical. Bright minds think alike, evidently.

Is there any further comment on CPC-15?

(Amendment negatived [See Minutes of Proceedings])

[The Chair, Liberal, Judy Sgro]

So amendment NDP-6 was negatived too.

We'll now go forward with the one just given to members by Ms. Block. It is referred to as amendment CPC-17-A.

You can go ahead and speak to that.

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

Sure. Notwithstanding that we've had rulings already on similar amendments that I've put forward, such as a review no later than three years of this bill coming into force, and appointing one or more persons, I guess I would state two things.

I respect the ruling of our assistants in this. I guess that might suggest that it wouldn't happen within the department itself to review the legislation. If the ruling is that there's a cost to it because we don't know who would be appointed, I think we assumed it would have been Transport Canada.

Finally, I'm just disappointed that this review wasn't included in the legislation originally, as it seems to be something that a number of witnesses said would be a really good idea, especially given the new remedy that's included in this legislation, the long-haul interswitching. A review would have seen how effective it was and whether or not it was accomplishing the purpose for which it was created.

[The Chair, Liberal, Judy Sgro]

Ms. Block, I'm going to rule this out of order, because again, it has an impact on the financial prerogative of the crown. Amendment CPC-17-A is not in order.

We'll now move to amendment LIB-3.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Madam Chair, there is a bit of a wrinkle to this one. In an attempt to accommodate some other related or similar amendments that could be built in to one, I fear if we pass one, we may mistakenly negate the others.

The essence of the proposed amendment is to give more notice to shippers on the potential removal of an interchange and to confirm that the removal of an interchange does not impact service level obligations. I think the other parties represented at the table had similar amendments.

In addition, I think it was Ms. Block, although it may have been another member, who raised something that I hadn't thought of. It had to do with keeping the agency looped into the process of removing interchanges.

I think there is something being circulated right now—I've included a French-language translation as well—that proposes a subamendment to my own proposal here as a way to try to accommodate the different pieces.

There are essentially three main pieces to the proposed subamendment.

The first would see the number of days increase from 60 to 120 so that shippers have more notice. This is something that I believe both the Canadian Oilseed Processors Association and the Western Grain Elevator Association asked for, so that nobody is surprised and they have a little more certainty.

With regard to the second proposal, there was differing language between the parties, and I hope this captures the same spirit. I've added a proposed subsection that reads:

(3) For greater certainty, the removal of an interchange under subsection (2) does not relieve a railway company from its service obligations.

I can't recall who put forward the other version I saw. I think both Monsieur Aubin and Ms. Block had something that talked about if the level of service was compromised. I had some concerns around the use of what I viewed to be ambiguous language because I didn't know what “compromised service” would be. I thought it was a little clearer to state that this does not impact their service obligations.

Finally, I've added into the subamendment that an interchange can only be removed from the list after the previously mentioned steps are taken and a copy of the notice is sent to the agency.

That's my proposal. I think everyone has received a copy.

[The Chair, Liberal, Judy Sgro]

Mr. Aubin.

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

Madam Chair, I do not know how I am to interpret the fact that all parties have the same ideas as I do. It is probably because we are working in a spirit of welcome collegiality.

Mr. Fraser, our two amendments indeed have much in common, but could we blend them into a single one on a friendly basis? It would let me support your amendment if you could amend it to add “under sections 113 or 114” after the words “subsection (2) does not relieve a railway company from its service obligations”. NDP-7 would then read “would compromise its ability to fulfill its service obligations”. If we could add “under sections 113 or 114” at the end of your amendment, we would be saying exactly the same thing.