Transport Committee on Oct. 30th, 2023

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

Mr. Harvey, the matter I would like to discuss with you may not be directly linked to Bill C-33, but it is certainly a current issue. I thought it was important to raise it with you.

A few years ago, I attended a press conference with some union representatives who were condemning the transfer of employees from the railway control centre in Montreal to Western Canada. Not so long ago, something similar occurred again, this time for customer service employees, approximately 50 of whom were transferred to Western Canada.

On these two occasions, the main concern was being transferred to a region where most people did not speak French. Lots of people in Montreal speak French and lots speak English. In Western Canada, finding someone who can speak French is like searching for a needle in a haystack.

First of all, how come jobs are being transferred systematically from Montreal to the west, when we know that it will have an impact on the quality of service in French? Secondly, what is CN's commitment to Montreal? According to the terms of its privatization, CN has an obligation to provide services in French and to keep its headquarters in Montreal.

[Eric Harvey]

Thank you for your question.

We have in fact made a commitment to Montreal in the province of Quebec. I believe that's clear. We are subject to the federal Official Languages Act and we voluntarily agreed to comply with measures taken by the Office québécois de la langue française to ensure that our employees in Montreal and Quebec can benefit from them.

I can also confirm that there are more employees working at CN in Montreal than there were at the start of the year. We hired over 450 people. There was some attrition, but we hired staff in Montreal too.

As for the more specific matter of transferring 50 customer service employees, no decision has been made. My understanding of it is that the reports prepared were based on information provided to us. However, CN has not yet made an announcement. Our response to the media on this is that no decision has been made yet.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Harvey and Mr. Barsalou‑Duval.

Next, to end this panel, we'll go to Mr. Bachrach for two and a half minutes, please.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

I have a question for Mr. Cato from CP. In the aftermath of February 2019 incident involving your railway, which killed three railroaders, the Transportation Safety Board came out with a report. Among the recommendations was one for the government to expedite the implementation of automatic parking brakes.

What percentage of the railcars your company operates have automated parking brakes today?

[Nathan Cato]

Thank you for the question.

We are working with Transport Canada as part of a working group that was established by the department to look at the implementation of that recommendation.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

It's just a percentage. What percentage of your railcars in Canada have automatic parking brakes?

[Nathan Cato]

The challenge with automatic parking brakes is that it's a technology that's still very much a prototype. It's not available at the moment for deployment across fleets of railcars. It is a prototype.

We are working, like I said, with Transport Canada and with the industry on the implementation plan for the use of that technology, but at the moment, it is a prototype that is very much still in its infancy.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Are automated parking brakes being used in other jurisdictions?

[Nathan Cato]

They're being tested and evaluated, but like I say, it's still a prototype technology.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

They're not deployed.

In the Transportation Safety Board's own words, “New technologies for enhancing train brake performance are available to North American railways now.” It was years ago that they made this recommendation. I'm surprised it hasn't been implemented.

Turning to another quote from Kathy Fox, the chair, in the wake of the East Palestine train derailment in February this year, she said, “Progress is being made, but it's very, very slow...I can't say [Ohio] couldn't happen here.”

Here we have a recommendation from years ago that hasn't been implemented—railcars in Canada don't have automated parking brakes—and we have the Transportation Safety Board, which is the watchdog that's supposed to help us understand whether companies like yours are actually making railways safer and whether the recommendations are being followed.... She's saying the progress is too slow and we could still have something like this major disaster happen here in Canada.

I think this is all rather shocking. Don't you?

[The Chair, Liberal, Peter Schiefke]

Give a 15-second response, please.

[Marc Brazeau]

I'll mention that there is no governing body in North America that has approved automatic parking brakes. We're not aware of any regulatory body that has approved automatic parking brakes. As Mr. Cato said, it's still in the testing stage. The tests have proven it's unreliable to have automatic parking brakes installed on the locomotives so far.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Bachrach, Mr. Brazeau, Mr. Cato and Mr. Harvey.

That concludes the first half of our committee meeting today.

I'd like to thank all of our witnesses for their testimony.

I'll suspend for five minutes as the audiovisual team sets up the next round of witnesses.

Thanks to everyone.

[The Chair, Liberal, Peter Schiefke]

I call this meeting back to order.

I would like to welcome our witnesses for the second round of testimony today. We have Mr. Bruce Campbell, adjunct professor, faculty of environmental and urban change, York University; and Mr. Rick McLellan, president, Genesee and Wyoming Canada Inc.

It's good to have you both here with us.

We will start with your opening remarks.

For that, I will turn it over to you, Mr. Campbell. You have five minutes, sir.

[Bruce Campbell, Adjunct Professor, Faculty of Environmental and Urban Change, York University, As an Individual]

Thank you, Mr. Chair and members of the committee, for inviting me.

My focus will be on the Railway Safety Act and the Transportation of Dangerous Goods Act.

My research on rail safety began shortly after the Lac-Mégantic disaster on July 6, 2013. It culminated in my book, which was published several years ago in both English and French.

I have a copy of it here in French.

Though I don't have expertise in the technicalities of legislation, hopefully my comments will help you assess where, if possible, the bill might be strengthened to help minimize accident risks.

First, as far as I can tell, the bill does not remove the power of railways to police themselves. Once again, Transport Canada is reviewing the issue. Also, the bill does not incorporate key recommendations in the standing committee's May 2022 report, including on railway policing, nor do I see much substantive improvement of safety management systems.

In its most recent 2022 watch list, the Transportation Safety Board noted that “SMS are not yet effectively identifying hazards and mitigating risks in rail transportation.” The watch list also found that some companies are still failing to conduct overall risk assessments in their safety management systems. The next TSB watch list won't be released until 2025. However, in an interview on the tenth anniversary of Lac-Mégantic last July, Kathy Fox, the chair, said that a lot of steps have been taken to improve the rules requiring trains to develop safety management system plans. However, the TSB is concerned about the adequacy of such plans, as well as the effectiveness of oversight by Transport Canada.

I'll also say that little has been done to lift the veil on corporate-government interactions protected under commercial confidentiality rules. When compared internationally, Canada's access-to-information and whistle-blower protection laws rank pretty poorly.

The latest watch list also concluded that “the unplanned and uncontrolled movements of rail equipment” continue to “create high-risk situations that may have catastrophic consequences.”

In the same interview I mentioned, Kathy Fox also said:

The bottom line is uncontrolled movements, which was the underlying cause of Lac-Mégantic, are still an outstanding issue...and while some actions have been taken, we are not where we need to be...because (Transport Canada) hasn't gone far enough.

Collisions and derailments on main tracks, which can have the highest severity of all rail accidents, were actually 25% higher in 2022 than the previous 10-year average. Transport Canada still has not mandated modern braking systems. The companies continue to push back against mandatory regulations on, for example, ECP brakes.

In the wake of Lac-Mégantic, government has mandated stronger tank cars for carrying dangerous goods and established a phase-out schedule for 2025. However, the DOT-111 cars carrying dangerous goods still run through Lac-Mégantic, according to local residents.

In a recent interview, Ian Naish, former TSB director of railway investigations, said that the evidence from derailments in recent years suggests that, if you have a derailment at a speed greater than 35 miles per hour, there is no guarantee that these new tank cars will contain their products. Lac-Mégantic residents want to see train speeds reduced and limits on train length.

Finally, companies have long resisted work-rest practices in accordance with the science. This remains an issue, even after new rules came into effect in May in a phased-in approach...fully by the end of 2024. Fatigue also remains on the TSB watch list.

I'll leave it there. Thanks.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Campbell.

Next I'll turn it over to Mr. McLellan.

Mr. McLellan, the floor is yours for your opening remarks. You have five minutes, sir.

[Rick McLellan, President, Genesee & Wyoming Canada Inc.]

Good afternoon, Mr. Chair and members of the committee.

I am pleased to appear on behalf of Genesee & Wyoming Canada Inc., which is a shortline railway holding company operating nine shortline railways and two rail repair facilities in a total of five Canadian provinces.

We employ roughly 400 Canadian railroaders, operate 940 track miles and, above all, move more than 100,000 carloads a year.

Short-lines provide vital first-mile, last-mile services that connect customers to the broader North American freight-rail network via class 1 railways, as well as to remote communities and global markets. Twenty per cent of Canadian rail volume is handled, one way or another, by a short-line. Short-lines provide a safe, environmentally friendly, low-cost and reliable transportation option for Canadian businesses of all sizes.

Genesee & Wyoming is recognized as an industry leader in safety excellence. We regularly participate in and host tabletop and full training exercises alongside Transport Canada and first responders in the different communities we serve. We hold safety workshops, conduct internal audits and support industry-wide safety programs. All our meetings start with safety as agenda item one.

Genesee & Wyoming invests in safety. These investments are non-negotiable, and a commitment to operating safely every day is a condition of employment for every one of our team members. Whether it's infrastructure upgrades, asset replacement or award-winning training programs, Genesee & Wyoming Canada is investing with the goal of achieving targets of zero, which you can find on each of our locomotives, our vehicles and our equipment along our network. At Genesee & Wyoming Canada, we will continue to build a strong safety record and culture that our customers, partners and communities continue to rely on.

Before getting to the substance of Bill C-33, I want to highlight for the committee the many challenges confronting short-lines in Canada. High fixed costs, aging infrastructure, commodity price volatility and policy imbalances with other jurisdictions and along with other transport modes, combined with taxes and expanding regulatory burden are threatening the sustainability of short-line operations.

Short-line revenues narrowly outpace their expenses. The average operating expense-to-revenue rate for a short-line railway is roughly 90%. A high operating ratio limits the ability of short-line railways to invest in enhancing the capacity and fluidity of supply chains, especially because investments in safety are, rightfully, non-negotiable.

Short-lines compete directly with trucks on publicly funded highways for traffic while operating lower-density lines than their class 1 counterparts do.

Short-lines need predictable, consistent government support to remain a viable alternative to trucking.

Despite significant support in the United States in the form of a 45G track maintenance tax credit and various other programs, there is no dedication of federal funding or incentive for short-line railways in Canada. Instead, our tax system disadvantages railways compared with trucks, and Canadian railways compared with American railways.

I urge this committee to note in its report that the federal government must do more to ensure the sustainability of our short-lines. This brings me to Bill C-33.

This committee should accept the recommendations put forward by the Railway Association of Canada with respect to port governance and separating out safety and security definitions.

We rely on the efficient functioning of Canadian ports—big and/or small.

Our Quebec Gatineau Railway exclusively serves the Port of Trois-Rivières. The QGRY is a great example of the first-mile, last-mile benefits that short-line railways provide.

The QGRY moves products, from wind turbines to bulk solids to liquids. Our business is highly integrated with and dependent on the Port of Trois-Rivières.

The port's vision and leadership matter, and so do the vision and leadership of the other Canadian ports we serve and all ports across Canada.

Ports need leaders who have operational and commercial qualifications and experience. This group of experienced individuals should select the chair.

We share the concern that has been raised at this committee about the time it takes for the government to make appointments. That is another reason for the board to choose the chair.

Our company manages several comprehensive safety and security management systems that are renewed and submitted to Transport Canada and are internally audited by us for effectiveness as well as by Transport Canada.

I'd like to add my voice to what my colleagues said about the distinction can be made between the two concepts of security and safety.

I'd like to thank the committee for having given me this opportunity to speak.

[The Chair, Liberal, Peter Schiefke]

Thank you very much.

We'll begin our line of questioning for the second round with Mr. Strahl.

Mr. Strahl, I will turn the floor over to you for six minutes, sir.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much, Mr. Chair.

My question is for Mr. McLellan.

You said that items, including taxes, were threatening short-line railways' viability. Can you speak a little bit more about that? What taxes in particular are you referring to there?

[Rick McLellan]

We pay taxes like everyone else, and, unfortunately, a portion all of our capital investments goes to tax like for everyone else; hence, the importance of bringing up the tax credit opportunity that allows businesses such as ours to invest more in their infrastructure and reduce the burden of having to pay excessive taxes.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

You talked about a short-line tax credit for railway maintenance in the United States. How does that work? Are the railway companies themselves, the rail operators, performing those upgrades? Has that shown to increase safety on those portions of the track that have that short-line tax credit? Can you maybe just talk a little bit about that credit and how it's working in the U.S.?

[Rick McLellan]

It's typically about a $3,500 tax credit per track mile. That is about what it equates to in Canadian dollars. If you couple that with the CRISI grant and other options they have in the U.S., if you want to compare the U.S. with Canada, they would relate to a tax credit of about $20,000 per track mile in Canada.

That tax credit has increased the amount of investment in the infrastructure, ties, rail and all of those essentials. It's a 47% increase and a 50% improvement in safety results. We definitely see the benefits of investing more in our infrastructure.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

You talked as well about servicing Trois-Rivières. We certainly heard concerns from port authorities and other witnesses that Bill C-33 seems to have a one-size-fits-all approach and that it's not taking into account the unique situation in the local markets. For instance, you have the Port of Vancouver, which will be served by class 1 railways almost exclusively. As you said, you're providing a key service in Trois-Rivières. Do you think that Bill C-33 needs to be amended to ensure that those unique features of each port authority are taken into account? How would it benefit short-line railways if that were done?

[Rick McLellan]

Definitely, as reiterated by my colleagues who spoke here before me and my comments in my earlier reading, I definitely feel, regarding the experience and the direction of growth and opportunities that the ports require, that having the experience and the knowledge to work alongside stakeholders is important and key.

You brought up the example of Trois-Rivières. Trois-Rivières is working on several growth projects, including dock space. Those are all essential to them, but those were all realized because of the integrated experience of both of us working hand in hand and the relationship that we have. I just feel that, if you don't have that important relationship where everybody is working for the same objective, then you don't always get the same efficiency.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

That brings me to my next point, which you mentioned as well. When the ports are working for a common objective and then they have the minister appointing the board chair, as opposed to someone who has been working with the board and has been elected by the board, do you think that puts that sort of collaborative local approach at risk?