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Transport committee This section is specific to the new service agreement provision—the right to ask a railway for one—but that provision makes a reference back to service obligations as being the service obligations in the common carrier obligations. So this would essentially be changing the definition.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee Yes.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee The department had issued some parameters for the intent of the bill before consultations began last summer. One of the things made clear in that document was that the new provision was not intended to alter existing provisions in the act. Certainly some of the points raised by the shippers about changing the common carrier obligation fell outside the scope of what was intended for the bill.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee Absolutely.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee The removal of the term “operational” certainly could have very unintended consequences from a shipper perspective, because it does, as Alain pointed out, allow for the possibility of the railway asking for volume commitments to be imposed on the shipper, or infrastructure changes to be imposed on the shipper, as part of the contract that's imposed.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee Not to our knowledge, no.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee Definitely. In fact shippers have told us that they hope they don't have to use this and that the legislation was structured in a way that there's a right for a shipper to ask a railway for a surface agreement. Essentially that's a commercial agreement. In the event that's not successful, then the second step would be to go and ask for arbitration.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee At the same time, the bill does allow for a process and gives the arbitrator a very broad scope to resolve service issues that are not addressed in a commercial negotiation. The way the bill is structured does ensure that when a shipper comes forward and says they can't get agreement on the three elements of service that are very important to them, the arbitrator will have scope to address those.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee I think the difference here is that even though this is an arbitration process, it is an imposed arbitration process. The idea of the parties agreeing to damages in a private arbitration, a commercial arbitration, is perfectly within their purview to do. In fact, we know that in commercial contracts there are often what are referred to as liquidated damages, whereby the parties agree that in the event of a breach, here is the amount one party will pay the other.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee We are still working within the confines of legislation and giving instructions to a regulatory body to carry out something. In constructing the scheme of arbitration within the act, we consider the normal function of a regulatory body. A regulatory body providing for an arbitration scheme whereby an arbitrator, case by case, can set out unique penalty schemes—damages schemes—for breaches that may occur in the future is just something we have not seen.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee Mr. Chair, is this question directed to the department?
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee There is. There's an administrative monetary penalty.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee It's a mechanism whereby, if a shipper feels that an arbitrated service agreement that has been imposed under the auspices of the agency has been breached, then the shipper can come to the agency and the agency will investigate the alleged breach. If it finds that in fact there has been a breach, then the agency can impose an administrative monetary penalty of up to $100,000.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee That's right.
March 26th, 2013Committee meeting
Annette Gibbons
Transport committee Non-performance would in fact be penalized through the use of the administrative monetary penalty. These penalties are used in various statutes. The fact that they go to the government is a feature of administrative monetary penalty regimes. The focus is not on earning revenues; the focus is on providing a deterrent to non-performance under the law.
March 26th, 2013Committee meeting
Annette Gibbons