Western Canadian Short Line Railway Association

News

Announcements and Updates

Brief to the Senate Standing Committee of Transport and Communities - February 2018

WCSLRA Position Paper - Bill C-49 - 2018

Brief to Standing CommitteE of Transportation, Communities and infrastructure, Sept. 12, 2017 - Supplementary Brief

Brief to the Standing Committee of Transportation, Infrastructure and Communities, Sept. 12, 2017

 

Brief to the Parliamentary Standing Committee on Transportation, Infrastructure and Communities - September 27th, 2016

Introduction

Short line railways offer a green transportation option that supports local communities and strengthens both Canada’s export capacity and grain transportation system. Saskatchewan Shortline Railway Association member railways operate 24% of the rail lines in the province. Short lines are a major employer and business enabler in 14 rural towns, and travel through 18% of Saskatchewan’s urban municipalities and 26% of rural municipalities.

Over the past 20 years, short lines have successfully increased export capacity and driven economic growth, transporting approximately $500 million worth of commodities per year from Saskatchewan alone.

Saskatchewan’s short lines build industry capacity to promote Saskatchewan’s agricultural exports, transporting resources and agricultural products for 72 small and medium sized businesses across the province that are built directly on short line railways.

SSSRA member railroads depend on competitive options, like producer cars, for a significant part of their business. One line having as many as 14 facilities on their line.  Producer cars make up over 65% of the volume transported by some SSRA member railways.

We believe that the future of transportation should include improved competitive choice for farmers and shippers, through:

  • maintenance of C-30 provisions which afford the Agency more power and the creation of an ombudsman to rectify issues in a timely manner resulting in real-time correction of issues which adversely affect the economy,
  • re-examination of the minimum volumes model while maintaining the spirit of the provision,
  • and the extension of interswitching provisions to local carriers (short line railways).

Technical note

Saskatchewan’s 14 short line railways are local carriers as per the definition of the Canadian Transportation Act, rather than railway companies.  One small piece of track, 6970184 Canada Ltd., operated by Great Sandhills Railway, crosses provincial boundaries, and as a result is considered a railway company.  As such, some of the provisions discussed in Bill C-30, Fair Rail for Farmers Act, applies to this piece of track.

5.1(2) Levels of service

The Fair Rail for Farmers Act extended to August 1, 2017:

5.1 (2) Paragraph 116(4) (c.1) of the Act is repealed.

Applicable Canada Transportation Act sections:

116(4) If the Agency determines that a company is not fulfilling any of its service obligations, the Agency may (a) order that (i) specific works be constructed or carried out, (ii) property be acquired, (iii) cars, motive power or other equipment be allotted, distributed, used or moved as specified by the Agency, or (iv) any specified steps, systems or methods be taken or followed by the company; (b) specify in the order the maximum charges that may be made by the company in respect of the matter so ordered; (c) order the company to fulfil that obligation in any manner and within any time or during any period that the Agency deems expedient, having regard to all proper interests, and specify the particulars of the obligation to be fulfilled; (c.1) order the company to compensate any person adversely affected for any expenses that they incurred as a result of the company’s failure to fulfill its service obligations or, if the company is a party to a confidential contract with a shipper that requires the company to pay an amount of compensation for expenses incurred by the shipper as a result of the company’s failure to fulfill its service obligations, order the company to pay that amount to the shipper;

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The Saskatchewan Shortline Railway Association does not support the repealing of this section.  We feel that it is important that the Agency have sufficient power to order a railway company to compensate those adversely affected by a railway company’s failure to fulfill its service obligation, as is the case in other industries.  We also feel that an ombudsman should be established, to ensure that issues are dealt with in a more efficient and timely manner.

To support and encourage competition, there must be either more choice in service providers, or an increase in the policing of service obligations to ensure that carriers respect their agreements.  Removing this clause would decrease the incentive for railway companies to fulfill their service obligations.  Any disruption to service obligations affects Canada’s reputation as a reliable and safe transportation network.  Negative impacts to Canada’s reputation have far reaching ramifications and the potential to discourage international companies from purchasing our resources as well as investing in companies and ventures within Canada.

The Saskatchewan Shortline Railway Association feels that a critical piece missing from the grain transportation system is a transportation ombudsman.  Bill C-30 holds several provisions, many of which are included in the committee’s study, which would be best dealt with by an ombudsman.  It is not reasonable to let issues build to a breaking point.  The current system is complex and costly and very few voices are being heard on the topic of service obligations in a timely enough manner to course correct.  This harvest season is already seeing signs of 2013/14, with major carriers having issues bringing cars to port.  If shippers and stakeholders had an easy and accessible place to log concerns, it may be possible to avert these issues, rather than only reflecting on them post- disaster.  This is critical to Canada’s reputation as an exporter, and the absence of an ombudsman, with the ability to influence railway company’s decision making, hurts Canada.

However, in the case of 6970184 Canada Ltd., we would like the committee to note, that any carrier other than CN and CP do not control their own fleet.  Meeting service obligations when you do not control the availability of cars could leave carriers like this at a disadvantage, as they could fail to meet their service obligations as a result of CN or CP not delivering cars.

6(2) Obligation to move grain

The Fair Rail for Farmers Act extended to August 1, 2017:

6(2) The Governor in Council may, by order, on the recommendation of the Minister and the Minister of Agriculture and Agri-Food, specify the minimum amount of grain that each company referred to in subsection (1) must move during any period within a crop year that begins on or after August 1, 2014.

Applicable section:

116.2 (1) Subject to volume demand and corridor capacity, the Canadian National Railway Company and the Canadian Pacific Railway Company must each move at least 500,000 tonnes of grain during each week in the period that (a) begins on the later of April 7, 2014 and the first Monday after the day on which this section comes into force; and (b) ends on August 3, 2014.

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The Saskatchewan Shortline Railway Association supports measures to encourage the movement of grain over other more lucrative goods.  We see this as important to Canada’s export reputation as well as to the economy of Western Canada. 

However, this obligation has had unintended consequences:

  • First, it unfairly disadvantages locations that are geographically further from port, as logically it is less costly and logistically more efficient to move grain from Alberta and western Saskatchewan to port than it is to move grain from the rest of Saskatchewan or Manitoba.  This is not fair for farmers.
  • Second, it hurts those customers shipping to the U.S., as again it is less costly and logistically more efficient to move grain to the Western ports when there is a volume to meet. 
  • Third, it disadvantages smaller shippers, short lines and producer cars, as there is an even larger disadvantage than usual to taking on smaller shipments rather than already assembled 140 unit trains.

The current obligation to move grain encourages CN and CP to favour large unit trains from large grain companies as close to the western ports as possible, disadvantaging the more eastern sites in Western Canada, those shipping to the US and smaller shippers, producer cars and short lines.

7(2) Interswitching

The Fair Rail for Farmers Act extended to August 1, 2017:

7(2) Subsection 128(1.1) of the Act is repealed.

Applicable Canada Transportation Act sections:

128(1.1) 128 (1.1) A regulation made under paragraph (1)(c) may prescribe different distances for the regions or goods that it specifies.

128(1) (c) prescribing, for the purposes of subsections 127(3) and (4), a greater distance than 30 km from an interchange.

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Interswitching is a useful and effective competitive access provision. It allows shippers access to the entire Canadian rail network and is a critical decision point for some shippers when deciding to do business in Canada.

Interswitching regulations do not benefit short lines in their current form.  Because we are railways and not technically shippers, the benefits of the regulation do not extend to us. As a result, this makes short lines a less attractive option to shippers looking for a location to build facilities with low cost access to both CN and CP for competitive purposes.

For example, please see Appendix A, which is a bill received by Great Sandhills Railway for an ‘interswitch’ of one mile. The bill is $2663.00 from CN for one locomotive to be switched a distance of one mile, from a CP interchange point to a short line interchange point. Extremely expensive movements like this make it impossible for shippers on our line to take advantage of the competitive option which is the intent of interswitching and discourages building on our lines.

It would be ideal for short lines to have interswitching regulations apply to them.  Or alternatively, some other form of rate guarantee could be extended to include short lines when using multiple carriers.  Competitive rates and carrier choice would allow us to offer competitive pricing and access to a larger transportation network to our clients.

8(2) Regulations (Arbitration)

The Fair Rail for Farmers Act extended to August 1, 2017:

8(2) Subsection 169.31(1.1) of the Act is repealed.

Applicable Canada Transportation Act sections:

169.31 (1.1) The Agency may make regulations specifying what constitutes operational terms for the purposes of paragraphs (1)(a) to (c).

169.31 (1) If a shipper and a railway company are unable to agree and enter into a contract under subsection 126(1) respecting the manner in which the railway company must fulfil its service obligations under section 113, the shipper may submit any of the following matters, in writing, to the Agency for arbitration: (a) the operational terms that the railway company must comply with in respect of receiving, loading, carrying, unloading and delivering the traffic, including performance standards and communication protocols; (b) the operational terms that the railway company must comply with if it fails to comply with an operational term described in paragraph (a); (c) any operational term that the shipper must comply with that is related to an operational term described in paragraph (a) or (b);

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The Saskatchewan Shortline Railway Association believes that arbitration is critical.  If arbitration, regulation and penalties are removed from the Act, the economy of Western Canada will be managed in the way most profitable to CN and CP shareholders. Because of the presence of only two large private national railway companies in Canada, there is a critical relational divide between what is best for our sovereign nation and what is best for CN and CP.  There must be governmental checks and balances in place to counterbalance the concentration of power in the hands of CN and CP.  These companies already have the most positive financial ratios in the industry, even when compared to US railways.  There must be clear, effective and easily operational measures in place to prevent these companies from profiting wildly at the expense of the nation overall.

Again, this is an ideal example of where an ombudsman would be an efficient solution to deal quickly with operational issues in an open, public and easily accessible manner. A public advocate, appointed by the Minister, would be an excellent way to represent the interests of the public and stakeholders by investigating and addressing complaints and violations.  The ombudsman could also identify systematic issues leading to poor service and attempt to resolve them through recommendations or mediation without the red tape so symptomatic of the current transportation system.

9(2) Regulation Making Powers

The Fair Rail for Farmers Act extended to August 1, 2017:

9(2) Subsection 177(3) of the Act is repealed.

Applicable Canada Transportation Act sections:

177 (3) The contravention of subsection 116.2(1) or (4) may be proceeded with as a violation in accordance with sections 179 and 180. The maximum amount payable for each violation is $100,000.

Obligation to move grain Obligation de transporter le grain 116.2 (1) Subject to volume demand and corridor capacity, the Canadian National Railway Company and the Canadian Pacific Railway Company must each move at least 500,000 tonnes of grain during each week in the period that

a) begins on the later of April 7, 2014 and the first Monday after the day on which this section comes into force; and (b) ends on August 3, 2014.

116.2 (4) Obligation (4) Subject to volume demand and corridor capacity, each company referred to in subsection (1) must move the minimum amount of grain that the Governor in Council specifies or varies by order.

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While the Saskatchewan Shortline Railway Association supports greater regulation making powers, the creation of an ombudsman, and the capacity to set an amount payable for violations, it must be done in a way that does not unfairly disadvantage some shippers and geographical locations, as per heading 6(2) Obligation to Move Grain.

10(2) Notices

The Fair Rail for Farmers Act extended to August 1, 2017:

10(2) The portion of subsection 178 (1) of the Act before paragraph (a) is replaced by the following:

178(1) The Agency, in respect of a violation referred to in subsection 177 (1) or (1.1), or the Minister, in respect of a violation referred to in subsections 177(2), may

Applicable Canada Transportation Act sections:

178 (1) The Agency, in respect of a violation referred to in subsection 177(1), (1.1) or (2.1), or the Minister, in respect of a violation referred to in subsection 177(2), (2.2) or (3), may (a) designate persons, or classes of persons, as enforcement officers who are authorized to issue notices of violation; and (b) establish the form and content of notices of violation.

177(2.1) The contravention of section 93.1 or 94 may be proceeded with as a violation in accordance with sections 179 and 180. The maximum amount payable for each violation is $100,000.

177(2.2) The contravention of subsection 155.7(1) or any of subsections 155.84(1) to (3) may be proceeded with as a violation in accordance with sections 179 and 180. The maximum amount payable for each violation is $100,000.

177(3) The contravention of subsection 116.2(1) or (4) may be proceeded with as a violation in accordance with sections 179 and 180. The maximum amount payable for each violation is $100,000.

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The Saskatchewan Shortline Railway Association does not recommend limiting the power of the Agency to apply penalties to CN or CP.  And further, we recommend matching the payable violation to the severity of the violation.  In some cases, a small risk of a fine will find its way into a corporate risk mitigation strategy.  As it is very costly and difficult for a shipper to begin a claim against CN or CP, it is reasonable to assume that without an easier to navigate system and stiffer penalties, this clause - even in its present form - may not deter the Class 1st from violations.  This is another example of where an ombudsman would be a useful addition to the system.

11(2) Continuing violations

The Fair Rail for Farmers Act extended to August 1, 2017:

11(2) Subsection 179 (1.1) of the Act is repealed.

Applicable Canada Transportation Act sections:

179 (1) Every person who contravenes a provision, requirement or condition designated under section 177 commits a violation and is liable to a penalty fixed pursuant to that section. (1.1) A violation that is committed or continued on more than one day constitutes a separate violation for each day on which it is committed or continued.

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The Saskatchewan Shortline Railway Association does not support repealing this section.  Any sections that diminish the severity of penalties increases the likelihood of violations occurring and harms a competitive environment for grain shipment in Canada.

12(2) Delegation by minister

The Fair Rail for Farmers Act extended to August 1, 2017:

12(2) In the case of a violation referred to in subsection 177(2), the Minister may delegate to the Agency any power, duty or function conferred on him or her under this Part.

Applicable Canada Transportation Act sections:

177(2)  (2) The Minister may, by regulation, (a) designate as a provision or requirement the contravention of which may be proceeded with as a violation in accordance with sections 179 and 180 any provision of section 51 or of any regulation made under section 50 or 51, or any requirement of any of those provisions; and (b) prescribe the maximum amount payable for each violation, but the amount shall not exceed (i) $5,000, in the case of an individual, and (ii) $25,000, in the case of a corporation.

177 (3) (3) The contravention of subsection 116.2(1) or (4) may be proceeded with as a violation in accordance with sections 179 and 180. The maximum amount payable for each violation is $100,000.

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The Saskatchewan Shortline Railway Association does not support diminishing the ability of the Minister to delegate. As stated earlier, the Agency requires significant power and flexibility to counteract the damaging economic effects of a transportation monopoly by private companies in Canada. As well, the Saskatchewan Shortline Railway Association supports the creation of an ombudsman for the rail transportation system.

 

 

 

 

The Saskatchewan Shortline Railway Association is a not-for-profit membership based organization representing the interest of 14 short line railways.

Saskatchewan short lines own and/or operate 24% of Saskatchewan’s 8722kms of track and are present in 18% of urban municipalities and 26% of the province’s rural municipalities. The railways create jobs, employing 183 Saskatchewan residents directly and enabling businesses that employ hundreds of middle class Canadians in rural areas.

According to the Railway Association of Canada, one in five carloads on Canadian railways originates on a short line. Short lines enable economic growth, increase export capacity and drive trade. Short lines provide supply chain connectivity and reduce negative externalities associated with road transport, including GHG emissions, road wear and tear and congestion.

Saskatchewan’s short line railways contribute significantly to the national economy. According to the Government of Saskatchewan’s report, ‘Investing in Saskatchewan’, the province is the world’s top exporter of durum wheat, lentils, dried peas, mustard and flax and boasts 43% of Canada’s farmland.  Saskatchewan’s short lines build industry capacity to promote Saskatchewan’s agricultural exports, servicing approximately 6000 producer cars per year and transporting resources and agricultural products from 72 small and medium sized businesses across the province that are built directly on short line railways.

 

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