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The Chartered Institute of Logistics and Transport Bill C-52 and Bill C-30 New Rail Provisions Nina Frid Canadian Transportation Agency September 11, 2014
The Chartered Institute of Logistics and Transport
Bill C-52 and Bill C-30 New Rail Provisions
Nina Frid
Canadian Transportation Agency
September 11, 2014
About the Canadian Transportation Agency
Federal administrative tribunal and economic regulator
Renders decisions on rail disputes related to level of service, certain charges and other matters
Administers Western grain max revenue entitlement program
Rules on cost apportionment for a road or utility crossing
Hears complaints on competitive access (Interswitching, CLR, Running Rights)
Develops and applies regulations (Interswitching, UCA, TPLI, Operational Terms, other)
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EXISTING DISPUTE RESOLUTION OPTIONS
Under the Canada Transportation Act, the Agency provides:
Facilitation
Mediation
Adjudication
Arbitration on Rail Level Of Service
Administers Final Offer Arbitration
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Fairness and Transparency in Dispute Resolution
Our vision is a competitive and accessible national transportation
system that fulfills the needs of Canadians.
Our mission is to be a respected and trusted tribunal and economic regulator through efficient dispute resolution and essential economic regulation.
Our values include integrity, fairness, transparency and quality of service.
Fairness – follow the rules of natural justice.
Transparency – committed to consultation with stakeholders, providing variety of business-critical information, making access to Agency dispute resolution services easy.
Efficiency - decisions are reasonable and well balanced, issued within established timelines, committed to performance targets.
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September 2009 - Transport Canada assembled a panel to conduct a review of Canada’s rail-based logistics system, focusing on rail service provided to Canadian shippers and customers;
October 2010 - the Panel released its Interim Report;
March 2011 - the Panel released its Final Report and Recommendations;
Fall, 2011 – Facilitator (Mr. Dinning) was appointed to help shippers and railways negotiate commercial approaches to railway level of service;
Spring, 2012 - Following six-month facilitation process, the government tabled Bill C-52;
June, 2013 – Bill C-52 was passed into law.
Rail Freight Service Review
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Bill C-52 – Fair Rail Freight Service Act Key Features
Division II of the Canada Transportation Act – Arbitration on Level of Service
Ss.169.31(1) – If a shipper and a railway are unable to agree and enter into
contract under Ss.126(1) respecting the manner in which the railway must
fulfill its service obligations, the shipper may submit the following matters in
writing to the Agency for arbitration:
a) Operational terms with respect to receiving, loading, carrying, unloading and
delivering traffic, incl. performance standards and communications protocols;
b) Operational terms that the railway must comply with if it fails to comply with terms
described in (a);
c) Operational terms that the shipper must comply with as it relates to (a) and (b);
d) Service provided by the railway that is incidental to transportation;
e) Whether the railway may apply a charge with respect to operational terms;
Important Points:
The application is filed by the shipper;
Service agreement is a confidential contract as in Ss.126(1)
Arbitration can address broad range of service issues but not rates or charges
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Bill C-52 – Excluded from LOS Arbitration
Ss.169.31 (2) and (3) – a shipper is not entitled to submit the following matters to the Agency for arbitration that:
a) Is governed by a written agreement including confidential contract;
b) Is subject to an order made under Ss.116(4);
c) Subject of confidential contract in force immediately before the day on
which this section comes into force;
d) Is a tariff or a contract resulting from Final Offer Arbitration (FOA);
e) Is a competitive line rate;
f) Is the arbitrator’s decision under Level of Service (LOS) arbitration.
Neither a rate for the movement of traffic nor the amount of a charge for that movement or for provision of incidental services is to be subject of LOS arbitration
Remedy for the rates remains FOA
Remedy for charges associated with incidental services remains Ss.120.1
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Bill C-52 – Shipper’s Submission + Other Provisions
Ss.169.32 – The shipper’s submission must contain:
Detailed description of the traffic to which service obligations apply;
Undertaking with respect to the traffic by the shipper to the railway to ship the goods;
Undertaking by the shipper to the Agency to pay the costs (if applicable – like in FOA);
Ss.169.33 The Agency must dismiss the application if: 1. The shipper has not served a copy of its submission to the Agency on the railway at least
15 days prior;
2. The shipper did not demonstrate that an attempt has been made to resolve the matter;
The shipper and the railway must each submit a proposal to the Agency within 10 days of the application for LOS arbitration;
The proposal must contain operational terms listed in 169.31
Ss.169.35(4) - LOS arbitration is not a proceeding before the Agency
Ss.169.36(1) - the Agency may make rules of procedure for LOS arbitration
Ss.169.4 (1) – Either the shipper or the railway can advise the Agency and the arbitrator that they wish to keep information confidential
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Bill C-52 – Arbitrator’s Decision and Costs
Ss.169.38(1) – The arbitrator’s decision:
Must be in writing;
Applies to the parties for one year;
Is final and binding;
Must be commercially fair and reasonable to the parties;
Must be made within 45 days unless it is not practical, allowing the arbitrator to make the decision within 65 days.
The arbitrator must provide the decision to the Agency; Ss.169.42(1) - The Agency must establish a list of persons, including members
or staff, who agree to act as arbitrators;
The list contains Agency members, senior staff and commercial arbitrators. The Agency intends to use members initially.
Ss.169.39(1) – The Agency may fix the fee to be paid if the arbitrator is not a member or staff of the Agency;
There is no fee if the arbitrator is Agency member or staff.
Ss.169.39(3) – the railway and the shipper are to share equally the fees and Agency costs in providing assistance to the arbitrator;
The railway and the shipper are each responsible for their own costs.
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Bill C-52 – Railway’s Objection
Ss.169.43(1) – A railway may apply to the Agency within 10 days after the shipper's
submission for an order declaring that the shipper is not entitled to LOS arbitration:
The railway’s application will be adjudicated on an expedited basis;
The Agency must make a decision within 35 calendar days or 25 business days;
This decision must be issued before the conclusion of arbitration;
The arbitration and adjudication of an objection run in parallel;
The member deciding on the railway’s objection will be different than arbitrator (impartiality);
Staff dealing with objection will be different from staff dealing with arbitration (confidentiality);
If the objection is granted, the submission for arbitration is dismissed and arbitration
discontinued;
Grounds for objection – refer to Ss.169.33; 169.31(2), (3) and (4)
The Agency prepared a separate procedure for adjudication of an objection:
The pleadings will open right away
The Agency will issue a decision and order if the objection is granted.
The Agency will issue a decision if the objection is dismissed.
Confidentiality will be respected at all times.
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Agency LOS Arbitration Rules
The Agency developed new Arbitration Rules: They are consistent with ADR Institute-recommended rules and
arbitration best practices incl. FOA;
Were prepared in consultation with shippers, railways, arbitrators, ADR
experts and other interested parties;
Reflect the timelines and requirements established in legislation;
Designed to be easy to understand, accessible, efficient and cost-
effective;
Respect principles of fairness and impartiality;
The Rules, as a Regulation, have been approved and published in
Canada Gazette Part II;
The Agency is applying them to the arbitration cases.
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NEW ARBITRATION RULES - HIGHLIGHTS
The arbitrator is appointed within 2 days;
Within 4 days of appointment – first pre-arbitration meeting
Used to clarify issues and scope, fix the dates, logistics
The pre-arb could be held by teleconference, if agreed
The arbitrator will provide summary after the meeting
Following first pre-arb, the parties will exchange arbitration briefs incl. agreed statement
of facts, evidence, expert reports, etc.
After that, possibly second pre-arb meeting, if needed (optional)
The arbitrator will provide summary after the meeting
The hearing will be held at Agency Headquarters or at a different, agreed-upon location
Each party will be able to present final oral arguments
Witnesses could be called and cross-examined
The decision will be made within 7 days of the hearing (each party will get a copy)
The arbitration has to be completed in 45 days or could be extended to 65 days if the
arbitrator and both parties agree
The arbitrator’s decision will be the LOS Agreement, final and binding 12
Enforcement and AMPs
Ss.177(1) – the Agency may by regulation designate a provision of this Act as a
provision the contravention of which may be proceeded with as a violation;
DPR was amended and approved
The Agency may by regulation designate any requirement imposed on a railway company in an
arbitrator’s decision as a requirement the contravention of which may be proceeded with as a
violation and prescribe the maximum amount payable for each violation
For LOS arbitration, the amount shall not be more than $100,000
The amount of an AMP is paid to the Receiver General;
The shipper must file with the Agency a request to enforce the LOS agreement
established by arbitration if one or more conditions ordered are not being met;
The purpose of enforcement is compliance with arbitration decisions;
Consistent with the Agency’s practice, the Agency will appoint a designated
enforcement officer (DEO) to investigate the allegation of non-compliance.
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Bill C-30 – Fair Rail for Grain Farmers Act
Purpose
To outline proposed legislative and regulatory changes to help deal with
the backlog in the grain handling and transportation system;
50% of total grain produced is exported, 94% moves by rail, representing
$23B in value in 2013;
In 2013, grains were 20% of total freight weight shipped; fuel oils and
petroleum - 6%
The pressures in grain handling and transportation system:
Country elevators at near full (93%) capacity
Port terminal capacity underutilized - 39% lower than in 2012-13
Partially filled vessels at anchor at West coast ports, ranging from 43
to 57 vessels (historical average is 8-10 vessels at any point)
Contracts with domestic and foreign buyers unfulfilled;
Risk of damage to Canada’s global reputation as a reliable grain supplier.
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Bill C-30 – Government Action
Ministers Ritz and Raitt met with numerous rail and grain representatives
Order in Council (OIC) took effect March 7, 2014, setting out minimum
volumes of grain that each railway company is required to move
Increasing volume requirements carried each week, over four weeks, to a
combined target of 1 MMT per week
Requiring railways to report to the Minister of Transport on weekly grain
shipments (till end of November, 2014)
Creating legal obligations on railways that could result in penalties for
non-compliance of up to $100,000 per day
Regulations requiring CN and CP to provide additional data on grain
movement to better monitor performance of the rail-based supply chain
The Government introduced the Fair Rail for Grain Farmers Act (Bill C-30)
to further contribute to a more efficient, effective and reliable supply chain
that will support the competitiveness of Canadian businesses across all
sectors.
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Bill C-30 – Amendments to the Canada Transportation Act
Address the backlog of grain by requiring CN and CP each to move at least
500,000 t/week;
Agency to recommend to the Minister of Transport minimum volume, over the
summer and early fall. The Agency’s advice is to be based on information
collected from grain handling stakeholders;
The GIC may, by order, specify (or vary) the min amount of grain CN and CP
must move in a crop year that begins on August 1, 2014;
Agency to amend Interswitching Regulations and extend the distance in AB,
SK and MB for all commodities to increase competition (150 primary elevators
will have access to more than one railway) – Ss.128(1);
Agency to develop Operational Terms Regulations prescribing the elements in
arbitrated SLA to improve overall supply chain performance;
Ss.116(4)(c.1) – if the Agency determines (on complaint) that a railway is not
fulfilling its service obligations, it may order the railway to compensate a
person adversely affected for any expenses incurred;
May 29, 2014 - Bill C-30 was granted Royal Assent.
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Defining Operational Terms in Regulations
Paragraphs 169.31(1)(a) to (c) of the Act provide some guidance stating that operational terms the railway company must comply with are in respect of receiving, loading, carrying, unloading and delivering of traffic.
The proposed Regulations contain an extensive but non-exhaustive list of operational terms with examples of terms eligible for arbitration.
"Operational terms" in the Regulations set out obligations of the railway company towards the shipper respecting the performance of an action related to receiving, loading, carrying, unloading and delivering of traffic, including: furnishing of cars,
schedule for furnishing of cars,
where the cars are to be furnished,
condition of the cars to be furnished,
type and specifications of those cars,
procedures to be followed,
furnishing of locomotives, other equipment and crews,
the transit time for delivery of traffic,
the route to be used for carrying the traffic,
performance standards for measuring railway's performance in respect of an operational term,
stipulation of circumstances resulting in the impossibility for the railway to perform an obligation set out in an operational term (a superior force, including a flood, fire or other natural disaster; war or an insurrection; a riot, strike or lock-out, a blockage of rail lines due to an accident, a demonstration, a natural cause or another cause),
Operational terms setting out an obligation of recovery the railway must comply with if it fails to comply with an obligation set out in an operational terms above.
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Operational Terms Regulations – Continued
For shippers, an operational term is an obligation towards the railway, respecting the
performance of an action related to a railway company's operational term:
Shipper's obligations include loading and unloading of cars, release procedures,
provision of access to the shipper's facilities, the number and scheduling of
switches;
For both, setting out of communication protocol for to communicate information in
respect of the performance of an obligation set out in an operational term.
The regulations came into force on August 1, 2014.
They were published in the Canada Gazette, Part II on August 13, 2014.
The Regulations are repealed on the day on which subsection 8(2) of the Fair Rail for
Grain Farmers Act comes into force (i.e. August 1, 2016).
As well, the Government promised to expedite the CTA Review – it was launched on
June 25, 2014, a year early.
The Honourable David L. Emerson will head the review with the support of five advisors:
Murad Al-Katib, David Cardin, Duncan Dee, Marie-Lucie Morin, and Marcella Szel.
Mr. Emerson will submit recommendations to the Minister of Transport by late next year.
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Questions
Thank you / Merci Beaucoup
Questions?
www.cta-otc.gc.ca
http://www.cta-otc.gc.ca/http://www.cta-otc.gc.ca/http://www.cta-otc.gc.ca/mailto:[email protected]:[email protected]:[email protected]
