Amended Canada Transportation Act receives Royal Assent



    OTTAWA, Feb. 29 /CNW Telbec/ - The Honourable Lawrence Cannon, Minister
of Transport, Infrastructure and Communities, today announced that Bill C-8,
Act to Amend the Canada Transportation Act (railway transportation), has
received Royal Assent.
    The Bill consists of amendments to clarify and strengthen the Act's
provisions that protect rail shippers from the potential abuse of market power
by railways. The amendments will help address shipper concerns about rail
service and rates, while providing regulatory stability to the railways to
encourage investments that are required to keep Canadian exporters and
importers competitive in international markets.
    "This government managed to get Bill C-8 passed in one of the smallest
minority governments in history, something that the last majority government
could not do," said Minister Cannon. "Bill C-8 proves that this government can
get things done and deliver real results for Canadians."
    "Canadian farmers depend on railways to ship their products to the
world," said the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food
and Minister for the Canadian Wheat Board. "This government is taking real
action to outline clear rights and responsibilities as railways and farmers
work together."

    
    The amendments include:

    - removing the requirement for the Canadian Transportation Agency (the
      Agency) to be satisfied that a shipper would suffer substantial
      commercial harm before it grants a remedy, as it is an unwarranted
      barrier to regulatory remedies;
    - extending final offer arbitration to groups of shippers on matters
      relating to rates or conditions for the movement of goods, provided the
      matter submitted for arbitration is common to all and the shippers make
      a joint offer that applies to all of them;
    - allowing for the suspension of any final offer arbitration process, if
      both parties consent to pursue mediation;
    - permitting the Agency, upon complaint by a shipper, to investigate
      charges and conditions for incidental services and those related to the
      movement of traffic contained in a tariff that are of general
      application, and to establish new charges or terms and conditions if it
      finds those in the tariff to be unreasonable;
    - increasing the notice period for augmentations in rates for the
      movement of traffic from 20 to 30 days to ensure that shippers receive
      adequate notice of rate increases;
    - requiring railways to publish a list of rail sidings available for
      grain producer car loadings and to give 60 days notice before removing
      such sidings from operation; and
    - ensuring that the abandonment and transfer provisions apply to lines
      that are transferred to provincial short lines (local lines under
      provincial jurisdiction) and subsequently revert to a federal railway,
      including the obligation to honour contracts with public passenger
      service providers.

    "These amendments represent the culmination of extensive consultations and
reflect the substantial contributions made by stakeholders from across the
country," said Minister Cannon. "The amendments balance the needs of both
parties and set a clear course for our rail transportation system to meet the
economic challenges of the future."
    In addition, the Government of Canada had committed to commence a review
of railway service within 30 days of the Bill receiving Royal Assent. The
Government of Canada has been consulting with the shippers and the railways on
the scope and terms of reference for this review. Details of the review will
be announced in the coming weeks. In the interim, shippers continue to have
access to the remedies already available in the Act.

    A backgrounder on the Canada Transportation Act with highlights of the
amendments is attached.

                                 Backgrounder
                                 ------------
                                 ------------

                          CANADA TRANSPORTATION ACT
                          -------------------------

    The Canada Transportation Act came into effect in 1996 and replaced the
National Transportation Act, 1987; the Passenger Ticket Act; the Government
Railways Act; and elements of the Railway Act.
    It modernized and streamlined rail regulations, promoted the formation of
short-line railways, ensured that shippers continued to have access to
competitive transportation services, eliminated unnecessary regulations in
other modes of transport, and placed greater emphasis on commercial
decision-making in the transportation sector.
    A thorough statutory review of the Act was completed in 2001, and the
amendments are the culmination of extensive discussions and consultations that
are aimed at updating the legislative framework governing significant
components of our national transportation system.
    Improvements to the rail freight provisions are the third and final
element of the Government of Canada's legislative strategy for amending the
Canada Transportation Act. The first, Bill C-3, the International Bridges and
Tunnels Act, received Royal Assent on February 1, 2007. The second, Bill C-11,
an Act to amend the Canada Transportation Act and the Railway Safety Act and
to make consequential amendments to other Acts, which contains amendments to
the general, air and rail passenger provisions, railway noise and the grain
revenue cap received Royal Assent on June 22, 2007.

        Highlights of the Amendments to the Canada Transportation Act
        -------------------------------------------------------------

    Rail Disputes: Elimination of Commercial Harm Test
    ---------------------------------------------------

    The Canada Transportation Act (CTA) previously required the Canadian
Transportation Agency (the Agency) to be satisfied that a shipper would suffer
"substantial commercial harm" before imposing a regulated remedy for disputes
relating to level of service, interswitching rates, and competitive line
rates.

    Amendment:
    The "substantial commercial harm" provision has been removed from the CTA
since this test focuses on the effect on the shippers rather than on the
behaviour of the railways.

    Final Offer Arbitration
    -----------------------

    Final Offer Arbitration (FOA) is a process for resolving disputes between
shippers and railways over rates and conditions of service for moving traffic
(e.g. hauling railcars from Saskatoon, Sask. to Vancouver, B.C.). Where goods
are shipped by rail under a confidential contract, FOA is not available for
the matter covered by the contract unless parties agree.
    Under the FOA provisions, an independent arbitrator considers the offers
made by the shipper and the railway and must select one, which is then
implemented for a period of up to one year. The arbitrator may not combine or
vary the offers made, and the decision is binding on the parties.
    Group FOA, which will allow a number of shippers to apply as a group for
an FOA on a matter of common interest, will reduce costs to individual
shippers and will also strengthen shippers' leverage in negotiations with the
railways.

    Amendments:
    Implement group FOA for rates and conditions of service for moving
traffic, provided the matter submitted for arbitration is common to all, the
shippers make a joint offer that applies to all of them, and the Agency is
satisfied that mediation has been attempted.
    Allow for the suspension of any FOA process, if both parties consent to
pursue mediation.

    Charges for Incidental Services
    -------------------------------

    Although railways primarily generate revenue from freight rates for the
movement of customers' traffic, such as hauling railcars filled with grain
from the Prairies to Vancouver, railways also apply charges for activities
which are incidental or not directly related to the movement of traffic. These
are referred to as incidental or ancillary charges.
    Examples include demurrage (additional charges to the shipper for taking
longer than the permitted time to load or unload a railcar), cleaning and/or
storing railcars, and weighing product.
    Railway charges have become an issue for shippers in recent years.
However, there are limited ways for an individual shipper to address these
concerns since final offer arbitration does not apply as a stand-alone remedy
to charges and their associated conditions.

    Amendments:
    The CTA is amended to permit the Agency, upon complaint by a shipper, to
investigate charges and conditions contained in a tariff that are of general
application.
    The Agency may establish new charges or terms and conditions if it finds
those in the tariff to be unreasonable.
    This provision applies to charges and conditions for incidental services
and those related to the movement of traffic, except for freight rates.
    The Agency will determine the time period for which the new charges and/or
conditions shall remain in effect, not to exceed one year.

    Notification of Changes to Tariffs
    ----------------------------------

    The CTA defines a tariff as "a schedule of rates, charges, terms and
conditions applicable to the movement of traffic and incidental services." The
CTA previously required a railway to publish a notice at least 20 days before
it increases a rate in a tariff for the movement of traffic. The notice
obligation does not apply to charges for incidental services nor to the terms
and conditions related to the tariff item.

    Amendment:
    The CTA is amended by increasing the notice period from 20 to 30 days to
ensure that shippers receive adequate notice of increases in rates for the
movement of traffic.

    Producer Car Sidings
    --------------------

    During consultations, some stakeholders requested greater control over
discontinuance of Prairie rail sidings used for loading grain in producer
railcars. Rail sidings are not subject to the transfer and discontinuance
provisions of the CTA. Complaints about closing producer railcar sidings stem
in part from the shippers' lack of knowledge about which sidings are currently
in operation. This situation arises because railways were previously not
obliged to inform interested parties which sidings are in service.

    Amendment:
    The CTA is amended to require railways to publish a list of sidings
available for grain producer railcar loadings and to give a 60-day public
notice before removing such sidings from operation.

    Leased Railway Lines
    --------------------

    Under the CTA, when a federally regulated railway company is no longer
interested in operating a rail line, the company can transfer the line to
another party for continued operation, whether by sale, lease, or otherwise.
In the case of a lease, the railway remains the infrastructure owner although
it has no obligations for the operation of the line. This means that when a
lease runs out or is terminated, the line reverts back to the owner and is
considered an unregulated asset.
    Under previous legislation, leased railway lines that reverted back to
owner railways could, in effect, circumvent the discontinuance process in the
Act that is intended to offer opportunities to affected communities.
    The Government recognizes the importance of shortlines to many communities
and local shippers and appreciates the need to preserve these valuable railway
lines. For some communities, lease arrangements with shortlines can be the
only economically viable way to maintain rail service on very low-traffic
lines. Therefore, modifications were required to provide opportunities for
other shortline operators to acquire the lines, or for governments to purchase
the line.

    Amendments:
    The CTA is amended to establish a process that offers communities and
shippers a more reasoned approach to discontinuance when leased lines revert
back to the owner railway.
    This process will only apply if the owner railway does not resume service
on the line.
    Given these conditions, a railway is required to:

    - Advertise the line for sale, and if a sale does not take place, offer
      it to governments at net salvage value before dismantling the line, and
    - Pay $10,000 per mile annually over three years to the local
      municipalities if a grain-dependent line is discontinued.

    Level of Service Obligations
    ----------------------------

    The level of service provisions currently in the CTA impose extensive
level of service obligations on railways, authorize the Agency to investigate
complaints, and provide broad authority for the Agency to order corrective
action, if warranted.
    No amendments were proposed for these provisions; however, the Government
of Canada has made a commitment to conduct a review of railway service to
commence within 30 days of the Bill receiving Royal Assent.
    The Government of Canada is consulting with the shippers and the railways
on the scope and terms of reference for this review. Details of the review
will be announced in the coming weeks.
                                                                February 2008
    




For further information:

For further information: Karine White, Press Secretary, Office of the
Minister of Transport, Infrastructure and Communities, Ottawa, (613) 991-0700;
Media Relations, Transport Canada, Ottawa, (613) 993-0055; Transport Canada is
online at www.tc.gc.ca. Subscribe to news releases and speeches at
apps.tc.gc.ca/listserv/ and keep up-to-date on the latest from Transport
Canada. This news release may be made available in alternative formats for
persons with visual disabilities.


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