Changes to the Canada Transportation Act Bill C-49 – Transportation Modernization Act 22nd Annual Fields on Wheels Conference December 15, 2017

Context Canada’s freight rail system is the backbone of our trade economy. Guiding principle of the Canada Transportation Act is to sustain competition and market forces. When regulating the freight rail industry, it is critical that we strike the right balance. Bill C-49 aims to support a transparent, fair, and efficient freight rail system.

Bill C-49 – Status Update Extensive Stakeholder Consultation Transportation 2030 Roundtable Talks Stakeholders submissions Tabled in Parliament on May 16, 2017 Amendments made by TRAN Committee in October. Passed Third Reading on October 31, 2017. Introduced to the Senate in November 2017 Passed Second Reading on December 8, 2017 Bill currently being studied by Senate Standing Committee on Transport and Communications.

Bill C-49 Strengthens the Freight Rail Policy Framework Transparency, including improved data on rates and service Require railways to report on Canadian operations. Authority for TC to report rate trends, aggregate rate data. Clarify the Agency’s authorities to make inquiries for Minister and post public reports.

Bill C-49 Strengthens the Freight Rail Policy Framework Fair access to remedies for service and rate disputes under the Canada Transportation Act (CTA). Define the “adequate and suitable” service railways must provide. Allow for reciprocal financial penalties in service agreement arbitration. Reduce Agency’s timeline for handling service complaints. Improve rate arbitration for shippers (provide option to extend duration of decision; broaden eligibility for streamlined process). Agency to set up informal information and dispute resolution service.

Bill C-49 Strengthens the Freight Rail Policy Framework Efficiency of the rail transportation system Create new Long-Haul Interswitching tool for captive shippers. Require railways to list their interchanges. Long-term investment in the railway network Modernize the Maximum Revenue Entitlement (MRE) regime. Facilitate updates of Regular Interswitching rates, ensure rates adequately compensate railways.

Amendments Made at House of Commons Interchanges: The notification period for removing an interchange was doubled to 120 days from 60 days, now including notification to the Agency; sufficient time for the Agency to decide on a level of service complaint. Long-Haul Interswitching: Amended to provide shippers with access to Kamloops as well as Montreal, for shippers in Northern Quebec. Data Provisions: The timelines for posting data were tightened, to 5 days for the railways (from 14) and 2 days for the Agency (from 5).

Bill C-49 – Enhancing Transparency 2) Service and Performance Bill C-49 proposes to significantly enhance transparency in the Canadian freight rail system. Each Class I carrier operating in Canada would be required to report two types of information for their Canadian operations: 1) Rate Data 2) Service and Performance Information

Rate Data – Requirements Each Class I carrier would be required to provide all of its waybills to Transport Canada on a monthly basis, one month after Royal Assent of Bill C-49. Reporting would be retroactive to August 2016. Waybill data would include over 60 specific fields, including: whether the traffic moved under confidential contract or tariff; detailed information on revenues, tonnage, and distance; commodity and rail equipment; volume incentives; routing information; and ownership of the rail car.

Rate Data – Purpose and Use Long-Haul Interswitching (LHI) - Transport Canada will share the dataset with the Agency, in a secure and confidential way, in order to calculate rates under the proposed LHI measure. Public disclosure - Rate data will be shared in aggregate form with the public (e.g. a periodically conducted rate study), in a way that protects commercially sensitive railway and shipper information. Policy-Making - Transport Canada will use the waybill data for evidence-based policy making (e.g. such as economic analysis and safety & security purposes).

Service and Performance Information – Requirements Each Class I carrier would be require to report eight service and performance metrics to the Agency on a weekly basis, including: Average velocity by unit train type; Origin and terminal dwell times; and Number of cars online, by car type. Each carrier reports separately but in a standardized, dashboard format. Reporting timelines (reflects amendments by TRAN): First weekly report due 180 days after the Bill receives Royal Assent. At the end of each reporting week, railways would have 5 days to report the information to the Minister/Agency. The Agency would have 2 days to post the metrics on its website.

Service and Performance Information – Regulations Regulations are not needed to begin reporting on the eight service and performance metrics proposed in Bill C-49. Transport Canada will lead a regulatory process to transfer the metrics out of the legislation into more permanent regulations. Opportunity to add more service and performance metrics, report on a more granular basis Stakeholders will be consulted Need to ensure information is relevant and does not disclose any commercially sensitive information for a single commodity group.

Proposed Data Workshop Transport Canada will host a data workshop to: Clarify the different data initiatives underway and how they interact Seek stakeholder feedback on regulated, mandated data you need and its purpose/value Discuss confidentiality concerns Present next steps on regulatory development for Bill C-49 service and performance information Data must include all supply chain participants to provide a comprehensive picture of system performance with the ability to identify any emerging issues and act quickly.

Next Steps Data workshop to be held in 2018 Invitations will be sent to stakeholders We look forward to your participation and engagement on Bill C-49 and other measures.

Thank You!