|
CANADA TRANSPORTATION ACT REVIEW:
LIST OF RECOMMENDATIONS
The following is a list of the recommendations of the Canada Transportation Act
Review panel. The full text of the final report, Vision
and Balance, is also available.
Competitive Rail Access and Shipper
Protections
Recommendation 5.1
The Panel recommends that sections 113 to 115 of the Canada Transportation Act be replaced with a requirement that a railway
publish in its tariff the level of service attached to rates in the
tariff.
Recommendation 5.2
The Panel recommends that the Canadian Transportation Agency
continue to have the authority to determine whether a railway has
met the level of service commitments in a tariff or confidential
contract and, in the event of a breach, to order the railway to take
specific steps to meet those commitments.
Recommendation 5.3
The Panel recommends that the existing interswitching limits
be retained.
Recommendation 5.4
The Panel recommends that section 128 of the Act, requiring the
Canadian Transportation Agency to determine fixed interswitching
rates, be amended to allow the Agency to prescribe maximum rates,
leaving it open to shippers and railways to enter into commercial
arrangements for lower interswitching rates, if appropriate.
Recommendation 5.5
The Panel recommends transforming the competitive line rate
provisions of the Canada Transportation Act into competitive
connection rate (CCR) provisions by
- removing the requirement that shippers obtain an agreement with
a connecting carrier before requesting the rate from the Canadian
Transportation Agency;
- making the remedy available only to shippers with no
“alternative, effective, adequate and competitive” means of
transporting the goods that would be subject to the rate and
where the Agency determines that the rate is substantially above
rates paid by other shippers of the specific commodity under
similar conditions and that cannot be explained by apparent
cost and value of service considerations;
- requiring the shipper and the railway to attempt to negotiate a
new rate within a 30-day period after the Agency determines
that a CCR is required;
- requiring the Agency, where the shipper and carrier do not
agree on the rate, to establish a CCR, subject to the
commercially fair and reasonable test of section 112, with
the rate falling in the range of the 75th percentile to the
90th percentile of revenue per tonne-kilometre for movements of
the same commodity over similar distances and under the same
conditions and levels of service as the CCR portion, together
with the interswitching rate for the first 30 kilometres;
- allowing for a CCR to be established by the Agency for a period
of one year;
- prohibiting the shipper from requesting final offer arbitration
of any rate being reviewed or established under the CCR
process;
- prohibiting the shipper from requesting final offer arbitration
for the portion of the movement by the connecting carrier;
- prohibiting the shipper from requesting a CCR for a rate
established by final offer arbitration; and
- giving the Governor in Council authority to suspend the CCR
provision if it determines that railway viability is seriously
affected by the operation of the CCR provision.
Recommendation 5.6
The Panel recommends that the substantial commercial harm test
in sections 27(2), (3) and (5) of the Canada Transportation Act be
repealed.
Recommendation 5.7
The Panel recommends that the Canadian Transportation Agency,
when establishing interswitching rates and competitive connection
rates, continue to be guided by the requirement that rates it
establishes be commercially fair and reasonable to all parties.
Recommendation 5.8
The Panel recommends that an arbitrator be required, in every
arbitration, to consider whether a shipper has alternative, effective,
adequate and competitive means to transport the goods that are
the subject of the arbitration.
Recommendation 5.9
The Panel recommends that the grain handling and transportation
system be moved to a more commercial basis, which could lead to
repeal of the revenue cap on grain rates.
Recommendation 5.10
The Panel recommends that any railway operator, whether under
federal or provincial jurisdiction, have the right to apply to the
Canadian Transportation Agency for running rights, provided the
operator meets all necessary operating and safety standards and is
adequately insured.
Recommendation 5.11
The Panel recommends that the running rights provision of the
Canada Transportation Act be amended to allow an applicant to
seek traffic solicitation rights.
Recommendation 5.12
The Panel recommends that a railway operator proposing to apply
to the Canadian Transportation Agency for running rights be
required to advise the infrastructure owner at least 60 days before
making the application to encourage negotiations between the
parties.
Recommendation 5.13
The Panel recommends that, as part of its public interest
determination on a running rights application, the Canadian
Transportation Agency consider, at a minimum,
- the adequacy of existing service,
- the existence of competitive alternatives,
- the impact on all users and shippers on lines where running
rights are sought,
- the impact on system efficiency,
- the financial and operational capability of the applicant,
- the willingness of the applicant to allow reciprocal access to its
lines where applicable, and
- the impact on the financial viability of the infrastructure owner.
Recommendation 5.14
The Panel recommends that guest operators with traffic
solicitation rights
- have the obligation to publish rates at the request of a shipper
and to specify the level of service to be provided as part of
published tariffs,
- have the right to enter into confidential contracts with shippers,
and
- have authority to limit liability for loss or damage of a shipper’s
goods only in accordance with section 137 of the Canada
Transportation Act.
Recommendation 5.15
The Panel recommends that interswitching, competitive connection
rates and final offer arbitration be suspended with respect to the
movement of traffic on lines served by an infrastructure owner
and one or more guest operators with traffic solicitation rights.
Recommendation 5.16
The Panel recommends that running rights orders issued by the
Canadian Transportation Agency include a requirement that the
guest operator provide reasonable notice when it intends to
withdraw service on a line.
Recommendation 5.17
The Panel recommends that running rights compensation be
negotiated between the parties. If the parties are unable to reach
a commercial agreement in 90 days, either party could ask the
Canadian Transportation Agency to set compensation in
accordance with the Panel’s rail access pricing proposals.
Recommendation 5.18
The Panel recommends that, where traffic solicitation is sought,
the rail access charge consist of
- compensation for all incremental costs the guest railway
imposes on the host; and
- a contribution to the common costs of rail ownership that
approaches the implicit contribution the infrastructure owner is
earning on the specific traffic being solicited.
Recommendation 5.19
The Panel recommends that the following considerations be used
as a guide in determining compensation for track access without
traffic solicitation rights:
- access fees should cover all incremental costs the host incurs as a
result of the guest railway’s operations;
- access fees that differentiate among users on the basis of the
value they place on rail access should be permitted;
- access fees based on differential pricing should not be allowed to
help infrastructure owners generate more revenue than they
need in total to cover costs, including a reasonable return on
their investment; and
- access fees for government-owned or -directed passenger and
commuter rail services should be limited to an amount that
compensates infrastructure owners for the additional costs they
incur, including congestion and delay costs, and provides a
reasonable after-tax return on the book value of the capital
assets used by the guest.
Recommendation 5.20
The Panel recommends that the Minister of Transport ensure that
implementation of the access proposals recommended in this
report comply with all applicable requirements of international
and internal trade law.
Recommendation 5.21
The Panel recommends that railways be required to identify and
publish a list of rail sidings in operation on their network and
available for producer car loading. The Panel recommends further
that railways be required to give 60 days public notice before
removing a siding from operation.
[Return to top]
The Merger Review Process
Recommendation 6.1
The Panel recommends the establishment of a new process for
reviewing proposed transportation mergers, either within modes
or cross-modally, to examine issues of broad national or transnational
interest separately from competition issues considered under the
merger review provisions of the Competition Act.
Recommendation 6.2
The existing Competition Act process should continue to be used to
evaluate whether a proposed merger in the transportation sector
would prevent or lessen competition.
Recommendation 6.3
The proposed public interest review process would have the
following steps:
- Parties notify the Minister of Transport of the proposed
merger at the same time notice is served to the Commissioner
of Competition.
- The notice to the Minister includes a statement of public
interest impact, including
- the objectives of the merger;
- the impact of the merger on the transportation sector
concerned and on the industry sectors it serves;
- possible costs and benefits to shippers or passengers;
- implications with respect to network rationalization and
the labour force;
- the regional impact of the merger;
- the impact of the proposed merger on the overall structure
of the transportation sector concerned; and
- remedial or mitigating actions proposed by the merging
parties to address public interest concerns.
- If the Minister concludes there are significant public interest
issues related to the proposed merger, he/she would appoint a
public interest evaluator to evaluate the proposed merger.
- The public interest evaluator evaluates public interest issues
identified by the Minister, based on the statement of public
interest impact provided by the parties to the proposed merger,
and can hold hearings to receive input on public interest issues.
- Parties to a merger may amend the statement of public
interest impact in response to concerns expressed by the public
interest evaluator on public interest issues.
- The public interest evaluator interacts with the Competition
Bureau to discuss and co-ordinate their respective investigations.
- At the conclusion of the evaluation, the public interest evaluator
reports to the Minister, recommending, with respect to public
interest issues, that the proposed merger
- be allowed to proceed;
- be allowed to proceed, subject to specified conditions; or
- not be allowed to proceed.
- After receiving the report of the public interest evaluator, the
Minister reviews it and makes a recommendation to the
Governor in Council.
- Approval should be subject to any conditions the Governor in
Council considers relevant to protect the public interest.
- Where the Governor in Council approves a merger subject to
the parties to the merger meeting conditions to protect the
public interest, a process to ensure compliance through
monitoring and enforcement must be put in place.
- The Competition Bureau and the public interest evaluator
should be encouraged to work closely with the appropriate
authorities in other countries when considering transnational
mergers.
Recommendation 6.4
The Panel recommends that the proposed merger review process
apply to all transportation modes under federal jurisdiction.
[Return to top] The
Airline Industry
Recommendation 7.1
The Panel recommends that the government enter into
negotiations with the United States and Mexico to create a
North American Common Aviation Area in which carriers from
Canada, the U.S. and Mexico would compete freely.
As a back-up option if negotiations do not succeed, the Panel
recommends that the government negotiate with other countries
for the reciprocal granting of modified sixth freedom rights and of
rights of establishment for foreign-owned domestic carriers.
Recommendation 7.2
The Panel encourages the government to pursue actively Canada’s
interest in a more liberal international environment for air
services.
Recommendation 7.3
The Panel recommends that the limit on the voting shares of
Canadian airlines that can be held by foreigners be raised to 49%.
Recommendation 7.4
The Panel recommends that carriers be given recourse to the
Canadian Transportation Agency for disputes over access to
airport facilities and that the Agency be given power to provide an appropriate remedy in situations where airlines are found to be
subject to unfair treatment in terms of prices charged or type and
quality of services provided.
Recommendation 7.5
The Panel recommends that the maximum annual domestic
passenger revenues used to determine eligibility for access to
Air Canada’s frequent flyer program be raised to $500 million.
The Panel recommends further that the requirement to provide
access to Aeroplan be extended until the Minister of Transport
determines that competition in the domestic market has strengthened
to the point where it is no longer necessary.
Recommendation 7.6
The Panel recommends that the Canada Transportation Act be
amended to remove the Canadian Transportation Agency’s powers
to review passenger and cargo fares on monopoly routes upon
complaint; to order additional fare classes on monopoly routes if
these are available on similar competitive routes; and to audit
carriers proactively and take appropriate action.
Recommendation 7.7
The Panel recommends that the government require Air Canada to
provide 180 days notice of services it plans to terminate in the first
six months of 2003.
[Return to top] Marine Transport
Recommendation 8.1
The Panel recommends that full recovery of the costs of marine
services attributable to users be pursued as a long-term goal.
Recommendation 8.2
The Panel recommends that opportunities to commercialize
marine services be sought.
Recommendation 8.3
The Panel recommends that the government make clear its
commitment to eventual elimination of the liner conference
exemptions from competition law and that it actively pursue
multilateral agreement among international partners to do so.
Recommendation 8.4
The Panel recommends that the government make clear to the
government of the United States its preference for eliminating the restrictions on entry to domestic shipping in the Coasting Trade Act
and offer to negotiate bilateral elimination of equivalent restrictions.
Recommendation 8.5
The Panel recommends that the 25% duty on vessels built or
purchased outside Canada be eliminated.
[Return to top]
Governance of the Newly Commercialized
Infrastructure Providers
Recommendation 9.1
The Panel recommends that principles be developed to govern the
setting of airport fees for aeronautical services; that airports be
required to provide adequate notice of their intention to revise
charges to airlines; and that, in the case of disputes over adherence
to the principles or process, there be a right of complaint to the
Canadian Transportation Agency.
Recommendation 9.2
The Panel recommends that
- a for-profit subsidiary of an airport authority be allowed to
provide a service to the airport only if it is the successful bidder
in a fair and open competitive tendering process;
- if an airport authority in its own right (rather than through a
subsidiary) undertakes activities that compete with commercial
firms, it be required to demonstrate that the decision is in the
airport’s financial interest; and
- airport land use regulations be required to adhere to basic rules
of fairness and equity, including the requirement that affected
parties be adequately notified and consulted about proposed
changes in airport policy.
Recommendation 9.3
The Panel recommends that legislation be introduced specifying
governance requirements for LAAs and CAAs and indicating the
penalties that can be imposed in cases of non-compliance.
Recommendation 9.4
The Panel recommends that well defined limits be placed on
airport authorities’ use of for-profit subsidiaries.
Recommendation 9.5
The Panel recommends that the airport authorities’ legislated
exemption from the Income Tax Act be removed.
Recommendation 9.6
The Panel recommends that airports be required to put in place
comprehensive performance measurement systems that adhere to
guidelines developed by Transport Canada. For major proposed
capital projects, airports should be required to undertake an
economic assessment, consult with airport users, and ensure that
stakeholders’ positions are made known to interested parties.
Recommendation 9.7
The Panel recommends that Transport Canada review its proposed
Aircraft Emergency Intervention Services regulations to determine
whether the standards are appropriate based on a careful
assessment of costs and benefits.
Recommendation 9.8
The Panel recommends that a limited program of support be
introduced to help smaller airports cover their operating
expenditures. The program should be financed from air system
revenues and be designed to encourage improved efficiency and
create incentives for airport rationalization.
Recommendation 9.9
The Panel recommends that the provisions of the Canada Marine
Act making the Crown responsible for liabilities of Canada Port
Authorities be removed.
Recommendation 9.10
The Panel recommends that borrowing limits in the letters patent
of Canada Port Authorities be removed.
Recommendation 9.11
The Panel recommends that the number of directors on Canada
Port Authority boards appointed directly by the Minister of
Transport be reduced to two.
Recommendation 9.12
The Panel recommends that well defined limits be placed on
Canada Port Authorities’ use of for-profit subsidiaries.
Recommendation 9.13
The Panel recommends that
- a for-profit Canada Port Authority subsidiary be allowed to
provide a service to the port only if it is the successful bidder in
a fair and open competitive tendering process; and
- if a port in its own right (rather than through a subsidiary)
undertakes activities that compete with commercial firms, it be
required to demonstrate that the decision is in the port’s
financial interest.
Recommendation 9.14
The Panel recommends that Canada Port Authorities be required
to develop comprehensive performance measurement systems and
to make the resulting information publicly available.
Recommendation 9.15
The Panel recommends that a review of the Canada Marine Act be
initiated by the beginning of 2002.
[Return to top]
Paying for the Roads
Recommendation 10.1
The Panel recommends that the World Bank/New Zealand
concepts of road and transport funding and management agencies
be adapted for Canada, including the following features:
- users should pay for roads, by means of appropriate charges
and fees;
- charges for roads should be based on costs imposed, differentiated
so far as practical by nature of vehicle, type of road, and amount
of congestion;
- managers of the road network should have responsibility for
both charging and spending decisions;
- users should be involved in decisions on charges and expenditures;
and
- alternatives to road spending in other modes should be allowed
to compete for road funds.
[Return to top]
Ferries, Intercity Buses and Passenger Trains
Recommendation 11.1
The Panel endorses initiatives to reduce subsidies to ferry services
and recommends that commercialization and divestiture of
responsibility for local service decisions to other levels of government
continue.
Recommendation 11.2
The Panel recommends that the Minister of Transport continue
the process already initiated to address regulatory fragmentation
in the bus industry.
Recommendation 11.3
The Panel recommends that the National Safety Code be structured
such that all vehicles carrying paying passengers are subject to a
consistent pattern of safety regulation that takes into account the
scale of the operation and risk exposure but does not rest entirely
on vehicle size.
Recommendation 11.4
The Panel recommends that VIA’s current services be reviewed to
ascertain the extent to which they have become tourism products;
if they have, they should be designated as such.
Recommendation 11.5
The Panel recommends a full cost recovery policy for Quebec City-Windsor
corridor rail and its commercialization.
As a first step, corridor operations as a whole should be separated
organizationally from VIA’s other services. Management should be
directed to pursue commercialization and to report cost recovery
progress for each of the corridor services on a fully allocated basis.
Management should be given full authority to terminate services
that prove unsuccessful.
Recommendation 11.6
The Panel recommends that, after Quebec City-Windsor corridor
services have been separated from the other routes that VIA Rail
now operates, legislation be enacted to give the entity providing VIA
corridor services the commercial freedom required to become and
remain self-sufficient.
Recommendation 11.7
The Panel recommends that each rail service now subsidized to
provide access to remote communities be reviewed to determine
- the present level of remoteness;
- whether a federal contribution toward development of road
access (by the province in question) might constitute a more
effective and efficient solution to the access issue;
whether an air, bus or other service, provided by the private
sector, might prove superior to rail; and
- whether the private sector could provide an adequate rail
service more economically under contract than is possible for
VIA Rail.
Recommendation 11.8
The Panel recommends that the policy of commercializing
passenger services, including divestiture to the private sector and
other levels of government, continue. Further, where federal
subsidy of passenger travel is deemed desirable, federal financial
support should be reassessed periodically and carrier- and mode-neutral
mechanisms to allocate the subsidies in a manner that
least distorts the commercial market should be used.
[Return to top]
The National Interest in Urban Transportation
Recommendation 12.1
The Panel recommends that transit operating agencies and their
funders seek the most cost-effective ways of improving their services.
Recommendation 12.2
The Panel recommends that experimentation with innovative
forms of service (smaller vehicles, shared taxis) be encouraged.
Recommendation 12.3
The Panel recommends that urban transit be permitted to qualify
for funding from road user charges.
Recommendation 12.4
The Panel recommends that payments to transit authorities be
made on the basis of their actual performance in inducing shifts
from private automobile use to transit.
[Return to top]
Preserving Urban Rail Corridors
Recommendation 13.1
The Panel recommends that section 118 of the Canada Transportation
Act, as amended by the Panel’s proposals, be made available to
commuter authorities.
Recommendation 13.2
The Panel recommends that future commuter rail contracts be
made public and that current contracts be made public unless one
of the parties can demonstrate to the satisfaction of the Canadian
Transportation Agency that the contract contains commercially
sensitive information and that it would be harmed by its release.
Recommendation 13.3
The Panel recommends that section 145 of the Canada Transportation
Act be amended to require that a railway offer lines it intends to
discontinue to commuter rail authorities before offering them to a
municipal or district government, provided the line has been
identified officially as being required for urban transit purposes.
Recommendation 13.4
The Panel recommends that land being transferred under the
Canada Transportation Act process at net salvage value be valued at
no more than its ‘across the fence’ value, with no premium for
assembly applied.
Recommendation 13.5
The Panel recommends that railway companies be required to
offer for sale at net salvage value, to the relevant province,
commuter authority or municipal government(s), a spur or other
line not covered by the current transfer and discontinuance
process, provided the line has been identified officially as being
required for urban transit purposes.
Recommendation 13.6
The Panel recommends that the purchase of railway lines for use
as urban transit corridors (including spurs identified through the
process set out in the previous recommendation) qualify for
funding consideration from the provincial and territorial roads
and transport funds the Panel proposes.
[Return to top]
Transportation Accessibility for Persons
with Disabilities
Recommendation 14.1
The Panel recommends that the Canadian Transportation Agency
be given the power to investigate accessibility matters on its own
motion.
Recommendation 14.2
The Panel recommends that the attendant air fare issue be
resolved as quickly as possible.
[Return to top]
The Trucking Industry
Recommendation 15.1
The Panel recommends that federal, provincial and territorial
governments collectively recognize the need for a cohesive framework
to govern the multiple elements of the trucking sector.
The Panel recommends further that jurisdictions establish a time
frame for developing and implementing an effective framework to
govern all elements of the trucking industry.
[Return to top]
The Impact of E-Business on
Transportation
Recommendation 16.1
The Panel recommends the establishment of a co-operative program
with the national carrier associations in all modes to facilitate and
encourage the development of e-business and e-commerce skills and
training in the application of the technologies.
Recommendation 16.2
The Panel recommends that the government continue to develop
e-government initiatives aimed at streamlining both internal and
government/industry communication processes.
[Return to top]
The Environment and Sustainable Development
Recommendation 17.1
The Panel recommends that the statement of objectives of national
transportation policy in the Canada Transportation Act recognize
the environmental goals of national policy.
[Return to top]
Public Policy Development
Recommendation 18.1
The Panel recommends that the Minister of Transport take the
necessary steps to make available for Canadian operations,
carriers and airports information similar to that routinely
available in the United States.
Recommendation 18.2
The Panel recommends that the government and transportation
industries expand the collection of transportation data and
develop new procedures to reflect changes occurring in the
domestic and global economies.
Recommendation 18.3
The Panel recommends that the Canada Transportation Act be
amended to ensure that transportation data can be shared across
federal departments.
Recommendation 18.4
The Panel recommends that the Minister of Transport ensure that
detailed information on the extent and cost of federally supported
transport infrastructure or carrier services be made available and
encourages similar actions by other levels of government.
Recommendation 18.5
The Panel recommends that penalties be introduced that will provide
effective incentives to comply with data reporting requirements.
Recommendation 18.6
The Panel recommends that the restriction on monitoring in
subsection 50(3) of the Canada Transportation Act be repealed.
Recommendation 18.7
The Panel recommends that the government increase its support
for transportation research.
Recommendation 18.8
The Panel recommends that transport policy and legislation be
guided by underlying principles, such as those identified in this
report, that are common to all transportation modes.
[Return to top]
Other Legislative Changes
Recommendation 19.1
The Panel recommends that provisions of the Canada Transportation
Act imposing an obligation or prohibiting specified actions without
mandating the Canadian Transportation Agency to administer
them be reviewed and, if necessary, amended to provide that the
Agency can enforce them on complaint.
Recommendation 19.2
The Panel recommends that section 29 of the Canada Transportation
Act be amended to give the Canadian Transportation Agency the
power to extend the 120-day time limit on its own motion where not
doing so would cause serious prejudice to a party. The Agency
should be required to report the circumstances where it exceeds its
statutory time limit in its annual report.
Recommendation 19.3
The Panel recommends that the Canadian Transportation Agency
be given the statutory authority to engage in mediation and to
establish rules setting out when mediation may be required before
complaints or applications enter a formal decision process.
Recommendation 19.4
The Panel recommends that section 53 of the Canada Transportation
Act be brought into line with the national transportation policy, as
amended by the Panel’s proposals.
Recommendation 19.5
The Panel recommends that the Minister of Transport consider
whether legislative amendments are needed to give a review panel
the power to compel the production of documents.
Recommendation 19.6
The Panel recommends that the Minister of Transport consider
whether the existing exemption in section 98 of the Canada
Transportation Act is appropriate.
Recommendation 19.7
The Panel recommends that the provisions of the Canada
Transportation Act allowing railways to appoint police constables
be repealed and that responsibility for policy questions on railway
police issues be transferred to the appropriate government
department.
[Return to top]
July 2001
|