Abridged CTA Testimony
December 6, 2000
Commuter Rail and the Canada Transportation Act
Review
Canadian commuter rail services share similar challenges in gaining access to rail
corridors at reasonable rates. We also share the objective of providing environmentally
safe, efficient public transportation for good taxpayer value.
The following commuter rail operators gave testimony at the Canada Transportation Act
(CTA) Review Hearing: West Coast Express – British Columbia; Agence Metropolitaine
de Transport -- Quebec; GO Transit – Ontario.
Benefits of Commuter Rail
Each year in Canada, commuter trains provide 53 million rides to customers and
taxpayers using only 500 kilometres of track. With 40 percent of greenhouse gases
originating from urban transportation sources, especially private automobiles, providing
alternatives to single occupant vehicles is clearly in the public interest.
With growing traffic congestion in urban corridors, more people will choose to commute
by rail, but only if favourable economics will allow the expansion of services to occur.
Rail-based transit has a key advantage over other forms of mass transit in that commuter
rail usually operates on existing rail infrastructure. This transit option does not compete
for space on roads and highways.
Canada has committed to reducing greenhouse gases to help minimize the impact of
global warming. Commuter rail can play an important role in meeting this commitment,
while protecting existing greenspace that might otherwise be lost to highway expansion.
Barriers to commuter rail access limit expansion
Commuter rail operates in an environment dominated by monopoly service providers
(Canadian Pacific Railway and Canadian National Railway) without recourse to
legislation if railways refuse access to their tracks. This means that commuter rail
services face unreasonably high rates, restrictive contract provisions and in some cases,
controls over how commuter rail service is delivered.
Under the CTA, shippers of goods such as wood, potash or grain have more rights and
dispute resolution processes available to them than commuter rail operators. Provincial
commuter rail authorities lack such things as access to running rights – (Section 138) and
level of service – (Sections 113 to 116)..Railways can arbitrarily stifle the growth of commuter rail operations, and often give
preference to the expansion of freight traffic in lieu of commuter operations. Railways
are able to resist public demands for commuter rail expansion because:
• there are no legislative remedies when railroads restrict access to their tracks,
• there is no independent assessment of the true capacity of rail corridors.
Commuter rail operations also face barriers to expansion because of the high cost of rail
access. In a monopolistic market, railroads extract the highest price commuter rail
customers can bear because there are no negotiating or competitive alternatives.
Commuter rail could provide better value for taxpayer’s dollars if railways charged
provable and direct costs plus a reasonable margin. This is not the current situation.
High costs for services are compounded by the railways’ demand that commuter rail
operators assume all risks (including the railway’s liability). This situation, places an
unreasonable cost burden on commuter rail operations and consequently on the taxpayers.
The free market does not exist for commuter rail operators. Our agreements with the
railways contain restrictive confidentiality clauses which effectively control the release of
information to the exclusive benefit of railways. In fact, these restrictive clauses limit
commuter rail operators from providing relevant information to the CTA hearing.
In summary, commuter rail has no legislative remedies if railways refuse access to their
lines, charge excessive fees for services or impose restrictive confidentiality clauses in
contracts. These circumstances create barriers to the viability and expansion of
commuter rail that is contrary to the public interest.
Required Relief
• Federal funding program to support urban transportation
• A national transportation policy that specifically recognizes commuter rail as an
integral part of the solution for current urban transportation issues.
• A regulated mechanism for commuter rail similar to the 1986 Bill C-97 providing
economic and other efficient protections for commuter rail and taxpayers to be
developed by the CTA review panel.
• Amendments to the Act to provide access for commuter rail to the Canadian
Transportation Agency for competitive reviews and, if needed, timely intervention
on issues where normal market practices are not occurring. Until a more defined
process can be implemented by the CTA Review, given the existence of long term
commuter rail agreements, the legislation should provide a process for a one time
review of all existing commuter rail agreements.
Rail Line Transfer and Discontinuance
The transfer of ownership of a railway line can have huge implications for commuter rail,
but under current legislation commuter rail has no voice in these decisions. Commuter.rail operators want the same rights as VIA Rail when railways wish to sell, lease, transfer
or discontinue operations on a line.
Under the Act, government authorities can acquire a railway line for “net salvage value”
if the railway company cannot sell the line on the open market. Commuter rail authorities
should be entitled to receive separate notice and have the right to receive and respond to
offers.
The Act also fails to contemplate situations where there may be little freight service on a
rail line, but the line is required for rail passenger transportation. In this situation, the
land will not be re-developed, so the highest and best value cannot be realized. The party
acquiring the line would be expected to pay the high price without being able to recoup
its real estate value.
To avoid a situation where railway companies have to absorb the “cost” of continued rail
passenger service, the party that takes over the line may pay for its value for public
transportation purposes while the railway company has the benefit for other uses, such as
fibre optics or other public utility purposes. Another alternative is that the railway could
obtain the full breakup value once the corridor is no longer needed for rail passenger
transportation.
Final Offer Arbitration
Commuter rail operators value the availability of final offer arbitration because it
encourages reasonable negotiation by railway companies. With final offer arbitration,
railways know that commuter rail authorities can take their negotiation position to an
independent arbitrator if necessary. If accepted, that position becomes part of the
arbitration award. The value of final offer arbitration is not in the number of times it has
been used, but the fact that it exists.
Conclusion
It is vital that commuter rail, as part of the fabric of regional economies, have access to
rail infrastructure at fair market prices. We need to be able to expand our service, run
counter-flow trains and obtain relief from extremely excessive costs and onerous
contractual conditions. Commuter rail costs should be calculated by railways using
directly related, provable costs plus a reasonable return, excluding overhead costs and
general allocations.
It is important to note that all commuter rail operators want to “pay their way” in dealing
with the railways but our operations need favourable economic and access treatment by
the railways so that operations are sustainable over the long term.
In closing we would like to note that we all believe that our operational relationships with
the railroads are solid, helping us to provide safe, reliable and efficient public
transportation.