Canada Gazette

The Canadian Transportation Agency, pursuant to section 128 of the Canada Transportation Act (see footnote a), hereby makes the annexed Regulations Amending the Railway Interswitching Regulations (Miscellaneous Program).

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 36(1) of the Canada Transportation Act (see footnote b), hereby approves the annexed Regulations Amending the Railway Interswitching Regulations (Miscellaneous Program), made by the Canadian Transportation Agency.

REGULATIONS AMENDING THE RAILWAY
INTERSWITCHING REGULATIONS
(MISCELLANEOUS PROGRAM)

1. The definitions "Act" and "siding" in section 2 of the Railway Interswitching Regulations (see footnote 1) are replaced by the following:

(a) a private siding that connects with a line of railway of a terminal carrier,

(b) a team track of a terminal carrier,

(c) a track where traffic may be loaded or unloaded directly from or into a shipper's facility abutting a terminal carrier's tracks,

(d) a track for loading or unloading in a public stockyard, and

(e) a point of origin or a point of destination, as those expressions are defined in section 87 of the Act,

(f) a track that is used by a terminal carrier for the transfer of traffic between cars or between a car and a warehouse owned by the terminal carrier, or

(g) a track that serves a reload or distribution compound, a container terminal or any other facility operated by a terminal carrier or its agent or for the terminal carrier's own purposes; (voie d'évitement)

(b) in respect of the operations and administration of a railway company if, in the immediately preceding three-year period, the company derived at least 90% of its gross freight revenues from interswitching, according to the returns prepared by the company under regulations made under section 50 of the Act.

8. Subject to section 9, the interswitching rate charged by a terminal carrier for traffic originating in or destined to an interswitching distance zone set out in column I of an item of the schedule is the interswitching rate set out in column II or III, as the case may be, of that item.

4. Section 10 of the Regulations and the heading before it are replaced by the following:

10. For the purpose of subsection 133(1) of the Act and with respect to the formula appearing in that subsection,

(a) the interswitching rate referred to in the description of A in that formula is the rate set out in column II or III, as the case may be, of item 4 of the schedule; and

(b) the value of E in the formula, namely, the total number of kilometres to which the interswitching rate applies, is 40 km as measured along the line of track of the terminal carrier.

5. These Regulations come into force on the day on which they are registered.

The Miscellaneous Amendments Regulations correct some inconsistencies that have no policy implications and amend section 8 of the Railway Interswitching Regulations (the Regulations), which was declared to be in contravention of the Canada Transportation Act (the Act) by the Standing Joint Committee for the Scrutiny of Regulations (the SJC).

The amendment to section 8 of the Regulations is designed to reflect the opinion received from the SJC to the effect that the statutory authority granted to the Canadian Transportation Agency (the Agency) by section 128 of the Act extends to prescribing interswitching rates, not maximum rates. In January 1999, the Agency notified the Minister of Transport, pursuant to subsection 36(2) of the Act, of its intention to proceed with several amendments to the Regulations, including revision to section 8 of the Regulations in order to delete the reference to interswitching rates being considered as maximum rates. In April 1999, the Minister advised the Agency that the review of the Act would constitute the appropriate forum to examine the issue of interswitching rates being maximum rates.

The Canada Transportation Act Review Panel, appointed by the Minister of Transport, recommended that section 128 be amended to provide the Agency with the authority to prescribe maximum rates. Following the report of the Review Panel, Parliament recognized the benefit of prescribed interswitching rates being considered as maximum rates and included this amendment in Bill C-26, An Act to amend the Canada Transportation Act. In essence, the promulgation of Bill C-26 would have made the wording of the Regulations conform to the legislation. In light of the Minister's advice in 1999 and the expected promulgation of Bill C-26, the Agency concluded that it was not appropriate to make regulatory amendments in this respect at that time. However, given the present uncertainty surrounding the promulgation of Bill C-26, the Agency has decided to proceed with the proposed revision of section 8 of the Regulations in order to make it consistent with the current Act, by prescribing a specific interswitching rate for each distance zone and deleting the reference to interswitching rates being considered as maximum rates.

Other amendments to the Regulations are necessary in order to ensure that they accurately reflect the legislative changes to the interswitching provisions introduced with the repeal of the National Transportation Act, 1987 (the NTA, 1987) and the promulgation of the Act in 1996. The Act encompasses the interswitching provisions of the NTA, 1987, with the addition of some new wording for clarity of meaning and intent as well as the introduction of a clause preserving the interswitching rights of shippers located on lines discontinued and transferred outside of the federal jurisdiction.

— an amendment to the definition of "Act" to refer to the Act instead of NTA, 1987;

— an amendment to the definition of "siding" in section 2 of the Regulations to include a point of origin or destination defined, for interswitching purposes, as a connection point between federal and provincial railways in order to preserve, in conformity with subsection 128(4) of the Act, the interswitching rate entitlement of shippers that are located on a line of a federal railway that has been transferred under Division V of the Act or section 158 of the NTA, 1987 to become a provincial railway;

— an amendment to paragraph 3(1)(b) of the Regulations to reflect the repeal of section 344 of the Railway Act which sets out the provisions concerning revenue data collection; and

— an amendment to section 10 of the Regulations to reflect that subsection 133(1) of the Act provides a formula for determining the interswitching rate to be used in calculating a Competitive Line Rate.

It is expected that the housekeeping amendments to the terms of the Regulations will have no negative impact on the rail transportation industry and the rail users in Canada. A positive feature of the amendments is that the Regulations will fully conform to the Act and preserve the entitlement of shippers, located on a line of a former federal railway that has been transferred to a provincial railway, to an interswitching rate.

At the same time, it should be noted that the amendment to section 8 of the Regulations will remove the ability of railways to negotiate a rate lower than the prescribed interswitching rate set out in the Regulations. Removing the ability of railways to negotiate rates lower than the prescribed rates may have an impact on transportation costs of certain commodities that are dependent on interswitching manoeuvres and which are presently moving under special interswitching arrangements. An exception to this rule may lie in the fact that by negotiating special arrangements with the terminal carriers in respect of the interswitching of traffic, shippers may be able to preserve their ability to negotiate a rate lower than the prescribed rate.

The Agency is of the view that the amendment to section 8 of the Regulations may result in a slight increase in the total revenues derived by the railways from the interswitching services and may impact negatively on certain rail users. However, this regulatory amendment will not be a surprise to the rail transportation community as the industry has been aware since 1996 of the polemic surrounding the authority of the Agency to prescribe maximum interswitching rates.

Michel Maisonneuve
Senior Investigations Officer
Rail and Marine Complaints and Audit Services Directorate
Rail and Marine Branch
Canadian Transportation Agency
Ottawa, Ontario
K1A 0N9
Telephone: (819) 953-2235
FAX: (819) 953-5564
E-mail: michel.maisonneuve@cta-otc.gc.ca