Implementation of Amendments to the Canada Transportation Act

The Transportation Modernization Act (Bill C-49) which came into force on May 23, 2018, amended the Canada Transportation Act (the Act) to introduce new measures related to freight rail, air transportation, and air passenger protection. 

Freight Rail

Own Motion Authority

The CTA can now launch an investigation into a rail level of service issue, with the authorization of the Minister of Transport. The Minister may set terms and conditions as part of an own motion investigation.

The CTA must complete its investigation within 90 days and can make an order as a result of its investigation.

Long-haul Interswitching

The new Long-haul Interswitching provisions enable certain shippers to make an application to the CTA requesting it to set a rate and the terms under which a local carrier must move the traffic to a connecting carrier that will perform the remainder of the movement. The nearest interchange in the reasonable direction of the traffic can be up to 1200 km away, or 50 percent of the total haul distance in Canada, whichever is greater.  The CTA will  render a decision within 30 business days. 

Regulated (30 km) Interswitching Rates

The amended Act enables the CTA to set the interswitching rate annually. The CTA will publish an explanation of the methodology used to calculate the rates.

Maximum Revenue Entitlement (MRE)

The Maximum Revenue Entitlement (MRE) is a limit on the overall revenue that can be earned by the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) for shipping regulated grain from specified origins, generally within Western Canada, to specific export locations. The amendments to the Act include: the establishment of individual  Volume-Related Composite Price Indices (VRCPI) for each of CN and CP; changes to the determination of the railway companies' revenues that are subject to the MRE; the exclusion of containerized traffic; and the inclusion of soybeans.

Level of Service Application 

The amended Act provides greater clarity with respect to the criteria to be taken into consideration by the CTA as part of the decision making process following a level of service application. When assessing whether a railway company has provided the highest level of service that it can reasonably provide, the CTA will look at traffic information, operational requirements and restrictions of the railway company and shipper. It will also assess the railway company's obligations, if any, with respect to public passenger service providers. The CTA will also review the railway company's contingency plan which would include information about how it would fulfill its service obligations when faced with foreseeable or cyclical events, and any other information that the CTA considers relevant to the application.

Level of Service Application Timeline

The timeline for resolving level of service applications has been reduced to 90 days from 120 days.

Reciprocal Penalties in Level of Service Arbitration

This provision allows the arbitrator to include reciprocal penalties as part of an arbitrated service level decision. The penalties are set by the arbitrator. 

Final Offer Arbitration (FOA)

In an FOA process, an arbitrator is mandated to resolve rates and service disputes between carriers and shippers who submit their final offers for decision. The process is confidential and the arbitrator's decision is enforceable as if it were an order of the CTA.

Two aspects of the FOA process have been changed as a result of amendments to the Act:

• The shipper can request the FOA decision to apply for two years, instead of one.
• The threshold for summary FOA has increased to $2 million. If the CTA determines that a shipper’s final offer involves freight charges in an amount of not more than $2 million and the shipper did not indicate a contrary intention when submitting its offer, an expedited process will apply.

Rail information

The amended Act mandates the CTA to provide information on railway transportation and remedies, including guidance to any interested person who wishes to access those remedies.  The CTA continues to post general information on its website and a confidential Rail Help Line is now accessible to all Canadians. The CTA may include, in its annual report to Parliament, information about rail applications, complaints, mediation and submissions for arbitration.

Rail Service and Performance Data

Class 1 railway companies are required by the amended Act to submit rail service and performance data.

Air Transportation

Canadian Ownership and Control in Fact

The maximum percentage of foreign voting interests in Canadian air carriers has increased from 25 percent to 49 percent, subject to restrictions. However, no single non-Canadian may own or control, directly or indirectly, more than 25 percent of the voting interests in that corporation. In addition, no more than 25 percent of the voting interest in a Canadian carrier may be owned by foreign air carriers. 

The CTA will continue to ensure that all Canadian air carriers comply with the requirement that air service licensees be owned and controlled in fact by Canadians.

Joint ventures

A new process for ministerial authorization of proposed joint ventures between carriers has been established.

Air Passenger Protection

The amended Act gives the CTA the authority to make regulations defining airlines' minimum obligations to passengers with respect to:

• the communication of passengers' rights and recourse options;
• denied boarding;
• flight delays and cancellations;
• tarmac delays of three hours or more including the obligation to provide timely information and assistance to passengers;
• lost or damaged baggage;
• the seating of children under the age of 14 years; and
• the development of terms and conditions of carriage on the transportation of musical instruments.