Long-Haul Interswitching: Proposed Guidance Material

Table of contents

Note

Note: The Proposed Guidance Material and Proposed Rules of Procedures for Long-haul Interswitching were developed for consultation as part of the Canadian Transportation Agency’s Regulatory Modernization Initiative, and is not final.

This web page will continue to be updated as needed, and will be finalized when the consultation process is completed.

Introduction

On May 23, 2018, amendments to the Canada Transportation Act (CTA) provided the Canadian Transportation Agency (Agency) with the authority to resolve disputes between a shipper and a local carrier related to Long-Haul Interswitching (LHI). The new LHI provisions enable a captive shipper (a shipper with access to the lines of only the local carrier at the point of origin or destination of the movement of the shipper's traffic in the reasonable direction of the traffic and its destination) to make an application to the Agency 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.

Definitions

class 1 rail carrier means

  1. the Canadian National Railway Company
  2. the Canadian Pacific Railway Company
  3. BNSF Railway Company
  4. CSX Transportation, Inc.
  5. Norfolk Southern Railway Company
  6. Union Pacific Railroad Company and
  7. any railway company, as defined in section 87, that is specified in the regulations

connecting carrier: a railway company, other than a local carrier, that moves traffic to or from an interchange over a portion of a continuous route

interswitching rate: a rate determined by the Agency in accordance with section 127.1 of the CTA

local carrier: a class 1 rail carrier that moves traffic to or from an interchange on a continuous route from the point of origin or to the point of destination that is served exclusively by the class 1 rail carrier

long-haul interswitching point: for the purposes of this document, the point of origin or destination of the movement of the shipper's traffic in the reasonable direction of the traffic and its destination that is served exclusively by the local carrier for which the shipper is seeking an LHI order

long-haul interswitching rate: a rate determined by the Agency in accordance with paragraph 134(1)(a) of the CTA

Quebec–Windsor corridor means the area of Canada that is bounded

  1. to the east by longitude 70.50° W;
  2. to the north by a straight line connecting a first point located at latitude 47.45° N and longitude 70.50° W to a second point located at latitude 43.70° N and longitude 83.25° W;
  3. to the west by longitude 83.25° W; and
  4. to the south by the Canada-United States border.

Vancouver–Kamloops corridor means the area of Canada that is bounded

  1. to the east by longitude 121.21° W;
  2. to the north by latitude 50.83° N;
  3. to the west by longitude 128.45° W; and
  4. to the south by the Canada-United States border.

Adjudication

A shipper may apply to the Agency for an LHI order against a railway company for the following reasons:

  • the shipper is dissatisfied with a rate charged or proposed to be charged, or
  • the proposed manner in which the railway company is to fulfil its service obligations for the movement of the shipper’s traffic between the LHI point and the nearest interchange in Canada with a connecting carrier.

Rules of Procedures for Long-Haul Interswitching

The Agency has developed the proposed Canadian Transportation Agency Rules of Procedure for Long-Haul Interswithing Adjudication (Rules of Procedure for LHI)

Eligibility

A shipper may apply for an LHI order against a railway company if all the following criteria are present:

  1. the shipper has access to the lines of only that railway company at the LHI point;
  2. the railway company is a class 1 railway company;
  3. a continuous route between the point of origin and destination is operated by two or more railway companies; and
  4. the matter(s) cannot be resolved between the shipper and the railway company.

No entitlement

A shipper is not entitled to apply for an LHI order if:

  1. The LHI point is:
    1. within a radius of 30 km of an interchange in Canada that is in the reasonable direction of the shipper's traffic and its destination;
    2. (or the nearest interchange is) located within the Quebec-Windsor or Vancouver-Kamloops corridors;
    3. located on a track that serves a reload or distribution compound, a container terminal or any other facility operated by the local carrier or for the local carrier’s own purposes; or
    4. located on a track that is used by the local carrier for the transfer of traffic between cars or between a car and a warehouse owned by the local carrier;
  2. The movement is for:
    1. (motor) vehicles or parts of those vehicles;
    2. TIH ((Toxic Inhalation Hazard) material;
    3. radioactive material;
    4. oversized traffic on flat cars where the dimensions require exceptional measures to be taken; or
    5. containers or trailers on flat cars;
  3. The traffic to be moved is already the subject of a LHI order;
  4. The rate for the traffic to be moved is addressed in an order made, or a consent agreement entered into under the Competition Act;
  5. In any other case specified in regulations made pursuant to section 136.7 of the CTA.

Determinations

The Agency will determine any of the following matters where the shipper and the local carrier do not agree:

  1. the LHI rate;
  2. the continuous route from the point of origin to the point of destination;
  3. the nearest interchange in Canada; and,
  4. the manner in which the local carrier is to fulfill its service obligations with respect to the movement of traffic from the LHI point to the nearest interchange.

Application

Before Filing an Application

A shipper may file an application with the Agency when, following an attempt to resolve the matter(s), the parties are unable to agree. Evidence of the attempt must be filed by the shipper in its application.

The Agency will consider the evidence filed by the parties when determining whether an attempt has been made to resolve the matters contained in an LHI application, e.g. written evidence that a specific request to the railway company has been made for the purpose of commencing negotiations for matters that it includes in its LHI application.

If a shipper fails to demonstrate that an attempt has been made, the application will be dismissed.

The Agency can help

In addition to the parties working together to resolve the matter(s), Agency staff can assist the parties in coming to an agreement before an application is filed. The Agency encourages parties to make use of alternate dispute resolution options to resolve their disagreements– which are less adversarial, and quicker, than adjudication – before making an application.

Overview: How disputes are decided described the alternative dispute resolution services offered by the Agency, including facilitation and mediation.

Facilitation Services - If you are interested in using the Agency's facilitation services or would like further information about this service, please refer to the Facilitation Toolkit.

Mediation Services - If you are interested in using the Agency's mediation services or would like further information about this service, please refer to Resolution of Disputes through Mediation - A Resource Tool.

What to include in an application

A shipper must file the information required by Schedule 3 of the proposed Rules of Procedure for LHI.

A shipper should also include the following information:

  1. The name of the connecting carrier;
  2. A description of the traffic for which the shipper is seeking an LHI order sufficiently detailed for the Agency to determine the comparable traffic based on the factors in subsection 135(3) of the CTA;
  3. A description of the matter(s) where the shipper and the local carrier do not agree;
  4. Evidence that an attempt has been made to resolve the matters;
  5. The shipper's undertaking to the local carrier to move the traffic by rail with the local carrier between the LHI point and the nearest interchange in Canada with a connecting carrier in accordance with the LHI order.
  6. The continuous route - from origin to destination – that the shipper has chosen for the movement of the traffic and rationale for the choice of continuous route.
  7. The nearest interchange point at which the shipper seeks to interchange its traffic between the local carrier and the connecting carrier and the rationale supporting the selection of the interchange point.
  8. Information indicating the shipper is eligible to apply for an LHI order, specifically, that :
    1. the shipper has access to the lines of only the local carrier at the LHI point; and,
    2. the continuous route between the origin and destination chosen by the shipper is operated by two or more railway companies.
  9. Information demonstrating that none of the situations where a shipper is not entitled to make an LHI application apply, specifically, that the application for an LHI order is not in respect to:
    1. A movement from an LHI point that is:
      1. within a radius of 30 km, or a prescribed greater distance, of an interchange in Canada.
      2. (or the nearest interchange) is located within the Quebec-Windsor or Vancouver-Kamloops corridors.
    2. A movement for:
      1. (motor) vehicles or parts of those vehicles.
      2. TIH material.
      3. radioactive material.
      4. oversized traffic on flat cars where the dimensions require exceptional measures to be taken.
      5. containers or trailers on flat cars.
    3. Traffic that is already the subject of an LHI order.
    4. Traffic that is subject to a rate that is addressed in an order made, or consent agreement entered into, under the Competition Act.
    5. In any other case specified in regulations made pursuant to section 136.7 of the CTA, when applicable.
  10. Any other information that may be relevant to the matters to be determined by the Agency.

Process

Two-stages process

The Agency will determine the LHI rate using a two-stage process. During the first stage, it will make a final determination on the following three issues:

  1. The continuous route from the point of origin to the point of destination (section 136 of the CTA);
  2. The nearest interchange in Canada (section 136.1 of the CTA); and,
  3. The manner in which the local carrier is to fulfill its service obligations (section 136.2 of the CTA).

At the second stage, the Agency will make its final determination on the LHI rate.

The Agency will open pleadings separately for each stage.

At the first stage of the process, the parties will be provided with an opportunity to file submissions on the three issues. In addition, the Agency, pursuant to subsection 38(1) of the CTA, will appoint an Inquiry Officer to prepare a report to the Agency on the comparable traffic and associated average revenue per tonne kilometre to be used by the Agency in deciding the application (report). The Officer will use the factors set out in subsection 135(3) of the CTA.

The second stage of the process will commence with a decision setting out the Agency's final findings on those issues and appends a copy of the report. The Agency will then provide the parties with an opportunity to file comments on the report as well as submissions on subsection 135(4) of the CTA.

The second stage of the process will end with a final decision setting out the Agency's final findings on the density of traffic on the lines of the local carrier where the traffic is to be moved and any long-term investment needed in those lines, if applicable, and the resulting LHI rate.

Objection

The carrier may file an objection to the application at the first stage of the process. The Agency will consider the objection concurrently as it considers the application.

The Agency will render its final decision within 30 business days of receiving a complete application.

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