Madam Chair, I'd like about nine or 10 minutes to go through a quick statement. I hit the key points that were asked of us to come here and discuss. I'm sure there are probably some others and we'll be here to answer whatever questions.
Safety is an important subject to CN. I got it. We're tight for time, but if you could let me go through this as quickly as possible, I will go quickly and if anybody has any questions, please ask me. But I'm going to go as quickly as possible because I want to cover off a number of points.
The introductions have been made. I did not bring Sean Finn because I was worried about having a lawyer here, but he deals with public and government affairs and that's what he's here for more than anything. Two important people, one is Michael Farkouh, who is responsible for, basically, the operation of the railroad from east of Winnipeg or so to Halifax. To my right is Sam Berrada, who is responsible for safety and sustainability for the company, for the whole of CN, which goes from New Orleans, Halifax, and all the way to Prince Rupert and Vancouver.
I really appreciate having the opportunity to come here and talk about a very important subject, which is safety for the railroads.
From the outset, I want to make it clear that nothing is more important at CN than safety. Our commitment to safety is unwavering and drives everything we do. Our focus on safety begins with our senior executives and extends to every employee at CN, even those not directly involved in operations. Running a safe railway is, of course, the right thing to do and the responsible thing to do, but frankly, it also makes good business sense and enables CN to fulfill its role as a backbone of the economy.
Accidents are extremely damaging to our business on every level. Canadians rely on us to get their goods to destination in a timely manner. This is why we choose to exceed regulatory requirements in many areas and continuously search for and implement new lines of defence, focusing on people, process, technology, and investment. You'll hear me repeat those four segments.
The truth is, Canadian railroads have never been safer. Our accident rates have decreased significantly over the past 10 years. At CN, our main track accidents are down almost 60% over the same period. The advances in technology have been dramatic and enable us to spot problems early and make repairs before accidents happen.
In addition, the focus on safety and the training of our employees is at a level far beyond where it was, even a few years ago. CN operates state-of-the-art training facilities in Winnipeg and Chicago where all of our employees are trained and our long-term employees upgrade their skills. Some 15,000 employees have completed training at these two facilities since they opened in 2014, so 15,000 out of a total workforce of just over 22,000. Building and operating these campuses was an expensive undertaking, but we believe that the benefits they provide in ensuring our employees are trained in a consistent manner with a focus on staying safe and looking out for their employees is well worth the cost.
Crossing safety is a high priority for CN. CN, along with Operation Lifesaver, works on an ongoing basis to prevent collisions at grade crossings and accidents linked to trespassing. We conduct monthly enforcement initiatives at crossings, including joint operations with local police forces.
We strategically deploy equipment and technology to reduce risk at high-risk crossings and we deliver safety presentations to high-risk groups in communities across our network. CN also engages with municipal, provincial, and federal officials in identifying and eliminating crossing hazards.
Quickly, I would like to move over and say a few words about our safety management system. I've heard a lot of people talk about safety management in the last year. First, I want to assure you that SMS is most certainly not self-regulation. SMS was developed in Canada and is a system whereby regulations are added on top of the many rules and regulations that govern operations, track, and rolling stock.
Railways are still heavily regulated by Transport Canada. The regulations remain in place and their inspectors are active on our property ensuring that the rules and regulations are properly followed.
SMS is an additional platform that complements government regulations. It puts the responsibility on us to ensure that a culture of safety pervades our entire operation. It enables us to do more than the regulations require, not less. At CN, our safety management system focuses on a variety of initiatives in the areas of people, process, technology, and investments.
With our people, it involves the training I just mentioned. It also includes CN's “looking out for each other” program, a program through which our employees are taught and encouraged to integrate a safety culture into their daily practices. The goal, of course, is to ensure everyone goes home safely at the end of the day.
Process refers to such things as risk assessments and mitigation and safety audits. It also involves ongoing engagement with the communities we serve. We meet with our first responders, providing them with training and information to ensure they are able to deal with any situation that could arise. To date we have met with over 300 municipalities and have engaged with information with another 1,200 across our system and our network.
In 2015 CN invested $2.7 billion in our capital spending program. This year the plan is to spend $2.9 billion, in spite of soft economic conditions. Of that program, $1.5 billion of the $2.9 billion is attached to maintaining and upgrading our track infrastructure. CN is investing for the long term and we are maintaining a capital program to support a safe and fluid railway network and to raise the bar on efficiency and customer service.
We are also constantly investing in new technologies. CN employs a wide range of technologies to monitor the conditions of our track and rolling stock to proactively minimize risks. CN has the densest network of wayside detection technology in North America, having increased the number of detectors on our network by more than 30% in the past decade. In that period we have also increased the number of wheel impact load detectors by 60% and doubled the frequency of ultrasound, which tests rail flaw detection. This is an example of where, using our safety management system, we go well beyond what is required by the regulations. We employ more detectors and inspections than required and have also invested in new technologies not covered by the regulations. Again, we do this because it is the right thing to do and because it makes good business sense.
With regard to the movement of dangerous goods, CN moved ahead of the regulators to implement new rules for key trains. We encouraged the to move quickly to upgrade tank car standards. Our operating procedures treat dangerous goods differently from other products, including operating trains at lower speeds. CN has dangerous goods officers strategically situated across our network. We also have additional employees trained as dangerous goods responders. We have specialized equipment located at key locations on our network and work closely with our customers' emergency response teams, specialized emergency response contractors, and local first responders.
CN has worked hard to engage municipalities to train their emergency responders and to provide real-time information on dangerous goods. CN led the way with a systematic approach to engaging municipalities, and many of our initiatives ultimately formed the basis for new regulations.
Together with CP and other railroads we developed AskRail, an app available to fire departments and first responders that provides them with real-time information and enables them to determine, live, the content of any railcar, and by extension, of all the cars in any train.
I know your committee has a particular focus on the area of fatigue management. This is a vital issue for CN and the unions and our individual employees. The regulations provide a solid foundation, and working with our employees beyond that we have a layered approach to ensure our personnel are able to get the rest they need. This includes fatigue management plans, consisting of education and numerous opportunities for employees to take rest beyond the requirements of work-rest rules. As well, a sizeable proportion of our employees work on set schedules, which provide consistency.
We continue to engage with our unions to reach agreements on additional measures that could be implemented to improve scheduling. Railroads operate 24 hours a day, seven days a week. We take one day off, and that's Christmas Day, so Christmas Eve to Christmas Day is the only time we get off. We understand that. This does present a challenge, but we have the measures in place to ensure our employees have the right to refuse work or stop work if they believe they are not well enough rested to work safely.
One proposal, which we believe has great potential to assist in this area, would be the use of inward-facing cameras. The use of this technology for safety monitoring and training would be a powerful tool for mitigating risk, including fatigue, when used within a safety management system. We'd love to have the processes put forward as we move ahead so we can use this technology properly. CN has worked with specialists who are developing visual recognition algorithms, which can be used with cameras to identify signs of fatigue.
You are also focusing on the use of locomotive remote control technology, commonly referred to as belt packs. First, I want to stress this is not a recent development. The technology was developed in Canada and is widely used across North America. At CN we have over 25 years' experience in using these devices safely. In fact, studies have shown—and this is fact, not people anecdotally giving you evidence—that for the sorts of movements where this technology is used, it is safer than conventional operations.
This is both because the positioning of the two conductors outside the locomotive provides them with better vision in all directions and also because it removes one step in communication between the employees, which reduces the potential for error. The technology includes numerous built-in safety features designed to further reduce the potential for error. These include regulated speeds and tilt detection. If an employee dropped for some reason or slipped and fell, the system automatically sends an alarm and tells you. If you're not wearing a belt pack it will not do it, so they regulate speeds and there's tilt detection, which immediately stops the movement of the locomotive.
The final area I want to touch on is risk assessment. CN has a robust system for preparing risk assessments for the corridors in which we operate. These assessments help us to identify what technologies and processes could be used to mitigate risk. We also work closely with communities to better ascertain the risks. Our processes are constantly being updated and have been reviewed by the University of Alberta’s Canadian rail research laboratory, who have helped us to further strengthen our methodology.
As you can tell, I'm very proud of all that we have done at CN to ensure the safety of our employees, our operations, and the communities we serve. I don’t, however, suggest that we are satisfied. While our accident numbers are down dramatically, I am convinced that they can and should be lower. We remain focused on this goal, and while it is not realistic to suggest that we can eliminate accidents, it won’t keep us from trying.
I'll end with that.
Hopefully I didn't go too fast. I went as quickly as possible, Chair, but hopefully I hit the high points of what I was trying to present. I probably saved all the questions, so if I'm all done I can just head off and head back towards Edmonton.
I will answer while my friend Jim can listen to the interpretation.
We did not mention Lac-Mégantic, but it is a tragedy for us all in Canada. We have been very aware of it. Every single railway worker at CN or in North America has been affected by the tragic accident in Lac-Mégantic that took the lives of 47 Canadians and wiped out the downtown area.
I would like to point out that, on the morning of the accident, Saturday, July 6, my colleague Mike Farkouh went to Lac-Mégantic. He was part of a team tasked to do three things. First, they had to determine whether a similar accident could happen at CN; we don’t think so. Second, they had to work with stakeholders to learn how to take action in the event of an accident of that magnitude. Third, they had to support the first responders from Sherbrooke and Lac-Mégantic.
The biggest change as a result of that tragedy is that rail companies have recognized that they have to do a better job of informing communities of what goes on in their areas. They have to understand that we are an integral part of their community and of their daily lives.
As Mr. Vena said, the CN has launched an engagement program in over 1,200 communities across Canada where it operates the network. We have met with people from more than 300 municipalities to talk about the transportation of hazardous materials, rail safety and level crosses. We have told them above all that the mayor, the municipal council and the people must be well aware of who the railway going through their municipalities belongs to, and who Jim Vena and Mike Farkouh are. The work has not stopped. Not one single day passes by without us being conscious of our duty to ensure that communities are aware of what do.
A number of measures are in place for the transportation of hazardous materials. A great deal of training is also provided to first responders in municipalities and to our employees. Incidents may occur, but a tragedy like the one in Lac-Mégantic is exceptional. However, we must keep in mind that communities expect CN to be there when something like that happens but also beforehand in order to train responders.
Mr. Berthold, that was a wake-up call for everyone in the industry. We have all been woken up by it. Without tooting our own horn, I think CN has played a leadership role in the field. As a result, the industry sees itself as a whole; the Railway Association of Canada, CP and short-line railways have become aware of the commitment they must make. They are true participants in the process.
It has nothing to do with the amount of money. What it has to do with is that you operate seven days a week, 24 hours a day. You're around the clock. You go across Canada from one end to the other. You deal with weather. You deal with customers that are giving you products. You deal with many influences from outside in.
We've worked hard over the years to have schedules in place, in fact, as recently as six months ago. We've implemented more of a scheduled railroad for a very non-scheduled environment, as much as we possibly can. We have a number of employees. We all look at it only as the people that are operating the trains. Sometimes people miss that. We have rail traffic controllers who are like airline traffic controllers and give the instructions to the trains. They work 24-7. In fact, they don't get Christmas off because we always have some VIA trains that are operating at Christmastime. They're there every day.
We look at it holistically. We've taken a lot of steps to make sure.... At the top, we're worried about making sure that we have fatigue plans. We review with employees. We work with the unions to be able to implement them. At the bottom end, the employees have the right to say that they can't go on, that they're done, or that they've set themselves up or are in a situation where it just doesn't work.
But in between that, we've been working on this for a long time. There's not an easy answer. We've implemented technology to make sure that if something happens.... On every locomotive that CN uses on the main line, if there were any reason that a locomotive engineer or conductor were incapacitated, the alerter system would bring the train to a stop, and very quickly.
There are systems that we've put in place. We've worked with the unions. We will continue to work, and there are some things we do that are above and beyond the regulations. The regulations allow people to book rest—or people are even forced to book rest—after a certain amount of hours on duty. We allow people, through contract and other means, to have even more time off in between. I think that if you really sit down and look at it.... I'd love to spend about eight hours with all of you in the room and explain everything we've done, because it's a complicated subject.
But the last thing you want as a railroad is to have people out there who have absolutely no idea and are unsafe. That's the last thing we want. We would never have it happen, and it has nothing to do with the amount of money that we're spending on it.
I was at Lake Wabamun for eight weeks when this happened. I spent a lot of time there.
I must say that in the last 10 years, the industry has evolved enormously. I think the Lac-Mégantic incident brought our game to even newer levels. In the past, the railroads would get information about the types of commodities but not information about the volumes. Protective direction 32 was added as a regulation almost three or four years ago now. It requires railways to provide first responders and municipalities, including the mayor of a town who is in charge of first responding, information on dangerous commodities, by quarter, by volume, in their towns. That's first.
Second, in the last two and a half years of working with towns, I appreciated, as a former mayor myself—we have the former mayor of Surrey here as well—that when the requests came in, towns were saying that they didn't have access to real-time information. We said, okay, and we developed the AskRail app. Every first responder who registers in Canada has on his BlackBerry the capability to call up a railcar, anywhere in our system, and know what's in the car, if it's empty or loaded, and what's on the whole train.
Third, when a train leaves a station or a yard, the locomotive engineer or conductor must have the content of every car behind the train. In the case of an incident, if the first responder arrives at the incident and says to the locomotive conductor or engineer, “Can I please see the content of railcar 42?”, he will get the information.
That was still not enough. More recently, as you probably know, there have been new rules on risk assessments. Towns can register with us and have a discussion with the railway about risk assessments in their town. If tomorrow morning, in Lake Wabamun, the mayor or the chief of police or the chief of the fire department said they wanted to talk to CN about a risk assessment on a sensitive waterway and about what CN was doing, we would sit down and do so.
I must say to you that since I was at Wabamun 10 years ago, it has changed quite a bit. We have made an effort to address the concern of first responders and mayors about real-time information. I co-chair the proximity committee with Jenelle Saskiw.
Thank you, Madam Chair, and good afternoon. We would like to congratulate you all for your election victories last fall. We thank you for the opportunity to appear today to discuss the important issue of rail safety.
As one of Canada's two class 1 railways, we operate a 22,000 kilometre network throughout Canada and the United States. We link thousands of communities with the North American economy and with international markets.
Rail continues to be the safest, most efficient means of transportation for many goods, commodities, and exports that drive the Canadian economy. Safety is at the heart of everything we do at CP. It has to be.
Simply put, the best way to provide effective reliable rail service for our customers is to operate as safely as possible at all times, without exception. Safety incidents, big or small, impede our ability to move goods efficiently. They cost time, money, slowdown the entire system, and can ultimately jeopardize the lives of our employees, neighbours, and the public. That's why at CP, we simply do not tolerate unsafe behaviour. We are working tirelessly to ensure operations are conducted safely and that we continue to improve our record.
The Canadian railway industry is one of the safest in the world. We are very proud that CP is the safest railway in North America. We have achieved the lowest frequency of train accidents in the North American railway industry in each of the last 10 years.
Although CP has achieved industry-leading safety performance, and we continue to see improvements year after year, more works remains. One accident is too many. There is room for improvement and that's what we're here to talk to you about today.
We will focus on three safety areas: the fatigue management regime, remote control device safety, and locomotive voice and video recorders.
I'll start with fatigue. Fatigue is a multifactorial problem. As such, fatigue must be addressed through a holistic program that strives to identify and to take into consideration all potential contributing factors. CP has devoted an extensive amount of time and resources to review, update, monitor, and expand this fatigue management program.
CP's fatigue management program begins at the point of hire. New employees are subject to a comprehensive medical assessment that includes an assessment of established medical conditions, including sleep disorders such as sleep apnea, metabolic disorders, mental health disorders, substance use disorders, and cardiovascular disorders. All of which can contribute to reduced fatigue tolerance.
This comprehensive medical assessment is industry-leading. Employees identified with at-risk medical conditions are not permitted to operate trains until these conditions have been addressed by a medical practitioner. The process of ongoing medical monitoring is then implemented to ensure that the medical conditions remain stable and are well controlled.
To complement the above, CP has an education program for its employees. The education program includes content on exercise, nutrition, and good sleep hygiene practices both at work and in the home environment.
Finally, CP has an employee and family assistance program that is available to our employees should they experience problems that may impact either their personal or work life.
In summary, fatigue management is a shared responsibility between the company, its employees, and the regulator. The employee's role in the system is to responsibly manage their rest and personal condition to ensure that they are able to safely perform their duties, and most importantly, to report and seek assistance if they have concerns about their ability to work safely.
I will now turn it over to Peter Edwards, our VP of human resources, to discuss the importance of personal choice, and how that impacts an employee's schedule and the schedules of others.
This is a topic I'm passionate about. I could talk on it for hours, for days even, without a note. I don't need notes to know what's on my mind and in my heart.
No matter what system you put in place, no matter what regulation you put in place, it all comes down to one thing—decisions, the decisions people make. In the case of rest, this is one of the most important factors as to whether a person is rested or not. We all know this in our personal life. We know that there are laws against driving while you're tired. We know that it's wrong to do it. But if we're honest, we'd all admit to having been on the highway and our heads have bobbed. We know that sometimes somebody else should be making that decision for us.
We've analyzed and looked at all the things that were the “myths” of work and rest in the railway and we tried to understand them on a level of detail that nobody in this industry—or in any industry—has attempted to do before. We're sharing this methodology with other railways.
We've looked at the old narrative, that the days were long, that there was no opportunity for rest, and that the days were unpredictable. When we got our information and we put everything...we didn't do a sample size and we didn't do averages. The truth gets lost in averages. You have to look at every piece of data. We looked at all 426,956 runs that were done in a year, and every person who went to work. That's how many person-days there were of people on the road. We looked at it and the average day, from the moment a person's foot hits our property to the moment that foot leaves the property, was six to seven hours. That's the typical day. The next typical longest day was seven to eight hours. The next typical longest day was four to five hours.
What you find out in the railway industry is that because of the improvement in railway speed, and because of the improvement in railways, the days aren't as long as they used to be. The typical person is working about a seven-hour day, or a six- to seven-hour day. That's the distribution. If you go to the next page you can see the exact numbers. Every once in a while, though, you'll hear a horror story, usually from a long time ago, about somebody who worked 24 hours. I can tell you that last year we had two people who were paid for 24 hours. Nobody works 24 hours, or 18 hours, or 17 hours. They might be paid for that but they don't work it.
If you look at the distribution, you'll see two. Who are those people? They are two people who were on a train, going down the track. There was a detection and they got out and found some trees. Well, they couldn't back the train up all that distance, so we had to send somebody out to, first, clear the trees and, second, get them and bring them back. It wasn't some place you could just drive up to, so we had to get a high-rail vehicle and it took a long time. So they sat on the train, slept, and did whatever they wanted until we came to get them and took them home. That's the way we operate and that's the world we live in. There will always be trees that fall, there will always be landslides, and there will always be snow. Sometimes someone will get stuck on a train and they will have to stay there until we can come and get them.
Now, does that happen a lot? Out of the 426,956, it happened to two people.
First we talked about long days. The next one we talked about was opportunities for rest. We put together a piece here that is about a third of a person's schedule. This person was someone the union picked some time ago and said that we should look them because they were overworked. We didn't choose the person. The little red arrows here indicate every time this person could have taken more rest and decided not to. This is only a fraction of that month. In that month, on 21 separate occasions, the person said, “I can take more rest and I don't want it”.
Since the last negotiations and the negotiations before that, there are even more opportunities for rest. We've listed 10 opportunities for rest. When you go out and you're at the away-from-home terminal—if you go from Montreal to Smiths Falls—you can take 10 hours off, eight plus two. Then when you get back, you can take 26 hours off, 24 plus two. Do that enough times and you get 48, and then in the middle of the month you can book up to 72. Then in the next one you can do the 10 and 26, 10 and 26, and your 48, and then if you waive off a lot of rest, you can take the end of the month off.
Good afternoon, Madam Chair.
My name is Frank Butzelaar. I am the president and CEO of Southern Railway of British Columbia, known as SRY. With me today is Derek Ollmann, director of operations for SRY.
SRY is a provincially regulated short-line railway headquartered in New Westminster, British Columbia, with 185 employees operating 196 kilometres of track, including 101 kilometres of mainline track between New Westminster and Chilliwack, B.C., with connections to CN, CP, and BNSF.
Through our subsidiary company, Southern Railway of Vancouver Island, we provide rail service on Vancouver Island on former CP trackage now owned by the Island Corridor Foundation, which consists of 11 first nations and five regional districts. Handling more than 65,000 railcars a year and 20% of all new vehicles purchased in Canada, SRY is a critical link in the supply chains for more than 140 customers located in Asia and across North America.
In addition to automobiles, we handle agricultural products, forest products, steel and machinery, building products, consumer products, and plastics and chemicals.
Our chemical business consists of 3,450 carloads of which 1,400 are classified as hazardous.
We're proud of our safety record. Looking at the past year, 2015, we had zero lost-time injuries, and we haven't had a lost-time injury in over four years. Our reportable injury frequency rate is 0.83%, which is well below the short-line average of 2.59%. We had 18 non-mainline derailments and zero mainline derailments in 2015. Our derailments overall are down 25% over the past five years. Nine of our 18 derailments were the result of human error, six the result of truck failure, and three the result of mechanical failure.
Given that 50% of our derailments are the result of human error, we continue to focus on improving our training programs and expanding our proficiency testing. On average, we conduct approximately 170 proficiency tests every month.
Managing worker fatigue is also a priority at SRY, but it's important to note that SRY does not operate in the same manner as a class 1 railway. SRY does not run trains that start in one location and terminate in another location. All trains originate and terminate at the same terminal, thus all employees have the ability to go home at the end of their shift and manage rests between shifts.
Although SRY is a provincially regulated railway, SRY complies with Transport Canada federal work-rest rules for railway operating employees. SRY has a fatigue management policy within our safety management system and collective agreement. Within the fatigue management system, there is a series of procedures and strategies designed to manage fatigue in the workplace. Some of these are the responsibility of the company, such as compliance with federal work-rest rules, and some are the responsibility of the employees, such as managing their off time to ensure alertness while on the job.
It's incumbent on the employees to come to work rested and prepared for their tour of duty, as per Canadian Railway Operating Rules, general rule A, which says that when reporting for duty, employees must be “rested and familiar with their duties and the territory over which they operate”. Within the collective agreement, employees have the ability to book rest. This procedure allows employees to limit overtime and guarantees them a minimum of 10 hours between shifts.
With respect to remote-control train operations, SRY does not operate remote-control trains and currently has no plans to operate remote-control trains. Our operation is intensively switching, and it's more efficient to have the three-person crews that we use—conductor, locomotive engineer, and brakeman.
On the subject of locomotive video recorders, we support legislation for railways to be required to install cab video monitoring devices. We believe that the legislation should support railways to use the in-cab video to conduct rules-compliance testing and promote safety.
Finally, I want to talk briefly about the challenges facing short-line railways in Canada. In total there are about 60 short-line railways across Canada, of which 40 are provincially regulated and 20 are federally regulated. Short lines are an integral part of the North American rail network. Of all rail traffic in Canada, 20 per cent or more than 135 million tonnes each year, begins on short lines. Many industries simply wouldn't exist without these railways. They provide an essential link between sometimes remote businesses and their domestic and international markets.
It should be noted that short lines in Canada, similar to those in the United States, often operate on low-density rail lines with razor-thin margins and often don't generate sufficient revenues to upgrade or expand their infrastructure.
At SRY, capital investments in rail infrastructure will total $7.3 million this year, which is up 26% over 2015 and up 21% over 2014. Over the next six years, railways will need to upgrade crossings to a new standard that will require significant investment in new signal systems. SRY has a total of 206 crossings at grade; 129 are road crossings and 57 are property access crossings. Six are farm crossings and 14 are pedestrian crossings.
Of the 129 crossings, 37 are currently signalized, but 92 road crossings are not signalized. Our current estimate of the cost to signalize, to finish this program, is that it will cost $30 million over the next six years. It is important to note that these required upgrades are not eligible for funding under the existing grade crossing improvement program and will further restrict the ability of short lines to make growth and productivity-enabling investments in their infrastructure.
In conclusion, Canadian short-line railways request that Transport Canada carefully consider recommendations contained within the recently released Canada Transportation Act review report pertaining to short-line infrastructure funding. Specifically, the review recommends modifying eligibility criteria for federal infrastructure programs to allow short-line railways to apply for funding directly, without a government sponsor, and to create a federal-provincial short-line infrastructure program in order to support capital infrastructure investments.
In the United States the short-line rail industry is supported through a variety of programs. At the federal level those include funding for railway highway grade crossings, covering 90% to 100% of the project costs. Additionally, a transportation investment-generating economic recovery program, known as the TIGER program in the United States, provides infrastructure grants to short lines, and the 45G short-line railroad tax credit program helps short lines leverage private investment. This is accomplished by allowing short-line railways a tax credit of 50 cents for every dollar spent on track improvements up to a cap based on the number of miles they operate.
As the Government of Canada looks to invest in the renewal and expansion of Canada's critical infrastructure, we urge you not to overlook the need to invest in Canada's short-line railways.
Good afternoon, Madam Chair, and committee.
Thank you for inviting me to speak today and for giving the Saskatchewan Shortline Railway Association the opportunity to share our thoughts on rail safety.
As you are aware, Saskatchewan has the most short lines of any province in Canada. We operate 24% of Saskatchewan's rail network and are a major employer in many rural towns. Over the past 20 years we have successfully created jobs, increased export capacity, and driven economic growth for rural Saskatchewan, the province, and Canada. We pride ourselves on being a green transportation option, with an average of over 125,000 truck loads being kept off the roads per year in the province, resulting in a 75% reduction in greenhouse gas emissions.
Even more important than our economic and environmental contributions is our dedication to rail safety. For our small short lines safety is not something that is an option. In our communities, where our employees live and work, our attention to safety is what brings home our children, wives, grandparents, and neighbours at the end of each day. It is at the core of our business and takes first place on our agenda.
Our railways follow all safety protocols dictated by the federal and provincial governments, safety management plans, and systems, as well as the requirements set out in the Railway Safety Act. We also go above and beyond that by using reduced speeds, increased track patrols, and yearly X-ray and track geometry car tests to reduce the risk of derailment.
Despite increased traffic and demand for services, we have maintained an excellent safety record. Between 2010 and 2014 Saskatchewan short lines experienced a 53% increase in grain carloads and a 93% increase in non-grain carloads. During this time period, we did not see an increase in main track derailments, and we were able to decrease our crossing collisions.
In 2015 with approximately 28,000 railcars transported, our record was as follows. We had three main track derailments, five non-main track derailments, zero dangerous commodity derailments, zero dangerous goods spills, one crossing collision, zero trespasser incidents or injury, and zero fail accidents. Although derailments are not to be taken lightly, the eight in Saskatchewan in 2015 involved an average of two cars. None were carrying dangerous goods, and the largest involved six cars carrying sand. We believe that railroading is not inherently dangerous, and we are open to learning new ways to improve safety by challenging our assumptions and changing to improve our safety record.
This brings me to the topic of consultation. Short lines come in many shapes and sizes. In Saskatchewan the majority of the short lines are relatively small operations with one to nine locomotives and between three and 35 employees. Recent changes to regulations have caused expenses that are increasingly difficult to manage, as they do not always fit the realities of running a small railway operation. Direct consultation with regulators is important to us, and we welcome more thorough and regular consultations with Transport Canada to ensure the complexity and the particularities of our operations are understood. Through consultations between Transport Canada and short lines, and between Transport Canada and provincial regulators, we would help to ensure that regulatory decisions are being made that reflect our business and can be implemented in ways that make us effective and as safe as possible.
The Saskatchewan Shortline Association also supports increased inspection by Transport Canada. We would welcome both positive and negative feedback in a timely fashion to allow us to celebrate our successes and be more proactive about the issues we have yet to improve.
In Saskatchewan we inherited rail lines from class 1 railways that were already showing signs of age and need of repair. Our small staff sizes and narrow profit margins, when compared to class 1 railways, must be taken into account when considering rail safety. To be as safe as possible, Saskatchewan short-line railways require major infrastructure overhauls to maintain safe track conditions.
The CTA reviews supported this notion, suggesting several funding options, including infrastructure funding modelled after the 45G tax credit funding system in the United States. The Saskatchewan Shortline Association supports infrastructure investments in short-line rail as critical to the continued safety of our transportation network, solidifying Canada's ability to drive trade and export capacity.
Federal support is critical in addressing the increased costs associated with any new regulatory requirements. For example, requirements concerning cab noise levels represent a major investment for a short line as our locomotive fleets are often aging. To retrofit a cab it costs over $20,000 per locomotive, and this is just a small example of how short lines differ from class 1s. It is very difficult for us to meet some of these financial changes under a barrage of change.
Another example of financial repercussions of regulatory changes is new securement requirements. For example, when a railway secures a train, they must leave it protected by derails or leave the locomotives running. For short lines, derails are not easily accessible. As a result, using one of our railways as an example, this has meant an additional $150,000 a year in fuel costs.
Infrastructure and regulatory changes have a critical impact on safety. Consultation before regulatory changes are made, and federal support for those changes, would make managing the associated costs and maintaining safety records more realistic for small short lines.
Finally, two other issues have an impact on short lines' ability to invest in infrastructure and safety: insurance and the potential elimination of the maximum revenue entitlement. Insurance premiums have skyrocketed. With a limited number of providers and a lack of insurance tailored to the operating realities and safety records of short lines, much-needed funds are being pulled from short lines' operating funds, thus affecting our ability to maintain infrastructure and invest in safety. Regarding the MRE, in 2015, 72% of the traffic on short lines in Saskatchewan was made up of producer cars. Any changes to rates that have a negative impact on producer cars will also have a negative impact on short lines.
While we are independent operations, we are still at the mercy of class 1 railways for car supply, schedule, and whatever rate structure they pursue. We have already seen a large discrepancy between single- and multi-car rates under the current MRE, and we are worried that increased rate freedom could be catastrophic for the producer and subsequently for the short lines.
In conclusion, ensuring open and transparent governance by making consultation with short-line industry stakeholders a requirement for future regulatory changes is critical for a short-line rail's ability to continue to create jobs, support economic growth, and increase export capacity. Infrastructure investment, financial support for regulatory changes, and close consideration of insurance and rate protection are also critical components to ensure that the railway can continue to contribute to middle-class prosperity.
Good afternoon, Madam Chair, members of the committee.
My name is Ryan Ratledge and I lead the operating team at Central Maine and Quebec Railway. Our Canadian operations are headquartered in Farnham, Quebec. Our customers originate and terminate a multitude of carloads on our railway, as well as utilize the CMQ to bridge carload traffic from the Maritimes and northern Maine through Montreal, then flowing into the North American railway network. We handle a very diverse range of commodities that include forest and paper products, chemicals, and propane. Three of our larger clients include NGL, AkzoNobel, and Tafisa.
CMQ has invested in excess of $22 million in our track and infrastructure since we started up in 2014. We will invest an additional $10 million of CMQ's money in 2016. We fully support and advocate for a refundable short-line tax credit for Canadian short-line railways.
CMQ is a federally regulated railway that began operations on June 30, 2014. We provide employment for about 50 team members in Quebec, and 70 in Maine and Vermont. Over the last 22 months, when compared with our former operator, we have realized a reduction in frequency, cost, and severity associated with injuries and derailments. We have made progress, but we continue to strive for improvement.
We connect directly with Canadian Pacific in the Montreal area, as well as the St. Lawrence and Quebec railway, Vermont Railway, Maine Northern Railway, New Brunswick Southern Railway, and Pan Am Railway.
Many leaders within the communities in which we operate have expressed interest in resuming passenger and commuter operations on our line between St-Jean-sur-Richelieu and Sherbrooke, Quebec. If this makes sense for Quebec, then CMQ supports this idea. Needless to say, this will require many millions of dollars of additional investment in the track and infrastructure.
Short-line railways have proven themselves to be safe and friendly to the environment, and I'm honoured to be a part of this industry.
I'm open and happy to answer any questions that you may have.
Thank you and thank you, Madam Chair.
I have to preface my comments, gentlemen, by stating that I truly do appreciate the services that you provide. I was formerly the mayor of a city for the past 14 years and I negotiated from CN the ownership of a short line and then successfully brought on a short-line operator, Trillium Railway, a tour operation, to the community, which really taught me a lot about the service you provide. You pretty well pick up the scraps that CN and CP leave behind and with that you're connecting those small businesses within pockets of this country into global markets, eventually giving them the ability to get on those short lines.
You're on low-density rail lines, and tax credit type programs, and grants, and revenue opportunities were mentioned earlier.
What I would ask you for is—and I know the answer already, so I'm not going to ask the question—is there a possibility that you can get some of those ideas to this committee so that we can look at the options through our investigation, our review, of the transportation act review, the Emerson report, and look at some opportunities that we might be able to present to you, whether it be opportunities when it comes to leveraging with partners, grant opportunities, revenue-sharing opportunities with other partners, etc.?
Any ideas that you may have, if you can get them to us, and therefore, if the does proceed down the road of possibly establishing a national transportation strategy, we can ensure that you're a great part of that, as you should be, because you're actually connecting those small pockets throughout the nation to the markets that they must attach themselves to.