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(the “Company”)
(the “Union”)
For the Company:
David E. Guerin – Sr. Director Labour Relations
Chris Clark – Assistant Director Labour Relations
For the Union:
Ken Stuebing – Caley Wray
Steven Weisman – Student-at-Law
Wayne Apsey – General Chair, TCRC – CTY East
John Campbell – General Chair, TCRC –LE East
Greg Edwards – General Chair TCRC –LE West
Harvey Makoski – Senior Vice General Chair, TCRC-LE West
Dave Fulton – General Chair, TCRC-CTY West
Doug Edward – Senior Vice General Chair, TCRC-CTY West
Ed Mogus – Senior Vice General Chair, TCRC CTY East
1. This matter concerns an interest dispute between Teamsters Canada Rail
Conference (the “Union” also referred to as “TCRC”) and the Canadian Pacific
Railway Company (the “Company” also referred to as “CP”) relating to the
process to be utilized to fill vacant annual vacation slots.
2. The dispute affects all four of the Union’s General Committees of
Adjustment (the “GCAs”). The two western GCAs represent the Union’s running
trade members employed by the Company throughout the region known as
Western Canada (Thunder Bay west to British Columbia). The two eastern GCAs
represent the running trade members employed by the Company throughout the
region known as Eastern Canada (Thunder Bay east).
3. The issue arises from the most recent round of collective bargaining that
was resolved by an interest arbitration award issued on December 7, 2015 by the
Honourable George Adams Q.C. (the “Adams Award”).
4. During the mediation that preceded the Adams Award, the parties agreed
to establish a process to fill vacant annual vacation slots. The parties were
unable to agree on an acceptable process and as a result they referred the issue
to me as an interest arbitrator.
5. The parties agreed to utilize the Canadian Railway Office of Arbitration &
Dispute Resolution (CROA) process for hearing and resolving grievances. The
CROA process involves the parties filing an extensive brief, which includes a
written statement of their position together with evidence and argument. The
arbitrator has jurisdiction to make such investigation, as he or she deems proper,
including whether or not oral evidence is necessary for resolving the dispute.
6. The nature of the dispute is set out in the Joint Statement of Issue filed by
the parties, which provides as follows:
The parties were unable to come to a final agreement on the process to fill
vacation slots.
Joint Statement of Issue:
During the 2014 round of bargaining the parties agreed to establish a process to
fill annual vacation slots. The agreed upon article read:
Annual Vacation Vacancies
Establish a process to fill vacation slots that become vacant through a
system of selection on a seniority basis, according to the craft list the
employee falls within that particular year.
Note: Should the parties not come to final agreement on the process to fill
vacation slots as provided above within 6 months of the issuance of the
Adams Award, the parties agree to take the outstanding matter to an
agreed upon third party. If the parties cannot agree on a third party, the
parties agree to use the services of the Senior CROA Arbitrator on an
adhoc basis.
The parties had two conferences calls and exchanged positions however were
unable to agree on the terms and conditions of the process to fill annual vacation
slots. The parties have agreed to take the matter to Arbitrator Stout.
Union Position:
It is the Union’s position that the annual vacation slots will, in all circumstances,
be filled to the established annual vacation flat line number for the respective
terminal. Annual vacation slots that become vacant throughout the year will be
filled by bids received each month.
The Union proposes the following language be incorporated into the Collective
Changes to allotted Annual Vacation periods will be handled as follows:
On the 1st Tuesday of every month from February to November the CMC
will issue a bulletin listing all the AV weeks (slots) available that have not
been fully allocated to the flat line number. Employees wishing to change
their vacation period(s) will have 10 days to fax/email in an Annual
Vacation Change Request Form to the AV Admin Clerk. Employees will
be notified of the results, by bulletin on the Friday of the following week.
Vacant slots between bulletin postings will be handled on a case by case
scenario and must have approval of CMC Management. The Company
reserves the right to exceed the flat line number in any given week.
Company Position:
The Company proposes the following language:
-Employees will only be able to move their vacation period into a week or
weeks which are not fully allocated.
On the 1st Tuesday of every month the CMC will issue a bulletin listing all
the weeks in the following month that have not been fully allocated and
remain available following operational/manpower considerations.
Employees wishing to change their vacation periods will have a 10 days
to fax/email in an Annual Vacation Change Request Form to the AV
Admin Clerk. Employees will be notified of the results, by bulletin on the
Friday of the following week.
*** All Changes must be approved by CMC Management ***
7. The Company is a class 1-railway operating across Canada.
8. The Union represents the Company’s running trades employees across
Canada. As indicated earlier, this dispute involves all four of the Union’s GCA’s.
9. The parties have agreed to extensive vacation language in their four
Collective Agreements. Relevant to these proceedings is the language found at
Article 67 of the CTY Collective Agreements and Article 17 of the LE Collective
Agreements. The relevant language in each Collective Agreement is similar as
far as the annual vacation (AV) selection process.
10. Generally, the Collective Agreement language provides for a certain
amount of annual vacation slots to be allocated per craft. These vacation slots
are referred to by the parties as the “baseline” or “flat line” allotment of vacation
slots for each craft for each week of the year, which represents the maximum
number of employees from each craft who can be scheduled for vacation during
each week.
11. During the AV selection process, a determination is made of the number
of actual employee weeks of annual vacation, which is divided over a period of
48 weeks and “rounded up”. This gives the parties the flat line number for a craft.
An example referred to by the Union was Locomotive Engineers (LE) in
Lethbridge, Alberta have four (4) as the flat line for AV in 2016. Therefore a
maximum of four (4) LE employees can be on vacation each week. If in any
given week only three (3) LE employees have scheduled vacation, then there
would be one (1) vacant slot.
12. There are a number of reasons why annual vacation slots may become
vacant. The following examples were referenced:
• Slots are not taken in the initial bulletin
• An employee becomes sick and declines to take their scheduled AV
• An employee retires before their allotted AV;
• An employee is terminated or laid off
• An employee moves their AV to another vacated slot
• An employee exercises their seniority to another terminal.
13. The Company implements the AV selection process, provided under each
Collective Agreement, by issuing a Terminal AV Bulletin each year on December
15 (for the following year’s vacation selection), which closes on January 15. A
Terminal AV Bulletin has six sections:
The following is the maximum number of running trades employees who
may be on vacation at any one time
14. Each Terminal AV Bulletin has a note, which provides as follows:
• Employees will only be able to move their vacation period into a week or
weeks which are not fully allocated.
• Employees who are unsuccessful in changing their vacation period must
take vacation as scheduled.
*** All Vacation Changes must be approved by CMC Management ***
15. While the Terminal AV Bulletins provide for the movement of vacation,
there has never been an agreed upon process for allocation. Rather, the
evidence indicates that various local arrangements were utilized, which were
generally based on seniority allocation and at the Company’s discretion.
16. The Union provided evidence concerning the Company’s cancellation of
local rules in the fall of 2012, see Canadian Pacific Railway Company, 2012
CIRB 669. The Union also provided evidence of how the current process for
filling vacant vacation slots lacks “transparency” and “consistency”.
17. In addition to the relevant Collective Agreement language, there are three
letters of understanding relating to annual vacation selection that are relevant to
this matter.
18. The first letter of understanding was agreed upon during the 1999 round of
collective bargaining (the “1999 LOU”), which is included in all four Collective
Agreements. The 1999 LOU addressed flat lining of annual vacation and
provides as follows:
Dear Sirs:
This pertains to our discussions during the current round of collective
bargaining regarding the flat lining of annual vacation.
Upon the receipt of the annual vacation allotment and the list indicating
preponderance of service for the Running Trade Employee, per terminal,
mutual agreement between the Local Union representatives and the
Company will determine the following:
The flat-line number of employees who will be allowed to go at any one
time, per terminal.
Further accommodations during the peak annual vacation periods will be
provided dependant upon traffic fluctuations.
Article 67, Annual Vacation, section four of the UTU West and Article 17,
Annual Vacation With Pay, section four of the BLE West will continue to
apply, regarding seniority and preference.
19. The second letter of understanding was agreed upon during the 2004
round of bargaining (the “2004 LOU”), and it provides as follows:
Dear Sir:
This is in regards to our conversations during bargaining pertaining to the
process for the flat lining of annual vacation (AV).
For clarification, it was agreed that prior to the awarding of AV, local union
and management representatives would meet to:
(i) Establish a base line determined by dividing the number of weeks of AV
at the terminal by the distribution period (48 weeks). In all cases, the
baseline is to be rounded up to the nearest whole number.
(ii) Review previous local experience and future traffic projections to
determine whether or not the base line can be increased and by how
much for periods of premium vacation demand.
(iii) Where appropriate, if traffic volumes decline more than anticipated
during periods of premium vacation or if employees are laid off, the
Company would offer additional AV slots and award according to local
It was also agreed that where authorized by the respective General
Chairman, local arrangements may be made to distribute annual vacation
amongst employees. Such arrangements, however, will not impact the
amount of AV slots provided per week as determined above.
20. The third letter of understanding was agreed upon on December 5, 2007
(the “2007 LOU”) and it addresses the peak vacation period. The 2007 LOU
provides as follows:
This is in regards to our conversations during bargaining pertaining to your
desire to increase opportunities for employees to take annual vacation
during summer vacation.
In order to provide more opportunities to a greater number of employees
during the summer and recognizing the restriction on employees from
taking their full allotment of annual vacation weeks during that time, it was
agreed that during the summer prime time vacation period:
• One additional annual vacation slot over the flat line are provided at
Wynyard, Wilkie, Minnedosa, Mactier, Sudbury, Windsor, Hamilton
and Regina. The twelve weeks will be divided equally between
Trainmen and Engineers.
• Two additional annual vacation slots over the flat line are provided
at St. Luc, Smith Falls, London, Chapleau, Schrieber, Thunder Bay,
Kenora, Brandon, Medicine Hat, Lethbridge, Red Deer, Edmonton,
Cranbrook, Revelstoke, Sutherland and Kamloops. On slot will be
provided to Trainmen and one slot to Engineers.
• Three additional annual vacation slots over the flat line are provided
at Vancouver, Calgary, Winnipeg, Moose Jaw and Toronto. One
slot will be provided to each vacation list.
The summer primetime vacation period is defined as a 12 week period
which includes the last week of June and the first week of September.
21. In the 2012 round of collective bargaining the parties addressed the issue
of scheduling vacations during the week that includes December 31. The parties
agreed as follows:
For the purpose of scheduling annual vacation, the week containing
December 31, will be considered as the last full week in which to schedule
vacation within that calendar year. Employees who are awarded the last
full week of the year are obligated to take any General Holidays at the
conclusion of the AV period. This week is exempt from the flatlining of AV.
The number of available AV slots will be no less than half of the slots
available during non-peak week, with a minimum of one slot per craft list.
22. During the most recent round (2014-2015) of collective bargaining, the
Union proposed a number of changes to the annual vacation provisions,
including a request to define the process for employees to bid on open annual
vacation slots. The Company also made proposals to alter the annual vacation
language to recognize “true flat lining of annual vacation” by scheduling over a
52-week period.
23. The 2014-2015 round of bargaining did not result in a negotiated
agreement between the parties. Rather a legal strike commenced on February
15, 2015. The strike ended when the parties agreed to have their dispute
resolved by interest arbitration. The Federal Minster of Labour appointed the
Honourable George Adams Q.C. as interest arbitrator.
24. The parties engaged in mediation/arbitration before Arbitrator Adams.
Through mediation, the parties reached the following agreement:
Annual Vacation
Annual Vacation Vacancies
Establish a process to fill vacation slots that become vacant through a
system of selection on a seniority basis, according to the craft list the
employee falls within that particular year.
Note: Should the parties not come to final agreement on the process to fill
vacation slots as provided above within 6 months of the issuance of the
Adams Award, the parties agree to take the outstanding matter to an
agreed upon third party. If the parties cannot agree on a third party, the
parties agree to use the services of the Senior CROA Arbitrator on an ad
hoc basis.
25. The Adams Award was issued on December 7, 2015. It is worth noting
that the Adams Award included a Union leave proposal that is relevant to this
matter, the relevant provision provides as follows:
All Local Chairmen can elect to schedule their annual vacation by way of
separate list and allotment over the flat line number. The maximum
number on Vacation within this separate list is two for any one week. All
officers utilizing this separate list will schedule their annual vacation onto
the list; with the understanding they may change their scheduled vacation
upon notice prior to the deadline for the relevant weekly crew change
26. Subsequent to the issuance of the Adams Award, the parties held two
conference calls and exchanged positions on the process to fill vacant vacation
slots. The parties were unable to agree on the process and the matter was
referred to me for resolution.
27. This matter is an interest arbitration and in that regard the principles are
well accepted. The goal is to replicate what the parties would have agreed upon
had they freely negotiated the Collective Agreements.
28. In the normal course, the parties would provide “comparators”, which
would include comparable negotiated or awarded collective agreements. In this
case, I was not provided with any relevant comparators. Rather the parties made
their submissions based on their own needs and interests.
29. The Company is, not surprisingly, concerned about their manpower
requirements and the ability to service their customers. The Company also
addressed the issue of employee availability, which they called the “ultimate key
factor that drives the dispute”.
30. The Company is open to sharing information with the Union and they are
prepared to issue regular bulletins affording employees the opportunity to bid on
vacant vacation slots, so long as any given terminal has been experiencing a
regular availability rate of 72% or higher over the previous four week rolling
31. The Union directed my attention to their material, which they advised
documented the problems that were being experienced by Union members under
the current process.
32. The Union submits that their proposed language is the most equitable
and consistent approach that complies with the established practice of respecting
seniority and affording employees the opportunity to take their vacation during
available slots.
33. The current process for filling vacant annual vacation slots appears to
have been left to the Company’s discretion. However, the evidence is clear that
the current process lacks transparency and consistency, resulting in disputes
between the parties. The parties have agreed that the status quo is unacceptable
and there needs to be a process to fill vacant vacation slots through a system of
selection on a seniority basis, according to the craft list an employee falls within.
34. I appreciate the concerns raised by the Company with respect to
manpower and customer service requirements. I note that the current Collective
Agreement language (and letters of agreement) already contemplates these
issues by providing a very detailed and specific process for determining the
availability of vacation slots, including additional slots during peak vacation
periods. I am of the opinion that the Company’s proposal will unreasonably limit
the vacation slots already agreed upon.
35. I also appreciate the Union’s concerns about the problems they have
encountered in the current process. However, I am not convinced that accepting
the Union’s proposal without amendment is justified as a demonstrated need. I
have a particular concern about tying the hands of management.
36. In my view, the best resolution is always one that is agreed upon by the
parties during free collective bargaining. An imposed resolution rarely satisfies
either party and may occasionally lead to future disputes, which is not conducive
to good labour relations. Unfortunately the parties were unable to reach a
negotiated settlement in this case.
37. I am not bound by the specific proposals submitted by either party as this
is not a situation where the parties agreed to final offer selection. In my view,
unless final offer selection is agreed upon by the parties, it should not be
imposed without prior notice.
38. Generally, collective bargaining is all about the give and take that is
required for parties to reach a mutually acceptable resolution. It is rare for one
party to be completely successful on a major issue. More often the negotiations
end in a compromise, where the parties agree to language that meets both their
39. In my opinion, the resolution of this matter should be one that balances
the interests of both parties and will foster further discussion and hopefully an
agreed upon outcome through free collective bargaining.
40. I am awarding a letter of agreement to be included in the collective
agreement. The letter is based on the Union’s language, but provides for the
exchange of manpower information so the parties may have an informed
discussion about any operational/manpower issues that may arise in the process.
The letter also provides for management to raise operational/manpower issues
and hopefully resolve these issues with the Union through discussion. If the
parties cannot resolve the issues then a third-party neutral will resolve the issues
in an expedited manner. The letter shall expire at the end of the collective
agreement, unless the parties agree to extend. This way the parties are free to
continue with the process, if it suits their needs, or agree upon a different process
during collective bargaining.
41. After carefully considering the parties submissions, I direct the parties to
include in their Collective Agreements a letter of understanding providing as
On December 15 of each year, the Company will provide the Union with the
previous twelve (12) months of manpower off duty reports for each terminal.
Employees shall be permitted to change their vacation period into a week or
weeks, which are not fully allocated. Such changes shall be made on a seniority
basis, according to the craft list the employee falls within that particular year. The
process for changing annual vacation slots shall be as follows:
On the first Tuesday of every month from February to November the CMC will
issue a bulletin listing all the AV weeks (slots) available that have not been fully
allocated to the flat line number. The Company shall also provide the previous
four week rolling average availability for the applicable terminal.
Employees wishing to change their annual vacation periods shall have ten (10)
days to fax/email in an Annual Vacation Change Request Form to the AV Admin
Clerk. Employees will be notified of the results, by bulletin on the Friday of the
following week and the Union will be given a copy of the bulletin.
CMC Management shall act reasonably in approving any given annual vacation
change request.
If CMC Management has any operational/manpower concerns, then they shall
raise such concerns with the Union for discussion and resolution. The parties will
meet to discuss and address any operational/manpower concerns with a view to
reaching a reasonable resolution. During the discussion, CMC Management shall
provide the Union with information supporting their concerns. If the parties can’t
reasonably resolve the issue then the matter shall be resolved on an expedited
basis by a CROA arbitrator.
Any vacant slots arising between bulletin postings will be handled on a case by
case basis and must have the approval of CMC Management.
This letter shall expire at the end of the current collective agreement and shall
not be renewed unless extended by agreement in writing.
42. I remain seized to address any issues arising from my award.
Dated at Toronto, Ontario this 17th day of October 2016.
John Stout – Arbitrator

19 October 2016 | Posted in Railways | Leave a comment

Increasing safety of Canadians by investing in rail improvements

Minister Garneau announces new rail safety program targeted at reducing incidents and accidents on rail lines
October 12, 2016 – Montréal, Quebec – Transport Canada

The Government of Canada is significantly increasing its investment, and expanding eligibility criteria to reduce injuries and fatalities, and increase public safety around the railway system.

The Honourable Marc Garneau, Minister of Transport, today announced the new Rail Safety Improvement Program with over $55 million in funding. This new program increases overall funding, expands the list of eligible recipients and broadens the scope of projects that could be funded to enhance rail safety.

Funding will support safety improvements on rail property, along rail lines and at road-rail grade crossings such as flashing lights, bells and/or gates; the use of innovative technologies; outreach, promotional awareness, educational activities and public service announcements, research and studies; as well as the closures of grade crossings that present safety concerns.

The new program builds on three previous rail safety programs: the Grade Crossing Improvement Program (GCIP); the Grade Crossing Closure Program (GCCP); and Operation Lifesaver.

Minister Garneau also launched a call for proposals for 2017-18 under the infrastructure, technology, and research program and the public education and awareness program.

“Canadians rely on our rail system to be safe. As I’ve said many times, rail safety is my top priority, and I remain committed to reducing the number of accidents and incidents on Canada’s rail lines and over 20,000 federally regulated crossings. There are new technologies to improve railway safety that have proven effective, and through this new program, we can invest in them and expand their use nationwide.”

The Honourable Marc Garneau
Minister of Transport

Quick Facts

Transport Canada is funding over 380 existing grade crossing improvement projects across the country.
The new Rail Safety Improvement Program is a comprehensive approach to improving the safety of rail transportation across Canada, through two key components: Infrastructure, Technology and Research Activities; and Public Education and Awareness.
Applications for both components will be accepted from a wide range of applicants, including: provinces, territories, municipalities and local governments; road/transit authorities and Crown Corporations; for-profit and not-for-profit organizations; Indigenous groups, communities and organizations; and, individuals.

Related Products
Backgrounder – Rail Safety Improvement Program (RSIP)
Rail Safety Improvement Program
Infrastructure Technology and Research
Education and Awareness

Delphine Denis
Press Secretary
Office of the Honourable Marc Garneau
Minister of Transport, Ottawa

Media Relations
Transport Canada, Ottawa

Transport Canada is online at Subscribe to e-news or stay connected through RSS, Twitter, Facebook, YouTube and Flickr to keep up to date on the latest from Transport Canada.

This news release may be made available in alternative formats for persons living with visual disabilities.

12 October 2016 | Posted in Transport Canada | Leave a comment

Minister Garneau to make announcement on rail safety

Minister Garneau to make announcement on rail safety
Montréal, Quebec — October 11, 2016 — The Honourable Marc Garneau, Minister of Transport, will make an important announcement concerning rail safety in Canada.


October 12, 2016


1:00 pm, Eastern Time


Port of Montreal – Area 32
Montreal, QC

Enter on Boulevard Pie-IX, turn right on rue Port de Montréal.
Drive a few minutes west to area 32 where a patrol vehicle of the Port of Montreal will be positioned. Parking is available on site.

Delphine Denis
Press Secretary
Office of the Honourable Marc Garneau
Minister of Transport, Ottawa

Media Relations
Transport Canada, Ottawa

12 October 2016 | Posted in Transport Canada | Leave a comment

Locomotive Voice and Video Recorders: a Sword of Damocles

Ottawa, September 20, 2016 – Officers of the Teamsters Union have reacted strongly to some of the conclusions revealed yesterday by the Transportation Safety Board (TSB) with respect to locomotive voice and video recorders. The Teamsters Canada Rail Conference (TCRC) took part in the study and represents almost all workers who operate the trains throughout the country.

The report recommends that the TSB and rail companies be authorized to access the content of locomotive voice and video recorders. Although the Teamsters agree the TSB requires access to these recordings for the purpose of conducting investigations into railway accidents, it is categorically opposed to providing rail carriers with access to these same recordings.

“We disagree with the TSB’s interpretation of certain data, but I would nevertheless like to point out here that we have consistently maintained our position on this issue for several years now. We agree with the implementation and use of voice and video recorders, but the TSB must be the only body with authorized access to the recordings,” explains the president of the TCRC, Doug Finnson. “Rail carriers are not to be given access to the recordings because that would be an unprecedented and unparalleled intrusion into the workplace, one that is unnecessary, and would be tantamount to violating workers’ right to privacy.”

The TSB report acknowledges the serious workers’ rights issues raised by LVVRs, and recognizes the need to implement a balanced system with clear instructions on how recordings are to be used. However, Doug Finnson thinks that a culture of fear and intimidation will be the consequence of railway managers having unprecedented access to 24/7 electronic surveillance of workers.

“The reality is that rail companies would use these recordings arbitrarily and that the already negative relations that prevail in the industry worsen considerably,” warns the union leader. “It’s a sword of Damocles that we don’t need given the already acrimonious relations that prevail between certain carriers and their workers.”

It needs to be pointed out that, according to a report filed by the Advisory Council on Rail Safety last June 7, access to recordings by TSB had previously been mentioned in five accident investigations in a 25 year period. Taking the TSB authority to access recordings provided specifically to them under law and providing uninhibited access to rail management for daily intrusion, meaning thousands of times annually, is completely unparalleled and disproportionate to the real situation. The TSB original request is to install LVVR on locomotives and to provide the recordings to them for their investigations. Since then, industry has been trying to leverage the TSB and they are hoping to hit a home run in surveillance they have no legal right to obtain.

The measure put forth by the Transportation Safety Board could also result in significant additional demands on railway workers who are already pressured by long working hours and the inability in too many cases to refuse work even if they feel too tired to work safely. The TCRC has been advocating for a real fatigue management system within the rail industry, and emphasizes the need for fatigue risk management systems and processes based on current fatigue science.

Conclusion: There is no concrete proof demonstrating that allowing rail carriers to conduct continuous and intrusive surveillance of their workers contributes to improving the safety of the rail industry. However, the presence of a real fatigue management system within the rail industry, more railway inspectors mandated to verify the condition of the tracks and authorize tired workers to rest up are sustainable and effective solutions to improve rail safety and protect both the workers and Canadian public.

The Teamsters represents 120,000 members in Canada in all industries, including 12,000 in the rail industry. The International Brotherhood of Teamsters, with which Teamsters Canada is affiliated, has 1.4 million members in North America.

4 October 2016 | Posted in Railways, Transport Canada, TSB | Leave a comment

Quebec: Pension fund turns passenger rail operator

Written by  David Thomas, Contributing Editor –  Railway Age

Quebec: Pension fund turns passenger rail operator

Proposing a radical new business model, Quebec’s huge public pension fund announced April 22, 2016 that it will directly undertake construction and continuing operation of a 67-km (41.5-mile), double-tracked, electrified and fully automated rapid rail network, the Réseau électrique métropolitain (REM), which will transform commuting in Montreal and its immediate hinterland.

The REM, which will be an automated rapid transit system (though the city is calling it “light rail”), will serve 24 stations 20 hours a day, with departures every three to 12 minutes depending on route and time of day.

The Caisse de dépôt et placement du Québec pension fund will put up C$3 billion of the C$5.5 billion project, with the balance coming from the Quebec and Canadian governments as subordinate equity investors.

Because of its fiduciary responsibilities to protect old-age pension payouts, the deal will guarantee the Caisse first call on profits, with the two levels of government claiming their share only above an agreed-upon threshold. But the Caisse will not ask government to backstop its investment and will assume the business risks of ridership and revenue.

Thus, the pension fund, which last November acquired 30% of Bombardier’s global rail business, becomes a railway operator. Caisse CEO Michael Sabia was in the 1990s chief financial officer of Canadian National.

Quebec is the only Canadian province to run its own old-age security pension; the others are covered by Canada’s national pension system.

The REM will involve reconstruction and conversion of the existing AMT Deux-Montagnes line, which tunnels under Mount Royal to the city’s Central Station, as well as new right-of-way utilizing the existing Highway 40 route from the island city’s western tip to a connection with the Deux-Montagnes.

In addition, the REM will include a spur to Pierre Elliott Trudeau International Airport and will extend new trackage from downtown to the bedroom communities of the St. Lawrence River south shore via a new Champlain Bridge scheduled to open in 2018.

Overhead catenary will provide the power, with third-rail rejected because of Quebec’s icy winters. REM will be the third-longest driverless rail system in the world, after Dubai and Vancouver, and will employ 1,000 workers.

The initial fleet will consist of 200 150-passenger cars with open “boa” vestibules between them. Rush hour trains will consist of four cars, with two-car trains operating in off-peak hours.

The Caisse promises WiFi connectivity for all trains and live smartphone access to actual train times. Fares will be comparable to existing tariffs for travel on the existing commuter train and bus services.

Sabia says construction should start in Spring 2017 with the full system operational in 2020. Procurement and environment assessment hearings are to begin this summer.

Montreal Mayor Denis Coderre endorsed the project, assuring that rights-of-way and infrastructure currently belonging to the city’s’ transit system (not including the Montreal Metro, operated by STM, Société de transport de Montréal) will transition to the new REM. The project fits with Montreal’s declared ambition to convert its bus fleet to electricity and provide a network of vehicle charging stations for public use.

The ambitious timeline depends on agreement by the federal and provincial governments to join in the Caisse’s scheme for a “public-public” partnership in which future seniors are the primary equity holders. Sabia said the business model is “a virtuous circle in which profits from passenger fares will feed public pension payouts. Every time passengers use their new transit system, they will be helping to secure their future retirement.”

Montreal LRT

27 April 2016 | Posted in Railways | Leave a comment

Little progress on rail safety in wake of Lac Mégantic

Are Canada’s rail-safety regulators in the pocket of a regulation-averse industry?

Smoke rises from railway cars that were carrying crude oil, after a derailment in Lac Megantic, Que., July 6, 2013.Paul Chiasson / THE CANADIAN PRESS

Smoke rises from railway cars that were carrying crude oil, after a derailment in LacMegantic, Que., July 6, 2013.

By: Bruce Campbell – The Toronto Star

Transport Minister Marc Garneau said recently that rail safety is his number one priority. The federal budget pledged an extra $143 million over three years to, among other things, “support new and expanded activities to strengthen oversight and enforcement” of rail safety.

While this is a laudable step, fundamental problems with the rail regulatory regime remain. Toronto mayor John Tory and 17 counsellors raised some of these in a letter to the minister.

Not mentioned was the issue of regulatory capture, which gained widespread attention during the U.S. subprime mortgage crisis. It is generally accepted that a major cause of the crisis was that regulators were in the pocket of a regulation-averse industry.

Capture exists where regulation is systematically directed to benefit the private interest of the regulated industry at the expense of the public interest. Characteristically, industry is able to shape the regulations governing its operations. It regularly blocks or delays new regulations, and seeks to remove or dilute existing regulations deemed be adversely affecting profits.

There is considerable evidence that regulatory capture of the rail regulatory regime played a role in the 2013 Lac Mégantic rail disaster.

Most importantly, why were these trains allowed to transport their massive oil cargo with only one crew member? Immediately after the accident, Transport Canada reversed itself, issuing an emergency directive requiring a minimum of two operators for trains carrying dangerous goods — an order which was subsequently entrenched in the Canadian rail operating rules.

Omitted from this narrative is how, several years earlier, the Railway Association redrafted the rail operating rules, notably introducing General Rule M, which enabled companies to implement single-person train operations for freight trains, under certain conditions, without needing a formal ministerial exemption. Transport Canada approved this rule modification, over the objections of the unions, without ensuring an equivalent level of safety.

Subsequently, the RAC lobbied hard on behalf of Montreal, Maine & Atlantic Railway — the first company to take advantage of the rule change; one with a poor safety record — to enable it to operate oil trains on its Lac-Mégantic line with a single operator.

Senior Transport Canada officials approved the MMA request despite opposition from within Transport Canada itself, and contrary to the advice of its own National Research Council-commissioned study.

A draft of the Transportation Safety Board (TSB) report, obtained by Radio-Canada, stated that the existence of a single operator was “a cause and contributing factor” to the accident. In the report’s final version this cause was curiously demoted to “findings as to risk.”

There is also evidence that the regulatory regime has not changed fundamentally since the disaster.

For example, the industry continues its knee-jerk defence of the Safety Management Systems (SMS) regime. This system was designed to give the companies greater responsibility for ensuring the safety of their operations. However, in an environment of regulatory capture, a SMS regime becomes highly problematic.

The industry claims that SMS is an effective additional line of defence. But that’s only true if government allocates sufficient resources, including on-site inspectors, for traditional oversight. Failing that, companies are in practice left to regulate themselves.

The sad history of MMA’s totally defective safety management system, and the failure of Transport Canada to do anything about it, is a case in point.

Several reports, including from Auditor General, have pointed out that SMS “contained serious flaws.” Safety Management Systems remain on the Transportation Safety Board’s watch list as “among those issues posing the greatest risk to Canada’s transportation system.” A vague TSB letter that there has been “satisfactory intent” to fix it, provides little comfort.

Furthermore, despite repeated requests from many municipalities, companies are still resisting making public their safety reports, risk assessments, and real-time information about their dangerous goods cargo.

There remain too many unanswered questions about the causes of that terrible tragedy, including the nature and extent of regulatory capture by industry. The people of Lac-Mégantic were victims of a regulatory regime that failed catastrophically. They should not be victimized again by a system that continues to obscure the truth about what happened and who was responsible — essential to preventing it from happening again.

Bruce Campbell is a visiting fellow at the University of Ottawa Faculty of Law, on leave from the Canadian Centre for Policy Alternatives. He received the 2015 Law Foundation of Ontario Community Leadership in Justice Fellowship.

14 April 2016 | Posted in Railways | Leave a comment

Canadian Pacific Drops Efforts to Merge With Norfolk Southern

By Jacquie McNish and Laura Stevens – The Wall Street Journal

CP says it sees ‘no clear path to a friendly merger’

Canadian Pacific Railway Ltd. abandoned its nearly $30 billion pursuit of Norfolk Southern Corp. on Monday after it was unable to overcome a wall of opposition from rival railroads, shippers and U.S. politicians warning the merger would diminish competition.

Canadian Pacific also has no plans to initiate merger talks with other competitors, Chief Executive Hunter Harrison said in an interview.


“I doubt very much we will be reaching out to anyone else. We fought the good fight; we tried to educate the public. But the political and economic environment was against us,” he said.

He said the Calgary, Alberta-based company’s board decided to withdraw from the takeover field over the weekend as it became clear that political and industry opposition was too great.

William Ackman, CEO of Pershing Square Capital Management LP and a major Canadian Pacific shareholder who actively backed the railway’s merger ambitions, approved the retreat, Mr. Harrison said.

A number of powerful interests including the U.S. Army and a top antitrust official with the U.S. Department of Justice recently raised concerns about the competitive effect of the merger. Canadian Pacific’s complex plan to hold Norfolk Southern in a trust until transportation officials completed a lengthy review of the proposed combination also drew opposition.

Virginia-based Norfolk Southern said its board was committed to “enhancing value for shareholders,” focusing on a five-year plan to eliminate $650 million of annual expenses. The U.S. railway ranks as one of the least efficient of North America’s major carriers.

“We are confident the continued execution of our plan will deliver superior value to all of the company’s stakeholders by best positioning Norfolk Southern to succeed,” the company said in a statement.

Canadian Pacific has been aiming to eliminate bottlenecks in busy rail hubs such as Chicago by merging with an Eastern-based railway to create the first transnational railway in the U.S.

The Canadian railway launched its Norfolk Southern pursuit in November, after a failed attempt in 2014 to combine with CSX Corp. As Norfolk Southern’s board and others voiced opposition, Canadian Pacific quietly—though unsuccessfully—tried to revive talks with CSX in January.

Some regulators, shippers and industry officials have raised concerns that any rail merger would trigger further consolidation, reducing North America’s current stable of seven major carriers to only a few. But with Canadian Pacific’s retreat on Monday, any further merger activity is likely now on hold for the near future. The U.S. Surface Transportation Board adopted rules in 2001 that place a heavier burden on merger applicants to show that a major deal is consistent with the public interest by enhancing competition.

Without the stimulus of a merger, Canadian Pacific faces pressure to boost its slumping earnings and stock price amid a commodity-price rout that has sharply reduced the volume of oil and mining products on the rails. Some analysts have predicted the railway will announce a significant share buyback.

Canadian Pacific reported lower fourth-quarter earnings and revenue in its final quarter of 2015, hurt by a drop in several key freight volumes. Its stock has also fallen sharply from a high of about $214 in October 2014.

Canadian Pacific shares were recently up nearly 4% at $140 in New York. Norfolk Southern shares declined more than 2% to $79.74.

Mr. Harrison had predicted that support for a transnational railway would increase as the U.S. economy pulls out of the commodity-price slump.

“When we have a rebound there will be problems. Where are we going to put all the oil? Are we going to put it on the highways?” he said.

11 April 2016 | Posted in Railways | Leave a comment

U.S. military: CP, Norfolk Southern merger could affect defense

By Nick Carey

CHICAGO (Reuters) – The U.S. military on Thursday raised concerns with a federal rail regulator over the voting trust Canadian Pacific CP.TO has proposed as part of its takeover bid for Norfolk Southern NSC.N and said the deal could adversely affect the country’s national defense.

In a letter to the U.S. Surface Transportation Board (STB) dated April 7, the Department of Defense said CP’s proposal to have its chief executive, Hunter Harrison, run Norfolk Southern as part of the voting trust “could prove to be untenable due to the appearance of common control” of the two railroads.

CP, which is Canada’s second-largest railroad, disclosed a $28 billion offer for Norfolk Southern in mid-November. The Calgary-based company has said a merger would result in savings of more than $1.8 billion annually.

Norfolk Southern has rebuffed all advances from CP.

The letter comes as a response to a March 2 petition from CP to the STB seeking a “declaratory order” on its voting trust proposal. The idea would be to place both railroads in a trust – if they agreed to merge – pending a review by the STB. Under the STB’s merger rules, common control is not allowed.

The Department of Defense said putting Harrison, a septuagenarian railroading legend, at the helm of Norfolk Southern while a review was underway would put him in a position in which he “must make business decisions with potentially competing interests.”

The Department said in the letter that “it is too early to determine” whether a merger would degrade national defense, but said “the potential certainly exists.”

Under the rules for a voting trust for a major railroad merger, there may be no collusion, joint decision-making or any other form of common control prior to regulatory approval. The two must continue to operate as separate entities until a merger gets the green light.

A spokesman for CP said the railroad looks forward to “providing a fulsome response” at the proper time to the department’s comments.

The U.S. military relies on rail networks to move defense-related cargo across the country, both during peace and times of war.

A number of major rail customers have recommended against any merger, citing concerns that CP’s plans to cut costs at Norfolk Southern would gut the railroad and harm service. They include package delivery company United Parcel Service Inc UPS.N, the single biggest customer of the major U.S. railroads.

Some U.S. politicians have also spoken out against a merger. Earlier this week, the chairman of the U.S. House Transportation and Infrastructure Committee said he did not believe a merger was in the interests of the U.S. freight transportation system.



8 April 2016 | Posted in Railways | Leave a comment

Rail, ports in Canada’s West need cash injections

Ross Marowits – MONTREAL — The Canadian Press

Cars wait at a rail terminal outside of Hardisty, Alta. (Amber Bracken For The Globe and Mail)

Big investments in both rail and marine infrastructure will be required to accommodate an acceleration in commodities shipments, particularly oil, over the next decade, says the Conference Board of Canada.

In a report released Thursday, the agency said annual tonnage of commodities shipped by rail will grow more quickly than in the past, rising 30 per cent to 260 million tonnes by 2025, up from 200 million tonnes in 2011.

The Conference Board said Canada’s shifting trade patterns are putting additional pressure on the country’s railways and ports to meet the growing demand for Canadian commodities.

Wheat, forest and energy products, especially crude oil, are expected to be the main growth drivers, with rising exports bound for Europe and Asia.

“Improving the performance of Canada’s transportation supply chain is essential to ensure that Canadian exports remain competitive in the global marketplace,” said the 135-page report, which didn’t put an estimate on the cost of upgrades.

Rail corridors between the Prairies and the United States and from the Prairies to British Columbia are expected to experience the most pressure from rising shipments. That will put pressure on Canadian National Railway and Canadian Pacific Railway to continue investing heavily in rail infrastructure to accommodate the increased demand, the Conference Board said.

The two railways spent, on average, more than $1.25-billion a year combined between 2005 and 2014 and appear to be focusing long-term spending in line with the report’s forecast, the board said.

The largest increase in rail volumes is expected to be for transporting energy products from Saskatchewan and Alberta to the United States.

The board said ports in Central and Eastern Canada have enough capacity, but that B.C. ports will need to be expanded to accommodate 7 million more tonnes of agricultural products by 2025.

8 April 2016 | Posted in Railways | Leave a comment

U.S. House Transportation chief opposes CP, Norfolk rail merger

David Morgan and Nick Carey – WASHINGTON/CHICAGO — Reuters

The Canadian Pacific railyard is pictured in Port Coquitlam, B.C., in this file photo from Feb. 15, 2015. (BEN NELMS/REUTERS)

The chairman of the U.S. House Transportation and Infrastructure Committee announced his opposition on Tuesday to Canadian Pacific’s proposed railroad merger with Norfolk Southern Corp, dealing a fresh blow to the prospect of a deal.

“I do not believe it is in the best interests of the U.S. freight transportation system, railroad employees, rail shippers and the short line railroads,” Representative Bill Shuster, a Pennsylvania Republican, said in a statement.

“I believe it is time for all parties to move on from hypothetical merger proposals,” he said.

CP, which is Canada’s second-largest railroad, disclosed in mid-November a $28-billion offer for Norfolk Southern. The Calgary-based company has said a merger would result in savings of more than $1.8-billion annually.

Virginia-based Norfolk Southern has rebuffed those advances.

A number of Democratic lawmakers in Congress, including all the party’s representatives from Illinois and Pennsylvania, have spoken out against a merger.

Some customers also oppose it, including package deliver companies FedEx Corp and United Parcel Service Inc , out of fears the associated cost cuts would hurt rail service. UPS is the largest customer of the major U.S. railroads.

Shuster’s opposition could resonate with the U.S. Surface Transportation Board, a federal rail regulator that has said it will not approve a major railroad merger shown not to be in the public interest. CP and Norfolk Southern would have to agree to a merger prior to a review by the STB.

Shuster noted that Canadian Pacific had actively pursued a merger in the United States since 2014. An earlier bid was rejected by CSX Corp.

“A strong, healthy and well-functioning freight rail system is critical to the movement of goods in this country,” he said in his statement.

“However, CP’s pursuit of a merger over the last two years has done nothing but create uncertainty in the rail industry, and there continues to be no clear path forward for such an arrangement.”

A CP spokesman said in an email that a merger with Norfolk Southern would provide “better, faster service for shippers” at a lower cost.

“The end result would be a single-line, transcontinental option that improves market access and ensures the timely and efficient flow of freight,” the spokesman said.

Norfolk Southern shares were down 1.8 per cent in midday trading on the New York Stock Exchange, while CP shares were largely unchanged on the Toronto Stock Exchange.

6 April 2016 | Posted in Railways | Leave a comment