Unifor Interswitching General Note

Table of Contents

1. Budget 2023: Increased Interswitching Limits Pilot Program

The amendments to interswitching regulations extends the interswitching limit for the prairie provinces to 160km. This is similar to 2014 to 2017 under the Fair Rail for Grain Farmers Act.

The amendment will sunset after 18 months unless the government extends it.

CN and CP will be required to provide data on the use of "regulated interswitching", the distance of the interchange from origin/destination and if CN or CP moved the railcar at the regulated interswitching rate.

  • Shippers: the purchaser of transport
  • Rail companies: owners of the track
  • Interswitching: One rail company accessing another rail company's track. Known as "reciprocal switching" in the USA. Rates are regulated by the government, but are based on market rates.
  • Extended interswitching: a much expanded catchment area (160km instead of 30km) for interswitching that allows a much expanded access to interswitching. It includes a different interswitching rate setting mechanism where the government sets a regulated (instead of market) rate.
  • Long-haul Interswitching: similar to extended interswitching, but with a cost-based government regulated price.

2. The debate

Rail companies versus shippers.

The main argument is over prices of shipping goods. Large shippers of goods want to be able to have a very large catchment area (distance between interchanges and origin or destinations) for accessing interswitching rates. Rates are set by the government. Shippers want the rate to be regulated down.

  • Shippers want to impose a low, regulated price on shipping. Shippers think that increased "competition" between rail operators on single lines with a regulated rate does this.
  • Rail companies want to be able to set the rates and argue that extending interswitching opens them up to too much price pressure and competition.
  • Most fo the concern for Canadian rail companies is with competition from USA rail companies. Extending the interswitching catchment area may mean that USA companies can carry Canadian goods on Canadian lines. This happened in 2014 in the first trial of extended regulated interswitching.

Further, the 160 km interswitching limit raises issues about connectivity and competition from railway carriers in the United States, as American carriers can solicit Canadian traffic, but the reverse is not true.

…

Competition could be enhanced, however, if interswitching rates were compensatory to the railways, as per Recommendation 3 above, and if section 127(4) of the Canada Transporta tion Act were modified in such a way that shippers could apply for extended interswitching under exceptional circumstances, without having to be located “ . . . reasonably close to the interchange.”

– Emerson report 2016

3. Unifor response

Unifor stands opposed to extending the interswitching distance limit.

Unifor members work on the tracks and are responsible for the safety, inspections, maintenance, and repair of freight cars and locomotives.

The two main concerns Unifor has are:

  1. Investment is needed for the potential increased inspection of locomotive and rail cars interswitching on Canadian tracks.
  2. Extending the limit will lead to loss of Canadian rail jobs to USA companies because of an unfair competitive environment created by extending the limit.

3.1. Issues

  1. Safety of locomotives and rail cars
    • Inspection of spark arrestors
    • General inspection of locomotives
    • Air break inspection/tests
  2. Fires are regularly set by trains. Unifor supports a made in Canada regulatory environment enforcing inspections to reduce spark-caused fires.
  3. Competitive environments that allow USA rail companies access to Canadian tracks without reciprocal access to interswitching in the USA will lead to Canadian job loss. Extended Regulated Interswitching does not exist in the USA like it does in Canada. Extending the distance limit will simply increase the number of USA companies on Canadian tracks without the opportunity of Canadian crews to be on USA tracks.
  4. Open data and increased collection on the rail system is in desperate need. Canada has had a history of attempting and then reversing the extension of the distance limit for interswitching, but access to data on regular interswitching is missing. The Budget 2023 pilot project recommends the collection of data during the pilot, but there is no clarity on who will have access to that data.
  5. The Emerson Report clearly outlined that the previous years-long attempt at increasing the distance limit was a failure. The Emerson Report stated that this extension should only be extended through an application process during extraordinary circumstances.

3.2. Recommendations

Unifor highlights that it is extremely important regulatory inspections and brake testing are given priority. There has been an exponential increase in the number of major and catastrophic derailments experienced on both sides of the boarder, and the impacts of those on the environment and public.

Unifor is also very concerned over any loss of Canadian railway operating jobs.

If the government moves forward with the pilot project, Unifor recommends the following.

  1. Unifor recommends that any extension of the 30KM interswitching limit be accompanied by regulation ensuring certified car and locomotive inspection. Current regulations for interswitching do not enforce safety inspection of freight cars by a certified car inspector. Any large extension of the interswitching catchment area needs to be accompanied by increased risk management through increased inspections.
  2. Unifor recommends any extension of the 30KM interswitching limit be accompanied by regulation enforcing air break tests of these trains. The safety of crews and communities should be primary concern to any pilot project testing expanded new limits.
  3. Any expansion of rail data collection by regulatory mandate, including on interswitching, should be made available to unions representing rail workers at no cost.
  4. Any extension of distances for interswitching must be monitored for negative effects on Canadian rail jobs. If the goal of the pilot project is to increase competition on prices, that savings should not be from exporting rail jobs. If Canadian jobs are negatively impacted by the regulation, then the pilot project should end and the cause be reviewed.

3.3. Questions for the NDP to ask

  • Are there stats on access to Canadian interswitching by USA companies now?
  • Will Canadian companies and workers be running the trains that enter Canada?
  • Will the interchanges in Canada be points of regulation for all locomotives and rail cars coming into Canada with the opportunity to deny entrance of those trains that do not meet Canadian regulatory standards?
  • Who is liable to USA company if they derail or air breaks fail, a derailment occurs, or fires are started along the track?
  • Are stats on USA inspection and derailments compared to Canada?

4. Transport Act Review

interswitch means to transfer traffic from the lines of one railway company to the lines of another railway company; (interconnexion)

interswitching rate means a rate determined by the Agency in accordance with section 127.1;

long-haul interswitching rate means a rate determined by the Agency in accordance with paragraph 134(1)(a);

51.3 Information that is provided to the Minister or the Agency in accordance with regulations made under paragraph 50(1.01)(a) is only to be used by the Agency for the purpose of determining the long-haul interswitching rate referred to in paragraph 134(1)(a) and, despite subsection 51(4) and section 51.2, the Agency may, for that purpose, communicate the information in an aggregated form.

2018, c. 10, s. 13

Class 1 rail carrier

(1.01) The Governor in Council may make regulations requiring any class 1 rail carrier or class of those carriers to provide information, other than personal information as defined in section 3 of the Privacy Act, to the Minister or Agency, when and in the form and manner that the regulations may specify, for the purposes of

(a) determining the long-haul interswitching rate referred to in paragraph 134(1)(a); and

(b) communicating service and performance indicators to the public.

Order

(2) If the point of origin or destination of a continuous movement of traffic is within a radius of 30 km of an interchange, the Agency may order

(a) one of the companies to interswitch the traffic; and

(b) the railway companies to provide reasonable facilities for the convenient interswitching of traffic in both directions at an interchange between the lines of either railway and those of other rai

Regulations

128 (1) The Agency may make regulations

(a) prescribing terms and conditions governing the interswitching of traffic, other than terms and conditions relating to safety; and

(b) establishing distance zones for the purpose of determining the interswitching rate.

Author: Graham Cox

Created: 2023-05-26 Fri 18:07