Level of Service Obligations

Railway Level of Service Obligations

Federal railway companies, such as CN and CP, are required by law to furnish “adequate and suitable facilities and service”. Railways cannot arbitrarily refuse to provide service, nor do they have to comply with every request for service. What is “adequate and suitable” depends on what is reasonable in all the circumstances. The responsibility for making this determination rests with the Canadian Transportation Agency (the “Agency”).

The railway’s level of service obligations include the obligation to:

  • receive, carry and deliver traffic without delay;
  • provide adequate cars and facilities for loading and unloading goods at all stopping points;
  • facilitate the transfer of traffic to and from another railway;
  • connect private sidings with their rail lines, place cars on those siding and move traffic to and from those sidings;
  • provide any other service that railway companies usually offer as part of their transportation services.

One of the factors which the Agency considers in dealing with a complaint is whether the railway company is discriminating between different shippers. Such discrimination is a good indicator that the railway company is providing inadequate service to the complainant. It may not be necessary to demonstrate discrimination, however, in cases where there has been chronic neglect and shortfall of equipment.

Who can make a complaint?

A complaint that a railway company is not fulfilling its service obligations in whole or in part may be made by a shipper, that is, a person who sends or receives goods by railway or intends to do so.

The Agency has the power to combine two or more complaints from different shippers and to deal with them as a single proceeding. Where several shippers initiate complaints which raise a common issue, the Agency may combine a portion of the proceedings, if it determines that this would be more efficient. Each shipper will be required, however to present evidence regarding its specific circumstances.

How does the process work?

Complaints must be made in writing to the Secretary of the Agency. A complaint should set out the basis for the complaint and include any supporting information and documentation. The railway company has the right to provide a written answer, and the complainant may file a written reply to the railway’s answer. A copy of each document that is filed with the Agency must be provided to the opposing party.

While the Agency may decide to hear oral evidence from witnesses, it is not required to do so. In fact, complaints are often dealt with on the basis of written material alone.

What Is required for a complaint to succeed?

In reaching a decision, the Agency is likely to consider the following questions:

  • What transportation alternatives does the person making the complaint have?
  • What costs are associated with these alternatives?
  • What costs will the railway incur if ordered to provide service?
  • What service has been provided in the recent past?
  • How does that differ from what the Agency is being asked to order?
  • How does it differ from what the railway company is providing now?

It is sometimes difficult for shippers to obtain reliable information in all of these areas, and this represents a hurdle for anyone making a level of service complaint.

While successful complaints are often based on evidence that a railway company has discriminated against the complainant, shippers should not be discouraged from making a complaint simply because they do not have access to reliable statistics regarding rail service provided to others. It may be sufficient to show that the service being provided to the complainant falls consistently and significantly short of what is required.

Although the CTA no longer requires the shipper to demonstrate that it will suffer “substantial commercial harm” if the Agency does not grant an order requiring the railway to take specific steps to improve service, evidence showing the detrimental effect of inadequate rail service on the shipper’s business will be important. This could include records which demonstrate:

  • the higher cost of using alternate transportation services, if they are available;
  • other expenses or losses incurred as a result of unreliable service, for example, lost cash flow and its impact on the shipper’s overall operation;
  • any contracts or opportunities that have been cancelled or missed as a result of inadequate service;
  • plant slowdown or shutdown;
  • inability to supply new or emerging markets;
  • cancelled sales orders or contracts;
  • complaints from customers.

How long does it take?

The Agency must make a determination within 120 days after receiving a complaint. When a complaint is dealt with entirely in writing, however, it will generally require less time. The Agency has the ability to shorten the timeframes for the various procedural steps and will do so whenever it concludes that immediate action is required. The complaint should include a request that it be dealt with on an expedited basis whenever necessary and state the reasons for that request.

What can the Agency do to improve inadequate rail service?

If the Agency determines that a railway is not providing adequate service, it can order the railway to allot, distribute and use cars, locomotives and other equipment in the manner it directs and to take any other steps the Agency may determine appropriate. In some cases, the Agency has required the railway to provide periodic reports to the Agency to allow it to monitor the service being provided to the successful complainant.

The Agency also has the power to order the railway to acquire whatever property may be needed to provide proper service, such as additional cars or locomotives. The Agency will take into account not only the financial impact that such relief would have on the railway company but all relevant considerations, including the impact of inadequate service on affected shippers and whether they have effective access to transportation alternatives.

The Agency has no authority to award damages for losses suffered as a result of inadequate rail service. However, if the Agency determines that a railway company has failed to provide adequate service, the shipper may rely on this determination to commence a law suit for losses resulting from the service failure.