The Canada Transportation Act is the Agency’s enabling statute to implement prescribed economic elements of the federal government’s transportation policies.
The Act requires the Agency to assess the operation of, and any issues observed in, the administration of this Act and to report its findings to Parliament through its Annual Report.
The Agency's assessment also includes possible approaches to address these issues for consideration of Parliament. Several of these issues have previously been included in the Agency’s annual reports to Parliament.
Rail Transportation
Railway line transfers and discontinuances
The Agency and the Federal Court of Appeal have rendered significant decisions concerning the determination of the net salvage value (NSV) of rail lines.
In a judgment of the Federal Court of Appeal regarding a Decision of the Agency (Decision No. 383-R-2007) under subsection 144(3.1) of the Act, the Court clarified jurisprudence on NSV determinations by ruling that Division V of the Act is a complete code and operates according to definite timelines that cannot be modified by the Agency.
Assessment
The Agency has no discretion to modify the timeline established for the completion of the discontinuance and abandonment process, and, in particular, within the 6-month period set out under subsection 144(4) of the Act. Accordingly, it is likely that the Agency will encounter difficulties completing the NSV of rail lines under this subsection within the timelines prescribed in the Act when there are difficult issues to be resolved, such as the assessment of environmental remediation costs or when winter weather conditions prevent the inspection of a railway line to assess track conditions. This may, in some cases, prevent the Agency from rendering the services it has been instructed by Parliament to provide to the parties involved.
Parliament may wish to consider whether there are exceptional circumstances under which the Agency should be allowed to extend the timelines set out in Division V of the Act to meet the intent of legislation and ensure the application of procedural fairness.
Removing the obligation to set interswitching rates through regulations
Currently, under subsection 128(1) of the Canada Transportation Act, the Agency—through regulation—must either establish the interswitching rates or specify the manner of determining these rates. There is no explicit authority for the Agency to establish the actual rates outside of the regulatory-making process.
Assessment
The current approach means that, because of the long lead time between the cost-based rates being first calculated and the actual promulgation of these rates, the rates being established through the regulatory-making process can be significantly different from those that could be established with the most up-to-date information.
Furthermore, establishing rates through the regulatory-making process as opposed to an Agency determination is more complex and does not offer clear advantages, given that the matter is essentially of a technical costing nature.
By clearly allowing the Agency to set these rates outside of the regulatory-making process in an open manner, the Agency would be able to reflect more accurately and efficiently the costs of providing interswitching services.
Power to order parties to produce reports at their cost as well as to recover costs from parties for independent studies required
Currently, the Agency has no authority to compel parties to produce expert reports and at their cost. In addition, the Agency has only limited authority to recover from parties costs incurred where the Agency retains independent experts to produce studies or reports.
Assessment
In various contexts, the Agency requires expert studies in order to provide information necessary for the Agency to make a fully informed determination or decision. Such studies may involve evaluations, noise and vibration assessments, environmental assessments or technical reports. For example, section 95.3 requires the Agency to adjudicate complaints related to the reasonableness of rail noise and vibration, and sections 144 to 146 of the Act require the Agency to provide a service to determine net salvage value, both of which can require the production of expert studies. However, there are no explicit legislative powers that give the Agency authority to order parties to produce expert studies, and at their expense.
Similarly, where the Agency itself is required to retain independent experts, the Agency has no authority to recover costs from parties except in limited circumstances (e.g., subsections 144(3.1) and 146.3(1) for net salvage value determinations). The costs associated can be substantial.
At times, parties have produced at their own expense expert studies required to fully inform the Agency's decision-making. However, they were under no obligation to do so and the Agency is still expected to make a determination with or without this information.
A modification to the Act could serve to clarify that the Agency can order a party or parties to produce necessary studies at their cost (and to determine the apportionment of costs between the parties where appropriate), or to reimburse costs incurred by the Agency to obtain the necessary studies.
Need for publicly-available information on service performance from railway companies
The Agency is responsible for administering level of service provisions under the Canada Transportation Act, including disputes with respect to the common carrier obligations of rail carriers and the arbitration of rail level of service terms where agreements cannot be negotiated commercially.
At present, there are no general obligations on railway companies to report publicly on their performance in respect of the levels of service to the shippers actually achieved. This hampers the ability of shippers and the Agency to determine whether railway companies' current services are reasonable and consistent with common carrier obligations.
Assessment
A modification to the Act could require prescribed railway companies to publish level of service metrics (which would be defined if this proposal proceeds) to increase the transparency of railway performance.
Most rail carriers have sophisticated information systems that help them manage their business in an efficient and effective way, tracking performance of their equipment, delivery times, etc. Asking railway companies to make this existing information public would therefore not represent a significant burden.
Air Transportation
Authority to address and suspend unreasonable domestic tariff provisions
Section 67.2 limits the Agency’s authority to cases where an application has been received, which limits the Agency’s ability to conduct investigations concerning the reasonableness of a carrier’s terms and conditions of domestic carriage.
There are no similar complaint-driven constraints in respect of international tariffs.
This means that a decision requiring a carrier to change its international tariff because it has been determined to be unreasonable cannot be extended to the equivalent domestic tariff unless there has been a specific complaint about the domestic tariff. However, in response to a complaint, should the Agency find a domestic tariff provision unreasonable, it can order changes to be made to a carrier’s domestic tariff while also ensuring these are reflected in the carrier’s international tariff.
Subsection 67.2(1) of the Act allows the Agency to suspend a domestic tariff against which a complaint has been filed, but only after the Agency has first determined that the tariff is unreasonable. This differs from the international regime where the Agency has the ability to suspend an international tariff pending the results of its investigation and decision on the matter.
Over the years, the Agency has received several complaints that relate concurrently to both domestic and international carriage, and has suspended the international condition at issue pending investigation, while the domestic condition remains in effect.
Assessment
The inability of the Agency to take action on its own motion regarding domestic tariffs can result in unequal treatment between domestic and international air travellers and increases the complexity of compliance for industry. It can also create confusion for passengers when dealing with the same air carrier, as different rules may apply for domestic and international legs of a flight.
A potential solution to avoid such confusion would be to allow the Agency to broaden its review to include the domestic tariff when investigating an international tariff provision, whether the investigation is of its own initiative or as a result of a consumer complaint. This would provide consistency in approach and eliminate situations where the Agency has found an international tariff to be unreasonable, but can take no action against the same domestic provision domestically with the same carrier.
Allowing the Agency to also suspend a potentially unreasonable domestic tariff provision pending its determination, in cases when it has taken similar action for the same international tariff provision, could also potentially eliminate an inconsistency that can confuse consumers.
Authority to address systemic issues related to international tariffs
In exercising its jurisdiction as one of the Canadian aeronautical authorities to address the issue of non-compliance with Canadian law (e.g., the Montreal Convention), the Agency can act on its own motion as it deals with an international tariff. However, such matters must currently be addressed on a carrier-by-carrier basis.
To obtain consistency, based on existing legislation, Agency staff must launch processes with each and every carrier individually. The Agency regulates hundreds of carriers operating international air services and tariffs typically contain many pages of legal text addressing liability matters.
The same applies to accessibility matters.
Assessment
The legal framework governing the Agency’s activities in respect of air transportation requires that tariffs be just and reasonable, and to be such, tariffs must comply with Canadian law, both domestically and internationally.
Allowing the Agency to address systemic issues of non-compliance with international conventions and Canadian law on a systemic basis would provide the Agency with additional leverage and methods to compel all non-compliant carriers to comply with Canadian law.
One approach to dealing with this issue may be to provide the Agency with the power to substitute or suspend terms and conditions of air carriage for all, or a group of, carriers and allow the Agency to issue an order applying to all air carriers to implement tariffs consistent with Canadian law and international conventions signed by Canada. Such an order, if disregarded by those carriers not in compliance with Canadian law, could be enforced by administrative monetary penalties. The same applies to issues related to accessibility in regards to enforcement of accessibility-related regulations.
It is the Agency’s view that such an approach, while ensuring fairness among carriers, would also enable more efficient and effective enforcement of Canadian law.
Addressing systemic air transportation-related matters
The Agency has the discretion to act on its own motion with respect to international air transportation tariffs on a carrier by carrier basis. However, the Act only allows the Agency to investigate domestic air-related matters on complaint. In all instances, the Agency's power to order remedies is limited to the carrier that is the subject of an international tariffs' own motion action or the respondent to a complaint.
While individual issues are effectively resolved through the complaint adjudication process, it is clear that in some cases, the issue goes beyond any particular carrier and may suggest a systemic problem. For example, in cases related to accessibility for persons with disabilities:
- Undue obstacles related to industry-wide policies or practices can only be resolved with the carrier named in the complaint. Persons with disabilities may continue to encounter the same undue obstacles with other service providers.
- Decisions placing requirements to remove undue obstacles to accessibility on only one or some service providers can create significant competitive cost and/or operational disadvantages among providers.
Agency consultations held with air transportation providers have consistently highlighted concerns regarding individual remedies and a preference for levelling the playing field where systemic issues are concerned.
Examples of past systemic issues brought forward on complaint include the one-person-one-fare policy and the provision of oxygen on board aircraft, matters related to the carriage of passengers with allergies aboard aircraft and, more recently, a range of matters related to the treatment of passengers in case of schedule irregularities (e.g. unreasonable compensation for denied boarding).
A complaint may be filed against a carrier’s policies that may have a broad public interest component, but due to the nature of the complaint, the Agency is limited as to what it can investigate.
Assessment
The current jurisdiction of the Agency limits its ability to expand the scope of an investigation when it would be appropriate to do so. As a result, the Agency is establishing through individual decisions—and on an ad hoc basis—what should otherwise be defined in a regulatory framework. This has several consequences:
Efficiency: As the same complaint can be lodged several times, against a different carrier every time, Agency resources are expended dealing with a matter that was previously resolved in relation to other carriers.
Consistency: Similar cases may end up producing different outcomes depending on the quality of the arguments presented to the Agency during its court-like process, which can generate inconsistencies in how the Agency responds to a given issue.
Fairness: As an Agency decision only applies to the carrier identified in the complaint, the carrier being required to comply is placed at a competitive disadvantage; this results in an uneven playing field among the industry.
Clarity: It is difficult for Canadians to know what their rights as air travellers are, when the tariffs of carriers differ on such matters as compensation for denied boarding.
To address the issue, Parliament may wish to consider a legislative amendment giving the Agency the discretion, under certain conditions and when it is determined to be appropriate, to properly and judiciously define the scope of a case in order to investigate issues raised in a complaint on a broader basis (be it industry-wide or limited to a sector of the industry). Any remedies or orders flowing from such an investigation would also be applied on an appropriate basis, industry-wide or focusing on a narrower sector.
Such an amendment could enable the Agency to more effectively review issues that have broad implications for stakeholders, while not necessarily placing individual transportation service providers at an unfair competitive disadvantage. It would also allow the Agency to stay an application that has ramifications for an entire sector while it completes a thorough investigation.
Having the flexibility to investigate known broader issues at the beginning of a process rather than having to wait for further complaints would allow for greater efficiency.
To preserve the integrity of the Agency’s quasi-judicial adjudicative process, including undue hardship analysis in the case of accessibility disputes, any orders issued by the Agency would be applied on an individual service provider basis. This would only be done after ensuring interests are fully considered and weighed, and after taking into consideration the operational and economic circumstances of each of the individual service providers.
Accessible Transportation
Jurisdictional overlap with the Canadian Human Rights Act
The Canadian Transportation Agency, the Canadian Human Rights Commission (CHRC) and the Canadian Human Rights Tribunal (CHRT) have the power under their respective legislation to address complaints by persons with disabilities regarding the accessibility of the federal transportation system.
Sections 170 and 172 of the Canada Transportation Act explicitly set out the mandate of the Agency to ensure that undue obstacles to the mobility of persons, including persons with disabilities, are removed from federally-regulated transportation services and facilities.
In 2007, the Supreme Court of Canada confirmed that Part V of the Canada Transportation Act is human rights legislation and that the principles of the Canadian Human Rights Act must be applied by the Agency when it identifies and remedies undue obstacles. The Supreme Court also acknowledged that the Agency uniquely has the specialized expertise to balance the requirements of persons with disabilities with the practical realities – financial, structural and logistic – of the federal transportation system.
Section 171 of the Act requires the Agency and the CHRC to coordinate their activities in order to avoid jurisdictional conflict, and a memorandum of understanding designed to achieve this was entered into between the Agency and the CHRC. Despite this, the CHRT issued a decision which dealt with the same complainant and identical issues while arriving at a different decision from one previously made by the Agency. In this case, the jurisdictional overlap resulted in a conflicting outcome.
At the request of the Agency, the Federal Court undertook a judicial review on these jurisdictional issues at the end of 2009-2010. In October 2010, the Federal Court overturned the CHRT’s Decision, affirming the jurisdiction of the Agency as the principal expert tribunal in all transportation matters, including those related to accessibility.
The Federal Court ruling was appealed by the CHRT. In November 2011, the Federal Court of Appeal (FCA) confirmed the Federal Court ruling to set aside the CHRT’s decision, stating that the CHRT could not reconsider a matter already adjudicated by the Agency. However, the FCA did not address the question of whether the Agency has exclusive jurisdiction over disability-related cases involving the federal transportation network.
Assessment
This jurisdictional overlap can lead to the following problems:
- Complainants face uncertainty as to which body should address their complaints, particularly given the different remedies available under the Canada Transportation Act and the Canadian Human Rights Act. Although the Agency has the mandate to remove undue obstacles from the federal transportation network, it does not have the power to award compensation for pain and suffering, unlike the CHRT.
- Respondents (e.g., carriers, terminal operators) face the possibility that they will have to defend the same issues under two different legislative regimes.
- To the extent that both the Agency and the CHRC/CHRT deal with the same complaint, there is uncertainty, the possibility of conflicting outcomes from the two tribunals and added costs for the respondent and the Government of Canada.
In order to clarify the jurisdictional responsibilities of the Agency and the CHRC/CHRT, to provide for consistency and comparability with the CHRC/CHRT, and to avoid claims that the Agency is limited in its ability to provide a resolution that is satisfactory to all parties involved, the Canada Transportation Act could be amended to:
- confirm the Agency’s exclusive mandate with respect to dealing with complaints by persons with disabilities regarding the accessibility of the federal transportation network;
- provide the Agency with the power to award costs for pain and suffering encountered, a power that the CHRT currently has; and
- provide the Agency with the jurisdiction to apply solutions on a wider, systemic basis, also a power that the CHRT currently has. Persons with disabilities would as a result be provided with the full range of remedies from one tribunal.
General
Clarification of the Agency’s two main business functions
The Canadian Transportation Agency is an independent body of the Government of Canada that currently performs two key functions within the federal transportation system.
- As a quasi-judicial tribunal, the Agency, informally and through formal adjudication, resolves a range of commercial and consumer transportation-related disputes, including accessibility issues for persons with disabilities. It operates like a court when adjudicating disputes.
- As an economic regulator, the Agency makes determinations and issues authorities, licences and permits to transportation carriers under federal jurisdiction.
In its role as an economic regulator, some of the Agency’s decisions – including many pertaining to charter permits or licensing activities – have effectively become routine and involve little or no real discretion. The delivery of such routine, non-discretionary regulatory services could be dealt with more effectively by staff.
However, there are no provisions for such a delegation of authority to staff in the Canada Transportation Act.
Currently, the Act:
- Provides limited guidance regarding the role of Members or the Chair/Chief Executive Officer (Chair/CEO);
- Requires Members to make all Agency decisions; and
- Makes no distinction between the adjudicative and regulatory provisions administered by the Agency.
Assessment
In the Agency’s opinion, when the Act is next reviewed, consideration should be given to clarifying:
- The authority of the Chair/CEO over the administration of economic regulation involving routine decisions and powers of delegation in that respect; and
- The two distinct functions of the Agency and the procedural expectations vis-à-vis each function.
These changes would:
- Allow Members to concentrate on their core role as adjudicators;
- Help distinguish between the administrative responsibilities carried out by the Agency and those borne by its Members as a tribunal; and
- Provide for the efficient, effective and timely administration of the routine and regulatory matters within the purview of the Agency.
120-day deadline
Subsection 29(1) of the Act states that the Agency will make its decision in any proceeding before it as expeditiously as possible, but no later than 120 calendar days after the originating documents are received, unless the parties involved agree otherwise.
The Agency has set in place high performance standards. With a view to ensuring transparent, fair and efficient dispute resolution and administration of its regulatory responsibilities, in 2007, the Agency implemented a performance measurement framework that establishes service standards based in part on client and stakeholder feedback and expectations. The framework is reviewed annually to adjust the benchmarks based on current business practices and to ensure that performance targets are "stretch" targets.
The framework’s performance measures are tailored to the specific requirements of, and based on benchmarks for, different areas of its service delivery.
For example, in 2014-2015, the Agency exceeded its performance targets related to air licensing and charters by issuing 94% of all air licences within 7 days and 97% of all charter permits within 4 days. It has also consistently exceeded its performance target requiring that 80% of all marine coasting trade disputes be resolved within 65 days – the Agency resolved 100% within 65 days. In fact, even in complex cases, the Agency targets a resolution within 65 days from the close of pleadings, a target that was met for 67% of cases in 2014-2015.
In keeping with the principles of transparency and good governance, the Agency publicly displays its service standards on its website, and reports on them every year in its Annual Report.
As a result, the single 120-day deadline – which was set in 1996 for all proceedings before the Agency – has been replaced in practice by the detailed performance measurement framework the Agency has adopted, and has been publicly reported on since 2009-2010.
As is clearly shown in the 2014-2015 Agency service standards report, below, most services are provided by the Agency well within the 120-day deadline.
Overall performance
| Services |
Standard |
Target |
2014–2015
Results |
|---|
| Overall client satisfaction |
Client Satisfaction Survey |
70 |
66% |
|---|
Dispute resolution
| Services |
Standard |
Target |
2014–2015
Results |
|---|
| Air travel complaints facilitated |
65 days |
80% |
65% |
|---|
| Rail and accessibility disputes facilitated |
20 days |
80% |
85% |
|---|
| Disputes mediated |
20 days or within extension requested by the parties |
100% |
100% |
|---|
| Complex disputes resolved |
65 days after pleadings are closed |
80% |
67% |
|---|
| All other disputes resolved (except coasting trade) |
85 days |
On average |
62 days on average |
|---|
| Disputed coasting trade applications resolved |
65 days |
80% |
100% |
|---|
| Undisputed coasting trade applications processed |
Prior to start date of vessel performing services |
95% |
99% |
|---|
| Rail level of service arbitrations |
45 calendar days up to 65 calendar days |
100% |
100% |
|---|
| Adjudication of objections to level of service arbitrations |
35 calendar days |
100% |
100% |
|---|
| Final offer arbitrations |
60 calendar days |
100% |
100% |
|---|
Regulation
| Services |
Standard |
Target |
2014–2015
Results |
|---|
| Air licences issued |
7 days after receiving a complete application |
85% |
94% |
|---|
| Charter permits and amendments issued after receipt of complete application |
4 days |
85% |
97% |
|---|
| International code-sharing and wet lease authorities issued |
15 days |
85% |
82% |
|---|
| Rail determinations issued |
85 days |
95% |
80% |
|---|
Compliance
| Services |
Standard |
Target |
2014–2015
Results |
|---|
| Air carriers and facility operators comply with regulatory requirements (compliance determinations) |
70 days (from inspection date) |
85% |
96% |
|---|
| Licensees/facility operators who have been found in contravention with regulatory requirements and are brought into compliance following a periodic inspection remain compliant |
n/a |
85% |
n/a |
|---|
| Level of compliance with targeted accessibility provisions in regulations |
n/a |
85% |
100% |
|---|
| Level of compliance with targeted accessibility provisions in voluntary codes of practice |
n/a |
75% |
75% |
|---|
Communications
| Services |
Standard |
Target |
2014–2015
Results |
|---|
| Client inquiries answered |
5 days |
85% |
100% (via email)
93% (via telephone) |
|---|
| 1-888 telephone calls answered (between 8:00 a.m. and 8:00 p.m. Eastern Time, Monday to Friday) |
18 seconds |
85% |
89% |
|---|
| Information about our programs and services available on our website |
24 hours per day / 7 days per week |
95% |
99% |
|---|
| Time to publish formal decisions on our website |
1 day |
100% |
94% |
|---|
Assessment
The Agency has adopted a series of service-specific, time-related performance measures that are more effective for overall Agency accountability than the single maximum 120-day legislated timeframe for all proceedings before the Agency. In all cases, these measures are based on time-related targets of less than 120 days.
The transportation industry has been informed of these targets and the Agency reports to Parliament and industry on its performance against them.
These performance measures and processes are based on client and stakeholder feedback and expectations, are relevant to the nature of each of the Agency’s business activities, and have been designed to ensure that its services are provided in an efficient, transparent and client service-oriented manner. Performance results are published in the Agency’s Annual Report to Parliament and on its Web site for clients and stakeholders.
Such results-focused performance indicators establish benchmarks and determine the standard of service the Agency needs to achieve to help maintain an efficient federal transportation system. They allow the Agency to track how closely its objectives are being met and to implement continuous improvements to enable it to meet the accountability expectations of Parliament and Canadians.
Subsection 29(1) of the Act already requires the Agency to act as expeditiously as possible and the Federal Court has previously ruled that the 120-day legislated timeframe is not mandatory. In addition, the Supreme Court of Canada (SCC) has recognized that 120 days is not an appropriate timeline for all cases, stating that:
Where a relatively limited adjudicative investigation is being conducted by the Agency, the Agency will gear its process towards rendering a decision within 120 days. On the other hand, where an adjudicative proceeding is broad in scope and has far-reaching implications, the Agency will have to adjust its process to take account of these conditions. The 120-day period in s. 29 does not preclude it from doing so or cause the Agency to lose jurisdiction if the 120-day period is exceeded.
Accordingly, the Agency recommends that the Act be modified to:
- Remove this 120-day deadline and, in its place, require the Agency to establish service-specific, time-related performance measures, which would continue to be reported on annually in the Agency’s Annual Report to Parliament; or, alternatively,
- Qualify exceptions to the 120-day period where more time may be required, as has been recognized by the SCC.
These proposed changes would contribute to better managing expectations by recognizing that in all instances the Agency aims to issue its decisions in less than 120 days, while acknowledging that this is not possible in certain circumstances.
