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Comparison of Canadian and United States Rail Economic Regulations

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Comparison of Canadian and United States Rail Economic Regulations www.cpcs.ca FINAL REPORT Comparison of Canadian and United States Rail Economic Regulations Prepared for: The Railway Association of Canada Prepared by: CPCS CPCS Ref: 13381 January 20, 2015 FINAL REPORT | Comparison of Canadian and U.S. Rail Economic Regulations CPCS Ref: 13381 Table of Contents Acronyms / Abbreviations ............................................................................................................. 1 Executive Summary ....................................................................................................................... 2 1 Purpose of the Report .................................................................................................................. 2 2 Scope of Rail Economic Regulation .............................................................................................. 2 3 National Transportation Policy Statements ................................................................................. 3 4 Market Entry and Exit ................................................................................................................... 4 5 Level of Services ........................................................................................................................... 5 6 Pricing of Services ......................................................................................................................... 5 7 Competitive Access Provisions ..................................................................................................... 7 8 Mediation and Arbitration ........................................................................................................... 8 9 Cost of Capital and Revenue Adequacy ........................................................................................ 9 10 Conclusion .................................................................................................................................... 9 1 Introduction ............................................................................................................................. 14 1.1 Background ................................................................................................................................. 14 1.2 Purpose of this Report ................................................................................................................ 14 1.3 Structure of this Report .............................................................................................................. 15 2 Canada and US National Transportation Policy Statements ...................................................... 16 2.1 Introduction ................................................................................................................................ 17 2.2 Canada Transportation Policy Statement .................................................................................. 17 2.2.1 Canada Transportation Policy Statement ........................................................................ 17 2.2.2 Transportation Policy Statement Characteristics ............................................................ 18 2.2.3 Creation and Evolution of the Transportation Policy Statement .................................... 19 2.2.4 Role of the Policy Statement in Interpreting the CTA ..................................................... 20 2.3 United States Transportation Policy Statement ......................................................................... 21 2.3.1 United States Transportation Policy Statement .............................................................. 21 2.3.2 Adoption of the Transportation Policy Statement .......................................................... 23 2.3.3 Transportation Policy Statement Characteristics ............................................................ 23 2.3.4 Role of the Policy Statement in Interpreting 49 U.S.C. .................................................... 24 2.4 Summary and Key Findings ........................................................................................................ 27 FINAL REPORT | Comparison of Canadian and U.S. Rail Economic Regulations CPCS Ref: 13381 3 Market Entry and Exit ............................................................................................................... 29 3.1 Canada ........................................................................................................................................ 30 3.1.1 Certificate of Fitness ........................................................................................................ 30 3.1.2 Construction of a Railway Line ......................................................................................... 32 3.1.3 Running Rights ................................................................................................................. 32 3.1.4 Discontinuance ................................................................................................................. 33 3.2 United States .............................................................................................................................. 37 3.2.1 Certificate to Construct and Operate .............................................................................. 37 3.2.2 Exemption from the Need to Obtain a Certificate ........................................................... 38 3.2.3 Environmental Analysis .................................................................................................... 40 3.2.4 Abandonment and Discontinuance ................................................................................. 40 3.3 Summary and Key Findings ........................................................................................................ 43 4 Level of Services ....................................................................................................................... 46 4.1 Canada ........................................................................................................................................ 47 4.1.1 Accommodation for Traffic – Section 113 ....................................................................... 48 4.1.2 Facilities for Traffic – Section 114 .................................................................................... 57 4.1.3 Adequate and Suitable Accommodation – Section 115 .................................................. 60 4.1.4 Complaint and Investigation Concerning Company’s Obligations – Section 116 ............ 61 4.1.5 Arbitration on Level of Services ....................................................................................... 67 4.2 United States .............................................................................................................................. 67 4.2.1 Common Carrier Transportation, Service and Rates – 49 U.S.C. 11101 .......................... 68 4.2.2 Facilities for Interchange of Traffic – 49 U.S.C. 10742 ..................................................... 71 4.2.3 Switch Connections and Tracks – 49 U.S.C. 11103 .......................................................... 74 4.2.4 Car Service – 49 U.S.C. 11121 and 11122 ........................................................................ 74 4.2.5 Railroad Development – 49 U.S.C. 10907 ........................................................................ 76 4.2.6 Remedies .......................................................................................................................... 77 4.2.7 Statutory Limitations on the Jurisdiction of the Board .................................................... 79 4.3 Summary and Key Findings ........................................................................................................ 82 4.3.1 LOS Obligations of Canadian Federal Railway Companies .............................................. 82 4.3.2 Canadian Rail LOS Complaint Mechanism ....................................................................... 83 4.3.3 New CTA Amendments .................................................................................................... 84 4.3.4 LOS Obligations of U.S. Federal Rail Carriers ................................................................... 85 FINAL REPORT | Comparison of Canadian and U.S. Rail Economic Regulations CPCS Ref: 13381 4.3.5 Mechanisms for Resolving Rail Service Issues in the U.S................................................. 85 4.3.6 Exempt Commodities ....................................................................................................... 85 5 Pricing of Services ..................................................................................................................... 87 5.1 Canada ........................................................................................................................................ 88 5.1.1 Where Are Rates and Charges Set Out? .......................................................................... 88 5.1.2 Rates ................................................................................................................................. 91 5.1.3 The Notion of Reasonable Rate and Final Offer Arbitration............................................ 92 5.1.4 Revenue Cap for the Movement of Western Grain ......................................................... 94 5.1.5 Charges ........................................................................................................................... 100 5.2 United States
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