File No. 36223 SUPREME COURT OF CANADA (ON APPEAL FROM A JUDGMENT OF THE FEDERAL COURT OF APPEAL) BETWEEN: CANADIAN PACIFIC RAILWAY COMPANY APPELLANT (Applicant) - and - ATTORNEY GENERAL OF CANADA CANADIAN TRANSPORTATION AGENCY RESPONDENTS (Respondents) FACTUM OF THE RESPONDENT ATTORNEY GENERAL OF CANADA (Rule 42 of the Rules of the Supreme Court of Canada) Mr. Mark Kindrachuk, Q.C. Mr. Christopher M. Rupar Mr. Alexander Pless Department of Justice Canada Ms. Sara Gauthier Campbell Suite 500, Room 557 Department of Justice Canada 50 O’Connor Street 10th Floor, Suite 123 Ottawa, Ontario K1A 0H8 2nd Avenue South Saskatoon, Saskatchewan S7K 7E6 Tel.: 306 975-4765 (Mr. Kindrachuk) Tel.: 613 670-6290 Tel.: 514 283-8767 (Mr. Pless) Fax: 613 954-1920 Tel.: 514 283-5805 (Ms. Gauthier) [email protected] Fax: 306 975-5013 / 514 283-3856 [email protected] [email protected] [email protected] Counsel for Respondent Agent for Respondent Attorney General of Canada Attorney General of Canada L-3901-15 Montréal 514 374-0400 Québec 418 641-0101 lafortune.ca - 2 - Mr. Douglas C. Hodson, Q.C. Mr. Jeffrey W. Beedell Ms. Kristen A. MacDonald Gowling Lafleur Henderson LLP MacPherson Leslie & Tyerman LLP Suite 2600 1500 Saskatoon Square 160 Elgin Street 410, 22nd Street East Ottawa, Ontario Saskatoon, Saskatchewan K1P 1C3 S7K 5T6 Tel.: 306 975-7101 (Mr. Hodson) Tel.: 613 786-0171 Tel.: 306 975-7102 (Ms. MacDonald) Fax: 613 788-3587 Fax: 306 975-7145 [email protected] [email protected] [email protected] Counsel for Appellant Agent for Appellant Mr. John C. Dodsworth Ms. Valérie Lagacé Canadian Transportation Agency 19th Floor 15 Eddy Street Gatineau, Québec K1A 0N9 Tel.: 819 997-9324 (Mr. Dodsworth) Tel.: 819 953-5510 (Ms. Lagacé) Fax: 819 953-9269 [email protected] [email protected] Counsel for Respondent Canadian Transportation Agency - i - TABLE OF CONTENTS Page FACTUM OF THE RESPONDENT ATTORNEY GENERAL OF CANADA PART I – OVERVIEW AND FACTS ......................................... 1 A. Overview ......................................... 1 B. Statement of Facts ......................................... 2 1) Canadian Transportation Agency ......................................... 2 2) Interswitching ......................................... 4 3) Context for adoption of subsection 128(1.1): the 2014 Grain Crisis ......................................... 6 4) The Emergency Orders in Council ......................................... 8 5) Fair Rail for Grain Farmers Act ......................................... 9 6) The Interswitching Regulations ....................................... 12 PART II – ISSUES ....................................... 17 PART III – ARGUMENT ....................................... 18 A. Concise statement of argument ....................................... 18 B. The Agency is not intended to be independent in its legislative functions ....................................... 18 C. The Agency acted in accordance with the Act and Parliament’s intent ....................................... 22 D. There is no free-standing principle which requires independence for administrative agencies acting in a regulatory capacity ....................................... 26 1) Administrative agencies are part of the executive branch – the requirements of natural justice do not attach to their legislative functions ....................................... 27 - ii - TABLE OF CONTENTS Page 2) Where Parliament has not expressly required the independence of an agency exercising legislative functions, it should not be presumed ....................................... 31 E. Conclusion ....................................... 35 F. Remedy ....................................... 36 PART IV – COSTS ....................................... 38 PART V – ORDER SOUGHT ....................................... 39 PART VI – TABLE OF AUTHORITIES ....................................... 40 ANNEX-A – Compilation of Committee Evidence re 160-km ....................................... 46 _______________ - 1 - Factum of the Respondent AGC Overview and Facts FACTUM OF THE RESPONDENT ATTORNEY GENERAL OF CANADA PART I – OVERVIEW AND FACTS A. Overview 1. In 2014, farmers in the Canadian Prairies were faced with a grain transportation crisis, one which Parliament and the Canadian Transportation Agency (the “Agency”) took transparent steps to address. There was serious concern that grain was not moving fast enough through Canada’s handling and transportation system, causing damage to Canada’s international reputation as an exporter and causing harm to the grain sector and the economy generally. Parliament, amongst other measures, amended the Agency’s regulatory powers specifically in order for the Agency to address the crisis. 2. The central question in this appeal is whether, in adopting the Regulations Amending the Railway lnterswitching Regulations1 (the “Interswitching Regulations”), it was unlawful for the Agency to expressly implement the stated policy objectives of the government as endorsed by Parliament. 3. The particular context in which the Interswitching Regulations were adopted is critical in assessing the Agency’s conduct. Given the statutory context in which the Agency exercises its legislative authority and the factual context in which the regulations were adopted, it was neither unlawful nor improper for it to choose to follow the government’s stated policy objectives. 4. In delegating legislative authority to the Agency within the framework of the Canada Transportation Act (the “Act”),2 Parliament intended the Agency to be responsive to the 1 SOR/2014-193 (Registration August 1, 2014), C Gaz II 2310, Book of Authorities of the Respondent the Attorney General of Canada, hereinafter “BA AGC”, Vol I, Tab 20. 2 SC 1996, c 10, BA AGC, Vol I, Tab 8. - 2 - Factum of the Respondent AGC Overview and Facts government’s assessment of the public interest and to the associated policy considerations. This is apparent from the statutory context. B. Statement of Facts 1) Canadian Transportation Agency 5. Because of the manner in which this appeal comes before this Court, there are no findings of fact of a lower court. The facts recited by the Appellant, the Canadian Pacific Railway Company (“CP”), are accurate but fail to establish the relevant background and context to assess the conduct of the Agency in this appeal. The facts as stated below are based on CP’s record and on official public documents. 6. The Agency is established by Part I of the Act. It is the continuation of the National Transportation Agency, which replaced the Canadian Transport Commission as the federal railways regulator. The Agency has existed under various names since 1903.3 Prior to that and in its earliest incarnation it was a committee of Cabinet named “The Railway Committee of the Privy Council”.4 7. As the administration of railways became increasingly complex and demanding, it became clear that the Railway Committee of the Privy Council was “over-worked and ill-equipped to deal with the responsibilities,”5 which were consequently devolved in 1903 to a distinct administrative agency that is today’s Canadian Transportation Agency. 3 CED (online), Railways, “Canadian Transportation Agency: General Jurisdiction” (III.1), at § 27, BA AGC, Vol II, Tab 77. 4 Canadian National Railway Co. v Canada (Attorney General), [2014] 2 SCR 135, 2014 SCC 40, at para 57 [CN v AGC], BA AGC, Vol I, Tab 31. 5 Colleen M. Flood & Jennifer Dolling, “An introduction to Administrative Law: Some History and a Few Signposts for a Twisted Path” in Colleen M. Flood & Lorne Sossin, eds., Administrative Law in Context, 2nd ed. (Toronto: Emond Montgomery, 2013), 1, at 6, BA AGC, Vol II, Tab 78; Jamie Benidickson, “The Canadian Board of Railway Commissioners: Regulation, Policy and Legal Process, at the Turn-of-the-Century” (1991) 36 McGill L J 1222, at 1231-1233, BA AGC, Vol II, Tab 76. - 3 - Factum of the Respondent AGC Overview and Facts 8. The Agency has a broad mandate in respect of transportation matters under the legislative authority of Parliament. Like many such administrative agencies, the Agency is multi- functional, exercising adjudicative, administrative, and legislative functions in accordance with its constitutive statute.6 9. The Agency performs two key functions. First, as a quasi-judicial tribunal, it resolves commercial and consumer transportation-related disputes. The Agency exercises many of the powers, rights and privileges of superior courts in its adjudicative capacity.7 10. Second, the Agency functions as an economic regulator, adopting regulations, making determinations and issuing licenses and permits to carriers functioning within the ambit of Parliament’s authority. As an economic regulator, the Agency exercises both administrative functions and legislative functions. In discharging its mandate both as a quasi-judicial tribunal and as an economic regulator, the Agency is required to deal with matters of significant complexity.8 11. The Agency is guided by the objectives of the Act as set out in section 5, the “National Transportation Policy”, including the direction at paragraph 5(b) that the objectives of the Act are most likely achieved when: […] regulation and strategic public intervention are used to achieve economic, safety, security, environmental or social outcomes that cannot be achieved satisfactorily by competition and market forces and do not unduly favour, or reduce the inherent advantages of, any particular