Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 1 - Evidence - March 1, 2001

The Standing Senate Committee on Transport and Communications, to which was referred Bill S-5, to amend the Blue Water Bridge Authority Act, met this day at 10:00 a.m. to give consideration to the bill.

Senator Lise Bacon (Chairman) in the Chair.

[English]

The Chairman: Today the committee is dealing with Bill S-5, to amend the Blue Water Bridge Authority Act. We will hear first from the officials from Transport Canada: Ms Brenda Baird, Director General, Surface Programs and Divestiture; Mr. Brian Hicks, Senior Analyst, Surface Diverstiture; and Mr. Robert Green, Departmental General Counsel, Legal Services. Welcome, Madam Baird, Mr. Hicks, Mr. Green.

Madam Baird, the floor is yours.

Ms Brenda Baird, Director General, Surface Programs and Divestiture, Transport Canada: By way of background, the Blue Water Bridge connects Point Edward, which is near Sarnia, Ontario, and Port Huron in Michigan. It is the fourth busiest Canada-U.S. border crossing, accommodating some 1.6 million trucks and approximately 4.4 million cars annually. It is a much-used Canadian border crossing between ourselves and our U.S. neighbours.

The Blue Water Bridge Authority has made capital improvements to compensate for the wear and tear created by traffic volume. In 1997, the second span of the bridge was opened at a cost of about U.S. $80 million. At that time the original span was redecked for an additional U.S. $43 million.

On the Canadian side, there were plans to redesign the plaza for safety and efficiency reasons, and build a pre-processing centre, with a total expected cost of up to Can. $50 million.

On the governance aspect of the bridge, the key fact is that the Canadian half of the bridge is owned, operated and maintained by the Blue Water Bridge Authority, or BWBA. Although this entity was created in 1964 by a special act of Parliament, it is a public body, independent of the Crown. It operates at arm's length. My group in Transport Canada acts as a secretariat for the Blue Water Bridge Authority.

The U.S. half of the bridge is owned, operated and maintained by the Michigan Department of Transportation, so it is directly part of a U.S. government department.

The proposed amendments that we are looking at this morning concern the legislation passed in 1964. At that time, a provision restricted the authority's borrowing with regard to the interest rate. In the proposed legislation before us, this restriction is replaced with a maximum borrowing cap of $125 million. This borrowing cap is more in line with the manner in which other international bridge authorities conduct their business.

It is also stipulated that all borrowing transactions are subject to approval by the Minister of Finance, which is another method by which the government ascertains that everything is fine on the part of the authority from a financial perspective. As well, it reinforces the fact that the federal government is not liable for any borrowing by the authority. As previously mentioned, the Blue Water Bridge Authority operates at arm's length from the Crown and, therefore, it has no call on federal government resources.

Those are the key provisions in the bill before the committee this morning. Mr. Dan Elash can give you more detail as to how authority business is conducted.

Senator Forrestall: I am very supportive of the bill. I understand the necessity of moving forward into the 21st century, if you will.

I will be posing this question to the authorities of the bridge as well. Somewhere down the road, will this have the capacity of restricting the freedom of movement that the bridge authority currently has, and which I am sure it would like to retain? I understand its wanting to get out from under the cap with respect to borrowing, but if that burden is going to be lifted, what new burden might be placed upon it by the cap that is suggested in the legislation?

Could you tell me where the cap figure comes from, and what components are used in arriving at it?

Mr. Brian Hicks, Senior Analyst, Surface Divestiture, Transport Canada: The $125 million cap was established in consultation with the Blue Water Bridge Authority. In their presentation, they will outline how they arrived at the $125 million figure.

The Blue Water Bridge Authority currently owes money for the twinning of the bridge that was done a couple of years ago, and a capital construction plan lies ahead of them. When you add the monies owed and the monies needed for construction, the total is somewhere in the order of $125 million.

Senator Forrestall: Are you suggesting that the $125 million figure was arrived at after consultation and negotiation?

Mr. Hicks: Yes , sir.

Senator Forrestall: Could you give more detail on the origin of this $125 million figure?

Mr. Hicks: When we sat down with the Blue Water Bridge Authority, we totalled up how much money was owed and what the construction plan would involve. Those figures totalled approximately $125 million.

The question then arose as to whether that would be sufficient for the distant future. The feeling was that, since the bridge has now been twinned and the original bridge beside the new one has been upgraded, the $125 million should see them through not only the short-term but also the long-term.

It was a proposal that came from the authority. We discussed it with the Department of Finance, and we have all agreed that it appears to be a reasonable figure.

Senator Forrestall: I have a fear that we may be dealing with this again in another eight or ten years' time, because of the rate of the increase of traffic across that border point. We may be considering a doubling of the capacity. Has any thought been given to tunneling in the future?

Mr. Hicks: I will let the Blue Water Bridge Authority people address that.

The picture at the front of our deck shows the two bridges side by side. It is the engineer's point of view that those two, side-by-side, bridges have the capacity to handle traffic well into the future. As to how long that will be the case, I am not sure. Perhaps Mr. Elash can be of some assistance in that regard. However, it is our feeling that the capacity is there well into the future.

Senator Forrestall: Are these three-lane or four-lane bridges?

Mr. Hicks: They are three-lane bridges.

Senator Forrestall: That means six lanes in total. I would suggest that you will reach capacity a lot sooner than you think.

I hope that some committee is not asked to deal with it again in seven or eight year's time when it is determined that we need another bridge or a tunnel. I would prefer that the authority would go about this by itself, within certain guidelines, as opposed to having to come back to Parliament, because that inevitably causes a delay, and additional costs are incurred when you have delays.

Senator Callbeck: I believe that this is half again the present capacity of the highway leading to the bridge, which is two lanes in both directions, four lanes.

Senator Forrestall: That is one way of expressing six lanes.

Senator Callbeck: Since the bridge authority received no money from the federal government, is the total revenue derived from tolls?

Mr. Hicks: Yes, ma'am.

Senator Callbeck: Does the federal government issue any guidelines or impose restrictions on how high the tolls can be, or does the bridge authority have the total say?

Ms Baird: That is a very good question. The international bridge rates are very competitive. There are a number of crossings in relatively close proximity. In a sense, there is a private sector competitive limitation on how much can be charged.

There is an avenue of appeal to the Canada Transportation Agency if people feel that the tolls are excessive. Typically, because of the number of international crossings and the volume of traffic that these crossings handle, there is more of a reliance on the private marketplace at this point to govern the authorities accordingly. Mr. Elash could comment further on this. From what I have seen with other international bridges there is very careful consideration given to any toll increase because of the realization that, from a truck traffic point of view and from a passenger vehicle traffic point of view, any increase could result in a possible decrease in volume because of the competitiveness of the crossings. There is, however, as I said, an avenue of appeal.

Senator Callbeck: Have there been any appeals?

Ms Baird: There have been no appeals on international bridge tolls.

Senator Callbeck: Do the duty-free shops come under the authority?

Ms Baird: I would ask Mr. Elash, the general manager of the bridge to handle that question. He is more aware of the duty-free aspects.

Senator Callbeck: Do you have any projections as to an increase in tolls when the capital expenditures are increased to $125 million, as this bill allows? By how much will the tolls be increased?

Ms Baird: We have no projections from a government point of view. As I said, the responsibility for managing the crossing lies with the Blue Water Bridge Authority, and that would be in their hands.

Senator Callbeck: Have they given you any projections?

Ms Baird: Again, I would ask Mr. Elash to handle that. I am sure that they have.

Senator Rompkey: I also have a question on the tolls, but I will wait until the bridge authority representatives are here, since they are responsible for the borrowing.

As a matter of historical perspective, I notice that the U.S. side of the bridge is operated by the Michigan government, whereas we appoint an arm's length body under the Government of Canada to operate the Canadian side. A state authority operates one side of the bridge, and a national authority, as it were operates, the other side of the bridge. Why was that done? Why was the Canadian portion of the bridge not simply put under a government department, such as transport, which could operate it within its budget?

Ms Baird: That is a historical matter that goes back to the early 1960s when the authority was set up. The legislation that I mentioned earlier was passed in the belief that it would end up being a bi-national, Canada-U.S., authority. Although we enacted that legislation in Canada, Michigan did not. Their half of the bridge has ended up being, as you mentioned, operated by the equivalent of Transport Canada.

Senator Rompkey: Not really, because Michigan is a state and Transport Canada is a national agency.

Ms Baird: I am not aware of why they decided not to enact legislation in the end. There have been discussions about re-looking at that, because that legislation still remains. It could be, as was the hope at the beginning, a full bi-national authority.

Senator Rompkey: When you compare this to other international crossings, is this the same or different from most of them?

Ms Baird: This is in fact the only one that has two different U.S. and Canadian entities operating it. The rest all have a one-entity approach.

Senator Rompkey: Could you describe another one? I do not know how relevant these questions are, but they are interesting to me. Could you give us an example of another one, a similar bridge that operates differently with an international authority?

Ms Baird: The one that comes immediately to mind is the crossing in Sault Ste. Marie, where the Canadian half of the bridge just reverted to Canada on September 1, 2000. We set up the first real, what I would label "bi-national" authority, to run that crossing. There are three Canadians and three Americans on a joint international bridge authority that acts as a board of directors. There is a manager who deals with the day-to-day operations of the bridge, but the board of directors basically overseas from a policy view point the major decisions -- everything from the business plan, the engineering plan, the corporate plans to the reports so forth.

That is run as a real bi-national entity. There is one entity with Canadian and U.S. people operating it, as opposed to the Blue Water Bridge situation where you have a separate, free-standing Canadian entity, with the American half still being operated within their Department of Transportation.

Senator Rompkey: Has any thought been given to doing for the Blue Water Bridge Authority what you did for Sault Ste. Marie?

Ms Baird: We have just recently finished the transaction at Sault Ste. Marie with the establishment of this authority. At this point, we are allowing some time to make sure that the governance aspects of it work well and smoothly before beginning discussions with Blue Water as to whether there is some merit in considering that method of operation for the Blue Water Bridge

Senator Rompkey: Are you considering changes in respect of the Blue Water Bridge Authority?

Ms Baird: There has been preliminary discussion about that.

Senator Rompkey: What would happen to this agreement -- the new authority and its liabilities -- if this were agreed to? I am thinking about the new cap. What will happen to this agreement when the new authority is put in place? I suppose, legally, it would just take over and the agreement would still hold.

I am interested in the arrangement, but perhaps we should leave these questions until we have the new authority.

Senator Callbeck: It is some years since I have crossed into the United States, but I do not remember ever paying a toll, for example in New Brunswick at St. Stephen. Are tolls everywhere now, or just at certain crossings?

Mr. Hicks: The large international bridges between Ontario and the United States all have tolls. The only international bridges that do not are between New Brunswick and Maine. The bridge between Calais and St. Stephen is quite small compared to the Blue Water Bridge, and there is equal ownership by the province of New Brunswick and the state of Maine. It is a small bridge and it was built reasonably economically, so there is no toll.

Senator Callbeck: Is there no thought of putting tolls there?

Senator Finestone: From your past experience in management, what would be the recovery time for $125 million, using your tolls? Do you have a business plan that shows the action and the activity that you think you would need?

The Chairman: The question should be addressed to the next witnesses.

Senator Finestone: Are you only concerned with the Canadian side? What happens when you go into an expansion of this kind? Do you share whatever the cost is on the American side? How does it work?

Ms Baird: There are different ways of answering that question. From a financial point of view, we are concerned with the Canadian side. However, from a traffic point of view, our concern is that the traffic moves safely from Canada into the U.S. and from the U.S. into Canada. For example, what occurs at the customs facilities in the Canadian and the American plazas are very much part of our concern. We, of course, do not have any control over what happens on the American side. Again, Mr. Elash could comment in more detail. The authority works very closely with its U.S. counterpart to determine if there are ways that the traffic flows can be smoothed out so that you do not have long line-ups on either side of the border while waiting for clearance at the toll facility or the customs facility.

Senator Finestone: With respect to the Canadian plaza and the entry to the highway, what is the accident rate? How many lives with this save? Will there be a cost savings to vehicles?

The Chairman: Senators, I would ask that you keep your questions for the representatives of the authority, please.

I would welcome our other witnesses to our committee this morning.

Mr. Dan M. Elash, General Manager, Blue Water Bridge Authority: Thank you, Madam Chairman. I appreciate the opportunity to speak to you and to answer your questions. I have a brief presentation to make. That has been distributed to you along with a picture of our plaza. I will be pleased to answer any questions about any of the features shown on that overhead photograph.

The Blue Water Bridge, as was noted in the Transport Canada presentation, is the fourth busiest Canada-U.S. border crossing, handling over 6 million vehicles in the year 2000. It is also the second busiest commercial, or truck, crossing in North America. Our 1.6 million commercial-vehicle count is second only to the Ambassador Bridge in Windsor, Detroit. In North America we passed the Laredo Bridge at the Texas-Mexico crossing some year and-a-half or two years ago. It is the fastest growing truck crossing on the U.S.-Canada border. That is a result of trade between Canada, Mexico and the United States, but primarily between Canada and the United States. As trade grows so does truck traffic. Approximately 74 per cent of all the trade between Canada and the United States is handled by truck. Thus, our volumes are growing, and even in today's terms they are growing. Our growth rate in January of this year was around 3.5 per cent total at the bridge for truck traffic. The downturn in the economy has not adversely affected our growth.

The Minister of Transport appoints all of our directors. That reporting mechanism, as Ms Baird mentioned in her presentation, is through her department. We have a working relationship with the Government of Canada through Transport Canada.

The proposed legislation, Bill S-5, before you, is to remove an interest cap and replace it with a borrowing cap. I am prepared to speak to that borrowing cap and to answer your questions.

Clause 2 in the bill stipulates that all borrowing transactions are subject to the approval of the Minister of Finance and the Minister of Transport. It reinforces that the federal government is not liable for any borrowing by the authority. Bear in mind that we are self-sustaining. Our revenues come, primarily, from our tolls, but we also have rental income from businesses like the duty-free shop and there is quite a broker establishment at the border crossing. We are, again, not-for-profit.

The layout of the capital financing here to support the $125 million, shows that we currently have a debt of approximately $60 million. This reflects building the Canadian portion of the new bridge and re-decking the Canadian portion of the existing bridge, which is over 60 years old now. It also reflects building some facilities for the Canadian government for customs, immigration and agriculture.

We do not get funding from the federal government, but we do, in fact, subsidize the federal government by providing, free of charge, the facilities for customs, immigration, and agriculture and by maintaining those facilities at no cost to the federal government.

In order to establish a bond, we are required to set up reserves. This is to show the bond purchasers that we can in fact weather a recession. I have with me Mr. Duncan McCallum from RBC Dominion Securities who can answer any specific questions regarding those particular areas. In order to establish the reserves necessary for a bond of approximately $110 million, we would have to top up our existing reserves with about $8 million from the proceeds of the bond.

We would also be establishing a pledge bond that would secure the operating line of credit. The operating line of credit is to give us some liquidity in a downturn like a recession. It is not there for everyday use, but is in fact a liquidity issue. We have a belt and suspenders in terms of giving the financial marketplace some security in terms of purchasing our paper, our debt.

The estimated underwriting cost of going to the bond market is about $1 million. Left out of that $125 million is about $41 million that we can use on new capital projects that are currently underway. In speaking to those capital projects, and an expansion on the previous presentation, we are looking at redesigning our plaza for improved safety and efficiency in order to deal with our growth rate and the increased bridge capacity that we currently have.

We are currently the largest border crossing in terms of capacity on the Canada-U.S. border. Our capital projects are expected to cost up to $50 million. The shortfall that you see from the $41 million available to the $50 million in capital projects can be accommodated through operating surpluses and project deferrals. That is how we would manage within the $125 million cap.

I look forward to your questions, and look forward to working with you in this project.

The Chairman: Was the American administration consulted when elaborating the multi-year capital investment plan? Is this an initiative of the Canadian side only?

Mr. Elash: This is an initiative on the Canadian side. The management of this particular border crossing is unique. However, I must say that all the border crossings are unique in their own way. No two border crossings are the same.

Our plans deal with the efficiency and safety issues on the Canadian plaza, and the approaches and exits from the Canadian plaza to the provincial highway system.

Consultation has taken place with our American counterparts in Michigan. The concept of a pre-processing centre, which is one of the projects that we will be working on, is for the benefit of the United States of America. It allows the drivers of truckloads of material to get their paperwork in order before they reach the border, which will reduce the line-ups we currently have.

In reference to Senator Finestone's question about accidents, the line-ups have been as long as 13 kilometres. There have been several accidents. The accidents at the Blue Water Bridge, on the highway, and they have occurred physically on the highway, are the result of the line-ups of trucks and other vehicles and, specifically, drivers not being aware that the line-up would be there as they come over a hill or around a curve, and thereby not being able to stop in time.

The worst accidents in the last year have occurred at the Peace Bridge and at the Queenston-Lewiston Bridge, which is part of the Niagara Falls Bridge Commission. Our accident rate is a little bit lower. We are working very aggressively to decrease it. This capital plan is primarily to reduce accidents.

Safety is one of our high considerations, and another is to improve the efficiency of the border crossing because our mandate is to expedite trade and tourism through the border point. Any inefficiency will impede trade or slow it down, certainly not expedite it which is what we believe is our mandate.

Senator Forrestall: How much capacity do you have today that you could rank as under-utilised in terms of volumes? How much more can you handle? How much growth can you absorb with your existing capacity?

Mr. Elash: I am going to refer you to what happens at another border crossing. The Ambassador Bridge is a four-lane structure between Windsor and Detroit. It currently handles approximately twice the volume of trucks and cars as the Blue Water Bridge.

The limitations at the Ambassador Bridge are plaza oriented, as well as access oriented. There is quite a problem on the approaches, especially on the Canadian side, that restrict volume to the international border.

Having said that, the Blue Water Bridge, which is currently a six-lane crossing, three lanes in each direction, has a capacity that is more plaza oriented than either highway or bridge oriented. I do not see this happening in the foreseeable future, but if customs and immigration on both sides allowed the vehicles to cross unimpeded, six lanes across the Blue Water Bridge would be ample to carry international trade for the next 40 to 50 years.

Our growth rate, as I pointed out in my presentation, has been over 400 per cent in the last 15 years. That is a result of trade growing between Canada and the United States. We foresee that continuing to happen. Foreign Affairs and Trade have indicated that a growth rate in the 5 per cent to 8 per cent rate is not unrealistic.

Our capacity in the foreseeable future is quite ample. Our concern down the road will be that our 60-year-old bridge will need to be replaced. According to our engineers and designers, the refit that we just completed has given an additional 50 years of life to that facility. Down the road, we will have to replace that bridge.

Senator Forrestall: Are the substructures in the general vicinity compatible with tunnelling?

Mr. Elash: There is a major railroad tunnel to the south of us between Sarnia and Port Huron. The answer is yes. However, it would be very expensive, given the highway connections and the engineering complexities, possibly more expensive than building a new bridge. Those are things that could be looked at in the future.

Senator Forrestall: My concern in all of this is that you did not in any way handicap yourself by moving from one set of restrictions to another. Hopefully, you are satisfied that that has not happened, and that you do not see any reasonable chance of you being back in front of us on this same topic. You may be in front of us to talk about safety and drug testing and where you park the cars and trucks or how to handle the traffic. There is an enormous host of interesting subject matters that we would like to get into about these crossings, and what could happen in the future.

If you are convinced that you will not be back here in 20 years on this same matter, I am satisfied. I will be long retired, and it will not be a problem for me. I hope it will not be a problem for you.

Good luck to you in your new way of borrowing money. I think that you are wrong, but you are the boss.

Senator Callbeck: If you complete the projects that you are talking about here, by what percentage increase do you see the tolls going up in the next 10 years?

Mr. Elash: We increased our Canadian toll rate in September of last year. Our 10-year financial forecast does not foresee our toll rate changing in the next 10 years with this debt load.

Senator Callbeck: The tolls are all about the same, are they, on these long bridge crossings?

Mr. Elash: The Blue Water Bridge tolls are, if not the lowest of the major border crossings in southern Ontario, at least equal to the lowest.

The structure of the tolls at the Blue Water Bridge is an axle count for trucks. Our toll rates are considerably less than those rates at the Ambassador Bridge, which would be our closest, major alternative crossing. Our growth rate today is as a result, partially, of the restrictions at the Ambassador Bridge, as well as the higher toll rates.

Senator Forrestall: From Toronto to Chicago, how much shorter is it to go across your bridge than through Detroit and Windsor?

Mr. Elash: Actually, it is the same distance. I am referring to the distance from London, Ontario, where highway 402 to Sarnia comes off highway 401 to Windsor; and the distance from London Ontario, to Marshall, Michigan, where highway Interstate 69 crosses Interstate 94. Interstates 69 and 94 both start at the Blue Water Bridge. We are the beginning, or the ending, of Interstates 69 and 94. Interstate 94 goes south through Detroit and then turns west to Chicago. Interstate 69, from the Blue Water Bridge, turns west through Flint and Lansing, and then goes south to Indianapolis. They cross each other at Marshall, Michigan. The distance from London, Ontario, to Marshall, Michigan, is within a few kilometres of being identical. The quickest way to get from Toronto to Chicago is, in fact, to go across the Blue Water Bridge, because you avoid the 4 million people in Detroit.

Senator Forrestall: I would have thought it was 100 kilometres, or as many as 200 kilometres shorter.

Senator Callbeck: You receive revenues from the tolls and from the duty-free shops. Do you have other revenue?

Mr. Elash: Yes, we have a large custom broker family as all border crossings do. We have 18 custom brokers on site, as well as one trucking company, Roadway, which rents space from us. The custom brokers prepare the paperwork so that the merchandise can proceed across the border. We have about 20,000 square feet of office space for custom brokers who pay rent to the Blue Water Bridge Authority.

Senator Rompkey: Why do you not charge the federal government for the space that they use?

Mr. Elash: There is a provision in the Canada Customs Act that requires authorities at border crossings such as the Blue Water Bridge Authority to provide that space free of charge.

Senator Rompkey: Presumably all legislation can be changed. You are doing a job for the federal government and not charging for the service, and they have no liability for you. That seems to be a bit unfair.

Mr. Elash: I would agree.

Senator Rompkey: Let the record show that.

Senator Callbeck: Are the duty-free shops run privately; and do they compete?

Mr. Elash: The duty-free shop at each border crossing on the Canadian side requires a licence from Revenue Canada. Each also requires a lease from the border-crossing operator to build the facility in the no man's land after the toll booths -- once are you in the duty-free shop you cannot return to Canada, you must leave the country. Thus, there is a restricted area at a border crossing where duty-free shops exist. They are normally on the border-crossing property, in this case the Blue Water Bridge property. They show up on the drawings here.

One of our projects that we will start this calendar year is, in fact, a new duty-free shop because our existing one is too small. Does that answer your question?

Senator Callbeck: How is it determined who runs your duty-free shop?

Mr. Elash: The people who have licences for duty-free shops must compete, and the Canada Customs and Revenue Agency handles the competition for the licences. The operator of the duty-free shop is determined by a federal selection process through the agency.

Senator Callbeck: Is the licence valid for a certain length of time?

Mr. Elash: Under the current legislation and regulations, licences are granted for five years, and five-year renewals are granted depending on the compliance rate of the operator.

Those regulations are currently under review and will probably change this calendar year. I do not know what the new regulations will state. Currently, an operator is granted a licence for five years and can renew the licence in steps of five years.

Senator Fitzpatrick: I understand that the second span was opened in 1997. It may have been since then that the American government initiated the North-south Trade Corridor Program, which provides financing to the tune of several hundred million dollars. I understand that it allows for funding up to within 50 miles of Canada. Is this applicable to the bridge and have you given consideration to funding, or having it paid for, by the American government under this initiative?

Mr. Elash: The unfortunate answer to your question is that the Americans will not allow their money to leave their country. However, we have worked very hard with the state of Michigan to help them obtain the funds for improvements to safety and efficiency on their plaza, which is in the United States and is eligible for those funds. The $125 million that is referenced in this particular legislation is designed only for projects in Canada.

Senator Fitzpatrick: I understood that they would provide funding within Canada if it was at a portal and the total improvement was required. Is that incorrect?

Mr. Elash: I have not been able to find the mechanism to acquire those funds yet. If it is there, they have hidden it well.

Senator Finestone: Would you mind, Madam Chair, if I asked for an explanation of the plaza that I am looking at on this map?

Mr. Elash: In the lower portion of the overhead photograph you have in front of you is the Blue Water Bridge Plaza. There are 12 primary custom booths for travellers. One of those is part of a new program that has been instituted for try-out at the Blue Water Bridge. It is the Nexus Program for two-way travellers and commuters across the international border.

There are also seven primary booths for trucks, and we have a compound, which you can see. There is a large parking area, where you can see some trucks, that is a secondary area for commercial traffic coming into Canada. Approximately 25 per cent of all the trucks crossing the border end up in "secondary" for paperwork or inspection purposes. We can park approximately 150 trucks in our secondary compound. The access road from that secondary compound to the highway is one of the major projects that we will undertake in this bond process. The project is to build an overpass to separate cars and trucks on the highway.

The buildings that you see in the centre area are customs, immigration, customs broker, commercial secondary, Queen's warehouse and Blue Water Bridge Authority buildings. Over 350 people work on this plaza, but only 62 of them work for the Blue Water Bridge Authority. The others are customs, immigration and agriculture officers. This is the busiest agricultural port entry into Canada, and agriculture has a very large contingent at this particular port.

There are also toll buildings and maintenance buildings. The pond that you see surrounded by trees is an environmental pond. It is there for the run-off from the bridge. This pond is quite scenic. It looks quite beautiful during the summer, and we get many requests for wedding pictures to be taken around that pond.

The bridge authority owns approximately 70 acres of land. That 70 acres is dedicated to studying environmental issues and the administration of the border crossing.

In the bottom left-hand corner of the photograph, right on the river, is the casino that opened just under a year ago, and that has been one of the reasons our automobile traffic has increased dramatically in the past 12 months.

Senator Finestone: What is the red scarring line?

Mr. Elash: The red line that you see on this overhead photograph is the old shoreline of Sarnia Bay. Everything towards the bottom of this photograph and below the red line is landfill. Everything above the red line is shoreline that has existed for about 100 years. This was a natural highway for the last thousand or so years. The shoreline is rich in archaeological resources. Those little yellow squares are known Aboriginal burial sites which have been cleared. We have a good relationship with the local First Nations. WE have an environmental clearance to proceed with development. We are working on a memorandum of understanding with the First Nations on a method of dealing with archaeological findings, and we work closely with the Province of Ontario, in compliance with federal regulations.

The shoreline is critical to development because it defines low-risk and high-risk areas and the environmental assessment process that we must go through in order to get the clearances to proceed with construction on any projects.

Senator Finestone: I find it fascinating that the Canadian government does not pay for the services you provide. In light of the fact that everything we do now is a partnership between the public and private sector, I cannot understand, Madam Chair, why we cannot recommend that the Canadian government pay some fees which would decrease the time required to pay off the debt and help with the improvements that are required.

Your explanation of the map was most interesting. It has added to my interest in seeing that the Canadian government becomes a paying partner. I had hoped that the use of all this other land was in a revenue base, although you have not mentioned that in the discourse you gave as to where you receive your revenue.

I hope that in the rebuilding plans there is provision to install a series of overhead flashing lights at certain intervals on the highway to advise drivers that the bridge is occupied and of the length of the anticipated delay, so that vehicles can stop before they rear-end each other. That may also lead to less fuel consumption.

Mr. Elash: We have worked diligently with MTO, and the flashing lights that Senator Finestone suggests were turned on a scant two weeks ago.

Senator Finestone: You needed me on board.

Mr. Elash: That would have been a pleasure.

This is the first border crossing at which the Ministry of Transportation Ontario has started thinking about this very issue. There is a queue-end warning system utilizing a sensor in the road. There are two stages: At the approach to this particular border crossing, there are some overpasses that shield backups and also some curves in the road that make it very difficult to see a line of cars that are backed up.

The sensors in the road set off two different sets of warning lights that go out right at the moment. They only go out six kilometres but those are the most frequent line-ups we have, in the two- to six-kilometre range.

We are working very aggressively on the pre-processing centre with U.S. Customs, because it is a U.S. customs process. If we get that in place in the next year or so it will help in significantly reducing those backups and the need for the flashing lights in the foreseeable future.

Senator Forrestall: Have you set aside funds?

Can you take advantage of the existing technology with respect to smart highways to deal with fog and snow? Are you doing any work in that direction? The worst traffic accidents in Canada happen down in your part of the world, and they are horrendous. It is not a case of one or two trucks off the road; rather, the number is 40, 50 or 60. There are deaths and terrible mishaps. Are you spending any money on planning for smarter highways, intelligent traffic control?

Mr. Elash: If you are speaking about intelligent transportation systems, the answer is yes. Unfortunately, the highway is not my mandate. My mandate stops at the beginning of Highway 402. I must work very closely with MTO to cover any issues that go beyond my immediate boundary.

Having said that, we have recently completed a new maintenance building to improve our access to the border crossing bridge and plaza. We have some of the most sophisticated equipment and sensors to deal with the weather and keeping the border crossing open. The bridge was open during the big snow storm that occurred in Southern Ontario on December 11 and 12 last year. Unfortunately, the highways connecting to it were closed, but we could get people back and forth across the bridge.

The border crossings are very efficient. We have a dedicated workforce. It is a small area to deal with relative to the province's structure, but it is sophisticated and efficient.

Senator Milne: Along with Senator Finestone, I am particularly interested in this map. I understand that one of the reasons that there is a rush to borrow this money and get on with the construction this year is the safety aspect. The safety aspect basically has arisen because of the recent construction of this casino. The cars come over from Michigan and must cross through the truck lanes to get to the casino. I would say that they probably come down this road, turn across here off the bottom of your aerial photo, cross where the trucks come out and have to go back up and around the casino, and that is where your problem is and why there is a certain degree of urgency for this year's construction season.

Mr. Elash: Yes.

Senator Milne: Why is there a time constraint? Why the rush?

Mr. Elash: Having the funding available is number one in order to start the process. We have deferred even design of this project until we have financing in place.

There will not be any construction on this particular project in this construction year because I have no real idea how quickly the legislation will move through all approvals in government. We are waiting for approval before we start the design process.

We have other projects on which we are working currently, such as the new duty free shop, that do require financing this calendar year.

Senator Milne: Regarding the safety aspects of this, once you get this bill approved and you can change your financing arrangements, you must then design a cure for your problems with the casino traffic. You also must undergo the Ontario government's environmental assessment, as well.

Mr. Elash: Actually, the province is working with us on that environmental assessment as we speak.

Senator Milne: You are getting a head start on that.

Mr. Elash: Yes, vis-à-vis the environmental assessment side of it. There is a study that has been done by the provincial government regarding the interface between the border crossing and their highway system. We are working with them on that environmental assessment, and I would hope that that will occur later in this calendar year.

Senator Milne: It is also on land that is filled land. It was originally water.

Mr. Elash: Yes, it was originally water.

Senator Milne: When are the best times to cross this bridge to avoid these two- to six-kilometre line-ups?

Mr. Elash: Early in the morning.

Senator Forrestall: Sundays.

Mr. Elash: Actually, Friday, Saturday and Sunday are car days. The profiles of international crossings are all different. They are unique in their travel patterns. The Blue Water Bridge is primarily a commercial crossing. During the week, our truck traffic and car traffic are almost equal. Our car traffic on a typical Tuesday, Wednesday, and Thursday will be 4,000 to 5,000 cars per day, in each direction. Our truck traffic will be in the neighbourhood of 3,000 to 3,500 trucks per day in each direction. It is almost one-to-one car and truck during the week.

On the weekend, truck traffic declines and car traffic doubles, to the range of 8,000 to 10,000 cars. It really picks up in the summertime.

The border crossings are very interesting places with unique traffic patterns. This particular border crossing is primarily commercial. We service truck traffic the most.

Senator Rompkey: Does the minister appoint the authority?

Mr. Elash: The minister appoints the commissioners, or my board of directors.

Senator Rompkey: Are they volunteer members?

Mr. Elash: Yes, they are.

Senator Rompkey: Do they represent individual organizations in the area? Are they appointed on a certain basis, or does the minister just pull names out of a hat? How does it work?

Mr. Elash: Actually, the local Member of Parliament pulls a list together for the minister to consider, and the minister normally picks from that list. We have a cross-section. I have one empty space on my current board, because of a retirement from the board. The current membership includes a retired businessman and a labour leader, who is vice-president of Ironworkers International in North America. There is also a woman who works for the local hospital board in fundraising. I have a cross-section of retired, labour, and business.

Senator Rompkey: Are you liable for the borrowing? As I understand, you have consolidated your debts. You would just continue to pay down your debt as you had been paying down your debt.

I am interested in your answer to Senator Callbeck. You said that you were not going to raise tolls. Are you confident that you can be responsible for this debt over time with no increase in revenues?

Mr. Elash: Providing that the economic forecast that has been given to us by the Government of Canada is reasonably accurate, the answer is, yes, I can do it without raising tolls. My ability to raise tolls is very flexible. A few years ago, we were under the Railway Act. That legislation was amended, I am going to suggest two to three years ago, and now the ability to raise tolls by any federal agency like the Blue Water Bridge Authority is 20 days notice.

We can change our toll rate by posting the new toll structure for 20 days. We can implement without any regulation or approval requirements from the Government of Canada.

Senator Milne: You do not intend to do that?

Mr. Elash: No. We are regulated not-for-profit. Our annual financial statements are audited and sent to the Government of Canada. The regulation would come down through the Minister of Transport to my board of directors. If we abused that right, that would be the direction for dealing with that abuse.

Senator Rompkey: In answer to Senator Finestone, you said that you do not charge agriculture. They operate free of charge.

Mr. Elash: Yes.

Senator Rompkey: Who owns the casino?

Mr. Elash: The casino is not on our property. I would love to have that. I would not need to be here if I had that.

It is owned by the Ontario Lottery Corporation.

Senator Rompkey: You cannot put it in the duty free shops?

Mr. Elash: No.

Senator Rompkey: I have one more question. There is no land claim with the Aboriginal people, correct?

Mr. Elash: There is no land claim.

Senator Rompkey: They are not in the process of putting together a land claim?

Mr. Elash: Not on this particular land. All of this land was properly transferred. There is a land claim in the Sarnia area. The Blue Water Bridge Authority has a very good working relationship with the First Nations in Sarnia.

Senator Callbeck: I have a question regarding the costing. You say that this is the fastest growing truck crossing on the Canada-U.S. border. It has increased 400 per cent in the last 15 years. You are asking for a cap of $125 million, which would leave $41 million for capital projects, according to this schedule.

Is that enough? Why are you asking for a cap of $125 million? Why not $200 million or $250 million?

Mr. Elash: Senator, I originally asked for $150 million. That number was put into this legislation as $125 million.

Senator Spivak: What is your estimate of traffic growth, particularly truck traffic, in the next 10 years? You have experienced a 400 per cent increase in the last 15 years, which preceded free trade, the huge explosion in truck conveyance, and so forth. What are you estimating the growth to be?

Mr. Elash: The Department of Foreign Affairs has projected trade increases in the 5 per cent to 8 per cent range. Our traffic and revenue studies, which we did for this particular bond issue, reflect a traffic increase of 5 per cent to 8 per cent annually.

The 400 per cent growth over the past 15 years takes us back to the initial Free Trade Agreement and subsequent NAFTA agreements. The increase is a result of how well those agreements are working for trade and how the border crossings collectively, and this one in particular, are responding to that demand.

Senator Spivak: Have you included estimations of the population growth in Sarnia?

Mr. Elash: Yes.

Senator Spivak: Is that a complicating factor? What if Sarnia experiences a growth explosion?

Mr. Elash: This boarder crossing primarily is a commercial crossing. The population of Sarnia is about 73,000 people. The population of Port Huron is less than 50,000 people. Both communities would have to grow substantially in order to affect the traveller portion of our traffic. Again, we are primarily a commercial crossing.

The Chairman: Thank you. Senators, no more questions?

Is it agreed, senators, that the committee move to clause-by-clause consideration of Bill S-5?

Senator Rompkey: I have one comment related to Senator Callbeck's question. If I understand correctly, the federal government appoints the authority, and those people appointed work as volunteers. The federal government accepts no responsibility for your borrowing, but they control how much you can borrow. You might tell them that you want to borrow $150 million and they tell you that you can borrow only $125 million. Presumably, it is the Department of Transport that provides that information.

Mr. Elash: I am not sure. I will defer to my colleagues in Transport Canada for that answer. I can give you what we presented initially.

Senator Rompkey: Is my understanding roughly correct, then?

Mr. Elash: Yes, it is.

The Chairman: Do you want to hear from the department, Senator Rompkey?

Do you have a question, Senator Finestone?

Senator Finestone: I was not quite sure whether it is a good idea to go into clause-by-clause now or whether we should hear from Transport Canada. I listened to my colleagues' questions and the recommendations and it struck me that if the requested amount was $150 million I do not know why we cannot ask why it should not be $150 million.

The Chairman: We can ask them to come back.

Senator Finestone: Thank you.

In what manner can we suggest that the Government of Canada pick up its fair share of the costs? Do we do that after we pass the bill or before? Do we send a resolution back to the minister?

The Chairman: Usually, it is dealt with by the revenue department of Transport Canada. Do you have any suggestions or recommendations, senators?

Senator Rompkey: It is something that we should do after.

The Chairman: Thank you, Mr. Elash.

Senator Rompkey, do you have a question for Ms Baird?

Senator Rompkey: Is $125 million a reasonable amount for the borrowing cap or should the cap be $150 million? Who determines the amount and on what basis?

Ms Baird: I can give you a bit more background in addition to what my colleague, Mr. Hicks, said before.

The amount was negotiated with officials from the Department of Transport and, specifically, officials from the Department of Finance. Their concern was twofold. They felt that $125 million was adequate, given the fact that this is a toll facility. They were concerned that $150 million was potentially too much exposure, from the point of view of the Government of Canada, even though it is a toll facility and technically there is no exposure for the Government of Canada. They were quite adamant that $125 million was the cap. They were not willing to raise the limit higher than that at this time, given the size of the facility. That was the conclusion. We simply had to go ahead because we could not get support for a higher number, even though Blue Water Bridge Authority had asked us, in the first instance, for $150 million.

Senator Rompkey: Did Transport Canada give any rationale for maintaining the cap at $125 million?

Ms Baird: Our rationale was that we felt $150 million was a better number because of what Blue Water needed. In fact, we had a letter from the bond company saying that the authority could support that amount. However, as I said, the Department of Finance did not agree.

Senator Rompkey: It was Finance, then.

Ms Baird: Yes, the Department of Finance is the key element in the whole issue, and they concluded that $150 million was an amount that they did not particularly wish to have at this time. They felt that $125 million was sufficient.

The Chairman: Before we go into clause-by-clause consideration, are there any further questions?

Thank you, Ms Baird.

Shall the title stand postponed?

Hon. Senators: Agreed.

The Chairman: Shall clause 1 carry?

Hon. Senators: Agreed.

The Chairman: Carried. Shall clause 2 carry?

Hon. Senators: Agreed.

The Chairman: Carried. Shall clause 3 carry?

Hon. Senators: Agreed.

The Chairman: Carried. Shall the title carry?

Hon. Senators: Agreed.

The Chairman: Carried. Is it agreed, honourable senators, that this bill be adopted without amendment?

Hon. Senators: Agreed.

The Chairman: Is it agreed that I report this bill to the Senate?

Hon. Senators: Agreed.

The Chairman: We will report the bill to the Senate. The bill is adopted.

If you will remember, honourable senators, at out last meeting I asked Senator Spivak to read the draft report from the subcommittee on communication and to give us their evaluation of the report of the subcommittee. I am today giving copies of the draft report to Senators Finestone and Spivak so that they can report to the committee as soon as they can.

The committee adjourned.