CN’s general counsel keeps work on track

James Bond would no doubt approve of the vehicle Olivier Chouc found himself riding in as general counsel for Canadian National Railway. It seemed like an ordinary pickup truck when Chouc first climbed in, but he soon learned it had unusual capabilities.

“It had a set of railway wheels on it,” he recalls. “We came off the road and onto the tracks, and the train wheels were lowered. We could then operate on the tracks with what a few minutes before used to be a regular pickup.”
If you can call this a perk — and many would — it comes with the territory when you work for a railway. These train-trucks are used primarily for repairs and inspections, and Chouc was taken for a ride on one as part of his orientation when he joined CN in 2000.

 “After a couple of times you don’t even notice it,” he says. “These guys are good — they have to know exactly where they stand. Then they just lower those wheels and you feel the truck going up a bit, and then off you go. It’s like driving, but you can’t turn left or right.”

Appreciating this kind of thing is the mark of the “true railroader,” as Chouc calls it — people with a passion for locomotives and steel. He is definitely one of them, if his impressive knowledge of CN’s workings is any indication.

For example, he has become quite well versed in the “precision railway” model that the company has adopted. Precision is all about “building the train" and making sure the sequence of rail cars makes sense for the journey ahead.

“CN operates on a very different model than the traditional railway model,” he explains. “We have a trip plan. We know from the get go where a given car is going to start and where it’s going to end and how much time it’s going to take. If you look at one railcar, it’s fairly easy — you just have to figure out the best route from point A to point B,” he explains.

“But when you have a train of 150 cars and you drop some along the way, how you build the train will make a huge difference to how efficient your operation will be. We are one of the most efficient in the industry.”

He also knows a thing or two about railway congestion. Sometimes the only way to alleviate it is to buy another railway. That’s what CN is doing. Remember buying “Short Line” in Monopoly? Chouc is doing it for real.

“We’re in the process of buying a short line called the Elgin Joliet & Eastern Railway, an old steel-industry line which goes around the congested Chicago area,” he says. It’s the only place in the U.S. where six major railways converge. The congestion is appalling.

"It takes just as long for a train to pass through Chicago as it does to trek from Prince George, B.C., to Chicago, says Chouc. “Once we can bypass that, we can improve our fluidity. Hopefully it will help others as well — it’s one less railway going through Chicago.”

At the moment, some of Chouc’s 20-lawyer staff are working with CN’s governmental- and public-affairs departments, making presentations to U.S. regulators and to the communities and stakeholders affected by the proposed acquisition.

“Most of the issues at the stakeholders’ meetings now are non-legal,” he explains. “But our legal staff are that much engaged that they can meaningfully contribute to those kinds of events.”

Another benefit of bypassing Chicago is the prospect of rerouting some “sensitive” traffic away from the urban area.

There have been concerns since Sept. 11 about the routing of dangerous commodities. CN has a pretty good record in terms of security, he says. As much as possible, it pre-clears trains before a border-crossing, to minimize the effect on transit time.

“We have sophisticated technology to X-ray our cargo, so the border agencies have a pretty good level of comfort in the railway and the security of the goods we’re shipping. We haven’t suffered too much with the increased security, post-9/11. Knock on wood.”

Another issue that arises from time to time is protest blockages of rail lines by First Nations. “We’ve had significant dealings with aboriginal groups,” Chouc explains. “Historically we’ve always had dealings and we’ve had pretty healthy relationships. But every now and then we get a splinter group that takes more radical action to promote what otherwise would be very legitimate interests.”

When that occurs, Chouc’s legal team steps into action.

“In the last two years we’ve had three major line disruptions for 24 to 36 hours, where aboriginal groups blockaded our tracks. It involves multi-level negotiations, where we talk to the band leadership, which is typically not the group behind the blockades — it’s usually a splinter group taking matters into its own hands. But we still have to deal with the official group elected to represent the band. At the same time, we deal a little bit more forcefully, so to speak, with the splinter group, to get injunctive relief to free up our track.”

Safety is also an ongoing concern for Chouc and his staff. “It’s not always fun stuff,” he says. “We’ve had our share of issues — major derailments, including some that involved fatalities. They were not fun but they were challenging. We worked hard to rebuild our reputation and show the regulator that we run a safe operation.”
There are a variety of reasons for derailments, he explains. Some are human error; some are mechanical, such as broken wheels or broken rail.

“It’s a steel-on-steel operation,” he explains. “The weather can have a huge impact. When it gets cold the steel is more fragile. The rail industry has made a lot of progress in terms of inspections. But there are limitations. You’re looking at 20,000 miles [about 33,000 kilometres] of track to inspect. We use a technology called rail-flaw detection, which is ultrasound-based.”

Before becoming an in-house lawyer, Chouc practised for eight years with Ogilvy Renault LLP in Montreal, focusing on mergers and acquisitions. Then, after a stint at a pulp and paper company, he joined CN.

“It was a great move,” he says. “I never had a doubt this was what I wanted to do. I’ve never had a regret and I’ve never been without a challenge. Not a day goes by where something exciting doesn’t happen.”

The reason he left private practice to go in-house was that he wanted to be close to the decision-making process.

“As I grew into my responsibility, I got closer to the decision-makers and eventually I became one of them. That’s the most rewarding thing — to have a chance to make policies and make decisions that influence how your company’s going to grow and perform, and to live through those decisions and their consequences.”

True, he admits, there have been difficult times. “After privatization and downsizing in the mid-1990s, you were dealing with a lot of bitterness. There were tough labour negotiations. People were rough around the edges in terms with their relationship with the employers.”

But by and large, he says, the people at CN love the business; they love the company, and they want to see it succeed. “We can,” he says, “still engage a true railroader.” IH

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