Court dismisses CN appeal over MRE ruling

The Federal Court of Appeal has dismissed an appeal by Canadian National Railway stemming from a two-year-old railway revenue cap ruling that forced CN to pay $5.23 million to the Western Grains Research Foundation.

In December 2014, the Canada Transportation Agency concluded that CN had exceeded its maximum revenue entitlement (MRE) for moving western Canadian grain by more than $5.23 million in the 2013-14 crop year.

CN was ordered to repay the full amount to the WGRF, a farmer-funded organization that provides financial backing for agricultural research projects.

CN appealed the ruling, arguing that the amount to be repaid should not include revenues derived from interswitching.

Interswitching is a practice that requires one railway company to move rail cars to a point, where cars can be transferred to the track of a competing railway carrier.

But in a ruling dated Nov. 1, 2016, the federal court dismissed the CN appeal without costs, saying the CN had failed to establish that the (CTA’s) interpretation and application of the Canada Transportation Act were unreasonable.

“Counsel for CN devoted significant time to this issue at the hearing,” wrote federal court justice J.A. Boivin in his ruling.

“There was not, however, any convincing basis given to interfere with the agency’s determination.”

“The (CTA) has repeatedly held that switching services complement the larger part of a movement.”

Boivin said the issue of interswitching has been “a friction point between CN and the CTA” since 2001.


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