The federal government is sticking to its guns when it comes to regulating weekly grain shipments in Western Canada.
Ottawa has confirmed that it will fine Canadian National Railway for the company’s failure to meet a mandate requiring CN to move more than 5,000 rail cars of grain a week.
The fine will be the first issued since Ottawa imposed new regulations, which required CN and Canadian Pacific Railway to each move 536,000 tonnes of grain and oilseed per week or face fines as high as $100,000 per day.
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Federal officials declined last week to say how much CN would be fined or how long the company had failed to meet its weekly grain movement obligations.
CN issued a statement last week saying Ottawa’s decision to impose monetary penalties is unfounded.
The company suggested that demand for rail service from the western Canadian grain industry is no longer high enough to warrant mandatory volume requirements.
“Any government penalties against CN in connection with its transportation of western Canadian grain would be unfounded, given that it’s the current balance of the grain supply chain that has not allowed us to meet the government’s … minimum grain volume requirement,” it said.
“CN’s weekly demand has been less than 5,000 cars per week on average for the last several weeks … below the level required to meet the new OIC target of 536,250 metric tonnes per week.”
CN said commercial grain stocks at country grain elevators are at reasonably low levels, in line with the five-year average.
Terminal operations at Prince Rupert, B.C., were recently closed for a week for maintenance, and terminals in Vancouver have not been working weekend shifts, the company said.
“Both these factors affected CN’s volumes.”
However, Wade Sobkowich, executive director of the Western Grain Elevators Association, said although grain movement has improved over the past few months, the backlog of rail cars, which is the number requested by grain companies minus the number delivered by railways, is still 20,000 to 25,000.
“Demand for rail cars still exceeds the supply,” he said.
Conservative MP Randy Hoback from Prince Albert, Sask., called CN’s claim of insufficient demand “grain backlog denialism of the highest sort.”
“Contrary to CN’s claim, there is still grain to move on the Prairies,” Hoback told the House of Commons.
“Farmers have told me that their grain is still not being moved and that CN is refusing to move it.”
Federal agriculture minister Gerry Ritz said in a statement that the decision to levy fines against CN proves Ottawa is taking the situation seriously and is intent on defending the interests of farmers and other shippers.
“Our government introduced and passed legislation that put into place clear and achievable solutions to ensure grain and other commodities move efficiently to market,” Ritz said.
“Using all means available, our government will continue to defend farmers and all shippers to ensure that our economy is well served by Canada’s rail logistics system.”
