The National Farmers Union wants Ottawa to close what the NFU describes as a loophole in the railways’ grain revenue cap.
The federal government is in the final stages of writing regulations governing money collected by the railways in excess of the cap.
The government has proposed a system of graduated financial penalties, with the money being paid to the Western Grains Research Foundation.
But the farmers union says that regardless of the system of penalties or repayment, there is a fundamental flaw in the cap.
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“That flaw is that while the cap can limit railways’ revenues, it cannot limit what railways collect from farmers,” the NFU said in a letter to Transport Canada.
It said the railways will be able to avoid the cap by putting excess revenue into infrastructure programs or loading incentives.
“It is almost certain that railways will deal with overcharging, not by turning that money over to farmers and the WGRF, but by turning it over to grain companies,” said the letter signed by board member Stewart Wells.
Under the rules defining the revenue cap, money is exempt from a limit if it is paid by the railways to grain elevator companies for “industrial development” such as sidings or as freight incentives.
The NFU’s view is supported by a number of other groups, including the Canadian Wheat Board.
Ian McCreary, chair of the board’s transportation committee, said there is no way to ensure that money spent on infrastructure or volume discounts goes back to farmers.
“It is a way to undermine the intent of the revenue cap,” he said. “It is a huge problem.”
A railway official said the infrastructure program is perfectly legitimate and denied it would be used to get around the cap.
“We don’t think that it’s a loophole at all,” said Jim Feeny of CN Rail.
Revenue paid to customers in the form of investment in the grain handling system benefits shippers, farmers and the railways, he said.
“The question is are we putting revenue back into the system, and the answer is yes,” said Feeny. “Such investments should quite properly be deducted from the cap.”
The infrastructure program has been around for 15 years and is unrelated to the revenue cap, he added.
A spokesperson for Transport Canada said the department received six submissions regarding the overpayment regulations. However Colin McKay declined any further comment, saying the department hopes to publish a final version in the Canada Gazette by the end of the June.
