The federal government’s latest plan to regulate railway performance in Western Canada isn’t as tough as it might appear on the surface, says Liberal MP Ralph Goodale.
Under closer scrutiny, he added, it looks more like a railway lapdog than a producer watchdog.
“The government wanted to appear tough so they continued the order in council,” said the Saskatchewan MP and former federal agriculture minister.
“But at the same time, they watered the regulations down substantially. The one-size-fits-all regulatory route that the government is trying to follow is one of the few tools that they have at their disposal, but the reality is that the system they have imposed over the last few years is far from effective.”
Goodale said the lack of logistical co-ordination in Canada’s grain industry will continue to hurt the consistency of Canadian wheat that is shipped abroad and the speed at which it is shipped.
“There is no effective method of common-sense co-ordination,” Goodale said.
“It’s a free for all. The grain companies are looking after their commercial objectives, the railways are looking after their commercial objectives … and there is no quarterback calling the plays for producers.”
He also raised questions about Ottawa’s ability to enforce weekly volume requirements and impose penalties for non-compliance.
“I think all of the stalling around whether or not CN was in violation of the previous order in council (in September) … demonstrates that the legal effectiveness of the last order was a bit of a hoax,” Goodale said.
“The fact that there is such confusion over what the exact offence was and how long it lasted and whether the penalties imposed against CN will be applied per day or per week … or per occurrence obviously indicates that the way these regulations were written up is like a piece of Swiss cheese. The lawyers serving the railways will be able to drive a train through them.”
Ottawa announced Nov. 29 it has extended regulations that force Canada’s two largest railway companies to haul minimum volumes of grain each week.
Under the new rules, Canadian National Railway and Canadian Pacific Railway will be required to move 200,000 to 465,000 tonnes of grain a week between now and March 28, 2015, or face fines as high as $100,000 each time they fail to comply.
Ottawa also said it expects CN and CP to:
• Submit formal winter contingency plans, including service plans for producer car loading sites and short-line railways.
• Provide information on car order fulfillment by corridor, including details on the number of cars delivered to producer car loading sites and short-line railways.
However, a spokesperson for transportation minister Lisa Raitt confirmed in an email that railways will not be penalized if they fail to submit winter contingency plans or submit incomplete plans. Failure or refusal to provide information about the number of cars delivered to producer car loading sites and short-line railways also won’t result in a monetary penalty.
“At present, there is no penalty for non-compliance,” the email said.
“The government expects the railways to work in the best interests of the overall supply chain and … supply their plans as soon as possible.”
Goodale said it remains to be seen whether Ottawa’s decision to impose “expectations” on railways will have any meaningful impact.
“Expectations is an interestingly ambivalent word,” he said.
“There’s no teeth there. No effective mechanism to achieve enforcement.”
Indeed, Ottawa’s will or ability to enforce regulatory measure and impose fines against non-compliant railways have come under question recently.
In mid-September, an official from Raitt’s office indicated that the government would fine CN for failing to meet minimum volume requirements imposed by Ottawa.
However, a Raitt spokesperson confirmed in late November that no fines have been issued.
Transport Canada “is currently in the process of examining information from CN in relation to its performance during certain weeks of the 2013-14 and 2014-15 crop years,” the email said.
“(But) no decisions have yet been taken.”
In a subsequent email, Transport Canada declined to offer additional information, saying the case is still under review.
Response to Ottawa’s new regulations has been mixed In Saskatchewan, where farmers were most effected by last winter’s rail delays.
Some organizations applauded the regulatory extension, saying it demonstrates Ottawa’s continued commitment to supporting farmers’ interests.
Others were more skeptical.
“We’re pleased that Ottawa kept the minimum volume requirements, but we’re a little disappointed with the numbers,” said Agricultural Producers Association of Saskatchewan president Norm Hall.
“We think they’re a little bit on the low side.”
Hall said he was pleased that Ottawa acknowledged farmers’ support for regulations, but he also expressed concerns about enforcement.
“It was good that they heard us, good that they listened … but I’m not sure what there is for teeth in the act that would allow the government to enforce that order.”
“Maybe the railways will once again be thumbing their noses at the government.”
Cam Goff, chair of the Saskatchewan Bartley Development Commission, said the interim regulations announced in late November might help in the short-term, but they will not address the ongoing need for tougher legislation, better enforcement and improved logistical co-ordination in the grain handling system, a function that was previously provided by the Canadian Wheat Board.
“Is it better than nothing? I suppose it is,” said Goff, a former CWB director.
“But it’s not what’s required to solve the transportation and marketing problems that Saskatchewan farmers are facing.”
He said grain farmers aren’t the only ones absorbing economic losses.
Federal government policies that have eroded Canada’s capacity to manage grain logistics effectively and challenge railway powers also affect domestic millers, domestic feeding operations, American oat buyers, maltsters, short-line railways, producer car loaders and foreign wheat customers.
“I think it’s obvious now that there has to be some major changes,” Goff said.”
“We have become, in the space of a year, a discount grain supplier, and our customers do not trust us to be able to give them the products when they need them.”