In February, Canadian Pacific Railway said it wouldn’t make needed investments in its western rail network as long as there was a possibility of running rights being introduced by the federal government.
In March, the government introduced a new transportation bill that made no mention of running rights.
In April, CPR announced it was investing $160 million to expand its capacity in Western Canada.
It’s a sequence of events that some in the grain industry say reflects who has the power when it comes to influencing grain transportation policy.
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“For the past 10 years or so it’s just been an unbroken winning streak for the railways,” said Darrin Qualman, policy analyst with the National Farmers Union.
“The government just gives them what they want and farmers get none of what we want.”
When CPR warned back in March that it wouldn’t go ahead with investment unless running rights were pulled off the table, Canadian Wheat Board director Ian McCreary said the railway’s statements bordered on blackmail.
In an interview last week, he said it’s now clear that the railway’s tactics worked.
“For sure there is a direct link,” he said. “CPR is clearly trying to leverage the type of regulatory environment they see as appropriate, regardless of what’s good for the industry or for farmers.”
The CWB and some prairie farm groups have for years urged the government to introduce running rights, or open access, as a way to bring competition into the grain transportation system.
They say reports in the 1990s by Justice Willard Estey and Arthur Kroeger led grain shippers and farmers to believe they would get running rights in return for giving up statutory grain freight rates and other protections.
CPR spokesperson Len Cocolicchio made no apologies for the railway’s efforts to convince the government not to bring in running rights.
The two national rail companies say it’s unfair to expect them to pay for track and other infrastructure and then sit back and watch other carriers use that same network to take away business.
“We made it very, very clear that we would not undertake the capital investment required for large-scale capacity expansion unless we had strong assurances from the federal government there would be no forced access imposed on the railways,” said Cocolicchio.
He said CPR feels that the government’s Bill C-44 provided those assurances.
“We were satisfied enough to go ahead with this first stage,” he said. “There has to be a stable regulatory environment for any railway company to make this level of capital investment and C-44 brought to the table the clarification and stability we required.”
Barry Prentice, director of the University of Manitoba’s Transport Institute, thinks it’s a good thing the government didn’t introduce running rights.
“The legislation seems to provide the security and encouragement the railways want,” he said, adding that he believes running rights would result in congested lines and inefficient use of rail resources.
Qualman said CPR was approaching the limits of its capacity and needed to go ahead with system expansion regardless of the regulatory environment.
In that sense, the company’s threats not to proceed with expansion unless it received a guarantee against running rights could well have been a bluff.
“If they extracted that promise (from the government) with that threat, it was probably a hollow threat,” he said. “It’s quite a windfall for them without much risk.”
