Ottawa signals extended railway provisions

The federal government says it plans to extend provisions in the Fair Rail for Grain Farmers Act, also known as Bill C-30.

In an April 22 news release, Ottawa said it will work with parliament to extend railway provisions in the Canada Transportation Act that allow Ottawa to retain expanded interswitching distances and set mandatory grain hauling targets for the country’s largest railway companies.

Interswitching rule changes compelled Canada’s large railway companies to move a competing railway’s cargo at prescribed freight rates within 160 kilometres of an interswitch location.

Under previous rules, the legislated interswitch distance was 30 kilometres.

The Liberal government hopes to postpone repeal of certain provisions enacted in the Fair Rail for Grain Farmers Act by one year.

“Postponing the repeal of the provisions would allow the various participants in the commodity and railway system to plan for the upcoming year under predictable conditions, while the Minister of Transport fully considers recommendations presented in the report of the Canada Transportation Act Review.”

Ottawa’s former Conservative government introduced expanded interswitching provisions and government-imposed grain hauling targets in 2014 in response to a supply chain bottleneck that slowed grain shipments to a crawl during the winter of 2013-14.

The provisions were due to expire in August 2016.

Ottawa’s decision to retain them for another year sends a message to western Canadian farmers that Ottawa is taking their concerns about rail service, said federal transport minister Marc Garneau.

“The content of these provisions, such as interswitching and level of service obligations, impacts all shippers and postponing the repeal of these provisions would allow the government to fully assess the freight rail transportation system for all commodities, in the context of its response to the review of the Canada Transportation Act and the development of a long term plan for the sector.”

Federal agriculture minister Lawrence MacAulay said the delay should allow time to engage with stakeholders.

Provisions being considered for extension include:

  • the ability to prescribe different distances, by region or by goods, when making regulations on interswitching;
  • the ability to make regulations specifying what constitutes “operational terms” that can be referred to in level-of-service arbitration;
  • the ability for Ottawa to order a railway company to pay compensation to a shipper or any person for any expenses they incurred as a result of the railway company’s failure to comply with its level-of-service obligations, and:
  • the ability for Ottawa to prescribe a minimum amount of grain to be moved by Canadian National Railway and Canadian Pacific Railway during any period within a crop year, and to authorize designated persons to impose administrative monetary penalties for failing to meet these requirements.

Reaction to Ottawa’s announcement from Canada’s major railway companies has been negative.

“CN is disappointed that the federal government has to decided to postpone for one year the repeal of unnecessary provisions of the Canada Transportation Act ,” said Canadian National Railway in a prepared statement.

“The provisions were never justified and should sun-set this August, as recommended by the report on the review of the Canada Transportation Act led by David Emerson.”

CP offered a similar comment, expressing disappointment in Ottawa’s decision and emphasizing that CP has moved record amounts of western grain since 2013-14.

It also urged Ottawa to “fully consider (the) thoughtful recommendations” contained in the Emerson Report, which suggested that the revenue caps be removed within seven years.

In Saskatchewan, provincial agriculture minister Lyle Stewart said he was pleased with Ottawa’s announcement

“Our government still wants to see improved transparency and accountability within the grain handling and transportation system,” Stewart said in a prepared statement.

Earlier this spring, Stewart urged Ottawa to extend interswitching provisions, at least until a long-term plan is put in place to ensure better rail service for the prairie grain sector.

“Extended interswitching in particular has been a success in western Canada,” he wrote in a March 3 letter to federal transport minister Marc Garneau.

“Even in cases where interswitching was not directly used by shippers, the option of its use resulted in a more competitive response from the railways.”

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