Rail volumes increased, service rules tightened

New minimums for railways | Federal government will monitor railway performance to ensure all markets for Canadian grain are being served

The federal government marked the beginning of the 2014-15 crop year with new regulations aimed at ensuring better rail service for Western Canada’s grain and oilseed farmers.

The regulations, which were announced Aug. 1 by federal agriculture minister Gerry Ritz, include another federal order requiring Canada’s major railways to each haul a minimum of 536,000 tonnes of grain per week until Nov. 29.

The order is intended to ensure that Canadian National Railway and Canadian Pacific Railway move an average of one million tonnes of grain per week throughout the 2014-15 crop year, despite the likelihood of reduced volumes during December, January and February.

Other measures include regulations that require railway companies to provide more information about key performance indicators such as car order fulfillment, fleet sizes and the number of hopper cars that are empty, loaded, in storage, en route or in bad order.

Railway performance will also be monitored more closely on a corridor-by-corridor basis to ensure that all markets for Canadian grain are being adequately served.

The new regulations also provide more details about the types of issues that can be brought before the Canadian Transportation Agency during CTA-arbitrated negotiations involving rail shippers and railway companies.

It is hoped that defining the issues allowed in an arbitrated settlement will encourage more shippers to pursue service level agreements with the railways.

In addition, monetary penalties can also be ordered.

CTA adjudicators will now have the ability to order railway companies to compensate shippers for expenses stemming from poor railway performance.

Regulatory details have also been established specifying prescribed freight rates to be used when interswitching provisions are used.

The regulations announced Aug. 1 add detail to legislative provisions that were contained in Bill C-30, the Fair Rail for Grain Farmers Act that Parliament passed earlier this year.

“As of today, we have put into force regulations in five key areas to strengthen our rail supply chain,” said Ritz.

The extension of weekly grain movement targets will ensure timely movement of grain throughout the critical harvest period, he added.

“Based on the ongoing needs of grain shippers and other commodities, the regulations being an-nounced today extend the requirement to move one million metric tonnes (of grain) a week to the end of November,” he said.

Farm officials who attended Ritz’s announcement welcomed the move.

Kent Erickson, chair of the Alberta Wheat Commission, said his organization is pleased with the steps Ottawa has taken.

“We haven’t seen a lot of detail yet in the regulations, so time will tell there,” said Erickson

“But today was definitely a big step forward because it puts a few more teeth in the whole process. It’s a good first step and hopefully the CTA review will be the next big step.”

Brett Halstead, a farmer director with the Saskatchewan Canola Commission, said short-term steps aimed at keeping grain flowing are essential.

“With another crop soon to come off, it’s important that we keep the grain moving,” Halstead said.

“But we also need to fix this long-term. Part of that is the regulations announced today, but another part of it is how we come through the review of the Canada Transportation Act. Hopefully, we can get some long-term fixes through that process as well.”

In Saskatchewan, provincial economy minister Bill Boyd said his ministry will monitor the impact on the province’s grain industry in the coming months.

Concerns persist in the province over car allocations to short-line railway companies and a burdensome provincial grain carryout that is estimated at 10 million tonnes, he said.

CN president Claude Mongeau was not impressed by the regulatory measures. He called Ottawa’s new regulations burdensome and ill-advised.

“It’s truly unfortunate that the federal government has decided to introduce extensive regulations in reaction to a 100-year grain crop that has been handled reasonably well in the normal course of business,” Mongeau said in a news release.

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