Sandi Mielitz says she “totally understands” why farmers and communities want to save their local rail line.
But if there’s not enough traffic to make a line economical, then it shouldn’t stay in business, said the vice-president of CN Rail.
The Canadian Transportation Agency is considering an application by seven municipalities that want to buy CN’s Cudworth subdivision. They have asked the agency to exclude from the purchase price the value of branch line rehabilitation paid for by the federal government.
In an interview following her appearance before the agency, Mielitz said the changing nature of prairie agriculture means more grain is consumed locally and less is shipped for export.
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That makes it difficult for smaller branch lines to generate enough traffic and revenue to be paying propositions, no matter who operates them.
“When you look at the local value-added, the barley that moves to southern Alberta, canola going to crushers, oats milling, alfalfa dehy plants, there is less demand for export grain shipments.”
Mielitz said CN finds itself in the awkward position of operating as a privately held commercial company that some people believe is still required to operate in the public interest.
She said when CN was sold to private shareholders for $2.2 billion in 1995, the rehab assets were included in that price.
“This is not an issue of us trying to kill lines,” she said. “But we can’t give away assets and say shareholders don’t own them. We have to be here defending this.”
Belongs to railway
During five days of CTA hearings, both national railways argued that they do own the rehab assets and should be free to dispose of them as they see fit.
Deepak Ekbote, director of cost research and analysis for CP Rail, said the rehab money was paid to the railways as a means of compensating them for inadequate revenues under the old Crow Rate. Therefore, CP owns those assets, just as it owns the money that was paid to the railways under the old Western Grain Transportation Act from 1984 to 1995.
“It was (the government’s) money until the completion of the rehab work,” he said. After that, CP was entitled to those funds or the assets produced by them.
