The Western Grains Research Foundation (WGRF) wants improvements in how it receives excess railway revenue.
The current system creates too much uncertainty and makes it difficult to invest funds received from the railways, said WGRF executive director Lanette Kuchenski.
“We are in discussions with the Canadian Transportation Agency about establishing some new guidelines,” she said.
When the national rail companies exceed their allowable revenue under the grain revenue cap, they are required by law to pay the difference, plus a five percent penalty, to the WGRF within 30 days.
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The problem is that railways can appeal the CTA’s revenue cap calculations to federal court, which can result in the foundation being required to repay money to the railway.
As a result, the foundation can’t be certain how much money it will ultimately collect, making investment decisions problematic.
“It’s very difficult to manage an endowment fund when the railway can appeal the payment going back several years,” Kuchenski said.
That happened last year when the foundation was required to repay $870,783 to Canadian Pacific Railway after the railway won a legal appeal of its original $1.5 million assessment for 2005-06.
The rail company didn’t tell the WGRF how much was under appeal so the foundation put all the money into long-term investments.
The WGRF is still in discussions with CPR over how and when the money will be repaid.
Canadian National Railway is also appealing approximately $500,000 of its $2.8 million payment for 2005-06. However, CN provided the WGRF with advance notice of the amount under appeal, so the agency put that much into a separate trust account until the appeal is resolved.
This year, CPR was ordered to pay the foundation $3.9 million for 2006-07. The railway has until the end of January to appeal.
“We haven’t had any word but I suspect that with that large an amount they are going to appeal.”
If so, Kuchenski would like CPR to indicate how much is under appeal so the foundation can invest it in more accessible short-term investments in case money has to be repaid.
She said the foundation would like the CTA to set out rules covering what the railways can appeal, whether the appeals can cover more than one year, whether the railways should be required to give notice to the WGRF of the amount under appeal and the method of repayment to the rail company.
