Proponents of railway running rights say Ottawa must introduce new
rules to boost railway competition.
They expressed frustration and disappointment at last week’s ruling by
the Canadian Transportation Agency that rejected Ferroequus Railway’s
bid for the right to haul grain over Canadian National Railway’s main
line from Camrose, Alta., to Prince Rupert, B.C.
“It’s fairly obvious that we need a change in legislation,” said
Canadian Wheat Board chair Ken Ritter.
“Until that happens, we’ll continue to get decisions like this.”
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James Nolan, a transportation economist at the University of
Saskatchewan, said the ruling was discouraging for those who want to
see more competition among railways.
He also said it’s important for the federal government to move quickly
to clarify the future direction of rail competition policy.
“The CTA certainly seems to be seeking some guidance from a higher
power,” he said. “My sense is they didn’t want to rock the boat.”
A special review panel last year concluded that running rights could be
used to enhance competition, but only as an extraordinary step where
there is clear evidence that the railway providing the service is not
acting in the public interest.
It recommended changes to the rules governing running rights, but the
federal government has yet to respond to the panel’s report.
Nolan said one good change would be to shift the burden of proof, which
forces an applicant to demonstrate that granting running rights would
benefit the public interest.
“I think it would be more fair to require CN or CP to prove that it
would not be in the public interest,” he said, adding he’s optimistic
that might happen.
In rejecting Ferroequus’s application, the CTA called running rights an
“exceptional remedy” that could only be granted in cases of market
abuse or failure.
That didn’t happen in this case, said the ruling signed by four of the
five CTA members who considered the case.
“Ferroequus has not established the existence of a rate or service
problem in the relevant markets nor has it established that the
granting of running rights would alleviate any lack of adequate and
effective competition.”
The fifth CTA member issued a dissenting ruling in which she argued
that Ferroequus’s application serves the public interest and should be
granted.
Some running rights proponents said if the Ferroequus application
couldn’t make the grade, it’s hard to imagine any running rights case
ever being successful.
CTA senior counsel Ron Ashley said that’s not necessarily true.
“The agency considers all of its cases as individuals, based on the
evidence presented,” he said. “The greater the problem, the more
inclined the agency would be to grant the right.”
But he also acknowledged that the Ferroequus decision is a significant
precedent.
The decision can be appealed to the federal cabinet or the Federal
Court of Appeal, but Ferroequus president Tom Payne said no decision
had been made.
He said the company will take some time to analyze the 30-page ruling
before commenting further.
CN welcomed the decision, saying shippers are better served by
deregulation than by government-imposed competition.
