Prairie grain farmers could be in line for millions of dollars in compensation from CP Rail.
The Canadian Wheat Board says it will use last week’s favorable ruling from the Canadian Transportation Agency on its service complaint to try to extract up to $30 million in damages from the railway.
That could mean going to court, although the board said it will first try to negotiate a settlement with CP.
“I would always prefer to do these things commercially because that’s a lot less expensive, and it’s done and over with more quickly,” said CWB chief commissioner Lorne Hehn.
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CP’s vice-president of agri-products, Rick Sallee, said the railway is prepared to talk to the wheat board about settling the case out of court.
“We’re always willing to talk,” he said Oct. 2. “I would say the ball is in their court … but we’ve never rejected discussions and we’d be crazy to.”
He added the rail company had not decided whether to appeal the CTA’s decision, which found that CP breached its statutory level of service obligation by discriminating against grain in favor of other bulk commodities in rail shipments to Vancouver during the winter of 1996-97.
Sallee also took issue with the figure of $30 million, which the board suggested as CP’s rough share of the estimated $50 million in total losses suffered by farmers that winter.
“That would all have to be proven,” he said.
(The wheat board dropped a similar CTA complaint against CN Rail in April, in return for an undisclosed amount of compensation.)
Hehn said the board’s bottom line has been to get money for farmers to make up for lost revenue from cancelled or deferred sales resulting from the shipping snags.
“This wasn’t done for the board,” he said. “This was done for farmers.”
In its long-awaited decision handed down Sept. 30, the CTA said that while severe winter weather hampered railway operations and CP couldn’t be expected to meet all the unload targets, when the worst of the weather was over and the system began to recover, CP gave preferential treatment to other commodities, particularly coal.
“During part of the complaint period, CP did not allocate to the CWB grain moving to Vancouver its relative share of the available capacity and resources,” the three-member CTA panel said in the 37-page ruling. “In other words there has been undue discrimination.”
The wheat board said it was “elated” by the ruling, which it described as a major victory for farmers.
Sallee said the railway was “very disappointed” by the finding of discrimination, which it denied throughout 32 days of public hearings and continued to deny in the wake of the CTA ruling.
“We truly in our heart of hearts do not feel that we discriminated,” he said, adding that the complexity of the grain collection and transportation system simply made it more difficult to recover.
While CP officials took some solace in the absence of any formal order or recommendation, wheat board lawyer Margaret Redmond said that was of no consequence.
“I consider what they said in the judgment as good an order,” she said. “In my mind they’ve issued a warning to the railway: You can’t discriminate, we expect you to respect that and should that happen we are here to consider it on a case by case basis.”
The agency also rejected several parts of the board’s complaint, involving movement to Thunder Bay and winter rail movement to Eastern Canada.
However board officials said those were relatively minor issues.
“We won on the big things we needed to win,” said Hehn. “The west coast corridor is where all of the big costs occurred in lost sales and demurrage.”
Hehn said the decision also sends an important message that farmers and other shippers can rely on the shipper protection clauses in the Canada Transportation Act.
“Obviously they have teeth and we’re not nearly as nervous as we might have been a few months ago.”
