Long awaited grain transportation legislation has finally been approved by the House of Commons and the Senate.
Bill C-49 contains significant amendments to the Canada Transportation Act.
“This will help rebalance the relationship between shippers and railways,” says Wade Sobkowich, executive director of the Western Grain Elevator Association. “Hopefully, it works out the way as intended and it becomes a more commercial-like relationship.”
Bill C-49 contains measures to establish service contracts between shippers and railways. These would include penalties for CN and CP not providing “adequate and suitable” service.
Both railways had challenges moving sufficient numbers of hopper cars to Western Canadian elevators this past winter. While not as serious as 2013-14, there were lengthy delays, penalties for late delivery and lost sales opportunities.
Farm organizations are pleased with the changes but says continued monitoring will be required to ensure railways adhere to the new regulations.
”That’s why they (railways) have 128 lobbyists in Ottawa, so that they can find loopholes and little nuances (in the legislation),” says Norm Hall, vice president of the Canadian Federation of Agriculture. “We are going to be depending on our legislators and the Canadian Transportation Agency to make sure the law is followed as intended.”
The first visible step will be this summer when CN Rail and CP Rail are required to develop plans on how they intend to move the 2018 crop to port.
“Hopefully, the minister (of transport) gets this plan and holds the railways’ feet to the fire to make sure they follow their plan,” Hall says.
Bill C-49, which contains a number of changes to the Canada Transportation Act, took 53 weeks from first reading to final passage. Senators proposed 18 amendments to the original bill. Six were adopted by Parliament, such as expanding long-haul interswitching and giving the Canadian Transportation Agency (CTA) the ability to investigate rail service problems without a formal complaint by a shipper.
It will take several months for railways and grain companies to negotiate service levels contracts.
“The railways are going to be inundated with requests to negotiate and the CTA will be inundated with requests to arbitrate,” says Sobkowich. “Once these service contracts are in place, we think it will require the railways to bring on and hold more capacity. Otherwise, they would be subjected to financial penalties for failure to perform.”
Bill C-49 also contains measures to encourage the two major railways to invest more money into grain handling assets, such as hopper cars.