Grain companies and farm groups want the federal government to extend regulations brought to deal with the grain transportation crisis of 2013-14 before they expire Aug. 1.
The legislation formally known as Bill C-30 made several changes to the Canada Transportation Act, including expanding interswitching within 160 km of an interchange, instead of 30.
It’s a valuable competitive tool grain shippers are using and want to keep, Wade Sobkowich, executive director of the Western Grain Elevators Association (WGEA), which represents Western Canada’s main grain-handling companies, said in an interview Feb. 10.
There’s more interswitching occurring than many people expected, said Canada’s grain transportation monitor, Mark Hemmes, president of Quorum Corporation.
The C-30 provisions came with a “sunset” clause because they were passed under emergency legislation. The former Conservative government was responding to a huge backlog in grain shipments by rail in 2013-14, a backlog that cost grain farmers at least $5 billion, according to University of Saskatchewan agricultural economist Richard Gray.
The other provisions set to expire in less than six months include allowing the federal cabinet to order the railways to transport a minimum volume of grain and the Canadian Transportation Agency to compensate any person for expenses caused by a railway’s failure to fulfil its service obligations.
A new definition of “operational terms” in service-level agreements will also end. It helped clarify cases eligible for the Canadian Transportation Agency arbitration.
“They were positive provisions and we are of the view that… they (government) should make those provisions in Bill C-30 permanent,” Sobkowich said.
Many farm organizations agree, including the Manitoba Pulse and Soybean Growers Association, the Canadian Canola Growers Association and the Keystone Agricultural Producers.
Pulse Canada, which represents farmers, processors and pulse traders, also wants the provisions to continue, said Greg Northey, Pulse Canada’s director of industry relations.
“C-30 raised the bar in terms of more power to grain shippers,” he said.
It was thought the provisions, if warranted, could be included with other amendments to the Canada Transportation Act expected to come from last year’s review of the act. However, the review presented to Transportation Minister Marc Garneau in December, hasn’t been made public. It’s unlikely amendments would be law before Aug. 1.
Sobkowich said he hopes renewing the provisions is “automatic.”
It won’t be, a Transport Canada official said in an email Feb. 12.
“A decision has not been taken on provisions of C-30,” he wrote. “As per the act, the sunsetting of these provisions on August 1, 2016 may be postponed via a resolution passed by both Houses of Parliament.”
Passing a motion is less onerous than passing a bill. Unlike a bill, a motion doesn’t go through three readings or be studied by committees.
“It’s a lot easier to manage,” Northey said. “I assume the government will want to help on this and don’t expect a lot of opposition to it.”
Francois Labelle, executive director, of the Manitoba Pulse and Soybean Growers Association, raised the alarm during the association’s annual meeting, Feb. 10 in Winnipeg.
“We need to work to get this (interswitching) extended,” he said.
“We don’t want those shipper protections to end,” Canola Growers of Canada CEO Rick White said following the Manitoba Canola Growers Association’s annual meeting Feb. 11. “Interswitching gets you closer to running right and adds competition.”
Canadian National and Canadian Pacific railways opposed C-30 and still do.
“Issues relating to the transportation of grain will not be solved in Ottawa but by the joint collaboration of all partners in the supply chain,” CP Rail chief executive officer E. Hunter Harrison said in 2014.
In its submission to the CTA review CP recommends the government not renew C-30.
It also notes that interswitching gives American railways an unfair advantage because they can get access to grain in Canada, but Canadian railways don’t have reciprocal access in the United States.
“CN believes the legislation’s extended interswitching provisions are not warranted and will undermine railway investment in branch line networks if the provisions do not sunset in August 2016,” Mark Hallman, CN’s director of communications and public affairs said in an email.
Bill C-30 was unnecessary, he said. Grain shipping lagged because of an extremely harsh winter and rebounded once the weather improved, Hallman said.
In Canada, an elevator company could get access to a competing railway if it was within 30 km of an interchange point. C-30 expanded to 160 km, giving companies more access to a competing railway.
The way it works is an elevator within 160 km of an interchange with a competing railway can strike a deal with that firm. If it does, the elevator’s local railway is obliged to pick up empty cars from the competing company and spot them. After they’re filled the local railway must return them to the competing railway, which takes them to their destination.
The change wasn’t expected to have much impact since CP and Canadian National would have little incentive to step on each other’s toes. But U.S.-based Burlington Northern Santa Fe has nothing to lose.
“At least three WGEA members use interswitching on a regular or semi-regular basis,” Sobkowich said. “Some of it is to get access to Burlington Northern Santa Fe.
“Expanded interswitching is an important thing.
“Companies are using it from certain locations and it also begins a dialogue in some cases where in the end of discussion they end up staying with the primary carrier. But they are getting better service or better rates out of that location. It would be a step backwards to lose it.”