A senior CN Rail executive says the original Bill C-49, the Transportation Modernization Act, passed by the House of Commons, without Senate’s amendments, needs to become law quickly.
“It’s a balanced bill (without the Senate amendments),” Sean Finn, CN Rail’s executive vice-president of corporate services and chief legal officer, said in an interview April 4. “I am a bit concerned — and I will be very clear with you — that some of the amendments the Senate is putting in overturn the apple cart to the point where that balance might be lost and then you have unintended consequences… you don’t want the railway making decisions of not to reinvest because it doesn’t think the regulatory environment is stable enough for us to do so. We need to know what the rules of engagement are.”
CN doesn’t welcome additional regulation, he added.
“I try to explain to people when you try and re-regulate the industry you have unintended consequences that prevent us from having a return on capital that allows us to reinvest in some of the lines in Canada, which are a bit less performing.”
One of the Senate’s amendments is intended to give shippers more flexibility with long-haul interswitching. Finn fears it could make marginal rail lines unprofitable.
Under C-49 long-haul interswitching replaces extended interswitching. But any elevator or processor within 30 km of an interchange isn’t eligible to use the provision because they can do a short interswitch.
The Senate, acting on a request from grain shippers, amended the bill so companies within 30 km of an interchange can still access long-haul interswitching.
Grain shippers said the close interswitch won’t stimulate rail competition if the other railway doesn’t service the market the shipper wants to deliver to.
But short trips earn the railway less money, Finn said.
“We can subsidize some of the lines that are less profitable because we can move the goods long distances,” he said. “If we have a regulatory regime that limits our ability to move goods a long distance then you put at risk the railway’s capability in reinvesting. You don’t want business decisions made simply to address regulatory concerns. You want them made for the right reason.”
CP Rail also opposes the Senate’s amendments.
“As CP has indicated previously, C-49 is not a perfect bill, and we have expressed concerns with certain elements,” Andy Cummings, CP Rail’s manager of media relations wrote in an email April 2.
“That being said, at this juncture, we call on Parliament to pass the original version of the bill, without amendment, in order to materially improve railway safety and unlock potential investments in new grain hopper cars to increase capacity.