“Maybe it is necessary to ‘re-regulate’ the railways because I don’t think the railways have been acting in good faith.”
– REG DYCK
The Canadian Transportation Agency (CTA) is just doing its job as required under legislation when it compels the railways to include certain revenues or exclude certain costs when calculating the revenue cap, says CTA spokesman Marc Comeau.
Starbuck-area farmer Reg Dyck, who also sits on the Keystone Agricultural Producers’ transportation committee, agrees.
Both were responding to Canadian National Railways’ (CN) Wayne Atamanchuk’s allegations of “creeping re-regulation” of western grain transportation made during the Fields on Wheels conference Nov. 19 in Winnipeg.
“Through the management of the revenue cap we see a creeping re-regulation of the grain industry and that creeping re-regulation is reducing the returns earned by transporting grain in Western Canada,” said Atamanchuk, CN’s assistant vice-president of bulk commodities.
In 2000, amendments to Canada Transportation Act set a limit on how much the railways can earn shipping grain. The cap is adjusted annually to cover inflationary costs, the volume of grain being hauled and the distance. The railways are allowed to set their own rates, but if total revenues from shipping grain exceed the cap they are penalized.
The cap was introduced to give railways rate flexibility to encourage efficiency, while giving farmers some assurance the railways can’t just charge whatever the market will bear.
The CTA, an independent, quasi-judicial federal agency, has the responsibility of calculating the revenue cap each year. The revenue cap legislation has not changed except for amendments to adjust the allowance for what the railways spend to maintain the federal government’s fleet of hoppers, which the railways get to use for free.
“If we change the way we look at the deductions they’re (railways) trying to make, that’s usually in response to changes they’ve made in their policies they’re imposing on the shippers,” Comeau said.
He likened the CTA’s role to that of the Canada Revenue Agency, which scrutinizes tax returns and sometimes rules a tax deduction is ineligible. And just as it is with income, CTA decisions can be challenged in court.
The railways did just that and won when the CTA ruled certain grain company demurrage penalties collected by the railways should be included under the revenue cap.
Dyck said the railways have a financial incentive to earn as much money outside of the cap as possible, but increases costs to grain shippers, including farmers.
“Maybe it is necessary to ‘re-regulate’ the railways because I don’t think the railways have been acting in good faith,” he said, noting that under the cap the railways were collecting almost twice as much revenue for hopper car maintenance than they were spending.
Meanwhile, the railways “keep raising the bar,” when it comes to the length of time the railways give grain companies to load and unload cars. When the grain companies are forced to pay staff overtime to load cars, the cost gets passed back to farmers, he said.
“And it’s always to please the railway,” Dyck said. “That’s why I don’t think they (railways) have lived up to the spirit of the transportation reforms and therefore I think it’s important to have regulations to keep the railways in check.” [email protected]