CTA ruling favours grain company in rail service dispute

Although CN Rail is appealing a Canadian Transportation Agency interim decision in favour of Louis Dreyfus Commodities’ complaint about last winter’s rail service, other complainants say it bodes well for their cases too.

May 2 the CTA ordered CN Rail to meet its service requirements to four Louis Dreyfus Commodities (LDC) elevators, a decision which could be reversed on appeal. But for now CN must provide LDC with the number of rail cars it is contractually obligated to provide — specifically for “placement of empty cars for loading and pickup of loaded cars at Glenavon, Sask. Aberdeen, Sask., Joffre, Alta. and Lyalta, Alta.

LDC filed a level-of-service complaint with the CTA April 14 claiming CN failed to fulfil its statutory obligations under Sections 113 to 116 of the Canada Transportation Act and a confidential contract it signed with CN in 1999.

LDC also requested interim relief and got it.

“The Louis Dreyfus case is an example of exactly the arguments that we’re making at the aggregate level, concerning both railways for all commodities across Western Canada,” Rick White, executive director of the Canadian Canola Growers Association, said in an interview June 17. “This is an important ruling.”

The Canola Growers filed a level-of-service complaint with the CTA May 26, alleging both railways breached the transportation act by failing to provide adequate service for grain this crop year.

The CCGA wants the CTA to order the railways to invest in additional rail capacity to move crops to export markets faster, White said.

The CTA said LDC met the three conditions for interim relief pending a final decision. One was that irreparable harm would occur in the absence of an interim order.

An LDC official declined to comment on the ruling, but in a letter to producers posted on its website, the company says it was “very dissatisfied” with rail service this winter.

“When LDC was unable to convince CN through direct discussions to meet its service obligations, LDC was left with little choice but to take legal action against CN by filing a complaint with the Canadian Transportation Agency (CTA),” the letter states.

“LDC’s reputation with its producer partners has suffered enough. We want to help Prairie producers clear out last year’s undelivered backlog and get focused on the present and the future.”

CN spokesman Mark Hallman declined to comment on the case because it’s being appealed. However, in an email he warned the CTA order could have negative consequences.

“To the extent any shipper is afforded preference, by law or otherwise, this will necessarily be at the expense of the rest of the industry,” Hallman wrote. “As such, CN intends to vigorously defend all of its grain customers’ interests in a fair and consistent car allocation.”

As of the end of May, CN’s grains volumes were four per cent better than its previous best and 13 per cent above average performance, Hallman wrote.

CN wants to move 6,000 cars of grain weekly this summer.

Although the CTA issued its ruling May 2 and immediately informed LDC and CN, it didn’t post it on its website until last week.

A CTA official said since the case involves confidential contracts, its decision had to be redacted and translated.

Rail car back orders peaked at about 78,000 this winter.

The railways blamed unusually cold temperatures and a record crop. Grain companies said the railways fell behind their 10,000-car-a-week commitment early in the fall and never recovered.

In March, the federal government ordered the railways to move a million tonnes of grain a week or be fined.

Last month Bill C-30, the Fair Rail for Grain Farmers Act, became law, allowing the federal government, after consulting with the grain industry, to continue setting grain-shipping targets for the railways.

The government also promises regulations under the act, still to be written, will strengthen service-level agreements between shippers and the railways allowing shippers to be compensated for expenses caused by railways’ failing to meet their service obligations.

B.C.-based Ashland Inc. has also filed a level-of-service complaint alleging poor rail service.

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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