Canada Transportation Act amendments will be introduced this spring before the House of Commons rises — but the grain industry is concerned key temporary provision may expire before legislation is passed.
The confirmation came after a query to Transport Minister Marc Garneau’s office.
“Minister Garneau is committed to introducing legislation this spring,” Marc Roy, Garneau’s director of communications said in a telephone interview May 5.
Garneau promised the legislation last Nov. 3 while speaking to the Montreal Chamber of Commerce. Back then he said the proposed legislation will establish reciprocal penalties between shippers and railways in service level agreements, better define adequate and suitable rail service, improve access to the Canadian Transportation Agency (CTA) and improve the timeliness of CTA decisions. Garneau also said the government would “address the future of the maximum revenue entitlement and extended interswitching.”
Grain farmers and shippers praised the announcement, but many worry the amendments won’t be law before regulations to help grain shippers under the Fair Rail for Farmers Act (Bill C-30) expire Aug. 1. The House of Commons breaks June 23 and MPs won’t return until Sept. 18.
That’s why the Alberta Wheat Commission (AWC), Western Grail Elevators Associations (WGEA) and Crop Logistics Working Group are asking Ottawa to extend C-30 in the interim.
“We appreciate the government’s commitment to introduce legislation that will ensure a more responsive, competitive and accountable rail system in Canada,” AWC chair Kevin Auch said in the release May 5. “But the current railway accountability measures (in place under C-30) must stay in place in the meantime. This will ensure we avoid a repeat of the transportation backlog that cost farmers billions of dollars in lost revenue during the fall and winter of 2013.”
Bill C-30, passed in 2014 to tackle a huge backlog in grain shipments, extended interswitching distances to 160 km from 30 km to encourage railway competition. It also set a minimum volume of grain movement railways had to move every week, or face fines.
Interswitching allows a railway within 160 km of another railway to access traffic on the other railway’s line and is intended to stimulate railway competition.
The provisions were set to end Aug. 1, 2016, but were extended one year by Parliament. Farm groups, including AWC and Keystone Agricultural Producers (KAP), and shippers represented by the WGEA, want the C-30 provisions extended for another year.
“In the absence of any long-term legislation, these provisions are the only measures the agriculture industry has to ensure that the service required to ship next fall’s harvest is in place,” the AWC release says.
“It’s critical that farmers can rely on Canada’s rail system to bring next year’s harvest to buyers here in Canada and around the world,” Auch said.
The WGEA, like the AWC and KAP, wants C-30 extended.
“We think it is important to keep the status quo until a new bill takes its place and not take a step backwards in the meantime,” WGEA executive director Wade Sobkowich said in an interview May 5.
KAP also wants C-30 extended, KAP president Dan Mazier said in an interview.
Roy declined to comment on whether the federal government will extend C-30. However, a reliable industry source said the government plans to let C-30 expire. The source said by then the railways will know the changes coming to the transportation act, including interswitching, and the government expects railways to abide by what eventually will become law.
One industry observer suggested that’s like announcing the speed limit will be lowered and expecting drivers to slow down before the law is changed.
House of Commons rules require new legislation be placed on the order paper before announcing when legislation will be introduced. But industry observers expect transportation act amendments will be tabled before May 18, when Garneau is scheduled to speak to the Edmonton Chamber of Commerce.
The WGEA says if the railways are subject to penalties for failing to meeting shipping commitments that should encourage better service.
Farm groups also want the maximum revenue entitlement (MRE) policy to continue, although most agree it could be improved. The WGEA does too.
“We feel quite strongly the MRE needs to remain in place and there are tweaks that can be made to encourage railway investment in their infrastructure, but the MRE needs to remain,” Sobkowich said.
Under the MRE the Canada Transportation Agency (CTA) calculates the total amount of annual revenue the railways can collect from shipping grain, based on a formula that gives the railways a fair return on investment. The policy gives freight rate flexibility to encourage shipper efficiency, while protecting farmers from monopolistic pricing.
Some farm organizations, including KAP, also want the legislation to order the CTA to review railway costs for shipping grain. Mazier said the CTA’s formula, which is adjusted for higher railway costs and grain volumes shipped, hasn’t been adjusted since 1992. As a result it doesn’t take into account improved railway efficiency. As a result the railways are earning much more hauling grain than they would in a truly competitive market, according to a study commissioned by several Saskatchewan farm groups.