The national body for over 43,000 canola producers across Canada is set to bring both of the country’s major railways up before regulators to answer for their grain service in 2013-14.
The Canadian Canola Growers Association (CCGA) announced Monday it has filed a level-of-service complaint with the Canadian Transportation Agency (CTA), alleging Canadian National (CN) and Canadian Pacific (CP) Railways “did not fulfill their common carrier obligations for the movement of western Canadian grains and oilseeds this crop year.”
The Winnipeg-based association’s complaint references sections 113-116 of the Canada Transportation Act — in short, the part which requires railways to provide “adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage,” then “without delay, and with due care and diligence, receive, carry and deliver the traffic.”
Such complaint “is a serious undertaking, but in the face of the dismal rail system performance it is farmers’ only recourse,” CCGA CEO Rick White said in a release.
The CTA now must investigate the complaint and issue a determination within 120 days of receiving it.
“We have compelling arguments that the railways have failed in their statutory service obligations, and we are asking the agency for a decision,” White said. “This complaint is about clarifying the statutory obligations of the railways to provide suitable and adequate service, now and for the future.”
The CCGA isn’t the first entity out of the gate this spring with a CTA complaint over the grain freight backlog seen in the winter of 2013-14.
The Canadian grain business of commodities giant Louis Dreyfus announced last month it would file a level-of-service complaint against CN, which serves six of Dreyfus’ 10 Prairie elevators plus its canola crushing plant at Yorkton, Sask.
Dreyfus’ Calgary-based Canadian arm also asked the CTA to issue an interim order requiring CN to abide by contractual terms during the proceedings. [Related story]
If either railway is found to not be fulfilling “any” of its service obligations, remedies under the Act may include the CTA requiring either or both of the railways to carry out “specific works,” to make a set number of rail cars, locomotives or other equipment available, and to charge only what the agency will allow.
The agency, if need be, may also grant limited running rights to another railway to serve a “grain-dependent” branch line.
Furthermore, the Act says, “every person aggrieved” by any neglect or refusal of a company to fulfil its service obligations has “an action for the neglect or refusal against the company.”
A win against the railways at the CTA, or through later court action, also wouldn’t be unprecedented. The Canadian Wheat Board in 1997 filed a level-of-service complaint against both CN and CP over service during the winter of 1996-97, which led to settlements with both railways — in CP’s case, an out-of-court settlement for $15 million in lieu of the $45 million the board had sought.
“The 2013-14 shipping record shows just how inadequate the railways have been in meeting the needs of grain shippers,” CCGA president Brett Halstead, a farmer at Nokomis, Sask., said in the association’s release Monday. “Farmers simply cannot tolerate a repeat of this year’s events.”
Farmers, he said, are facing consequences such as “unprecedented” carryout stocks expected to negatively impact grain markets for years to come; a “sustained” wide basis; and a “potential shrinking or loss of international markets due to perceived vulnerability and ineffectiveness of the Canadian supply chain.”
The railways, White said, “cannot continue to restrict the commercial success of the Canadian grain sector and the broader national economy to fit their business plans or their historic approach to operations.”
Levi Wood, president of the Western Canadian Wheat Growers Association and a farmer at Pense, Sask., described the CCGA’s complaint as “an important test case.”
“It will help us determine whether the existing legislation is strong enough to meet the needs of farmers and our customers,” he said in a separate release Monday.
A positive ruling from the CTA “will establish that the railways have an obligation to increase capacity to meet grain shipping demand,” the Wheat Growers said, while a negative ruling “would point to a need to strengthen transportation legislation to ensure the requirements of the grain sector are met.” — AGCanada.com Network