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Feds’ grain freight legislation heads to Senate

(Sen.Parl.gc.ca)

UPDATED, May 30, 2014: The federal government’s legislative package to tighten the terms of grain freight service agreements between shippers and railways has cleared the House of Commons.

Bill C-30, the Fair Rail for Grain Farmers Act, was delayed last Thursday due to an amendment which Commons Speaker Andrew Scheer ruled out of order. [Related story]

However, the bill passed third reading Monday for referral to the Senate and includes essentially the same amendment as was proposed last week.

The amendment — which came back to the bill Monday with the approval of the Commons standing committee on agriculture and agri-food — creates the authority for the Canadian Transportation Agency to order a railway to compensate shippers for expenses incurred as a result of a railway’s failure to fulfill its service obligations.

C-30 “will play an important part in improving Canada’s rail logistics supply chain for all commodities and our government encourages the Senate to review and pass this bill as quickly as possible,” federal Agriculture Minister Gerry Ritz said Monday.

The bill, as first tabled in the Commons in late March, authorizes the federal Governor-in-Council to set grain transport volume requirements if need be in “extraordinary circumstances,” on the joint recommendation of the federal agriculture and transport ministers, with penalties of up to $100,000 per day.

The Canadian Transportation Agency from now on will also advise the transport minister “as to whether minimum volume requirements may be required for the coming crop year,” based on consultations each year with railways, grain companies and others in the supply chain.

C-30 also grants the CTA regulatory authority to allow for “greater specificity” for operating requirements in any level-of-service agreements reached by arbitration between railways and shippers.

The government noted in March there have been no requests made for arbitrated agreements between shippers and railways since the government legislated the authority to do so in June last year. The tightened amendments in C-30 may make parties “more comfortable” in seeking arbitration, the government said.

C-30 also grants Prairie shippers — in grain, and all other commodities and goods shipped by rail — a wider radius for interswitching, in which one rail carrier picks up cars from a shipper and delivers them to another railway for the line haul.

Specifically, C-30 authorizes the CTA to “prescribe different distances for the regions or goods that it specifies” — thus to extend maximum interswitching distances in Saskatchewan, Alberta and Manitoba to 160 km, up from 30 currently.

The government said in March a wider interswitching radius could “increase competition among railways and give shippers access to alternative rail services,” though at least one railway CEO has panned the proposed move as “bad policy.” [Related story]

C-30 comes in the wake of attempts to clear a massive grain freight backlog on the Canadian Prairies, due in part to a record 76 million-tonne crop from 2013-14 and, according to Canada’s big two railways, unusually harsh winter conditions.

“Through this legislation, we have taken strong measures to manage the extraordinary backlog of grain and help the transportation system respond to peak demand in the future,” federal Transport Minister Lisa Raitt said in Monday’s release. — AGCanada.com Network

CLARIFICATION, May 30, 2014: A previous version of this article described C-30 as taking effect in August 2016. The bill, in its final form, includes “sunset clauses” which take effect in August 2016 if the bill’s measures are not renewed.

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