Ottawa to keep revenue cap on grain shipments by rail

Ottawa | Reuters — The Canadian government introduced draft legislation on grain transportation on Tuesday that would keep in place a revenue cap on western grain that railways haul for export.

The grain revenue cap, or “maximum revenue entitlement” (MRE), has been in place since 2000 and is intended to balance the market power of the two big railways with that of farmers and grain companies, who in many areas rely on one rail company.

Reuters first reported that the cap would stay on Monday. Railways oppose the measure, saying it reduces their incentive to invest in grain hauling.

The measure is popular with farmers, who say the annual revenue cap controls costs they pay when they deliver grain.

The legislation also introduced a so-called long-haul interswitching mechanism that will provide captive shippers across Canada with access to a competing railway.

Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul.

Federal regulations generally allow shippers to use interswitching for only up to a 30-km radius, but interim legislation expanded interswitching rights up to 160 km for grain and all other commodities moved by shippers in the three Prairie provinces.

That interim legislation, first passed in 2014, is due to sunset Aug. 1 unless another extension is granted. Grain grower groups have pressed the government to grant another extension at least until the new bill takes effect.

The long-haul interswitching mechanism introduced Tuesday is expected to “provide captive shippers across all sectors and regions of Canada with access to a competing railway, to ensure they have options,” the government said in a release.

The legislative package, introduced by Transport Minister Marc Garneau, also sets up new data reporting requirements for railways on rates, service and performance, to “enhance system transparency,” the government said.

It also sets a new definition of “adequate and suitable” rail service and is expected to provide “more accessible and timely remedies for shippers on both rates and service.”

The legislation is also expected to allow shippers to seek “reciprocal financial penalties” in their service agreements with railways.

Tuesday’s bill will also require railways to install voice and video recorders in locomotives for safety purposes.

For the air transport sector, the bill also lays out “clear standards of treatment for air travellers in common situations as well as financial compensation under certain circumstances.”

The bill would also ensure that “no one is involuntarily removed from an airplane due to overbooking.”

— Reporting for Reuters by David Ljunggren in Ottawa. Includes files from AGCanada.com Network staff.