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A Canadian National freight train - Date unknown Photographer unknown - CN.
16 May 2017
Federal Rail Bill to Overhaul Revenue Cap and Expand Inter-switching


Ottawa Ontario - Long-awaited amendments to the Canada Transportation Act that Prairie grain farmers and shippers hope will result in better rail service were tabled Tuesday in the House of Commons.
 
At press time Tuesday farm organization and grain company officials were still assessing Bill C-49 that also deals with other transportation issues, including air travel.
 
At first blush the Alberta Wheat Commission (AWC), for one, liked what it saw.
 
The 72 page bill includes measures to make a more transparent, fair, and efficient rail system, federal Agriculture Minister Lawrence MacAulay said in a release.
 
The legislation addresses many grain industry priorities, including reciprocal penalties for when the railways fail to meet service obligations, a definition of "adequate and suitable" rail service, maintaining and modernizing the Maximum Revenue Entitlement (MRE), and a new long-haul inter-switching provision, MacAulay said.
 
"AWC believes the legislation will go a long way to providing long-term solutions to rail transportation challenges that Canadian farmers have faced for decades," AWC general manager Tom Steve wrote in an email.
 
"We like the focus on provisions aimed at improving railway accountability including reciprocal penalties, better definition of adequate and suitable service, and long haul inter-switching. We will be seeking further clarity on how these measures will be implemented. It also appears the MRE will be retained with a proposed change in the cost index to individual railways."
 
Most farm groups and shippers have said they would support tweaking the MRE, including changes that would accurately reflect each railway's purchase of new hopper cars.
 
Under the current structure, if one railway buys 1,000 cars and the other doesn't, the buying railway only gets half the benefit by having its entitlement increased, while the non-buying railway gets the other half.
 
The MRE gives the railways freight rate flexibility to encourage grain shippers to be efficient, but it also allows the railways to earn a fair return from hauling grain while protecting farmers from price gouging in what most observers agree is not a competitive market.
 
The entitlement is adjusted annually to reflect higher railway costs, the volume of grain hauled and the distance.
 
The proposed new long-haul inter-switching option is expected to be welcomed by grain companies and farmers.
 
Inter-switching allows one railway to move goods from a competitor's line and is meant to encourage competition.
 
C-49 proposes under certain circumstances, inter-switching distances be increased to 1,200 kilometres instead of the current 160 kilometres, a temporary measure introduced in 2014 under the Fair Rail for Farmers Act, set to expire 1 Aug 2017.
 
The standard inter-switching distance had been 30 kilometres.
 
The railways, which had not issued a statement on the bill at press time, have long opposed additional regulation, saying it would discourage investment in a capital intensive business.
 
Observers doubt the bill will be law by 1 Aug 2017 so some farm groups, including the AWC, want the Fair Rail for Farmers Act extended in the interim.
 
MacAulay also announced a fourth mandate for the Crop Logistics Working group, a forum of industry representatives who identify supply chain challenges and opportunities.
 
Agriculture and Agri-Food Canada will provide a government co-chair.
 
The Grain Monitoring Program, introduced in 2000 to independently measure the efficiency of the West's grain pipeline, will continue another three years, MacAulay said.
 
Allan Dawson.

OKthePK Joint Bar Editor:  Since the federal government increased inter-switching rules from 30 to 160 kilometres less than 1 percent of the crop has moved under this provision.

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