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Archived - Backgrounder: Important measures for the grain handling and transportation system now in force
The Fair Rail for Grain Farmers Act (Bill C-30), which received Royal Assent on May 29, 2014, was introduced to bring stability to the grain sector while participants in the rail-based supply chain work together to bring greater capacity, predictability and accountability to the system.
Following the passage of the legislation, regulations are being introduced to ensure grain products continue to be transported to market as quickly and efficiently as possible.
The measures include:
Order in Council (OIC) specifying the minimum amount of grain to be moved
This OIC ensures that minimum grain volume requirements, which are currently in place under the Fair Rail for Grain Farmers Act, and previously in place under an OIC enacted in March 2014, continue to apply.
This OIC states that the minimum amount of grain that Canadian National Railway Company (CN) and Canadian Pacific Railway Company (CP) must each move is 536,250 metric tonnes a week for the period beginning on August 3, 2014 and ending on November 29, 2014. This will ensure that more than one million tonnes of grain is moved per week through this fall's harvest.
As recommended by the Canadian Transportation Agency, this order has been drafted with the goal of ensuring that over the course of the full crop year, CN and CP continue to move on average one million metric tonnes of grain per week, taking into account reduced capacity through the winter months.
Regulations amending the transportation information regulations
The amended regulations allow the government to collect more detailed information from CN and CP on a more frequent basis. The new data to be collected will include:
- Railway car cycle data covering all grain movements.
- Weekly grain traffic by tonnage, carloads, railway car type and corridor travelled.
- Railway car fleet information for all railway cars used for grain transportation, including the number of cars that are empty, loaded, in storage, enroute or in bad order.
- Railway car order fulfilment information, including dates orders were placed, name of shipper, origin and destination of the grain, the total number of railway cars ordered and cancelled by the shipper, and number of railway cars the rail carriers have committed, placed and/or cancelled.
This information will allow the Grain Monitor to provide more timely updates on the state of Canadian grain transportation. Transport Canada will use the additional information collected to ensure a continuous and effective monitoring of the grain handling and transportation system. With the collection of information on all grain movements and the improvement in the completeness, accuracy and timeliness of the information, Transport Canada will have the opportunity to monitor, plan and react sooner in the event of a spike in demand for all grain movements and to better foresee capacity shortages in the sector. The information will also be shared with the Canadian Transportation Agency to assist the agency in developing its advice for the Ministers of Transport and Agriculture and Agri-Food Canada in regards to the determination of minimum grain volumes.
Regulations amending the railway interswitching regulations
Interswitching is a competitive access provision for the benefit of shippers. It ensures that shippers with only one choice of railway have fair and reasonable access to another competing railway at a regulated rate.
The Regulations Amending the Railway Interswitching Regulations prescribe new rates for extended interswitching distances of 160 kilometres (km) for shippers of all commodities in Alberta, Saskatchewan and Manitoba. This amendment extends the limit from the existing limit of 30 km, increasing competition among railways and improving shippers' access to markets.
Regulations on Operational Terms for Rail Level of Services Arbitration
The new Regulations on Operational Terms for Rail Level of Service Arbitration specify what constitutes operational terms that may be brought to a rail level of service arbitration. The Canadian Transportation Agency may consider, on a case-by-case-basis, whether other terms are operational for purposes of the Canada Transportation Act.
By defining operational terms, these regulations clarify the matters eligible for arbitration by the Agency. This will support the efficient processing of arbitration cases within the 45 to 65 calendar day statutory deadline.
The operational terms set out in the Regulations include railway obligations such as the furnishing of railway company cars, pick-up times, and transit times, along with terms that stipulate the circumstances that would make it impossible for the railway company to comply with an operational term (a force majeure provision). The regulations also stipulate than an operational term includes an obligation of recovery that the railway company must comply with if it fails to comply with the other operational terms and includes a recovery plan for the purposes of minimizing the consequences for the shipper of the railway company's non-compliance and of ensuring that compliance.
Operational terms related to a shipper's obligations would include, for example, loading and unloading of railway company cars and the subsequent release procedures, number of switches required and provision of access to the shipper's facilities.
Administrative monetary penalties will be used to enforce railway compliance with arbitration decisions. Alleged violations of an obligation imposed on a railway company in a level of services arbitration decision will be investigated. If a contravention has taken place, the Agency has the authority to issue a notice of violation of up to $100,000 per violation. In addition, in level of service adjudications, the Agency may now order a railway company to pay a shipper compensation for expenses arising from a breach of an obligation contained in an arbitrators' decision to allow shippers to be compensated for these expenses rather than downloading them to the farm gate.
These regulations complement the Rules of Procedure for Rail Level of Service Arbitration.
Regulations providing accountability between producers and grain companies
Amendments to the Canada Grain Act provide the Canadian Grain Commission with the authority to regulate provisions of grain contracts between producers and licensed primary and process elevators and licensed grain dealers.
New provisions in the Canada Grain Regulations address non-compliance for grain contracts between licensed grain companies and farmers that specify a delivery timeframe. Farmers now have a mechanism where they could be paid a penalty amount if their grain deliveries are not accepted within the timeframes defined in their contracts with grain companies licensed by the Canadian Grain Commission.
The new provisions will result in enhanced producer protection and will contribute to more balanced contractual relationships between grain companies and farmers.
Director of Communications
Office of the Honourable Gerry Ritz
Office of the Honourable Lisa Raitt
Minister of Transport, Ottawa
Agriculture and Agri-Food Canada
Follow us on Twitter: @AAFC_Canada
Transport Canada, Ottawa
Canadian Transportation Agency
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