Canada extends grain transportation rules one year

By Rod Nickel
WINNIPEG, Manitoba, April 22 (Reuters) - Canada's new
Liberal government on Friday extended by one year rules put in
place in 2014 to speed movement of grain by rail, after an
unprecedented backup of grain on the western Prairies that year.
The former Conservative government took drastic steps to
ease the backlog, including giving U.S. railways greater access
to Canadian shipments and requiring minimum grain shipment
volumes of the country's two main railways, Canadian National
Railway Co CNR.TO and Canadian Pacific Railway Ltd CP.TO .
Those provisions were due to expire Aug. 1, 2016. But the
Liberal government, in office since November, said it needed
more time to consider them.
Postponing the decision ensures that commodity and railway
shippers can plan for the next year under predictable
conditions, Transport Minister Marc Garneau and Agriculture
Minister Lawrence MacAulay said in a joint statement.
Farmers and grain handlers rely heavily on railways to move
grain vast distances from western farms to ports and North
American buyers.
The delay means that expanded use of interswitching - the
transfer of cars from one railway's line to the line of another
railway - remains in place for now, giving U.S.-based BNSF
Railway Co BNISF.UL further opportunity to handle Canadian
shipments.
That provision has proved to be "an effective tool to
provide additional competition" among CN, CP and other carriers,
said Wade Sobkowich, executive director of Western Grain
Elevator Association, whose members include grain handlers
Richardson International and Cargill Ltd CARG.UL .
BNSF spokesman Michael Trevino declined to comment.
Spokespersons for CN and CP could not immediately comment.
Actual minimum requirements for grain movement were
previously lifted, but the government's authority to impose them
again was due to end this summer.
A provision that allows the government to order a railway to
compensate a shipper for failure to provide adequate service
also remains in place.
Bigger changes for Canada's grain transportation system may
be in store.
In February, a study for the Canadian government said Ottawa
should phase out over seven years its cap on the amount of
revenue railways can earn transporting grain.