UPDATE 1-Canada extends grain transportation rules one year

(Adds Canadian National, Canadian Pacific comments)
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 shipments by
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 on 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 shippers and
railways 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 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 railways, said Wade
Sobkowich, executive director of Western Grain Elevator
Association, whose members include Richardson International and
Cargill Ltd CARGIL.UL CARG.UL .
Canadian National and Canadian Pacific said they were
disappointed by Ottawa's delay.
The measures were "never justified," said CN spokesman Mark
Hallman. The grain backlog was due to factors outside railways'
control, such as a huge harvest and extreme weather, he said.
"The grain supply chain has never been more efficient,"
added Canadian Pacific spokesman Martin Cej.
BNSF spokesman Michael Trevino declined to 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 it
should phase out over seven years its cap on the revenue
railways can earn transporting grain. by Diane Craft and Matthew Lewis)