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Important Measures for the Grain Handling and Transportation System Now in Force

New regulations all related to the Fair Rail for Grain Farmers Act

SASKATOON, SASKATCHEWAN -- (Marketwired) -- 08/01/14 --

Agriculture Minister Gerry Ritz and Transport Minister Lisa Raitt announced today the coming into force of a series of important regulations and an Order in Council (OIC) related to the implementation of the Fair Rail for Grain Farmers Act (Bill C-30), which received Royal Assent on May 29, 2014.

The Fair Rail for Grain Farmers Act amended the Canada Transportation Act and the Canada Grain Act to ensure that Canada's rail transportation network moves grain to markets as quickly and efficiently as possible, following a record crop year for Canadian farmers.

The measures, which take effect immediately, include:

--  The passing of an OIC, which sets out the minimum grain volumes that
    Canadian National Railway Company (CN) and Canadian Pacific Railway
    Company (CP) are each required to move from August 3, 2014 to November
    29, 2014. 
    
--  Regulations requiring CN and CP to provide additional data on grain
    movement to better monitor the overall performance of the rail-based
    supply chain. 
    
--  Regulations to clarify the operational terms in a service level
    agreement that can be arbitrated by the Canadian Transportation Agency,
    to support commercial negotiations between shippers and railways. These
    newly defined rail service obligations will increase predictability for
    all shippers. 
    
--  An amendment to the Railway Interswitching Regulations extending the
    limit for rail interswitching from 30 kilometres to 160 kilometres in
    the provinces of Alberta, Saskatchewan and Manitoba for all commodities
    to increase competition among railway companies and give shippers access
    to alternative rail services. 
    
--  Regulations to provide farmers with better protection through more
    accountability for grain companies in contracts. 
    

Quick Facts

--  At 76 million tonnes, the 2013-14 Western Canadian crop was 50% higher
    than the 10-year average. 
    
--  Since March 7, 2014, when the initial Order in Council, which set out
    minimum weekly volumes of grain that CN and CP were each required to
    move was passed, the railways have together moved an average of more
    than 1 million metric tonnes of grain per week. 
    
--  The regulations passed today are intended to maximize the amount of
    grain moved by rail before the winter season and allow the government to
    re-assess the situation later in the fall, with the longer term goal of
    returning carryover stocks to normal levels by the end of July 2015. 
    

Quotes

"After taking immediate action to get grain and other commodities moving, our Government has been building a solid foundation for managing future challenges. Today's regulations are the latest step in our ongoing efforts to create a rail supply chain that farmers and all shippers can depend on as they grow the Canadian economy."

- Agriculture Minister Gerry Ritz

"The coming into force of these important regulations puts the measures in place to avoid a repeat of last year's problems. Our Government has made tough decisions for the benefit of our producers, and to maintain Canada's good reputation as a global supplier."

- Transport Minister Lisa Raitt

Related Products

Associated Links

- Regulations on Operational Terms for Rail Level of Services Arbitration

- Regulations amending the Railway Interswitching Regulations

- Amendments to the Canada Grain Regulations

- Harper Government Welcomes Passage of Fair Rail for Grain Farmers Act

- Bill C-30 Passes Third Reading in the House of Commons

- Harper Government Introduces Legislation to Address Rail Capacity Challenges

- Harper Government acts to get grain moving in Western Canada

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 CN and 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 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 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.

Contacts:
Jeff English
Director of Communications
Office of the Honourable Gerry Ritz
613-773-1059

Jana Regimbal
Press Secretary
Office of the Honourable Lisa Raitt
Minister of Transport, Ottawa
613-991-0700

Media Relations
Agriculture and Agri-Food Canada
Ottawa, Ontario
613-773-7972
1-866-345-7972

Media Relations
Transport Canada, Ottawa
613-993-0055

Media Relations
Canadian Transportation Agency
819-934-3448

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