Vol. 148, No. 7 — March 26, 2014
Registration
SOR/2014-55 March 7, 2014
CANADA TRANSPORTATION ACT
Order Imposing Measures to Address the Extraordinary Disruption to the National Transportation System in Relation to Grain Movement
P.C. 2014-274 March 7, 2014
Whereas the Governor in Council is of the opinion that an extraordinary disruption to the effective continued operation of the national transportation system, other than a labour disruption, exists;
Whereas the Governor in Council is of the opinion that a failure to act under section 47 of the Canada Transportation Act (see footnote a) at this time would be contrary to the interests of users and operators of the national transportation system;
And whereas the Governor in Council is of the opinion that there are no other provisions in that Act or in any other Act of Parliament that are sufficient and appropriate to remedy the situation and counter the anticipated damage that would be caused by the disruption;
Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Transport, and of the Minister of Industry in the Minister’s capacity as the minister responsible for the Competition Bureau, pursuant to section 47 of the Canada Transportation Act (see footnote b), makes the annexed Order Imposing Measures to Address the Extraordinary Disruption to the National Transportation System in Relation to Grain Movement.
ORDER IMPOSING MEASURES TO ADDRESS THE EXTRAORDINARY DISRUPTION TO THE NATIONAL TRANSPORTATION SYSTEM IN RELATION TO GRAIN MOVEMENT
Definitions
1. The following definitions apply in this Order.
“grain”
« grain »
“grain” means any grain, crop or product listed in Schedule II to the Canada Transportation Act.
“move”
« transporter »
“move” means to carry grain over a railway line from a point on any rail line west of Thunder Bay or Armstrong, Ontario, to any point in Canada or the United States or beyond for unloading.
Measures
2. Subject to volume demand and corridor capacity, the Canadian National Railway Company and the Canadian Pacific Railway Company must each move the following minimum amounts of grain:
- (a) during the first full crop week after the day on which this Order comes into force, a minimum of 250,000 t;
- (b) during the second full crop week after the day on which this Order comes into force, a minimum of 312,500 t;
- (c) during the third full crop week after the day on which this Order comes into force, a minimum of 375,000 t;
- (d) during the fourth full crop week after the day on which this Order comes into force, a minimum of 437,500 t; and
- (e) during any subsequent full crop week after the day on which this Order comes into force, a minimum of 500,000 t.
Reporting
3. The Canadian National Railway Company and the Canadian Pacific Railway Company must provide the Minister of Transport with a report indicating the weekly volume demand and the volumes of grain moved in each corridor, within one week after the end of a crop week.
Effective period
4. This Order is effective for a period of 90 days after the day on which the Order comes into force.
Coming into force
5. This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Background
Throughout fall 2013, railway companies were moving efficiently; however, since December, extremely cold temperatures and winter conditions have affected normal railway operations (i.e. reduced train lengths by up to 30% and limited frequencies). As a consequence, railway companies have not been able to fulfill shippers’ car orders. In addition, Western Canada grain farmers have produced a record of 75.8 million metric tonnes of grain this year.
The inability of the railway company to move normal numbers of loaded hopper cars has created an extraordinary disruption to the effective and continued operation of the national transportation system, and compromising the ability of Canadian grain to access markets in Canada and beyond.
Objectives
The objective of the Order, pursuant to section 47(1) of the Canada Transportation Act, is to stabilize the national transportation system, and, specifically, to ensure the ability of the transportation system to move grain to market in a timely manner.
Description
This Order requires, subject to volume demand and corridor capacity, that Canadian National Railway Company (CN) and Canadian Pacific Railway Company (CP) carry a minimum number of metric tonnes of grain each, from a point on any railway line west of Thunder Bay or Armstrong, Ontario, to any point in Canada or the United States or beyond for unloading
- (a) During the first full crop week after the day on which this Order comes into force, a minimum of 250,000 t;
- (b) During the second full crop week after the day on which this Order comes into force, a minimum of 312,500 t;
- (c) During the third full crop week after the day on which this Order comes into force, a minimum of 375,000 t;
- (d) During the fourth full crop week after the day on which this Order comes into force, a minimum of 437,500 t; and
- (e) During any subsequent full crop week after the day on which this Order comes into force, a minimum of 500,000 t.
The Order also requires that within one week of the end of a crop week that CN and CP must report to the Minister of Transport the following information:
- weekly volume demand per corridor; and
- weekly volumes of grain moved per corridor.
The Order comes into force on the day it is made and is effective for 90 days.
“One-for-One” Rule
A carve-out of the “One-for-One” Rule is permissible based on the unique, exceptional, and extenuating circumstances to stabilize the national transportation system as per the objectives of this proposed Order under section 47 of the Canada Transportation Act.
Small business lens
The small business lens does not apply to this proposal, as there are no costs on small business.
Consultation
The Minister of Transport, in cooperation with the Minister of Agriculture, has been meeting with implicated stakeholders, including grain companies and railway companies to discuss the problems that have impacted the effective and continued operation of the national transportation system and to discuss possible solutions.
Rationale
There are no suitable alternatives to achieve the objective noted above and resolve this disruption in a timely fashion.
Not proceeding with this Order would have a detrimental impact on many users and operators of the national transportation system, including
- — Reduced cash flows and lost revenue for farmers;
- — Contract penalties, lost sales, and lost premiums incurred by grain companies;
- — Increased storage costs for farmers and grain companies and, in some cases, increased risk of crop contamination for those who have resorted to storing grain on the ground;
- — Reduced amounts of grain available for loading at port, as terminal stocks are substantially below those available last year and the five year average;
- — Increased vessel line-ups at West Coast ports;
- — Substantially reduced supply for domestic use, including flour mills having to shutdown due to reduced inventories of wheat; and
- — Increased impact on farmers and Canadian economy, with an estimated at 26 to 30 million metric tonnes of carry over into the next crop year, that at $275 per tonne, results in approximately $7.2 to $8.3 billion lost sales.
Not proceeding with this Order would have a detrimental impact on many users and operators of the national transportation system, and it would cause harm to Canada’s global reputation for reliable transportation, recognizing that
- — Grain exports are shipped to diverse global markets, including 11.8 million metric tonnes to markets in Asia, 3.1 million metric tonnes to the Middle East and 1.56 million metric tonnes to Europe;
- — Exports of wheat, canola and other crops were valued at $16.15 billion in 2012;
- — Grain exports to the United States are approximately $1.5 billion per year;
- — The canola industry contributes $19 billion annually to Canadian economy; and
- — Ocean vessel operators may choose other ports in the United States or in Mexico that are more fluid when a large number of vessels are lined-up at Canadian ports.
Implementation, enforcement and service standards
Subsection 47(8) provides that persons who contravene an order made under section 47 may be found guilty of an offence and liable on summary conviction
- (a) in the case of an individual, to a fine not exceeding $5,000; and
- (b) in the case of a corporation, to a fine not exceeding $100,000,
for each day the person contravenes the order.
Contact
Carolyn Crook
Director
Rail Policy
Surface Freight Policy
Place de Ville, Tower C, 27th Floor
Ottawa, Ontario
K1A 0N5
Telephone : 613-998-1918
Fax : 613-998-2686
Email : Carolyn.Crook@tc.gc.ca
- Footnote a
S.C. 1996, c. 10 - Footnote b
S.C. 1996, c. 10