(The Canadian Press circulated the following on March 3.)
TORONTO — Canadian National Railway Co. (TSX:CNR) said Monday it will seek leave to appeal a decision by the Canadian Transportation Agency to cut the rail revenue entitlement for grain transportation under the Canada Transportation Act.
The Montreal-based company, which owns Canada’s largest railway, said the decision on Feb. 19 to cut rail grain rates by eight per cent under the revenue cap was retroactive to Aug. 1, 2007.
CN president and chief executive Hunter Harrison said rail rates for grain transport in Canada are among the lowest in the world and significantly less than those in the United States, where CN has extensive operations.
“With the latest CTA decision, the government of Canada is effectively transferring income from one sector of the economy – railways – to another – farmers – in what we believe is an unfair ruling on rate cap inputs,” Harrison said.
“Unless amended by the Federal Court of Appeal of Canada, the CTA ruling will permanently damage CN’s grain business. It will turn the grain business – now producing slightly below average profits – into our least-profitable commodity group”.
Harrison suggested the government seems to be returning to the days when it subsidized producers for the movement of grain.
“There is no sound policy rationale for arbitrarily lowering railway grain rates, nor is there any fairness or equity in favouring grain producers over rail shippers from all other sectors who have to pay market rates consistent with a privately funded railway industry,” he said.