New agreements between the federal government,
Canadian National Railway (CN) and Canadian Pacific (CPR) to operate, maintain and refurbish the federal fleet
of hopper rail cars have been reached, according to federal Agriculture Minister Gerry Ritz.
“These rail cars are an essential link, allowing Canadian
farmers to move their products to markets around the world,” said
Ritz in a statement on Friday.
The government owns about 11,900 grain
hopper cars, provided to the railways at no cost to carry regulated grain from the Prairies. The railways manage, maintain and operate these cars on a
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In May last year, Ottawa announced it
would retain ownership of its fleet and would negotiate new
operating agreements with the railways.
- The government said its new agreements meet several key commitments made to grain producers and taxpayers, including:
- continuing to provide the hopper cars to the railways at
no cost, thereby avoiding an increase in railway grain revenue caps; - continuing $10-15 million per year in railway payments to Ottawa for their use of the cars for purposes other than regulated grain movements;
- refurbishing the fleet to ensure the cars
remain in good condition throughout their service life; - that the railways will replace the cars as they are retired from service; and
- ensuring accountability and transparency in the operation of the hopper cars by the railways.
During the first five years of the agreements, every steel
hopper car built after 1974 will be inspected to determine the
refurbishment work needed. A third-party
expert will perform physical inspections of the cars to ensure the work is done.
Inspections will then be carried out every two years
to ensure the railways maintain the fleet in good
operating condition.
Reporting requirements will ensure both
railways meet their obligations to operate the fleet efficiently,
and that the federal cars are replaced as they are retired from
service, the government said. The railways will provide operations, maintenance and refurbishment data to Transport Canada.
The National Farmers Union reacted to Friday’s announcement by calling for auditing of the railways’ spending on the hopper cars, either by the Canadian Transportation Agency or the federal auditor general.
Jim Robbins of the NFU suggested in a release that a major objective of this new agreement is to “close the door” to any future purchase of the hopper cars by farmers.
The Farmer Rail Car Coalition, a farmers’ organization with representatives from several national and provincial farm groups, had previously bid to assume ownership of the government hopper cars on farmers’ behalf but was derailed by Ottawa’s decision to keep them. The NFU, in its release, pressed the coalition’s claims that the railways had overcharged farmers about $1 billion in maintenance fees for the cars since the early 1990s.
NFU vice-president Terry Boehm added that Ottawa, in making this deal, also seemed to have surrendered what leverage it may have had, in terms of allocating hopper cars for grain movement.
“They’re guaranteeing the railways access to the cars in a long-term agreement, which means they have no leverage to exercise over the railways for non-performance,” said Boehm, who farms at Allan, Sask.
(With files by FBC staff.)
