The federal government’s transportation bill, which includes changes to railway legislation welcomed by farm and grain industry stakeholders, gained final approval from the Senate late Tuesday, after bouncing back and forth several times between the House of Commons and the Senate.
Among other measures, the bill gives shippers the right to charge railways with penalties for poor service, increases the powers of the Canadian Transportation Agency, and clarifies the definition of “adequate and suitable” service by railways — some of the longstanding requests made by farm and grain industry groups.
“Grain farmers have been waiting years for a legislative fix to Canada’s rail transportation system,” says Jeff Nielsen, president of Grain Growers of Canada, in a statement. “Bill C-49 will improve the long-term competitiveness of the grain supply chain and it is welcome news that these measures will become law.”
Cereals Canada president Cam Dahl calls the passage of the legislation “a historic achievement for the grains industry” and “good news for everyone involved – including Canada’s customers.”
“Bill C-49 is a monumental turning point,” echoes Jason Lenz, chair of Alberta Barley, in a joint statement from Alberta’s barley and wheat producer commissions. “It not only provides the long-term competitive mechanisms to improve rail service that we’ve been working to see implemented, but also paves the way for Canada to maintain its status as a reliable supplier to our global customers.”
The bill, which was originally introduced by Transport Minister Marc Garneau in the House of Commons on May 16, 2017, maintains the volume-based maximum revenue entitlement (MRE) for grain shipments by rail. However, the MRE math will be tweaked to give the railways more incentive to make capital investments in grain handling.
As a transportation-themed bill, C-49 also includes several measures related to rail safety, airline and railway ownership, and air passenger rights.
Back-and-forth between the House of Commons and the Senate
The Senate originally proposed 18 amendments to the bill. The House of Commons accepted or modified six, before sending the bill back to the Senate, where Senators voted to re-introduce two of the rejected amendments. MPs in the House of Commons rejected those amendments a second time, by a vote of 163-123 on Tuesday afternoon. Shortly after, the Senate voted to approve the legislation without the rejected amendments.
The Senate amendments approved by the House of Commons include adding soybeans to the list of crops under the MRE, widening the long-haul interswitching to give more grain elevators access, and giving the Canadian Transportation Agency authority to investigate rail service problems without a formal complaint from a shipper (while still requiring approval from the transport minister.)
“This is sober second thought in action,” said Senator Grant Mitchell, who sponsored the bill in the Senate. “The Senate is under transformation and I think Canadians can be confident that ongoing modernization will continue to work in their favour.”
One of the amendments that MPs rejected twice pertained to final offer arbitration (FOA) hearings — a measure that was repeatedly requested by shippers in the mining, fertilizer, and forestry sectors. Several grain industry stakeholders also voiced concern about this amendment being rejected.
Railway investments to be announced?
Under the current MRE structure, when one of Canada’s two Class I railways invests in new grain handling capital, the benefit is shared between both railways. To give the railways more incentive to invest, the bill includes “bifurcation” of the MRE, which will see the full benefit of a railway’s investment flow directly back to that railway.
Both CN Rail and CP Rail said they would make new investments in grain handling capital if the original bill was passed without amendments.
During a conference call with investors in April, CN’s interim president and CEO J.J. Ruest said the railway was looking to buy 1,000 new generation hopper cars in 2019 and 2020, contingent on C-49 “going through the House the way it was originally written.”
“We welcome passage of the Bill C-49, which balances the needs of both customers and railways and gives us the certainty we need as we move forward with record investments in trade-enabling infrastructure and equipment,” said Ruest in a statement on Wednesday.
CP has also said it has hundreds of millions of dollars in potential capital investment tied to the passage of C-49.
Meanwhile, federal Agriculture Minister Lawrence MacAulay’s office has confirmed the minister is scheduled to be in Winnipeg on Thursday morning for an event related to the passage of C-49.
More to come.
Bill C-49 timeline:
Some of the twists and turns along the way for the Transportation Modernization Act...
May 16, 2017 — Bill C-49 is introduced in the House of Commons by Transport Minister Marc Garneau. Farm and grain industry groups welcomed the legislation, as it contained some long-standing requests, such as giving shippers the right to impose reciprocal penalties for poor rail performance and granting increased power to the Canadian Transportation Agency.
May 24, 2017 — Garneau tells RealAgriculture he hopes to have the legislation in place by the end of 2017.
November 1, 2017 — C-49 passes third reading in the House of Commons, sending it to the Senate.
December 8, 2017 — It becomes evident the bill will not be passed before year-end, as the Senate transport committee begins reviewing C-49.
January and February, 2018 — Railway performance deteriorates, creating a grain backlog in Western Canada. Farm groups ramp up pressure on Parliament to pass C-49, with reciprocal penalty provisions.
March 29, 2018 — The Senate passes C-49, along with 19 amendments. The list of amendments includes several changes that were requested by farm and grain industry groups, such as: giving the Canadian Transportation Agency the ability to investigate rail performance without a formal complaint from a shipper; adjusting the long-haul interswitching provision to give elevators more access; and adding soybeans to the list of grains under the maximum revenue entitlement for railways.
April 27, 2018 — Transport Minister Marc Garneau introduces a motion to accept 10 of the Senate’s 19 amendments, including the main amendments lobbied for by the agriculture groups. The rejected amendments are largely unrelated to grain, pertaining to rail freight rate-setting mechanism that’s not usually used in agriculture, as well as airline investment, airline passenger rights, and transportation safety.
May 3, 2018 — The House of Commons approves Garneau’s motion, sending C-49 back to the Senate.
May 9, 2018 — Senators debate the changes and vote 43-39 in favour of bringing back two of the amendments that were rejected by the House of Commons, sending the bill back to the House a second time.
May 11, 2018 — Liberal MPs indicate they will reject the Senate’s latest amendments, sending it back to the Senate. However the House did not vote on the amendments prior to rising for a one week break; the earliest it can be sent back to the Senate is May 22.
May 22, 2018 — Liberal MPs in the House pass a motion to reject the Senate’s two amendments. The Senate agrees to pass the legislation as is, sending Bill C-49 for Royal Assent, in time for the start of the new crop year on August 1, 2018.
