The grains research fund that benefits when Canada’s major railways make too much money hauling Prairie grain must give Canadian Pacific Railway a partial refund from 2007-08.
The Western Grains Research Foundation, which on top of its checkoff funding invests railways’ Prairie grain revenue overages in research projects on farmers’ behalf, owes CPR $205,896, the foundation said Wednesday.
The Canadian Transportation Agency (CTA), which sets the caps on what the railways can keep from their Prairie grain handling, made the decision after having been ordered by the Federal Court of Appeal in February to rethink some of what it defined as grain revenue for CPR.
The CTA in late 2007 had found CPR was collecting cash penalties from Prairie grain shippers who failed to meet the 24-hour unloading condition CPR required under the railway’s Multi-Car Block (MCB) Incentive program.
The CTA said those payments “could not be reasonably characterized as being a performance penalty” and thus defined it as grain revenue, putting CPR even further over its CTA-imposed revenue cap for the 2007-08 crop year.
But the Federal Court of Appeal ruled in February that those amounts were, in fact, “reasonably characterized as performance penalties” and thus referred the matter back to the CTA.
The CTA’s new ruling trims a relatively small amount from CPR’s substantial revenue overage for 2007-08, which the CTA set at $33.81 million and has now revised down to $33.63 million.
The record revenue overage for 2007-08 follows the CTA’s decision to lower the revenue caps for both CPR and Canadian National (CN), when it recalculated both railways’ allowable costs for maintenance of grain hopper cars.
Though both railways have appealed that decision, the overages charged against CN and CPR led to debate among and between farmer organizations over whether the WGRF should keep the $68 million from the railways, or farmers should get some of that cash back directly.
Under the Canada Transportation Act, when the railways exceed their grain revenue caps, the excess plus a fifteen per cent penalty is required to be paid to the WGRF’s Endowment Fund.
Since 1981, the fund has put up over $19 million for research projects across various crop types. The amount available to invest depends on interest rates and has been between $400,000 and $700,000 annually, the WGRF said.