Railways Pay $68 Million to WGRF

VANCOUVER - Jan 1/09 - SNS -- Canada's two major railways were fined $68 million for exceeding their revenue caps from hauling grain in 2007-08, with the money being paid to the Western Grains Research Foundation (WGRF) for use in agricultural research projects.

The Canadian Transportation Agency said both the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CPR) have exceeded their revenue caps for crop year 2007-2008 for the movement of Western grain.

CN's grain revenue of $409,267,319 was $25,961,880 above its revenue cap of $383,305,439 while CPR's grain revenue of $407,440,160 was $33,806,200 above its cap of $373,633,960. The railways now have 30 days to pay WGRF the amounts which were over their respective caps plus a fifteen-percent penalty of $3,894,282 for CN and $5,070,930 for CPR. This is the largest amount that any railway has exceeded its revenue cap. These large overages reflect the actual costs incurred by CN and CPR for the maintenance of grain hopper cars and reduces the historical maintenance costs that were "embedded" in the revenue caps.

Under the Canada Transportation Act, amounts received by the railways for grain movement in excess of the revenue cap are paid into the WGRF Endowment Fund. The interest earned on the Endowment Fund is used to support all types of crop research. When the act was passed, the WGRF Endowment Fund was deemed by the federal government to be a logical place for these producer dollars. Administrative costs would be high to return the money directly to producers and it would be difficult to do this equitably. By funding a variety of research projects on all types of crops, the money benefits all crop producers in the Prairie region.