Canada's new government concludes new agreements with railways operating the federal grain hopper car fleet



    SASKATOON, Oct. 12 /CNW Telbec/ - The Honourable Gerry Ritz, Minister of
Agriculture and Agri-Food and Minister for the Canadian Wheat Board, on behalf
of the Honourable Lawrence Cannon, Minister of Transport, Infrastructure and
Communities, today announced new agreements between the Government of Canada,
Canadian National Railway (CN) and Canadian Pacific, for the operation,
maintenance and refurbishment of the federal fleet of hopper rail cars.
    "These rail cars are an essential link, allowing Canadian farmers to move
their products to markets around the world," said Minister Ritz. "Canada's New
Government is committed to giving Canadians the infrastructure advantages they
need to compete with the world."
    "Through concrete action and strong partnerships with industry, our
government has delivered on its commitment to conclude new operating
agreements with the railway companies," said Minister Cannon. "These new
agreements will generate economic, safety and environmental benefits for grain
producers and taxpayers, while strengthening the Government of Canada's
oversight and management of public resources."
    The Government of Canada owns approximately 11,900 grain hopper cars,
which are provided to the railways at no cost for the transportation of
regulated grain from the Prairies. The railways manage, maintain and operate
these cars on a day-to-day basis.
    In May 2006, the Government of Canada announced that it would retain
ownership of its fleet and would negotiate new operating agreements with the
railways. The 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 for
      the transportation of regulated grain, thereby avoiding an increase in
      railway grain revenue caps;
    - continuing a taxpayer benefit of $10-15 million per year - from railway
      payments for using the cars for purposes other than regulated grain
      movements;
    - refurbishing the fleet to ensure that the hopper cars remain in good
      operating condition throughout their service life - 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.

    Jean-Jacques Ruest, senior vice-president of marketing for CN, stated that
the railway is pleased to have reached this new agreement with the government.
He noted CN has already upgraded 256 cars in the railway's Transcona Shops in
Winnipeg. Mr. Ruest said "The key to reducing costs and improving service to
all grain industry participants lies in velocity - moving more grain through
faster car cycling. This agreement allows CN the needed flexibility to
continue this focus."
    Fred Green, president and CEO of Canadian Pacific said: "This agreement
aligns with Canadian Pacific's continued focus on improving car quality to
better serve our customers. Our gate replacement program is now underway and
the results will enhance car utilization and the fluidity of our grain
movements across our system."
    During the first five years of the agreements, every steel hopper car
built after 1974 will be inspected to determine the refurbishment work needed.
An independent, qualified, third-party expert will perform physical
inspections of the cars to ensure that the work has been completed. Additional
inspections will be carried out every two years to ensure that the railways
are maintaining the fleet in good operating condition.
    Stringent reporting requirements will ensure that both railways meet their
obligations to operate the fleet efficiently, and that the federal cars are
replaced as they are retired from service. The railways will provide
operations, maintenance and refurbishment data to Transport Canada. An annual
report prepared from this data will be publicly available.

    A backgrounder with more information on the agreements is attached.


                                 BACKGROUNDER
                                 ------------

                     CANADA'S HOPPER CAR FLEET AGREEMENTS
                     -------------------------------------

    The Government of Canada owns approximately 11,900 grain hopper cars
purchased between 1972 and 1994 to carry Western Canadian grain. These cars
are provided at no cost to Canadian National Railway (CN) and Canadian Pacific
(CP) for the transportation of regulated grain from the Prairies to the ports
of Vancouver and Prince Rupert, B.C., Churchill, Man., and Thunder Bay and
Armstrong, Ontario. Currently, each railway has about 6,000 federal hopper
cars - which they manage, maintain and operate on a day-to-day basis. The
Government of Canada does, however, receive annual alternate-use revenues from
the railways when the cars are not used in regulated grain service.
    On May 4, 2006 the Government of Canada announced that it would retain
ownership of the federal grain hopper car fleet and negotiate new operating
agreements with CN and CP. Negotiations are complete and new operating
agreements have been concluded separately with each railway.

    The 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 for
      the transportation of regulated grain, thereby avoiding an increase in
      railway grain revenue caps;
    - continuing a taxpayer benefit of $10-15 million per year - from railway
      payments for using the cars for purposes other than regulated grain
      movements;
    - refurbishing the fleet to ensure that the hopper cars remain in good
      operating condition throughout their service life - 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.

    The government also committed to amend the Canada Transportation Act to
enable an adjustment to the hopper car maintenance costs within the railways'
grain revenue caps, which will save farmers an estimated $2 per tonne. The
amendments received Royal Assent in June 2007, and the Canadian Transportation
Agency will issue a final decision on the adjustment to the revenue caps by
January 2008.


                 KEY ELEMENTS OF THE NEW OPERATING AGREEMENTS
                 ---------------------------------------------

    -------------------------------------------------------------------------
    Duration      - Ten years with one year notice of termination in eighth
                    year, for no more than 3,000 cars.  If not terminated,
                    agreement remains ever-green.
                  - The CP agreement is effective July 1, 2007.
                  - The CN agreement is effective August 1, 2007.
    -------------------------------------------------------------------------
    Use of cars   - Can be used to carry grain in North America.
                  - Can be used for other commodities if precautions are
                    taken to protect their physical integrity.
    -------------------------------------------------------------------------
    Payment
     for use     - Cars are provided to railways at no cost for regulated
                   grain movements.
                 - Alternate-use payments for non-regulated movements.
    -------------------------------------------------------------------------
    Maintenance  - Railways are responsible to maintain cars to federal
                   government safety standards and industry operating
                   standards.
                 - Government will conduct inspections every second year to
                   ensure cars meet these standards.
                 - Railways are responsible for maintenance costs.
    -------------------------------------------------------------------------
    Refur-
     bishment    - Each and every steel car built after 1974(*) will be
                   inspected during the first five years of the agreement to
                   identify refurbishment requirements.
                 - Cars will be refurbished to industry standards at the
                   railways' expense.
                 - Refurbishment includes replacing defective gates that
                   resulted in grain leakage and installing safety reflectors
                   on every car.
                 - The government will conduct post-refurbishment inspections
                   to ensure needed work has been completed.

                   (*)It is not cost-effective to refurbish cars built before
                   1975 because of their short remaining life.
    -------------------------------------------------------------------------
    Replacement  - Railways are responsible for replacing cars that are
                   retired or destroyed, which is consistent with their
                   obligations under the Canada Transportation Act.
    -------------------------------------------------------------------------
    Operating
     Reports      Reports include:
                - Monthly reporting on car use.
                - Monthly reporting on destroyed cars and repairs.
    -------------------------------------------------------------------------
    Public
     Annual
     Report      The Public Annual Report will:
               - summarize information in monthly operating reports.
               - report on change in railways' grain fleets - retirements,
                 destroyed cars, and additions.
               - summarize results of refurbishment and maintenance
                 inspections.
               - summarize information on revenues received from the
                 railways.
    -------------------------------------------------------------------------
                                                                 October 2007
    




For further information:

For further information: Karine White, Press Secretary, Office of the
Minister of Transport, Infrastructure and Communities, Ottawa, (613) 991-0700;
Todd MacKay, Director of Communications, Office of the Honourable Gerry Ritz,
Minister of Agriculture, (613) 579-1059; Kevin Franchuk, CN Regional Manager,
Public and Government Affairs, (780) 421-6127 (office), (780) 288-8854 (cell);
Media Relations: Transport Canada, Ottawa, (613) 993- 0055; Breanne Feigel,
Manager, Media Relations, Canadian Pacific (403) 319-3932; Transport Canada is
online at www.tc.gc.ca. Subscribe to news  releases and speeches at
apps.tc.gc.ca/listserv/ and keep up-to-date on  the latest from Transport
Canada.; This news release may be made  available in alternative formats for
persons with visual disabilities.


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890