Saskatchewan asks federal committee to toughen law to clear grain backlog

REGINA - Saskatchewan is urging a federal committee to toughen legislation aimed at clearing a rail bottleneck that has left grain sitting in bins across the Prairies.

The province has made a written submission to the House of Commons Agriculture Committee, which is reviewing the proposed law introduced last month.

"We're hopeful that between our submission and other stakeholders that we'll get at least most of the things that we're asking for on this. We think it's very important," Agriculture Minister Lyle Stewart said Friday.

The legislation would amend the Canada Grain Act and the Canada Transportation Act to extend what are called inter-switching limits from 30 kilometres to 160 kilometres in Alberta, Manitoba and Saskatchewan. Most grain elevators on the Prairies are only served by one railway and the federal government says expanding inter-switching would allow more service by more rail companies.

Another change would enshrine a previous government order for Canadian National (TSX:CNR) and Canadian Pacific (TSX:CP) railways to move 11,000 grain cars a week or face a penalty of up to $100,000 a day.

Saskatchewan says that should be bumped up to 13,000 cars weekly and the penalty should be increased to $250,000 a day.

Stewart also wants the committee to change a clause that would see the legislation end in August 2016.

"Now granted, it can be renewed at the whim of the government of the day, but that does not in our view provide the security for our industries and our shippers that's required," he said.

"Two years isn't much of a future."

Saskatchewan also wants to see service level agreements between shippers and railways, including reciprocal penalties and expedited arbitration.

It's not the first time Saskatchewan has voiced concern about the legislation. The province made requests before the legislation was introduced and Stewart met with federal Agriculture Minister Gerry Ritz after the law was proposed.

Stewart said the province isn't going to stop pushing for change.

"Not only the grain industry in Western Canada or in Saskatchewan, but our entire economy sort of rolls on rail wheels here, and we are constrained if we can't get better service across the board, that's grain, potash, oil, manufactured goods, forest products and so on," said Stewart.

"We have to win this."

The federal New Democrats proposed amendments to the legislation Friday that match much of what the province is demanding.

"We've heard from the Prairie provinces and from stakeholders across the supply chain that this bill doesn't go far enough in addressing the grain backlog and providing fair rail service," said NDP agriculture critic Malcolm Allen.

"We need a bill that gets the job done for farmers, and that's what our amendments set out to do."

The NDP said the committee is to begin voting on the amendments Monday afternoon.

The railroads have expressed disappointment with the proposed legislation. They say they're the victims of heavy-handed regulatory intrusion by the federal government.

CN and CP have blamed the backlog on the record size of the harvest and extremely cold weather. They have said they had to use shorter trains during freezing temperatures to ensure brakes could be used properly — and that meant less capacity.

CN has also said grain elevator companies acted too slowly at the beginning of last year's harvest to get the crop to market.

However, CN said earlier this week that it is progressing towards meeting the government's target of increased grain shipments. The country's largest railway said it provided 5,102 hopper cars for loading last week — which it said is the most in its history at this point of the season.

Farmers are frustrated because they don't get paid until the grain is exported to customers.