CN cheers CTA decision denying Ferroequus’s running rights application

Canadian National cheered yesterday’s decision of the Canadian Transportation Agency (CTA) to deny the running rights application of Ferroequus Railway Company Ltd.

CN said the decision upholds the Canada Transportation Act and previous CTA rulings. CN had strongly objected to Ferroequus’s application, in which the railway asked the CTA to impose running rights to permit it to use CN’s Western Canadian network to carry grain from Camrose, Alta., to the Port of Prince Rupert, B.C., for export.

The CTA said that a statutorily imposed running right is an “exceptional remedy” that requires actual evidence of market abuse or serious service failure before an application under the Canada Transportation Act may be granted. The agency said Ferroequus “has not established the existence of a rate or service problem in the relevant markets, nor has it established that the granting of running rights would eliminate or alleviate any lack of adequate and effective competition.”

CN said deregulation of Canadian railways has benefited shippers substantially, providing them better service, lower rates and a competitively strong rail industry. The CTA said granting of Ferroequus’s application would negatively affect many participants in the grain handling and transportation system by injecting inefficiencies into the system.

The vast majority of CTA panel members concluded that imposed running rights are an “intrusive regulatory intervention (that) is not warranted in this case.” CN has long argued that granting Ferroequus running rights would allow it to enter the rail business, not by investing in its own network, but by “cherry-picking” CN traffic through regulatory means. Giving third parties running rights with traffic solicitation privileges over federal railways in Canada would reverse the successes of deregulation and have significant adverse consequences for the financial viability of the nation’s major railways.