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Rail Freight Service Legislation Introduced in Canada

December 11th, 2012

Canada’s Minister of Transport, Infrastructure and Communities Denis Lebel and Minister of Agriculture and Agri-Food Gerry Ritz today announced the Fair Rail Freight Service Act bill, intended to give companies that ship goods by rail the right to a service agreement with railways and to create an arbitration process to establish an agreement when commercial negotiations fail.

“This bill will help shippers maintain and grow their businesses while ensuring that railways can manage an efficient shipping network for everyone,” Minister Lebel said.

The bill is part of a key commitment following the recommendations made by the Rail Freight Service Review Panel in 2011, which encouraged the use of bilateral service agreements between shippers and railways as an effective way of bringing more reliability to rail service.

The new process aims to give shippers and railways a strong incentive to negotiate service agreements commercially.

If negotiations are not successful, shippers will be able to trigger an arbitration process with the Canadian Transportation Agency. The arbitrator will have the mandate to establish terms of service based on the shipper’s needs, as well as the railways’ requirement to provide suitable service to all other customers.

Failure by railways to meet service obligations could result in penalties, including a fine of up to $100,000 for each violation of an arbitrated service level agreement.

“This bill is good news for Canada’s farmers as it will help ensure all shippers are treated fairly by the railroads,” said Minister Ritz.

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