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Sask. farmer to sue railways, Ottawa: report

A western Saskatchewan grain farmer plans to sue the federal government and both major Canadian railways, claiming the railways have overbilled farmers for grain freight for over 25 years, the Saskatoon StarPhoenix reported Wednesday.

Gordon Wallace, who farms with his brothers at Unity, about 90 km southwest of North Battleford, told the newspaper he plans to apply to have his suit certified as a class action on behalf of Prairie farmers.

The suit stems from the Canadian Transportation Agency’s February 2008 ruling that substantially lowered the maximum annual revenue Canadian National (CN) and Canadian Pacific Railway (CPR) are allowed to keep for moving Prairie grain.

The CTA ruling, upheld in November by the Federal Court of Appeal, found that the railways’ costs for maintenance of grain hopper cars, previously “embedded” in the revenue cap at over $4,300 per car, were below $1,400.

That figure, when worked into the caps that the CTA has applied on the 2007-08 season, led to an order last month that the railways forfeit almost $59.8 million by which they exceeded their combined caps, plus an $8.97 million penalty.

Wallace’s lawyer told the newspaper that the CTA’s ruling shows “serious and substantial overcharging” by the railways for grain handling, but that the question remains how long farmers have overpaid the freight.

The federal government’s transport minister and various transport regulators are named in Wallace’s suit, lawyer Joel Hesje told the StarPhoenix’s Joanne Paulson. The newspaper quoted the lawsuit as claiming the agencies in question did not exercise scrutiny and due diligence.
None of the allegations have been proven in court.

The newspaper said the suit, if certified as a class action, could seek as much as $1.75 billion in damages if it can be proven that the railways had been overcharging by about $70 million going back to 1983. Ottawa has, in one way or another, regulated since 1983 what a railway could charge Prairie farmers for hauling their grain.

CPR, the suit’s only defendant to provide comment in the newspaper’s article Thursday, pointed out that the CTA regulates how much CPR can earn by moving grain.

Thus, a railway spokesperson said, there’s no benefit to a railway deliberately overcharging above that entitlement, because the annual overage since 2000 has been forfeited to the Western Grains Research Foundation’s (WGRF) endowment fund. Interest income from the endowment fund goes toward Prairie crop research.

The fate of the 2007-08 overage, however, has recently become a subject for debate. Grain shippers such as the Canadian Wheat Board and the Western Grain Elevator Association, which represents mainline grain companies, have urged Ottawa to redirect the “unprecedented” $59.8 million directly to farmers rather than to the WGRF.

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