Decision No. 20-R-2008

January 18, 2008

File No. T7375-3/07-5

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COMPLAINT

[1] On September 5, 2007, the Canadian Wheat Board (hereinafter CWB) filed with the Canadian Transportation Agency (hereinafter the Agency) the complaint set out in the title.

[2] CWB submits that the Canadian National Railway Company (hereinafter CN) has failed and is continuing to fail to provide adequate rail service through the supply of general distribution rail cars to CWB. CWB also submits that the advance products programs currently being implemented by CN discriminate against CWB in the distribution of rail cars and hinders CWB's ability to move its grain efficiently to market causing damage to CWB's reputation in world markets.

[3] On September 5, 2007, a similar complaint was filed by North East Terminal Ltd., and on September 10, 2007, complaints were also received from North West Terminal Ltd., Paterson Grain, Parrish and Heimbecker Limited, and Providence Grain Group Inc. All of these companies, including CWB, are members of the "CARS" group of grain shippers (hereinafter the CARS Group). The CARS Group was established after the introduction of certain CN advance products offerings for the purpose of trading cars among themselves in order to supplement their car supply. All of these companies have made a similar submission to that of CWB, that is that CN has failed and is continuing to fail to provide adequate and suitable rail service. The Agency determined in its Decision No. LET-R-180-2007 dated October 3, 2007 that in the interests of efficiency, routine procedural matters pertaining to all six complaints would be dealt with as a group. However, the Agency also noted that the merits of each complaint would be dealt with individually.

PRELIMINARY MATTERS

[4] There were a number of preliminary matters that the Agency dealt with prior to hearing the merits of the CWB complaint.

Mediation

[5] By letters dated September 5 and 10, 2007, respectively, the CARS Group and CN made a request to the Agency for mediation to resolve their differences. By letter dated September 13, 2007, the Agency referred the dispute for mediation. Pursuant to subsection 36.1(6) of the Canada Transportation Act (hereinafter the CTA), the mediation has the effect of staying for the period of the mediation any proceedings before the Agency insofar as they relate to a matter that is the subject of the mediation, and extending the time within which the Agency may make a decision or determination under the CTA with respect to those proceedings by the period of the mediation.

[6] In a letter dated September 27, 2007, CN advised the Agency that the parties were unable to reach a mediated settlement. As the parties could not agree on a settlement through mediation, by virtue of paragraph 36.1(6)(b) of the CTA, the statutory deadline for disposition of this complaint is January 19, 2008.

Issuance of an Agency interim order

[7] In its complaint, CWB requested that the Agency issue an interim order suspending CN's advance products programs for crop year 2007-2008 until further order of the Agency. CWB submitted that interim relief is required because if CN is permitted to proceed with its advance products programs pending the disposition of the complaint, a portion of the available car supply will be dedicated to a small sector of the grain industry, that does not include CWB, for the current crop year.

[8] In Decision No. LET-R-185-2007 dated October 19, 2007, the Agency denied the request for an interim order. The Agency determined that the three-part test that is applied for interlocutory injunctions as well as stays should be applied to a complaint for an interim order under subsection 28(2) of the CTA. In this respect, before granting an interim order, the applicant had to demonstrate that there was a serious question to be tried; that irreparable harm would result if the relief were not granted; and an assessment of the balance of convenience had to be made, that is a determination had to be made as to which of the two parties would suffer greater harm from the granting or refusal of the order. The Agency found that while the issue is a serious matter, an insufficient progression of time had occurred into the 2007-2008 crop year to arrive at a clear finding of irreparable harm which would warrant the suspension of CN's advance products programs. Further, on balance, the Agency found that it would be unreasonable to order CN to suspend its programs at this time as a suspension would impact a large number of CN's other grain customers.

Submissions from the Government of the Province of Saskatchewan and the Government of the Province of Manitoba

[9] Interventions were filed by the Government of the Province of Saskatchewan and the Government of the Province of Manitoba, on October 1 and 30, 2007, respectively.

[10] CN requested that these interventions be given little or no weight by the Agency on the basis that the provincial governments failed to demonstrate that they were "persons who had any direct involvement in the complaints", and that they cannot add any new or worthwhile perspective on the issues to be determined therein. On November 22, 2007, the Agency issued Decision No. LET-R-201-2007 wherein the Agency ruled that the mandates of the provincial ministers who have filed intervention statements with the Agency relate to the grain handling and transportation system within their respective provinces. As such, they have a clear interest in these proceedings, within the meaning of subsection 43(1) of the Canadian Transportation Agency General Rules, SOR/2005-35. Their respective portfolios also place them in a position of being able to offer insight on matters that are relevant in these proceedings. Their interventions were accepted as filed.

Decision No. 344-R-2007 dated July 6, 2007

[11] On March 8, 2007, Great Northern Grain Terminals Ltd. (hereinafter GNG) filed with the Agency a complaint against CN regarding its service obligations for the receiving, carrying and delivering of grain to and from the facility of GNG's terminal at Nampa, Alberta. Based on the evidence in that case, the Agency found that CN's rail car policies adopted for the 2006-2007 crop year resulted in an unsuitable and inadequate level of service, constituting a breach of its common carrier obligations to GNG, and that the systemic nature of CN's conduct also affected other grain shippers. The Agency directed CN to allow GNG to reserve railway capacity for a contract period; not to prohibit GNG from trading cars or to restrict it in the manner it does so; and advise GNG of the methodology CN uses in its determination of allocating car supply. The Agency also encouraged CN to publish its car allocation methodology on its Web site.

[12] During the pleadings with respect to this complaint, CWB and CN have presented their interpretations of the meaning of Decision No. 344-R-2007. The Agency's decision in the GNG complaint speaks for itself.

[13] While the Agency's findings in the GNG complaint may be germane to the current issue before the Agency and will be considered, the issue to be addressed in this case is not whether CN complied with that order. Further, while both CN and CWB have presented their evidence on the level of service being provided to GNG during the current crop year, it is important to note that GNG has not filed a further complaint nor has it intervened in this proceeding. Accordingly, the Agency will only consider the evidence filed in this complaint that addresses the alleged inadequate rail service to CWB by CN for crop year 2006-2007 and crop year 2007-2008.

LEGISLATION

[14] CWB filed its complaint pursuant to sections 26, 37 and sections 113 to 116 of the CTA. Sections 113 to 115 of the CTA set out the statutory service or operating obligations of federally regulated railway companies and prescribe the services that a railway company must provide to accommodate traffic. Section 113 of the CTA deals with what is generally referred to as "common carrier" or "level of service" obligations. Under this provision, a railway company must provide, according to its powers, adequate and suitable accommodation for the receiving, loading, carrying, unloading and delivering of all traffic offered for carriage on its railway. More specifically, paragraph 113(1)(c) of the CTA provides that a railway company shall without delay and with due care and diligence receive, carry and deliver the traffic. Section 116 of the CTA requires the Agency to investigate a complaint with respect to the level of service offered and if the Agency determines that a railway company is not fulfilling its service obligations it has broad remedial powers which are set out in subsection 116(4) of the CTA. Under subsection 27(2) of the CTA, the Agency must also when granting relief be satisfied that the shipper would suffer substantial commercial harm if the relief were not granted.

ISSUE

[15] The issue to be addressed is whether CN has breached its common carrier obligations to provide CWB with adequate and suitable service.

FACTS

[16] CWB is a producer-controlled marketing organization incorporated to market grain grown in western Canada in an orderly manner in interprovincial and export trade. Its mission is to market quality products and services in order to maximize returns to western Canadian grain producers. Under the Canadian Wheat Board Act, R.S.C., 1985, c. C-24, and the regulations passed under it, CWB has exclusive jurisdiction over the purchase and sale of wheat, durum and barley grown in western Canada and intended for export or domestic human consumption.

[17] The Canadian crop year runs from August 1 to July 31 of each year. Primary elevator companies take delivery of CWB grain in the course of a crop year from producers. These elevator operators can only purchase grain on behalf of CWB as its agent and CWB take title upon delivery to the primary elevator. The primary elevator advises CWB on the quantity of grain it has to ship to port each week. CWB then allocates orders to the grain companies for the particular grain and grade required to meet CWB sales commitments. The grain is then transported to port where it is either unloaded into a terminal elevator or, occasionally, loaded directly onto a vessel.

[18] The primary elevator pays producers an "initial payment" on behalf of CWB which reflects CWB's initial price for the particular grain delivered to Vancouver or St. Lawrence Valley, less deductions made by the elevator agent for transportation related charges and handling charges. The balance of the payment to the producers is distributed through "adjustment" and "interim" payments as sales are made with a "final" payment being made generally within five or six months of the end of the crop year. All of the money received from the sale of CWB grain is pooled into one of four "pool accounts", i.e., wheat, durum, barley and designated or malt barley. All sales revenue earned by CWB, less CWB's operating costs, is returned to the producers. Any increase in CWB's operating costs results in a reduction in the return to producers.

[19] CN's 2007-2008 grain shipping options are as follows. A description of each option can be found in Appendix A.

CN's 2007-2008 grain shipping options

1. The GX 100 program^{Note 1} (Tariff CN 6151-H)
2. The GT Secure Export program (Tariff CN 6145-G)
3. The GT Secure North America program (Tariff CN 6132-J)
4. The GT Pro Export program (Tariff CN 6147-I)
5. The GT Pro North America program (Tariff CN 6133-G)
6. The GT Pro British Columbia program (Tariff CN 6130-D)
7. The GT Secure Transload program (Tariff CN 6186-A)
8. The GT Pro Transload program (Tariff CN 6185-G)
9. General car supply program

Changes to CN's 2007-2008 grain programs as compared to those of the 2006-2007 crop year

[20] Between August 3 and September 30, 2007, CN has made the following changes to its grain products programs for the current crop year:

1. Reduced the allocation of cars per week for the GX 100 program from 600 in crop year 2006-2007 to 400 in crop year 2007-2008. Subsequently, CN suspended the GX 100 program for the 2007-2008 crop year, and reallocated that car capacity to the GT Secure Export (hereinafter GTSE) program.
2. Reintroduced, with modifications, the 50-car GTSE program for Vancouver and Thunder Bay corridors that was eliminated in the 2006-2007 crop year.
3. Modified the GTSE program to include a Series A for registered shippers that have been awarded a GX 100 contract under Tariff CN 6151-H, and a Series B for registered shippers that have not been awarded a GX 100 contract under Tariff CN 6151-H.
4. Reduced the minimum contract periods, which begin in grain week 10, for the GTSE, GT Secure North America and GT Secure Transload programs from 30 consecutive weeks to 20 weeks, not necessarily consecutive.
5. Modified rationing procedures for GT advanced products to ensure that all shippers who submit offers receive a level of advance car supply.
6. Introduced a deficit account on its advance products that reduces CN's contractual obligations on these products, designed to free up more cars to general distribution when there is a serious shortfall situation.
7. Published its rationing criteria for general distribution allocation.
8. Allowed shippers to trade general allocation car supply.
9. Published results of its weekly allocation decisions, beginning in grain week 8 of the current crop year.

Negotiations between CN and the CARS Group - summer 2007

[21] Subsequent to the Agency's Decision No. 344-R-2007, CWB and other members of the CARS Group initiated meetings with CN to resolve car supply issues. Four meetings between CN and representatives of the CARS Group took place on July 27, 2007, August 9, 2007, August 24, 2007 and August 31, 2007.

[22] During the course of these meetings the parties outlined their requirements and exchanged service proposals, but were unable to reach an agreement.

SCOPE

[23] The Agency is being requested to make a determination as to whether CN failed and is continuing to fail to provide adequate rail service through the supply of general distribution rail cars to CWB. As part of its analysis, the Agency will examine the evidence and rail car distribution programs in effect for crop year 2006-2007. As CN has now modified these programs, the Agency will also examine the evidence and programs related to crop year 2007-2008 to determine whether or not CN is continuing to fail to meet its common carrier obligations.

CN's rail service for the 2006-2007 crop year

[24] As noted previously, on March 8, 2007, a level of service complaint against CN was filed with the Agency by GNG and on July 6, 2007, the Agency issued Decision No. 344-R-2007. With respect to that complaint, as a member of the CARS Group, CWB filed an intervention supporting GNG. CWB adopts and incorporates by reference in this complaint the evidence that was filed in its intervention in the GNG complaint.

[25] Overall, CWB's position is that CN has unilaterally implemented a program that fails in its service obligations to CWB as it forces those shippers that can participate to secure car supply that is inflexible, given the variations in the demand for car supply in a crop year.

[26] CWB states that the GX 100 program offers too many large unit trains and too few smaller unit trains, thereby impairing CWB's ability to orderly market grain at a reasonable cost.

[27] In considering CN's GT Pro program, CWB asserts that this program discriminates against CWB as it forces shippers to pay a premium above tariff rates to secure car supply. Shippers with a 100-car spot can book through the GX 100 program at no cost above tariff rates, therefore the smaller companies must pay bid amounts to secure any reliable supply of cars. Further, there is no guarantee that a bid will be accepted while CN can influence the amount of the bids because it controls car supply.

[28] In addition, CWB asserts that CN's general car supply distribution process is unreliable and non-transparent and that an insufficient amount of cars are committed to this program such that shippers cannot forward plan and effectively manage their sales programs.

[29] CWB concludes that CN's programs are causing serious systemic issues for the transportation of grain which in their totality result in a breach of the rail carrier's statutory service obligations.

[30] CN did not address CWB's evidence filed in the GNG case. Rather, CN requested that CWB's intervention and several others be rejected as the persons making the interventions had failed to demonstrate an interest in the complaint. The Agency subsequently issued Decision No. LET-R-97-2007 on May 24, 2007 ruling that all of these interventions, including that of CWB, had been authored by participants in Canada's export grain handling and distribution industry. They all had direct experience in the industry, and all the interventions shed light on relevant service standards in the export grain industry. In the present case, CN's position is that its program and tariff changes have corrected any shortfalls in service received by CWB during the last crop year.

[31] It is important to review the Agency's overall findings in GNG's March 8, 2007 complaint against CN as this is relied upon extensively by CWB in the present case.

[32] Prior to the issuance of the GNG Decision by the Agency on July 6, 2007, CN had in place various rail car distribution programs for the transportation of grain domestically and for export purposes. In Decision No. 344-R-2007, the Agency determined that CN's GX 100 and GT Pro Export programs deviated from what had been an expected standard of rail service for grain movements in western Canada. The Agency also found that with the elimination of CN's GTSE program, shippers no longer could transport grain with the same flexibility, commercial certainty, or reliability that previously existed. The Agency concluded that with respect to crop year 2006-2007, CN's rail car policies resulted in an unsuitable and inadequate level of service, which constituted a breach of its common carrier obligations to GNG. Moreover, the Agency found that the service problems associated with CN's rail car distribution programs were not isolated instances, but rather were systemic in nature. The Agency found that the evidence filed by CN's largest grain customer, CWB, to be particularly compelling in demonstrating the widespread effect that these policies had on the grain handling transportation system.

[33] The issues raised by CWB in this complaint are identical to those it raised in the GNG case. That is, CWB asserts that CN's advance products programs provide a competitive advantage to a limited group of very large shippers, with the result being fewer general distribution cars available to meet the requirements of the remaining shippers. The various CN programs for the transportation of grain applicable to GNG during crop year 2006-2007 were also applicable to CWB. However, the notable difference between these two complaints is that CN has now modified some of its rail car distribution programs for grain service for crop year 2007-2008, programs that were at the heart of the GNG Decision and formed the basis for the finding of a breach of service. These changes are pertinent as CWB argues that despite CN's changes, rail service quality continues to be unsatisfactory.

[34] Having arrived at a determination in the GNG Decision that CN's rail car distribution programs at that time were causing systemic problems, it is not necessary to review the inherent problems that were associated with these grain programs. The Agency's opinion relative to these various programs is clearly enunciated in the GNG Decision. That is, the GX 100, the GT Pro and the elimination of the GTSE programs resulted in an unsuitable and inadequate level of service, constituting a breach of its common carrier obligations to GNG.

[35] In this case, the Agency will only examine whether CWB has received adequate and suitable accommodation for the transportation of its products. Accordingly, the Agency must determine whether the evidence and arguments filed demonstrate that CN breached its common carrier obligations to CWB.

[36] CN carries over half of CWB grain that moves by rail to the ports of Vancouver, Prince Rupert, the St. Lawrence Valley, Churchill and Thunder Bay. CN also moves CWB grain to the United States of America and Mexico and CWB is one of CN's largest customers over the course of the crop year. CWB has the responsibility of getting grain from the farm to sales position at the right time to meet its domestic and export sales commitments. To do this, CWB submits that it requires the flexibility to manage the movement of grain in a range of car block sizes, from 100-car trains down to single car loadings. To do so, CWB indicates that it must participate in CN's advance products programs as well as in the general allocation process.

[37] In its intervention in the GNG case, CWB filed its evidence on advance products offerings and general rail car allocation for crop year 2006-2007. The Agency determined the following at paragraph 76 in Decision No. 344-R-2007:

Industry evidence provided by CWB shows that 69 percent of CN's overall car supply was dedicated to its advance products offerings and that CN's projected general allocation car supply offering of 43 percent for the 2006-2007 crop year was reduced to 31 percent and in some grain weeks was a low as 2 percent (18 cars) in the Vancouver corridor. Based on this and other information, the Agency finds that CN, through its advance products programs, has rendered all but a small percentage of its capacity as a premium service and has limited the availability of these programs to only a select number of grain facilities capable of meeting its criteria. [...]

[38] With such a significant portion of CN's capacity being allocated to its advance products programs, the residual available for general distribution is low. This is evident from CWB's intervention in the GNG case where at Appendix 11 of its submission, CWB includes 34 weeks of data for crop year 2006-2007 showing the number of general allocation cars requested and accepted by corridor. This table shows that CN provided CWB with 29 percent of its general car requests for the Vancouver corridor and 71 percent for Prince Rupert. As noted previously, where CWB used the 50 and 100 block advance products programs, it also relied on the use of general allocation cars to meet its requirements.

[39] CN argues that car order requests are an inappropriate measure of user-based needs because weekly car order requests are significantly inflated over the demand forecasts provided. According to CN, the ratio of cars allocated to car requests does not identify whether the receiver actually used the equipment.

[40] CWB counters that car order requests are an appropriate measure of user-based needs considering the realities shippers face in planning a sales program and the consequences of CN shorting shippers on the car demands they request. CWB considers comparing car order requests to cars received to be the most basic measure. The shipper requests the cars and the carrier supplies the cars. The extent to which the carrier does not supply the cars is the measure to assess according to CWB.

[41] Over the course of the GNG pleadings, the parties filed statistical evidence with the Agency showing the number of cars ordered and the number of cars authorized and supplied by CN to depict the level of service provided. While CN alluded to a practice whereby shippers would frequently order more cars on a weekly basis than they actually required, the Agency notes that, at that time, CN did not object to using car order requests as a measure to assess user needs.

[42] The Agency considers that an examination of a service must begin with the essential metrics of cars ordered and cars received. The Agency finds, however, that there may be other qualifying factors that need to be taken into consideration in determining a carrier's service performance. These factors would include, but not be limited to, information as to the number of allocated rail cars a shipper cancelled, refused or traded, the time period over which the rail cars were spotted, loaded, released and lifted at a shipper's facility and the degree of congestion in the pipeline which may have a bearing on the overall time for delivering a product to its final destination.

[43] While the entire grain handling and transportation system is complex in itself, essentially the basic consideration is logistics: that is getting the right goods at the right time to the right place in the right condition at the best possible cost. Grain companies make forward sales, arrange for vessels and sign contracts. In their ongoing commercial relationship, railway companies and shippers must seek a balance that encompasses reliable cycle times, management of inventories and facilities. Certainly, at times, requests for cars may exceed actual demand to make-up for shortfalls; however, grain companies must also critically assess their own ability to receive, load and return the equipment in a timely manner. The existence of railway company penalties and demurrage charges are also a motivating factor to be considered by grain shippers when determining their transportation requirements. It is not a rational business decision to systematically inflate car requests. Grain shippers like CWB are experienced and sophisticated and recognize the short-sightedness of this kind of business practice.

[44] The Agency finds in this case that an evaluation of the number of cars requested as compared to the number of cars received is a reasonable method to use.

[45] The Agency finds that the present issues raised by CWB are no different than the issues raised in the GNG case. The various programs in place for the transportation of grain that were applicable to GNG during crop year 2006-2007 were also applicable to CWB. Fundamentally, due to CN's GX 100 and GT Pro Export programs and the elimination of CN's GTSE program in crop year 2006-2007, an insufficient quantity of general distribution cars was available to CWB.

[46] The Agency finds that based on the general distribution cars allocated in the Vancouver and Prince Rupert corridors for the first 34 weeks of crop year 2006-2007, CN is not providing reasonable and adequate accommodation. Specifically, over this period of time, CN seriously failed to meet the CWB stated general car allocation needs. The records in this respect points to a chronic service failure where only 29 percent of the shippers orders were met for Vancouver and 71 percent for Prince Rupert. In the absence of any justification by CN that mitigates this failure, the Agency finds that over this period, CN breached its statutory service obligations to CWB.

CN'S RAIL SERVICE FOR CROP YEAR 2007-2008

[47] As part of its general argument, CWB asserts that the GNG Decision describes the standard of rail service that should be expected and clarifies CN's statutory obligation to grain shippers with the related consequences for non-compliance. CWB quotes paragraph 71 of the GNG Decision, in part:

[...] CN has the statutory obligation to provide all grain shippers, whatever their size, with adequate and suitable accommodation for the carriage of their products to the extent that the service required is reasonable in the circumstances. This encompasses the provision of railway equipment in acceptable quantities at acceptable times. The Agency finds that in establishing car supply policies that have restrictive terms and conditions like minimum order durations and exclude significant segments of the shipper community, CN unilaterally becomes the arbiter of which of its captive shippers are eligible for a competitive advantage. [...]

[48] With respect to the changes CN has made to its 2007-2008 grain programs, CWB is of the opinion that they do not address the systemic issues found by the Agency in the GNG case and that service shortfalls are continuing in this crop year prior to the traditional harvest peak.

[49] CWB points out that it cannot bid on a GTSE Series A program, because the GTSE Series A is restricted to shippers who have, in the past, secured a GX 100 contract. CWB also states that only 22 percent of the grain handling facilities in western Canada have a 100-car spot and are capable of participating in either the GX 100 program or the GTSE Series A program, leaving both programs available to only a limited group of shippers. CWB now asserts that although CN has suspended its GX 100 program for the 2007-2008 crop year, the fact remains that prior participation in the GX 100 program creates exclusivity to the same group for the GTSE Series A and that the cars allocated to the GTSE Series A still represent a very significant proportion of the Vancouver corridor capacity.

[50] CWB states that the 75 cars per week allocated to the GTSE Series B program for shippers who have not previously secured a GX 100 contract is insufficient to meet the needs of all the shippers that comprise this group, especially considering that 50 of those cars must be designated to GNG in compliance with the Agency's order in the GNG Decision.

[51] CWB is of the view that changing the minimum bid period to 20 weeks from 30 weeks on the GTSE program is inconsequential as successful bids are still based on the length of bid, and its experience has shown that bids which specify less than the maximum number of weeks are not accepted.

[52] Further, while the Agency encouraged CN to publish its car rationing criteria to the extent that other grain shippers might also benefit from this information, CWB indicates that the data released by CN is incomplete and does not allow grain shippers to understand CN's rationing criteria in advance. CWB notes that while CN has reduced its accountability with respect to its advanced products via the deficit account concept, there is still no CN accountability on general distribution cars. CWB considers an important part of transparency to be the publication of a shipping plan and the measurement of a railway company's performance to that plan. CWB notes that CN had published a Weekly Spotting Performance Scorecard up to grain week 26 of the 2006-2007 crop year, but has discontinued providing this information to its customers. In addition, CWB indicates that CN has also discontinued providing its capacity plan numbers on its Web site.

[53] CWB acknowledges that CN has other customers who are 100-car shippers and that, as such, CN has an obligation to design programs to meet their needs, but at the same time CN must provide adequate and suitable accommodation for traffic required by other grain shippers.

[54] CWB points out that in the Vancouver corridor, CN over the years has slowly increased the number of cars available as part of its advance products regime which implies a shrinking of the residual general distribution cars available. Further, CWB indicates that when CN eliminated the GTSE program for crop year 2006-2007, the 500 cars allocated to this program were reallocated: 200 cars to general distribution and 300 cars to CN's GX 100 program and its GT Pro Export program (bid car program).

[55] In terms of its own service records, CWB also does not agree with CN's statement that CN supplied 91 percent of CWB's car order requests for all corridors for grain weeks 1 through 7. Rather, CWB submits that between grain weeks 1 through 14, the following percentages of its car order requests were fulfilled:

• grain weeks 1 - 5: 100 percent;
• grain week 6: 88 percent;
• grain week 7: 63 percent;
• grain week 8: 68 percent;
• grain week 9: 70 percent;
• grain week 10: 71 percent;
• grain week 11: 67 percent;
• grain week 12: 70 percent;
• grain week 13: 68 percent; and
• grain week 14: 77 percent.

[56] CWB submits that CN is not providing a reasonable degree of certainty to shippers in terms of price and supply and, in keeping with the language of the GNG Decision, CN is not fulfilling its statutory common carrier obligations. CWB indicates that CN makes arbitrary changes without consultation and prior notice to the industry, which results in CN's car supply programs being a constantly moving target. CWB requests that if the Agency ultimately finds in favour of CWB, the Agency should order CN to put in place the changes CN has already made or has represented throughout these proceedings.

[57] CN asserts that it has fully complied with both the directions and principles contained in the Agency's GNG Decision and notes that the relief now being claimed by CWB is identical to that requested by GNG in the earlier proceeding with one additional request, that being that CN be required to provide reports on its performance to shippers and the Agency. In this light, CN argues that CWB cannot be permitted to pursue a complaint where it is an attempt to have the Agency vary or reconsider what it has already ruled upon.

[58] CN states that it has voluntarily suspended its GX 100 program for the 2007-2008 crop year and that the 400-car capacity previously allocated to the GX 100 program will be transferred to CN's reintroduced GTSE "Series A" and "Series B" capacity, a program which had been eliminated for the 2006-2007 crop year.

[59] According to CN, the GTSE "Series B" is specifically designed to accommodate those smaller shippers who were unable to participate in CN's GX 100 car program. CN notes that the GTSE "Series B" capacity offering of 75 cars/week exceeds the historic shipping levels of those CN shippers at which it was targeted.

[60] In addition to reducing the minimum GTSE contract offer requirements from 30 to 20 weeks, CN notes that it has removed the previous requirement for an offer to be for a consecutive number of grain weeks. This change will allow shippers to be eligible to receive advance car supply not previously available.

[61] CN expresses concern that its car allocation system must cope with the practice of "phantom car ordering", that is shippers ordering more cars on a weekly basis than they actually require. Nevertheless, CN states that it will allow all shippers to trade general allocation car supply, a practice it had previously only condoned among a small group of shippers.

[62] Contrary to the position of CWB with respect to the publication of car rationing criteria, CN notes that it does publish its car rationing methodology on its Web site, but there is no universally-applied "perfect" formula for all circumstances. Each situation must be reviewed individually to make the proper allocation decisions. CN adds that a foremost consideration for any railway company is pipeline management, followed by an assessment of historic shipping percentages and an "off the top" allocation for small shippers with minimal historic shipping percentages. Further, and due to the Agency's findings in the GNG decision, CN states that it has modified the rationing procedures for GT products to ensure that all participants that submit valid offers receive some allocation of advance car supply.

[63] In an extreme rationing situation, and to alleviate concerns that small shippers are not provided with cars when advance products shippers are given their guaranteed allocations, CN states it has introduced a feature so that it may waive its service obligations on an advance product in a given week. According to CN, this will make more car supply available for general allocation as its GT advance products commitments would be relaxed.

[64] CN reiterates that CWB and the CARS Group car order requests are an inappropriate measure of user-based needs. CN notes that the ratio of cars allocated to weekly car requests do not include any indication of the utilization of the railcars allocated. CN states that between grain weeks 1through 12 of the current crop year, the CARS Group did not utilize 37 percent of the cars allocated. CN adds that shippers inflate car requests because there are no consequences or penalties for cancelling rail car orders.

[65] CN also submits that the filing of this complaint on the basis of a single week of car allocation is premature. CN points out that notwithstanding its concerns over the utilization of car allocated versus car requests as a measure of service, CN has supplied 91 percent of CWB's weeks 1 through 7 car order requests for all corridors. CN notes that it did not fully meet CWB's demand requests for grain week 7 because allocation decisions were influenced by the effect of the harvest and the lack of sufficient deliveries into the grain elevator system. This caused several grain companies to request late car spotting in grain week 6 that generated the shortfall for grain week 7.

Interveners

[66] James Richardson International Ltd. (hereinafter JRI), Viterra, Cargill Limited, the Government of the Province of Saskatchewan and the Government of the Province of Manitoba all filed interventions with respect to this complaint filed by CWB.

[67] JRI and Viterra agree and support the relief requested by CWB in its application except for CWB's request that CN be required to allocate at least 50 percent of its fleet of rail cars available for grain service for general distribution to shippers by corridor on a weekly basis. They also do not support that the maximum car blocks permitted for CN's advance products offerings be set at 50 cars. Further, they do not support the discontinuance of CN's practice of auctioning cars to the highest bidder. Viterra submits that the remedies sought by CWB will reduce the capacity of the grain handling and transportation system during the peak period and will reduce the level of service being provided. Viterra also submits that CWB remedies, if granted, will impose new inefficiencies into the grain handling and transportation system.

[68] Cargill Limited is supportive of any measure which will enhance overall railway service. Yet and before any remedy is granted, Cargill Limited asks that the Agency consider the impact on all system participants. According to this grain company, the extent and type of remedies being sought here may, if granted, have a negative impact on the overall efficiency and capacity in the system.

[69] The Government of the Province of Saskatchewan in its submission dated October 1, 2007 fears that under existing CN programs, there will not be an adequate supply of general distribution rail cars to CWB, and small shippers in general. It is the Government of the Province of Saskatchewan's opinion that CN's advance products programs capture an excessive amount of CN rail car supply.

[70] The Government of the Province of Manitoba is of the view that shippers require a car allocation policy that is flexible, transparent and predictable. The Government submits that a program which allows shippers to order 100-car blocks for a large number of sequential shipping weeks unduly discriminates against shippers in Manitoba that are unable to meet this requirement, adding that only one shipper in Manitoba is able to comply. The Government of the Province of Manitoba states that CN's practice of not allowing shippers to trade rail cars ordered is inappropriate and inefficient and that any Agency ruling should ensure that the advance car order programs do not constitute an undue obstacle to the export of grain from Canada for the majority of shippers.

Analysis and findings

[71] In its answer to the complaint, CN states that the changes it has made to the various rail car programs for grain for the current crop year will provide adequate and suitable accommodation for the CWB traffic. CWB argues that these changes do not address the systemic issues found by the Agency in the GNG case. The Agency has reviewed CN's changes and finds that CN has taken some steps to improve its rail car allocation programs.

[72] CN has reintroduced the GTSE program, a program which was considered to be of assistance to shippers in allowing them to order manageable car blocks in advance and, therefore, plan their operations. Further, by creating a GTSE Series "A" and "B", CN is recognizing the needs of its larger customers as well as those of its smaller shippers who may be incapable of building 100-car block trains. This 50-car block GTSE program still permits the former GX 100 customers to build 100-car block trains by contracting for two 50-car blocks.

[73] CN's reduction of the GTSE contract offer requirements from 30 to 20 weeks is also a positive measure because it improves access to advance cars by smaller shippers whose operations could not sustain a lengthy contractual commitment. CN's modification that the contractual commitment need not be for consecutive weeks should extend access for others to advance car supply previously not available. However, CWB's experience is that although the new requirements are less stringent than under the previous system, successful bids are still based on the total number of weeks offered.

[74] CN is concerned over the trading of general allocation cars which it states facilitates phantom ordering. Nevertheless, the Agency notes that CN has extended the practice of permitting trading among all shippers where, previously, trading was limited to a certain group of shippers, i.e., the CARS Group. The Agency finds that under the current circumstances, the ability to trade cars will allow for increased access to the supply of rail cars in addition to promoting efficiencies in shipper operations.

[75] With respect to providing a methodology on how CN rations general allocation car supply on its Web site and modifying its rationing procedures for its GT Products, the Agency finds that this change will assist shippers in understanding how and why CN must at certain times restrict access to its rail network. At the same time, it will help ensure that all customers receive equitable access to advance products during times when rationing is necessary. CN's implementation of its "Railway Deficit Account" mechanism should also grant additional access to general distribution cars. However, the Agency notes CN's caution that this provision would only be exercised in exceptional circumstances.

[76] CN has also begun publishing the results of its weekly allocation decisions on its Web site, and is providing its grain shippers with a weekly planned service report for facilities. This type of information will increase transparency and assist shippers in determining whether they are receiving similar service levels to those of their competitors.

[77] Finally, as noted previously in this Decision and in the GNG Decision, a large percentage of the available rail cars were historically being allocated to CN's GX 100 program, a program which only a limited number of shippers could utilize. Effective September 30, 2007, CN reduced the allocation of cars per week for the GX 100 program from 600 to 400. Subsequently, CN has suspended this program for the current crop year and indicates that it has transferred the 400-car capacity to its GTSE "Series A" program. CN has indicated that it can still attain the efficiencies and advantages of concentrated, larger block shipments without this program. Series A, though, is only available to those CN customers previously awarded a GX 100 contract.

[78] All of these changes have a directionally positive impact on the allocation of rail cars within the respective programs.

[79] In reviewing those changes which would increase the availability of general distribution cars, CN has made two changes that merit a note of caution from the Agency. CN now allows trading of general allocation cars among all shippers and has introduced its "Railway Deficit Account" mechanism. The "Railway Deficit Account" mechanism allows CN to introduce a feature whereby it may waive its service obligations on an advance product in a given week, should extreme rationing be required, and to alleviate concerns amongst small to mid-sized shippers that they were often not provided with cars so that CN could satisfy its guaranteed allocation commitments to advance products shippers. The trading provisions mean that shippers have to co-operate to obtain the necessary equipment, and the CN "Railway Deficit Account" mechanism is only applicable under situations of extreme, unforseen supply chain conditions.

[80] While CN argues that the CWB complaint has been rendered moot with the changes to the advance products programs, the Agency finds that service issues continue to exist. Notably, while the majority of the changes made by CN pertain to the advance products programs and while they have freed up certain capacity for general allocation, these may not solve all of CWB's service issues.

[81] Appendix 10 to CWB's complaint indicates that CN provided 100 percent of the cars requested in the first six grain weeks of the current crop year for the Vancouver and Prince Rupert corridors. These percentages, however, declined to 44 percent and 68 percent respectively in grain week 7. The Agency notes that for the most part, 100 percent of the car requests are met in the early stages of any crop year as volumes in store are the previous crop year's grains and the current crop year's gathering of crops is just commencing. This is an annual pattern. While CWB's evidence in the complaint demonstrates less than 100 percent service in grain week 7, the Agency finds that a single week of car allocations is not sufficient information to base a decision on whether CN is in breach of its statutory obligations. The Agency notes that additional weekly information was provided in CWB's reply to CN's answer. While not split out by corridor, this evidence indicates that from grain week 8 to grain week 14, CN has fulfilled from 68 percent to 77 percent of CWB's requests.

[82] Overall, while CN has made positive changes to its tariffs, there is evidence that there are continuing service shortfalls in crop year 2007-2008; however, based on the limited information for the current crop year, the Agency finds that the evidence of service shortfalls at this point in time is not sufficient for the Agency to find a breach of CN's common carrier obligations for crop year 2007-2008.

ADDITIONAL CONSIDERATIONS

Port of Prince Rupert

[83] Subsequent to the issuance of the GNG Decision, the CARS Group members and CN met in an attempt to resolve car supply issues. The CARS Group stated that the changes as proposed by CN did not adequately address the deficiencies in CN's car distribution regime identified by the Agency in the GNG Decision. In subsequent meetings, the CARS Group presented CN with its specific car supply estimates for the current crop year and CN also provided a proposal for car supply to the CARS Group for discussion.

[84] CN states that on August 31, 2007, it offered the CARS Group 475 cars per week to Vancouver and 1,000 cars per week to Prince Rupert. According to CN, if the CARS Group were to fully utilize the CN capacity offering for Prince Rupert, 13.6 million dollars in transportation savings could be realized with the economic incentives in place to use this corridor. CN further notes that as the CARS Group had expressed concerns over the level of guarantee and assurance of service, CN proposed increasing the supply of capacity to Prince Rupert. CN asserts that Prince Rupert is CN's most reliable corridor for shipping grain as it has a lower traffic density than the Vancouver corridor, as it has the most efficient grain terminal in western Canada, and as there are efficiencies associated with not having to interchange traffic between railway companies.

[85] CWB submits that despite CN's referenced rate reductions to route traffic through Prince Rupert, it is still more economical for the CARS Group members to ship grain through Vancouver. The Port of Vancouver is more favourable for some grain shippers due to factors such as ownership of elevator terminals, terminal rebate agreements, and the presence of more than one railway company at the Port. CWB states that CN should not be permitted to dictate the routing of its shippers' traffic.

[86] The Agency notes that even though CN indicates that grain shippers can save $335 per car in transportation costs by using the Prince Rupert corridor rather than the Vancouver corridor, there are other benefits to using the Port of Vancouver rather than the Port of Prince Rupert that may outweigh the cost savings proposed by CN. Due to the landscape of Canada, the same grade of grain may be grown in different regions and is often combined and blended by the time it reaches the ports for export. As such, CWB may need to combine grains found on CN and the Canadian Pacific Railway Company lines to meet sales commitments. The ability to blend grains exists at the Port of Vancouver and the Port is served by both railway companies, whereas CN is the only carrier providing service at Prince Rupert. CWB states that blending at Prince Rupert is economically viable only in exceptional circumstances.

[87] In addition, the only grain facility at Prince Rupert is Prince Rupert Grain Ltd. While this is a modern grain terminal which concentrates on export volumes of CWB grains, the Agency notes that five grain terminals exist in Vancouver, all of which compete for traffic and are able to offer CWB terminal rebates.

[88] Finally, as CWB submitted, and as stated in Agency Decision No. 457-R-1997, in the case of Eagle Forest Products Limited Partnership against CN, the Agency did confirm a shipper's fundamental right to determine the routing of its traffic and, in so doing, to obtain the best price for the movements. The Agency is still of that opinion.

SUBSTANTIAL COMMERCIAL HARM

[89] Subsection 27(2) of the CTA states that:

Where an application is made to the Agency by a shipper in respect of a transportation rate or service, the Agency may grant the relief sought, in whole or in part, but in making its decision the Agency must first be satisfied, after considering the circumstances of the particular case, that the applicant would suffer substantial commercial harm if the relief were not granted.

[90] To assist shippers and carriers in understanding this provision, the Agency has published Guidelines for the Interpretation of Substantial Commercial Harm (hereinafter the Guidelines). These Guidelines indicate that in determining substantial commercial harm, the Agency may consider, among other matters: the type of traffic involved; its origin and destination; the standards of service required; and the markets that the shipper is seeking to maintain, expand or enter. Further, as the legislation speaks of likely future harm if the relief is not granted, the Agency is charged with arriving at an assessment which requires a certain amount of freedom as it is speculative. Accordingly, as it may be difficult to arrive at an assessment of future harm if relief is not granted, an applicant may demonstrate that it has suffered past harm and will continue to do so, unless relief is granted by the Agency.

[91] CWB states that to ensure the orderly marketing of wheat and barley, which is its mandate under the Canadian Wheat Board Act, it is required to make forward sales of grain. CWB's business reputation is developed and maintained through the timely delivery of grain to its customers which is tied to these sales. As such, it needs a reliable rail service from CN to transport the grain required to meet its sales commitments. CWB submits that it must correctly forecast the availability of rail cars to meet these sales. It also points out that in addition to working with CN's advance products programs in the past, it has also been required to move vessels between the Ports of Vancouver and Prince Rupert, it has made excessive payments on bid cars and it has also deferred sales, to meet its contractual obligations. CWB submits that these mitigation techniques cost CWB a substantial amount, both monetarily and in loss of reputation, and are caused by CN's failure to provide adequate and reasonable service.

[92] CN takes the position that while CWB may be able to provide proof that it has suffered substantial commercial harm in the past, CWB is unable to provide evidence to sustain its claim that it will continue to suffer substantial commercial harm in the future unless the Agency acts to remedy the situation. CN submits that CWB cannot validly point to the service received from CN in the previous crop year and claim that this could assist the Agency in evaluating potential future harm for the remainder of the current crop year. As it has altered the nature of its advance products programs between the 2006-2007 and 2007-2008 crop years, CN states that under these circumstances, it is not possible to make any lineal extrapolation of past service to likely future service.

[93] CN adds that CWB simply concludes as a fact that it will suffer substantial commercial harm as a result of CN's car distribution practices. According to CN, this is not sufficient evidence to satisfy the Agency on a balance of probabilities that future substantial harm will actually be suffered and CWB has failed in its onus to establish such future harm.

[94] The Agency has examined the circumstances of this case and has considered a variety of factors, including the programs CN had in place for the transportation of grain during crop year 2006-2007 and the changes implemented by CN for crop year 2007-2008. The Agency finds that for crop year 2006-2007, CWB did suffer substantial commercial harm as a result of CN's advance car programs. Although not quantified in any detail, the inability of CWB to secure an adequate supply of general distribution cars caused it to alter the nature of its normal operations, for example altering the marine component of export moves and having to consistently bid over tariff rates to obtain equipment. These changes, along with their financial implications, constitute substantial commercial harm encountered during the last crop year.

[95] While the changes implemented by CN for the crop year 2007-2008 should impact positively upon the availability of general distribution cars, the Agency is of the opinion that at the time of the complaint, it is unable to make a final assessment for this crop year. It is clear though that if any shortfalls experienced to date in crop year 2007-2008 continue and are significant and CWB is not able to secure a reasonable quantity of general distribution cars, there is a potential that it may incur substantial commercial harm. This would arise from it not being able to meet its contractual obligations and consequent damage to its reputation in the world marketplace. As the largest single seller of wheat and barley in the world, its reliance on a dependable transportation network is essential to its success.

REMEDIES

[96] CWB requests that the Agency make the following orders:

1. require CN to provide reasonable and suitable accommodation for the transportation of CWB's grain;

2. require cars, motive power or other equipment required for the movement of grain be allocated, distributed, used or moved by CN under a system of rail car distribution conforming to the following principles:

   • rationing process utilized by CN be fair, fully transparent and not discriminatory;
   • CN size and maintain its fleet of rail cars available for grain service at a size that will enable CN to meet its level of service obligations to CWB and other small grain companies;
   • CN offer, distribute, spot and deliver at least 50 percent of its fleet of rail cars made available for grain service for general distribution to shippers by corridor on a weekly basis;
   • CN report to shippers and the Agency their performance to this requirement;
   • maximum car blocks permitted for CN's advance products offerings be set at 50 cars (which could be then combined to 100-car blocks by shippers that are able to do so);
   • auctioning cars to the highest bidder be discontinued;
   • permit shippers to "trade" all of CN's distributed cars, whether distributed by advanced products or general distribution, amongst themselves to meet their individual needs;
   • CN report to the Agency as to any rail cars in its fleet used for grain service that have been retired from service or that have been made unavailable for grain service through storage or otherwise since the initial implementation of its advance products programs; and
   • prior to making any reduction to its fleet of rail cars available for grain service, CN be required to notify the Agency and grain companies of such reduction, and satisfy the Agency that CN will be capable of fulfilling its level of service obligations to CWB as well as small grain companies notwithstanding the reduction.
3. require CN to implement such specified steps, systems or methods as may be ordered by the Agency;
4. require CN to fulfill its level of service obligations in such a manner and within such time or during such period as the Agency deems expedient having regard to all proper interests, and that the particulars of the obligations to be fulfilled be specified by the Agency; and
5. require all such further and other relief be granted as the Agency may deem reasonable in the circumstances.

[97] CN submits that the remedies being requested are out of proportion to the alleged breach and that, historically, the Agency has been careful to limit the scope of its remedial orders so that they are tailored to fix the particular breach found to exist. CN adds that the Agency's role is limited in these proceedings to ensure that an aggrieved shipper has received an adequate level of service from the carrier and any remedy contemplated by the Agency must be strictly limited to addressing that specific breach. CN states that the remedies being sought by CWB, which include changes to CN's general car distribution system and policies, bear no relation or proportion to the alleged breach vis-à-vis the service provided to CWB. CN also indicates that it is no longer the role of the Agency to interfere in the commercial operations of a railway company and issue such intrusive and disproportionate regulatory relief which would have broad and harmful implications for other grain shippers and the grain handling system as a whole.

[98] CWB submits that the relief it is requesting is basic. It requests the Agency to determine that CN has not fulfilled and is not fulfilling its level of service obligations to CWB. Further, it requests the Agency to require CN to provide reasonable and suitable accommodation for the transportation of CWB grain. The other parts of the relief requested are measures that the Agency may consider in remedying CN's service obligations.

[99] CWB also submits that it is apparent from a review of the nature and timing of CN's actions that CN has only made changes to its programs when faced with an order of the Agency, or the threat of such an order. CWB states that the arbitrary changes made by CN without consultation and prior notice to the industry have resulted in CN's car supply programs being a constantly moving target, making it impossible for CWB to plan business strategies to satisfy customers' expectations and requirements. Consequently, CWB requests that, in addition to any other terms that the Agency may deem expedient, the changes that CN has represented at various times during this proceeding that it has made or is willing to make to its rail car distribution programs be incorporated into a finding and order of the Agency.

AGENCY ORDER

[100] Subsection 116(4) of the CTA sets out the powers that the Agency has in granting relief when the Agency determines that a railway company is not fulfilling any of its service obligations. Paragraph 116(4)(c) states that the Agency may:

order the company to fulfil that obligation in any manner and within any time or during any period that the Agency deems expedient, having regard to all proper interests, and specify the particulars of the obligation to be fulfilled.

[101] The Agency has broad powers under the CTA to order whatever relief it deems necessary, if it finds that there has been a breach of service obligations and that the applicant would suffer substantial commercial harm if the relief were not granted. If an appropriate remedy results in the Agency "interfering" in the commercial operations of the railway company as CN claims, then such an order will be issued nonetheless.

[102] In this particular case, the Agency may order a remedy as it has found that at least for crop year 2006-2007, CN is in breach of its level of service obligations and that CWB would suffer substantial commercial harm if the situation were to continue without relief. The Agency recognizes that CN is making an effort to revise its programs to meet the needs of all its shippers including CWB. CWB is now requesting that these changes be fixed by an order of the Agency.

[103] Certainly, new CN grain products programs have been designed to address some of the earlier deficiencies which caused the Agency to find a breach in crop year 2006-2007. The Agency is prepared to accept that these new programs, which at least in design, represent an effort on the part of CN to provide reasonable and adequate accommodation for the traffic of CWB. However, there is insufficient information before the Agency on the record of service provided for crop year 2007-2008 under these revised programs for the Agency to rule on a final remedy at this point in time.

[104] As referenced previously, the Agency has broad powers to order a railway company to fulfill its level of service obligations in any manner deemed expedient. The Agency also has the authority to issue conditional orders.

[105] This is a conditional ruling whereby the Agency finds that the new tariffs reflect an effort on the part of CN to address past service shortfall issues. However, prior to a final determination on this, CN and CWB shall file with the Agency service information, electronically and in hard copy, in the format prescribed below, for the period of the 2007-2008 crop year beginning with grain week 1 through to and including grain week 36 , that is, approximately, the first week of August 2007 up to and including the first week of April 2008.

For CN

With respect to service to CWB, by point of origin and destination, and by week:

• the number, and through which grain program, of rail cars ordered, allocated, cancelled, spotted, released and lifted;
• the degree of fulfilment, expressed as a percentage; and
• any other information that CN considers relevant regarding this data.

With respect to rail service provided by CN to the grain handling transportation system as a whole, by corridor, and by week:

• the number, and through which grain program, of rail cars ordered, allocated, cancelled, spotted, released and lifted;
• the degree of fulfilment, expressed as a percentage;
• the total number of hopper cars (whether owned by CN or third parties) that have been available to CN since September 30, 2007;
• the total numbers of hopper cars that CN has retired from service or that have been unavailable for grain service for any reason, including storage or maintenance, since September 30, 2007; and
• any other information that CN considers relevant regarding this data.

For CWB

With respect to service from CN, by point of origin and destination, and by week:

• the number, and through which grain program, of rail cars ordered, allocated, cancelled, traded away, received in trade, spotted, released and lifted;
• the degree of fulfilment, expressed as a percentage; and
• any other information that CWB considers relevant regarding this data.

[106] The parties are required to submit the foregoing information for grain weeks 1 through 27 of crop year 2007-2008 by no later than February 11, 2008. Subsequently, this information is to be provided to the Agency on a weekly basis by each Monday of the remaining grain weeks 28 through 36 of crop year 2007-2008. (A sample layout can be found in Appendix B.)

[107] To address issues of predictable car supply relative to service standards encountered during crop year 2006-2007, the Agency orders that CN, as per its representations:

• Allocate a minimum of 75 cars per week to its GTSE program in Series B;
• Reduce the minimum contract requirement for GT Secure programs from 30 consecutive weeks to 20 not necessarily consecutive weeks;
• Permit all shippers to trade rail cars obtained through advance products programs and general allocation;
• Continue to publish the methodology it uses for rationing general allocation car supply;
• Continue to implement the modified rationing process to ensure all shippers who submit offers for a product receive a level of advance car supply;
• Continue to apply its "Railway Deficit Account" criteria to ration car supply in a manner that will not "shut out" the CARS group from general distribution car supply;
• Continue to publish the results of its weekly allocation decision on its Web site;
• Suspend the GX 100 program for the balance of the 2007-2008 crop year; and
• Transfer the 400 cars previously allocated to CN's GX 100 program to CN's GTSE "Series A" capacity.

[108] The Agency also reserves the right to hold a hearing, if required, to determine whether CN has failed to provide adequate rail service for crop year 2007-2008 and whether further remedies need to be considered. The Agency intends to complete its review so that any further remedies that may be ordered can be reflected in CN's programs in advance of coming into effect for the new crop year.

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APPENDIX A

A. The GX 100 program

A GX 100 program is applicable to shipments for western Canadian grain to ports in British Columbia for export. A GX 100 contract allows a shipper to reserve railway capacity for a contract period covering a specified number of grain weeks, commencing on grain week 10 and ending no later than grain week 52 to the corridors of Vancouver and Prince Rupert. A shipper may contract at tariff rates for one or more Contract Units, each representing a block of 100 or more empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin to one destination on a corridor, with a minimum commitment of 20 grain weeks to Vancouver and a minimum of 12 grain weeks to Prince Rupert. In its letter dated October 5, 2007, in response to CWB's request for an interim order, CN indicates that it has suspended the GX 100 program for the 2007-2008 crop year.

B. GT Secure Export program

The GT Secure Export program is applicable to shipments for western Canadian grain to ports at Vancouver, British Columbia or Thunder Bay, Ontario/Duluth, Minnesota for export. A shipper may reserve railway capacity for a contract period covering a specified number of grain weeks, commencing on grain week 10 and ending no later than grain week 52. A shipper may contract at tariff rates for one or more Contract Units, each representing a block of 50 empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin to one destination on a corridor, with a minimum commitment of 20 grain weeks to Vancouver and a minimum of 12 grain weeks to Thunder Bay, Ontario/Duluth, Minnesota.

Under the GT Secure Export program, two different contract types are offered. A "Series A contract" means a GT Secure Export contract applicable for the Vancouver Corridor and only available to shippers who have been awarded a GX 100 contract. A "Series B contract" means a GT Secure Export contract applicable for the Vancouver Corridor and only available to shippers who have not been awarded a GX 100 contract. Segmented capacity available to be booked under the Series B contracts is an average of 75 cars/week.

C. The GT Secure North America program

The GT Secure North America program is applicable to shipments for western Canadian grain to domestic destinations in Canada, the United States and Mexico excluding British Columbia or Thunder Bay, Ontario. A shipper may reserve railway capacity for a contract period covering a specified number of grain weeks, commencing on grain week 10 and ending no later than grain week 52. A shipper may contract at tariff rates for one or more Contract Units, each representing a block of 25 empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin to one point on a corridor, with a minimum contract commitment of 20 grain weeks.

D. The GT Pro Export program

The GT Pro Export program is applicable to western Canadian grain shipments to the ports of Vancouver and Prince Rupert in British Columbia and for the ports of Thunder Bay, Ontario/Duluth, Minnesota for export. A shipper may reserve railway capacity for a specific grain week, for a specified number of Contract Units, each representing a block of 50 empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin to one destination on a corridor subject to the terms and conditions of the tariff. In order to reserve capacity, a shipper must submit a GT Pro Export contract offer which must specify the destination corridor, the specific grain week, in which CN has given prior notice that Contract Units are available and; an offer, in Canadian funds per car, of not less than CAN$1 per car, that the shipper commits to pay to CN if awarded the contract.

E. The GT Pro North America program

The GT Pro North America program is applicable to western Canadian grain shipments to domestic destinations in Canada, United States and Mexico but excluding points in British Columbia, Thunder Bay, Ontario. A shipper may reserve railway capacity for a specific grain week, for a specified number of Contract Units, each representing a block of 25 empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin for shipment of grain within the corridor subject to the terms and conditions of the tariff. In order to reserve capacity, a GT Pro North America contract offer must be submitted to CN. The contract offer must identify the destination corridor, the specific grain week, in which CN has given prior notice that Contract Units are available and; an offer, in Canadian funds per car, of not less than CAN$1 per car, that the shipper commits to pay to CN if awarded the contract.

F. The GT Pro British Columbia program

The GT Pro British Columbia program is for western Canadian grain shipments to provincial mainland destinations for domestic use. A shipper may reserve railway capacity for a specific grain week, for a specified number of Contract Units, each representing a block of 10 empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin for shipment of grain to destinations on a corridor subject to the terms and conditions of the tariff. In order to reserve capacity, a GT Pro British Columbia contract offer must be submitted to CN. The contract offer must identify the specific grain week, in which CN has given prior notice that Contract Units are available and; an offer, in Canadian funds per car, of not less than CAN$1 per car, that the shipper commits to pay to CN if awarded the contract.

G. The GT Secure Transload program

The GT Secure Transload program is for western Canadian grain shipments to the port of Vancouver in covered hoppers for transloading into containers or vessels or for transfer to storage. A shipper may reserve railway capacity for a contract period covering a specified number of grain weeks, commencing on grain week 10 and ending no later than grain week 52. A shipper may contract at tariff rates for one or more Contract Units, each representing a block of 10 empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers. Placement and loading is from one origin to the port of Vancouver with a minimum commitment of 20 grain weeks.

H. The GT Pro Transload program

The GT Pro Transload program is for western Canadian grain shipments to the port of Vancouver in covered hoppers for transloading into containers or vessels or for transfer to storage. A shipper may reserve railway capacity for a specified grain week for a Contract Unit, each representing a specified number of empty rail cars allocated and supplied from the CN-controlled fleet of covered hoppers.

Placement and loading is from one origin for shipment of grain to destinations subject to the terms and conditions of the tariff.

A shipper may request a GT Pro Transload Contract Unit by submitting an offer which must specify: 1) the number of cars requested for each contract unit with a minimum of 10 cars and a maximum being the number of cars CN has given prior notice to be offered by CN through the program and available for the requested grain week; 2) the specific grain week in which CN has given prior notice that Contract Units are available; 3) an offer, in Canadian funds per car, of not less than CAN$1 per car, that the shipper commits to pay to CN if awarded the contract.

I. General Car Supply program

Weekly car supply not offered through the advance products programs is referred to as general car supply. A shipper may order one or more cars on a weekly basis, approximately 1 ½ weeks prior to the load week at posted tariff rates. There are no restrictions on unit size. If general car order requests in a corridor exceed CN's forecast of available capacity, CN rations among these general car order requests using one or a combination of the following factors:

1. Pipeline management;
2. Historic shipping percentage;
3. Off-the-top;
4. Pro-rata basis;
5. Order utilization.

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APPENDIX B

Suggested format

With respect to service provided by CN to CWB, by point of origin and destination, and by grain week:

(To be completed by the carrier)

CWB
		Week 1	Week 2	Week 3	Week ...	Week 36
Point of origin and destination and grain program
Cars ordered
Cars allocated
Cars cancelled
Cars spotted
Cars released
Cars lifted
Total number of hopper cars (whether owned by CN or third parties) that have been available to CN since September 30, 2007
Total numbers of hopper cars that CN has retired from service or that have been unavailable for grain service for any reason, including storage or maintenance, since September 30, 2007
Comments
Any other relevant information

With respect to service received by CWB as provided by CN, by point of origin and destination, and by grain week:

(To be completed by the shipper)

CWB
		Week 1	Week 2	Week 3	Week ...	Week 36
Point of origin and destination and grain program
Cars ordered
Cars allocated
Cars cancelled
Cars traded away
Cars received in trade
Cars spotted
Cars released
Cars lifted
Comments
Any other relevant information

Members

• Geoffrey C. Hare
• Beaton Tulk
• Raymon J. Kaduck