CN gets income-cap cash back on appeal

The ag research fund that benefits in years when Canada's railwaysearn too much revenue hauling Prairie grain must now pay back over$128,000 to Canadian National Railway (CN). The Western Grains Research Foundation reported Tuesday that itwill pay back $128,468.47 to the railway, following a successfulappeal by CN to the Canadian Transportation Agency (CTA). Federal transportation legislation requires that when either CN orCanadian Pacific Railway (CPR) exceed their grain revenue Back Cap,they must pay the excess plus a five per cent penalty to the WGRF'sendowment fund for crop research. CN in January last year said it would appeal the CTA's ruling onthe company's 2005-06 grain revenue. CN argued that the penaltycharged by the CTA was $522,383 too high; the CTA had initiallyruled CN had exceeded its grain revenue cap by about $2.7 million. CN said at the time that the revenue cap imposed on it that yearshould instead have been adjusted based on the math used tocalculate intermodal pickup-and-delivery and demurrage overages,the WGRF said Tuesday. The WGRF said its repayment will include $116,900 for the reducedrevenue cap overage, $5,845 reimbursement of the five per centpenalty initially collected and $5,723.47 for CN's share ofinterest earned, dating back to when the appeal was made. Loss of interest The refund doesn't jeopardize any specific research, because theWGRF put CN's excess-revenue donation from that year into a trustaccount until the CTA could rule on CN's appeal. "We are happy that a decision has been reached and that the balanceof the funds can now be invested into research that benefitsfarmers across Western Canada," WGRF spokesperson Amanda Soulodresaid in a press release Tuesday. Nevertheless, the WGRF said, the refund to CN will translate to theloss of about $6,137 in interest income per year for the endowmentfund. That interest, if collected over five years, would support aone-year research project, the WGRF said. CN wasn't the only railway to successfully appeal against the CTA'srulings for 2005-06. The WGRF in October last year was told it hadto refund about $871,000 to CPR, which appealed to the CTA on the$1.6 million it was charged based on the 2005-06 grain revenue cap. CN and CPR also both plan to challenge the CTA's decision inFebruary to substantially reduce their revenue cap for 2007-08. TheCTA ordered a $72.2 million reduction in the grain revenue cap,retroactive to Aug. 1 last year. The agency said "significantimprovements" in railway operating efficiency had reduced therailways' costs of maintaining federally-owned grain hopper cars. The CTA in December last year also ruled that CPR had exceeded its2006-07 cap by $3.76 million. CPR hasn't yet said if it will appealthat ruling.