Decision No. 204-R-2010
May 19, 2010
REDETERMINATION by the Canadian Transportation Agency, in response to a ruling by the Federal Court of Appeal, with respect to the Canadian National Railway Company's appeal of the Canadian Transportation Agency Decision No. 628-R-2008 and a confidential Letter Decision, both dated December 30, 2008.
File Nos. T6650-2
 In Decision No. 628-R-2008, the Canadian Transportation Agency (Agency) determined the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) revenues and revenue caps for moving western grain by rail in crop year 2007-2008. In its Decision, the Agency dealt with six new issues. Three of those issues were appealed by CN:
- that grain brought by rail from the United States of America and moved through Canada to be exported by sea is a grain movement under the Revenue Cap Program;
- that CN and CP shall not reduce intermodal revenue under the Revenue Cap Program for container lifting costs, container maintenance costs nor for container ownership costs; and
- that a ruling on the ownership of Industry Development Fund (IDF) assets be delayed until a full industry-wide consultation could be held.
 In a confidential letter decision dated December 30, 2008, the Agency dealt with a seventh issue, which was also appealed by the CN:
- iv. the payment by the shipper to CN for not performing a contractual obligation is not reasonably characterized as a performance penalty as it caused no detriment to CN. Thus the repayment was deemed to be revenue under the Revenue Cap Program.
 On March 30, 2010, the Federal Court of Appeal (FCA), in Docket No. A-156-09, ruled in CN's favour on issue (iv), finding that the amount in question is reasonably characterized as a performance penalty and according to paragraph 150(3)(b) of the Canada Transportation Act, S.C., 1996, c. 10, as amended is not to be included as CN's revenue for the movement of grain in a crop year under the Revenue Cap Program. The FCA remitted the matter back to the Agency for redetermination.
Analysis and findings
 Given the FCA's ruling, the Agency finds that the amounts collected by CN from the failure of the shipper to meet all of its terms and conditions under its volume rebate contract are not to be included in CN's revenue for the movement of grain in the crop year under the Revenue Cap Program for crop year 2007-2008.
 For crop year 2007-2008, CN's revenue figure is revised to $407,608,916 and the excess amount (i.e., the amount it exceeds its Revenue Cap) is revised to $24,303,477. It should be noted that in Decision No. 529-R-2009, the Agency varied Decision No. 628-R-2008, adjusting CN's 2007-2008 revenue figure by reducing it to take into account additional Industrial Development Fund contributions made by CN.
 As CN had exceeded its revenue cap for crop year 2007-2008, it paid the Western Grains Research Foundation (Foundation) the amount of excess plus a 15 percent penalty. As this Decision lowers the amount that CN exceeded its revenue cap for crop year 2007-2008, CN has overpaid the Foundation with respect to that crop year. Therefore, the Foundation is requested to return the amount of $1,380,000 to CN, which includes the amounts of the excess and of the penalty.
- Jean-Denis Pelletier, P. Eng.
- Raymon J. Kaduck