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5/1/2002



Rail News: Rail Industry Trends

CN leases Saskatchewan grain line to railway owned by six provincial municipalities; averts running-rights application


Canadian National Railway Co. May 1 announced a 20-year agreement with Wheatland Railway Inc., under which the short line — established earlier this year by six north-central Saskatchewan municipalities trying to preserve rail service — will lease CN's 46-mile Cudworth subdivision in Saskatchewan beginning Aug. 1.
Wheatland Railway will be responsible for line maintenance and for securing originating traffic, mostly farmer-loaded grain cars.
CN, which will be Wheatland Railway's sole rail-service provider and contractor, plans to employ its own personnel and equipment on Wheatland Railway during specific off-peak times.
Shipments would originate from Humboldt, Saskatchewan, on weekends or weekday evenings when local assets generally are available; Wheatland Railway would use CN's usual car-ordering procedures to forecast and obtain cars.
"[The agreement] reflects CN President and Chief Executive Officer Paul Tellier's commitment a year ago to Saskatchewan Premier Lorne Calvert
that CN would work with farm groups and rural communities to find economically viable ways to maintain rail service on low-traffic lines," said Francois Hebert, CN vice-president, corporate development, in a prepared statement.
Wheatland Railway plans to ship 60,000 tons of grain on the line in its first year of operation, through a combination of grain elevators and producer cars. The short line expects volumes to more than double to 130,000 tons by 2007.
As part of the agreement, Wheatland Railway's owners agreed to withdraw an appeal regarding the line's net salvage value that was submitted to Federal Court of Appeal, as well as a petition to Canada's federal
cabinet. The pact also concludes CN's line-abandonment process under Canada Transportation Act.
The agreement, too, bypasses Wheatland Railway's early-February deal with OmniTRAX Canada Inc., under which the short-line holding company would have provided train operations over the Saskatchewan line, had Wheatland Railway and OmniTRAX obtained running rights to CN's track through Canada Transportation Agency (CTA).
The companies planned to move cars along CN's lines — per a commercial fee — to Saskatoon, where they'd be transferred to CN or Canadian Pacific Railway.
However, CN and CPR strongly oppose running rights, and CN is in the midst of a running-rights dispute with Ferroequus Railway Co. Ltd., which is seeking CTA approval to access 1,200 miles of the Class I's track to annually haul about 800,000 tons of grain from Camrose, Alberta, to the Pacific port of Prince Rupert, British Columbia.
A CTA hearing on that matter began April 29, at which Ferroequus officials said the railway's business plan involves collecting grain from CPR, whose line intersects CN's Camrose line.
"What you've got here is an attempt by somebody who doesn't have the network, who didn't build it, who doesn't maintain it and who wants to use it in a way that we don't think is practical," said CN spokesman Jim Feeny at the hearing, according to a prepared statement.
Ferroequus, which was founded by former CPR locomotive engineer Tom Payne, who also created the Alberta-based regional Central Western Railway Corp., plans to lease 11 locomotives and 325 covered hopper cars from federal, provincial and Canadian Wheat Board fleets.
The hearing is expected to last about two weeks.


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