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Canadian Transportation Agency (CTA) Sept. 10 denied Ferroequus Railway Co.'s application seeking running rights over Canadian National Railway Co.'s line between Camrose, Alberta, and Port of Prince Rupert, British Columbia, to compete for grain business.


The agency determined that a statutory running right is an "exceptional remedy" that requires actual evidence of market abuse or failure before CTA could grant an application under Canada Transportation Act section 138.


"Ferroequus has not established the existence of a rate or service problem in the relevant markets, nor has it established that the granting of running rights would eliminate or alleviate any lack of adequate and effective competition," said CTA in its decision, according to a prepared statement.


The agency also ruled that granting Ferroequus's application would have a negative impact on many of the area's grain handlers and transportation providers; the railway's business plan is overly optimistic; the proposed traffic interchange at Camrose cannot be performed without creating inefficiencies in the current grain-handling system and affecting area pipe-manufacturing companies; and inefficiencies imposed on grain-handling and transportation-system participants other than Ferroequus wouldn't be offset by the railway's operating efficiency.


CN, which strongly opposed the application, issued a statement welcoming CTA's decision and emphasizing that de-regulation of Canadian railways has benefited shippers by providing them better service, lower rates and a competitive rail industry.


"CN has long argued that granting Ferroequus running rights would allow it to enter the rail business, not by investing in its own network, but by 'cherry-picking' CN traffic through regulatory means," CN said, adding that if third parties obtain running rights, it would reverse de-regulation's successes and adversely affect the rail industry's financial viability.


Railway Association of Canada's (RAC) 40 short-line members also agreed with CTA's ruling.


"Our short-line members … said that access arrangements should be negotiated between railways, not imposed by government regulators," said RAC President and Chief Executive Officer Bill Rowat in a prepared statement, adding that the associations' small roads were concerned that CTA could allow a new railway to run on their tracks and solicit their business.


Neither Ferroequus Railway nor Association of Regional Railways of Canada, a short-line and regional railroad organization formed in September 2001 to promote open rail competition, issued statements on the decision.