WINNIPEG, Manitoba (Reuters) - The Canadian Wheat Board and its supporters said on Friday they may seek an injunction to stop the federal government's move to end the board's monopoly on sales of Western Canadian wheat and barley.
Such a move could create enormous uncertainty for grain handlers and farmers who are preparing to sign deals for next year's crops, with government aiming to open the market as of next August.
A Federal Court judge ruled on Wednesday that Agriculture Minister Gerry Ritz had breached existing law by not consulting with the Wheat Board or holding a farmer vote before introducing legislation to end the board's marketing monopoly. But the judge did not order the new legislation killed.
The legislation is scheduled to get final approval in the Senate on Thursday, after which it would need royal assent by the governor general to become law.
Friends of the Canadian Wheat Board, the group that initially brought the case against the Conservative government, is considering asking for an injunction to stop the bill from taking effect. But the group's lawyer, Anders Bruun, said it would not do so until after the bill becomes law.
"(An injunction) would prevent the government from acting on that piece of legislation," Bruun said. "We'll have to see what the government does, and it may not be necessary (if) they back up and do things in the proper procedure and have a vote."
The Wheat Board, which is calling on the government to let farmers decide its fate, is looking at all of its options, including a possible injunction, said spokeswoman Maureen Fitzhenry.
The Conservative government filed its appeal of the court's ruling on Friday and said it would proceed with the legislation to end the Wheat Board's 68-year-old monopoly on marketing Western Canadian wheat and barley for milling or export.
"Western farmers should continue to plan on having the same freedom as other farmers in Canada so that they too can market their grains in the best interests of their individual farms," Agriculture Minister Gerry Ritz said in a statement.
The legislation conforms with the Constitution and is within the powers of Parliament, the government statement said.
In his ruling Wednesday, the judge noted that the minister's conduct, not the bill itself, was the focus of the case.
Even so, others said it is unclear how the government could implement the law with its appeal still pending.
"That ruling of the court stands, it's the law," said Ned Franks, professor emeritus of political studies at Queen's University. "As long as that appeal process is underway, the government cannot implement the provisions of the law."
Parliament has the authority to pass legislation without court interference, but there are a few limits, Franks said. In particular, it must adhere to "manner and form" - that is, the law currently in effect. The government failed to do that when it introduced its bill to break the monopoly without holding a farmer vote, Franks said.
On Thursday, an opposition attempt to derail government legislation to end the Wheat Board's grain marketing monopoly, based on the court ruling, failed in the Canadian Senate.
Art Stacey, a Winnipeg lawyer specializing in agri-business, said Parliament can pass laws as it sees fit but must respect the process.
"I don't see how the government thinks it can enact a piece of legislation that a Federal Court says has been passed in a way that is unlawful," said Stacey, who does not represent anyone involved in the case. "The government is as much subject to the law as you or I."
The government might have been on more solid ground if it had moved in two stages, first removing the requirement for a farmer vote, then scrapping the monopoly, Stacey said.
The immediate implications of the bill are that grain handlers like Viterra, Richardson International and Cargill can sign forward price contracts with farmers as soon as the bill passes. One derivatives exchange, ICE Futures Canada, also plans to list new wheat and durum contracts on January 23, assuming the monopoly ends.
"It's up to the companies to assume a level of risk because we don't know what's going to happen legally," said Wade Sobkowich, executive director of the Western Grain Elevators Association, speaking to a Senate committee on Friday.
It's critical that farmers also have certainty about the legislation, said Conservative member of Parliament David Anderson.
"So that's why we need to move ahead ... we've got a strong feeling our appeal will be successful."
ICE Futures Canada president Brad Vannan said the exchange's view is that the ruling does not affect the legislation.
Reporting By Rod Nickel in Winnipeg; additional reporting by Randall Palmer and David Ljunggren in Ottawa; Editing by Peter Galloway