UPDATE 4-Canada bill imposes penalties for rail service failure

Tue Dec 11, 2012 5:00pm EST
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* Bill gives shippers right to service contacts

* Penalties up to C$100,000 per violation could be imposed

* Shippers, railways had failed to agree on a template

By Rod Nickel

WINNIPEG, Manitoba, Dec 11 (Reuters) - Long-awaited federal legislation unveiled on Tuesday would force Canadian railways to reach service agreements with shippers that request them and could impose penalties on the railways if they fail to meet their obligations.

The bill, unveiled by Transport Minister Denis Lebel and Agriculture Minister Gerry Ritz at a press conference in Winnipeg, seeks to address complaints by grain handlers, miners and shippers of commercial goods, which want better service from the country's big railroads: Canadian National Railway Co and Canadian Pacific Railway Ltd.

The legislation would give railways 30 days to respond to a shipper's request for a service contract. If an agreement could not be reached, arbitration would be available.

"There is an imbalance in the shipper-railway relationship," Lebel said at a news conference attended by shipping groups, but not railways. "(A government-appointed panel) recommended the use of service agreements as a tool to enhance clarity and predictability and reliability on rail service."

Lebel, however, said that rail service has improved recently.   Continued...