UPDATE 2-CN rail fines over grain shipments to proceed -Ottawa

Tue Sep 23, 2014 12:29pm EDT
 
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(Adds reaction from CN, comment from Ritz paragraphs 5-8)

By Randall Palmer

OTTAWA, Sept 23 (Reuters) - The Canadian government dismissed on Tuesday complaints from Canadian National Railway Co that fines for failing to ship the required minimum amounts of grain were unfair because there was not enough demand.

Agriculture Minister Gerry Ritz said there was a backlog of grain waiting for CN to move, even though it is less than expected, and the other main carrier, Canadian Pacific Railway Ltd, was having no problem meeting its minimum.

"I'm not sure where CN is getting the idea there isn't grain to handle," Ritz told reporters on a conference call from India. "The fines will be assessed, they will be levied, and we expect CN to actually pick up their game."

CN faces fines of up to C$100,000 ($91,000) a week for failing to move the 500,000 tonnes of grain per week required by the government in an effort to unclog the shipping bottlenecks that followed record 2013 wheat and canola harvests.

"I know there's buyers out there. There's still some 20 boats sitting in Vancouver waiting for cargo, waiting to be loaded and moved away," Ritz said.

CN, which says weekly demand had been below the level required to meet the government target, said it met its commitment to move as much grain as possible and as efficiently as possible.

"CN believes any Canadian government penalties levied against the company in connection with its transportation of Western Canadian grain would be unfounded, given that it's the current balance of the grain supply chain that did not allow CN to meet the ... weekly requirement lately," spokesman Mark Hallman said in an email.

He added that the company had yet to receive a notice of violation from the government.

($1=$1.10 Canadian) (Editing by Chizu Nomiyama and Gunna Dickson)