Court rules against Canadian railways on grain

Tue Nov 25, 2008 3:36pm EST
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VANCOUVER, British Columbia (Reuters) - A court has ruled against Canadian Pacific Railway Ltd. and Canadian National Railway Co. in a battle over the cost of maintaining the government's grain car fleet.

The Federal Court of Appeal rejected the railways' argument on Monday that the Canadian Transportation Agency erred in the way it retroactively cut the amount of revenue the carriers could earn from shippers in the 2007-08 crop year.

The court also rejected Canadian Pacific's claim the regulators wrongly used rival Canadian National's data to determine how much it cost both railways to maintain their share of the hopper car fleet.

The cars are owned by the federal government but operated and maintained by the railways, and used to ship Prairie grain to seaports.

The ruling is part of a long-running battle between the railways and grain farmers over rates and service levels.

Canadian Pacific said on Tuesday it was studying the lengthy decision, which it said reduced its revenue for the 2007-08 grain crop by C$23 million ($18.8 million).

"CP will review its products and pricing as it relates to this decision and will communicate this to customers in the near future," the country's second largest railroad said in a brief news release.

Canadian National, the country's largest railway, did not immediately comment on the court's ruling.

($1=$1.23 Canadian).

(Reporting by Allan Dowd; editing by Rob Wilson)