The railway regulatory environment in the United States and Canada will continue to be an important subject of discussion in 2016. CN works hard to help inform lawmakers about the role that regulators have in fostering an efficient and safe rail industry that generates the returns required for significant capital investments in plant, equipment and technology. We believe the U.S. federal government has struck the right balance through the work of the Surface Transportation Board and Federal Railroad Administration.
It was the deregulation of the rail industry – first in the United States in 1980 and later in Canada in 1987 and 1996 – that was the turning point, allowing the overall rail industry to embark on a solid revival, to improve customer service and step up investments. Unfortunately, in 2013 and 2014, the former Canadian government took a step backward on the regulatory front, imposing minimum grain volume requirements on the two main railways, extending inter-switching limits extensively in three western provinces, and re-enforcing a spirit of finger-pointing and railway-bashing that has prevailed in the countryside.
The new Liberal government in Canada today has a significant opportunity to advance the competitiveness of Canada’s global supply chains — so critical to the nation’s economy — as it picks up the Canada Transportation Act review process. The CTA sets out Canada’s National Transportation Policy. That policy has long emphasized that transportation services are to be based on competition and market forces, and that government regulation and intervention should be generally limited to cases where the market cannot otherwise achieve satisfactory outcomes.
The prospect of the economic reregulation of the rail industry also remains an issue in the United States. We continue to believe that commercial principles and a stable regulatory environment in both Canada and the U.S. are essential for an effective, well-functioning rail transportation marketplace.