June 4, 1999
(Executive Council)

Minister reacts to decision of Canadian Transportation Agency on Term 32(2)

Intergovernmental Affairs Minister Walter Noel was pleased with a decision announced yesterday by the Canadian Transportation Agency (CTA). The CTA concluded that Term 32(2) of the Terms of Union, which sets a ceiling on railway freight rates to, from, and on the island, continues to apply to Canadian National (CN).

Term 32(2) sets a ceiling on railway freight rates to, from, and on the island, with freight rates for the Gulf crossing treated as if it was part of an "all rail movement." Upon the closure of the Newfoundland Railway in 1988, the federal government agreed that CN would continue to apply Term 32(2) rates to intermodal shipping. Until recently, CN did not challenge the continued operation of Term 32(2). Because of CN privatization and deregulation of railways in 1996, CN maintained that it was no longer obliged to provide rates in accordance with Term 32(2).

In 1997, Gordon Moffatt, a local shipper, requested Final Offer Arbitration under the Canadian Transportation Act, complaining that CN was failing to meet its obligation to provide freight rates in accordance with Term 32(2). The CTA concluded in its decision that Term 32(2) continues to apply on such freight traffic, and that CN continued to be bound by it. Mr. Moffatt may now proceed to arbitration over the rate to be applied.

Minister Noel stated: "The provincial government intervened in support of Mr. Moffatt's application during the public hearings in 1998 to ensure Term 32(2) remained in effect, and we are pleased with the Canadian Transportation Agency's decision. Those who drafted the Terms of Union recognized the difficulties inherent in shipping goods to and from the island, and the expense involved, and put a ceiling on them. The agency has confirmed that Term 32(2) is still in effect, which is very good news for the province."

Media contact: Ron Fitzpatrick, Communications, Intergovernmental Affairs, (709) 729-2077.

1999 06 04                            11:50 a.m.