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Canadian Pacific CEO wants more Canada-U.S. consistency on rail rules

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CALGARY - The CEO of Canadian Pacific Railway (TSX:CP) says he'd like to see Canada and the United States work together on rail regulations — though he admits it may be difficult to pull off.

The company is trying to talk to regulators in Washington and Ottawa about how the lack of consistency is hurting business, Hunter Harrison said Thursday.

"What I would like to see is — and look, this is almost a dream — to have a North American policy... harmonize the rules and work together in the collective spirit to try to decide what's going to be done," he told reporters following the company's annual meeting.

"We're trying to spend time with the regulators in Washington and in Ottawa and try to explain to them the difficulties that are created when you get to the border and the locomotive's OK in Canada, but it's not in the U.S., or vice-versa."

Transportation Minister Lisa Raitt announced a suite of new rules in Ottawa last week to make transporting crude oil by rail safer. U.S. regulators, however, are still working out their changes. A fiery train wreck in Virginia on Wednesday renewed calls for the Obama administration to tighten crude-by-rail rules more quickly.

Harrison concedes his call for more bilateral agreement may not bear much fruit.

But he says more collaboration with U.S. regulators makes sense in light of recent changes to rules around interswitching — the ability for customers captive to one railway to move shipments from one network to another at federally-regulated rates.

Ottawa, in a move to improve service to Prairie grain elevators that, for the most part, have access to only one railway, has increased the radius for inter-switching from 30 kilometres to 160 kilometres in Alberta, Saskatchewan and Manitoba — in theory, enabling connections with U.S. railways.

"It would look like it makes a lot of sense to have the same rules and regs — and maybe that's too much of a reach. But I think that would be very smart, very rational and maybe too smart and rational."

Harrison has been critical of Ottawa's response to two hot-button issues — the safety of moving crude by rail and delays in moving a bumper Prairie grain crop to market.

While Harrison is happy thousands of older-model cars used to transport flammable goods — like those involved in the deadly crash in Lac-Megantic, Que., last summer — are being taken off Canadian tracks, he said other measures, like one related to train speed, don't make sense.

On new regulations regarding grain shipments, Harrison said railways have been told they need to move a certain number of railcars of grain per week without any consideration to how far those cargoes are travelling.

"I think there's a lot of gaps, there's a lot of things they missed that we could have been helpful with," he said.

"Clearly, in my view at least, the regulators were under a lot of pressure. I understand and appreciate that. But I would think that they would have taken more time to utilize the expertise and experience that exists in this industry throughout Canada to get some feedback on what should be done."

Follow @LaurenKrugel on Twitter

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