UNREASONABLE ANCILLARY CHARGES, TERMS OR CONDITIONS
Availability of remedy
Federal railway companies, such as CN and CP, publish tariffs
setting out the rates and charges for the various services they
provide, together with rules governing the application of such rates
and charges. Recent amendments to the Canada Transportation Act empower
the Canadian Transportation Agency (the “Agency”) to review and assess
the reasonableness of ancillary charges and associated terms and
conditions set out in a railway tariff that applies to more than one
shipper. If the Agency finds that the charges or conditions are
unreasonable, it can establish new charges and conditions, and the
railway company must then vary its tariff to reflect the Agency’s
Order. The charges and conditions established by the Agency remain in
effect for up to one year.
In determining whether a charge, term or condition is unreasonable, the Agency must take into account the following factors:
- the objective of the charges or associated terms and conditions, e.g. discouraging shippers from overloading railway cars
industry practice in setting the charges or associated terms and
conditions, i.e. whether other railways have the same charges, terms
- in the case of a complaint
relating to the provision of any incidental service, the existence of
an effective, adequate and competitive alternative to the provision of
that service, e.g., warehousing or weighing
- any other factors the Agency considers relevant
new charges and conditions established by the Agency must be
commercially fair and reasonable to the shippers who are subject to
them as well as to the railway company.
Who can make a complaint?
A complaint that charges or associated terms and conditions are
unreasonable may be made by a shipper who is subject to those charges
or conditions. The Agency has the power to combine two or more
complaints and deal with them as a single proceeding. Since the
application of the ancillary charge or condition to other shippers is
one of the factors the Agency must consider in making its decision,
there is a good chance that shippers who share similar concerns with
respect to the same tariff provision will be able to persuade the
Agency to combine their complaints. Alternatively, other shippers who
have an interest in the matter may apply to the Agency to participate
How does the process work?
Complaints must be made in writing to the Secretary of the Agency. A
complaint should set out the basis for the complaint and include any
supporting information and documentation. The railway company has the
right to provide a written answer, and the complainant may file a
written reply to the railway’s answer. A copy of each document that is
filed with the Agency must be provided to the opposing party.
the Agency is not required to hear oral evidence from witnesses, it may
decide to do so in order to provide other shippers who are subject to
the same charges, terms or conditions an opportunity to make
presentations to the Agency on the subject.
Canada has indicated that this new remedy is intended to deal with
ancillary charges and not line-haul rates. The new legislation does not
use this language. It provides for complaints regarding charges “for
the movement of traffic” or “for the provision of incidental services”
but excludes complaints in respect of “rates for the movement of
goods”. In addition, the legislation distinguishes between ancillary
charges, terms or conditions related to the movement of traffic and
those with the provision of incidental services. The shipper will need
to determine into which category the charges, terms or conditions to
which the complaint relates belong. This will not always be obvious.
The expressions “incidental services”, “charges for the movement of
traffic”, and “rates for the movement of goods” are not defined in the
Act. As shippers begin to use the new remedy, the Agency will likely be
called upon to define the scope of these terms more clearly in response
to disputes over whether a particular charge is eligible for review by
the Agency or whether the existence of competitive alternatives is
relevant in a particular case.
What Is required for a complaint to succeed?
In reaching a decision, the Agency is likely to consider the following questions:
- What triggers the charge complained of?
- Is this something within the control of the shipper, the railway company, a third party?
- What is the objective of the charge or condition complained of?
- Does the charge or condition advance this objective?
- How do the charges or conditions compare with those of other railway companies?
- Does the charge or condition relate to an incidental service?
so, what alternatives does the person making the complaint have to
obtain the incidental services to which the charges or conditions
- How is the shipper making the complaint affected by the charge or condition?
- How are other shippers affected by it?
- What costs does the railway incur in providing the service to which the charge or condition applies?
In order to address these questions, a complaint should include or be supported by the following:
- an explanation or illustration of how the charge or condition applies to the shipper’s traffic
This would include a discussion of how the charge is most often
triggered and what if any steps the shipper can take to avoid the
imposition of the charge. If the complaint is occasioned by a change in
the railway’s rules or charges, the application of the new tariff
provision should be contrasted with that of the previous version.
- a discussion of the objective of the charge or condition and whether this objective is advanced by the tariff
In some instances it may be difficult for shippers to obtain reliable
information concerning the objective of the charge or condition. In
others, a railway company may have included an explanation of their
rationale for imposing or changing the charge or condition on their
websites or in other informational material sent to shippers. In some
instances, for example, charges imposed for weighing at a shipper’s
request, the main objective of a charge may be to compensate the
railway company for work that is being performed. In other cases, for
example failure to use a railway company’s on-line communications
platform to submit bills of lading or release cars, the main objective
may be to alter shipper behaviour.
- information regarding how other railway companies handle the charge or condition at issue
railway companies now make their tariffs available via the internet.
This will enable shippers to compare the tariff provision that is the
subject of a complaint with those of other railway companies.
- information regarding competitive alternatives
the complaint relates to an incidental service rather than a charge for
the movement of traffic, evidence demonstrating that there are no
effective, adequate and competitive alternatives will be required.
- effect of the charge or condition on shippers
The CTA does not require a shipper to demonstrate that the ancillary
charge or condition at issue is damaging to its business. A more
general description which illustrates the unfairness or
unreasonableness of how the charge or condition applies to the shipper
or to other shippers should nevertheless be included. The railway
company, in its written answer, may question the extent to which the
shipper’s business interests are harmed, but the shipper should resist
any attempts to have this factor treated as a criterion in the Agency’s
determination of the matter.
Depending on the circumstances of the case, evidence in the following areas may also be relevant:
- railway costs
Where compensation for services rendered is the main objective of a
charge, the cost which the railway company actually incurs to provide
the service will be relevant. This type of evidence is not readily
available to shippers, but there are consultants with expertise in
railway costing who can provide an analysis of the costs involved.
Costs may also be a relevant consideration in connection with charges
designed to alter shipper behaviour. For example, do demurrage charges
bear any relation to additional costs incurred by a railway company
when the allotted free time for loading or unloading is exceeded or do
charges imposed for faxed railcar releases correspond to additional
costs incurred by the railway company in connection with this
If the ancillary charge or condition discriminates unfairly between
different shippers or commodities, this should be brought to the
Agency’s attention. An example of this would be a demurrage rule that
provides for less free time at loading or unloading for some
commodities than for others.
- other forms of unfairness
If the specific shipper conduct that a charge or condition is intended
to discourage is limited to a certain industry or commodity group, this
may support an argument that the ancillary charge or rule is overly
broad, by punishing or imposing onerous conditions on all shippers in
order to address problems created by only a few.
How long does it take?
The Agency must make a determination within 120 days after receiving
a complaint. When a complaint is dealt with entirely in writing,
however, it will generally require less time.
The number of
participants at particular proceedings will also be a factor affecting
its length. A case relating to an ancillary charge that attracts the
attention of many segments of the shipper community, may involve
several parties and intervenors. The Agency may determine that
additional time is required to deal with all relevant evidence and
submissions and may request that the parties consent to an extension of
the 120 day timeframe.
What can the Agency do?
If the Agency determines that a charge or associated term or
condition is unreasonable, it can establish new charges and conditions.
The railway company will then be required to amend its tariff
The Agency will specify the time during which its order remains in effect, but that time may not exceed one year.
Agency does not have the ability to order a railway company to
reimburse shippers for charges paid that are subsequently found to be
Ancillary Charges - Sample Complaint Letter
Ancillary Charges - Instructions for Completing the Complaint Letter
Ancillary Charges - Supplementary Information for the Ancillary Charge Complaint Process