The Western Grains Research Foundation won’t have to pay withdrawal penalties to come up with cash it owed to Canadian Pacific Railway (CPR).
The fund, which endows research on cereal grains, is the beneficiary of penalties paid by the two national railways, CPR and Canadian National (CN), whenever they exceed their regulatory caps for revenue from handling Prairie grain.
But CPR, in October 2007, won an appeal at the Canadian Transportation Agency which reduced the amount of that penalty for the 2005-06 crop year. Thus, the WGRF had to repay $870,783 to CPR.
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For its part, CPR “has been flexible in not requiring the return of the overpayment back in October,” said Lanette Kuchenski, the WGRF’s executive director, in a release Monday.
“This has helped WGRF avoid interest rate penalties that would have accrued from removing the money from long-term investments.”
CPR, in turn, learned last month that it owed the WGRF $3,948,371 in excess grain revenue for the 2006-07 crop year — and was thus able to write the WGRF a cheque for just $3,077,588 to pay off the newer penalty, the fund announced Monday.
WGRF said it hasn’t yet heard whether CPR plans to appeal its 2006-07 penalty. The fund also still awaits the outcome of CN’s appeal of the $2.8 million-plus penalty that railway had to pay into the WGRF for 2005-06.
The WGRF’s endowment fund generates about $400,000 per year in interest to put toward crop research. The extra $870,783 would have generated about another $47,000 in interest, the fund said in its release.
