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On March 9, 2026, the Canadian Transportation Agency ("Agency") issued a determination1 ("Determination") in connection with its 2024 statutory review of the Railway Interswitching Regulations (the "Regulations").2
The Fair Rail Coalition (the "Coalition"), Canadian National Railway ("CN") and Canadian Pacific Kansas City Railway ("CPKC") each made submissions.3 The Coalition is a group of rail shipper associations representing various bulk commodity groups whose shipments represent more than half the rail traffic in Canada. McMillan represented the Coalition in its participation in the statutory review process.
In the Determination, the Agency addressed two key issues regarding regulated interswitching ("RIS") under the Canada Transportation Act (the "Act"): the eligibility of certain types of traffic for RIS and data transparency in RIS determinations.
What Is Regulated Interswitching?
RIS is the regulated transfer of traffic between two federal railway companies at an interchange (the point where the lines of two federal railway companies meet and where loaded or empty cars may be stored). RIS is available to shippers whose origin or destination is within a radius of 30 km of an interchange. A shipper may require a railway that serves the origin or destination to transport traffic to and from the interchange at the RIS rates the Agency sets annually.
The Agency's Determination
CN and CPKC argued that several categories of traffic should be ineligible for RIS rates. The Agency rejected all these arguments, finding that all traffic is eligible for RIS, subject only to the limited exceptions set out within the Regulations themselves. The Agency found that the definitions of "traffic" and "goods" in the Act are clear and support broad eligibility.
- Empty Rail Cars: Before the Determination, CN and CPKC took the position that shipments of empty railcars were not eligible for RIS rates.4 While observing that "the need for competitive access does not disappear simply because a railcar is empty",5 the Agency found that RIS applies to all traffic, including empty cars, locomotives and other equipment,6 thus resolving differences in understanding amongst stakeholders. CPKC also suggested that making empty-car repositioning movements eligible for RIS could incentivize shippers to use the rail network for "on-wheel" storage of empty cars and to under-invest in their own facility infrastructure. The Agency found this argument unconvincing, noting that CPKC had not offered any evidence to support its claim.7
- Special Cargo (e.g., hazardous materials, temperature-controlled goods): Shippers of hazardous materials, chemicals, and other specialized cargo retain full access to RIS. The Agency disagreed with CN's submission that special handling loads should be ineligible for RIS. The Agency observed that CN did not provide data showing how the frequency or cost of handling special loads fundamentally differs from regular switching operations, and that the Agency's RIS rate calculations already incorporate special handling loads through sampling during site visits.
- Shippers With Access to More Than One Railway ("Dual-Served" Shippers): A shipper that already has direct access to two railways at origin or destination may still use RIS to reach a third. The Agency confirmed that RIS is "intended to promote competitive access; it is not meant to constrain competitive access to just one additional railway company."8 RIS also protects situations where the second railway does not want to compete for the shipper's traffic or where one of the railway lines is inoperable.9 Thus, the Agency rejected CN's argument that dual-served shippers should be ineligible for RIS.
- Intermodal Freight: The Agency found that excluding intermodal traffic from eligibility for RIS could negatively impact the overall efficiency of the Canadian transportation system, and that excluding it could lead to increased rail rates for intermodal shippers, making truck transportation comparatively more appealing. The Agency observed that a shift of intermodal volume from rail to road would worsen highway and port congestion, resulting in an inefficient outcome that is not aligned with the principles enshrined in Canada's National Transportation Policy.10
Greater Transparency in RIS Rate Setting
The Agency's annual RIS determinations have described the Agency's RIS rate-setting methodology without making the underlying data available for third-party verification. The Determination acknowledged "the potential benefits of enhancing data transparency in the regulated interswitching rate determination process"11 and indicated that beginning with the 2027 RIS rate determination, the Agency "will begin publishing aggregated interswitching data used in the rate-setting process including carloads in each interswitching distance zone and workloads collected each year."12 That step is intended to improve stakeholder confidence in the Agency RIS rate determination process.
What's Next?
The Agency deferred consideration of "commercial market factors" in setting RIS rates. The Agency initiated a further consultation on that topic on November 10, 2025.13 First phase submissions were due on March 6 and the Agency advises it will post the first phase submissions on March 20.14
For further information regarding the Fair Rail Coalition, see fairrail.ca.
McMillan's Rail Transportation Group regularly makes submissions to both Houses of Parliament, Transport Canada, the Canadian Transportation Agency and other bodies in connection with rail regulatory and economic policy on its own behalf and on behalf of clients. Click here for a list of public submissions we have authored or which our clients have submitted.
Footnotes
1. Determination R-2026-41. The Determination is not yet available on the Agency's website, but the Agency's consultation paper and the various submissions in the review are available at: 2024-interswitching-consultation.
2. Section 128(5) of the Canada Transportation Act requires the Agency to review the Railway Interswitching Regulations once every five years or when circumstances warrant. The Agency last conducted such a review in 2019. The Agency launched its 2024 review on 21 November 2024, inviting stakeholders to comment on (1) eligible traffic, and (2) factors in setting the interswitching rate.
3. The Coalition was the only stakeholder that provided a response to the initial round of submissions, Determination R-2026-41, paragraph 13.
4. Determination R-2026-41, paragraphs 24–25.
5. Determination R-2026-41, paragraph 47.
6. Determination R-2026-41, paragraph 59.
7. Determination R-2026-41, paragraph 58.
8. Determination R-2026-41, paragraph 38.
9. Ibid.
10. Determination R-2026-41, paragraph 43.
11. Determination R-2026-41, paragraph 65.
12. Determination R-2026-41, paragraph 66.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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