Transport Committee on March 27th, 2014

[The Chair, Conservative, Larry Miller]

I call this meeting to order. We're finally back on track on our rail safety study.

[A voice]

No pun intended.

[The Chair, Conservative, Larry Miller]

No, there wasn't any pun intended.

I'd like to welcome and thank our witnesses for being here today, and with no further ado, we'll turn it over to National Steel Car for ten minutes, please.

[Jamal Hematian, Vice-President, Product Engineering, National Steel Car Limited]

Thank you, Mr. Chairman, and honourable members.

I will start with an introduction about us. I am Jamal Hematian, the VP of product engineering, and I have Max Vanderby with me. He's our director of production engineering. We run the engineering department of National Steel Car.

National Steel Car is the only railcar manufacturer in Canada. We are over 100 years old. We serve North America and some international markets. Our workforce is about 2,000 people and sometimes goes up to 2,400 people. We design and build freight cars: 12 different cars and 76 models. We have five flexible lines, and our maximum production capacity can go between 12,000 to 15,000 per year.

We are certified to AAR requirements and we are the only railcar manufacturer in North America certified for ISO. We have over 300 patents on different car designs and we spend about $5 million to $6 million on R and D projects every year.

In this slide you can see the variety of railcars we design and build, including tankers. This next slide is important because it shows our AAR certification. You can see in the table that it covers almost every type of railcar, including tankers. We are certified to design and build different tankers, repair them, or refurbish them.

The point about tankers is the rules and the governing bodies. It's very heavily regulated, and there are different organizations that have rules, and we have to obey them and to follow them. If you compare a tanker to another freight car, we don't have that much option of making decisions because everything is in the book and you go by the book.

I summarize major organizations and rules in this slide. There is an Association of American Railroads, which is AAR, and there are different manuals that I summarize over there. There are two important ones, if you take note of them. The third line is CPC-1232, Petition-1577. Also there are more rules from CFR and PHMSA that we have to obey and follow.

On top of that, there are Transport Canada, FRA, ASTM, AWS, and API. You can see that for tankers, it's very well organized and governed, and everybody has to play by the same rules. On top of that, it's well documented. NSC has a certification to design and build tankers. For every order, we have to make a package of drawings and we have to send it to EEC, which is an engineering equipment committee at AAR. They will review it and they give us a certificate for that order with that package. Even during the process if we want to change anything in there, we have to go back through the process and tell them what we want to change. They review it and they get back to us with yes or no. It's a very heavily regulated environment.

There are so many different types of tankers. In total, I think there are over 334,000 tankers in service, but that includes all different types of tankers. They categorize them based on the application of those tankers, on what service they do. They classify them as pressure, non-pressure, jacketed, non-jacketed, insulated, and non-insulated.

When we talk about DOT-111, we are talking about non-pressure tankers. Within this group, we again have subsections. We call them packing groups I, II, and III. What this means is that for the commodities you are moving with these tankers, what's the level of the potential for risk or danger with them? Group I is the highest. It is the most critical one. Group II is a little bit lower, and group III is much lower.

This next slide shows the DOT-111A100W1, which is general purpose, non-pressure, and good for groups I, II, and III. It addresses all of them. Crude oil and ethanol fall into the group I and II packing groups. The first one, at 31,800 gallons, is non-jacketed. The second and third ones are insulated and jacketed. There is another point to that, and we have to be careful. There are two things that we have to consider. We have jacketed with insulation, and we have thermal-protection jacketed. So on the insulation and the thermal protection, they are two different things, and you have to deal with them differently. The design is not so different, but they are two different animals, so we have to be careful with that.

At NSC, we design and build the first two right now. We have the approval to go ahead. We have shipped the first one—I think 25 or 30 tankers right now—and we are building both of them at the same time.

The next point I want to mention is very important. Again, we have all of these discussions about improvements and changes in design. For all of these tankers within DOT-111—I am focusing on this one and not going to any other tanks, because it's going to be endless—for crude oil and ethanol, we have two generations before 2011. They are called legacy cars. The code is HM-251. For this meeting, let's call them old cars.

In 2011, a new package came in to improve the design and make some changes, with about 80% of these changes being about the safety of these tankers, and they called that car CPC-1232. If you remember, when I was going through the rules I said to remember that CPC-1232 is the key. There were changes from legacy cars to these, which they called “good-faith cars”. They called the CPC-1232 the good-faith car. So if you hear that, you can differentiate between them.

One major difference between legacy cars and good-faith cars is the gross rail load. When we talk about gross rail load, it means the car body, the truck or bogies and suspension, what you put inside, and how much it weighs all together. The legacy car was 263,000 pounds; we call it gross rail load.

That's fixed in those cars, just split it into two portions, car body and what you put there. What's the car body? We call it light weight. What you put there, we call lading or capacity. If you increase the light weight, you lose your capacity because the sum is fixed at 263,000. If you reduce light weight, you increase the capacity.

So, the legacy car is 263,000 pounds GRL and the new, good-faith car is 286,000. The gross rail load jumped from 263,000 to 286,000. Because of this jump, to increase the efficiency of the system, they had to review the design and determine what needed to be done to improve the car. At the same time, they looked at other incidents that happened with tank cars and put it all into one package. In a circular letter from the AAR regarding the CPC-1232, they said that going forward, we had to follow this. Nobody could design or build the old one.

[The Chair, Conservative, Larry Miller]

If I could just ask you to wrap up—

[Jamal Hematian]

That's it. We are here for the technical part. I have some slides in my presentation, if you are interested I can show you the differences between legacy cars and good-faith cars. If you have any technical questions related to the design and manufacturing of railcars or freight cars, Max and I are here to answer those questions. My expertise is in car body and suspension, Max's expertise is in brakes, safety appliances, and fittings.

[The Chair, Conservative, Larry Miller]

Okay, thank you very much.

With that we'll move to United Steelworkers, Mr. Boudreault.

You have 10 minutes, please.

[Richard Boudreault, Area Coordinator, District 5 (Québec), United Steelworkers]

Thank you, Mr. Chairman and members of the committee, for inviting the steelworkers to discuss our union's perspective on the future of rail safety in Canada as it relates to railway workers and the transportation of dangerous goods.

I'm Richard Boudreault, the steelworkers' area coordinator from Montreal. I'm also the coordinator responsible for our transportation members in the province of Quebec. Since 2005, I am also the chief leader for the negotiations on The Montreal, Maine and Atlantic Railway. The last collective agreement was voted on and adopted by our members in April 2012 and is still in force right now.

The USW, or Syndicat des Métallos, as we are known in Quebec, represents more than 5,000 rail workers across Canada and Quebec, from clerks and intermodal employees to maintenance of rail employees and on-train conductors. As well, I am pleased that also appearing before you today are representatives of National Steel Car Limited, a company that employs members of USW Local 7135 at its Hamilton operation. Indeed, our members have been involved in both manufacturing of rolling stock and railway operations for more than 70 years. We are clearly stakeholders in the future of rail safety.

The Lac-Mégantic tragedy on July 7 involved a railway company that employed our members, including the conductor, Mr. Tom Harding, whose life has changed as dramatically as the families in the community. All were impacted by both government and company decisions that we believe were wrong-headed from the start. For us, a union dedicated to protecting our members and their communities, the Lac-Mégantic story itself can in part be traced to our experience in collective agreements.

In fact, we were in negotiations for 15 months, and I have just a few comments about that. We had a new issue concerning the one-person operation, and we went before the federal government and this item was a deal breaker. We had been told by the federal mediator that we were not the union that would decide if this would be implemented; it was not our responsibility. The responsibility was Transport Canada's to decide if it agreed or not to implement the one-man crew operation at MMA.

In fact, it is important to note that The Montreal, Maine and Atlantic Railway received permission to go with a one-man crew in May 2012 , exactly one month after the signature of the actual collective agreement with our union. MMA was the second company in Canada that received that authorization from Transport Canada; the first one was QNS&L, Quebec North Shore and Labrador.

We are all aware that the volume of dangerous goods shipped by rail across Canada has jumped 30% in recent years. The boom in petrochemical and crude oil shipments is raising new challenges that obviously have not been fully addressed. Otherwise, none of us would be in this room today. We have responded in various ways to questions of rail safety over the years, including on such issues in the Railway Safety Act as the construction or alteration of railway works. This includes the rail lines, structures, signals, and road and utility crossings. This section simply says that the minister or Governor in Council can make regulations that require railway companies to undertake certain actions, such as changing engineering standards.

Our members involved in railway track maintenance report that speed is an issue they often feel threatened by. They often work in very remote areas where trains, including those carrying dangerous cargo, race through a maintenance zone at top speed with workers only a few metres away from the track.

Other so-called rules are that the minister may require a company to make or amend rules on just about every aspect of their operations. In doing so they must consult, during a period of 60 days, with each association or organization that is likely to be affected. This has not been done or enforced as rigorously as it should be. Allowing railways the absolute discretion to inform and involve whomever they choose in the process of transporting increased amounts of dangerous goods is the rail equivalent of allowing the fox to guard the henhouse.

As I said earlier, our members not only work in but are residents of communities through which dangerous goods pass on a daily basis. There is no excuse for safety management systems not to include full disclosure to relevant stakeholders, including employees, their unions, municipalities, and possibly others. Raising the spectre of national security or the threat of terrorism is unjustified. If you ask anyone who still lives in Lac-Mégantic, I am sure that they feel they were the victims of a corporate act of terror.

The steelworkers believe that the role of Transport Canada should be, first, to promote and provide for the security and safety of the public and the environment in railway operations; second, to promote and facilitate participation of interested parties in improving rail safety; third, to monitor railway companies to ensure they adhere to the Railway Safety Act and its rules, regulations, and standards, as well as to monitor the overall safety of railway operations through audits, inspections, and data collection; fourth, to promote transparency of their operations and findings as well as data collected; and, fifth, to investigate rail accidents with the full participation of workplace health and safety committees.

The first two recommendations come from the objectives of the railway act, subsections 3(a) and 3(b). Items three and four are gleaned from the Government of Canada website on Transport Canada.

Comprehensive data collection is, or should be, part of the ongoing federal monitoring of railway companies to ensure they are managing their risks related to safety. For workers, there must be a stronger commitment, compelled by Transport Canada, to develop, monitor, and implement safety management systems, in conjunction with our unions, which are ultimately carrying out the companies’ bidding. This is even more crucial in cases when railway companies apply for exemptions to the regulations or act.

The United Steelworkers union has always taken our role in health, safety, and the environment very seriously. But the very safety of our members and their communities is being put at risk by a Minister of Transport who grants exemptions to railway companies like handing out Halloween candy to kids.

The union believes that the focus of rail safety has been on the development of management safety systems, reducing worker participation, regulations, and enforcement to a subset of those management systems. It is our view that worker participation, supported by their union, is an independent component of safety in the workplace. It provides a well-needed check and critique of the safety system. This is not a new position and was included in our 2007 submission on rail safety.

We will do no less to ensure that workers, their families, and their communities are protected from disaster. Without changes that allow greater transparency and sharing of information, disaster remains a constant potential in the increasing transportation of dangerous goods. You don’t have to take my word for it, just spend some time in Lac-Mégantic.

Thank you very much.

I would be pleased to answer any questions you may have.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We now move to Mr. Mai for seven minutes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Chair.

Thank you, witnesses, for being here today.

That is very informative. Everything you have raised is quite interesting.

My question is for Mr. Boudreault.

You said that you represent the employees who were with MMA on the ground. If anyone can really know what the problems were, I think you are a good representative.

You were pretty hard on the government with everything surrounding deregulation and that fact that there was only one conductor. Can you tell us about that? What problems did that cause and why do you think, in the Lac Mégantic case, there was only one conductor?

[Richard Boudreault]

In fact, there were a lot of things. We think there's a wall between the board of safety and Transport Canada because in 1996, just as an example, there was an accident up here in Quebec with the QNS&L, and the problem was the one-man crew. The report is well known. It's on the Internet.

Also, we have a report here from 2009. The number of the report is R09T0057. It was an accident that happened in southern Ontario, in Hagersville. In the report of the Transport Safety Board of Canada, on February 11, 2009, page 17:

When only one crew member is left to complete train securement tasks at the end of a work shift, the risk for runaway equipment is increased, because there is no opportunity for other crew members to identify and correct any errors.

So you see already in 2009 there was a lot of concern from Transport Canada about this one-man crew operation. Our position is that we don't believe it's safe because when you transport dangerous goods, at least you have to have some people who will double-check what the operator is doing, and if he's doing something wrong, well at least someone can make the appropriate correction.

Also, when this was implemented by MMA, it was with huge lobbying, without any consultation with the communities, with the unions, with the workers. It was made with no education on how it was going to be implemented, how it will be done, how exactly the people will work with that. Plus, if you record the history of that company, MMA, I don't know what kind of inquiry was made before it was...? In fact, I don't know how MMA had the permission from Transport Canada to go with a one-man crew. Because the history was so terrible, that was not supposed to be like that.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Given all that, it is quite unbelievable that the government authorized it. You spoke about an exception. You said that there were only two companies in Canada, one of them being MMA.

I will come back to you if I have any time left for more questions.

I have questions for the National Steel Car Limited.

Yesterday I asked a question to the minister in the House. We know that, for instance, CN has said they'll change all their old DOT-111s within four years. Irving have said they would do it within one year. The minister had said 10 years, as mentioned by the U.S., is too long, but the minister right now won't give us a timeline.

What do you think would be a doable timeline in terms of changing the old DOT-111 to the new standard, for Canada, obviously?

[Jamal Hematian]

Good question. There are a few things I want to mention.

When we talk about freight cars, we have to look at North America, because it's not that at the border you change the rules or you change your car as they are going between the two countries. There are no boundaries there.

I think CN has only 148 cars. I think there are close to—my number you have to check—100,000 DOT-111s. We have to check the numbers.

My reference is RSI, the Rail Supply Institute. I'm sitting on the tank car task force.

The other thing is what changes we want to make. Then it will answer your question. Are we going to change the whole design? Are we going to retrofit? Are we going to change the brakes? Are we going to change the fittings? Are we going to change the safety appliances? So there are so many aspects in the design. We have to look at it and see how long it takes. How much does it cost?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Just let me ask you this question. Do you manufacture the new DOT-111 according to the new...you call it the legacy—

[Jamal Hematian]

CPC-1250.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

So do you manufacture them?

[Jamal Hematian]

Yes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

In Canada?

[Jamal Hematian]

Yes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

How many can you manufacture, let's say, within the year?

[Jamal Hematian]

This is the kind of business information we don't usually share publicly, because we have competitors and everyone has a certain capacity.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Would you say it is a competitive market? You say in Canada it's only you, but in the U.S. are there a lot of manufacturers? Or are there in general in the world?

[Jamal Hematian]

In North America there are about four or five major tank car builders. The total capacity could be around—and here I'm just going with rough numbers—maybe 20,000 per year.

Just another number, maybe it's interesting to you.... On some other issues we mentioned here, just to give you some numbers, between 2003 and 2012 it's recorded that there have been 14,229,880 tank car shipments just in North America. These are not my data, this is from RSI. It has only recorded 508 individual accidents causing major problems.

Don't go with my numbers, I suggest you look at it. I'm saying that because if you look at the global system in transportation we have on water, in the sky, on rail, on road, and if you want to categorize the efficiency of each of them in big numbers, you can see that after water is railroad. That's the highest efficiency you get.

[The Chair, Conservative, Larry Miller]

Okay, we'll leave it on that and move to Mr. McGuinty for your seven minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Mr. Chair.

Bonjour messieurs.

I would like to go back to Monsieur Boudreault.

Monsieur Boudreault, you've given some astounding testimony here this morning, in fact, some astonishing testimony. It's no secret, and I think it's fair to say the government has difficulty managing its relationship with labour in Canada. It's not sure what to make of labour. Some days it's all about union busting, other days it's about inclusiveness. We're never sure where the Conservative Party really is in its relationship with organized labour in Canada.

Can I ask you a general question? In the last eight years, what's your experience in terms of interfacing with Transport Canada and with the minister? Is there a relationship problem here between the government and your union in terms of the recommendations you're making, in terms of the improvements you're trying to put forward? Is there a hearing problem on the government side?