Transport Committee on April 3rd, 2014

[The Chair, Conservative, Larry Miller]

I call our meeting to order.

Today we have representatives here from CN, CP, and the Railway Association. Thanks, gentlemen, all of you, for being here to participate in our study.

We'll move right into presentations.

Mr. Bourque, you have 10 minutes or less, please.

[Michael Bourque, President and Chief Executive Officer, Railway Association of Canada]

Good morning, Mr. Chair and members of the committee. Thank you for the opportunity to speak with you today.

My name is Michael Bourque, and I am president of the Railway Association of Canada. I'm delighted to be here with my colleagues from CN and CP.

Our association represents most of the railways in Canada, mainline railroads like CN and CP, some 40 short-line railroads, VIA Rail, commuter railways such as GO and AMT, as well as tourist railways, including the famous Rocky Mountaineer. We also represent some 65 railway supplier members who are important partners of Canada's great rail industry.

Canada's railways know that the safety discussion has taken on an even greater urgency and importance post-Lac-Mégantic. This tragedy deeply affected every railroader and every railroad in Canada. We know we are in a different environment now, and we accept our position with responsibility and humility.

Please allow me to speak to you briefly about the concrete measures we took since the Lac-Mégantic events, that is to say what we have done up till now, what we are doing currently and what we are determined to do.

Prior to Lac-Mégantic, Canada's rail industry had been working collaboratively with its regulators, unions, and other stakeholders on outstanding Transportation Safety Board recommendations and watch-list items. Our success rate at clearing TSB recommendations stands at 90%, which is good, but we still have some room for improvement. Importantly, the industry's efforts allowed the TSB to remove two rail safety items from its 2012 watch list: the implementation of rail safety management systems, and the operation of longer, heavier trains.

These efforts were in addition to the significant investments in plant, equipment, safety technology, training, and process improvement made by Canada's railways, and yet, unfortunately, the Lac-Mégantic tragedy occurred.

As you know, within days of the accident, the Transportation Safety Board issued two safety advisory letters concerning the securement of unattended trains, locomotives, and equipment. Transport Canada immediately followed these up with an emergency directive that covered these matters as well as the operation of single-person train crews. Canada's railways collaborated fully with Transport Canada in order to get these safety improvements in place immediately.

Similarly, when the TSB issued safety advisory letters concerning proper product labelling for crude oil, Transport Canada followed up with a protective direction. Again, the rail industry took immediate steps to put these new procedures in place.

In short, the industry had a strong record of collaborative safety action prior to the accident, and worked quickly with government to implement the new requirements identified to date as a result of the tragedy.

In addition to the ongoing investments, training, and operating improvements I just mentioned, the industry is undertaking a number of actions, including working with the Federation of Canadian Municipalities to enhance the supply of information concerning dangerous goods movement to local emergency responders, and redoubling our efforts on safety culture development by, among other things, developing safety culture assessment tools and making a commitment to safety culture a requirement for membership in the Railway Association of Canada.

We're developing principles for the use of in-cab audio and video recording systems as part of our safety management systems, which is a TSB recommendation.

Jointly with Transport Canada and local municipalities, we're redoubling our efforts on grade-crossing safety, including closing redundant crossings, upgrades at existing crossings, and education through the operation lifesaver program. We make about 2,000 presentations per year in operation lifesaver, working with government, police, unions, the media, public organizations, and the public themselves to spread the word.

We're requiring all non-pressure tank cars ordered for dangerous goods service after October 2011 to be of the enhanced design.

We're also redoubling our efforts for emergency preparedness through first responder training, dangerous goods training and outreach, such as TRANSCAER, as well as our own safety programs at the RAC. This year, we expect to train over 2,500 firefighters, about 600 industrial plant personnel, and over 200 railway employees. In the last five years, we've trained about 17,000 stakeholders across Canada.

We're also working with a number of associations, including the Canadian Association of Petroleum Producers and the Canadian Association of Fire Chiefs on emergency preparedness, response training, and mutual aid.

We fully expect government action in other areas, and we're committed to working with regulators and stakeholders to put them in place. This could include accelerated removal from dangerous goods service of the legacy DOT-111 tank car fleet, enhanced insurance and compensation regimes, and regulations and measures flowing from the Railway Safety Act.

I'll just make one editorial comment, if I'm allowed, and that is that some choose to portray railway safety in Canada as deregulated or self-regulated, but I believe that nothing could be further from the truth.

The Railway Safety Act is a modern piece of legislation that has been extensively reviewed and updated since its passage in 1989. It provides for a robust regime of regulatory inspections, oversight, compliance, and enforcement actions, including recently enhanced administrative and judicial penalties against companies and individuals. In parallel with this regulatory regime, it requires each company to have its own safety management system with the attendant focus on proactive risk assessment and management, employee involvement, audit, and safety culture development. Those are requirements under the act.

With that, Mr. Chairman, I'll look forward to questions later.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Now we move to CP. Mr. Creel, you have 10 minutes, please.

[Keith E. Creel, President and Chief Operating Officer, Canadian Pacific Railway]

Good morning, Mr. Chairman.

I'd like to thank you for the opportunity to discuss rail safety and safety management systems today. In the interest of time, I cannot get into all the elements of rail safety, especially the regulatory regime. However, I do understand you'll be hearing from additional witnesses specifically on the robust regulatory regime in place in Canada including the Railway Safety Act and safety management systems.

CP operates a 22,000-kilometre network through Canada and the United States. In 2013, we moved over 2.6-million carloads of traffic, with each car moving an average of 1,400 kilometres. Approximately two-thirds of that traffic moves to or from a port. The border gateway is part of Canada's global trade.

The Canadian railway industry is one of the safest in the world. CP recognizes that the best way to provide effective service to our customers and to execute our part in the supply chain is to operate as safely as possible.

I'm proud to say that CP is the safest railway in North America. We've achieved the lowest frequency of train accidents in the railway industry in each of the last eight years. In 2013 that equated to 1.8 Federal Railroad Administration reportable train accidents for every million train miles we operated.

A train accident was reportable in 2013 under FRA standards when the damage exceeded $10,000 U.S. With the locomotives costing approximately $2.5 million and the amount of heavy steel in motion we have in our business, you can imagine it's not very hard to have damages that exceed that amount. Yet we only did that 1.8 times for every million miles of train operations in 2013.

We achieved these high standards for safety through a combination of people, process, technology, and investment. The two areas I'll speak to today will focus on people and technology.

Our journey is not yet complete, but the continuous improvement in safety is evident as we better and better understand how to monitor, predict, and prevent where we could previously only search and react.

If we look at the statistics, and we do that a lot on this railroad, we see that the incidents caused by equipment and track failures are trending down. In fact, in 2012 Canadian railroads had the safest year on record. A big part of the reason for a reduction in the number of incidents caused by equipment failures is that we continue to improve our assets. This year we'll spend between $1.2 billion and $1.4 billion to improve our railroad, especially the track we operate over. In deciding where to invest, we look at the most critical areas.

Another piece of this is technology on the railroad. We now have hundreds of wayside inspection systems which look in an automated manner at the status of equipment, such as bearings, wheels, and track. These technologies are in various stages of development. Some are proven and implemented, while others are still in development.

These technologies are fundamentally changing the way we inspect infrastructure and equipment by enabling proactive identification of emerging problems. This allows the railroad to focus repair efforts on problem areas before they present risks at the operation. We'll continue to invest in safety enhancing technologies as we move forward.

Every incident at CP is taken very seriously. I personally review in detail all incident reports on a daily basis. We push very hard when it comes to rules compliance. We set expectations for people who are leaders on the ground and expect those to be met.

Training is also very important not only for current but also future railroaders. We invest significantly in training, coaching, recognition, and obtaining employee input to strengthen our safety culture. At a corporate level, we're committed but we're also focused most specifically on manager and employee accountability.

My job is to set the expectation to provide the tools, including training, so people know what's expected. I've said many, many times that no job on our railroad will ever be so important that we can't take time to do it safely. Safety enables performance.

I want every man and woman who comes to work every day to operate in a manner that puts safety first and foremost. People's lives are at risk. That must be at top of mind every day, every hour, every minute we're on the property.

Where we're seeing, however, a stubborn flat line of statistics is in an area called human factors. These are incidences essentially caused by human error. This is one area we need to focus on going forward. That's why we want to add cameras and recording devices in locomotives.

Today there's a convergence of onboard locomotive technologies occurring whereby a number of information technologies can be linked, including outward-facing cameras, locomotive cab digital recording, and various detection systems. Identifying these human factors is critical to understanding why accidents occur before they occur.

When companies cannot use voice and video recordings proactively, they're deprived of opportunities to reduce risk and improve safety, as I've said, before an accident occurs. I urge you to consider recommending changes to the statutory provisions to fully allow deployment of this technology. In my view, this is the most important step that can be taken at the immediate time to further improve safety.

In terms of the movement of dangerous goods, railroads in Canada, in North America for that matter, have what is called a common carrier obligation. That means if a shipment is presented to the railroad, we have to move it. It's the law. The customer can also instruct us on how they'd like their product moved.

The fact is, do we want to be moving some of these products? Probably not, but it's the only way some of these products would get moved. Our problem is each time we move these products, we take a significant risk that could have tragic consequences not only for the public but also for the railroad.

Producers of some products would argue that these products need to be made. They would submit that they drive the economy, sanitize your water, and that they are not highly substitutable. I can buy that to some degree, but not completely. That is why we are looking for some changes in government policy to ensure that the regime deals with the risks and liability in a manner that is in the broad public interest.

There is also urgency about the need for safer tank cars to move these dangerous goods. We at CP have been very vocal about this for some time.

The vast majority of railcars that carry crude and other hazardous materials are single-walled cars known as DOT-111 cars. l'm not happy with these cars for moving dangerous goods. In fact, I'm not happy at all.

There is a process that has been started in the United States, which Canada is also involved in, looking at the new tank car standards and how to phase out the older ones. I look forward to the outcome from this process that sees more new cars coming online sooner versus later.

If we can get everyone working together, adopting a higher level of safety and accountability, we are going to be able to reassure our neighbours and the communities we operate in and through that they can sleep at night.

A lot of you see trains going through your towns and you're concerned. I get that. Those pictures from Lac-Mégantic caused sleepless nights for all of us.

I would like to reaffirm to you that we do operate safely. We continue to improve our safety performance. CP is the leader in North American rail safety, and that is something I am not only very proud of, but continue to be focused on every day.

Thank you, Mr. Chairman.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Vena from CN.

[Jim Vena, Executive Vice-President and Chief Operating Officer, Canadian National Railway Company]

Good morning, Mr. Chair and members of the committee.

I'd like to thank you for this opportunity of allowing me to present before you. My name is Jim Vena—it's actually Vincenzo Vena—from Jasper, Alberta. I'm the executive vice-president and chief operating officer with CN Rail. I'm accompanied by Michael Farkouh, our vice-president of safety and sustainability.

We understand the committee is being asked to review the safe transportation of dangerous goods and the role of safety management systems. This morning I will be touching on these very points and explaining the regulations that oversee the rail transportation in our industry and additional measures our railroad has put in place and continues to work towards.

CN has an unwavering commitment to rail safety and is continually building multiple lines of defence through people, process, technology, and investment. The CN safety record for accidents continues to see improvements. Between 2003 and 2013, CN's main-track accidents declined by approximately 50%, even with the amount of business that has increased. Since 2009, we've seen a 30% increase in business alone; I won't even go back to 2003. We are committed to continuous improvement and continue to seek and implement additional lines of defence to make an already solid safety record even better.

A lot of discussion is being heard about the self-regulation of the rail industry. This point can be no further from the truth, as Michael has spoken about before. The rail industry is very much regulated in all facets of its operation. This can be seen through the extensive Canadian rail operating rules, whereby the rules are reviewed, vetted, and their compliance monitored by Transport Canada. The inspection process for both infrastructure and rolling stock is much the same. We have stringent standards for the inspection frequency and tolerances allowed for track, signals, freight cars, and locomotives, to mention but a few.

The committee must recognize that at CN we clearly understand that the regulations in place are a minimum and that we exceed regulations on many fronts. In fact, the regulation says we only have to do a rail flaw detection four times per year, and we're doing it up to 18 times a year in places.

Concerning SMS, allow me to address an area that this committee has reviewed: the safety management system, better known to us as our SMS plan. As already indicated, the SMS is a plan that we're all regulated to have in place. It's what guides CN on all of our elements of safety. SMS is an explicit set of processes designed to integrate safety into all decision-making, planning, and operational activities. CN has taken the requirements of SMS and translated them into a plan consisting of actionable steps exercised on a continual basis with our operation's workforce and management. The steps encompass the requirements and representative involvement in safety management and safety culture development, risk assessment, safety audit and evaluation, accident and incident reporting, investigation analysis, and corrective action. In other words, it's a broad range.

The CN SMS plan is also explained in our “Leadership in Safety” brochure. If anybody wants to see it, there's a new copy of on our website. This brochure is available to the general public, and all our employees get it sent to their homes. One element that would be of particular interest to this committee is our risk mitigation work performed through our corridor risk assessments, whereby we review the amount of dangerous goods, population density, topography, and the proximity to waterways and the environment, to see what we need to do and how we operate and what secondary measures we need in place.

Auditing and monitoring are other key elements of our SMS plan. We perform audits with our 106 health and safety committees made up of unionized and management employees. We do detailed integrated audits with management to ensure compliance of policies, instruction, and operating rules. We perform daily auditing on the tasks of our employees by virtue of our efficiency testing process. We performed over 400,000 of those tests in 2013. This amounts to well over 1,000 per day. I don't know why we did that; you guys are good with math, but we had to divide it anyway. This audit is over and above the monitoring and inspections that Transport Canada would perform on our railroad in Canada.

I need to talk about safety culture because this is very important to us and it’s an area we continue to strive to get better in. A successful ingredient in the world of safety is safety culture, and CN is building strong elements to foster this safety culture. Safety culture is about creating a true belief and desire for being safe. We interact with our system health and safety committee, of which I am a member, along with our employee representatives to discuss and develop means to build on this.

We have developed peer engagement groups and initiated safety summits and onboarding programs for new hires to our company. We are industry leaders in measuring safety culture, which is featured on Transport Canada's website.

We have worked closely with Saint Mary's University in developing the CN Centre for Occupational Health and Safety. In fact, we'll be holding a symposium on safety culture in October at the university, where we'll be expecting interested government agencies, the railroad industry, and university academics to help further the subject of safety culture. We are committed to creating the right safety environment for our employees and management.

I'd like to talk for a minute about dangerous goods, especially after Lac-Mégantic.

To give you a bit of my history, I've been railroading since 1975. I actually started by throwing ties out of boxcars. In 1977, while I was going to the University of Alberta, I was hired on as a brakeman, when we had four or five people on trains. After that I was a conductor, and after that I became a locomotive engineer before I finished off my degree.

I've seen railroading have a number of accidents. We always have to make sure we sit down and learn, because as much as we think we've done everything we can, there comes a point when, if you have an incident, you have to make sure you haven't missed anything in all the processes you have, and you move ahead.

Rail transportation safety is about identifying, analyzing, and mitigating risk throughout our network. Dangerous goods travel in rail transportation is a subject that has come under great public interest. On a factual basis, the transportation of dangerous goods in North America is very safe. We transport without incident 99.997% of dangerous goods safely from origin to their respective destination.

However, this statistic does not provide any level of comfort when an incident such as Lac-Mégantic occurs. This truly tragic event, which claimed the lives of 47 individuals, cannot be forgotten. It has allowed us to step back and evaluate our SMS plan and review opportunities to further enhance our robust plan. We believe several lines of defence may have gone wrong for such an accident to occur in this runaway train in Lac-Mégantic. However, we await the TSB's report and recommendations on their analysis and findings on this incident.

Let's talk about a few of them. One that we know about is securement. CN has worked closely with all the stakeholders in addressing concerns in the securement of railway equipment. Transport Canada issued an emergency directive on the means, and CN had already many of the suggested changes in place. The element of securing the locomotives and the application of handbrakes was an example of some of the elements that CN had previously put in place. We felt they were strong, and added a few of the changes that were given to us and we worked with Transport Canada to put in place.

I want to talk for a minute about OT-55. Let me explain it. CN did not stop at this one element with this operation. We began reviewing other areas that we felt would strengthen our lines of defence. One such area was adoption in Canada of a speed restriction for hazardous goods, having more than 20 carloads of such cars, or one toxic or poisonous inhalation car on the train on high-volume corridors of dangerous goods to a maximum speed of 50 miles an hour. This industry-adopted approach in the United States was brought up to our Canadian rail operation. As an example, a train carrying 20 or more dangerous goods between Toronto and Montreal can now not exceed 50 miles an hour. The adoption of the OT-55 policy has been in place on our network since August 13, 2013.

Earlier this year, the U.S. Secretary of Transportation had a call to action by all the class I railroads to assist in further strengthening the lines of defence for rail transportation. As an industry, we came together and developed several commitments that we would undertake for the movement of crude oil.

The items consisted of, to name a few, speed restriction of 40 miles per hour in a high-threat urban area for trains carrying 20 or more crude oil cars having as a minimum one older-style DOT-111 car. If a train has one DOT-111 car, it's restricted to 40 miles an hour.

There's also the review of routes for crude oil. If you have options, we look at the risk assessment and how we would operate if you have options of where you operate.

As well, wayside detection allows for the inspection of moving trains at an interval of no more than 40 miles. Even though in most of our routes we had the frequency of less than 40 miles, we made sure there weren't any areas where we were not compliant.

Although there are others, I've taken the time to mention these commitments by CN, and we'll be bringing these items to our Canadian network. Everything we agreed to in the U.S., the speed restriction, the 40-mile spacing, we're going to implement on the Canadian side of the operation.

I also want to take a minute to talk about emergency response in communities.

CN has undertaken a number of initiatives to strengthen emergency response and to engage communities. In line with dangerous goods volumes along rail routes, resources and processes to enhance response have been strengthened. We have initiated mutual aid protocols with other railways to leverage greater response. CP and CN might be competitors, but we work together to ask, “Where do you have equipment? What do you have in place?” In case anything ever happens, we can respond.

We are engaging customers and other stakeholders, such as the Canadian Association of Petroleum Producers, to work together as a group. We are leveraging the TRANSCAER program to train external responders to augment readiness.

CN also believes that the rail industry can enhance safety by working closely with communities through the structured community engagement program that we launched last October. CN is engaging municipalities by approaching municipal officials and their emergency responders to ensure that they have contact information for appropriate CN officials, as well as targeted information. We have reached out to 1,098 communities in Canada and initiated 100 outreach meetings with our dangerous goods offices.

In these meetings we discuss CN's comprehensive safety plan, solid safety performance, and the nature of volume and economic importance of dangerous goods we transport through the communities, and we review emergency response planning. We also arrange to conduct training centres for emergency responders when required.

On technology and risk mitigation, a key area that CN has continued to leverage is its technology. Following the Lac-Mégantic accident, we have also taken a step back and reviewed our existing comprehensive network of technology. This network consists of inspection technology as we monitor the health of a moving train for wheel conditioning, bearing temperatures, and dragging equipment. The network is among the densest networks in North America.

We also reviewed our infrastructure inspection technologies which consisted of ultrasonic rail flaw detection. This looks at the actual rail to see if any discontinuances exist in the rail. We use track geometry technologies whereby we measure the gauge of the rail, cross-level alignment, and profile.

In November 2013 we announced a further $10 million capital investment that complemented our already robust investment of $2 billion in 2013. Of the $2 billion capital investment in 2013, we invested $1.2 billion in rail and signal infrastructure on our own right-of-way.

The additional technology investment consists of additional wayside equipment, inspection systems, a new track geometry test guard, an optical track inspection system, brittle bar detectors to minimize the adversity, and control signalling on certain key sidings. These additional investments will continue to layer our lines of defence and mitigate our risks.

Quickly, I'll talk about DOT-111. I think you've heard from both, and we've been very up front that we think it is time to change out the DOT-111 cars. In fact, instead of repeating it, for time, we use about 40 that we own. We don't have a lot of tank cars but we have 40 of them that we do own ourselves. We use them in the movement of diesel, which is not the same classification and packing group as the other commodities. But we think it is important enough to show some leadership on this and by the end of this year, we will have removed the 40 and replaced them with 40 new ones of the latest vintage.

In conclusion, CN believes that safety is a journey and not a destination. Our safety record continues on the right trend with decreases in accidents; however, we recognize that much work lies ahead of us. A robust regulatory framework is in place and our SMS plan is key to ensuring that we continue to operate in the safest manner possible.

Through people, process, technology, and investment we will continue to further our risk mitigation on this continuum of our safety journey.

With that, Mr. Chair and members, thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Vena.

We'll now move to questioning, and to Mr. Mai, for seven minutes.

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

Thank you, Mr. Chair.

I thank the witnesses for their presence here with us.

You all mentioned that the Lac-Mégantic tragedy had a big effect on the way in which Canadians now view rail transportation.

Mr. Bourque and Mr. Vena said that they were not in favour of deregulation in the rail sector. There is still no agreement on that. Regulations are adopted and laws are amended, certainly. The government is going to propose safety-related regulations, but that is only laying the groundwork. Companies such as yours, that care a great deal about safety, as you mentioned, will apply stricter standards than those the government imposes.

You say that there are regulations, but the Auditor General and the Transportation Safety Board both say that Transport Canada does not have sufficient resources to get to the bottom of things, do things thoroughly and ensure safety first and foremost. For our part, from a political point of view, we do not agree on the fact that the government does not apply the rules or that the rules are really minimal, and that companies such as yours have to go beyond them.

On the ground, one of the big problems that people point out has to do with the transparency of information. As you know, municipalities do not always have the information on all of the dangerous products that are transported. There are safety management systems that are put in place by companies and Transport Canada, but often, the municipalities are not in the loop and are not informed. The population does not know what is being transported on the rails, which generates a certain concern. The information concerns infrastructure.

In Saint-Lambert, for instance, there is a viaduct that belongs to the CN. Even if they are not experts, people can see it and are very concerned about the state of that infrastructure.

My question is for the CN representative. When people have questions about the state of infrastructure, how can they obtain more information and ensure that there has really been an inspection?

[Michael Bourque]

I am going to answer the questions about the Auditor General's report in English, and afterwards, I am going to ask the CN representatives to reply to the question that concerned them.

I'm going to answer the Auditor General question, and then CN can answer the question for their company.

I just wanted to make the following point. The Auditor General's recommendation that struck me was that there wasn't a sufficient number of audits of SMS as part of their regime.

At the same time, there have been a significant number of inspections by Transport Canada, some 30,000 last year. In the wake of the tragedy at Lac-Mégantic, we found that there was a clamouring by critics and others for more inspections and more punishment, which are heading in precisely the opposite direction from relying on the safety management systems and an audit of the safety management systems which is seen.... Again, the Railway Safety Act was passed just two years ago with unanimous consent.

We have the system that we do and the construct of using safety management systems because it is accepted worldwide as being the most effective way you can manage safety within complex organizations like railways.

Unfortunately what we often get is a knee-jerk reaction that we need to inspect more and we need more regulation, but in fact, it is the safety management system that is—

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

I simply want to specify one thing. You mentioned the 30,000 inspections, but when we discovered there are problems, there is no follow-up in 74% of cases. That is a problem.

Since I have very little time left, I would like an update on the DOT-111 tank cars.

Mr. Hunter Harrison, the Canadian Pacific Limited Railways CEO,

actually said, “Stop them tomorrow.”

He was talking about old DOT-111 tank cars.

He said, “Stop them tomorrow. Don't wait for a study. We know the facts. You know what it comes down to, and I hate to say this, it's the almighty dollar. Who's going to pay for this?"

Mr. Vena, you mentioned that you were in a position to replace the old DOT-111 tank cars.

Will CP also takes steps to replace the old tank cars? In fact, we have known for 20 years that they have problems. Recently, the Transportation Safety Board of Canada made some very clear recommendations. Why can we not obtain a timeline about the elimination of the DOT-111 tank cars today?

My question is addressed first to Mr. Creel, from CP.

[Keith E. Creel]

He definitely intends to replace the tanker cars. As far as transition is concerned, it will take a couple of years to be able to do it. An exact timeframe we have not come to yet, but we are in the process of developing that.

A key point to remember, though, is that the tanker cars at CP haul diesel fuel. Diesel fuel is dangerous, and I'm not suggesting it's not, but it's low risk relative to other items, and it's the same fuel that our locomotives burn. It's something we're seized with, we're concerned with. But I just want to make that point known: that is the only thing that CP hauls in those cars.

[Jim Vena]

If I could answer, you had a question earlier about the transparency and the products that we move through the municipalities.

I think there has been a lot of misunderstanding about this whole issue. One is, on every train there is a conductor, and part of his job is to make sure he has a list of everything that's being carried on the train. It's always with the train. On top of that, to make sure that we know what's on the train, our computer system keeps track of every train, by train, by car, what's on every train. We keep track of what's at that customer siding that we spotted. We keep track of it in our yards, and where they are. At no time do we have any commodity that we do not understand what's on the train. We have automated systems that read the trains as they go by, just as you would at the grocery store, that read the bar code. Just in case a human makes a mistake we have systems in place that do that. On the train, there is no train movement today right now in Canada, on CN or CP, that we would not have a complete list of what's on the train.

Now, how do you engage the communities that you operate through? We think the best way to communicate...it's not a big change. Every day we don't get new products. We have a number of products that we handle. The flow of them might be different, but at the end of the day, it's a set number of products that go through, and if there is a new one we need to sit down to make sure we have the response and the communities have the response. That's why we have a community outreach program that is formalized. We sit down with the responders to understand exactly.

I think you have to be careful that you don't cross too far with making it completely live what we have on the trains, even though we do know live what we have on the trains. You don't want people who should not know what we're carrying on these trains as we run through North America with them.... In fact, in the U.S., for security reasons, they do not want us to tell people live what we have exactly on that train, at that moment, in the public venue so that everybody can see it.

We work closely with the municipalities. That's why we said we were going to target over 1,000 of the communications with them, and if there's something else they want for information, we're more than willing to give it to them, the numbers per day, per week, the different types of commodities, how you respond, what we need to do, and how we operate through their place.

On the infrastructure, we have regulations that tell us how many times, and we exceed those regulations because we think it's smart in areas just because of the mix of traffic and interaction of the risk assessments that we do. Perhaps somebody phones us and asks us to take a look at the track in Saint-Lambert. First of all, our chief legal officer lives in Saint-Lambert. He's the first guy to phone us if he thinks that he can hear anything different. Second of all, we're more than willing to make sure that we have a safe infrastructure and we'd react like anybody else.

I hope I answered the questions.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll now move to Mr. McGuinty, for seven minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, gentlemen, for being here this morning.

Gentlemen, my first question is, are you prepared to come back if we need more time with you? This is an extremely complex subject. We're struggling with reconciling all kinds of different moving parts. Would you be prepared to come back if you were invited by the committee to testify again?

Yes? Thank you.

I would also begin by asking the two companies here, CP and CN, whether you can give Canadians who are watching an idea of what your gross revenues were last year.

[Jim Vena]

Our gross revenue was just north of $10 billion.

[David McGuinty, Liberal, Ottawa South, ON]

CN’s was $10 billion.

Mr. Creel, what was CP’s?

[Keith E. Creel]

CP’s was $6 billion.

[David McGuinty, Liberal, Ottawa South, ON]

It was $6 billion. Okay, so we're talking grosso modo $16 billion of gross revenues last year.

Gentlemen, it's hard to slice this. There are so many moving parts. As I said, you're the regulated and Transport Canada is the regulator. You have the Transportation Safety Board issuing new standards. You have a scathing Auditor General's report that cannot be skated around. You have your insurance companies, and you have shareholders and shareholder value. You're under a lot of pressure.

My first opening comment would be that I'm a little bit surprised at the response by the railway companies, because I look to other examples of crises in recent Canadian history. For example, I look at the listeriosis crisis and the way McCain handled it, and it's very different from how the railways have handled Lac-Mégantic. I think McCain got out in front of their issue. I think they were extremely forthright, I think they were transparent, and I think they admitted their mistakes. They held press conferences, one after the other, and I'm not seeing that in the railway sector.

One of the issues I want to raise with you that jumps out loud and clear in the Auditor General's report, which Mr. Bourque referred to, is the whole question of audits. It is important to get on the record that the Conservative government spends more money, each and every year, on its economic action plan advertising than it does on railway safety. I've raised this repeatedly. I even went to the Minister of Finance and I asked him to stop it in a budget, which he wouldn't do. They're spending more money on advertising than rail safety. It's important for Canadians to know that.

I want to ask about the whole question of Transport Canada's role.

Mr. Bourque, you alluded to this partnership between the regulated and the regulator, the instrument being the safety management system. I think Canadians understand that it's a shared responsibility, but when you see that only 25% of the audits that Transport Canada said were necessary to keep your railways in compliance were actually performed, that's a really big problem for Canadians.

Let me ask the two corporate representatives here, what do you make of Transport Canada's performance? I'm sure from a shareholder value perspective, you want to assure your shareholders, your investors, and your insurance companies that you're putting the right amount of pressure on the regulator to make damn sure it’s actually doing its job. What is your response with respect to the audits that were not performed?

Mr. Vena.

[Jim Vena]

Sure, I’ll start off and Keith can jump in.

It's not my job to worry that the regulator is given enough money to regulate.

[David McGuinty, Liberal, Ottawa South, ON]

It's not your job?

[Jim Vena]

No. My job is to run a safe railroad. My job is to live up to the regulations that are in place, use the regulations as a basis to start with, build on them, and make sure that we run the safest railway possible. You heard CP say that they have the best accident ratio in the industry. We're not that far behind. We're all very close, and we're all trying to improve and get better. That's my job. I'm not going to comment on what the government's doing. You guys have that discussion. That's your job.

What I will talk about, though, is the audits. We see Transport Canada personnel out there. We see Transport Canada safety personnel. We see Transport Canada targeting certain areas. They do a decent job, from what we see, looking at areas where we find issues. I don't know about the Auditor General's report. I've read it, but I can't really comment. That's between them and Transport Canada. For us on the railroad, we go out and do a thousand audits a day, and we do that on purpose to see what our employees are doing, trying to change the safety culture, working with Saint Mary's University to change the culture, peer to peer. We work with our unions on a daily basis. For me, that's what's important. The trend line in accidents; can we get better? Yes, we want to get better. We'd like it as low as possible and as close to zero, and we're not there. At the end of the day, that's what's important.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Vena, I hear you.

Here is the report from the Auditor General, and I have to say I'm a little surprised, as a recovering corporate lawyer, that you would say that your company is not interested in finding out what the regulator is doing. Your social licence is derived. Even the fossil fuel companies in Canada now understand they can't act without making sure that their social licence is warranted. Your shareholders are asking questions.

Mr. Creel, what does your company have to say about the Auditor General's report, the lack of enforcement, the lack of inspectors, and the lack of audits that are going on? This is part and parcel of your SMS relationship with the regulator.

[Keith E. Creel]

Certainly. Mr. McGuinty, I would say that I am not seized day to day with the audits that have not been performed at Transport Canada. In my experience with Transport Canada, I've never had an inspector or any Transport Canada officer hesitate to issue a notice or notice of an order if they find an unsafe condition.

What we are seized with at CP is making sure that our employees, our officers, perform their inspections, that they're out daily doing testing and making sure that we maintain and create a safe work environment. That is what we're seized with at CP.

[David McGuinty, Liberal, Ottawa South, ON]

Very quickly, let me ask you one last question, gentlemen.

A lot of Canadians are writing to me and many parliamentarians at this table saying that liability for this risk should be shared between the railways and between the folks who own the dangerous substances and goods.

What is your position as the two largest carriers—$16 billion last year in gross revenues—on sharing the liability? You are carrying a lot of it now, about $1 billion each in insurance liability, although that figure is not fully disclosed. Should the folks who own the dangerous substances that are shipped on your railways share in the legal liability if there's an accident?

[Keith E. Creel]

Absolutely. CP has been an advocate for sharing liability for some time. We've actually pushed for this. We've been a leader in the industry on this issue and this topic. We have secured all the insurance that we can provide. Some of the products that we carry, some of these catastrophic accidents that could occur, are about the company mentality.

The only way, in my mind, to provide additional liability is for shippers of those products, which we have to ship, as I've stated, to share in that liability.