Bill C-52 (Historical)

Safe and Accountable Rail Act

An Act to amend the Canada Transportation Act and the Railway Safety Act

This enactment amends the Canada Transportation Act to strengthen the liability and compensation regime for federally regulated railway companies by establishing minimum insurance levels for railway companies and a supplementary, shipper-financed compensation fund to cover damages resulting from railway accidents involving the transportation of certain dangerous goods.
Among other things, the amendments
(a) establish minimum insurance levels for freight railway operations based on the type and volume of goods that are transported;
(b) require the holder of a certificate of fitness to maintain the liability insurance coverage required by that Act, and to notify the Canadian Transportation Agency without delay if its insurance coverage is affected;
(c) establish that a railway company is liable, without proof of fault or negligence, subject to certain defences, for losses, damages, costs and expenses resulting from a railway accident involving crude oil or other designated goods, up to the level of the company’s minimum liability insurance coverage; and
(d) establish a compensation fund in the Accounts of Canada, financed by levies on shippers, to cover the losses, damages, costs and expenses resulting from a railway accident involving crude oil or other designated goods that exceed the minimum liability insurance coverage.
The enactment also amends the Railway Safety Act to, among other things,
(a) allow a province or municipality that incurs costs in responding to a fire that it is of the opinion was the result of a railway company’s railway operations to apply to the Canada Transportation Agency to have those costs reimbursed by the railway company;
(b) clarify the Governor in Council’s power to make regulations respecting the restriction and prevention of access to land on which a line of railway is situated, including by means of fences or signs on that land or on land adjoining it;
(c) authorize a railway safety inspector who is satisfied that there is an immediate threat to the safety or security of railway operations to order a person or company to take any measure that the inspector specifies to mitigate the threat;
(d) authorize the Minister to require, by order, a company, road authority or municipality to follow the procedures or take the corrective measures that the Minister specifies if the Minister considers it necessary in the interests of safe railway operations;
(e) provide the Governor in Council with a regulation-making power regarding the submission of information that is relevant to the safety of railway operations by any person, other than the Minister to any person;
(f) authorize the Minister to order a company that is implementing its safety management system in a manner that risks compromising railway safety to take the necessary corrective measures; and
(g) declare that certain regulations and orders that were made under the Railway Act are deemed to have had effect from the day on which they were made under that Act and that those regulations and orders continue to have effect from that day as if they were made under the Railway Safety Act.

Safe and Accountable Rail Act

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, the member and I have worked together a great deal on the whole issue of rail safety in the city of Toronto. We represent very similar ridings.

The member talked about the need to prevent accidents. He cited the Auditor General's report that really highlighted the lack of supervision and the lack of regulatory structure and enforcement to ensure that the public is protected with these major shipping routes of highly volatile substances, such as oil, going through our neighbourhoods.

It was in 1999 that the Liberal government amended the Railway Safety Act that really accelerated deregulation of the industry. It kind of took off like a runaway train. Later they brought in safety management systems that turned safety over to the companies to regulate themselves.

Can the member comment on how effective or ineffective this has been, and how he thinks we should deal with this problem in the future?

[Andrew Cash, NDP, Davenport, ON]

Mr. Speaker, I would like to thank my colleague from Parkdale—High Park who has done excellent work in the city of Toronto on this issue of rail safety, and not just on the issue of rail issue but on many other issues.

It may be worth reminding Canadians that many of the people who have served on the front bench of the Conservative Party were also on the front bench of the Ontario Progressive Conservative Party during the tragedy at Walkerton, which was in part connected to the very fact that inspectors, oversight and regulation of the water supply had been cut down and destroyed by an ideological Conservative government. It is the same gang here now.

It is no surprise that they would oversee or preside over the biggest food safety scandal in the history of this country. It is an ideological path that the government pursues, and it is one that does not put public safety first.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, I must point out that there is a seniors' residence on Turgeon Street in my riding that is located less than 100 feet from the rail line. In Rosemère, there are residences that back directly onto the rail line, which runs about 20 or 25 feet above ground. If a rail car were to ever go off the track, it would fall directly on those homes.

This problem can unfortunately be seen all over Canada. Too often, people built homes much too close to the rail lines. Unfortunately, I too have often seen with my own eyes DOT-111 cars travelling along the rail lines in my riding.

I would love to believe that there is no risk, but is it wise to agree to systematically hand over safety responsibilities to private, for-profit companies, as the current government is doing?

[Andrew Cash, NDP, Davenport, ON]

Mr. Speaker, the description of the member's community is very similar to many right across the country where neighbourhoods are very close to these rail lines.

We have given some of these rail companies carte blanche for decades upon decades. It is time for rigorous oversight and safety measures of the shipping of dangerous goods along our rail corridors.

It is vital. It is vital for the economy. It is vital for the safety of our communities. We have seen time and time again in recent history that the oversight and safety measures are not enough in Canada right now.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Speaker, I appreciate the opportunity to rise today to speak to Bill C-52, the safe and accountable rail act.

Before I start, I would like to say that I appreciate the opportunity to share my time with the hard-working member for Lambton—Kent—Middlesex.

There are three points I want to make today. One is why Bill C-52 is important. I want to also talk a bit about the approach that we are using and how this compares to other liability legislation in recent times, and then about some basic provisions of the bill.

The first priority of Transport Canada, as we know, is safety and the prevention of accidents, but if an incident does occur, the liability and compensation regime must be able to respond to and support Canadians and their communities. We must take the steps necessary to ensure that in the event of a catastrophe, sufficient funds are available to compensate potential victims and pay for environmental cleanup and remediation.

We all know, as it has been commented on earlier in the House today, about the tragic accident in Lac-Mégantic with the Atlantic railway in 2013. The cleanup costs alone have been in the hundreds of millions of dollars, but the railway company had third party liability insurance of only $25 million. The railway has subsequently gone bankrupt. The Minister of Transport has moved quickly following the tragedy to improve the safety regime that applies to railways, especially for the transportation of crude oil.

In January of 2014, there was an accident in my riding involving CN Rail just outside of Plaster Rock, New Brunswick, in a small community called Wapske. It was not a big thing like Lac-Mégantic by any stretch of the imagination, but there were a number of railcars carrying oil and propane.

It is important for us to represent our communities, especially rural communities with a lot of volunteer first responders and firefighters. Kudos to all the first responders who came to the scene during that accident and guaranteed community safety at that time, especially Tim Corbin, the fire chief at the Plaster Rock Fire Department, Mayor Fenner for Plaster Rock, as well as all the first responders and the hazardous materials people who attended the site.

Over the long term, though, we have to ensure that adequate resources are available to compensate third parties so that taxpayers are not responsible for paying. Indeed, the bill before us is based on generally accepted principles that polluters should be held accountable for covering the costs for which they are responsible. How is this principle incorporated into the liability and compensation regimes for other sectors, such as marine and pipeline? Let me share with the House a few observations on those.

I will begin with the marine sector. In the event of a marine oil spill, the financial burden of an incident is shared between those responsible for transporting the oil, the shipowner, and those who benefit from the movement, the receivers of the oil. In the marine sector, there are several sources of compensation for oil spills. This starts with the insurance carried by the shipowners themselves to cover their liabilities.

As well, Canada is a member of the International Oil Pollution Compensation Funds. This body administers two international funds to compensate oil pollution damage caused by persistent oil. In addition, Canada's ship-source oil pollution fund, which is financed by levies on oil shipped by marine, pays compensation for damages caused by spills of any type of oil from any ship. Taken together, this fund provides funding of approximately $1.4 billion per incident.

What if the extent of a marine spill damage exceeds that amount? Earlier this year, the government announced it would remove the per incident limit of liability to make the full amount of the ship-source oil pollution fund available as part of a world-class tanker safety system. If the costs of an oil spill go beyond the amounts available from the ship-source oil pollution fund and other sources, the government will ensure that the fund is temporarily topped up to cover damages and cleanup costs for the spill. These amounts will be recouped from the industry through a levy. In other words, the polluter will pay.

Another example is the liability and compensation regime for pipelines. In Canada, we are strengthening the regime to ensure that pipeline companies are responsible for damages resulting from an incident. The former minister of natural resources announced that the government will require oil pipeline operators to be able to pay for any damage caused by spills or incidents.

On December 8, 2014, the pipeline safety act was introduced in the House. The act would amend the National Energy Board Act and the Canada Oil and Gas Operations Act to, among other things, strengthen the liability and compensation regime for pipelines. Major oil pipeline companies would be required to demonstrate a minimum financial capability of $1 billion and would be liable for damages up to that amount, regardless of fault. Above that amount, the liability would be determined by who was at fault for the accident. If a pipeline company were to become insolvent as a result of an incident, the government would pay for the cleanup and compensation using the consolidated revenue fund as a backstop. However, the industry would be levied to recover those costs.

These are examples of approaches to liability and compensation in which the polluter must pay for the cost of cleanup and compensation.

The marine model is built around different tiers that enable the sharing of responsibility for those costs. For marine and pipeline modes, the taxpayers is protected when the government is able to levy industry to recoup any loan from the consolidated revenue fund.

The bill before us draws on those best examples from the liability and compensation regimes in these other modes and uses them to create a regime for rail transportation of dangerous goods. First, it would apply the polluter pays principle to rail freight transportation through mandatory minimum insurance levels. This insurance would cover third-party liabilities resulting from any type of rail incident. In addition, it would establish a fund to cover the cost of major accidents involving crude oil that exceeds a railway company's insurance level. The regime could later be expanded to include other designated goods.

Under the bill before us, mandatory minimum insurance requirements would be imposed on federally regulated railways, depending on the type and volume of crude oil and other dangerous goods they transport. Railways that carry small quantities of dangerous goods would be required to hold $25 million in insurance. For railways carrying higher amounts of dangerous goods, there would be an initial requirement to hold either $50 million or $125 million in insurance, depending on the volume. One year later, those requirements would rise to $100 million and $250 million respectively. This approach would provide short-line railways with sufficient time to adapt to these new requirements so that there would be a certain predictability for that business and for its customers.

Finally, railways carrying substantial amounts of specified dangerous goods, such as class one railways, would be required to hold $1 billion in insurance. The Canadian Transportation Agency would assign each railway an insurance level based on its traffic and would review insurance coverage to ensure that each railway carried the appropriate amount. Railway companies would be required to inform the agency of any changes that would affect their insurance coverage. The agency would be authorized to make inquiries as necessary for assessing compliance. If a railway company failed to comply with the insurance requirements or to notify the agency of an operational change that would affect its insurance, it would be subject to an administrative monetary penalty of up to $100,000 per violation.

One thing we should understand about this insurance, and I heard in some of the comments in the debate earlier today about insurance and what it does, is that it can also be preventative. Insurance will add a certain amount of rigour to this process, because to obtain coverage, the companies themselves will have to have proper safety management systems and will have to account for that as well. In my view, that will also ensure that they up their game when it comes to their safety management systems.

The second tier of funding would be provided by shippers of crude oil collectively. They would be required to pay a levy of $1.65 on each ton of crude oil carried by a federally regulated railway as a condition of its movement. These amounts would be held in a special account in the consolidated revenue fund called the “fund for railway accidents involving designated goods”. Should the cost of an accident involving crude oil exceed the mandated third-party insurance, this account would be used to compensate for remaining liabilities.

The bill before us would establish this new regime. It is consistent with other polluter pays regimes we are having in the marine and pipeline industries, and it is a regime we need in place in response to the tragedy we saw at Lac-Mégantic and to what we saw on a smaller scale outside my community of Wapske. Doing what we are doing demonstrates that we are determined to learn from these incidents to build a more comprehensive liability and compensation regime for the future.

I can tell from the debate that many of my colleagues in this House support this bill going to committee, and I look forward to their support as we send it to committee for further study.

[Eve Adams, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, each and every year that the Conservative government has been in power, it has spent more money on advertising than on rail safety. This is true even this year, when it is spending $42 million promoting income splitting and only $38 million on rail safety. Could the hon. member tell me if he thinks those priorities are correct?

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Speaker, I would suspect that in the past few years we have probably spent a bit of money in her riding, so it is funny that the hon. member is asking that question.

The minister has been very conscious of what she has learned from the Auditor General's report and is taking action on railway safety. As I pointed out, when we add the private element of insurance to this, I think there will be an extra level of rigour brought by the private insurance business, which will encourage much more safety and a safety culture in the railways, not only for class 1 railways but for the short-line railways. I think Canada will be a winner after that.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, while there are elements in this bill I could find myself supporting, there is a larger question. We have had in northern B.C. a number of derailments, unfortunately, like much of the rest of the country. When I talk to first responders, fire chiefs, ambulance attendants, and emergency responders, their concerns are primarily around the safety equipment and the training, particularly as there has been a large increase in materials of different compositions, more toxic materials, and more flammable and explosive materials.

As my friend pointed out in his speech, there are new forms of oil coming through. I believe that 70% or 80% of all the fire departments across the country are volunteer-based. They do not have access to the training or to funds to have the equipment on hand to deal with a major spill of much of what is now transported by rail.

My question for my friend across the way is this: Is there not a need for the federal government, which permits and sanctions a lot of this transport, to come in and be a willing partner in helping many of these fire departments and first responders across the country have the equipment when an accident happens, because we know that one is going to happen again, to protect their communities and protect those first responders, who are often putting the most on the line?

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Speaker, that is a good question, because every fire department in my riding is a volunteer fire department, so I understand that very well.

The incident I referred to in Plaster Rock was a good example in terms of some of the provisions in this bill. One of the provisions would allow the minister regulatory authority to provide information to the municipalities so that they know what is coming through. There is some provision in the bill that is on the front end of what he is talking about.

Second, I know that the volunteer firefighters have made presentations to me and were in visiting the fire chiefs, as well, to talk about another kind of levy to provide a fund for that training. That is not contemplated in this bill. However, I am sure that is something the government could be thinking about going forward.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, it is always an honour to stand and speak in this great place. Today it is regarding Bill C-52, the safe and accountable rail act.

The bill would fulfill its title, in part, by strengthening the authorities of the Minister of Transport and the rail inspectors of Transport Canada in their efforts to maintain and improve the rail safety regime of Canada's rail transportation system. This is especially vital in the transportation of dangerous goods, including crude oil.

Canada has a good rail system. Some would argue that it is among the best in the world, both in terms of safety and in its ability to deliver transportation services that enable shippers to compete in a global economy. Under the current safety regime, 99.997% of dangerous goods transported by rail arrive safely. That is quite an impressive statistic, but we also know that we can never rest while there are still means available to increase that number even further.

Hon. members may recall that in May 2013, the Safer Railways Act introduced new safety provisions. It strengthened Transport Canada's oversight and enforcement capacity by giving it the authority to make regulations and by requiring all railways to meet regulatory requirements to obtain a safety-based Railway Operating Certificate. Transport Canada's enforcement powers were also strengthened at that time with the implementation of administrative monetary penalties. Existing judicial penalties were also increased.

Now, with the safe and accountable rail act before us, we go further. We would respond to issues raised by the 2007 review of the Railway Safety Act, the 2013 report of the Auditor General, and the recent report of the Transportation Safety Board on the Lac-Mégantic tragedy. Each has called attention to the need for Transport Canada to strengthen its oversight regime for rail.

The bill before us would provide the Minister of Transport and the railway inspectors with more oversight of railway safety and the ability to act when they believe that action is required to address threats to safety.

Bill C-52 would amend subsection 47.1(1) to enable information-sharing regulations that would require railways, for example, to prepare a summary of any risk assessment they have conducted. The summary would also include the mitigation measures identified and the plan to monitor the effectiveness of the mitigation plan itself.

Under future regulations, this summary would be shared with parties affected by any significant change to railway operations. In other words, local municipalities would be informed of changes to operations that would have an effect on safety in their communities. That was just addressed a few minutes ago.

Section 37 of the Railway Safety Act would be amended to permit the sharing of information related to safety. Detailed information on a risk assessment, for example, would be required to be provided to the minister under the terms of the Canada Transportation Act.

The bill would also require railway companies to comply with engineering standards, and failure to comply with these standards would then mean that they broke the law.

Under section 31, railway inspectors would be given broadened authority to issue notices and orders where there was a threat or an immediate threat to safety. Under the current regulatory regime, Transport Canada inspectors are limited in how they require railways to address safety concerns. The bill would broaden that authority so that in the case of an immediate threat, the inspector would have the power to order any appropriate corrective measures to be taken.

The Minister of Transport would be given new powers and authorities under this bill. When she believed that there was a particular threat to safety, she could order a company, road authority, or municipality to take corrective action, stop any action, follow any procedure, or suspend operation. This would give the Minister of Transport a powerful tool to oversee the safety of Canada's rail transportation system. Bill C-52 would also extend this new oversight authority to the safety management systems created by the railways.

I would like to clear up some misconceptions about the safety management systems, or the SMS. They do not represent an abdication of the government's responsibility to regulate and monitor railway safety by passing it off to the railways themselves. Rather, the SMS create an additional level of safety management to how the railways actually operate. An SMS includes, for example, safety goals and performance targets along with risk assessments.

In addition to following existing rules and regulations, the railways needs to identify hazards and mitigate risks to prevent accidents, often learning from minor incidents and trend analysis on day-to-day operations.

Transport Canada has created regulatory requirements around safety management systems, and oversees a railway's compliance to the SMS regulations. The department assesses the SMS documents developed by the railways and conducts periodic inspections and audits.

The role of safety management systems in all modes of transportation was studied by the Standing Committee on Transport, Infrastructure and Communities, but in the meantime, our government has taken steps to increase the regulatory enforcement of an SMS in rail and has given the minister authority to apply it in an effort to promote a safer railway systems.

Under the bill before us, if the minister believes the manner in which the railway is implementing its safety management system in fact compromises safety, the Minister of Transport can use a ministerial order to direct a company to take specific necessary actions. In this way, the SMS truly becomes another level of safety prevention, adding to the measures already in place to ensure safe and secure transportation.

Another component of the changes to the Railway Safety Act gives new authorities to the Canada Transportation Agency. A new section 23 of the act would permit a province or municipality to apply to the Canada Transportation Agency to recoup costs it must pay as a result of putting out fires believed to be caused by railway operations. Previously, these costs were paid for by the province, the municipality and taxpayers.

The Canada Transportation Agency would then determine whether, in its view, the fire was indeed caused by a company's railway operations. Sometimes those are very difficult to determine on rolling stock. It would determine whether the fire was indeed caused by a company's railway operations, what the costs were and would require the railway to reimburse the provinces or municipality for those costs.

There are many ways in which the safe and accountable rail act would give new force to the regulatory authorities and promote the safety and security of our rail system. We are taking the transportation system and making it better.

Clearly, this is a significant endeavour that will improve rail safety and its protection. Therefore, supporting Bill C-52 is a reasonable and sensible thing to do.

The House resumed consideration of the motion that Bill C-52, An Act to amend the Canada Transportation Act and the Railway Safety Act, be read the second time and referred to a committee.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, while the bill would make some modest progress in rail safety, the constituents in the area I represent in Parkdale—High Park, who have tanker after tanker of highly volatile, highly flammable substances going right by their homes, behind their bedroom windows, are very concerned about the possibility of some kind of catastrophic accident taking place in a highly-populated area, like our neighbourhood.

While there would be some modest improvements in insurance coverage, could the member tell me why there is not more significant attention and urgency being given to regulatory safety, stricter regulatory measures and also better enforcement?

Certainly the Auditor General has indicated that lack of enforcement and a real lackadaisical approach to the safety enforcement by Transport Canada was a key part of the disaster in Lac-Mégantic.

Could he tell me why the government has not put greater urgency on that part of prevention?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, that is the case regardless of where we live. In my riding, which is quite a rural riding with small towns, the lights will go on, the warning signals go down and a constant line of oil cars will go by. A number of years ago, that was not the case, but we are in a new time.

The proposed safe and accountable rail act addresses just the things the member has brought forward in a couple of ways. Issues were raised back in 2007 about the Railway Safety Act. The bill would make improvements based on those suggestions. As well, there were the comments of the Auditor General in his report of 2013 and also the Transportation Safety Board's recommendation that came from the Lac-Mégantic tragedy.

We have taken very enthusiastic steps forward to help with the prevention of rail accidents and protection of our communities, as well as some unforseen costs because of an accident with which they may be caught.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, we in the Liberal caucus recognize there is some value to the legislation. It would make some improvements in rail safety and so forth.

The question I have for the member is somewhat related to the type of question I asked earlier today.

It is often great to see a government bring forward legislation, but people want to see more than just the legislative component. There has been a great deal of concern in the government's lack of interest in investing through infrastructure programming and what it could potentially be doing to improve the quality of our rail line system.

Could the member share his thoughts on how infrastructure dollars could potentially be used to provide additional safety to our rail lines?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Speaker, I thank the member for Winnipeg North who is here every day challenging, which is great because he has brought up a very good point.

In terms of the investment in infrastructure, as members know, we have made a significant investment to the primary line 1 rail systems. The other part, as in my area, is in the short lines.

We have introduced the largest infrastructure program in Canadian history. Part of that will help in some parts of my area, because it is a smaller community. My largest populated urban area is 14,000. Therefore, when I talk about small communities, we now have dollars that are available for municipalities that would actually take over some of the short lines if they come. Now they have those funds to help upgrade and maybe procure those short lines.