Thank you very much, Mr. Chairman.
I appeared before this committee just about a year ago when it was talking about safety management systems in particular, and the safe and accountable rail act, of course, is a good follow-up to the work that's gone on over the past year.
The Freight Management Association has been around for 99 years representing the views of shippers. We advocate for our member companies regarding air freight, trucking, marine, and rail. Just as background, I am a member of the Transport Canada advisory committee on rail safety, representing the shipper community.
Before addressing Bill C-52 specifically, I'd like to offer a few general comments about transportation safety, and let me preface it by saying I don't work in the rail industry. We have a lot of conflict with the rail industry between the shipper community.
With that I would say the following: first, by any reasonable standard modern transportation in all modes in the western world is safe; second, as long as there is movement controlled by human beings there will be accidents; third, safety can never be taken for granted and vigilance can never be let down; and fourth, there is always room for improvement.
The Canadian transportation safety regime—that is, policy, laws, regulation, enforcement, accident investigation and practices—focuses on prevention of accidents, and this is as it should be.
The recent Lac-Mégantic derailment was a tragedy and the work by all stakeholders in both Canada and the U.S. to take actions to minimize the possibility of another such accident has been intense and thorough. The Transportation Safety Board has made its recommendations and the government has taken action in response. This includes, of course, Bill C-52.
I should point out that such accidents are extremely rare and that this needs to be considered in any actions the government takes. While there are derailments periodically—as there have been, and always will be—as the previous speaker mentioned, the last accident that came anywhere close to Lac-Mégantic in terms of its impact was the derailment of propane tank cars and other dangerous goods cars, including chlorine, on the Canadian Pacific Railway, in Mississauga on November 10, 1979. That's nearly 36 years ago. In that accident, no one was killed or injured. There was limited property damage, and about 250,000 people had to be evacuated for several days. Transport Canada and the railways learned a lot of lessons from Mississauga, and the result is that there has been no accident as severe as Mississauga on either of the two class 1 railways since that time.
The Transportation Safety Board is the scorekeeper with regard to accidents in aviation, marine, rail, and pipeline, and the statistical long-term trend in all modes is in the right direction. There are perturbations from time to time and there has been a little bit of an uptick in some of the modes in the last couple of years.
So looking at Bill C-52, we did provide some comments to the Transport Canada discussion paper that was issued last year, and there are a number of points we made to them, and I'll make them again today.
First, of basic and fundamental importance to the Canadian economy are the common carrier or level of service provisions, that is, sections 113 to 116 of the act. With only two class 1 railways in Canada, with many commodities that have no other practical transportation option, including a lot of dangerous commodities, it is imperative that this basic provision of Canadian law be maintained. Bill C-52 does maintain the level of service provisions and adds proposed subsection 113(2.1), which provides a mechanism for the railways to collect the levy for shippers of crude oil.
Second, and this is from the government discussion paper, the Transport Canada discussion paper: “A cornerstone of the Government’s approach to liability and compensation regimes in other modes and sectors is the “polluter-pays” principle...”.
FMA agrees with the government that this is a fundamental cornerstone of the third-party liability and compensation regime and is in line with long-standing legal principles that have been confirmed by the courts over time, and Bill C-52 appears to follow that principle.
Third, given the rarity of such major accidents and the ability of the class 1 railways to manage the aftermath of such accidents, and given the levels of third-party liability insurance, we understand that while the bill is only calling for a maximum of $1 billion, my understanding—albeit I can't confirm this—is it's been reported that CN and CP have each been carrying about $1.5-billion worth of liability insurance.
It's imperative that the bill should focus on the short-line railways, especially those that carry significant quantities of dangerous goods, especially inflammable goods.
Reinforcing this point, the safety record of the class1 railways, their knowledge of handling dangerous goods, and their safety procedures and training activities make it less likely they will have an accident of Lac-Mégantic proportions. The thing to remember is that Lac-Mégantic was a runaway train. All the other derailments that have been talked about are ones where the train has been under power.
Fourth, shippers, especially those that produce and ship dangerous goods, carry appropriate amounts of insurance and are prepared to live by the polluter pays principle. If the shipper is negligent, the courts will assess the degree of negligence and assess damages accordingly.
Fifth, as noted in a Transport Canada discussion paper, issues of national competitiveness and the need to maintain rail service on short lines for industries important to regional economies are factors that need to be considered in making any changes.
Some specific comments on Bill C-52 include the minimum liability insurance coverage. This is essentially the first line of defence for ensuring that valid claims resulting from a railway accident are paid. When dangerous goods are in the care of the railways, the first claim should be on the railways and Bill C-52, in my reading, confirms this.
Bill C-52 appears to have been sensitive to the balance that is required with regard to short lines and regional railways, which is that the insurance coverage should be high enough to address the risk, but not so high as to put the short lines out of business. The four levels of coverage proposed in schedule IV attempt to meet this balance, and proposed subsection 92(4) provides authorization for the Governor in Council to revise schedule IV, and, as more experience is gained with proposed levels, presumably the minister will be able to amend the schedule as required.
Item 4 of schedule IV is of concern. This is the one that requires railways in this category—essentially, CN and CP—to have minimum liability coverage of $1 billion per occurrence. The Transport Canada discussion paper reports that “Large North American railways carry third party liability insurance coverage of up to $1.5 billion each.” It is understood that CN and CP have coverage in this range.
There is concern that, if the law requires only $ 1 billion, the class1 railway carriers may reduce their current level of coverage. FMA recommends that Transport Canada review this with CN and CP, and that Parliament amend item 4 of schedule IV as per recommendation from Transport Canada. In this connection, proposed section 152.7 limits the railway liability to the maximum liability insurance coverage. This would appear to potentially reduce the liability of CN and CP to $1 billion each from their current level of $1.5 billion.
Second, regarding the crude oil shipper finance supplementary fund, division VI.2, proposed subsection 153.4(1), liability and compensation in case of railway accidents involving designated goods, establishes a fund for accidents involving these designated goods. By proposed section 155.3, shippers of crude oil are required to pay a levy of $1.65 per tonne until March 31 of next year.
