Transport Committee on April 23rd, 2015

[David McGuinty, Liberal, Ottawa South, ON]

Okay.

[Lisa Raitt, Conservative, Halton, ON]

—but I can look to somebody else in the department for that information and we'd be pleased to provide it to you.

[David McGuinty, Liberal, Ottawa South, ON]

What's my time?

[The Chair, Conservative, Larry Miller]

You just have a couple seconds. Use them—

[David McGuinty, Liberal, Ottawa South, ON]

Judiciously? Thank you, Mr. Chair.

Minister, a key part of the railway safety regime is of course safe tank cars. I don't see the new highly anticipated regulations in this bill for these new cars. Why not? The companies who manufacture these cars are asking for these standards, and they've been asking for them to be announced immediately.

[Lisa Raitt, Conservative, Halton, ON]

I agree with you, Mr. McGuinty. We are working very diligently to come out very soon with what that new standard is. The department has provided an update on their website, but most importantly, we need to ensure that we are harmonizing as much as possible with the United States, and those discussions are ongoing.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Watson, you have seven minutes.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

We are here to talk about Bill C-52, not last year's public accounts, and certainly not tank cars, which are not what's in Bill C-52, so I will direct my questions, Minister, to the actual legislation in front of the committee.

Proposed section 153.1 of Bill C-52 states:

A railway company is not liable under subsection 152.7(1) if it establishes that (a) the railway accident resulted from an act of war, hostilities, civil war or insurrection; or (b) any other defence set out in the regulations applies.

Minister, does this proposed subsection also establish terrorism, including, for example, a lone terrorist attack, as a defence to the railway company's liability?

[Lisa Raitt, Conservative, Halton, ON]

Thank you very much.

Mr. Chair, what I can tell the committee is that subsequent to tabling the bill and having the discussion, we of course have been meeting with industry and with insurance representatives as well. I want to make it clear, just for the sake of making it clear, that the language used in the defence pertaining to war hostilities, civil war, or insurrection that's in proposed section 153.1 does align with the other statutes in Canada, and those statutes are interpreted to include acts of terrorism as well. I appreciate the opportunity to make that clarification here to the committee.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Minister.

We have been hearing, I think incorrectly, that the supplemental fund is somehow capped at the level of $250 million. It's something I've been hearing frequently. I think it's even been reported that it's capped at $250 million. That's not my understanding of the bill.

Minister, can you clarify that?

[Lisa Raitt, Conservative, Halton, ON]

Yes. Sometimes it's easy for people to see the term “capitalization” and think that we're saying “a cap”. What we are saying is that initially the fund would be for $250 million. That's how we developed the amount of $1.65 and the number of years, based upon how much oil there was.

But the important part of this, Mr. Chair, is that this fund is not meant to be capped or cut off. It will cover all damages above the railway insurance in the event of a rail accident involving crude oil. Claims against the fund will not be limited. As I said, we picked $250 million to capitalize to, because that would actually give a substantial additional coverage for crude oil accidents, but it is a notional target.

Also, the bill does provide that a ministerial order can be used to suspend or reinstate a levy to ensure that the fund is at the appropriate level to accommodate liability in excess of insurance requirements. As well, if needed, while not holding excess capital unnecessarily—because you don't want a fund that can't be utilized necessarily—in the unlikely event that damages from an accident surpass both the insurance level and the amount in the fund, the government's CRF will back up the fund, but this is a loan, and it would be recouped through levies back to the shippers.

[Jeff Watson, Conservative, Essex, ON]

In fact, you wouldn't want levies in perpetuity, I think for the reason you gave earlier, Minister, which is that, first of all, you may not require them. The ship-source oil pollution fund I think is a perfect example of that, where there was a target initially for it and the levies ultimately stopped, but the fund continued to grow based on interest on the fund, to a significant level. This would function in very much the same respect, if I understand that clearly.

[Lisa Raitt, Conservative, Halton, ON]

That is the model that we chose to follow, and it's for good reason too. From a public policy point of view, shippers don't want to see the government collecting taxes and levies on a continuous basis and growing that capital that cannot be utilized in other parts of the economy.

[Jeff Watson, Conservative, Essex, ON]

I want to return to the question of “fatigue science” for just a moment. That is being withdrawn. I think it's in subclause 17(1). But authority is being put in—I think it's in subclause 34(3)—for the authorization, if you will, for the SMS regulations to tackle the issue of fatigue management with respect to employees' scheduling.

I think Ms. Kinney referred at least notionally to some of the the restrictions in the legislative definition. I'm looking at the principles that I think are included in the gazetted SMS regulations. Can you cover the four aspects that are in the SMS regulations?

[Lisa Raitt, Conservative, Halton, ON]

On the four things that we wanted to ensure were covered on human fatigue, the principles are as follows: that human fatigue is governed by physiology; that human alertness is affected by circadian rhythms; that human performance degrades in relation to hours of wakefulness and accumulated sleep debt; and that humans have baseline minimum physiological sleep needs. Those are important things that people have been asking to have recognized.

[Jeff Watson, Conservative, Essex, ON]

Companies, with respect to the operation of their rules, once the regulations are in place and they adopt and graft these into their safety management systems, would have to schedule in only a manner that is consistent with those principles and shouldn't be violating those principles when it comes to scheduling. Is that fair?

[Laureen Kinney]

If I could, I'll phrase that slightly differently. They would need to take this into account in their safety management system. They would need to take it into account in their work/rest rules scheduling. They would have to look at any risks created by how they address that issue, and then they would have to look at how they mitigate those risks. It's a matter of taking those principles and turning them into specifics, which is a bit complex, but you're generally correct.

[Jeff Watson, Conservative, Essex, ON]

Okay. So the regulatory route gives the flexibility needed to address it in a way that you couldn't draft regulations in order to address it.

[Laureen Kinney]

Exactly.

[Jeff Watson, Conservative, Essex, ON]

Okay, fair enough.

Minister, the class I railways are concerned that they'll be exposed to additional risk from short lines operating on their track due to regulatory requirements to interswitch. Will railways be able to refuse to allow other railways onto their tracks to interswitch? How will you handle the issue of interswitching?

[Lisa Raitt, Conservative, Halton, ON]

Railways already have obligations with respect to interswitching and those are not going to be affected by this bill. There is currently a risk that class I railways may not want to provide short lines with access to their tracks, especially those with poor safety records, given their liability concerns. This bill ensures that short lines have minimum insurance coverage, which helps mitigate that risk for them.

Regulated interswitching ensures that shippers' goods are moved to market efficiently, but the question of whether a class I railway can refuse access to a short line in the context of regulated interswitching has to be addressed by the CTA, should that case arise.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Watson. Your time has expired.

Mr. Yurdiga, you have seven minutes.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair, and thank you, Minister, for being here today.

Could you please clarify for the committee how the CRF backstop will function?

[Lisa Raitt, Conservative, Halton, ON]

In the unlikely event that insurance has been exhausted and the consolidated shippers fund has been exhausted as well, we would utilize the CRF as a backstop, but it's always going to be subject to terms and conditions that are established by the Minister of Finance.

The way it would work is that a shipper levy would first repay that loan made from the consolidated revenue fund to the shipper fund, and then that fund would be recapitalized through the levy as well. The bill allows and gives authority to put in place a special levy on railways to help repay that loan to make sure that liability continues to be shared appropriately in the event of a catastrophic accident. We have covered off how he can go back and recoup those levies and that loan from the shippers.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Minister.

As you know, proposed section 152.9 of Bill C-52 states:

If a railway company is liable, without proof of fault or negligence, under subsection 152.7(1) and under any other Act with respect to the same railway accident, the company is liable under that subsection up to the greater of the limit of liability for an amount that is referred to in that subsection and the limit up to which the company is liable under the other Act.

Could you please elaborate on the intent of this clause and whether it will expose the railways to any additional risk?