Transport Committee on April 28th, 2015

[The Chair, Conservative, Larry Miller]

We're going to call our meeting to order.

I'd like to thank our witnesses who have joined us, Mr. Boissonneault, Ms. Saskiw, and Mr. Rubinstein; and by teleconference, we have Mr. Tim McMillan. Thanks very much.

Mr. McMillan, can you hear me?

[Tim McMillan, President and Chief Executive Officer, Canadian Association of Petroleum Producers]

Yes, I can hear you loud and clear.

[The Chair, Conservative, Larry Miller]

Very good.

In case we run into technical difficulties, Mr. McMillan, we're going to start with you.

I'll turn it over to you for 10minutes or less.

[Tim McMillan]

Great.

Good afternoon. Thank you, Mr. Chairman and members of the committee.

My name is Tim McMillan. I'm president and CEO of CAPP, the Canadian Association of Petroleum Producers. Our industry association represents both large and small companies on the upstream aspects of oil and natural gas. We represent about 90% of the oil and natural gas produced in Canada.

The goal of this bill is to improve accountability through increased liability by railways that carry crude oil and other designated goods. In this bill, provisions are made for appropriate insurance for railway companies, which will be available if accidents involving crude oil or other designated goods happen. Provisions are also made for a supplementary compensation fund—the fund for railway accidents, financed by crude oil shippers—similar to what is in place for marine transport.

To put the issue of rail transportation in perspective, today Canada produces about 3.7 million barrels of crude oil per day. We ship the majority of that on pipelines, but about 5%, 200,000 barrels a day, is currently utilizing our rail system. We expect that number to grow in the coming years. Canada has been endowed with great resources—valuable resources that contribute greatly to the prosperity of our country and its people. Maintaining the competitiveness of this resource is a key priority.

Safety is paramount to our industry. We are committed to the safe, environmentally responsible development of the resource, and, as such, operators are responsible for and face the liability for their decisions.

We are not alone in this business. Our industry relies on others to transport our products to market. Pipelines are responsible for the safe transport of oil that they accept for shipment. They face the liability if there is a failure and a loss results. The shipper may also see costs of the insurance reflected in the rates charged by the pipeline, but the liability is clearly on the pipeline. This reinforces accountability.

We support a system for rail transportation that also is based on the liability of the carrier, coupled with a regulatory system that ensures that the carrier's commitment to safety is achieved. In broad terms, we are pleased that steps are being taken through this bill to reinforce accountability to support the commitment to safety of rail carriers.

Canadian oil is not the only oil making use of the Canadian railway system. There has been tremendous growth of U.S. oil production, and that oil is finding its way to eastern Canadian refineries. In fact, imports of U.S. oil are substantially displacing offshore oil transported by ships in eastern Canada. We want to make sure that all oil carried on Canadian railways pays into the new fund. We also want to make sure that payment into the new fund is collected only once. We have pointed out areas where we feel the language in the bill could be improved to ensure that this intent is clear.

I should also mention that crude oil is not the only commodity moved by rail that is categorized as hazardous. There are many other dangerous goods transported by rail. We are firmly of the view that rail safety is not simply an issue of crude oil. We believe that all dangerous goods should be designated and contribute to the new fund.

In the event of an accident, there must be effective response and responsibility. These are matters of great concern for our members. CAPP has been supportive of and engaged in the many initiatives taken to enhance rail safety. It is the railway's commitment to safety that we all acknowledge and rely on. Likewise, it is the railways that are accountable and bear the liability. We believe that if a shipper contracts with a major railway company to carry a shipper's oil and the railway company makes use of another smaller railway where an accident occurs, then the liability under Bill C-52 should fall on both companies. This will make the higher insurance held by the larger company available to compensate for the loss.

While the bill contemplates that more than one railway can be liable for an accident, the bill is not clear on how that liability would arise. We have pointed out an area in our written submission where the language of the bill could be improved to provide more clarity.

In regard to the new fund for railway accidents, the equivalent marine liability fund is capped. We look to the government to place a cap on the fund at the $250 million target that was mentioned in the House on March 30, 2015.

With that, Mr. Chairman and committee members, thank you for your interest and for including CAPP and our perspective in your discussions today. Thank you very much.

I look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. McMillan.

We'll now move to representatives from the Federation of Canadian Municipalities, or FCM.

Ms. Saskiw, you have 10 minutes or less, please.

[Jenelle Saskiw, Mayor of Marwayne, Alberta, Federation of Canadian Municipalities]

Thank you very much. Good afternoon and thank you, Mr. Chair, for your introduction and thank you to the committee members for extending an invitation to the Federation of Canadian Municipalities to participate in your study of Bill C-52, the safe and accountable rail act.

The FCM last appeared before your committee in March 2015 as part of your study on Bill C-627, an act to amend the Railway Safety Act and we are pleased to be here again today.

I am the mayor of Marwayne, Alberta; the chair of FCM's standing committee on municipal transportation and infrastructure; and the co-chair of the joint proximity initiative between FCM and the Rail Association of Canada. I'm happy to be here today to represent FCM as co-chair of the National Municipal Rail Safety Working Group. The working group was established after the tragic derailment that devastated the community of Lac-Mégantic in 2013. Our work is guided by three priority areas: to equip and support municipal first responders to rail emergencies, to ensure that federal and industry policies and regulations address the rail safety concerns of municipalities, and to prevent the downloading of rail safety emergency costs to local taxpayers.

I'm joined today by Daniel Rubinstein, manager of policy and research at FCM and our policy lead on rail safety and the transportation of dangerous goods.

The Federation of Canadian Municipalities is the national voice of our municipal governments. Our member municipalities come from every corner of Canada and collectively represent over 90% of Canada's population. Members include Canada's largest cities, all urban and rural communities, and 20 provincial and territorial municipal associations. In leading the municipal movement, FCM works to align federal and local priorities, recognizing that strong hometowns make for a strong Canada.

FCM is an active participant in a number of initiatives related to rail safety and the transportation of dangerous goods. We are members of the TDG general policy advisory council, the advisory council on railway safety, and Transport Canada's emergency response task force. We also actively engage Minister Raitt and Transport Canada's senior leadership on these critical issues.

Before speaking on Bill C-52, I want to reiterate for committee members that FCM and the National Municipal Rail Safety Working Group are guided by the essential work undertaken by the Transportation Safety Board of Canada. The TSB serves a critical function in making safety recommendations to the federal government. At FCM we believe that the standard for progress is full implementation of TSB safety recommendations. My colleagues and I from FCM are pleased that the government has substantively responded to the TSB's reports and recommendations following the tragedy in Lac-Mégantic. We expect the same type of response once the TSB has completed its investigation into the recent derailments in northern Ontario and has made additional recommendations to government.

In terms of the focus of today's meeting, let me say a few words about Bill C-52. The key elements of the legislation respond directly to concerns raised by FCM related to insurance and liability, information sharing, and Transport Canada's oversight of federal railways. The bill is an important step forward in improving the safe transportation of dangerous goods by rail. The changes to insurance requirements for railways and a new levy for crude oil shippers, in particular, will address an important concern of municipalities and ensure that those affected by rail emergencies at the local level are fully compensated. While we understand the decision to focus on the risks posed by crude oil shipments, we hope that Transport Canada will look closely at the possibility of expanding the new levy to shippers of other dangerous goods once Bill C-52 has come into effect. It is a positive sign that the legislation includes the ability to scope in other products in the future.

Bill C-52 also represents an important step forward in providing both the minister and the railways inspectors with new powers that will allow for specific corrective actions to be ordered in the event of unsafe railways operations. This includes new power for the minister to issue an order to address any threat to safe railway operations, as opposed to only an immediate threat under the existing railway act. FCM is pleased to see these measures included in Bill C-52, as they should provide the regulator with additional tools to improve rail safety.

Bill C-52 also includes provisions for Transport Canada to develop expanded regulations on information sharing between the railways and third parties, including municipalities. Municipalities need to know about potential risks associated with rail corridors in their communities to reduce the safety risks related to the transportation of dangerous goods by rail and to ensure that local services can plan and respond effectively to emergencies. We look forward to a detailed discussion with Transport Canada on the development of these regulations.

Now, I will shift from the provisions in Bill C-52 to land use planning near rail corridors. As discussed at our last appearance on Bill C-627, FCM and the Railway Association of Canada are committed to building common approaches to the prevention and resolution of issues that may arise when people live and work in close proximity to rail operations. In May 2013, we unveiled new proximity guidelines and a new website intended to promote best practices and awareness about the issues associated with developments near railway operations. Several of Canada's largest cities are now in the process of studying how best to implement these guidelines locally.

Given the considerable interest in proximity issues at our last committee appearance, I want to reiterate that a one-size-fits-all approach on proximity issues is not suitable for a country as geographically and jurisdictionally diverse as Canada. Thus it is critical for the federal government to continue to work closely with provincial and local governments on any new policy initiatives related to land use in proximity to railway operations.

These are a few of the policy areas where proactive and ongoing discussions between FCM and our member municipalities, the federal government, and industry have resulted in concrete reforms that will improve the safety of Canada's railways.

That said, unfortunately our work is not yet done. As derailments continue to occur, again we look to the TSB to provide Canadians with analysis of the causes of recent derailments and recommendations to further improve rail safety in Canada. We look to the government, the rail industry, and the Parliament, through this committee, to ensure that any recommendations are implemented in full.

In closing, FCM welcomes a new insurance and third-party liability regime for railways and dangerous goods shippers, as well as new measures to expand and clarify the oversight and enforcement powers of the minister, the CTA, and railway safety inspectors, including the amendments to the Railway Safety Act and Canada Transportation Act in Bill C-52. We hope that Transport Canada and the Canadian Transportation Agency will ensure that these powers are fully implemented as soon as possible.

Again, thank you very much to the committee for giving FCM the opportunity to present our municipal perspective on Bill C-52. Daniel and I will be happy to answer any questions in regard to the bill, as well as any other issues related to rail safety and the transportation of dangerous goods by rail through our municipalities.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now go to Mr. Paul Boissonneault, from the Canadian Association of Fire Chiefs, for ten minutes or less.

[Paul Boissonneault, Fire Chief, County of Brant Fire Department, and President, Canadian Association of Fire Chiefs]

Thank you, Mr. Chair, and good afternoon, everyone.

My name is Paul Boissonneault. I'm the fire chief for the County of Brant, Ontario, and president of the Canadian Association of Fire Chiefs. Founded in 1909, the CAFC is an independent, non-profit organization representing approximately 3,500 fire departments across Canada. As the voice of the fire services in Canada, the CAFC promotes the highest standard of public safety in an ever-changing and increasingly complex world. The CAFC acts as the national public service association dedicated to reducing the loss of life and property from fire.

Canadian communities face an ongoing and growing risk from the consistent and substantial increase in the quantity of dangerous goods being shipped, particularly flammable class 3 liquids shipped by rail over the last five years. In the case of crude oil, we went from 500 carloads in 2009 to an estimated one million barrels per day today.

This risk has been realized in an increase in the number of accidents and near misses involving these goods. In 2013 there were 144 accidents involving dangerous goods, seven of which resulted in a dangerous goods release. When these accidents occur, firefighters will almost inevitably be the first responders on the scene.

Canada’s economy and thousands of jobs depend on the safe and timely production and transportation of dangerous goods. They are essential to a variety of industries. The risk they pose to communities and the environment, however, needs to be better managed.

The tragic derailment in Lac-Mégantic highlighted the need to further strengthen the rail regime to ensure there are sufficient resources to fund response and recovery in the event of a disaster. 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 and has subsequently gone bankrupt.

Because railways will never be able to prevent all accidents, all of us have the shared responsibility of mitigating the community impact of a train derailment involving dangerous goods in Canada. To do so, we need a system that improves the liability and compensation regime of Canada's railways. CAFC believes Bill C-52 is a step in the right direction as it protects municipalities, the fire service, and more generally, Canadian taxpayers from having to bear the substantial financial responsibility of a catastrophic incident.

Extending the responsibility for compensation to railways and shippers embraces the polluter pays principle, a notion that CAFC has supported in the past. Requiring shippers to share the liabilities associated with the transport of their goods reflects the fact that the qualities of their product contribute to the risks and costs associated with an accident. Moreover, while CAFC recognizes that a drop in oil prices is putting a strain on shippers, the risk posed by their products remains the same regardless of the price.

Since the Lac-Mégantic derailment, CAFC has been asking government to consider a modest, true-cost user fee levied on a per-tanker-car basis payable by the shippers for all class 3 flammable liquids, dangerous goods transported by rail to establish a flammable liquid firefighter training fund. Since the bill does not address the serious firefighter training gap that currently exists in Canada, we would ask this committee to consider a mechanism to fund this training, such as through a small allocation of the disaster relief fund.

Few fire services, whether career, composite, or volunteer, have the necessary training or specialized equipment to adequately respond to these incidents involving flammable liquids transshipped via rail through their areas of responsibility. The issue has been raised in several accident investigation reports from the Transportation Safety Board. Most firefighters in Canada are trained to firefighter level 1 and some are further trained to a hazardous materials awareness level, which is only a basic level of training. Moreover, neither training is adequate for responding to railway incidents involving multiple tank cars of class 3 products in a large-scale fire situation.

The lack of specialized training increases the probability of serious consequences during this response. Properly trained firefighters have the ability to assess a situation, understand the intervention's risks based on the products involved. This in turn would allow them to take appropriate actions to protect themselves, the public, property, and the environment, thus mitigating the impact of the incident.

The CAFC has been working with various industry stakeholders to help develop and promote training programs for fire departments, municipal officials, and emergency planners. It is imperative that we provide firefighters with the appropriate training and equipment for these types of incidents.

Another aspect of Bill C-52 that the CAFC supports is the ability of a province or municipality to apply to the Canadian Transportation Agency to recoup costs it must pay as a result of putting out fires caused by railway operations. This new authority would allow the Canada Transportation Agency to determine whether in its view the fire was indeed caused by a company's railway operations, and relieve the financial burden of these fires on provinces, municipalities, and specific fire services.

Overall the CAFC welcomes Bill C-52 because it defines the liability of railways in order to provide claimants with a greater certainty of compensation. It builds upon recent government actions focused on strengthening rail safety and the transportation of dangerous goods. It is consistent with liability and compensation regimes used in other modes and sectors.

The CAFC does have some concerns with the bill. First, we would like to ask the committee to reevaluate the $250 million limit for the disaster relief fund. Considering the costs of the Lac-Mégantic tragedy, we believe that a higher limit is required to ensure that the fund is able to meet its objectives in the case of a large-scale disaster.

Second, recognizing that crude oil is not the only product that could cause significant damage if involved in a rail accident, we ask the committee to consider the inclusion of other dangerous goods, such as propane and chlorine, in a shipper-financed fund amendment.

Third, the bill gives authority to inspectors and the minister to order a company to immediately correct safety problems. This is very important, but ensuring that there are enough inspectors with all the required resources to audit the safety management systems is as important in preventing these incidents.

Fourth, the bill allows for requirements related to information sharing between railways and municipalities to improve the response in case of emergencies. The proposed changes to the regulation do not reflect the level of detail contained in protective direction 32 of the Transportation of Dangerous Goods Act. This direction requires disclosure of yearly aggregate information on the nature and volume of dangerous goods to the designated emergency planning official of each municipality through which dangerous goods are transported by rail. We cannot stress enough the importance of this information for emergency response planning as well as immediate access to train manifest information and material safety data sheets when a derailment occurs.

Fifth, the CAFC believes that maintaining and strengthening the Canadian Transport Emergency Centre should be part of the current regulatory revisions. CANUTEC is a vital resource for emergency response with planning and real time support during a dangerous goods incident. It is the equivalent to a first responders’ call for 9-1-1. Its industry leading emergency response guidebook and its experienced 24-hour-a-day professional chemists assist emergency responders with advisory and regulatory information in the event of a dangerous goods accident.

Finally, despite the progress achieved to date in railway safety and accountability, our work is not yet done as derailments continue to occur. CAFC believes that greater emphasis should be placed on the prevention of these incidents through increased safety and monitoring measures. We should be proactive in planning rather than reactive in emergency response. The CAFC is committed to continue working with government, industry, and this committee to ensure that first responders have the information, training, and emergency planning protocols to protect Canadians and our communities when incidents occur.

We recognize Bill C-52 is a step in the right direction in the government action required to address the evolving risks associated with the transportation of dangerous goods in Canada.

On behalf of the CAFC, our chief fire officers, and firefighters from across Canada we thank the committee for this opportunity to share our point of view. I look forward to any and all of your questions.

[The Chair, Conservative, Larry Miller]

Thank you very much to all of you for keeping to your time.

We'll now move to questioning.

Mr. Mai, you have seven minutes.

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

Thank you, Mr. Chair.

My thanks to the witnesses for being here.

Let me start with you, Mr. Boissonneault. First of all, thank you for your work as a firefighter. We see how important your work is every day. We also saw how important the firefighters were at Lac-Mégantic.

You have really hit the nail on the head. Of course we have to make sure that there are enough inspectors. You also mentioned CANUTEC. Both those points have been in NDP recommendations.

You also mentioned training, which is an issue I have been bringing up for a long time. There are costs associated with training firefighters. You suggested that part of the relief fund go directly to that. Do you have an idea about the amount, the percentage, you need? Do you have any figures on that for us?

[Paul Boissonneault]

Thank you for the question.

The exact cost of the training is not known at this point, simply because what we're looking at is establishing a minimum criteria, at least for an awareness level. Because over 80% of the fire service in Canada is by volunteers, we have a very diverse fire service. It is a challenge to ensure that all people are trained to the same standard. Certainly, municipal resources in larger cities are far more prevalent than in some of the smaller communities. However, railway lines go through those communities, as we have seen. The last time that I presented to this committee, I applauded the efforts associated with the mutual aid and automatic aid responses, specifically within the Lac-Mégantic response area, because it really was a coordinated effort that helped deal with the situation. The reports arising from that show that there's a need for standardized training and resource allocation so that we can better respond to these emergencies in the future.

Much like the National Fire Protection Association's standard for hazardous materials training in general, there's an awareness level, an operations level, and a technical level. There would still be the autonomy within specific municipal sectors for smaller departments to gain at least an awareness level, and maybe a larger city could get to a technical level. However, right now there is no basis at all for at least an awareness level training program specific to class 3 flammable liquids, and that has to be absolute.

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

I am going to ask the representatives of the Federation of Canadian Municipalities to comment on that, since municipalities have to assume a good part of the costs of training, resources and equipment for first responders.

Do you support the idea that money from the disaster relief fund should be used to pay for things like training and equipment, which normally fall to municipalities?

[Jenelle Saskiw]

Absolutely. It is something that we would consider. We would have to work through some details.

I am mayor of a tiny community of 700 people, so I understand what it's like to work with a volunteer fire department of a few members and not having a guarantee that the members are actually in our municipality should disaster strike. For that reason, I would like to entertain the idea of also having training for police officers. We often see that they are the first ones on the scene, before the firefighters get there. It's something I would entertain discussing in the future, definitely.

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

Have you had discussions with the government on the funding that goes directly to that? Has anything been done along those lines?

My question also goes to Mr. Boissonneault.

[Daniel Rubinstein, Manager, Policy and Government Relations, Federation of Canadian Municipalities]

I can speak to that briefly. We are members of Transport Canada's emergency response task force, as Ms. Saskiw mentioned. The task force was given a mandate to look at the emergency response after Lac-Mégantic, specifically around flammable liquids. One of the key pieces is how to improve training. We agree with the fire chiefs that there needs to be an awareness level across the board, and that there needs to be a technical level where appropriate. The mechanism to fund that has not yet been arrived at. The task force has the mandate of establishing the levels that are needed, and that work is ongoing.

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

My next question goes to the Canadian Association of Petroleum Producers.

In 2009, there were 500 crude oil tanker cars in circulation. In 2013, there were 160,000.

Could you tell us how many there were in 2014 and how many you project for 2015?

[Tim McMillan]

Certainly. We know that only about 5% of our current production is going out on the rails, and our numbers reflect that it's about 200,000 barrels a day. We expect that is going to increase incrementally over time, but today it's about 200,000 barrels.

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

Could you translate that into approximate carloads per year for us? The reference we had in 2009...or maybe you can submit it to the committee when you get the numbers, just so we can really understand the importance of crude oil circulating on rail.

[The Chair, Conservative, Larry Miller]

I believe Mr. McMillan is trying to get that answer.

Maybe you could give it to us when you get it, Mr. McMillan.

[Tim McMillan]

Certainly. We're doing the math here, and I hope we will have it before the committee adjourns.

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

Okay.

I have a question for you and Ms. Saskiw.

We heard from the fire chief about other goods that could be covered: propane and chlorine.

Do you have any specific suggestions regarding dangerous goods that maybe should be part of the disaster relief fund, or that should be levied?

[Jenelle Saskiw]

We've definitely had that discussion. We are open to any possibility. We don't want to just have crude oil singled out; there are a lot of different commodities that fall in the same category.

One of my concerns from a municipal standpoint, especially when we talk about chlorine, is to ensure that the cost of the levy or the shipment isn't downloaded back on to municipalities.

That is something that the minister is aware of; we've brought it from our working group. That's something I want to ensure doesn't happen.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. McGuinty, for seven minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Mr. Chair.

Thank you for being here this afternoon.

Chief Boissonneault, what is the budget of CANUTEC right now? Do you know?

[Paul Boissonneault]

I do not have the exact budget of CANUTEC at this time.