Evidence of meeting #53 for Transport, Infrastructure and Communities in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-52.
A recording is available from Parliament.
Conservative
The Chair Conservative Larry Miller
Okay, I can hear you well too. With that, I'm going to turn it over to you to start. You have ten minutes or less, please.
Patricia Lai Co-founder, Safe Rail Communities
Thank you. Good afternoon, everyone. Bonne après-midi. Thank you for this opportunity.
Before I share our thoughts on Bill C-52, I'd like to tell you a bit about our organization.
Safe Rail Communities was created in the wake of the Lac-Mégantic rail disaster, which occurred in the early hours of July 6, 2013. Forty-seven people died a violent death that night. Why? They were too close to a rail line where crude oil tank cars derailed and exploded.
My neighbours and I live within metres of a rail line in the west end of Toronto in an area called The Junction. Our riding is bordered on three sides by rail. Trains are a part of our daily life. Their low rumble is our constant soundtrack. When we learned that the same lethal tank cars that derailed in Lac-Mégantic first travelled past the windows of our children's bedrooms as they slept, we realized that we needed to act.
We researched derailments and plotted their steady rise. We learned that tank cars carrying the same type of volatile crude oil that exploded in Lac-Mégantic were travelling past our homes in never before seen numbers. In 2014 it was 280 times the number of cars that travelled in 2009.
In March of 2014 Safe Rail Communities was born. We are a group of ordinary citizens who are concerned about dangerous goods being transported by rail. Our goal is to raise awareness on this issue and to press government and industry to take meaningful action. We share our knowledge and resources with others across Canada who live close to rail lines. We take every opportunity to publicly document our recommendations on this issue, which is why today I am pleased to share with you our group's thoughts on Bill C-52.
Although it has some promising elements, we feel that Bill C-52 could go further to ensure safety and accountability. Before I discuss what Safe Rail Communities would like to see added to Bill C-52, I would like to discuss six concerns that our group has identified within the current legislation.
Our first concern relates to liability insurance. Bill C-52 sets a minimum insurance requirement of $1 billion for class 1 railways, but CN and CP already carry at least $1 billion in liability insurance without a law telling them to do so. An accident on the scale of Lac-Mégantic would require liability insurance about six times this amount. This estimate of $6 billion U.S. for a high-consequence event comes from the Pipeline and Hazardous Materials Safety Administration in its draft regulatory impact analysis.
Our group would instead recommend that class1 railways carry unlimited liability to cover the full cost of a rail accident. This would put the focus squarely on prevention. It also fits with the polluter pays principle, which is the supposed basis for Bill C-52.
Our second concern with the bill concerns how this minimum insurance coverage is determined. Right now the amount of insurance needed is dictated by the total tonnage the railway carries in a year. However, the risk of accident is always in relation to a single event. This means a railway carrying only a few large loads a year could have coverage that is drastically insufficient to cover the damage those few large loads could cause.
Our third concern is who has a say in deciding liability. Railways can avoid liability if they can establish, according to Bill C-52, that any other defence set out in the regulations applies. The federal cabinet is given power to decide these regulations. The cabinet's future decisions about what defences will be available to railways adds uncertainty to this legislation. It also provides the possibility of decisions that could undermine the effectiveness of Bill C-52.
Our fourth concern with the bill is that it restricts the ability to sue for environmental damages to the government. This means members of the public, whether an individual or group, will not be able to sue for environmental damages. Our concern is that even though both the federal and provincial governments have had the ability to sue for environmental damages for more than a decade, they have not done so. We wonder who will hold railways responsible for the damage they do to the environment.
The fifth point we'd like to make concerns the compensation fund that the bill proposes. Bill C-52 imposes a levy on the companies that ship dangerous goods by rail. The levies collected will be used to create a $250 million compensation fund. But again, $250 million is relatively small compared to the estimated cost of $6 billion U.S. needed to compensate a high-consequence event. Moreover, there is likely no access to the compensation fund for environmental damages because of the priority given to other types of damages.
Our sixth and last point concerns railway safety inspectors. Bill C-52 authorizes inspectors to identify immediate risks and request any measure that would mitigate risk. We find this amendment to the Railway Safety Act unclear. We would like to see included in the bill an inspection schedule with specific criteria to determine risk and with specific corrective action.
These six deficiencies of Bill C-52 that I've just outlined for you are of great concern to us. In our view, a preventative approach that highlights meaningful action should be the focus of legislation covering railway safety and the transportation of dangerous goods. Prevention should be paramount, then mitigation.
I'd now like to share what we feel should be included in any legislation that addresses safe and accountable railways. First, there should be increased government regulation and enforcement. The rail disaster in Lac-Mégantic and subsequent fiery derailments have shown that the current safety management system, with its reliance on self-regulation, is inadequate.
Secondly, existing rail safety technologies such as positive train control, automated railcar monitoring, and automated track inspection should be implemented with robust standards.
Third, first responders should receive current information about any dangerous good travelling through their communities. In a rail disaster precious time is wasted confirming train manifests.
Our fourth recommendation also touches on the matter of transparency. Last summer's Bill C-31 included the repeal of sections of both the Railway Safety Act and the Transportation of Dangerous Goods Act. These sections provided the opportunity for Canadians and interested groups to review and comment on proposed regulation at the last stages of the regulation-making process. These sections should be reinstated.
Our fifth point is that crude oil can and should be stabilized and/or treated at the point of departure to decrease its volatility.
Our sixth point is that we would like to see effective tank car standards for crude oil. The current standard is the CPC-1232, which has been shown in the Lynchburg and Gogama derailments to be inadequate.
Finally, we believe that the speed of trains carrying dangerous goods should be monitored and enforced.
The safe transport by rail of dangerous goods, including crude oil, involves many factors, such as track condition, volatility, tank car integrity, and speed.
Co-founder, Safe Rail Communities
We strongly feel that an independent risk analysis of all relevant factors could properly assess the safest way to manage all of these risks together and that the results of this analysis should be shared with the public.
We support our friends in Lac-Mégantic in their call for a public inquiry on the disaster, which will have its second anniversary this July. While the people of Lac-Mégantic wait for answers, how many more rail communities will have to go through this horrific and traumatizing experience before meaningful change occurs? Just this year Gogama has had two close calls within three weeks. What would a high-consequence derailment look like in a densely populated city like Toronto, Vancouver, or Montreal? Small or large, all rail communities are at risk.
We trust the government to protect us and what we find here is a broken business model in which industry profit not only puts Canadians at risk, but also leaves us paying the cost of industry calamity.
Safe Rail Communities has spent countless hours researching and writing and more hours knocking on doors and speaking to Canadians. We see and hear that Canadians are deeply concerned about this issue. We are calling for meaningful action and meaningful change to prevent further tragedy.
Thank you. Merci.
Conservative
The Chair Conservative Larry Miller
Thank you very much.
We'll now move to Mr. Ballantyne from the Freight Management Association of Canada.
You have 10 minutes or less, sir.
Robert Ballantyne President, Freight Management Association of Canada
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.
President, Freight Management Association of Canada
Thank you.
This appears to be appropriate and it looks as if there is provision for further changes, if necessary.
Third, the administrative monetary penalties, AMPS, section 177 of the act is amended by adding proposed subsections 177 (2.1) and 177(2.2), providing for penalties of up to $100,000 per violation for failure to keep the agency apprised of changes and that are in violation and to remit the levies and to keep appropriate accounting records. FMA supports this.
Finally, concerning proposed amendments to the Railway Safety Act, it is preferable—and what I say will be controversial—to leave safety management systems and the detailed management of safety to the railway managers and employees. However, replacing section 32.4 with the new subsections 32.4(3.2) and 32.4(3.4), and adding a new section 32.01 gives the minister authority to order the railways to take “necessary corrective measures”. This is reasonable, especially with regard to short lines, and FMA supports this recommendation.
That's all I have to say.
Conservative
The Chair Conservative Larry Miller
Thank you very much.
Ms. Frid, I believe you're presenting on behalf of the Canadian Transportation Agency.
Nina Frid Director General, Dispute Resolution Branch, Canadian Transportation Agency
Yes. Thank you very much, Mr. Chair.
Mr. Chair, honourable members of the committee, thank you for inviting us to appear before you on the subject of Bill C-52, An Act to amend the Canada Transportation Act and the Railway Safety Act.
I am Nina Frid, from the Canadian Transportation Agency, where I am responsible for the Dispute Resolution Branch. My colleague, Liz Barker, is the agency's general council.
With your permission, I would like to briefly outline the role of the agency.
The agency is a federal administrative tribunal and economic regulator with jurisdiction over a broad range of air, rail and marine matters. As well, the agency is responsible for removing undue obstacles to the mobility of persons with disabilities within the federal transportation network.
The Canada Transportation Act is the agency's enabling statute. It outlines the extent of the agency's authority and jurisdiction, as well as the agency's role in administering the act. As a tribunal, the agency resolves a range of disputes, by facilitation, mediation, arbitration, and adjudication. With respect to our role in rail transportation, the agency mandate applies to railway companies under federal jurisdiction. There are currently 30 active railways under federal jurisdiction, including class ones and short lines.
Pursuant to the Canada Transportation Act, the agency resolves disputes pertaining to level of service; road and utility crossings; noise and vibration; interswitching; and disputes between a public passenger service provider and a railway company. The agency issues certificates of fitness to railway companies, approves railway line construction, establishes interswitching rights, determines the maximum revenue entitlement for the movement of western grain, and determines the net salvage value of railway lines under the transfer and discontinuance provisions.
When we appeared before your committee last year as part of your study on rail safety, we spoke about the agency's consultation on third-party liability insurance. As you may recall, in the summer of 2013, we announced our intent to review the approach to determining the adequacy of railway third-party liability insurance, as our immediate response to the tragic derailment in Lac-Mégantic.
At that time, a year ago, we informed the committee that our consultation was an information-gathering exercise designed to serve as a basis for the work that our colleagues at Transport Canada conducted as part of their broad consultation on the policy aspects of liability and compensation. I'd like to tell you that the policy is not within the legislative authority of the agency under the Canada Transportation Act.
As part of our consultations, the agency explored a number of issues that helped provide information, and, in some instances, inform the work that happened to develop the bill that is before you. Specifically, we consulted on whether there should be additional or different third-party liability insurance requirements related to the transportation of certain commodities like dangerous goods, whether minimum coverage requirements for liability insurance should be established, and whether administrative monetary penalties or other mechanisms would be appropriate for non-compliance.
The agency received comments from over 25 organizations, including a wide range of stakeholders: railways, both class ones and short lines; the insurance industry; shippers; and municipal associations. I would like to thank our stakeholders for their thoughtful comments, including the Federation of Canadian Municipalities; the Canadian Association of Petroleum Producers; the Freight Management Association of Canada—and many others you saw today who provided their comments to us—as well as Marsh Canada, which advised us; and the Railway Association of Canada, which provided comments on behalf of the rail industry.
We heard from our stakeholders that they support the introduction of minimum requirements of insurance. They support the different requirements for various commodities, especially dangerous goods, and the use of the administrative monetary penalties as an effective compliance tool in our compliance toolbox.
Bill C-52, the safe and accountable rail act, clarifies a number of sections of the Canada Transportation Act and updates the aspects that were covered by the agency regulations for third-party liability insurance coverage, and introduces new requirements for compliance and enforcement. This bill, in our view, will strengthen the liability and compensation regime for federally regulated railways 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.
Under the new regime introduced in this bill, the agency will assign legislated minimum levels of insurance to railways based on the type and volume of commodities they carry, including dangerous goods. Minimum insurance levels would vary by type and quantity of crude oil or dangerous goods, as specified in schedule IV of the bill.
To address concerns that some short lines may have difficulty absorbing the costs of minimum insurance requirements, we would say that they will be phased in over time. Initial insurance requirements corresponding to half of the full amount specified in schedule IV will come into effect in 12 months, and then the full amount a year after, while class ones will be requiring $1 billion.
To ensure that liability is shared, as designed in the new regime, the bill also makes changes to section 137 of the Canada Transportation Act to clarify that railways will not be able to impose their third-party liability on shippers unless it is done by means of a contract signed by both parties. We understood from our consultations that this is a very important point for the shippers.
Bill C-52 also establishes more robust oversight and enforcement mechanisms to ensure that railways comply with the requirements of the new regime. Railways will continue to be obligated to notify the agency of any changes to their operation that may affect their insurance coverage. Under the new regime, the agency will be empowered to make inquiries on our own motion to determine compliance and as before, or as currently, the agency will be able to suspend or cancel the certificate of fitness of a railway that fails to comply with insurance requirements.
As well, the bill introduces administrative monetary penalties up to a maximum of $100,000 for contravention of the requirements. Like our stakeholders we believe that it is an effective mechanism to ensure compliance without having to cancel or suspend railway operations, because that is what the shippers want and it supports the economic activity.
In terms of the measures introduced under the Railway Safety Act, this is a completely new mandate for the agency. According to the proposed amendments, a province or a municipality that believes the fire was a result of railway operations can apply to the agency for reimbursement of costs incurred in responding to the fire. This amendment gives the agency new authority, and the agency will work very hard to develop the process and procedure and the steps and guidance for the parties so they can take advantage of these provisions, and do it in a transparent and predictable way.
These applications will be adjudicated by the agency. It will be a two-step process, where, in the first step, the agency would have to determine whether the fire was caused by a railway operation. Once that is established, the agency will review the claim of the cost that's presented and establish what costs are properly assigned to the railway, and then order the railway to reimburse the municipality or province.
This certainly will be a bit of challenge for us since this is a new mandate. As we have done with the previous Bill C-52, and after Bill C-30, we'll do our best to make sure that these measures are available and clear.
In conclusion, I would like to thank you very much for the opportunity.
My colleague and I would be pleased to answer your questions.
Conservative
The Chair Conservative Larry Miller
Thank you very much.
I want to remind members that the clerk informed me that the bells will start at 5:15 for votes in the House, so we're not going to get through as much as we had liked.
Ms. Nash, you can start with the questions.
You have seven minutes, please.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Thanks very much, Mr. Chair.
Thank you to all the witnesses for your presentations.
My question is for Ms. Lai. As your member of Parliament we know each other. I want to congratulate you on your presentation today. It was very clear and specific in your critique of the bill and very specific in terms of your recommendations. I want to thank you for the many months and countless volunteer hours you have put into becoming an expert in rail issues as they affect our local community.
Ms. Lai is absolutely right when she says that the trains are right there. People almost feel that they can reach out of their bedroom windows and touch them they're so close. You've been so specific and we have heard some of the other witnesses speak positively of the bill. Mr. Ballantyne, for example, said that while we had a little uptick in some areas, he's generally happy with the bill. The shippers seem to be happy with it.
Can I ask you, Ms. Lai, to channel the voices of the community that you have spoken with and express for the committee their comments, their views, and what they're telling you about the importance of the critiques you're making today and the recommendations you are making on rail safety?
Co-founder, Safe Rail Communities
Thanks, Peggy.
Absolutely, the people who we have spoken with—and these are not just people in the GTA, but people we've reached out to across the country—are terrified. There are small communities who have real fears because they feel they probably will not be equipped if anything happens. The residents in Gogama are extremely upset and extremely afraid, as that second derailment was very close to the town. I know that right now they're still dealing with it, just as the residents of Lac Mégantic are. It's so important for our representatives to understand the real fear and concern that is out there. Safe Rail Communities is not anti-rail, we're not anti-oil, and certainly we understand the economic importance of the goods that are shipped by rail.
What we are asking for is not unreasonable, as a lot of the technologies I have spoken about already exist. I think people across the country are supporting our asks and supporting our recommendations. They would like to convey to their elected members that this is a real issue for them.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Thank you.
I have one minute left.
Many of the issues that you raise are certainly feasible and they're technologically possible. In terms of things unlimited liability other countries are already doing this.
Can you give us your view as to the urgency of the committee amending this bill—it does take some steps forward—in light of Lac Mégantic to get the best possible outcome for this bill?
Co-founder, Safe Rail Communities
I think some of the recommendations might take a little more examination and review. Everything that we have put forward is possible, is rational, and is reasonable. Definitely for things like the issues around environmental damages, we want to make sure that people who are affected by any kind of rail disaster will have the opportunity to make sure they have coverage. As Mr. Ballantyne mentioned before, I don't think anyone believes that derailments will not happen. Given the increase in volume of dangerous goods shipped across the country, I think people feel it is a real possibility and it could happen anywhere. They would like to feel for sure that our elected numbers are taking every possible precaution to ensure that it doesn't happen, and if it does happen, and if it should happen, that we are protected and we at least feel confident that our elected representatives are doing everything they can to ensure that.
Conservative
Mike Sullivan NDP York South—Weston, ON
To the CTA, I would point out that CN and CP both carry much more insurance now than this bill would force them to carry, so essentially we're giving them a break with this bill of about half of the cost of their insurance bill. And MMA, if they were to be insured under this bill, would have $125 million—$62.5 million this year and $125 million eventually. It's nowhere near what the cost of the derailment was, really. So this suggestion that we are somehow improving things seems rather vague, at best.
Is it possible to have unlimited liability? Is that something other jurisdictions have done? Why would we walk away from an unlimited liability system to a system that actually gives the big railroads a break on their costs?
Director General, Dispute Resolution Branch, Canadian Transportation Agency
I cannot pretend to be an expert on that subject. I know that you have heard from the insurance industry directly, and based on what they presented and what we heard from Marsh Canada, there is a certain way that the railway insurance is underwritten. We also understand that the current level that is underwritten for class1 railroads, not only in Canada but across North America, is pretty much the maximum that is available.
NDP
Director General, Dispute Resolution Branch, Canadian Transportation Agency
I cannot give the exact number because this is confidential at the moment. The railways claim this information as confidential and the agency is obligated to keep it so.
NDP
Mike Sullivan NDP York South—Weston, ON
Mr. Ballantyne, you suggested that these collisions are a rarity. Perhaps in dense urban areas they are rarities, but in fact with spills in Aliceville, Casselton, and in West Virginia, and in Gogama, and in Saskatchewan, there has been a 50-fold increase since 2012 in the amount of crude oil that has spilled as a result of these incidents.
Mr. Ballantyne, would you agree with me that it's no longer a rarity, given the volume of crude oil that is now being transported, and the volatility of the oil that's being transported?
President, Freight Management Association of Canada
The simple answer is no, I wouldn't agree with you.
Conservative
The Chair Conservative Larry Miller
Okay, thank you.
Ms. Nash, at the start you talked about how in the homes of Ms. Lai and a number of her group you could almost reach out and touch the trains. Simply for clarification, were the homes there first, or the rail line?