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.