Good afternoon, Madam Chair, and committee.
Thank you for inviting me to speak today and for giving the Saskatchewan Shortline Railway Association the opportunity to share our thoughts on rail safety.
As you are aware, Saskatchewan has the most short lines of any province in Canada. We operate 24% of Saskatchewan's rail network and are a major employer in many rural towns. Over the past 20 years we have successfully created jobs, increased export capacity, and driven economic growth for rural Saskatchewan, the province, and Canada. We pride ourselves on being a green transportation option, with an average of over 125,000 truck loads being kept off the roads per year in the province, resulting in a 75% reduction in greenhouse gas emissions.
Even more important than our economic and environmental contributions is our dedication to rail safety. For our small short lines safety is not something that is an option. In our communities, where our employees live and work, our attention to safety is what brings home our children, wives, grandparents, and neighbours at the end of each day. It is at the core of our business and takes first place on our agenda.
Our railways follow all safety protocols dictated by the federal and provincial governments, safety management plans, and systems, as well as the requirements set out in the Railway Safety Act. We also go above and beyond that by using reduced speeds, increased track patrols, and yearly X-ray and track geometry car tests to reduce the risk of derailment.
Despite increased traffic and demand for services, we have maintained an excellent safety record. Between 2010 and 2014 Saskatchewan short lines experienced a 53% increase in grain carloads and a 93% increase in non-grain carloads. During this time period, we did not see an increase in main track derailments, and we were able to decrease our crossing collisions.
In 2015 with approximately 28,000 railcars transported, our record was as follows. We had three main track derailments, five non-main track derailments, zero dangerous commodity derailments, zero dangerous goods spills, one crossing collision, zero trespasser incidents or injury, and zero fail accidents. Although derailments are not to be taken lightly, the eight in Saskatchewan in 2015 involved an average of two cars. None were carrying dangerous goods, and the largest involved six cars carrying sand. We believe that railroading is not inherently dangerous, and we are open to learning new ways to improve safety by challenging our assumptions and changing to improve our safety record.
This brings me to the topic of consultation. Short lines come in many shapes and sizes. In Saskatchewan the majority of the short lines are relatively small operations with one to nine locomotives and between three and 35 employees. Recent changes to regulations have caused expenses that are increasingly difficult to manage, as they do not always fit the realities of running a small railway operation. Direct consultation with regulators is important to us, and we welcome more thorough and regular consultations with Transport Canada to ensure the complexity and the particularities of our operations are understood. Through consultations between Transport Canada and short lines, and between Transport Canada and provincial regulators, we would help to ensure that regulatory decisions are being made that reflect our business and can be implemented in ways that make us effective and as safe as possible.
The Saskatchewan Shortline Association also supports increased inspection by Transport Canada. We would welcome both positive and negative feedback in a timely fashion to allow us to celebrate our successes and be more proactive about the issues we have yet to improve.
In Saskatchewan we inherited rail lines from class 1 railways that were already showing signs of age and need of repair. Our small staff sizes and narrow profit margins, when compared to class 1 railways, must be taken into account when considering rail safety. To be as safe as possible, Saskatchewan short-line railways require major infrastructure overhauls to maintain safe track conditions.
The CTA reviews supported this notion, suggesting several funding options, including infrastructure funding modelled after the 45G tax credit funding system in the United States. The Saskatchewan Shortline Association supports infrastructure investments in short-line rail as critical to the continued safety of our transportation network, solidifying Canada's ability to drive trade and export capacity.
Federal support is critical in addressing the increased costs associated with any new regulatory requirements. For example, requirements concerning cab noise levels represent a major investment for a short line as our locomotive fleets are often aging. To retrofit a cab it costs over $20,000 per locomotive, and this is just a small example of how short lines differ from class 1s. It is very difficult for us to meet some of these financial changes under a barrage of change.
Another example of financial repercussions of regulatory changes is new securement requirements. For example, when a railway secures a train, they must leave it protected by derails or leave the locomotives running. For short lines, derails are not easily accessible. As a result, using one of our railways as an example, this has meant an additional $150,000 a year in fuel costs.
Infrastructure and regulatory changes have a critical impact on safety. Consultation before regulatory changes are made, and federal support for those changes, would make managing the associated costs and maintaining safety records more realistic for small short lines.
Finally, two other issues have an impact on short lines' ability to invest in infrastructure and safety: insurance and the potential elimination of the maximum revenue entitlement. Insurance premiums have skyrocketed. With a limited number of providers and a lack of insurance tailored to the operating realities and safety records of short lines, much-needed funds are being pulled from short lines' operating funds, thus affecting our ability to maintain infrastructure and invest in safety. Regarding the MRE, in 2015, 72% of the traffic on short lines in Saskatchewan was made up of producer cars. Any changes to rates that have a negative impact on producer cars will also have a negative impact on short lines.
While we are independent operations, we are still at the mercy of class 1 railways for car supply, schedule, and whatever rate structure they pursue. We have already seen a large discrepancy between single- and multi-car rates under the current MRE, and we are worried that increased rate freedom could be catastrophic for the producer and subsequently for the short lines.
In conclusion, ensuring open and transparent governance by making consultation with short-line industry stakeholders a requirement for future regulatory changes is critical for a short-line rail's ability to continue to create jobs, support economic growth, and increase export capacity. Infrastructure investment, financial support for regulatory changes, and close consideration of insurance and rate protection are also critical components to ensure that the railway can continue to contribute to middle-class prosperity.
Thank you.