Mr. Speaker, I am truly honoured to rise in this place today to speak to this very important piece of legislation. I represent the great riding of Wetaskiwin, which has major rail lines in it, both CP and CN. Constituents in that large rural riding know the value railways have, and I take very seriously the importance of the safety of the operation of the railways in that riding.
Before I go on, I would like to advise that I will be sharing my time with the dapperly dressed member for Elgin—Middlesex—London, who will, I am sure, enlighten the chamber with his thoughts as well.
I rise today to speak in support of Bill C-52. It is a good bill. It is the safe and accountable rail act, which would reinforce the government's polluter pays principle for the rail sector.
The polluter pays principle holds industry accountable to Canadians and supports responsible resource development. It also reflects Canadians' expectations about making responsible parties pay the costs of the accidents they are responsible for.
The polluter pays principle is a key part of the modernization of the liability and compensation regime in other sectors, including the marine sector, the nuclear sector, pipelines, and offshore oil and gas. A number of those bills have already been brought before the House, where we have made exactly the same kinds of legislative changes when it comes to the polluter pays principle in dealing with absolute liability and so on.
In voting for this bill, parliamentarians will be supporting this important principle. This is our government's objective: to ensure that sufficient funds are available to compensate victims of railway accidents and to pay for cleanup costs in the event that those things may happen.
The polluter pays principle means, first, that railways pay the cost of accidents for which they are responsible. Therefore, we are proposing that each railway be required to hold a minimum amount of third-party liability insurance to cover the cost of an accident. This is a good thing. This would give a level of assurance to Canadians that their tax dollars would not be used when it comes to an accident, cleanup, or spill or any of the other damages that might be associated with a minimum level of liability. These minimum insurance levels would be established in the legislation so that they were clear and transparent and so that Canadians would know what they could expect.
With this approach, Canadians would be reassured in the wake of something like the Lac-Mégantic tragedy that railways would have enough insurance to cover these costs when accidents, unfortunately, may happen in the future.
These insurance levels are based on risk. It is an insurance program, and it will be based on risk, as any other real insurance program is. They were developed based on an analysis of rail accident cost data and the potential severity of incidents involving certain types of dangerous goods. The levels range from $25 million to $1 billion, based on the type and volume of dangerous goods the railway may carry. When the new regime comes into force one year after the bill's royal assent, railways that carry little or no dangerous goods will be required to carry $25 million minimum in insurance.
Requirements for railways carrying higher amounts of specified dangerous goods, including crude oil, would be phased in over time. Initially, the railways would be required to carry either $50 million or $125 million of insurance coverage. One year later, those requirements would increase to $100 million or $250 million of coverage.
Railways moving substantial amounts of specified dangerous goods, such as our major national railways, CN and CP, would be required to carry a minimum of $1 billion in liability insurance.
We have heard that some short lines may have difficulty adjusting to the enhanced insurance requirements or that the increased costs may affect their viability. However, as the Lac-Mégantic incident has shown us, accidents involving smaller railways carrying dangerous goods can result in catastrophic damages. It is for this reason that the government committed to hold railways more accountable through enhanced insurance requirements.
Phasing in the highest levels of insurance for short lines at $100 million and $250 million would help mitigate concerns and provide the railways required to hold these amounts with sufficient time to adjust. We do not expect that railways required to hold either $25 million or $1 billion in insurance would need additional time to adjust, so those levels would take effect immediately after the legislation comes into force. This is only fair.
Railways would have to notify the Canadian Transportation Agency of any changes affecting their insurance coverage. The agency could make inquiries to ensure compliance, and the insurance requirements would be enforceable through penalties of up to $100,000 per violation. These measures would ensure that railways were properly insured for their operations.
Another important component of the bill is the polluter pays principle and its clearly established liability in this legislation for railways.
Under the bill, railways would be liable up to their minimum insurance level, without the need to prove fault or negligence—and I have to stress that, without the need to prove fault or negligence—for a railway accident involving crude oil or any other designated good.
As our 2013 Speech from the Throne commitment implied, the railway is not the only responsible party in a railway accident that involves goods such as crude oil. Our government committed to requiring both shippers and railways to carry additional insurance, so that they are also held accountable.
Shippers of dangerous goods like crude oil are a part of the polluter pays concept for the railway sector. This is because such goods have inherent characteristics that contribute to the severity of an accident.
Accordingly, the bill would provide for a mechanism to share liability for accidents more broadly between shippers of crude oil and railways. This would be done through a shipper-financed fund that would supplement a railway's insurance if and when necessary. The fund would be triggered once the cost of a crude oil-related railway accident exceeds a railway's insurance level.
The fund, combined with the insurance levels, would protect potential victims and pay for environmental cleanup and restoration. It would also reimburse governments for the cost of responding to a railway accident.
This two-tiered approach—the insurance and then the fund for any accidents that go over the insured amount—would provide a broad range of coverage for damages in the case of a crude oil railway accident. Higher insurance levels would ensure that railways have more resources available to pay for their liabilities. For accidents involving crude oil, the fund would insure that all other damages and losses were compensated.
This regime would equally cover all actual loss or damage incurred, including damage to people, property, and the environment. The costs incurred in responding to the accident might also be claimed. In addition, the federal or provincial Crown may seek compensation for the impairment of non-use value of public resources.
We are focusing on crude oil because this is a dangerous product that is moved in large quantities by rail over long distances and is a particular concern for Canadians following the Lac-Mégantic tragedy. However, recognizing that other goods have characteristics that could also contribute to the severity of an accident, we have provided the option of adding other goods to the fund in the future by regulation.
Shippers of crude oil would contribute to the fund through a levy of $1.65 per tonne shipped. This levy would apply to any shipment of crude oil carried by a federally regulated railway including a shipment originating from the United States or on a provincially regulated short line.
Capitalizing the fund to $250 million initially would provide substantial additional coverage for crude oil accidents, but this is a notional amount and certainly not a cap on the fund. The bill would allow the minister to discontinue and reimpose a levy as necessary.
Based on a reasonable projection of oil-by-rail traffic growth in the coming years, we determined that a $1.65 per tonne levy on rail shipments of crude oil would likely generate $250 million for the fund in approximately five years. However, the bill provides flexibility for the levy to continue longer than five years should oil-by-rail traffic grow at lower than expected rates.
It is important to emphasis that. Regardless of the capitalization target, the fund would cover all rail accident costs above railway insurance. In the unlikely event that damages exceed the amount being held in the fund, the consolidated revenue fund would provide a loan to cover the shortfall and pay the remaining claims. Any loans from the consolidated revenue fund would be recouped from the industry through levies. These measures are also to reinforce the polluter pays principle.
As I conclude, I want to urge all members to think carefully about how they are going to vote on this piece of legislation. Canadians are counting on us to make a good decision on their behalf.
As we have seen, the accidents have happened in Lac-Mégantic and in my riding of Wetaskiwin, where there are so many communities right on the CP and CN lines. We start out in places like Millet and Wetaskiwin and go down through the Maskwacis area, through Ponoka, Lacombe, and Blackfalds, through Red Deer, and so on; and the CN line goes out in the eastern part through communities like Mirror, Gwynne, and so on. These are communities that are near railway crossings.
The railway traffic in Alberta has increased tremendously over the last number of years with the expansion of oil sands projects and the inability of some pipeline companies to get their projects approved. We have seen an increased dependency on rail for the movement of these items, so it is very important to reassure my constituents, and reassure not only Albertans but any people who have a rail line going through their community, that there will be the coverage available and it will not be at taxpayers' expense as it was with the absence of this legislation, unfortunately, as we saw at Lac-Mégantic.
This is very important legislation, and I encourage all colleagues to vote for it. While they may have criticisms of the bill, or they may want to play politics with this bill, in essence, it would be a sad commentary if we could not come to an agreement in the House that the bill, while it would never be perfect for 308 members, certainly is good enough to be passed into law before we rise for the summer.