Mr. Speaker, I appreciate the opportunity to rise today to speak to Bill C-52, the safe and accountable rail act.
Before I start, I would like to say that I appreciate the opportunity to share my time with the hard-working member for Lambton—Kent—Middlesex.
There are three points I want to make today. One is why Bill C-52 is important. I want to also talk a bit about the approach that we are using and how this compares to other liability legislation in recent times, and then about some basic provisions of the bill.
The first priority of Transport Canada, as we know, is safety and the prevention of accidents, but if an incident does occur, the liability and compensation regime must be able to respond to and support Canadians and their communities. We must take the steps necessary to ensure that in the event of a catastrophe, sufficient funds are available to compensate potential victims and pay for environmental cleanup and remediation.
We all know, as it has been commented on earlier in the House today, about the tragic accident in Lac-Mégantic with the Atlantic railway in 2013. 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. The railway has subsequently gone bankrupt. The Minister of Transport has moved quickly following the tragedy to improve the safety regime that applies to railways, especially for the transportation of crude oil.
In January of 2014, there was an accident in my riding involving CN Rail just outside of Plaster Rock, New Brunswick, in a small community called Wapske. It was not a big thing like Lac-Mégantic by any stretch of the imagination, but there were a number of railcars carrying oil and propane.
It is important for us to represent our communities, especially rural communities with a lot of volunteer first responders and firefighters. Kudos to all the first responders who came to the scene during that accident and guaranteed community safety at that time, especially Tim Corbin, the fire chief at the Plaster Rock Fire Department, Mayor Fenner for Plaster Rock, as well as all the first responders and the hazardous materials people who attended the site.
Over the long term, though, we have to ensure that adequate resources are available to compensate third parties so that taxpayers are not responsible for paying. Indeed, the bill before us is based on generally accepted principles that polluters should be held accountable for covering the costs for which they are responsible. How is this principle incorporated into the liability and compensation regimes for other sectors, such as marine and pipeline? Let me share with the House a few observations on those.
I will begin with the marine sector. In the event of a marine oil spill, the financial burden of an incident is shared between those responsible for transporting the oil, the shipowner, and those who benefit from the movement, the receivers of the oil. In the marine sector, there are several sources of compensation for oil spills. This starts with the insurance carried by the shipowners themselves to cover their liabilities.
As well, Canada is a member of the International Oil Pollution Compensation Funds. This body administers two international funds to compensate oil pollution damage caused by persistent oil. In addition, Canada's ship-source oil pollution fund, which is financed by levies on oil shipped by marine, pays compensation for damages caused by spills of any type of oil from any ship. Taken together, this fund provides funding of approximately $1.4 billion per incident.
What if the extent of a marine spill damage exceeds that amount? Earlier this year, the government announced it would remove the per incident limit of liability to make the full amount of the ship-source oil pollution fund available as part of a world-class tanker safety system. If the costs of an oil spill go beyond the amounts available from the ship-source oil pollution fund and other sources, the government will ensure that the fund is temporarily topped up to cover damages and cleanup costs for the spill. These amounts will be recouped from the industry through a levy. In other words, the polluter will pay.
Another example is the liability and compensation regime for pipelines. In Canada, we are strengthening the regime to ensure that pipeline companies are responsible for damages resulting from an incident. The former minister of natural resources announced that the government will require oil pipeline operators to be able to pay for any damage caused by spills or incidents.
On December 8, 2014, the pipeline safety act was introduced in the House. The act would amend the National Energy Board Act and the Canada Oil and Gas Operations Act to, among other things, strengthen the liability and compensation regime for pipelines. Major oil pipeline companies would be required to demonstrate a minimum financial capability of $1 billion and would be liable for damages up to that amount, regardless of fault. Above that amount, the liability would be determined by who was at fault for the accident. If a pipeline company were to become insolvent as a result of an incident, the government would pay for the cleanup and compensation using the consolidated revenue fund as a backstop. However, the industry would be levied to recover those costs.
These are examples of approaches to liability and compensation in which the polluter must pay for the cost of cleanup and compensation.
The marine model is built around different tiers that enable the sharing of responsibility for those costs. For marine and pipeline modes, the taxpayers is protected when the government is able to levy industry to recoup any loan from the consolidated revenue fund.
The bill before us draws on those best examples from the liability and compensation regimes in these other modes and uses them to create a regime for rail transportation of dangerous goods. First, it would apply the polluter pays principle to rail freight transportation through mandatory minimum insurance levels. This insurance would cover third-party liabilities resulting from any type of rail incident. In addition, it would establish a fund to cover the cost of major accidents involving crude oil that exceeds a railway company's insurance level. The regime could later be expanded to include other designated goods.
Under the bill before us, mandatory minimum insurance requirements would be imposed on federally regulated railways, depending on the type and volume of crude oil and other dangerous goods they transport. Railways that carry small quantities of dangerous goods would be required to hold $25 million in insurance. For railways carrying higher amounts of dangerous goods, there would be an initial requirement to hold either $50 million or $125 million in insurance, depending on the volume. One year later, those requirements would rise to $100 million and $250 million respectively. This approach would provide short-line railways with sufficient time to adapt to these new requirements so that there would be a certain predictability for that business and for its customers.
Finally, railways carrying substantial amounts of specified dangerous goods, such as class one railways, would be required to hold $1 billion in insurance. The Canadian Transportation Agency would assign each railway an insurance level based on its traffic and would review insurance coverage to ensure that each railway carried the appropriate amount. Railway companies would be required to inform the agency of any changes that would affect their insurance coverage. The agency would be authorized to make inquiries as necessary for assessing compliance. If a railway company failed to comply with the insurance requirements or to notify the agency of an operational change that would affect its insurance, it would be subject to an administrative monetary penalty of up to $100,000 per violation.
One thing we should understand about this insurance, and I heard in some of the comments in the debate earlier today about insurance and what it does, is that it can also be preventative. Insurance will add a certain amount of rigour to this process, because to obtain coverage, the companies themselves will have to have proper safety management systems and will have to account for that as well. In my view, that will also ensure that they up their game when it comes to their safety management systems.
The second tier of funding would be provided by shippers of crude oil collectively. They would be required to pay a levy of $1.65 on each ton of crude oil carried by a federally regulated railway as a condition of its movement. These amounts would be held in a special account in the consolidated revenue fund called the “fund for railway accidents involving designated goods”. Should the cost of an accident involving crude oil exceed the mandated third-party insurance, this account would be used to compensate for remaining liabilities.
The bill before us would establish this new regime. It is consistent with other polluter pays regimes we are having in the marine and pipeline industries, and it is a regime we need in place in response to the tragedy we saw at Lac-Mégantic and to what we saw on a smaller scale outside my community of Wapske. Doing what we are doing demonstrates that we are determined to learn from these incidents to build a more comprehensive liability and compensation regime for the future.
I can tell from the debate that many of my colleagues in this House support this bill going to committee, and I look forward to their support as we send it to committee for further study.