Canadian Underwriter
News

Bill mandating railway insurance coverage reaches third reading


May 8, 2015   by Canadian Underwriter


Print this page Share

A proposal to mandate insurance coverage of up to $1 billion for railway operators in Canada is in a federal government bill that was tabled Thursday for third reading in the House of Commons, the same day a separate bill proposing up to $1 billion in absolute liability on pipeline operators was tabled for first reading in the Senate.

Bill C-52, the Safe and Accountable Rail Act, was returned to the Commons from committee. It proposes minimum levels of insurance for Canada’s railways Bill C-52, Safe and Accountable Rail Act, was the subject of hearings last month before the House of Commons Standing Committee on Transport, Infrastructure and Communities on Parliament Hill in Ottawa. The committee returned the bill to the Commons with some amendments.

Federal law does not mandate specific levels of coverage, though it does require railway operators to be covered for third-party liability, third-party bodily injury or death. The Canadian Transportation Agency reviews each railway’s insurance coverage on a case-by-case basis, and has the power to issue and suspend certificates of fitness.

Bill C-52 “would establish minimum mandatory insurance levels that are explicitly linked to risk,” Joe Preston, Conservative MP for Elgin-Middlesex-London, Ontario, said Thursday in the Commons. “The Canadian Transportation Agency would assign railways to a minimum insurance level based on the type and volume of the specific dangerous goods they carry. The minimum mandatory insurance requirements take into account the potential severity of accidents. The requirements range from $25 million for railways that carry few or no dangerous goods to $1 billion for railways that transport significant volumes of dangerous goods. Insurance would cover the damages involving third party injury or loss of life, third party property damage, and the risk associated with a leak, pollution or contamination.”

The bill was not put to a vote Thursday because the time for government orders expired. The last MP speaking on it was Philip Toone of the NDP, who represents Gaspésie-Îles-de-la-Madeleine, Quebec in the Commons.

“Today, we have before us a bill that will not improve rail safety, but will instead address the issue of insurance after an accident,” Toone said. “This is a reactive rather than a proactive bill.”

Despite its misgivings, the NDP will support Bill C-52 because “the polluter pays principle is important,” said Hoang Mai, vice-chair of the transport committee and NDP MP for Brossard-La Prairie, Quebec.

“Railways would automatically be liable up to their insurance limit without having to prove fault or negligence, and the railways would have to be operationally or physically involved in the accident in order to be held liable,” Preston said Thursday of rail accidents involving crude oil. “This would give potential victims more certainty regarding their compensation claims, and it would protect taxpayers from having to cover the excess liability that we know can result from a catastrophic accident. For other accidents, liability would continue to be established through the courts, based on fault or negligence, as it is today.”

Another pollution liability bill before Parliament is Bill C-46, the Pipeline Safety Act, which passed third reading Wednesday and was introduced Thursday in the Senate. If passed into law, Bill C-46 will impose absolute liability of up to $1 billion, for “unintended or uncontrolled releases,” of commodities such as oil and gas, on pipelines regulated by the National Energy Board.

Bill C-46, the Pipeline Safety Act, passed third reading Wednesday

For railway insurance, Bill C-52 is based in part on consultations launched by CTA in 2013, about six months after a parked and unattended Montreal, Maine and Atlantic (MMA) Railway train, with 72 oil tanker cars, moved downhill and derailed in Lac-Mégantic, Quebec, killing 47. CTA suspended MMA’s certificate of fitness, effective Aug. 20, 2013, finding that MMA had not demonstrated its third-party liability coverage was adequate. At the time, court records indicated MMA was insured, with a per occurrence limit of US$25 million, for pollution clean-up expenses, bodily injury and property damage, by XL Insurance Company Ltd. A separate inland marine policy from Travelers Property and Casualty Company of America covered property, rolling stock, track and repairs and business interruption, according to court records of MMA’s filing in Canada under the Companies’ Creditors Arrangement Act.

“Montreal, Maine and Atlantic Railway only carried $25 million in third-party liability insurance, which we now know is not nearly enough to cover the incredible magnitude of the resulting damage and loss of both life and property that night,” said Jeff Watson, parliamentary secretary to federal Transport Minister Lisa Raitt, in the House of Commons Thursday. With Bill C-52, Watson added, “railways would be required to hold a mandatory level of insurance based on the type and volume of dangerous goods they carry. These levels would range from $25 million for short lines carrying limited or no dangerous goods to $1 billion for railways carrying significant amounts of dangerous goods, namely (Canadian National) and (Canadian Pacific).”

David McGuinty, a vice chair of the transport committee and Liberal MP for Ottawa South, questioned whether $1 billion in coverage is sufficient.

“What if, heaven forbid, an accident like the one that occurred at Lac-Mégantic occurred in downtown Toronto, Montreal, Edmonton, Ottawa or Vancouver? I think the government would be singing a very different tune,” McGuinty said, but added “some elements” of Bill C-52 are “very strong.”

Debate on Bill C-52 comes on the heels of two recently-passed laws increasing pollution liability for shipowners, offshore oil and gas producers and nuclear operators.

Bill C-22, the Energy Safety and Security Act, received royal assent Feb. 26. It increases the absolute liability for offshore petroleum producers to $1 billion, and phases in an increase – to $1 billion over three years – in absolute liability for nuclear operators.

Bill C-3, the Safeguarding Canada’s Seas and Skies Act, received royal assent Dec. 9, 2014. It requires ship owners to carry compulsory insurance and to establish strict liability, for shipowners, if hazardous or noxious substances are spilled.


Print this page Share

Have your say:

Your email address will not be published. Required fields are marked *

*