Canadian Underwriter

New regulations would give federal transport minister power to stop unsafe railways from operating

March 18, 2014   by Canadian Underwriter

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The federal government is proposing to give the Minister of Transport the power to stop a railway from operating if there are “extreme safety issues.”

Currently, the Railway Safety Act gives railway inspectors the power issue a “letter of non-compliance” if a railway firm is found to be violating the law. Under this system, an operator would have 14 days to correct the problem.

“Currently, Transport Canada’s only option in cases of persistent non-compliance is prosecution,” the federal government stated Saturday in a notice in the Canada Gazette.

“The proposed Railway Operating Certificate Regulations and associated legislative provisions expand Transport Canada’s enforcement continuum and provide the Minister of Transport with the ability to remove a (railway operating certificate), thereby stopping a company from operating in a case where there are extreme safety issues.”

The proposed new regulations are actually published in the current version of the Railway Safety Act, but they are not in force. Stakeholders have until April 14 to give feedback on those new proposed regulations.

If the new regulations are implemented, every firm operating a railway – and every firm operating equipment on a railway – would need to apply to the federal transport minister for a railway operating certificate.

“The Act also provides the Minister with the authority to suspend or cancel the ROC if the prescribed conditions of issuance cease to be met, or if any provision of the Act or its instruments is contravened by a company,” the government stated in its impact analysis published March 15.

Currently, railways regulated by the federal government require a certificate of fitness from the Canadian Transportation Agency, an independent quasi-judicial agency. As such, CTA is mandated to review those railways’ insurance coverage, on a case-by-case basis.

The government does not set a dollar value on coverage requirements because operators’ risk factors vary, though the ruling Conservatives promised last October, in the throne speech, that they would require shippers and railways to “carry additional insurance.”

The Railway Third Party Liability Insurance Coverage Regulations require railway operators to carry third-party liability, third-party bodily injury or death, including injury or death to passengers and third-party property damage, excluding damage to cargo.

In November, CTA published a discussion paper asking a series of questions on possible revisions to the insurance requirements. That review was carried out in the aftermath of the Lac- Mégantic, Quebec tragedy.

On July 6, 2013, a Montreal, Maine and Atlantic (MMA) Railway train was carrying 72 oil tanker cars when 63 of them derailed, killing 47.

CTA initially suspended MMA’s certificate of fitness effective, finding that that the railway firm had not demonstrated that its third-party liability insurance “is adequate for ongoing operations.”

CTA announced its public consultation and review of the adequacy of insurance coverage for the issuance of certificates of fitness. It received 23 submissions, including one from Burns & Wilcox Canada.

Burns & Wilcox Canada  recommended that CTA “examine the feasibility of requiring that railways maintain a database of all railcars that are allocated to haul hazardous materials.” That database, Burns & Wilcox stated, “could detail the age and construction of each railcar in addition to the type of material stored and hauled as well as the results of the most recent integrity test.”

Burns & Wilcox suggested that CTA review insurance requirements for comprehensive general liability, environmental impairment liability and directors’ and officers’ liability.

Another company submitting feedback to CTA was Canadian Pacific Railway Ltd.

“After the Lac-Mégantic incident it would seem that there should be minimum insurance requirements placed on both the shipper and the carrier of hazardous commodities,” CP stated in its submission, noting that it is the shippers who initiate the movement of hazardous goods.

“The railway is obligated to carry the minimum standard car and it is unlawful for them to refuse,” CP stated. “Shippers load the product, determine the type of car, direct the destination (which controls the route) and drive the volumes shipped.”

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