Canadian Underwriter

Senate energy report calls for ‘appropriate’ minimum liability coverage for rail companies

August 22, 2013   by Canadian Underwriter

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A Canadian Senate committee has released a report on transporting energy safely in the country, including a recommendation that Transport Canada apply “appropriate minimum liability coverage thresholds” to rail companies.


The report from the Senate’s Standing Committee on Energy, the Environment and Natural Resources includes 13 recommendations for improving energy transport via tanker, pipeline and rail.

Although the committee began its study last November, its report comes following the disaster in Lac-Mégantic, Que., where an unmanned train carrying crude oil derailed and caused a massive explosion

“The scope of the Lac-Mégantic disaster and the reported difficulties in securing funding for loss of life and personal and property damages, as well as environmental clean-up and other liabilities underscores the need for minimum thresholds for liability coverage,” the report says.

As a recommendation, the committee says that Transport Canada should “apply appropriate minimum liability coverage thresholds to ensure rail companies have the financial  capacity to cover damages caused by a major incident.”

The report points to the federal government’s announcement last June that companies operating major pipelines must require a minimum of $1 billion financial capacity in bonds, lines of credit, third party guarantees or liability insurance.

For tankers, the committee also recommends “that the Transportation Safety Board expand and modernize its database to provide detailed information on ship-sourced spills, including the type of ship and the volume and type of product released.”

It also suggests that That the National Energy Board and Transport Canada create a web portal that would include information and maps on spills and incidents involving pipelines, tankers and railcars, including the type of product released and the cause of the incident.