Ottawa, U.S. plan joint shipping checks

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Transport Canada is working with its U.S. counterparts on a plan to launch joint inspections in both countries amid reports that some shippers are not testing potentially explosive crude before loading it on trains.

The plan will include enforcement in Canada and the United States if the shipping industry is found to be ignoring current regulations, a Canadian source said. The inspections are expected to begin in the coming weeks. It is not clear how the rules will be enforced during the joint inspections, but Transport Minister Lisa Raitt has said in the past that anyone found breaking Canadian regulations could face fines and prosecution under the Transportation of Dangerous Goods Act.

The planned crackdown comes after a Globe and Mail investigation revealed that some companies are exploiting the wording of a recent Canadian directive requiring them to test oil before shipping it. Sources told The Globe those companies believe they can skip the tests as long as they fill out paperwork classifying the oil as the most volatile type that is permissible to ship.

But unless they test the oil first, shippers have no way of knowing whether the crude they are transporting is especially dangerous and potentially unsuitable for shipping. The Canadian directive was issued last month in response to the July disaster in Lac-Mégantic, Que., where a runaway train carrying light crude derailed and exploded, killing 47 people.

But even after the deadly derailment, employees of two companies associated with shipping oil told The Globe that minimal testing is being done on oil that is transported from North Dakota by rail.

Officials from Transport Canada told a parliamentary committee this week that inspectors would work with their U.S. counterparts to see whether companies are following the regulations. Referring to those officials' comments on Friday, Ms. Raitt said Canadian inspectors are "specifically looking at the issue."

"Transport Canada inspectors are looking at all aspects that are covered by the protective [direction], which includes anyone who is importing, anyone who is shipping, anyone who is handling," Ms. Raitt said after a transit announcement in Mississauga. "They all have obligations under the directive and we want to ensure that it's enforced, and that's what they're working on right now. It's a very high priority."

She said companies found to be "offside" with federal regulations on oil testing would be prosecuted. "We won't have people flouting what we take as very serious measures that we've put in place."

There has been growing concern about the safety of moving oil by rail since the disaster in Lac-Mégantic. Investigators found the oil – which was drawn from the Bakken formation in North Dakota – was more volatile than most types of crude, a possible explanation for the severity of the explosions.

Transport Canada has never required an emergency response assistance plan for oil. ERAPs are normally used for products that require special equipment if they are involved in an accident.

However, an official with the department acknowledged that a "new" type of crude is being transported and said that shift could necessitate an ERAP in the future.

Transport Canada is under pressure to respond to allegations that it has not taken rail safety as seriously as it should have in recent years. Last week, the federal Auditor-General issued a report that found the department completed just a quarter of the rail safety audits it had planned for a recent three-year period. The report also slammed the department for a lack of sufficient auditing staff, poorly trained inspectors and weak follow-up with companies after problems are found.