Canadian Pacific Railway Ltd. wants the power to refuse to haul dangerous goods, a signal it has grown weary of the risks and regulations that accompany the business of hauling oil.
The country’s second-largest rail company says it wants an overhaul of the so-called common carrier obligations of the Canada Transportation Act that require railways to haul any and all legal goods in rail cars that meet safety standards.
CP CEO Hunter Harrison has touted the railway’s safety record as rail companies have faced criticism over several recent derailments and explosions.
But Mr. Harrison said CP’s board of directors, concerned about the company’s liability and the potential dangers faced by the public in the event of a derailment, has decided it no longer wants to haul some dangerous goods, but was given legal advice that it had no choice.
“Our board of directors looked at this very carefully and said, ‘what kind of exposure do we have and what kind of exposure are we [exposing] the public to by hauling some of these commodities?’ And in spite of the bottom line – and I was very proud – we’ve sat back and said we might get out of this business,” Mr. Harrison said in an interview on BNN television.
In addition to the right to reject some shipments, CP wants the ability to refuse to move dangerous goods on certain routes through heavily populated areas such as Chicago or Toronto. It also wants the power to refuse to haul dangerous goods like oil or ammonia from Edmonton to Toronto, for example, if the same products are available closer to Toronto.
“The rail industry should have the right to choose whether it carries dangerous goods or not,” said Martin Cej, a CP spokesman.
For CP and other railways, hauling oil is a small but fast-growing line of business that comes with massive potential liabilities, government attention and public scrutiny. Trains are forced to run more slowly than those hauling other commodities, and any derailment brings bad publicity for an industry that prides itself on moving goods safely.
Mr. Harrison, who conceded that the revelation about the board’s reluctance to ship oil could come as a “surprise,” has said the company can move dangerous goods safely and that the government “overreacted” to the Lac-Megantic disaster that killed 47 people with rules that did not address the cause – human behaviour.
CP declined to say when the board meeting happened. Mr. Harrison was not available to comment on Wednesday.
Mr. Harrison has said derailments of any kind are tough to prevent, and that trains bearing dangerous goods are vulnerable to terrorist attack, an event that would have devastating effects in the densely populated areas that surround some railroads. But common carrier obligations, which force railways to serve shippers who have no other way of getting their goods to market, bind the company’s hands.
“Railroads are the only form of transportation that I’m aware of that have a common carrier obligation. We don’t get to choose what we haul. Whatever is tendered to us, we by law have to haul. Somebody should talk to Ottawa,” Mr. Harrison said on Monday in a speech to a Bay Street lunch crowd.
CP and other North American railways have seen a sharp rise in demand for crude oil shipments amid an increase in oil production and persistent lack of pipeline capacity. Calgary-based CP’s revenue from hauling oil rose by 29 per cent in 2014 to almost $500-million, or about 7 per cent of sales. For 2015, CP has said it expects to haul 140,000 tank cars of crude, 30,000 more than in 2014.
Even as a plunge in crude prices to $50 (U.S.) has made moving oil by train a money-losing venture for shippers, industry-wide volumes are up about 10 per cent this year, compared with 2014, according to the Association of American Railroads.
In the wake of a derailment and explosion of a Montreal Maine and Atlantic oil train in Lac-Megantic, Que., governments in Canada and the United States have toughened crash-worthiness of tank cars, implemented speed limits on some trains and begun testing crude to ensure the more explosive elements are filtered or treated accordingly.
But there have been several fiery derailments since Lac-Megantic. A Canadian National Railway Co. train carry diluted bitumen from Alberta derailed and burned for days in Northern Ontario last month. The next day, a CSX Corp. train carrying Bakken crude derailed and exploded in West Virginia.
Last week, Ottawa introduced legislation that makes railways buy minimum amounts of liability insurance, based on their crude oil volumes, and requires oil shippers to pay a fee that goes into a fund that will pay for any damages or cleanup that results from a derailment. The move followed industry consultations in which the Railway Association of Canada said the companies that ship the oil should be made to share the responsibility.
“Preferably, railways should be given the right to decline carrying dangerous goods,” the group said.
A spokesman for CN said the Montreal-based railway would not say if the railway wanted the right to refuse to handle dangerous goods, and noted the government has not stated any intention to review the common carrier obligations.
Transport Minister Lisa Raitt’s office referred an interview request to Transport Canada, which did not respond.Report Typo/Error