Rules covering the shipment of crude oil and ethanol by rail should be toughened to include a wider range of dangerous goods, a review of the Canada’s transportation laws says.
A report on the Canadian Transportation Act says companies that use railways to move chlorine, ammonia and other hazardous products should be required to pay a per-tonne fee that would be pooled to help cover the costs of a derailment and spill. It also says a group insurance system should be set up to ease the burden on short-line railways.
The federal government applied those rules last year to shippers of crude oil by rail, but left out other, often more dangerous goods.
The report, tabled on Thursday in Parliament, says last year’s measures fell short. “This inconsistency leaves a hole in a regime that otherwise more fairly apportions liability to third parties in the event of an incident among shippers and railways,” says the 250-page report, which contains recommendations on the country’s broad transportation system, including air, marine and railways. The 18-month review, required by law, considered input from more than 300 transport and trade stakeholders and was led by David Emerson, a former lumber company executive who served as a federal cabinet minister in Liberal and Conservative governments.
The review was launched in the wake of the Lac-Mégantic, Que., oil train disaster that killed 47 people and amid a tussle between the railways and the grain industry over service.
Malcolm Cairns, a former rail executive who writes about the industry for the public-policy think tank Macdonald-Laurier Institute, called the report “fair and balanced” for rail companies and those that rely on them. He said a disaster compensation pool funded by a broader range of shippers would reduce the insurance burden on railways, which are not allowed to refuse to move legal cargo.
“The railways are worried about the potential impact of a catastrophic accident in dangerous goods,” Mr. Cairns said by phone. “And they are obliged to carry them because of the common carrier obligations, and they’re having to insure themselves against a catastrophe which could wipe out a railway, and I mean a big one.”
For the rail industry and its customers, the report recommends:
- Canada find a way to harmonize its rail-safety technology with the United States. In the United States, lawmakers are requiring railways to install fail-safe technology in locomotives that would help prevent crashes;
- Draft a plan to install in-cab locomotive video and voice recorders;
- Phase out the rail companies’ revenue cap on western Canadian grain shipments for overseas export over seven years. (Railways have complained about the limit and said it prevented them from investing in the decades-old fleet of grain hopper cars.);
- Phase out the rule that widened the geographic region for which western Canadian shippers of grain and other commodities could force railways to carry their goods to a competing railway.
In response to the report, the Western Canadian Wheat Growers Association said the lack of competition among railways and the limited ways to get Prairie crops to market means regulation over grain rates is needed. “Grain growers also need to see much greater competition and increased capacity among the railways – we can’t keep losing customers and valuable export markets due to system failures,” the group said.
Transport Minister Marc Garneau promised to move quickly on the report’s recommendations. “We will begin a process of consulting group stakeholders on the recommendations that the report contains and that will eventually lead to government implementing specific policies,” Mr. Garneau said in an interview.
Representatives of western grain companies and the two major railways said they were reviewing the report and had no detailed response.
With a report from Robert Fife in OttawaReport Typo/Error