Proposed rail safety laws to make oil carriers responsible for accidents

Proposed rail safety laws introduced today will make railways and crude oil shippers responsible for the cost of accidents, federal Transport Minister Lisa Raitt says.

The Safe and Accountable Rail Act will bring in minimum insurance requirements for railway crude oil shippers using federally regulated railways, from $25 million for carriers of minimally dangerous goods to $1 billion for substantial quantities of them, Raitt said at a news conference.

Two new liability insurance levels — $100 million and $250 million — will be phased in during the two years after the bill receives royal assent. Companies will be required to come up with half that amount in the first year and the full amount the year after that.

Companies that ship crude oil will also have to pay a fee per tonne shipped that will go into a $250-million backup fund to cover costs above what their insurance covers if they're involved in an accident involving crude oil.

Raitt said the changes bring railway crude oil shippers in line with other transporters of oil such as pipelines and tankers and were related to the 2013 Lac-Mégantic derailment and explosion and the general increase in moving oil by rail.

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"How stunned were we all to learn there was only $25 million of insurance for that railway at the time, and there wasn't enough to even come close to compensating what happened to the families in that community and what happened environmentally," she said.

"Today is a huge step forward on that."

Raitt said CN and CP would be required have $1 billion in liability insurance.

In an email, CP spokesman Jeremy Berry said the railway has received the details about the proposed changes and is reviewing them.

CN spokesman Mark Hallman​ said in an email the company is reviewing the proposals and has no comment at this time.

Latest proposed changes after Lac-Mégantic

The government is also proposing more powers for the minister of transportation and inspectors to order railway companies to take specific measures or stop activities they deem necessary for safety reasons, plus new regulations requiring companies to "integrate safety into their day-to-day operations," according to a news release.

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As an example, Raitt said, railway companies would be required to follow "principles of fatigue science" when scheduling employees to make sure they're properly rested.

She said Transport Canada and counterparts in the United States are also in the final stages of developing "new, next-generation tank car standards for flammable liquids" to reduce the chance of leaks after a derailment and are working to have those in place by 2017.

Raitt said these changes were mentioned in the speech from the throne and would affect the Railway Safety Act and Canada Transportation Act.

Some of the other changes put in place since the Lac-Mégantic explosion left 47 people dead include requiring trains carrying dangerous cargo to have at least a two-person crew, removing the least crash-resistant DOT-111 tanker cars from circulation and minimum requirements for hand brakes and other equipment that could protect from similar incidents.

However, liability insurance was one of the issues raised after the crash that had not been addressed until this point.

The company involved in the Lac-Mégantic explosion, Montreal, Maine and Atlantic Railway, was banned from operating in Canada because it didn't have the required third-party liability insurance or enough money to cover the self-insured portion of its coverage.