Hike insurance, panel urges
Senate committee calls for minimum amount of railway liability coverage
In light of the recent rail disaster in Lac-Mégantic, Que., a Senate committee said Thursday railway companies should be required to have a minimum amount of liability coverage in case of accidents.
The Senate committee on energy, the environment and natural resources issued its recommendation after months putting together a study that focused on crude oil and natural gas transported by pipeline, rail and ships in Canada. The committee also put forward another 12 recommendations for the federal government to consider.
Although the committee did not specify exactly how much money a railway company should have available to pay for damages, it noted that pipeline companies are subject to a minimum of $1 billion available in bonds, lines of credit, third-party guarantees and liability insurance.
After the July 6 train derailment and massive explosion in Lac-Mégantic, which claimed 47 lives and destroyed many buildings, the Montreal, Maine & Atlantic railway company filed for bankruptcy and will likely be unable to cover the full cost of damages.
The committee chair, Sen. Richard Neufeld, said the panel as a whole is supportive of minimum liability coverage for railway companies.
“If they can’t afford their liability coverage, maybe they shouldn’t be in the business,” he said.
Third-party liability coverage rules for railway operators under the Canada Transportation Act do not indicate a minimum dollar figure for coverage. Under current rules, coverage is required, but is deemed “adequate” on a case-by-case basis.
Neufeld said it was the LacMégantic derailment that influenced the committee’s decision to add minimum liability coverage for rail companies to its list of recommendations.
“What was added on that we weren’t aware of, that probably should have been, was the liability coverage,” he said.
Of the five recommendations related to rail transport of hydrocarbons, the committee also recommended that Transport Canada speed up the process of bringing older railway cars up to current safety standards. The railway car models known as CTC-111A in Canada and DOT111 in the U.S. are still used in both countries; the Senate study mentioned a “concern about the risk to the public and environment from the existing fleet in operation.”
In 1997, two years after a train derailment in Gouin, Que., released 230,000 litres of sulphuric acid into the environment, the Transportation Safety Board concluded that the CTC-111A cars were likely to leak products when trains derailed because of problems with the top fitting on the cars.
A report from the TSB expressed concern that the “carriage of certain dangerous goods in such cars might be putting persons and the immediate environment at risk in the event of an accident.”
Karine Martel, a media relations adviser with Transport Canada, wrote in an email that new cars being built meet new safety specifications.
Neufeld said one of the most important parts of the report was the emphasis on improving corporate safety culture, one of the report’s recommendations for pipeline and rail transportation.
Companies need to look into how they can better emphasize safety in all of their operations, Neufeld said.
“I think the ships are … pretty good,” he said. “But pipeline and rail — we need to work on that safety culture to make sure it permeates right from the top down to the bottom.”
In the Lac-Mégantic derailment, Neufeld said that safety culture within MMA seemed to be missing.
While the committee stressed that the report was not intended to establish which mode of transporting hydrocarbons was the safest, TSB data included in the study show that rail accidents far exceed accidents with pipelines and tankers. As the Senate energy committee releases 13 recommendations to improve safety of hydrocarbon transport, the government is mum on whether it will reintroduce a bill that would address some concerns about tanker safety at sea.
The Safeguarding Canada’s Seas and Skies Act, which would have strengthened requirements for oilspill response plans and enhanced the ability of groups to respond to spills, was introduced in the House of Commons in March.
On the same day, then-minister of transport Denis Lebel announced the implementation of eight tanker safety measures and the creation of a tanker safety expert panel to review Canada’s tanker safety regime. Together, the actions were intended to take the country “toward the creation of a world-class tanker safety system.”
The expert panel continues to review Canada’s tanker safety system, but the proposed legislation will soon disappear from the government agenda. Prime Minister Stephen Harper announced this week that he plans to ask the Governor General to end the current session of Parliament, which was scheduled to return from summer recess Sept. 16. The decision to prorogue means government bills before the House of Commons will die, though it is possible for the Conservative government to pass a motion to reinstate the current bills.
New Transport Minister Lisa Raitt declined to comment on whether she would reintroduce the Safeguarding Canada’s Seas and Skies Act in the fall.
The Senate report released Thursday concluded that tankers “are a safe and effective means of moving crude in large quantities around the world” and that there have been no major tanker spills in Canada for more than 30 years. The committee also noted that incidence of large tanker oil spills has fallen worldwide since the 1990s.
But despite the impressive safety record of tankers, senators noted work still needs to be done to respond to increasing tanker traffic in Canadian waters.
Further recommendations on tanker safety are expected this November when the government-appointed expert panel releases its first report on the tanker safety regime in southern Canada.