By Darryl Anderson and K. Joseph Spears
On February 20, Bill C-52, the Safe and Accountable Rail Act was introduced into Parliament. The proposed legislation offers amendments to both The Canada Transportation Act and the Rail Safety Act. In summary, Bill C-52 sets out new minimum insurance requirements, introduces new levies for crude oil shippers, and provides for enhanced oversight and information sharing. This article provides an overview of the stated policy of the government of Canada with respect to transport safety management of which oil-by-rail is but one important subset of the movement of dangerous goods.
Bill C-52 in the amendments to the Rail Safety Act will permit rail safety inspectors to take a more proactive approach with respect to rail safety, with increased powers. For example, section 25 of Bill C-52 amends section 31 of the Rail Safety Act. Section 31 is now proposed to be amended to read:
31(1) If the rail safety inspector is of the opinion that a person’s conduct or any thing for which a person is responsible constitutes a threat to the safety or security of railway operations, the inspector shall inform, by notice sent to the person and to any company whose rail operations are affected by the threat, the person and the company of that opinion and of the reason for it.
(2) If the rail safety inspector is satisfied that the threat is immediate, the inspector may, in the notice to the person or any company whose rail operation are affected by the threat, take measures that are specified in the notice to mitigate the threat until it is been removed to the inspector’s satisfaction.
These provisions give more regulatory authority to Transport Canada rail safety inspectors then previously existed, and can be applied in the prevention and protection phase of risk management to avert incidents, for example limiting rail speed.
Similar type provisions are long-standing in the Canada Shipping Act 2001 and its predecessor that allowed a Marine safety inspector appointed under the authority of Parliament to detain any ship it felt was unsafe, and can be traced back to the 19th century and the UK’s Merchant Shipping Acts. It did not require the Minister of Transport’s or executive level approval. Rather, the power could be exercised solely in the opinion of the inspector. This is a very powerful tool in the regulatory toolbox. Including such provisions in Bill C-52 seems to indicate that the regulatory agency, Transport Canada, does not believe that the current rail safety management system is as effective as it should be, and requires greater powers to take proactive preventative measures.
The 2007 Transport Canada policy document Moving Forward -Changing the Safety and Security Culture – A Strategic Direction for Safety and Security Management provides the underlying governance philosophy that is being further refined with Bill C-52. It is based on the regulator working in partnership to apply risk management strategies. This approach to risk management is based on a system of prevention, protection and response. The goal is to prevent accidents from happening by concentrating on the prevention side to addresses various factors such as rail bed maintenance, training, fatigue, and train speed. This risk approach seeks to minimize low probability, high consequence events that can have disastrous impacts on communities as we have seen in Lac Megnatic, and in the three recent derailments in Northern Ontario.
If Moving Forward represented the first period in the new era of our transport risk hockey game, surely Bill C-52 marks the start of the second period in the rail league.
The Canadian Transportation Safety Board (TSB) will be seeing a lot of ice time in this second period since it is investigating the three most recent rail incidents. Statisticians and commentators on the transport of dangerous goods will know that the TSB findings will be critical in determining how a safety management system across the rail sector must evolve. Yet, we suggest that this is only one of the players that need to be in the game and see more ice time. In addition, the federal government, the railways, and local communities need to be part of the starting line-up. However, the Minister of Transport has stated publicly that she is awaiting the TSB report before further commenting.
Contemporary safety management best practices seek to integrate corporate regulatory risk management and stakeholder perspectives and concerns in establishing performance objectives and progress indicators. Currently, a more flexible risk management approach is used that focuses on outcomes rather than the more prescriptive style of rules and process-driven regulations that characterized earlier periods of transport safety management. It was thought that this less prescriptive approach would encourage early adoption of new technologies, and that best practices would be brought to bear to minimize transportation risk. Standards could be developed working in conjunction with the private sector and the regulator.
However, perhaps regulators have been late to realize that at a local community level the only thing that matters is the safe passage of trains rolling through communities. Given the importance of Canada’s multimodal transport system, we need to look at the regulation of all transportation sectors and, in particular, the railways, which is the subject matter of this article, across federal, provincial and municipal boundaries and jurisdictions.
As the second period unfolds, have we begun to realize that environmental, safety and economic regulations are interconnected, and must be examined under the lens of safety management, which is simply a form of both governance and corporate risk management. The key is to create a nimble regulatory regime that encourages economic activity but at the same time minimizes risk. There has been very little analysis done between these linkages.
Under the leadership of former federal Minister of Industry and Trade, David Emerson, The Minister of Transport has set up a Review Panel under the Canada Transportation Act to provide guidance on possible steps to help ensure that the national transportation system has the capacity and nimbleness to support economic activity across all sectors over the medium and long-term. From the safety standpoint, it will specifically cover how safety and well–being concerns related to rail transportation through communities can be addressed.
The fact that Bill C- 52 has been tabled in Parliament before that Review Panel has issued its report highlights the sensitivity around the safe transport of oil products which has not lost sight of the context in which the transport of dangerous goods game is being played: the amount of oil-by-rail traffic has jumped significantly in Canada and the United States because of the lack of pipeline capacity.
David Emerson wrote in the February 2011 issue of Policy Options an article entitled “Why Canada needs an Energy Strategy”, in which he stated that “Canada has spent billions on the Asia – Pacific gateway corridors initiative, but its failure to include 21st century oil and gas transportation and logistics capacity is a glaring gap that will seriously constrain the economy over time.” Mr. Emerson went on to argue that Canada should commit to a high standard of resource stewardship with environmental performance standards across water, land and ecosystems. Whether his remarks provide any glimpse into where the Review Panel may be headed remains to be seen as this second period unfolds.
The Lac Megantic derailment has been described as a low probability, high consequence incident or “Black Swan” event. A black swan event is a metaphor that describes an event that is a surprise (to the observer), and which has a major impact. While the amendments contained in Bill C-52 are a good regulatory first step, all aspects of rail safety need to be examined, including the economic components of rail transportation. Under Bill C-52 a regime is being created where the shippers are paying a levy for increased insurance, along with increased freight rates. This simply addresses the issue with respect to the response component of risk management. It does not address in any way the prevention and protection phase of risk management.
Lac Megantic was a wake-up call for action to ensure our transportations system is both nimble and safe. This will be especially challenging in a declining price environment for oil, coupled with lack of access to pipeline capacity. The Canada Transportation Act review is an integral part of reviewing this issue. Rail safety is an integral part of our transportation strategy. It is not an add-on.
Hockey is Canada’s national game. Hockey and Canada’s railways are intertwined with our Canadian identity. Railways were the strands of steel that bound Canada together in the 19th century and they are critically important in the globalized 21st century for a variety of reasons. For one, they are one of the most environmentally efficient way of moving goods on land with a low carbon footprint.
If we use the hockey analogy as a lens, issues dealing with both safety regulation and liability and compensation arising from the movement of oil-by-rail are really the start of the second period of the game. The period has just got underway and there is lots more action to come.
K. Joseph Spears of the Horseshoe Bay Marine Group has acted as legal counsel for Canadian National. Joe assisted Transport Canada in developing and delivering a National Marine investigation course for a decade. He has been examining and researching risk management best practices from a public and private standpoint since 1984. He can be reached at kjs@oceanlawCanada.com
Darryl Anderson is a strategy, trade development, logistics and multi-modal transportation consultant. His blog Shipper matters focuses exclusively on transportation and trade related policy issues. (http://wavepointconsulting.ca/shipping-matters ). He can be reached at wavepoint@shaw.ca