By Alex Binkley

The safety record of the North American tank car fleet drew a lot of media attention to a half-day workshop on the transportation of dangerous goods in mid-January.

imageHowever, the overflow audience of nearly 100 presenters and participants from the railways, shippers, government departments and municipalities at the workshop organized by the Canadian Transportation Research Forum delved far more deeply into the complex issue of making railway transportation safer. They raised issues and questions about safety technologies and liability insurance, which have received scant public attention so far. On several issues, they noted that Transport Canada as the safety regulator seemed reluctant to show real leadership.

Last summer’s deadly derailment in Lac-Mégantic figured in many discussions. While the government has promised additional safety measures, it is waiting for the final report from the Transportation Safety Board (TSB) as well as an indication what action American authorities are prepared to take on about 80,000 older style DOT 111 tank cars used to haul crude oil and other dangerous substances.

Locomotive voice and visual recorders (LVVRs) and the affordability of liability insurance for smaller railways were other contentious issues that attracted a lot of attention. Mario Brault, President of Genesee and Wyoming Canada, warned that a review launched by the Canadian Transportation Agency into the liability coverage required of Canadian railways could lead to unaffordable premium increases for short lines and regional railways.

The Canadian Transportation Agency (CTA) launched a consultation on railway liability last August in the aftermath of the Lac-Mégantic derailment. The Montreal, Maine & Atlantic Railway sought bankruptcy protection because its $25 million in liability coverage fell miles short of the compensation and clean-up costs associated with the catastrophe, which are expected to exceed $200 million. A new owner of the line will likely be named in the coming months. Just who will pay the rest of compensation and clean-up costs for Lac-Mégantic will be the subject of court proceedings in Quebec in the coming months.

Federally regulated railways require a certificate of fitness from the CTA, which is issued when the Agency is satisfied there is adequate liability insurance coverage for the company that meets Transport Canada regulatory requirements. Other than Lac-Mégantic, no Canadian railway has ever been unable to meet its liability requirements.

Brault proposed governments cap the liability insurance a carrier is expected to carry. “There is a precedent for doing this in the Canadian Nuclear Liability Act and the Marine Liability Act.” They set limits on how nuclear plant operators and shipping lines are required to pay in compensation for catastrophes with taxpayers picking up the rest.

He also urged the government to remove a federal regulation called the common carrier obligation which requires railways to move any traffic offered to them. That would enable railways to decline to move goods that are beyond its capability or liability coverage. Other railway speakers also called for changes to the common carrier obligation.

The comment period for the consultation ended in late January and the CTA hopes to issue a report in March on issues that were raised during the consultation and possible recommendations for government action, a spokesman said.

The review says the increasing shipments of crude oil and other hazardous materials by rail “have highlighted the need to review the current approach to determining the adequacy of railway third party liability coverage and appropriate accountability of federal railway companies for liabilities related to their operations.” Currently, there are 30 federally incorporated railways, operating 48,000 kilometres of track, that hold a certificate of fitness issued by the Agency.

The CTA determines whether a railway is adequately insured “based, in part, on the risk assessment carried out by the insurance company and the railway company.” It compares the amount with industry practices and “verifies that both the railway company and the insurance company have the financial capacity to pay claims under the self-insured portion and the insurance policy, respectively.”

The rail insurance industry is highly specialized and involves relatively few players. Railway companies have access to approximately 30 to 40 companies that are willing and able to offer railway liability insurance. Eight provinces require provincially-incorporated railways to have third party liability insurance coverage, ranging from $2 million to $25 million.

On the contentious issue of cab recorders, a CN spokesman said that the government has done nothing to advance the issue beyond former transport minister Denis Lebel’s call last year for the railways to begin talks with their unions on the voluntary installation of the devices to TSB accident investigations. However, the President of the union that represents operating crews at CN, CP and VIA Rail said contract talks due this year at the three railways could be the forum for reaching agreements on the installation of the recorders. Rex Beatty said the Teamsters Canada Rail Conference (TCRC) understands the safety benefit of the recorders but wants privacy protection for engineers and conductors who can spend up to 12 hours in a shift in a locomotive cab. “It’s about finding a balance between the privacy of our members and safety,” he said in an interview. “Let’s see how the contract negotiations this year can be used to resolve the issue.” The Railway Association of Canada said the recorders would cost the carriers $25 million to install but under existing federal law, they wouldn’t have access to the recordings. The TSB could only use them in accident investigations.

When CN announced a test of LVVRs last fall, TCRC said it would grieve the move. The railway backed off and urged the government to get more involved. Beatty said he has had some correspondence with the railways about LVVRs, which lead him to conclude the contract negotiations presented the best opportunity for dealing with the issue.

VIA Rail is in the preliminary stages of introducing a GPS-based system that would keep train crews aware of upcoming signals, switches to other tracks and meets with oncoming trains. However, it will be 2018 before that system morphs into anything like a LRRV and VIA says it will work with its operating crews to gain acceptance of the system.

TSB has been pushing for the recorders since it issued its final report about a 2011 VIA crash near Ancaster, On. that killed three train crew who appeared to have missed a signal to slow down and switch to another track. The Board’s investigators were stymied in figuring how the three experienced crew could have made such a deadly mistake. TSB is concerned that there are about 10 to 12 instances every year of crews misreading or misunderstanding the trackside signals that are meant to keep train operations safe.

The workshop also heard that preliminary examination of the early January derailment near Plaster Rock, N.B. shows that newer versions of the DOT111 tank cars are better equipped to survive an accident than the older style of the car. Five of the DOT 111 tank cars were involved in the crash, a senior CN official told the workshop. Three built to modern standards came out of the crash with less damage than two of the older cars.

However with a price tag of $1 billion and a long lead time to rebuild the 80,000 older tank cars, they may be around for some time, industry experts agreed. About 70 per cent of those cars were built in the last 20 years and can remain in commercial use for another 20 years unless specifically barred by governments. The tank cars are owned primarily by leasing companies and contracted by petroleum and chemical shippers to move their products by rail throughout North America. Even if agreement could be reached on paying for rebuilding the cars, it could be years before freight car manufacturers, which already have a backlog of orders for new tank and other freight cars, would be able to get to the project. Tanks cars built since 2011 have thicker ends and better pressure release valves to reduce the risk of a rupture during an accident or fire.

Talking the 80,000 cars out of service would pinch a lot of industries in Canada and the United States, noted Bob Ballantyne, President of the Freight Management Association of Canada, formerly the Canadian Industrial Transportation Association. There has been no discussion on how the cost of upgrading the older cars would be shared among shippers and the owners or what it could be mean for the price of goods, he added

Until five years ago, North American railways weren’t even in the crude-by-rail business. The advent of fracking has opened up oil reserves in areas not served by pipelines and the railways now expect to move more than 300,000 car loads of crude oil annually.

“Rail has the ability to adapt rapidly to changing geographical markets, shorter contract commitments, reduced construction costs and shorter transit times,” say the organizers of the Crude by Rail 2014 conference. “These attributes, for many, offset the higher cost per barrel for transportation, and have led railroads such as Union Pacific to announce it will invest $3.65 billion this year in network and infrastructure.”