Transportation Minister Lisa Raitt announced today that the federal government has introduced Bill C-52, the Safe and Accountable Rail Act.  Bill C-52 would significantly tighten the regulation of crude oil rail transportation in Canada in three ways: by imposing a new levy on rail shipments of crude oil to create a compensation fund for accident victims, by increasing insurance requirements, and by imposing absolute (no-fault) liability on railroads for crude oil accidents.

  1. Levy / Compensation Fund

The federal government will charge a fee per tonne of crude oil shipped, which will be used by the federal government to fund any cleanup in excess of a shipper’s insurance limits.  The fee would be equal to $1.65 per tonne, or approximately 23¢ per barrel.

  1. Absolute Liability

In addition, the proposed Act would significantly alter railroads’ liability for releases of crude oil.

For spills involving crude oil, railroads would be liable for all damage caused, without proof of fault or negligence, up to the limit of their insurance.  This absolute liability would not apply to accidents caused by war or insurrection.  The railroads would not be entitled to rely on the limit of liability in cases of accidents resulting from acts or omissions carried out with intent to cause the accident, or acts or omissions carried out reckless and with the knowledge that the accident would probably result.

For dangerous goods other than crude oil, the existing compensation system (requiring proof of fault) would continue to apply.

  1. Minimum Insurance Requirements

The minimum insurance requirements railways transporting dangerous goods are being substantially increased, to between $25 million and $1 billion (depending on the amount of dangerous goods shipped).  The major rail carriers in Canada will require $1 billion in coverage, and a formula is provided to determine the coverage required for other carriers.

Because the changes to the insurance regime are so significant (both in regards to limits of liability and as a result of the imposition of absolute liability), the requirement for additional insurance will be phased in over a period of several years.

The new Act would grant the Minister additional powers to set specific safety rules for railroads, and new regulations would require railroads to integrate safety into their day-to-day operations.

For further information, see this backgrounder, and Bill C-52 on the Parliamentary website.