Emergency plans necessary for oil transport: municipal federation

OTTAWA—Municipal leaders emerged from a meeting with Transport Minister Lisa Raitt this week determined to see railways, shippers and producers of dangerous goods assume full liability for accidents and spills.

Ensuring rail companies are properly insured for even catastrophic events like last summer’s devastating crash in Lac-Megantic, Que., is the next major hurdle in fixing the system, Claude Dauphin, the president of the Federation of Canadian Municipalities, said in an interview.

“It’s on the table. That’s our third key area—to make sure that any accident, incident or catastrophe won’t be downloaded to our taxpayers,” Dauphin said.

That could include a fund that spreads the liability for major disasters—currently shouldered largely by railways—across the full supply chain, from producers to consumers.

Dauphin and others are quick to praise Transport Canada and the minister for regulatory changes made since the July 6 derailment, explosions and fire in Lac-Megantic that claimed 47 lives, Canada’s worst rail disaster in more than 100 years.

Municipalities are now being notified about the types of freight shipped through their precincts.

Increasingly common oil shipments are to be classified as dangerous goods, which will require railways to develop emergency assistance response plans.

Raitt met with the federation’s rail safety working group, where she said she wants all flammable liquids, including ethanol, classified as dangerous.

It was the third such meeting since the municipal working group was formed after the Lac-Megantic disaster, and it came the day after the Canadian Transportation Agency wrapped up a consultation on revamping insurance for rail carriers.

Dauphin said current rules gauge each railway’s “adequate” liability coverage on a case-by-case basis.

“We want more meat around the bone,” said Dauphin, the mayor of Lachine, Que.

“What does ‘adequate’ insurance mean? We had a lot of discussion with the minister about that, not only today but in the past.”

Raitt issued a news release following the meeting that called rail safety a “shared responsibility amongst international partners, provinces, territories, municipalities and industry.”

But more needs to be done, say municipal officials—even those who are pleased with the federal government response to date.

Saskatoon Mayor Don Atchison lauded the “tremendous amount of progress being made” on rail safety and called the speed of the federal response “breathtaking.”

But he had a blunt assessment of what’s next: “Who’s going to pay for what?”

“Municipalities are 100 per cent united in the sense that it’s not our responsibility to pay for those clean-ups,” said Atchison. “It’s not our responsibility to have to buy insurance for that.”

One idea in the mix is an industry fund, similar to the one for ocean shippers, that would pool resources in the event of a catastrophic accident such as Lac-Megantic.

“We didn’t discuss the details, but it’s in the air,” Dauphin said of the fund proposal.

He was being overly reticent.

In a submission to the Canadian Transportation Agency, the Federation of Canadian Municipalities stresses that the public purse is effectively the insurer when significant railway accidents occur.

“These costs must be borne by the industry in accordance with the ‘polluter pay’ principle through an industry-funded comprehensive liability insurance regime which provides full coverage for catastrophes,” states the federation brief.

The federation argues it is unlikely railways could obtain enough liability insurance on the open market to cover the worst events.

It calls for a national mechanism, financed through contributions from everyone involved in transportation of dangerous goods by rail: carriers, importers, brokers, producers and industrial purchasers.

The fund would be accessible to anyone who has suffered a loss.

The Railway Association of Canada (RAC) also raises the idea of a common fund.

It says in many cases dangerous goods are essential to Canadians’ quality of life and the operation of industry, but railways absorb the risk of carrying them.

“It is our view that other members of the supply chain such as producers and end users must play a larger role in addressing risk and resulting liability,” says the association’s submission.

Its United States counterpart, the Association of American Railroads (AAR), agrees, saying that “where the government mandates railroads to move dangerous commodities for the public interest, it is not unreasonable for the risks of transporting such commodities to be shared by shippers and receivers who control the decision to ship.”

According to the Canadian Transportation Agency discussion paper that introduced the consultations, insuring individual railways to the full amount of the most catastrophic event may not be possible.

“Given the number of players in the rail insurance industry and their risk tolerance, there are practical limits to what railway companies can obtain in the market for third party liability insurance,” states the agency.