On February 20, 2015, the Government of Canada introduced the
Safe and Accountable Rail Act1, detailing
proposed amendments to federal railway legislation, including the
Canada Transportation Act2. The
amendments are in response to the 2013 Lac-Mégantic train
derailment and are aimed at, among other things, strengthening the
liability and compensation regime for federally-regulated railway
companies transporting certain dangerous goods, including crude
Minimum Insurance Requirements
The amendments establish minimum liability insurance levels for
freight railway operations. The minimum liability insurance
coverage is based on the type and volume of goods transported and
ranges from $25,000,000 for transportation of minimal quantities of
dangerous goods to $1,000,000,000 for transportation of large
volumes of dangerous goods, including crude oil. Railway
companies that do not maintain the applicable minimum liability
insurance will be prohibited from operating and may be subject to a
fine of up to $100,000.
A railway company operating a train that is involved in an
accident will be liable for the losses, damages, costs and expenses
in relation to the accident up to the amount of the minimum
liability insurance coverage that the company is required to
maintain and such liability does not require proof that the railway
company was at fault or acted negligently. A railway company
may also be liable for amounts in excess of their minimum liability
insurance where an accident has resulted from an act or omission of
the company committed with intent to cause the accident or
recklessly and with the knowledge that the accident would probably
Shipper-Funded Fund for Railway Accidents Involving Crude
The amendments also establish a compensation fund, financed by
levies on shippers, to cover the losses, damages, costs and
expenses resulting from railway accidents involving crude oil or
other designated goods that exceed the minimum liability insurance
coverage. Shippers will be required to contribute $1.65 per
tonne (or approximately $0.23 per barrel) of crude oil shipped on a
federal railway to the fund.
The new liability and compensation regime for railway shipment
of dangerous goods, which is based on the "polluter pays"
principle, makes railway companies and shippers responsible for the
cost of accidents and brings railways in line with other modes of
transporting dangerous goods, including pipelines and marine
1 Bill C-52, An Act to amend the Canada
Transportation Act and the Railway Safety Act, 2nd Sess., 41st
2 S.C. 1996, c.10.
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