Canada: A Novel Cause Of Action Coming Down The Track And Other Railway Legislation Changes

Late last month, the federal government introduced Bill C-52, which, if enacted, will amend both the Canada Transportation Act (CTA) and the Railway Safety Act (RSA). The federal government also proposed new Railway Safety Management System Regulations (New SMS Regulations) under the RSA, which are intended to replace the existing SMS Regulations and expected to come into force on April 1, 2015.

Once implemented, the changes introduced through Bill C-52 and the New SMS Regulations (collectively referred to as Recommended Changes) will significantly alter the requirements imposed on federally regulated railway companies as well as non-federally regulated railway companies operating on federal railway tracks involved in the transport of dangerous goods, including oil. This article summarizes many of the Recommended Changes, including the introduction of a novel statutory cause of action against federally regulated railway companies based on loss of use of a public resource.

CHANGES PURSUANT TO BILL C-52

Financial Changes

The most significant changes set out in Bill C-52 appear to be primarily financial in nature. For example, once enacted, the provisions of Bill C-52 will require federally regulated railways that move large quantities of dangerous goods (including oil) to carry minimum amounts of insurance ranging from C$25 million to C$1 billion depending on the quantities of goods that are transported annually. Furthermore, in the event of an accident involving crude oil, federally regulated railway companies will be liable for damages up to the amount of their minimum insurance limits without proof of fault or negligence (subject to limited defences such as accidents caused by civil war or insurrection). Finally, the provisions of Bill C-52 will also result in the imposition of an additional levy of C$1.65/tonne of crude oil shipped. The amount will subsequently be adjusted annually based on the consumer price index.

Novel Cause of Action

In addition to the above changes, Bill C-52 also introduces (in section 153.2 of the CTA), what appears to be a novel statutory cause of action based on loss of use of a public resource (Public Resource Claim). More specifically, either the federal or provincial governments will be able to initiate a Public Resource Claim against a railway company involved in an accident involving crude oil or any other good designated under the regulations, up to the minimum amounts of insurance for "loss of non-use value relating to a public resource that is affected by the railway accident or as a result of any action or measures taken in relation to the accident."

Although the concept of loss of use value and non-use value presently exists in several federal statutes (notably the Canada National Parks Act and the Canadian Environmental Protection Act, 1999), and is proposed for introduction in several other statutes (notably the Canada Wildlife Act and the Migratory Birds Convention Act, 1994), it appears to be otherwise restricted to sentencing considerations. In other words, the loss of use value and non-use value resulting from an incident is a factor to be taken into consideration in determining an appropriate sentence for a person found guilty of violating a statutory provision. Its application in the sentencing context is very different from the Public Resource Claim under the CTA, which would actually form the basis of a statutory claim for damages that the government could make against a railway company.

The basis of a Public Resource Claim under the CTA also appears to be different from what exists in the United States where some statutes incorporate the concept of natural resource damage. However, the concept appears to be predicated more on recovering the costs of remediating the environment rather than the loss of use of a public resource.

Claiming for loss of non-use value relating to a public resource in a Public Resource Claim is an interesting cause of action that presumably arises out of the Supreme Court of Canada's decision in British Columbia v. Canadian Forest Products Ltd. In that decision, the court held open the possibility of the government suing for compensation on behalf of the public for environmental damages. Indeed, the Public Resource Claim under the CTA appears to have taken the concept one step further by actually incorporating the concept as a statutory cause of action.

Once in force, the Public Resource Claim will presumably allow for governments to pursue wide-ranging damages claims predicated upon loss of use of parklands or waterways due to closures associated with an oil spill from a railway accident. What remains unclear is how such claims will be quantified. Furthermore, although a Public Resource Claim is intended to be covered by the minimum amount of insurance carried by the railway company, it too may have financial implications if, by becoming an additional recognized cause of action, it results in increased railway insurance premiums. Finally, it remains to be seen if the Public Resource Claim will be expanded to products other than oil and further if it will remain isolated to the CTA or adopted as the basis for a statutory cause of action in other legislation.

CHANGES PURSUANT TO NEW SMS REGULATIONS

The New SMS Regulations are significantly different from the existing SMS Regulations in several respects, including their application to different railway companies. Whereas the existing SMS Regulations only apply to federally regulated railway companies, aspects of the New SMS Regulations will apply to both federally regulated railway companies as well as non-federally regulated railway companies operating on federal railway tracks. This has presumably been done to minimize any regulatory oversight gaps involved with railways operating on federal tracks.

Second, although the existing SMS Regulations refer to various components of an SMS (i.e. identification of authority and accountability at all levels within a railway company, processes for the identification of safety concerns, risk control strategies, processes for the collection and analysis of safety data, etc.), they provide little guidance as to what the components involve or how they are to be implemented. Conversely, the New SMS Regulations are much more prescriptive and provide a detailed list of what each component entails. Such an approach will presumably result in more clarity and consistent production of SMS information.

Third, the New SMS Regulations require federally regulated railway companies to include as part of their SMS a procedure for enabling employees to report to the company a contravention of the RSA or any regulations or applicable rules directives etc., without fear of reprisal.

Fourth, the New SMS Regulations require federally regulated railway companies to apply the principles of fatigue science when scheduling the work of employees. These principles include an analysis of fatigue/alertness as well as how human performance degrades in relation to accumulated sleep debt. What is interesting is that although the term "fatigue science" is presently defined in the RSA, the existing SMS Regulations do not refer to the term. Conversely, pursuant to the provisions of Bill C-52, the existing definition of fatigue science will be deleted, yet the requirement to apply principles of fatigue science will be introduced in the New SMS Regulations.

Fifth, the New SMS Regulations explicitly require railway companies and local companies operating on federal tracks to designate a company executive as being responsible for the implementation of the SMS. Whereas the existing SMS requires that a federal railway company submit the name of the person responsible for the SMS, the New SMS Regulations explicitly require the person from a federal railway or local railway operating on the federal main track to be a company executive who must provide the minister with a signed declaration accepting such responsibility.

SUMMARY OF IMPACT OF RECOMMENDED CHANGES

Once implemented, the Recommended Changes will result in much greater obligations being imposed on railway companies. The most significant obligations imposed by Bill C-52 appear to be financial in nature and include being potentially subject to a Public Resource Claim, whereas those imposed under the New SMS Regulations are more administrative in nature. Taken together, they are clearly indicative of the significance that the federal government is placing on railway transportation, particularly with respect to the movement of crude oil.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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