On June 18, 2015, the Governor General of Canada gave Royal
Assent to Bill C-52, the Safe and Accountable Rail Act. As
a previous bulletin described in greater detail, Bill C-52
responds to a number of concerns that gained wide attention
following the tragic derailment at Lac-Mégantic,
Québec as well as railway company efforts to pass risks of
liability onto shippers.
Specifically, Bill C-52 imposes a levy on shipments of crude oil
and requires railway companies subject to the authority of
Parliament to hold minimum liability insurance set at various
thresholds for prescribed third party and contamination risks.
Transport Canada's June 18, 2015 news release in respect of Bill C-52
receiving Royal Assent indicates that "The new liability and
compensation regime under the Canada Transportation Act
will be brought into force one year from today".
The legislative process in respect of Bill C-52 resulted in
relatively minor revisions, which were primarily to clarify that a
railway company is not required to collect, administer and submit
the crude oil levy to the Receiver General when it carries traffic
at an interswitching rate; instead Bill C-52 imposes those
obligations on the first railway company to carry the traffic after
loading at a rate other than an interswitching rate.
As explained previously, Bill C-52 restricts a railway
company's ability to unilaterally shift to shippers the risk of
third party liability. Recall that certain railway companies have
unilaterally issued tariffs that purport to require shippers to
indemnify and defend railways from third party spill and accident
claims in connection with the transportation of certain dangerous
goods. Bill C-52 attempts to address this issue by amending section
137 of the Canada Transportation Act to set out that a
railway company's "liability, including to a third
party" shall be dealt with "only by means of a written
agreement". The amendments in respect of Bill C-52 are now
effective. As a result, a shipper may now be able to limit its risk
exposure by choosing to ship its traffic by way of tariff (as
opposed to contract), although it may have to balance its desire
for limiting risks it cannot control while its traffic is in
transit on the railway with higher rates or inadequate terms of
service or both.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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