In a joint Canada-US press conference held earlier this month,
Canada's Transport Minister Lisa Raitt and US Transportation
Secretary Anthony Fox announced harmonized cross-border regulations
aimed at strengthening safety standards for rail tank cars used to
transport crude oil and other dangerous goods. The announcement
comes after ongoing discussions between regulators and industry
stakeholders in both countries and is in response to increasing
public concern over the safety of transporting crude by rail.
The New Regulations
The proposed new Canadian regulations introduce the following
three changes to the existing framework:
new requirements for manufacturers to build rail tank cars with
upgraded safety features, specifically to reduce the risks of
puncture, derailment and leaks;
new performance-based standards to retrofit older tanks;
a schedule to phase-out the use of some older tank cars.
The US regulations mirror the Canadian regulations and include
additional braking requirements for trains carrying large
quantities of crude oil. After 2023, trains carrying large
quantities of crude and other flammable goods will only be allowed
to exceed 30 miles per hour if they have electronically controlled
pneumatic brakes installed. Minister Raitt will look to find a
Canadian solution to harmonize breaking requirements with the US
but stopped short of making any statement about what the Canadian
requirements would include.
The regulations aim to balance the interests of the burgeoning
crude oil transport industry with safety concerns. Attention to
these regulations is particularly high in Texas and North Dakota
where growth in production from shale deposits is increasing demand
for rail transport drastically. For example, in North Dakota's
Bakken patch, 70 percent of oil produced moves by train.
Domestically, the transport of crude and other fuel oils by rail
almost tripled in Canada between 2011 and 2014, in part due to
increasing opposition, cost and delay facing pipeline projects.
The new joint regulations on rail reflect a cross-border
response to the tragic train derailment at Lac-Mégantic,
Québec in 2013 and increasing public concern over
transporting crude by rail. They will add additional costs to the
transport of crude and undoubtedly have impacts across the oil and
gas industry. The amendments are not yet in force in Canada and
there has been no indication of when they will be introduced.
Borden Ladner Gervais LLP will monitor and report on these
legislative changes as they occur, which are expected before the
end of the current Parliamentary session.
In 2017, Canada's energy sector faces continued uncertainty and inertia. From taxes to transportation, Canada's natural resource industries – and their benefits to the national economy – are under threat...
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