Safe and Accountable Rail Act comes into force in June

OTTAWA, Ontario—The strengthened liability and compensation regime for rail, under the Safe and Accountable Rail Act, will be brought into force on June 18, 2016. The regime is based on the “polluter pays” principle, sharing responsibility for rail accidents between railways and shippers.

Under the new regime, federally regulated railways will be required to carry a mandatory minimum level of insurance, based on the type and volume of dangerous goods they carry, ranging from $25 million to $1 billion.

The two middle insurance levels, $100 million and $250 million, are being phased in to provide short line railways with additional time to adjust to the new requirements. These levels will be fully implemented on June 18, 2017.

Railways will have to demonstrate they carry the appropriate level of insurance coverage in order to receive and maintain a Certificate of Fitness to operate from the Canadian Transportation Agency.

The regime also establishes a supplementary compensation fund—the Fund for Railway Accidents Involving Designated Goods—financed by shippers of crude oil by rail. This fund will cover any damages above the railways’ mandatory insurance level for accidents involving crude oil.

All shippers of crude oil carried by a federally regulated railway in Canada will be required to contribute to the shipper-financed compensation fund through a levy of $1.67 per tonne (indexed to inflation).

These measures ensure that sufficient resources will be available to adequately compensate potential victims, pay for clean-up costs and protect taxpayers in the event of a rail accident.

“Reinforcing rail safety is a top priority for the Government of Canada. However, should a rail accident take place, the strengthened liability and compensation regime will ensure that the polluters, and not Canadian taxpayers, will be held responsible for compensating victims and paying for clean-up,” said Marc Garneau, minister of transport.