Regulations Amending Certain Regulations Made Under the Canada Transportation Act (Rail Transport): SOR/2019-254

Canada Gazette, Part II, Volume 153, Number 14

Registration
SOR/2019-254 June 25, 2019

CANADA TRANSPORTATION ACT

P.C. 2019-921 June 22, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 36(1) of the Canada Transportation Act footnote a, approves the annexed Regulations Amending Certain Regulations Made Under the Canada Transportation Act (Rail Transport), made by the Canadian Transportation Agency.

Whereas, pursuant to subsection 36(2) of the Canada Transportation Act footnote a, the Canadian Transportation Agency has given the Minister of Transport notice of the annexed Regulations;

Therefore, the Canadian Transportation Agency, pursuant to subsections 92(3) footnote b, 128(1) footnote c and 177(1) footnote d of the Canada Transportation Act footnote a, makes the annexed Regulations Amending Certain Regulations Made Under the Canada Transportation Act (Rail Transport).

Gatineau, May 22, 2019

J. Mark MacKeigan
Member, Canadian Transportation Agency

Lenore Duff
Member, Canadian Transportation Agency

Regulations Amending Certain Regulations Made Under the Canada Transportation Act (Rail Transport)

Railway Interswitching Regulations

1 The long title of the Railway Interswitching Regulations footnote 1 is replaced by the following:

Railway Interswitching Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

3 (1) Subsection 7(1) of the Regulations is replaced by the following:

7 (1) The distances referred to in subsection (2), other than the distances referred to in subparagraph (2)(d)(i) and paragraph (2)(e), are measured along the track of the terminal carrier.

(2) The portion of paragraph 7(2)(d) of the Regulations before subparagraph (i) is replaced by the following:

(3) Paragraph 7(2)(d) of the Regulations is amended by striking out “and” at the end of subparagraph (i) and by adding the following after subparagraph (i):

(4) Subsection 7(2) of the Regulations is amended by adding the following after paragraph (d):

4 The heading before section 8 and sections 8 to 10 of the Regulations are repealed.

5 The schedule to the Regulations is repealed.

Railway Third Party Liability Insurance Coverage Regulations

6 (1) The portion of section 2 of the Railway Third Party Liability Insurance Coverage Regulations footnote 2 before paragraph (a) is replaced by the following:

2 Sections 3 to 5 of these Regulations apply only to persons proposing to

(2) Paragraph 2(b) of the Regulations is replaced by the following:

7 The Regulations are amended by adding the following after section 4:

Information

5 (1) An applicant for a certificate of fitness for the proposed operation of a railway that relates to a passenger rail service or the proposed construction of a railway must provide the Agency with the information set out in Schedule 1.

(2) A holder of a certificate of fitness for the operation of a railway that relates to a passenger rail service or the construction of a railway must provide the Agency with the information set out in Schedule 1, accompanied by a description of any changes to the information that was most recently provided under this section,

6 (1) An applicant for a certificate of fitness for the proposed operation of a railway that does not relate to a passenger rail service must provide the Agency with the information set out in Schedule 2.

(2) A holder of a certificate of fitness for the operation of a railway that does not relate to a passenger rail service must provide the Agency with the information set out in Schedule 2, accompanied by a description of any changes to the information that was most recently provided under this section,

(3) Despite subsections (1) and (2), the information set out in item 13 of Schedule 2 is not required to be provided by

8 The Regulations are amended by adding, after section 6, the Schedules 1 and 2 set out in the schedule to these Regulations.

Canadian Transportation Agency Designated Provisions Regulations

9 Item 13.01 of the schedule to the Canadian Transportation Agency Designated Provisions Regulations footnote 3 is replaced by the following:

Item

Column 1

Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable — Individual ($)

13.01

Section 90

25, 000

5, 000

13.011

Any requirement imposed under subsection 95.3(1)

25, 000

5, 000

13.012

Section 98

25, 000

5, 000

13.013

Any requirement imposed under subsection 116(4)

25, 000

5, 000

13.014

Subsection 117(1)

25, 000

5, 000

13.015

Subsection 117(2)

25, 000

5, 000

13.016

Subsection 117(3)

25, 000

5, 000

13.017

Subsection 117(5)

25, 000

5, 000

13.018

Section 118

25, 000

5, 000

13.019

Subsection 119(1)

25, 000

5, 000

13.02

Paragraph 119(2)(c)

25, 000

5, 000

13.021

Subsection 120.1(5)

25, 000

5, 000

13.022

Subsection 120.1(6)

25, 000

5, 000

13.023

Subsection 122(2)

25, 000

5, 000

13.024

Subsection 125(1)

25, 000

5, 000

13.025

Any requirement imposed under subsection 127(2)

25, 000

5, 000

13.026

Subsection 127(3)

25, 000

5, 000

13.027

Section 128.1

25, 000

5, 000

13.028

Subsection 136.4(1)

25, 000

5, 000

13.029

Subsection 136.9(1)

25, 000

5, 000

13.03

Subsection 141(1)

25, 000

5, 000

13.031

Subsection 141(2)

25, 000

5, 000

13.032

Subsection 141(2.1)

25, 000

5, 000

13.033

Subsection 142(1)

25, 000

5, 000

13.034

Subsection 142(2)

25, 000

5, 000

13.035

Subsection 143(1)

25, 000

5, 000

13.036

Subsection 143(2)

25, 000

5, 000

13.037

Subsection 143(3)

25, 000

5, 000

13.038

Subsection 144(1)

25, 000

5, 000

13.039

Subsection 145(1)

25, 000

5, 000

13.04

Subsection 145(1.1)

25, 000

5, 000

13.041

Subsection 146.01(1)

25, 000

5 000

13.042

Subsection 146.2(1)

25, 000

5, 000

13.043

Subsection 146.2(2)

25, 000

5, 000

13.044

Subsection 146.2(3)

25, 000

5, 000

13.045

Subsection 146.2(4)

25, 000

5, 000

13.046

Subsection 146.2(6)

25, 000

5, 000

13.047

Subsection 149(1)

25, 000

5, 000

13.048

Subsection 149(2)

25, 000

5, 000

13.049

Subsection 151.1(1)

25, 000

5, 000

13.05

Subsection 151.1(2)

25, 000

5, 000

13.051

Subsection 152.4(1)

25, 000

5, 000

13.052

Subsection 156(5)

25, 000

5, 000

13.053

Subsection 157(5)

25, 000

5, 000

10 The schedule to the Regulations is amended by adding the following after item 13.1:

Item

Column 1

Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable — Individual ($)

13.2

Subsection 173(1)

25, 000

5, 000

13.3

Subsection 173(2)

25, 000

5, 000

11 The portion of item 14 of the schedule to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable — Individual ($)

14

25, 000

5, 000

12 The schedule to the Regulations is amended by adding the following after item 14:

Railway Interswitching Regulations

Item

Column 1

Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable — Individual ($)

14.1

Section 4

25, 000

5, 000

14.2

Section 5

25, 000

5, 000

14.3

Section 6

25, 000

5, 000

13 The schedule to the Regulations is amended by adding the following after item 124:

Railway Third Party Liability Insurance Coverage Regulations

Item

Column 1

Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)Maximum Amount Payable — Individual ($)

Column 3

 

125

Subsection 5(2)

25, 000

5, 000

126

Subsection 6(2)

25, 000

5, 000

Coming into Force

14 These Regulations come into force on the day on which they are registered.

SCHEDULE

(Section 8)

SCHEDULE 1

(Section 5)

Information for a Certificate of Fitness for the Operation of Passenger Rail Service or the Construction of a Railway

SCHEDULE 2

(Section 6)

Information for a Certificate of Fitness for the Operation of a Railway That Does Not Relate to a Passenger Rail Service

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In May 2016, the Canadian Transportation Agency (Agency) launched its Regulatory Modernization Initiative (RMI) in order to review and modernize the full suite of regulations it administers. This Regulatory Impact Analysis Statement addresses minor, but essential, administrative changes to some of the rail-related regulations administered by the Agency that were identified as a part of its RMI process. In particular, amendments now align rail-related regulations with a series of changes to the Canada Transportation Act (Act), introduced by the Transportation Modernization Act (TMA) [assented to in May 2018] and the Safe and Accountable Rail Act (SARA) [assented to in June 2015]. Further, the amendments ensure that administrative monetary penalties (AMPs) can be levied for railway companies’ non-compliance with the Act’s rail-related provisions and Agency orders. The amendments update the Railway Interswitching Regulations to align with the introduction of long-haul interswitching (LHI) and with changes in how regulated (30 km) interswitching rates are calculated under the amended Act; prescribe filing and information requirements for freight railways concerning their minimum third party liability insurance requirements, also in line with the amended Act; and designate various rail-related provisions and Agency orders as subject to AMPs of up to $25,000 for non-compliance, including LHI orders. Overall, the regulatory amendments ensure that recent legislative amendments are smoothly implemented and can be properly enforced.

Background

Canada’s National Transportation Policy, as declared in the Act, states that a competitive, economic and efficient national transportation system […] is essential to serve the needs of its users, advance the well-being of Canadians and enable competitiveness and economic growth in both urban and rural areas throughout Canada.” It also indicates that these objectives are most likely to be achieved when competition and market forces are the prime agents in providing viable and effective transportation services. However, it also acknowledges that regulation and public intervention may be required to meet public objectives or in cases where parties are not served by effective competition.

In line with the National Transportation Policy, Parliament has determined that regulation or intervention by the Agency is required in certain respects. Within the specific powers assigned to it by legislation, the Agency is responsible for the economic regulation of railway companies under federal jurisdiction, administering and enforcing a range of requirements and remedies. In particular, the Agency is responsible for the following:

To support these mandates, the Agency administers the following rail-related regulations: Railway Third Party Liability Insurance Coverage Regulations; Railway Traffic Liability Regulations; Railway Traffic and Passenger Tariffs Regulations; Regulations on Operational Terms for Rail Level of Service Arbitration; Railway Costing Regulations; and the Railway Interswitching Regulations. Finally, the Canadian Transportation Agency Designated Provisions Regulations (DPR) facilitate the enforcement of statutory requirements and orders through AMPs (which are levied by designated enforcement officers of the Agency).

Significant amendments have been made to the Act in recent years, requiring corresponding adjustments to the rail-related regulations administered by the Office to ensure they are relevant and to ensure provisions can be enforced. Notably, under the TMA, a new remedy, LHI, was introduced to provide shippers across regions and sectors of Canada with access to a competing railway company under certain conditions, to ensure they have options. At the same time, an existing remedy, competitive line rates (CLR) was repealed. In addition, the Agency was empowered to set regulated (30 km) interswitching rates by decision rather than by regulation, to ensure that these rates are established and communicated in a timely and transparent manner. Amendments were also made to the Act with the intent of providing more accessible and timely remedies for shippers on rates and service; for example, the timeline for level of service decisions was reduced from 120 to 90 days.

Significant amendments were also made to the Act under the SARA to require federally regulated freight railways to carry minimum third party liability insurance coverage, ranging from $250 million to $1 billion, based on the type and volume of dangerous goods carried annually. These amendments, developed following the Lac-Mégantic derailment of 2013, provide the Agency with the mandate to validate that railways are carrying the correct level of insurance. The Agency must suspend or cancel a railway’s certificate of fitness to operate if it is not carrying the appropriate amount of insurance.

While significant changes have been made to the Act, the rail-related regulations administered by the Agency have not kept pace. For example, the Railway Interswitching Regulations refer to the old CLR remedy and contain outdated references to the regulated interswitching rates that have since been surpassed by an Agency determination issued in November 2018. Similarly, the Railway Third Party Liability Insurance Coverage Regulations make no mention of the forms and information that the Agency requests of railways to validate their third-party liability insurance coverage, nor are these filing requirements currently enforceable by AMPs.

Furthermore, under the Act, rail-related provisions or orders must be formally designated by regulation before AMPs can be levied for non-compliance. To date, few existing rail-related requirements have been designated as subject to AMPs. Similarly, the new LHI remedy, and amended remedies intended to be more timely and accessible under the TMA, are not enforceable by AMPs. This is in contrast to existing requirements for the air sector (and upcoming requirements under the proposed Air Passenger Protection Regulations, which are subject to AMPs for industry non-compliance). The lack of ability to issue AMPs against railways for non-compliance undermines the effectiveness of rail-related requirements and orders, including remedies for shippers on freight railways’ rates and service.

Objectives

In order for the Agency to continue to effectively fulfill the National Transportation Policy objectives, as set out in the Act, the regulatory amendments are necessary to ensure that industry’s regulatory obligations are clear, predictable and relevant to a range of existing and emerging business practices, that the demands associated with compliance are only as high as necessary to achieve the regulations’ purposes, and that the efficient and effective identification and correction of instances of non-compliance are facilitated. These amendments, while administrative in nature, clarify regulatory requirements and provide the Agency with agile enforcement tools while continuing to provide a sufficient level of regulation to ensure that government policy objectives are met.

Description and rationale

Administrative amendments to certain rail-related regulations align them with legislative changes and ensure provisions can be enforced. They serve to bring the regulations up-to-date by addressing specific issues such as the removal of the now outdated rate schedule from the interswitching regulations, and the clarification of information requirements for railway insurance filings. The amendments also provide the Agency with agile tools to use in cases of non-compliance, specifically via the use of AMPs, through the designation of certain rail-related provisions listed below. The amendments were developed pursuant to the rail provision authorities found in the Act; in the context of the current operating environment in the rail industry; and by taking into consideration the views of, and the impacts on, stakeholders.

Railway Interswitching Regulations

Interswitching is an operation performed by railway companies whereby one railway company picks up cars from a customer (shipper) and transfers these cars to another railway company that continues moving the cars onward towards destination. The interswitching arrangement is made in cases where a shipper has immediate access to a single railway company, but is within a defined distance (zone) within a 30 km radius, to one or more competing railway companies. Regulated interswitching provides shippers with options between railways, at a regulated rate.

The TMA has amended the Act such that the Agency must now determine interswitching rates annually by decision rather than through a regulatory process. Specifically, the Agency must set the interswitching rates for distance zones within a 30 km radius by December 1 of every year, and publish them in the Canada Gazette, along with the methodology by which they were derived, by December 31. This new process will ensure that rates are more timely and transparent.

Given these changes, amendments to the Railway Interswitching Regulations are now required, including to remove the outdated interswitching rate schedule. This schedule dates to 2013 and sets out the rates for various distance zones, within a 30 km radius, that railway companies were obligated to follow (e.g. move traffic at that rate upon shippers’ request). The old rate schedule has been surpassed by Agency Determination No. R-2018-254, which establishes the rates for 2019 based on more current data, and must now be removed to prevent confusion.

However, the distance zones, for which regulated interswitching rates are set, will continue to be determined according to the Railway Interswitching Regulations, in line with the amended Act. Determination No. R-2018-254 confirmed the new rates for zones 1, 2, 3 and 4, and additional kilometrage, within the 30 km radius.

Administrative monetary penalties

The DPR prescribe provisions of the Act and regulations that, if violated, may result in the imposition of AMPs by Agency-designated enforcement officers.

AMPs are considered a simpler, less costly, and timelier means of ensuring compliance with statutory requirements than the alternatives. They also provide a nimble enforcement tool to effect compliance with Agency orders.

The Act provides maximum amounts for AMPs that can be assessed for provisions prescribed in the DPR ($5,000 for individuals and $25,000 for corporations). An AMP imposed in a notice of violation may be reviewed by the Transportation Appeal Tribunal of Canada.

At present, there is only one rail-related provision that is designated in the DPR: any requirement imposed under section 169.37, i.e. in an arbitrator’s decision in level of services arbitration. The amendments designate additional rail provisions in order to provide an effective mechanism to enforce statutory requirements and orders in the area of rail, including compliance with the new or enhanced remedies introduced under the TMA (e.g. LHI and level of service decisions issued under the new 90-day timeline) and existing requirements (e.g. regulated interswitching).

The amendment would also increase the AMP for non-compliance with the obligation to provide reasonable assistance to an enforcement officer (subsection 178(5)), from $10,000 to $25,000 for corporations. This provision applies not just for rail, but for enforcement activities in general under the Act (e.g. in regard to the air mode).

In summary, the Agency has designated the provisions of the Act and other regulations listed in the table below, in line with its authorities. Specifically, the Agency has designated all of the following provisions up to a maximum of $25,000 for corporations and $5,000 for individuals.

Canada Transportation Act

Railway Interswitching Regulations

Railway Third Party Liability
Insurance Coverage Regulations

  • section 90
  • subsection 95.3(1)
  • section 98
  • subsection 116(4)
  • subsection 117(1)
  • subsection 117(2)
  • subsection 117(3)
  • subsection 117(5)
  • section 118
  • subsection 119(1)
  • paragraph 119(2)(c)
  • subsection 120.1(5)
  • subsection 120.1(6)
  • subsection 122(2)
  • subsection 125(1)
  • subsection 127(2)
  • subsection 127(3)
  • section 128.1
  • subsection 136.4(1)
  • subsection 136.9(1)
  • subsection 141(1)
  • subsection 141(2)
  • subsection 141(2.1)
  • subsection 142(1)
  • subsection 142(2)
  • subsection 143(1)
  • subsection 143(2)
  • subsection 143(3)
  • subsection 144(1)
  • subsection 145(1)
  • subsection 145(1.1)
  • subsection 146.01(1)
  • subsection 146.2(1)
  • subsection 146.2(2)
  • subsection 146.2(3)
  • subsection 146.2(4)
  • subsection 146.2(6)
  • subsection 149(1)
  • subsection 149(2)
  • subsection 151.1(1)
  • subsection 151.1(2)
  • subsection 152.4(1)
  • subsection 156(5)
  • subsection 157(5)
  • subsection 173(1)
  • subsection 173(2)
  • section 4
  • section 5
  • section 6
  • subsection 5(2)
  • subsection 6(2)
Third-party liability insurance coverage — freight rail operations

The Agency is responsible for ensuring that freight rail operators hold insurance that covers risks identified in the Act as well as minimum amounts of liability insurance coverage as set out in Schedule IV of the Act. The minimum amount of insurance that freight rail operators must maintain is based on the type and volumes of dangerous goods carried per year, including crude oil and toxic inhalation hazards (TIH). The Agency cannot issue a certificate of fitness, and must suspend or cancel an existing certificate of fitness, if it determines that an operator does not hold the mandatory minimum level of insurance. As freight rail volumes change year to year, it is imperative that the Agency has the appropriate up-to-date information to adequately discharge its responsibilities under the Act.

These amendments to the Railway Third Party Liability Insurance Coverage Regulations are necessary to ensure freight rail operators’ compliance with the minimum insurance requirements, which were introduced under the SARA following the Lac-Mégantic tragedy of 2013.

As per Schedule IV of the Act, freight railway companies are to hold insurance policies between $25 million per occurrence to a maximum of $1 billion per occurrence depending upon the volume of dangerous goods it carries. For instance, the operation of a railway that includes the carriage, per calendar year, of at least 4 000 tonnes but less than 50 000 tonnes of TIH materials, or of at least 100 000 tonnes but less than 1.5 million tonnes of crude oil, must carry at least $250 million per occurrence.

The Agency has amended the Railway Third Party Liability Insurance Coverage Regulations to be consistent with these amendments, notably to prescribe information that railway companies must provide so that the Agency may determine whether the railway company holds the required minimum liability insurance coverage for the proposed operation of a freight rail service. The information must be provided upon application for or variance of a certificate of fitness. The Regulations also require that each railway company provide such information annually to the Agency so that it is in a position to validate the company’s insurance coverage, prior to the annual renewal of its insurance policy.

Filing requirements are subject to AMPs of up to $25,000 under this regulatory proposal. It should also be noted that a railway company’s failure to maintain proper insurance is already subject to an AMP of up to $100,000 per violation, under subsection 177(2.1) of the Act.

Consultation

May to August 2018

As part of the consultative process respecting rail transportation, the Agency prepared a discussion paper that focused on key issues related to its suite of rail-related regulations. The discussion paper was posted on the Agency website with a link (ferroviaire-rail@otc-cta.gc.ca) for sending in comments and submissions.

The purpose of the consultations was to engage with key rail industry stakeholders, including passenger and freight railway companies, railway and shipper associations, industry groups and associations, and rail industry experts in order to inform the amendments to the rail-related regulations administered by the Agency and to its associated guidance material. In particular, comments were solicited in the following key areas: amendments to the Railway Interswitching Regulations; AMPs; insurance filing requirements for freight rail operations; insurance requirements for passenger rail operations and construction of a railway; and guidance material related to shipper remedies and fire provisions. Input was also solicited on whether the rail-related regulations administered by the Agency should be consolidated into a single set of regulations for ease of reference.

The consultation process included 20 formal bilateral meetings with representatives from Canadian and U.S. passenger and freight railway companies, shipper associations across a range of commodity groups, and industry experts. These were undertaken between August and September 2018. In addition, the Agency received 26 written submissions from stakeholders.

The comments received were generally positive on the administrative amendments described above related to interswitching.

While shipper associations supported AMPs to address non-compliance, some raised concerns that the use of AMPs could somehow preclude them from obtaining compensation from a railway company for a service breach. For example, they questioned whether, if an AMP were levied against a railway company for non-compliance with an Agency level of service order, this would subsequently preclude the affected shipper from obtaining compensation from the railway company in question for the service breach. It was clarified to these stakeholders that the purpose of an AMP is to secure compliance, that the money goes to the Crown, and that this is distinct from compensation owed to an affected party.

Railway companies questioned the need for AMPs and also suggested it was unnecessary to formalize insurance filing requirements in regulation.

Overall, shipper associations tended to emphasize the importance of clear and accessible guidance material on the use of shipper remedies on rates and service, including LHI, rather than regulatory amendments. Freight railway companies particularly noted the importance of having compensatory and transparent interswitching rates, which are now set annually by decision from the Agency. The Agency is in the process of updating its guidance material, starting with LHI, and will shortly be launching consultations on interswitching rate-setting methodology to inform the next Agency decision on interswitching rates in subsequent years.

Both shipper associations and freight railway companies raised concerns with the prospect of changes to the Railway Costing Regulations, which they argued underpin remedies such as regulated interswitching. Given the complexity of those Regulations and the need for further analysis and discussions, no changes are proposed to those Regulations in this regulatory amendment package. Further engagement on the Railway Costing Regulations will take place as part of the above-mentioned consultations on interswitching rate-setting methodology in 2019.

There was little support for the suggested consolidation of the regulations (into a single set of regulations) from either stakeholder group, with a number of stakeholders actively opposed to the concept, raising concerns it would result in a dense and unusable regulatory instrument. Others noted that consolidation was unnecessary to improve accessibility, as provisions of the regulations can be readily searched online. Therefore, consolidation was not pursued in this regulatory initiative.

Little input was received on the topic of minimum insurance requirements for passenger railway operations and construction of a railway. In general, passenger railway companies advocated for the current approach, by which the Agency establishes insurance requirements on a case-by-case basis having regard to specified factors. As the methodology for setting appropriate insurance levels is a complex issue requiring further analysis and consultation, no changes are proposed at this time.

Prepublication in Part I of the Canada Gazette (CGI) — March 2019

On March 30, 2019, proposed regulations were published in CGI with a 30-day comment period to allow interested persons and stakeholders to submit comments. The Agency received five written submissions during the comment period.

Generally, stakeholders expressed support for the amendments to the rail-related regulations, noting that the majority of the amendments are administrative in nature to better align the regulations with current legislation. Some stakeholders noted concern with regards to a few technical matters within the CGI proposal. Key comments from stakeholders include:

1. Interswitching

Some stakeholders indicated that the repeal of section 9 and the addition of zone 4B of the Railway Interswitching Regulations would introduce an element of uncertainty when interpreting the regulations. The CGI proposal contained amendments to section 7 that prescribed two new interswitching zones, 4A and 4B. Zone 4A, which is established in the amended paragraph 7(2)(d), is consistent with the previous zone 4. It includes sidings located wholly or partly within 40 km or less of an interchange, that are wholly or partly within a 30 km radius of an interchange and fully outside zones 1, 2 and 3. Zone 4B, established through paragraph 7(2)(e), is a zone that includes sidings within a radius of 30 km of an interchange but that are fully outside of zones 1, 2, 3 and 4A. Prior to its repeal, section 9 addressed the additional kilometre interswitching rates for the distances established in zone 4B. One stakeholder felt that the proposal made it unclear whether new zones or rate categories, beyond the 30 km limit, were being added to the regulations. Another stakeholder noted that the words wholly or partly, which were present in section 9, were missing from the description of the proposed zone 4B.

The Agency notes that the creation of zone 4B does not extend interswitching beyond the 30 km radius. It is simply establishing a zone for interswitching traffic that would have been covered under the repealed section 9 of the Railway Interswitching Regulations. To provide further clarity and to ensure consistency with the repealed section 9, the words “wholly or partly” have been added to subparagraph 7(2)(e)(i) before the word “within.”

2. Designated provisions

Stakeholder feedback on the amendments to the Canadian Transportation Agency Designated Provision Regulations was mixed. Non-industry stakeholders generally supported the amendments made to the list of provisions subject to AMPs as well as the increases to the maximum AMP amount for non-compliance by corporations. An industry stakeholder indicated that, instead of assigning the same maximum AMP amount to all provisions, the maximum amounts should vary based on the severity of the non-compliance. Industry stakeholders stated that to treat all violations equally is inconsistent with the intent of the Act, as well as other federal AMP regulations. Industry stakeholders also indicated that the Agency has not described how it will apply AMPs in a fair and consistent manner.

The Agency has determined that the maximum AMP amounts for each designated provision should align with the Agency’s authorities under the Act ($25,000 for corporations and $5,000 for individuals). It is important to note that these are maximum amounts and that the Agency’s approach to administering AMPs takes into account the severity of the initial violation, as well as the number of subsequent violations. The Agency has posted guidance on its website regarding this enforcement approach. The increases to the maximum AMP amount as well as the additional rail provisions to the DPR provides an effective mechanism to enforce statutory requirements and orders in the area of rail.

3. Insurance

Stakeholders expressed some concerns regarding the amendments to the Railway Third Party Liability Insurance Regulations. A stakeholder questioned the authority of the Agency to include item 16 of Schedule 2 of the regulations, which specifies that the Agency may request “any other information relevant to the insurance coverage and the assessment of the liabilities of the operation.” The stakeholder contends that this section grants the Agency open-ended power to determine, at a future date, what information it may require and to make that requirement binding by way of the regulation. This information would be used by the Agency to assess compliance with insurance requirements. The Agency has determined that paragraph 92(3)(a) of the Act gives it the authority to include item 16 of Schedule 2 in these regulations.

Stakeholders also expressed concern regarding item 13 of Schedule 2 in the Railway Third Party Liability Insurance Regulations that prescribes volume information railways must provide to the Agency for the purpose of determining if a railway company holds the appropriate amount of insurance. Stakeholders indicate that if a railway holds the maximum amount of insurance, it should not be necessary for it to file volume information, and that adding this new requirement would increase regulatory burden.

The Agency requires the volume information to confirm the required level of insurance. When a railway holds the maximum level of required insurance, the Agency would, as such, not require the volume information. In the final regulations, the Agency has clarified that railways that hold the maximum level of required insurance will be exempted from the requirement to file traffic volume information with the Agency.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as the amendments are clarification amendments and amendments due to legislative requirements that do not apply to small business, as defined, and therefore add no costs to small business in the freight rail industry.

Implementation, enforcement and service standards

Compliance with the rail-related regulations administered by the Agency and a program of effective enforcement are important elements to the success of the regulatory regime. The Agency can enforce the rail-related regulations using its authority under the Act.

The DPR set out certain provisions of the Act and regulations that must not be contravened. A contravention of one of these designated provisions is considered a violation of the Act and can be subject to a monetary penalty. A designated enforcement officer of the Agency may impose fines of up to $5,000 for an individual and $25,000 for a corporation where either has been found guilty of an offence as a result of contravening these Regulations.

The regulatory amendments result in new designated provisions, although there are no increases in the maximum amounts, under the Act, that can be levied.

Contact

Tom O’Hearn
Acting Senior Director
Analysis and Outreach Branch
Canadian Transportation Agency
15 Eddy Street, 15th Floor
Gatineau, Quebec
K1A 0N9
Telephone: 819‑953‑9933
Email: tom.ohearn@otc-cta.gc.ca