Chapter 4: Regulatory Framework
2. State of Rail Safety in Canada
4. Regulatory Framework
5. Safety Management Systems
6. Information Collection, Analysis and Dissemination
7. Proximity Issues
8. Environmental Protection and Response
9. Operational Issues
10. Scientific and Technological Innovation
12. Building Relationships
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The regulatory framework for railway safety encompasses the federal and provincial legislation, regulations, rules, and standards that provide the structure in which railway companies can operate safely. Some 34 Canadian railways1 have interprovincial or Canada-U.S. operations and are therefore regulated by federal law. These include the two major freight-carrying railways, CN and CP,2 the passenger rail company VIA Rail, and more than 30 short line companies. Another 62 railways3 (excluding industrial lines) operate entirely within a single province and are, therefore, regulated by provincial governments.
4.1 Federal Legislation Affecting Railway Safety
Several federal statutes play a role in the regulation of railways, the most important of which is the Railway Safety Act, together with the regulations and rules made pursuant to it. Other federal legislation affecting railway safety includes: the Transportation of Dangerous Goods Act, the Canadian Transportation Accident Investigation and Safety Board Act, the Canada Labour Code and the Canada Transportation Act.
The Railway Safety Act (RSA), which came into force in 1989, gave responsibility to Transport Canada for overseeing railway safety. It separated this role from those of the Canadian Transportation Agency (for economic regulation and dispute resolution) and the Transportation Safety Board (for accident investigations).
The basic principle introduced by the RSA was that railway companies must be responsible and accountable for the safety of their own operations, while the regulator must retain the power to protect people, property and the environment by ensuring that the railways operate safely within a national framework. The Act reinforces this principle by providing for government regulations and rules, as well as the development of operating rules and engineering standards by the industry that can be legally recognized as equivalent to regulations through approval by the Minister of Transport. Rules and engineering standards may be adapted to the needs of different railways and may be developed more quickly than regulations.
The RSA sets out the parameters for regulations and rules as follows. The Governor in Council (GIC) has the power to make regulations with respect to all matters under the Act (see section 47). The GIC has exclusive regulation-making powers over all aspects of crossing safety, for example, construction of crossings, preventing access to railway land by means of fences, signs or other means, and controlling automobile and pedestrian traffic on road approaches to railway crossings. Similarly, the government has exclusive regulation-making powers in the areas of the construction, alteration or maintenance of buildings, drainage systems or other structures on non-railway land; the control of "any other activity ... that could constitute a threat to safe rail operations" on land adjoining railways; and the removal of vegetation and other hindrances to clear vision of a road or line of railway.4 Finally, the Governor in Council has exclusive powers to adopt regulations with respect to safety management systems (SMS).5 Regulations under the RSA are developed by Transport Canada and presented by the Minister of Transport to Cabinet for approval, under a formal process that includes publication in the Canada Gazette and public consultation, before being adopted by the Governor in Council.
Other matters may be the subject of either government regulations or engineering standards or rules. For example, section 7 of the Railway Safety Act authorizes three methods for developing engineering standards for the construction or alteration of railway works. The Governor in Council may make regulations defining engineering standards, or the Minister of Transport may order a railway company to formulate engineering standards for these works, or a railway company may develop engineering standards on its own initiative. Engineering standards developed by the industry are subject to the approval of the Minister.
Part II of the Act, which deals with the operation and maintenance of railways, provides for the development of regulations, railway-initiated rules and Minister-mandated rules on a wide range of subjects. Rules may be drafted by railways or by the government, but must always be approved by the Minister. The Minister may also exempt individual railways from the requirements of a rule.6 Matters under Part II that can be the subject of rules or regulations include: maintenance of line works; railway equipment; security; training of personnel; and designation of safety-critical positions.
Rules differ from regulations in two important respects. Firstly, a rule applies only to those railways that sign on to it, whereas regulations have general application. Secondly, rules and engineering standards require only the approval of the Minister of Transport, whereas regulations require adoption by the Governor in Council. Nevertheless, once approved by the Minister, rules have the same force and effect as regulations. Regulations take precedence over rules, and the government can make regulations that supersede rules at any time.
Amendments made to the Railway Safety Act in 1999 added the objective of environmental protection to the Act, strengthened the requirements for industry to consult with relevant organizations in the process of developing new rules and imposed a requirement to consult prior to applying for an exemption from a rule. At the same time, provisions were added to the Act requiring railways to implement safety management systems. As part of this change, the primary emphasis of Transport Canada in relation to compliance monitoring was intended to shift from detailed technical inspections for compliance, to auditing the implementation of company safety management systems.
The Transportation of Dangerous Goods Act (TDG Act) sets out specific requirements governing the handling and transport of dangerous goods, including transportation of such goods by rail. The TDG Act provides a framework for prevention of incidents and spills involving dangerous goods, and for appropriate response in the event of such an incident. The framework for emergency preparedness and response is discussed further in Chapter 8.
The Canadian Transportation Accident Investigation and Safety Board Act deals with accident and incident reporting and investigation for all modes of transport under federal jurisdiction, including rail.
The Canada Labour Code deals with on-the-job occupational health and safety of workers in federally regulated workplaces, including railways under federal jurisdiction.7 The occupational health and safety provisions of Part II of the Code are reinforced by the principles that all employees have the right to refuse dangerous work. Every employer is required to establish a workplace health and safety committee for each workplace (controlled by that employer) that has 20 or more employees. The Code also requires employers to appoint a health and safety representative for each workplace with fewer than 20 employees. The committees are responsible for health and safety matters that apply to individual workplaces.
The Canada Transportation Act provides an overall economic framework for the national transportation system that is "competitive, economic and efficient" and "meets the highest practicable safety and security standards."8 It came into effect in 1996, replacing inter alia the National Transportation Act, the Government Railways Act and elements of the Railway Act, and it established the Canadian Transportation Agency (CTA).
References in the Railway Safety Act to the definition of a "railway company" in the Canada Transportation Act have the effect of limiting the application of the RSA to companies holding a Certificate of Fitness issued by the CTA. This creates a potential jurisdictional gap, which is discussed later in the chapter.
4.2 Provincial Railway Safety Legislation
As discussed in Chapter 3, the role of provincial governments in regulating railway safety has increased in importance since the creation of many short line railways in the 1990s. We have already commented on how this increases the importance of maintaining collaborative working relations between the federal and provincial governments.
Differences in regulation and enforcement among provinces, and between the provincial and federal regimes are inevitable. Most provinces, including British Columbia, Alberta, Manitoba, Nova Scotia and New Brunswick, have incorporated by reference into their own legislation, some or all of the provisions of the Railway Safety Act, regulations and rules, thus ensuring that the same rules apply to provincial railways.
The Ontario Shortline Railways Act enables the adoption of federal legislative provisions, regulations and rules through a provincial agreement with the federal government. As a result, the Ontario railway safety regime most closely resembles the federal regime. Ontario and Manitoba automatically adopt changes to the applicable federal rules and regulations. In other provinces, this may be done on a case-by-case basis when amendments are made at the federal level.
A concern was raised with the Panel that although provincial railways can be bound by RSA rules, they are not able to apply for exemptions from the rules. This is a matter for provincial governments to address. We note that the Ontario government has adopted a regime that allows its provincial railways to apply for exemptions from rules. This provides a model that other provinces could consider.
NB Southern Railway, Saint John, New Brunswick, July 2007
Saskatchewan and Quebec have taken a different approach by developing their own legislation without reference to the federal Railway Safety Act. These provinces operate on a consultation model, under which they choose the manner in which the various provisions of their own safety regimes will reflect the RSA system. For example, Saskatchewan uses a combination of powers in its Act and guidelines to regulate its provincial railways. The Saskatchewan legislation is more performance-based than the federal RSA and does not provide for industry rule making.
Most provinces with provincially regulated railways also have a memorandum of understanding (MOU) with Transport Canada under which federal railway safety inspectors provide inspection services to the province on a cost-recovery basis.9 The terms of these MOUs and the extent to which each province uses the services of federal railway inspectors vary from one jurisdiction to another. Federal inspectors apply the rules and regulations adopted by each province when inspecting provincial railways, but generally do not have enforcement powers. In most provinces, provincial enforcement officers carry out enforcement.10 British Columbia is an exception, performing its own inspections and enforcement activities.
British Columbia has adopted its own requirements for safety management systems in its legislation, and performs its own audits. Federal-provincial MOUs between Transport Canada and the provinces of Ontario, New Brunswick and Nova Scotia result in the provincial railways in these provinces being subject to the federal Railway Safety Management System Regulations. These provinces, however, perform their own SMS audits.
4.3 Railway Safety Act Issues
In our review and consideration of the Act, we found that while its general principles are fundamentally sound, a number of improvements could be implemented.
4.3.1 Objectives of the Railway Safety Act
As amended in 1999, section 3 of the Railway Safety Act sets out the following objectives:
3. The objectives of this Act are to
- promote and provide for the safety of the public and personnel, and the protection of property and the environment, in the operation of railways;
- encourage the collaboration and participation of interested parties in improving railway safety;
- recognize the responsibility of railway companies in ensuring the safety of their operations; and
- facilitate a modern, flexible and efficient regulatory scheme that will ensure the continuing enhancement of railway safety.
Section 4 of the Act further clarifies:
4. (4) In determining, for the purposes of this Act, whether railway operations are safe railway operations, or whether an act or thing constitutes a threat to safe railway operations or enhances the safety of railway operations, regard shall be had not only to the safety of persons and property transported by railways but also to the safety of other persons and other property.
The purpose of the Act, therefore, is to protect people, property and the environment from potential harm caused by the operation of railways. The Railway Safety Act, together with the Canada Transportation Act, also provides a framework to address safety concerns for people and property in close proximity to railway operations.
The 1999 amendments to the Railway Safety Act added "protection of the environment" to the list of safety objectives in section 3(a), and several other sections in the Act elaborate on this objective.11 Through these amendments to the RSA, Transport Canada has been given the responsibility for protecting the environment from the effects of emissions and spills of environmentally hazardous products from trains. It is important for Transport Canada to fulfill the environmental objective set out in the Act by holding the railway industry accountable for its environmental performance.
It is also clear in section 3 that Parliament intended Transport Canada and the industry to collaborate with one another and with other interested parties in improving railway safety. Another objective in section 3 is to facilitate a regulatory regime that is "modern, flexible and efficient" in order to ensure the continuing enhancement of railway safety. The objective of continuous improvement, so clearly articulated in sections 3(b) and (d) of the Act, is consistent with the inclusion in 1999 of authority to develop Safety Management Systems Regulations and, in our view, should be the central focus of all actions taken by the regulator and the industry under the Railway Safety Act.
...accidents are an inevitable part of the work of a far-flung transportation operation like CN, but ...[CN's] overall safety record has improved.
CN spokesperson cited in Ian Bailey, "Third CN derailment revives Opposition calls for safety record inquiry," The Globe and Mail, September 18, 2007
Safety management systems are intended to continuously reduce safety risks to a level as low as reasonably practicable, and this objective should be articulated in section 3 of the Act. The objective of continuous improvement should also be the central focus of the SMS Regulations, and performance reporting should be directed to this end.
These are necessary first steps to improving the safety culture of the railway industry. We noted during the course of the Review that railway accidents continue to occur frequently. Railway companies still sometimes take the position that accidents are an inevitable part of the railway business. In our opinion, accidents should not be viewed in this manner and should never be accepted as such by the government or the railways themselves.
By focussing on the objective of continuous improvement and managing safety through safety management system plans that are filed with, and professionally audited by, Transport Canada, the government can ensure that railway companies systematically assess and manage risks to achieve the best possible safety performance. We recommend, therefore, that section 3 of the Railway Safety Act be amended to reflect the objective of continuous improvement and the central importance of company safety management plans in planning and reporting on safety performance.
Section 3(c) of the Railway Safety Act should be amended to read:
"The objectives of this Act are to …
(c) recognize the responsibility of railway companies to demonstrate, through their safety management systems, that they continuously manage their safety risks to a level as low as reasonably practicable."
4.3.2 Application of the Railway Safety Act
Two sections in the RSA link it to the Canada Transportation Act. Section 2(2) provides that the RSA "applies in respect of transport by railways to which Part III of the Canada Transportation Act applies." Section 4(2) states that if the RSA does not contain a definition of a term, the definitions set out in the Canada Transportation Act are to be used. Although the term "railway company" is used frequently in the Railway Safety Act, there is no definition of "railway company" in the RSA itself. The Canada Transportation Act defines a "railway company" as a company that has been issued a Certificate of Fitness (COF) by the Canadian Transportation Agency.12
The CTA, an independent agency at arm's length from the Minister of Transport, issues a Certificate of Fitness when it is satisfied that a company proposing to construct or operate a railway under federal jurisdiction has adequate liability insurance. Certified companies are monitored by the CTA for continued compliance with this economic criterion.
Transport Canada's jurisdiction depends on whether or not a company has been granted a Certificate of Fitness by the CTA. Historically, the CTA has been reactive - responding to a company when it applied for a COF, rather than actively investigating to ensure that an application was forthcoming. This is seen as a jurisdictional gap and has resulted in five railway companies which do not have a federal COF or a provincial operating licence.13
Jurisdiction is further complicated by the fact that many provincial railways run over federal railway lines owned by CN or CP. By contractual agreement with the owners of the track, the provincial railway is obliged to follow federal operating rules while running on federal track. Transport Canada does not take direct enforcement action against the provincial railway, however, if safety provisions are violated. Rather, the department brings any enforcement action against the track owners (that is, CN or CP), holding them responsible for the actions of the railway using their track. This awkward enforcement practice does not provide for optimal accountability and transparency and may become more problematic if additional enforcement powers, such as administrative monetary penalties, are added to the Railway Safety Act, as we recommend below.
We believe that application of the Railway Safety Act should occupy the full scope of federal jurisdiction. This would have the effect of applying RSA rules and regulations (e.g., those governing speed) to all railways operating on federal track.
To resolve the problem of possible gaps in jurisdiction, the application of the Railway Safety Act should be established within the RSA itself, relying on the principles set out in sections 91 and 92 of the Constitution Act 1867. This is the normal practice for federal statutes, and is the case for the Transportation of Dangerous Goods Act, the Canadian Transportation Accident Investigation Safety Board Act, and the Canada Labour Code; that is, these statutes do not refer to the Certificate of Fitness as a criterion for their provisions to apply.
Section 2(2) of the Railway Safety Act should be amended to provide that the Act applies in respect of all matters of railway safety and security under the legislative authority of Parliament.
When jurisdiction is established directly in the Railway Safety Act, it will also be necessary to include a definition of "railway company" in the Act, so that it will no longer be necessary to refer to the Canada Transportation Act. Most elements of the RSA apply to "railway companies," and the Act refers to this term throughout. The new definition of "railway company" for the purposes of the Railway Safety Act should include in its scope all entities to which its objectives are intended to apply.
A definition of "railway company" should be included in the Railway Safety Act.
4.3.3 Baseline Requirements for Operation
A new railway company is authorized to begin operations when the Canadian Transportation Agency (CTA) issues a Certificate of Fitness (COF). The COF simply indicates that the railway is under federal jurisdiction, has sufficient financial capacity to operate, and has obtained appropriate insurance coverage. This is in keeping with the economic mandate of the CTA.
The Railway Safety Act imposes two baseline safety requirements on a new railway company (through the SMS Regulations). The company must submit specified information in respect of its safety management system, and it must comply with all railway safety regulations in force at the time. In practice, these are pre-conditions to the issuance of the COF, and we understand that the CTA keeps the Transport Canada, Rail Safety Directorate informed of possible new entrants who are applying for a COF.
The SMS Regulations under the Railway Safety Act require that a new railway operator submit its safety management system information at least 60 days before operations begin.14 Transport Canada reviews the information to ensure that it contains all of the required elements, but does not approve the SMS in terms of its effectiveness. Transport Canada does not undertake an inspection to verify the safety capacity of the company before the COF is issued. In fact, Transport Canada normally does not examine the SMS in depth until an SMS audit is done, which may be several years later.
A new railway company, including a new entity that is created as a result of a merger or other corporate restructuring, must also comply with railway safety regulations in force and with rules to which the new company will be a signatory. A start-up inspection should be undertaken to verify its capacity to comply.
We note that a number of provinces require operating permits or licences for railways under their jurisdiction.15 This approach could serve as a model for federal railway companies. Similarly, an Air Operator Certificate is required from Transport Canada to operate an air transport service. The civil aviation sector in Canada is regulated, under the Aeronautics Act, through a system of "Canadian aviation documents," such as Air Operator Certificates, Certificates of Registration, Certificates of Airworthiness, flight crew licences and permits, which are granted (and may be suspended or cancelled) according to prescribed procedures.
In our view, Transport Canada should establish baseline safety requirements by regulation, and complete a comprehensive safety inspection of every new railway company before it begins operation, to determine whether it complies with the regulatory framework. Once satisfied that the railway company has met an acceptable level of safety, Transport Canada should issue a Rail Operating Certificate (ROC). A Rail Operating Certificate would be required in addition to the Certificate of Fitness (COF) issued by the Canadian Transportation Agency, and should be a precondition to obtaining the COF.
The ROC could also be suspended or cancelled on safety grounds, as is the case in civil aviation. Although this would be a remedy of last resort, it would provide an important additional enforcement tool for Transport Canada in the rail transportation mode. Canadians expect the regulator to have the power to shut down unsafe operations, when other enforcement approaches fail. Any decision to suspend or cancel an operating certificate should be taken at senior levels, with the direct involvement of the Minister. The holder of an ROC should have the right to seek redress for a decision to suspend or cancel the certificate, including review by the Transportation Appeal Tribunal of Canada (TATC), with procedures analogous to those available for Canadian aviation documents.
The requirement for a Rail Operating Certificate should apply to all railways under federal jurisdiction, including existing ones. A "grandfathering" provision should be adopted that would automatically grant an ROC to a railway company that already meets the existing requirements (that is, for a COF only) on the date the new provision comes into effect. Nonetheless, a Rail Operating Certificate issued to any company, whether new or long-established, could be suspended or cancelled on safety grounds as described above.
A railway should be required to obtain a Rail Operating Certificate (ROC ) as a precondition to obtaining a Certificate of Fitness (from the Canadian Transportation Agency) and to commencing or continuing operations. Transport Canada will issue the ROC when satisfied that the railway meets baseline safety requirements determined by regulation. Existing companies would automatically be issued the ROC. Transport Canada would have the power to suspend and/or cancel the ROC if the company fails to meet baseline safety requirements.
4.3.4 Rules and Regulations
As outlined in the introduction to this chapter, the Railway Safety Act provides for detailed safety requirements to be developed by the government in the form of regulations, or developed by the industry in the form of rules, and submitted to the Minister of Transport for approval.
Most stakeholders acknowledge that the use of a system of rules, rather than more formally created regulations, offers flexibility and efficiency. It takes advantage of the experience and expertise of the railway companies and other participants in the rule-making process.
Those who favour industry-initiated rule making see it as the key element of a more modern, realistic and effective approach to railway safety. They argue that only the industry itself (management in cooperation with its employees) can bring about safe operations, and that industry rule making dovetails with the philosophy of safety management systems (SMS) because it has the potential to reflect the expert knowledge and interests of those most directly concerned with rail safety.16 Although significant issues have arisen from time to time in rule-making projects, in our view, the rule-making provisions of the Act are fundamentally sound and should be retained.
Some presentations to the Panel expressed concern that the development of proposed rules by the industry amounts to "self-regulation." With respect, we disagree. We believe that rule development within the industry is more accurately described as a form of "co-regulation" or collaboration, rather than "self-regulation."
The rule-making structure of the RSA provides that the Minister has ultimate authority to approve or reject industry proposals on the grounds that they are or are not conducive to safe railway operations.17 The overall framework of the Act contemplates final ministerial or government approval of safety requirements, whether these requirements are in the form of rules originated by railway companies or by government, regulations, engineering or other standards, orders (by RSIs or the Minister's delegate) or Minister's directives. Moreover, whether initiated by the industry or government, once approved, all rules have the force of law, and Transport Canada has broad powers to require a rule, a rule change, or development of its own regulation over the subject matter.18
There were, at the time of writing, 18 safety-related regulations under the Railway Safety and Transportation of Dangerous Goods acts applying to railways, and 16 rules. In four cases, the Minister directed the development of the rule; otherwise the industry initiated their development. There are also engineering standards developed by the railway industry and approved by Transport Canada.
There is no guidance in the Act as to the circumstances in which a safety issue should be the subject of a rule developed by the industry (subject to approval by the Minister) or a regulation developed by the government. Although the Act permits an initiative to develop rules for all of the subjects outlined above, in some circumstances, regulations may be more appropriate. A key consideration is the impact on third parties of the measures being considered. Where this impact would be significant, it is appropriate for the government to lead the work in the form of developing a regulation, which requires much broader consultation and public notice. Transport Canada should set out clear principles to determine what types of railway safety issues are most appropriately addressed by rules and what types should be addressed by regulations.
The process for making regulations, which applies across federal statutory authorities, is intended to be more responsive and flexible than the process for amending legislation and has been greatly streamlined in recent years.19 Nonetheless, it has many formal requirements and the process can be long and costly. The process is governed by the Statutory Instruments Act, which sets out requirements for examination of the proposal (including review by Justice Department drafting experts), consultations, publication across Canada, review by Cabinet, and final publication and promulgation. The draft proposal must be accompanied by a formal Regulatory Impact Analysis Statement (RIAS) that describes the potential impacts of the proposal, overall costs, options considered and the degree of contention and support among affected parties and Canadians. When the interests of many parties must be considered, it is often a challenge in terms of developing a regulation that represents a balance of viewpoints, and managing the consultation process. This is the case, for example, with the Grade Crossing Regulations, which involve industry, municipalities, the general public, and provincial and federal governments.
We agree that the use of rules - with the improvements we recommend below - remains appropriate for many aspects of railway safety in which third parties are not affected and a more limited consultation process is adequate. We also recommend that regulations be used in other areas, where a proposal cannot be adopted without the participation of many parties.
4.3.5 Strengthening the Rule-Making Process
Throughout our consultation process, everyone involved - the railway industry, provincial governments, unions, other stakeholders and Transport Canada - expressed concerns about how rule development is functioning in practice.20 We concluded that the current problems in the development of rules are mainly lack of clarity and the fact that working relationships among partners in the process (i.e., Transport Canada, Rail Safety and the industry) have broken down. These relationships need to be re-established on a more constructive and collaborative basis.
The development of the Work/Rest Rules for Rail Operating Employees is a particularly problematic example.21 The project began in 1993, as a direct result of the Hinton train crash of 1986, with the objective of developing a rule setting out the maximum hours of work for railway operating employees.
The industry and the Brotherhood of Locomotive Engineers (BLE)22 began by working together on a major study on the science of work, rest and fatigue - the CANALERT '95 study. CN and CP paid for the study. By 2001, a working group composed of the industry, the BLE and Transport Canada, Rail Safety had developed draft Work/Rest Rules for Rail Operating Employees and an interpretation document, known as Circular 14 - Recommended Procedures and Practices for the Application of Work/Rest Rules. Very little of the advice provided in the CANALERT '95 study had found its way into the draft rules.
The draft Work/Rest Rules were presented to the Railway Safety Consultative Committee, and they were met with criticism from some of committee members. Transport Canada then engaged an expert to review the proposed rules and hosted a workshop with stakeholders to resolve the outstanding issues. As a result of the workshop, the department asked for certain improvements in the fatigue management plans that were considered central to the proposed approach. We understand that Transport Canada, Rail Safety officials became increasingly concerned at this time that situations could arise in which train crews could work very long hours or be obliged to return to duty without having had sufficient rest. Nevertheless, in 2002, they approved the rules that were to come into effect in April 2003.
During information sessions in the spring of 2003, it became evident that there were significant differences between Transport Canada and the industry in the interpretation of these new rules. Having reviewed the 2003 version of the Work/Rest Rules, we concluded that the document was so poorly drafted that many interpretations were possible. It is regrettable regulatory practice to have such ambiguity in a document that will have the force of law.
As soon as the Work/Rest Rules came into effect, Transport Canada began to receive complaints from the industry about interpretations of the rules by railway safety inspectors, and from railway employees about how the rules were being implemented by their employers. Transport Canada, Rail Safety Directorate again reviewed the situation and concluded that there were valid concerns with the interpretation of these rules.
We share Transport Canada's reservations about the content of these rules. On the other hand, we are also sympathetic to the industry's perspective that, once Transport Canada, Rail Safety officials had assessed these rules and totally rejected the revisions, this compounded the problem. For example, in December 2003, apparently frustrated with industry's response to their new concerns, Transport Canada officials rejected an entire package of revisions, later acknowledging that there were some elements they could have accepted. Officials gave their reasoning for rejecting certain clauses but did not provide the documents on which their reasoning was based. Revised Work/Rest Rules for Rail Operating Employees were finally approved in June 2005.
After 12 years of effort to develop minimum work and rest provisions for operating employees of railways, the result is Work/Rest Rules that do not correspond to current expert advice on the subject and a loss of mutual trust and respect between the regulator and the industry.23 There is a pressing need for Transport Canada and the industry to re-establish effective working relationships on rule making and a range of other issues. We believe that the department must take the initiative in this process.
Some stakeholders told us that, in recent years, Transport Canada has used the rulemaking provisions of the RSA in a way that the stakeholders consider inappropriate. They assert that by imposing conditions on the approval of industry-initiated rules and by closely specifying the desired outcome when requiring the development of rules by the industry, Transport Canada is sometimes steering the development of rules to an unreasonable extent and thereby distorting the process.24
To address concerns about whether the department is likely to propose, in the end, that the Minister approve a given rule, Transport Canada should be engaged throughout each rule-making project, by assigning to the working team a qualified officer who has a mandate to speak on behalf of the department. There should be a process for this employee to verify the continuing support of the department as the work progresses. Any concerns that the department has about the proposal should be raised as early as possible, so that differences can be resolved before the package is submitted to the Minister for approval. There should be no surprises at the approval stage of the process.
For its part, the railway industry should listen carefully to the input of the department and attempt to resolve any differences of opinion before submitting the proposed rule for approval by the Minister. Transport Canada has an essential responsibility to represent the interests of the general public in this process. In their submissions, many members of the public underlined to the Panel their expectation that the department will fully discharge this responsibility.
In recent years, Transport Canada has imposed conditions more frequently on new rules and exemptions. A better approach would be for Transport Canada, Rail Safety Directorate to work with the industry on the development of the rule, raise any concerns early in the drafting process, seek to address these concerns in the text of the rule itself, and to do so prior to submission of the proposed rule for approval by the Minister. This would provide the industry with ample notice of the department's position and avoid surprises at the approval stage. Conditions should be imposed as a last resort, when the department and the industry cannot come to a consensus on the rule. If conditions are to be used, a consolidated version should be published which integrates the conditions with the rule.
A key issue for the rule-making process will be for Transport Canada to provide the rationale for its decisions to the industry and other stakeholders. Transport Canada's decision-making process should be - and should be seen to be - more open and evidence-based. The information and analysis that support decisions on rules should be available to those who might wish to comment, as it must be when regulations are under consideration. Also, the rationale behind the decision should be made more explicit or Transport Canada could be vulnerable to suggestions of using either an inadequately evidence-based process, or inappropriate criteria.25 Industry should also provide a rationale for its draft rules, addressing and documenting the analysis, including net benefits and alternatives considered, of proposed rules that they initiate. This will contribute to transparency, accountability and trust among all participants.
Another major area of concern about the rule-making process relates to the nature and extent of consultation beyond Transport Canada, Rail Safety and the industry. As mentioned in Chapter 3, the provinces are concerned that they are not consulted about rules that will have a major impact on railways under their jurisdiction. They are usually informed after the rules are approved. To aid federal-provincial harmonization of safety practices and collaboration between the two levels of government, Transport Canada should ensure that the provinces are consulted before new rules are adopted, and are kept informed as the development of proposed rules proceeds. Similarly, the unions representing railway workers are typically consulted by the industry at the very end of the development process, and given 60 days to comment on the draft rules.
A better approach to consultation is for the team developing a rule to consult other interested parties throughout the development process, rather than simply meeting the minimum requirement under the Act. In recommending a more open, consultative approach, we are not suggesting that other interested parties necessarily have a place at the rule-making table. Rather, we believe that two kinds of changes are necessary. First, the attitudes of Transport Canada and the railway industry should become more open and responsive to input. Second, mechanisms should be created and supported to provide opportunities for input and discussion before and during rule making, not just after the fact.26 Meaningful consultation during the development of regulatory proposals, in fact, saves time and money in the long run.
Finally, we are very concerned about the quality of drafting of rules. Although rules, once approved by the Minister, have the same force and effect as regulations, they are not statutory instruments27 and, therefore, are not subject to the requirements set out in the Statutory Instruments Act. As a result, draft rules are not reviewed by experts in regulatory drafting at the Department of Justice with respect to language, consistency with other rules, scope and jurisdiction, delegation of powers, enforcement of goal-oriented provisions, and other issues which would be considered when regulations are drafted.
This is a serious deficiency. We learned that poor quality drafting has led to difficulties in enforcing several rules - the Track Safety Rules are an example. These provisions leave considerable decision-making discretion to railway employees, especially regarding what falls under exemptions to the rules, and make it difficult for companies and inspectors to know what, in fact, constitutes an infringement of the requirements.
The quality of drafting rules needs to be improved to ensure that they are clear, unambiguous, and enforceable. At a minimum, draft rules should be reviewed by Department of Justice lawyers to ensure that drafting norms are met. Transport Canada should also consider providing training in regulatory drafting to all those engaged in the rule-making process, including their own employees in the Rail Safety Directorate.28
We recommend that Transport Canada, in consultation with the industry and other stakeholders, establish an improved process for developing rules under the RSA that addresses the issues outlined above. To ensure wide participation and public notice of the changes, we recommend that the process be outlined in the form of a regulation.
A process for the formulation and/or adoption of rules, standards and exemptions should be established by regulation. All stakeholders must have an opportunity to be involved in developing the process. This regulation should embody the following principles:
- transparency and openness;
- early and meaningful involvement of Transport Canada;
- appropriate participation of stakeholders;
- high quality legal drafting; and
- consistency with section 3 of the Railway Safety Act to facilitate a modern, flexible and efficient regulatory scheme.
4.3.6 The Role of the Railway Association of Canada in Rule Making
Whether the Minister directs the industry (or an individual railway company) to develop a rule, or the industry initiates its development, the procedural steps are the same. The industry drafts the rule and is required to consult organizations that are likely to be affected by it, giving them at least 60 days to comment. The main industry association - the Railway Association of Canada (RAC) - usually leads the rule-making process on behalf of its members. Individual railways decide if they will sign on to the proposed rule, which they are encouraged to do by the RAC. The proposed rule is then submitted to the Minister for approval. The procedure is that the RAC will file a proposed rule with a list of signatory railways attached as an annex. Once approved by the Minister, a rule has the same force and effect as a regulation.29
The RAC's authority to undertake this work on behalf of its members may not be clear, as the RSA refers only to railway companies developing rules on their own initiative or when directed to do so by the Minister. The RAC currently performs this work under powers of attorney from those members who wish to adopt the rule.30 The current practice could be seen as a delegation of powers from individual companies to an industry association that represents their interests. A principle of public law, however, prohibits the further delegation of powers extended by legislation to an individual or a company. To clarify this situation, the Act should expressly provide for railway companies to appoint an agent, such as the RAC, to act on their behalf in developing draft rules, by allowing them to delegate the powers set out in the Act related to rules.
The Railway Safety Act should be amended to clarify that a railway company may delegate its power to develop and submit a rule to the Minister for approval.
4.3.7 The Process for Extending a Rule to Additional Railways
A railway company can also undertake to be governed by a specific rule that is already in effect by becoming a signatory to the rule after the fact, whether or not it is a member of the RAC. The RSA does not, however, expressly provide a process for extending coverage of a rule to companies that were not part of the original submission. We learned that the practice of Transport Canada, Rail Safety Directorate is to write to a railway company that is not otherwise bound and ask if it wishes to be party to the rule, or to submit its own rules. Usually, the company will assent by letter, indicating that it will comply with the approved rule.31 The legal effect of this exchange of letters should be clarified. We conclude that it would be helpful to clarify and legitimize a process for railways to "sign on" to rules after they have been developed and implemented.
As it stands now, the Act does not require a new railway company to submit a rule, if it does not sign on to an existing one. This creates potential regulatory gaps, particularly for a new company operating on its own track. However, the Minister has the power to direct a railway company to develop a rule. If the company fails to file a rule after having been directed to do so by the Minister, the Minister can develop his own rule, after consultation.32 Also, if a new railway company runs on CN or CP track, it will be subject to the host railway's rules through the operating agreement between them.
To complement this, the Minister should also have the power to extend the application of an existing rule to a given railway company - always, of course, with appropriate consultations among directly affected parties.
The Minister of Transport should have the power, after appropriate consultation, to extend the application of an existing rule to a given railway company. There should also be a process in the Act for a railway company to adopt an existing rule.
4.3.8 Enforcement Powers
Our terms of reference specifically directed us to examine the adequacy of the existing enforcement powers under the Railway Safety Act and to consider whether administrative monetary penalties (AMPs) should be added to the range of enforcement actions available under the Act.
The RSA provides rail safety inspectors with significant powers under section 28 to enter premises, inspect, seize property and question people, in carrying out their responsibilities. When a violation is found, the inspector will normally issue a letter of non-compliance, specifying what is not in compliance and setting out the time frame within which the railway must correct the situation. Railway safety inspectors carry out follow-up inspections to verify corrective actions undertaken by the regulated party.33 Failure to correct the non-compliance will result in either steps towards prosecution, the issuance of a notice (if there is a threat to rail safety), or a notice and order (if the threat is immediate).
Refusal to comply with a letter of non-compliance is not sufficient, in itself, to justify a section 31 notice. The threat to safe railway operations must be assessed in each case. In addition, a section 31 notice and order cannot automatically be used as a progressive step when a railway fails to comply with a letter of non-compliance or a notice. In this case, the immediacy of the threat to safe railway operations must be demonstrable. If the threat is considered immediate, the inspector has the power to issue a notice and order requiring the railway company not to use those works or equipment, or to use them subject to conditions established in the order. The railway company must follow the conditions set out in the order until the inspector is satisfied that the threat is removed. Transport Canada inspectors issued a total of 214 notices and orders from 2003 to 2006.34
The Minister can also issue emergency directives to a railway, if he is of the opinion that there is an immediate threat to safe railway operations, and can order the railway to stop using certain works or railway equipment, or to follow a maintenance or operating practice specified in the directive. The exercise of this power has been delegated to the Director General of Transport Canada, Rail Safety Directorate. A ministerial emergency directive remains in effect for six months, and the period can be renewed. Ministerial emergency directives cannot be appealed. They can be made orders of the Federal Court and would be enforceable under the Federal Courts Act.35
If a railway fails to comply with the rules and regulations cited in the letter of non-compliance and an immediate threat to safe railway operations cannot be demonstrated, the only recourse is prosecution, which is a very cumbersome remedy for many rule violations. Because this process is so costly and time consuming, it is used very infrequently and is, therefore, ineffective for many violations.
This represents a significant weakness in the enforcement scheme of the Railway Safety Act. We recommend that administrative monetary penalties be implemented as an additional enforcement option under the Railway Safety Act, and as an alternative to prosecution, particularly in respect of cases of persistent non-compliance, for example. The availability of administrative penalties would also make rail safety consistent with other modes of transport, particularly civil aviation and marine, as well as with the transportation of dangerous goods in all modes of transport under federal jurisdiction.
An administrative monetary penalty scheme is a more efficient and less costly means of enforcing legislative requirements than prosecution, since it uses administrative, rather than judicial, processes. This is consistent with the principles of minimizing the regulatory burden on Canadians, while at the same time promoting regulatory compliance.
Sections 228-243 of the Canada Shipping Act 2001, and the proposed Administrative Monetary Penalties Regulations under that Act, provide a sound model for an administrative penalty scheme under the RSA. Administrative monetary penalties apply to contraventions of the Canada Shipping Act designated by regulations, and they are an alternative to criminal prosecutions. The regulations set out a range of penalties for various contraventions, while the Act provides for reviews by the Transportation Appeal Tribunal of Canada. The Minister can suspend the penalty if the person or vessel undertakes an "assurance of compliance" and remedies the non-compliance within a specified period.
An administrative penalty regime under the Railway Safety Act should follow the same principles. The proposed approach allows for a degree of discretion in the decision to impose a penalty and the determination of the level of the penalty. That discretion should be exercised according to clearly established principles. To assure predictability and accountability, those principles should be accessible through the publication of an enforcement policy. The decision to impose a penalty should be the Minister's, and should be exercised by senior officials within Transport Canada. We do not think it appropriate for railway safety inspectors to have this authority. A decision to impose an administrative penalty should be reviewable by the Transportation Appeal Tribunal of Canada.
The main elements of the system should be outlined in the Railway Safety Act, itself. More detailed provisions, such as the amount of penalties and types of procedures, should be set out in regulations.
An administrative monetary penalty (AMP) scheme should be included in the Railway Safety Act as an additional compliance tool. The scheme should include the following elements:
- the decision to impose a penalty should be the Minister's decision;
- before a decision is made, due process should be followed;
- the decision should be reviewable by the Transportation Appeal Tribunal of Canada;
- the level of fines should be consistent with those imposed in the aviation and marine modes; and
- an enforcement policy prescribing parameters for AMPs should be made public.
In summary, the enforcement powers currently set out in the Railway Safety Act need to be reinforced by the introduction of an appropriately structured scheme of administrative monetary penalties and the ultimate sanction of removal of an operating certificate. These additional enforcement mechanisms will complete the array of powers provided to the department to ensure compliance with the Railway Safety Act, regulations and rules, together with reinforcement of safety management system requirements.
4.3.9 Review of Orders
The Railway Safety Act provides for a review by the Transportation Appeal Tribunal of Canada (TATC) of an order made by a railway safety inspector under section 31. The review is conducted by a member of the TATC who can either confirm the order or refer the matter to the Minister for consideration. The member cannot substitute his or her own decision for that of the inspector and thus cannot revoke or alter the inspector's order. The same is true in the case of an appeal to a panel of the TATC from a decision of one of its members. The Tribunal can only dismiss the appeal or refer the matter to the Minister for consideration; it cannot substitute its own opinion for that of the inspector.36
In contrast, under the Aeronautics Act, in case of an immediate threat to aviation safety or security, the Minister's decision to suspend a Canadian aviation document is subject to review and appeal to the TATC37 in the same manner as in the RSA, but the member or the panel can substitute its own decision for that of the Minister as to whether an immediate threat to aviation safety or security exists. We believe that this aspect of the Aeronautics Act provides a sound model for the RSA to follow.
The same problem arises for TATC review of ministerial orders under sections 32.1 and 32.2 of the RSA. The Tribunal can only confirm a ministerial order or refer it back to the Minister for reconsideration.38 This too is inconsistent with the approach of the Aeronautics Act and does not provide for a robust review system. This argument also applies to decisions of the Minister related to administrative monetary penalties, whose implementation we have recommended above, including the possibility of review by the TATC.
Sections 31.1(4) and 31.2(3) of the Railway Safety Act should be amended so as to authorize the Transportation Appeal Tribunal of Canada, in the case of a review of an order of a railway safety inspector, to confirm, revoke or alter the order.
Similar amendments should be made in relation to the review of a ministerial order under sections 32.1(5) and 32.2(3) of the RSA.
4.3.10 Obsolete Provisions
We learned that many orders and regulations are still in force under the Railway Safety Act that may have come into effect many years ago - indeed, under predecessor legislation, such as the Railway Act or the National Transportation Act, which are no longer in force. For example, the RAC's website provides a list of 25 orders issued by the Canadian Transport Commission or the National Transportation Agency of Canada between 1981 and 1988. Some of these were issued at the request of one or more railway companies, and amount to a form of rule making before that option was provided by the Railway Safety Act, beginning in 1989.39
This issue is not new. We note that the committee that undertook the statutory review of the new RSA in 1994 had similar concerns and recommended a "sunsetting" provision to revoke all orders, rules or regulations issued by previous authorities.40
We learned that it is difficult to gain ready access to a comprehensive set of applicable regulations, rules and orders. Some rules still contain text that has long since been superseded by a separate rule or regulation. We do not propose a strict timeline for repealing all superseded provisions, but suggest that a five-year time frame would be appropriate for the modernization process. All orders, rules or regulations currently in effect should be published in a convenient location on Transport Canada's website, and Transport Canada and the RAC should work together to keep this up to date.
All orders, regulations and rules related to safety should be reviewed and those that are obsolete should be amended or repealed.
1 See Appendix E.
2 Categorized as "Class 1" in the United States.
3 See Appendix E.
4 Railway Safety Act (1985, c. 32 (4th Supp.)), ss. 18(2) and 24(1).
5 RSA, s. 47.1(1).
6 RSA, ss. 18-22.
7 For on-board employees, Part II of the Canada Labour Code and the On Board Train Occupational Health and Safety Regulations are delegated to Transport Canada, Rail Safety for enforcement, under a Memorandum of Understanding between the two departments. Human Resources and Social Development Canada (Labour Program) enforces Part II of the Code and the Canada Occupational Health and Safety Regulations for so-called "off-board" employees, such as those performing track maintenance and car and locomotive repairs.
8 Canada Transportation Act (1996, c. 10), s. 5.
9 Transport Canada recovers the costs of the services of railway safety inspectors under the various agreements. We learned that some or all of these costs are invoiced directly from the railways being inspected; see submission of Huron Central Railway Inc. (August 2007); Ministry of Transportation of Ontario, Submission to Railway Safety Act Review Panel (August 2007) page 3.
10 A federal-provincial agreement under the Ontario Shortline Railways Act (1995) specifies that federal services will be provided in accordance with the federal regulatory regime, and permits Transport Canada to inspect the railways under Ontario jurisdiction and take most enforcement actions directly (see Ontario, Submission, op. cit., pages 2-3). The Ontario Northland Railway (ONR) is an exception; it is essentially self-regulating (ibid., page 8).
11 See RSA ss. 4(4.1), 24(1)(e), and 47.1(2)
12 Canada Transportation Act, ss. 87, and 90-94.
13 See Deana Silverstone, The Legislative and Institutional Framework for Railway Safety in Canada (July 2007), paragraph 10.
14 Railway Safety Management System Regulations (SOR/2001-37), s. 4(2)(b).
15 For example, in British Columbia, new companies must obtain an operating permit from the registrar of railway safety prior to commencing operations; in Manitoba, a new entity must obtain a Licence to Operate from the Motor Transport Board, which requires proof of liability insurance, and a certificate from a qualified engineer that the applicant complies with railway safety requirements, The Provincial Railways Act (C.C.S.M. c. R15) s. 30; and Provincial Railways Fitness Criteria and Safety Regulation.
16 See James Mitchell and Nigel Chippindale, Sussex Circle Inc., The Governance of Railway Safety in Canada (September 2007), section 5-B; Harvey Sims, Sussex Circle Inc., The Development of Work/ Rest Rules for Railway Operating Employees: A Case Study Prepared for the Railway Safety Act Review Panel (August 2007).
17 RSA, ss. 19(4), 20(4).
18 See Silverstone, Framework, op. cit., paragraph 138.
19 Treasury Board of Canada, Cabinet Directive on Streamlining Regulation (April 2007); Treasury Board of Canada, Assessing, Selecting, and Implementing Instruments for Government Action (August 2007).
20 As noted in Silverstone, Framework, op. cit.; Mitchell and Chippindale, Sussex Circle, Governance, op. cit.; and, Sims, Sussex Circle, Work/ Rest Rules Case Study, op. cit.
21 Sims, Sussex Circle, Work/ Rest Rules Case Study, op cit, paragraphs 79-205.
22 The other major union - United Transportation Union - opted out of the process. The union later raised objections to the final product.
23 Sims, Sussex Circle, Work/Rest Rules Case Study, op cit, paragraph 199; Maury Hill and Associates, Inc., A Study of the Role of Human Factors in Railway Occurrences and Possible Mitigation Strategies (August 2007), section 4, "Work/Rest Rules."
24 Mitchell and Chippindale, Sussex Circle, Governance, op. cit., section 5-B.
25 Ibid., section 5-B, "Issue 2."
26 Ibid., section 5-B, "Issue 3."
27 RSA, s. 46(b).
28 Silverstone, Framework, op. cit., paragraphs 169-182.
29 RSA, s. 23.
30 Silverstone, paragraphs 166-168.
31 Ibid., paragraph 166.
32 This particular aspect of the Minister's power to make a rule, under section 19(7) of the Act, has never been used to date.
33 See Silverstone, Framework, op. cit., paragraphs 309-310, 349.
34 Quoted in Silverstone, Framework, op. cit., paragraph 358.
35 RSA, ss. 33-34.
36 RSA, ss 31.1-31.2. Since the TATC was given jurisdiction for railway safety matters in 2003, there have been very few requests or appeals under provisions of the RSA - six were filed to be heard at the first level, and all have been withdrawn (see Silverstone, Framework, op. cit., paragraph 426).
37 Aeronautics Act (1985, c. A-2), ss. 7(3), 7.2(1). "Canadian aviation document" includes licences, permits, accreditations, certificates or other documents issued by the Minister - for example, a pilot's licence, operating or airworthiness certificate, Transportation Security Clearance for aviation workers, etc.
38 RSA, ss. 32.1(5) and 32.2(3).
40 Railway Safety Act Review Committee, On Track: The Future of Railway Safety in Canada, Report of the Railway Safety Act Review Committee (December 1994), Recommendation 10.4, page 170.
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