Rail transportation liability is necessary because the rail network is an integral part of Canada’s economic engine and the confidence of shippers and the public in general in the country’s ability to deal effectively and expeditiously with the aftermath of accidents is important.
Rightly or wrongly, the perception has been created that the environmental risk and risk to human life through rail transportation of dangerous goods is far greater than previously thought. This has caused a great deal of concern to first responders, and municipalities must respond to these incidents. With the realization that there are more than forty small railways operating in Canada, and with the perception that what passes through Canadian communities is potentially disastrous, the issues of liability and adequate insurance coverage are emerging at the top of the agenda in many communities. The Calgary Fire Department took the unusual step of asking Canadian Pacific Railway for hundreds of thousands of dollars to cover costs of the department’s response to two derailments in the city in 2013.
The existing rail transportation liability and compensation regime in Canada and the United States is under stress. Litigation will expose the shortcomings of the present system of liability coverage and insurance for rail transport. Under Canadian law, a person who has suffered a loss must prove negligence in a court of law to hold the railway responsible for the loss. There is no automatic entitlement to compensation, even though the damage may be apparent. Canadian federal law requires that railways carry “adequate” liability insurance. There is also liability under both federal and provincial environmental laws for environmental cleanup resulting from a derailment, which varies from province to province. An injured party can and will hold responsible a host of others involved in the shipment, such as the owner of the cargo, the consignee, and intermediaries such as contract carriers and others.
Given the greater perceived risk posed by the movement of crude oil, it is important to consider adopting another, more practical and less resource-intensive practice to deal with liability and compensation issues resulting from railway accidents. Indeed, the liability and compensation regimes covering other single incident-high risk industries such as pipelines, offshore oil and gas platforms, and the nuclear industry should be re-assessed. K. Joseph Spears in this Canadian Shipping article suggest that this could probably result in the establishment of stand-alone compensation funds after a full discussion and analysis of the problem.