Transport Minister, Marc Garneau, said recently that rail safety is his number one priority. The federal budget pledged an extra $143 million over three years, to among other things “support new and expanded activities to strengthen oversight and enforcement” of rail safety.
While this is a laudable step, fundamental problems with the rail regulatory regime remain. Toronto mayor, John Tory and 17 counselors, raised some of these in a letter to the Minister.
Not mentioned was the issue of regulatory capture, which gained widespread attention during the 2007-8 US sub-prime mortgage crisis. It is generally accepted that a major cause of the crisis was that regulators were in the pocket of a regulation-averse industry.
Capture exists where regulation is systematically directed to benefit the private interest of the regulated industry at the expense of the public interest. Characteristically, industry is able to shape the regulations governing its operations. It regularly blocks or delays new regulations, and seeks to remove or dilute existing regulations deemed be adversely affecting profits.
There is considerable evidence that regulatory capture of the rail regulatory regime played a role in 2013 Lac-Megantic rail disaster.
Most importantly, why were these trains allowed to transport their massive oil cargo with only one crew member? Immediately after the accident, Transport Canada reversed itself, issuing an emergency directive requiring a minimum of two operators for trains carrying dangerous goods—an order which was subsequently entrenched in the Canadian rail operating rules.
Omitted from this narrative is how, several years earlier, the Railway Association redrafted the rail operating rules, notably introducing General Rule M, which enabled companies to implement single-person train operations for freight trains without needing a formal ministerial exemption, accompanied by tough conditions. Transport Canada approved this rule modification, over the objections of the unions, without ensuring an equivalent level of safety.
Subsequently, the RAC lobbied hard on behalf of MMA—the first company to take advantage of the rule change; one with a poor safety record—to enable it to operate oil trains on its Lac-Mégantic line with a single operator.
Senior Transport Canada officials approved the MMA request despite opposition from within Transport Canada itself, and contrary to the advice of its own National Research Council- commissioned study.
A draft of Transportation Safety Board (TSB) report, obtained by Radio-Canada’s Enquête, stated that the existence of a single operator was “ a cause and contributing factor” to the accident. In the report’s final version this cause was curiously demoted to “findings as to risk.”
There is also evidence that the regulatory regime has not changed fundamentally since the disaster?
For example, the industry continues its knee-jerk defence of the Safety Management Systems (SMS) regime. SMS was designed to give the companies greater responsibility for ensuring the safety of their operations. However, in an environment of regulatory capture, a SMS regime becomes highly problematic.
The industry claims that SMS is an effective additional line of defence. SMS becomes rather a substitute for existing lines of defence if government does not allocate sufficient resources, including on-site inspectors, for traditional oversight. Companies are in practice left to regulate themselves.
The sad history of MMA’s totally defective safety management system, and the failure of Transport Canada to do anything about it, is a case in point.
Several reports, including from Auditor General, have pointed out that SMS “contained serious flaws.” Safety Management Systems remain on the TSB’s Watch list as “among those issues posing the greatest risk to Canada’s transportation system.” A vague TSB letter that there has been “satisfactory intent” to fix it, provides little comfort.
Furthermore, despite repeated requests from many municipalities, companies are still resisting making public their SMS documents, risk assessments, and real time information about their dangerous goods cargo.
There remain too many unanswered questions about the causes of that terrible tragedy, including the nature and extent of regulatory capture by industry. The people of Lac-Mégantic were victims of a regulatory regime that failed catastrophically. They should not be victimized again by system that continues to obscure the truth about what happened and who was responsible— essential to preventing it from happening again.
Bruce Campbell is a visiting fellow at the University of Ottawa Faculty of Law, on leave from the Canadian Centre for Policy Alternatives. He received the 2015 Law Foundation of Ontario Community Leadership in Justice Fellowship.
This piece was originally published in the Toronto Star.