1. What is the purpose and function of the FRAIDG?

The Fund for Railway Accidents Involving Designated Goods (the Fund) is a specified purpose account in the accounts of Canada, established under section 153.4 of the Canada Transportation Act (the Act). The Fund compensates victims of damages caused by a major crude-by-rail accident. Compensation starts after federally‑regulated railway companies have paid damages up to the amount required by law, and for which they must have insurance coverage. This mandatory insurance coverage is based on the risk, type and volume of crude oil they transport. It varies between $100 million to $1 billion. The Fund was created as a response to the Lac-Mégantic tragedy. Now, in the event of a railway accident involving crude oil, the Fund protects Canadians from bearing the cost of damages.

2. How much was collected by the Fund through levies during the past fiscal year?

The Fund collected over $31 million during the past fiscal year ($31,154,877).

3. What does “designated goods” mean?

For the time being, “designated goods” means “crude oil”. The Act provides the possibility to designate additional goods by regulation. However, the definition of designated goods has not yet been expanded.

4. How many federally regulated railways are covered by the regime and where can I find the list?

The list of federally‑regulated railways can be found on the Canada Transportation Agency website at https://otc-cta.gc.ca/eng/federal-railway-companies. This list counts some 26 active federally-regulated railways (as of August 13, 2019). However, only a few of these railways actually do carry crude oil.

5. Who may file a claim with the Administrator of the Fund?

As provided by legislation, any person in Canada (including individuals, all levels of government, Indigenous peoples, first responders, corporations, and landowners) impacted by the accident may submit a claim with the Administrator respecting loss, damage, costs and expenses resulting from a major railway accident.

6. What is the funding mechanism for the Fund and how is the Fund maintained?

A federally‑regulated railway that is first to carry a crude oil shipment shall pay a per‑tonne fee. This fee, called a “levy”, increases every year. The levy is remitted to Transport Canada, who processes the payment. The amount is then transferred to the Fund.

7. What is the amount of the levy on shipments of crude oil by rail?

The levy is indexed to inflation and adjusted based on changes to the Consumer Price Index.

For the fiscal year starting April 1, 2020, the levy is $1.79.

8. How long has the levy been in existence?

The Fund was created in 2016 in response to the Lac-Mégantic tragedy, and the levy came into effect with it. As of March 31, 2020, the levy has been in existence for a little under four years.

9. How much money was paid out of the Fund to settle claims during the fiscal year?

The Administrator did not have to settle any claims during the year 2019-2020 as there has been no railway accident involving crude oil that could have triggered the involvement of the Fund. Therefore, no money was paid out of the Fund for this purpose.

10. How many federally regulated crude-by rail accidents triggered payments from the Fund so far?

There have been no federally‑regulated railway accidents involving crude oil that have triggered the Fund’s intervention. Six accidents involving crude oil prompted the monitoring process of the Fund and the opening of an accident report for each of them. However, it is unlikely that any of those accidents will reach the railway’s limit of liability.

11. What were the Fund’s annual operating costs?

The Fund’s operating costs were $538,462 during the 2019-2020 fiscal year. These expenses include the Fund’s staff and consultants’ costs, its share of office and personnel costs shared with another Fund, fees paid to the Administrator, Deputy Administrator and Auditors, as well as costs linked to outreach efforts and related communication, translation and travel costs.

12. How many staff work for the Fund?

In addition to the Administrator, Deputy Administrator, Director, Lawyer, and Policy Analyst, the Fund is also supported by the administrative and professional staff shared with the Ship-source Oil Pollution Fund, as needed.

13. What was the Fund’s balance in the special accounts of Canada on March 31, 2020?

The balance in the Fund was over $75 million on March 31, 2020 ($75,378,808).

14. What is the maximum liability of the Fund for all claims from one railway accident?

In the event of a disaster, the Fund has no limit to how much it can compensate. The Fund also has access to additional federal money through the Consolidated Revenue Fund, should the balance of the Fund be insufficient to pay all eligible claims.

15. What is keeping the Office of the Administrator busy in the absence of claims to assess and compensate?

The Administrator continues to work on the action plan aimed at ensuring the Fund’s readiness to manage and assess claims. The plan includes:

  • Working with railway companies carrying crude oil to develop communication protocols in case of spills.
  • Retaining, on a stand-by basis, resources specialized in claims assessment for different types of damages that can be compensated under the regime, so that the Fund can manage large volumes of claims, if needed.
  • Consolidating the key stakeholders’ network and the key payers’ network.
  • Developing a key payers’ network readiness plan, including a number of best practices and tools.
  • Developing claims management policies and assessment guidelines and circulating them for comments.
  • Working with other federal entities who would be involved in the compensation of damages following an accident, such as the Canadian Transportation Agency (CTA) (who would be involved in assessing damages caused by fire) and the Federal Courts administration (who would be involved in reviewing the Administrator’s assessment decisions).
  • Holding discussions with federal and provincial entities that also have a mandate to assess (1) pure environmental losses or a loss of non-use value relating to a public resource, or (2) claims from Indigenous peoples for loss of fishing, hunting or gathering opportunities.
  • Conducting additional research and consultation on pure environmental loss, loss of non-use value relating to a public resource and loss of fishing, hunting, or gathering opportunities among Indigenous peoples.
  • Holding periodic workshops, including workshops dedicated to table-top indemnification scenarios.
16. What engagement activities did the Fund organize or partake in during the past fiscal year?

 

In the 2019-2020 fiscal year, the Fund:

 

  • Attended 42 meetings with key stakeholders from all levels of governments, Indigenous organizations, emergency responders, railway companies and related associations, oil and gas industry and claims and insurance specialists
  • Delivered three presentations at national or international conferences
  • Reached seven provinces & territories
  • Showcased four exhibitions at provincial and national trade shows with high foot traffic