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The Need to Strengthen the Liability and Compensation Regime for Rail in Canada

From Transport Canada: The July 2013 derailment in Lac-Mégantic highlighted the need to strengthen the liability and compensation regime for rail in Canada. The railway involved – the Montreal, Maine and Atlantic Railway (MMA) – did not have enough insurance to cover damages, and went bankrupt. Stronger liability and compensation requirements came into force on June 18, 2016, under the Safe and Accountable Rail Act (the Act). The Act amends the Canada Transportation Act. It ensures that more resources are available, if a rail accident occurs, to:

  • compensate victims
  • pay for clean-up costs
  • protect taxpayers

New measures under the Act:

  • require federally regulated freight railways to hold a minimum insurance of $25 million to $1 billion, based on risk
  • define railway liability, including liability without proof of fault or negligence for crude oil accidents
  • create the Fund for Railway Accidents Involving Designated Goods, which:
    • is financed by crude oil shippers
    • pays compensation when a railway’s mandatory insurance level is not enough to cover the full cost of damages from a crude oil accident

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