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 ranges from $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 is the Fund financed?

The Fund is financed through a levy, a per-tonne fee charged to shippers, which is collected and remitted by the first railway to carry the crude oil in Canada. Collected levies accumulate in the Fund. 

3. How much was collected by the Fund through levies in 2021-2022?

The Fund collected over $10 million ($10,127,730). 

4. What does “designated goods” mean?

The Fund applies to railway accidents involving specific dangerous “designated” goods.  

Currently, only crude oil has been designated under the Fund. This means the Fund can only be activated in the case of a railway accident involving crude oil.   

The government, not the Fund, determines whether other goods are added to the list of designated goods. 

5. 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 Canadian Transportation Agency website at https://www.otc-cta.gc.ca/eng/federal-railway-companies. This list counts some 25 active federally regulated railways (as of June 2, 2022). However, only a few of these railways currently carry crude oil. 

6. Who can submit a claim with the Fund?

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 respecting loss, damage, costs and expenses resulting from a major railway accident. 

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

In 2022-2023, the levy was set at $1.86 per tonne. 

For the fiscal year starting April 1, 2023, the levy is $1.89. 

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

8. How long has the levy been in existence?

The levy came into effect in 2016. As of March 31, 2022, both the Fund and the levy have been in existence for close to six years. 

9. How much money was paid out of the Fund to pay claims 2021-2022?

The Administrator did not have to pay any claims during the year 2021-2022. No accident has activated this process since the Fund was created in 2016. 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?

No railway accidents have triggered the Fund’s intervention since the Fund was created. Six railway accidents involving crude oil have happened since June 2016 and are being monitored. It is unlikely that the Fund will be activated by any of these accidents. 

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

The Fund’s operating costs were $1,373,284 in 2021-2022. These expenses include the Fund’s staff and consultants’ costs, its office and personnel costs shared with another Fund, fees paid to the Auditors, as well as costs linked to outreach efforts and related communications, translation and travel costs.  

12. How many staff work for the Fund?

Four persons in addition to the Administrator and the Deputy Administrator. The Fund is also supported by the administrative and professional staff shared with the Ship-source Oil Pollution Fund, as needed.   

A total of five students worked for the Fund during the year. Two of these students worked on outreach and communications projects. Three of these were law students helping with legal research.

13. What was the Fund’s balance in the special accounts of Canada on March 31, 2022?

The balance in the Fund was over $94 million on March 31, 2022 ($94,046,685). 

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

In the event of a major accident, the Fund ensures victims can access unlimited compensation over and above the railway company’s insurance. The Fund has access to additional federal money through the Consolidated Revenue Fund, should the balance of the Fund be insufficient. 

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

2021 was a milestone year for the Fund, marking five years of ongoing preparedness. 

As we continue our work towards key elements of preparedness, we have been coordinating with other payers of the regime. We developed processes for management and assessment of claims, and formalized our communications plan for key stakeholders and the public. 

We accomplished a critical step by signing a contract with a supplier for claims management and assessment services. The company, retained after a complex procurement process, would support our office in case of a major crude-by-rail accident activating the Fund. 

We also continued to work on the action plan aimed at ensuring the Fund's readiness. 

The action plan includes: 

• Communications protocols and training 
• External claims assessment services 
• Network of key stakeholders and payers 
• Key payers’ readiness plan 
• Claims policies and guidelines 
• Engagement with relevant federal entities and national associations 
• Discussions on new types of claims 
• Research and consultation on new fields of law 
• Scenario based training