Transportation of Dangerous Goods by Rail Security Regulations: SOR/2019-113

Canada Gazette, Part II, Volume 153, Number 10

Registration

SOR/2019-113 May 6, 2019

TRANSPORTATION OF DANGEROUS GOODS ACT, 1992

P.C. 2019-413 May 3, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to sections 27 footnote a and 27.1 footnote b of the Transportation of Dangerous Goods Act, 1992 footnote c, makes the annexed Transportation of Dangerous Goods by Rail Security Regulations.

Transportation of Dangerous Goods by Rail Security Regulations

Interpretation

Definitions

1 (1) The following definitions apply in these Regulations.

Act means the Transportation of Dangerous Goods Act, 1992. (Loi)

railway carrier means a person who has possession of dangerous goods for the purposes of transportation by railway vehicle on a main railway line, or for the purposes of storing them in the course of such transportation. (transporteur ferroviaire)

Terminology — Transportation of Dangerous Goods Regulations

(2) Unless the context requires otherwise, all other words and expressions used in these Regulations have the same meaning as in section 1.4 of the Transportation of Dangerous Goods Regulations.

PART 1

Rail Security Reporting

Objective

2 This Part sets out security requirements for the purposes of section 5 of the Act.

Potential threats and other security concerns

3 (1) A railway carrier must immediately report any potential threat or other security concern by telephone to the Transport Canada Situation Centre. Potential threats and other security concerns include

Contents of report

(2) The report must include, if applicable and to the extent known, the following information:

PART 2

Rail Security Requirements

General

Objective

4 This Part sets out security requirements for the purposes of section 5 of the Act.

Coordinator

Rail security coordinator

5 (1) A railway carrier must, at all times, have an employee designated as a rail security coordinator or an acting rail security coordinator.

Contact information

(2) The railway carrier must provide the Minister with

Duties

6 A railway carrier must ensure that the rail security coordinator or acting rail security coordinator

Inspections

Security inspection — railway vehicle accepted

7 (1) If a railway carrier accepts a railway vehicle that contains dangerous goods for transport in a train and a placard is required under Part 4 of the Transportation of Dangerous Goods Regulations, the railway carrier must carry out a visual security inspection of the railway vehicle when it is accepted for transport and when it is placed in the train.

Security inspection — dangerous goods accepted

(2) If a railway carrier accepts dangerous goods for transport in a railway vehicle in a train and a placard is required under Part 4 of the Transportation of Dangerous Goods Regulations, the railway carrier must carry out a visual security inspection of the railway vehicle when it is placed in the train.

Tampering or suspicious items

(3) If a railway carrier that is carrying out an inspection under subsection (1) or (2) discovers signs of tampering or a suspicious item, the railway carrier must take measures to determine whether security has been compromised.

Compromise of security

(4) If the railway carrier determines that security has been compromised, the railway carrier must take measures to address the situation before transporting the dangerous goods.

PART 3

Security Plan and Training

General

Prescribed persons

8 A railway carrier, or a person who is employed by or is acting directly or indirectly for a railway carrier, is a prescribed person for the purposes of section 7.3 of the Act.

Security Plan and Security Plan Training

Application — security-sensitive dangerous goods

9 Sections 10 to 13 apply only to railway carriers that transport any of the security-sensitive dangerous goods set out in Schedule 1.

Security plan

10 (1) A railway carrier is required to implement a security plan that

Implementation

(2) The railway carrier must

Commensurate measures

(3) The measures required under subsection (1) and under subsection 7.3(2) of the Act must be commensurate with the security risks identified in the assessment referred to in paragraph (1)(f).

Pre-existing plan

(4) For greater certainty, nothing in this section requires a railway carrier to develop a security plan if it already has a plan that meets the requirements of subsections (1) and (3).

Persons required to undergo security plan training

11 (1) A person who is employed by or is acting directly or indirectly for a railway carrier to which this section applies is required to undergo training on the security plan if that person

Provision of training

(2) The railway carrier must ensure that training on the security plan is provided to the person

Supervision

(3) The railway carrier must ensure that, until a person with the duties referred to in paragraph (1)(b) undergoes training on the security plan, the person performs their duties under the supervision of a person who has undergone training on the components of the plan that are relevant to the duties of the person being supervised.

Training topics

12 Training on the security plan must cover the following topics:

Training on revised plan

13 If a railway carrier revises the security plan under subsection 10(2) in a way that significantly affects the duties referred to in subsection 11(1), it must ensure that a person with those duties is provided with training on the revisions as soon as possible but not later than 90 days after the day on which the plan is revised.

Security Awareness Training

Security awareness training

14 (1) A railway carrier must ensure that security awareness training is provided on the following topics:

Persons required to undergo training

(2) A person who is employed by or is acting directly or indirectly for the railway carrier is required to undergo the security awareness training if the person

Provision of training

(3) The railway carrier must ensure that the security awareness training is provided to the person

Supervision

(4) The railway carrier must ensure that, until a person with the duties referred to in paragraph (2)(b) undergoes security awareness training, the person performs their duties under the supervision of a person who has undergone that training.

Training records

Training Records

15 (1) A railway carrier must have a training record for each person who has undergone training under section 11, 13 or 14.

Contents of training record

(2) The training record must include

Retention period

(3) The railway carrier must retain the record for at least two years after the day on which the person ceases to be employed by or act directly or indirectly for the railway carrier.

PART 4

Exemptions

Various exemptions

16 Parts 1 to 3 do not apply in respect of dangerous goods that are exempted from all or a portion of the Transportation of Dangerous Goods Regulations in accordance with one or more of the provisions of those Regulations that are set out in Schedule 2.

Limited quantities

17 Parts 1 to 3 do not apply in respect of dangerous goods that are in a limited quantity as determined in accordance with subsection 1.17(1) of the Transportation of Dangerous Goods Regulations.

Excepted quantities

18 Parts 1 to 3 do not apply in respect of dangerous goods if

Samples for classifying, analysing or testing

19 Parts 2 and 3 do not apply in respect of samples of goods that a railway loader reasonably believes to be dangerous goods if

Dangerous goods in apparatus, piece of equipment or piece of machinery

20 Part 2 and sections 9 to 13 do not apply in respect of dangerous goods that are exempted from a portion of the Transportation of Dangerous Goods Regulations in accordance with special provision 167 of those Regulations.

Flammable liquids

21 Parts 2 and 3 do not apply in respect of dangerous goods that are exempted from a portion of the Transportation of Dangerous Goods Regulations in accordance with section 1.33 of those Regulations.

Engines or machinery containing dangerous goods

22 Parts 2 and 3 do not apply in respect of dangerous goods that are exempted from a portion of the Transportation of Dangerous Goods Regulations in accordance with special provision 154 of those Regulations.

Human or animal specimens

23 Parts 1 to 3 do not apply in respect of dangerous goods that are exempted from a portion of the Transportation of Dangerous Goods Regulations in accordance with section 1.42 of those Regulations.

Medical or clinical waste

24 Parts 1 to 3 do not apply in respect of dangerous goods that are medical waste or clinical waste if the conditions set out in paragraphs 1.42.3(a) and (b) of the Transportation of Dangerous Goods Regulations are met.

Radioactive materials

25 Parts 2 and 3 do not apply in respect of dangerous goods that are radioactive materials included in Class 7 if the conditions set out in paragraphs 1.43(a) and (b) of the Transportation of Dangerous Goods Regulations are met.

Residue in drum

26 (1) Subject to subsection (2), Part 2 and sections 9 to 13 do not apply in respect of a residue of dangerous goods contained in a drum if the conditions set out in paragraphs 1.44(a) and (b) of the Transportation of Dangerous Goods Regulations are met.

Exception

(2) This exemption does not apply in respect of dangerous goods that are included in Packing Group I or that are contained in a drum for which a Class 1, 4.3, 6.2 or 7 label is required under the Transportation of Dangerous Goods Regulations.

Marine pollutants

27 Part 2 and sections 9 to 13 do not apply in respect of substances that are classified as marine pollutants in accordance with subparagraph 2.43(b)(ii) of the Transportation of Dangerous Goods Regulations.

Life-saving appliances

28 Parts 1 to 3 do not apply in respect of dangerous goods that are determined, in accordance with subsections (1) and (2) of special provision 21 of the Transportation of Dangerous Goods Regulations, to be either UN2990, LIFE-SAVING APPLIANCES, SELF-INFLATING or UN3072, LIFE-SAVING APPLIANCES NOT SELF-INFLATING, if the conditions set out in subsection (3) of that special provision are met.

Molten sulphur

29 Parts 1 to 3 do not apply in respect of dangerous goods that are UN2448, MOLTEN SULFUR, MOLTEN SULPHUR, SULFUR, MOLTEN or SULPHUR, MOLTEN, if the dangerous goods are transported in a large means of containment and the conditions set out in paragraphs (a) and (b) of special provision 32 of the Transportation of Dangerous Goods Regulations are met.

Lithium cells and batteries

30 Parts 1 to 3 do not apply in respect of dangerous goods that are UN3090, LITHIUM METAL BATTERIES (including lithium alloy batteries), UN3091, LITHIUM METAL BATTERIES CONTAINED IN EQUIPMENT (including lithium alloy batteries) or LITHIUM METAL BATTERIES PACKED WITH EQUIPMENT (including lithium alloy batteries), UN3480, LITHIUM ION BATTERIES (including lithium ion polymer batteries) or UN3481, LITHIUM ION BATTERIES CONTAINED IN EQUIPMENT (including lithium ion polymer batteries) or LITHIUM ION BATTERIES PACKED WITH EQUIPMENT (including lithium ion polymer batteries), if

Neutron radiation detectors

31 (1) Parts 1 to 3 do not apply in respect of a neutron radiation detector, including one with solder glass joints, that

Radiation detection systems

(2) Parts 1 to 3 do not apply in respect of a radiation detection system that contains a neutron radiation detector, including one with solder glass joints, if

PART 5

Amendments and Coming into Force

Amendments to These Regulations

32 Subsection 1(1) of these Regulations is amended by adding the following in alphabetical order:

handling site means a facility connected to a railway line where a railway vehicle is placed for the loading or unloading of dangerous goods. (lieu de manutention)

railway loader means

33 Section 9 of these Regulations is replaced by the following:

Application — security-sensitive dangerous goods

9 (1) Sections 10 to 13 apply only to railway carriers that transport and railway loaders that offer for transport or handle any of the security-sensitive dangerous goods set out in Schedule 1.

Precision

(2) For greater certainty, paragraph 10(1)(g) does not apply to railway loaders.

34 Sections 10 to 15 of these Regulations are amended by replacing “railway carrier” and “railway carrier’s” with “railway carrier or railway loader” and “railway carrier’s or railway loader’s”, respectively.

Coming into Force

One month after registration

35 (1) Subject to subsections (2) to (4), these Regulations come into force on the day that, in the first month after the month in which they are registered, has the same calendar number as the day on which they are registered or, if that first month has no day with that number, the last day of that first month.

Three months after registration

(2) Sections 4 to 7 come into force on the day that, in the third month after the month in which these Regulations are registered, has the same calendar number as the day on which they are registered or, if that third month has no day with that number, the last day of that third month.

Nine months after registration

(3) Sections 8 to 15 come into force on the day that, in the ninth month after the month in which these Regulations are registered, has the same calendar number as the day on which they are registered or, if that ninth month has no day with that number, the last day of that ninth month.

First anniversary of registration

(4) Sections 19 and 32 to 34 come into force on the first anniversary of the day on which these Regulations are registered.

SCHEDULE 1

(Section 9 and paragraphs 10(1)(f), (h) and (i) and 11(1)(a))

Security-sensitive Dangerous Goods
Item Description
1 Any quantity of dangerous goods included in Class 1.1, 1.2 or 1.3
2 Any quantity of dangerous goods included in Class 1.4, 1.5 or 1.6 for which a placard is required under Part 4 of the Transportation of Dangerous Goods Regulations
3 Any dangerous goods included in Class 2.1 that are in a single means of containment and are in a quantity that exceeds 3 000 L
4 Any dangerous goods included in Class 2.2, with a subsidiary class of Class 5.1, that are in a single means of containment and are in a quantity that exceeds 3 000 L
5 Any quantity of dangerous goods included in Class 2.3
6 Any dangerous goods included in Class 3 that are included in Packing Group I or II, are in a single means of containment and are in a quantity that exceeds 10 000 L
7 Any of the following dangerous goods included in Class 3 that are included in Packing Group III, are in a single means of containment and are in a quantity that exceeds 10 000 L:
  • (a) UN1170, ETHANOL with more than 24% ethanol, by volume, ETHANOL SOLUTION with more than 24% ethanol, by volume, ETHYL ALCOHOL with more than 24% ethanol, by volume, or ETHYL ALCOHOL SOLUTION with more than 24% ethanol, by volume;
  • (b) UN1202, DIESEL FUEL, GAS OIL or HEATING OIL, LIGHT;
  • (c) UN1267, PETROLEUM CRUDE OIL;
  • (d) UN1268, PETROLEUM DISTILLATES, N.O.S., or PETROLEUM PRODUCTS, N.O.S.;
  • (e) UN1863, FUEL, AVIATION, TURBINE ENGINE;
  • (f) UN1987, ALCOHOLS, N.O.S.;
  • (g) UN1993, FLAMMABLE LIQUID, N.O.S.;
  • (h) UN3295, HYDROCARBONS, LIQUID, N.O.S.; and
  • (i) UN3494, PETROLEUM SOUR CRUDE OIL, FLAMMABLE, TOXIC
8 Any quantity of any of the following dangerous goods included in Class 3 that are desensitized explosives and for which a placard is required under Part 4 of the Transportation of Dangerous Goods Regulations:
  • (a) UN1204, NITROGLYCERIN SOLUTION IN ALCOHOL with not more than 1% nitroglycerin;
  • (b) UN2059, NITROCELLULOSE SOLUTION, FLAMMABLE with not more than 12.6% nitrogen, by dry mass, and not more than 55% nitrocellulose;
  • (c) UN3064, NITROGLYCERIN, SOLUTION IN ALCOHOL with more than 1% but not more than 5% nitroglycerin; and
  • (d) UN3379, DESENSITIZED EXPLOSIVE, LIQUID, N.O.S.
9 Any quantity of dangerous goods included in Class 4.1 that are desensitized explosives and for which a placard is required under Part 4 of the Transportation of Dangerous Goods Regulations
10 Any dangerous goods included in Class 4.2 that are included in Packing Group I or II, are in a single means of containment and are in a quantity that exceeds 3 000 L
11 Any quantity of dangerous goods included in Class 4.3 for which a placard is required under Part 4 of the Transportation of Dangerous Goods Regulations
12 Any dangerous goods included in Class 5.1 that are included in Packing Group I or II, are in a single means of containment and are in a quantity that exceeds 3 000 L
13 Any quantity of either of the following dangerous goods included in Class 5.2:
  • (a) UN3111, ORGANIC PEROXIDE TYPE B, LIQUID, TEMPERATURE CONTROLLED,; and
  • (b) UN3112, ORGANIC PEROXIDE TYPE B, SOLID, TEMPERATURE CONTROLLED
14 Any dangerous goods included in Class 6.1 that are in a single means of containment and are in a quantity that exceeds 3 000 L
15 Any quantity of dangerous goods included in Class 6.1 that are included in Packing Group I due to inhalation toxicity
16 More than 500 kg of either of the following dangerous goods included in Class 7:
  • (a) UN2977, RADIOACTIVE MATERIAL, URANIUM HEXAFLUORIDE, FISSILE; and
  • (b) UN2978, RADIOACTIVE MATERIAL, URANIUM HEXAFLUORIDE, non-fissile or fissile excepted
17 Any quantity of a substance that is set out in the table to section 2.2 of Regulatory Document REGDOC-2.12.3, Security of Nuclear Substances: Sealed Sources, published in May 2013 by the Canadian Nuclear Safety Commission, as amended from time to time, and that is categorized in accordance with that table as a category 1 source or category 2 source
18 Any quantity of dangerous goods included in Class 7 that are Category I nuclear materials, Category II nuclear materials or Category III nuclear materials as defined in section 1 of the Nuclear Security Regulations
19 Any dangerous goods included in Class 8 that are included in Packing Group I, are in a single means of containment and are in a quantity that exceeds 3 000 L

SCHEDULE 2

(Section 16)

Exemptions Under the Transportation of Dangerous Goods Regulations
Item Provision of the Transportation of Dangerous Goods Regulations
1 Section 1.15
2 Section 1.18
3 Section 1.19
4 Section 1.25
5 Section 1.27
6 Section 1.32
7 Section 1.36
8 Section 1.42.1
9 Section 1.42.2
10 Section 1.45
11 Section 1.46
12 Special provision 18
13 Subsection (2) of special provision 25
14 Special provision 33
15 Special provision 36
16 Subsection (2) of special provision 39
17 Special provision 40
18 Subsection (2) of special provision 56
19 Special provision 63
20 Subsection (1) of special provision 64
21 Subsection (2) of special provision 70
22 Special provision 90
23 Special provision 95
24 Special provision 96
25 Special provision 97
26 Subsection (2) of special provision 99
27 Special provision 100
28 Subsection (2) of special provision 104
29 Special provision 107
30 Subsection (7) of special provision 124
31 Special provision 127
32 Special provision 128
33 Special provision 134
34 Subsection (2) of special provision 144
35 Special provision 148

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Freight trains transporting dangerous goods can be particularly vulnerable to misuse or sabotage, given the harmful nature of the goods and the extensive and accessible nature of the railway system. To mitigate these risks and to better align Canadian standards with international standards, Transport Canada is introducing risk-based regulations for the transportation of dangerous goods by rail in Canada.

Description: The Transportation of Dangerous Goods by Rail Security Regulations (the Regulations) will require railway carriers and railway loaders to proactively engage in security planning processes and manage security risks, by introducing the following elements:

  • security awareness training for employees;
  • security plans that include appropriate measures to address risks; and
  • security plan training for employees with duties related to the security plan or security sensitive dangerous goods.

Railway carriers will also be required to

  • conduct security inspections of railway vehicles containing dangerous goods for which a placard is required when accepted for transport and when placed in a train;
  • report potential threats and other security concerns to the Transport Canada Situation Centre; and
  • have a rail security coordinator.

Cost-benefit statement: The Regulations are expected to have a positive impact on public security, by increasing the likelihood that terrorist activities would be detected and prevented, and by minimizing the consequences should an incident occur, such as loss of life, property damage, environmental damage, and reduced international trade flows.

The Regulations are expected to result in costs to railway carriers and railway loaders and the Government of $17.43 million over a 10-year period (present value). As with the analysis of any security proposal, it is difficult to quantify the benefits; however, the Regulations will result in a positive impact on public security by reducing the likelihood that a terrorist attack involving dangerous goods transported by rail would occur.

“One-for-One” Rule and small business lens: The “One-for-One” Rule applies, with an estimated annualized administrative cost increase to railway loaders and railway carriers of $784 (IN) and an additional regulatory title.

The Regulations are expected to result in incremental compliance and administrative costs for all railway carriers and railway loaders of dangerous goods, regardless of their size. To minimize costs, Transport Canada is introducing an approach that aligns compliance costs with underlying risks, and gives industry the flexibility to implement security practices that are commensurate with their individual risk profiles and operational environments. Under this flexible approach, compliance activities and associated costs are expected to be lesser for small businesses.

Domestic and international coordination and cooperation: The Regulations will enhance alignment of the Canadian dangerous goods security requirements with the United States hazardous materials requirements, and facilitate the cross-border movement of dangerous goods by rail. The Regulations are also generally aligned with the United Nations Model Regulations respecting transportation of dangerous goods security.

The Regulations are also consistent with the objective of the Canada–United States Regulatory Cooperation Council, which is to better align Canada–United States regulatory approaches to make it easier for industry to do business on both sides of the border.

Background

Dangerous goods are an important aspect of the Canadian economy, with an estimated 30 million shipments transported within Canada each year, approximately 24% of which are transported by rail. Dangerous goods are used in almost every facet of Canadians’ lives, from fuelling vehicles and providing home comfort, to manufacturing and industrial processes. Though dangerous goods are important to the Canadian economy and essential to modern life, they can, by their nature, be harmful to people, property and the environment, if misused or mishandled.

To mitigate harm during transport, the Government has historically focused on implementing safety requirements to reduce the likelihood and consequences of an accidental release of dangerous goods. However, dangerous goods are also vulnerable to deliberate misuse or sabotage in the rail supply chain. Though there have been no successful attacks in Canada, terrorist groups have committed numerous deadly attacks using dangerous goods in other parts of the world, which have highlighted the vulnerability of the system. In recognition of this risk, Parliament amended the Transportation of Dangerous Goods Act, 1992 (TDGA) in 2009 to provide new federal authority to enhance the security of the transportation of dangerous goods in Canada. To date, the authority to regulate security has not been exercised: there are no regulations in place respecting the security of the transportation of dangerous goods by rail. Rather, Transport Canada and the rail industry have been working together to strengthen rail security, in part through a Memorandum of Understanding with the Railway Association of Canada and its member signatories. Under this agreement, signatories have implemented a number of effective security practices. However, the agreement does not specifically target the transportation of dangerous goods, nor does it include all railway carriers or any railway loaders.

Other comparable jurisdictions have implemented regulatory regimes for the security of the transportation of dangerous goods by rail. The United Nations has developed Model Regulations to encourage the uniform development of national and international transportation of dangerous goods requirements. The Model Regulations are widely accepted internationally, and form the basis of several international agreements and national regulatory regimes (as well as that of the European Union). The United States, Canada’s largest trading partner, has also developed security regulations for the transportation of hazardous materials by rail that are generally aligned with the United Nations Model Regulations.

Issues

Strategic risk assessments conducted by Government of Canada security experts have indicated that the transportation of dangerous goods by rail is vulnerable to misuse or sabotage, including a terrorist attack, and the adverse impacts of such an event could be significant.

Though there is no imminent threat to the transportation of dangerous goods in Canada at this time, there are heightened concerns about the potential threat posed by individuals who subscribe to extremist ideologies. In addition, past events have highlighted the devastating impact that rail incidents involving dangerous goods can have on public safety, the environment and the economy. Most notably, on July 6, 2013, a Montreal, Maine & Atlantic Railway (MMA) train carrying light crude oil derailed in downtown Lac-Mégantic, Quebec: the ensuing explosions and fire killed 47 people, destroyed 40 buildings, and caused serious environmental damage to the downtown area and adjacent river and lake. Though this incident was safety-related, it underscores the devastation that could occur if trains transporting dangerous goods were specifically targeted by terrorists.

The Lac-Mégantic accident and other recent derailments across the United States and Canada (e.g. Casselton, North Dakota; and Gogama, Ontario) have occurred against the backdrop of growing North American crude oil production, limited pipeline transmission capacity, and the corresponding rise in the volume of oil moved by rail. The transportation levels of crude oil by rail are predicted to continue in the near-to-medium term. This increase in volume of crude oil and other dangerous goods transported by rail translates into an increase in the inherent risks of moving these dangerous goods through Canada’s communities.

Though Transport Canada has voluntary agreements with many railway carriers, Canada currently has no security regulations that require railway carriers and railway loaders to address the risks associated with transporting dangerous goods by rail, which is inconsistent with international standards. In an effort to improve Canada’s security posture and align Canadian standards with international standards, Transport Canada is introducing risk-based regulations to strengthen the security of transporting dangerous goods by rail.

Objectives

In support of the Government’s overall mission to promote a safe, secure, efficient and environmentally responsible transportation system, Transport Canada is introducing a regulatory framework for the security of the transportation of dangerous goods by rail in Canada. The Regulations are intended to mitigate the security risks associated with the transportation of dangerous goods by rail, to demonstrate the Government of Canada’s commitment to safe communities by increasing the security of the transportation of dangerous goods by rail, and to align Canada’s transportation of dangerous goods by rail security regime with international standards and best practices. The objectives include the following:

Description

The Regulations have been designed using a management-based approach that will require railway carriers and railway loaders to proactively engage in security planning processes and manage security risks. This approach was chosen in response to the open and extensive nature of the railway system and the fact that security risks are constantly evolving. It was also chosen to give railway carriers and railway loaders the flexibility to adopt security practices that are tailored to their operations and proportionate to their risks.

The Regulations will require railway carriers and railway loaders to implement the following risk-based security practices and controls. footnote 1

The table below summarizes the application of the requirements.

Table 1: Application of the requirements
Requirement Who? footnote 3 Section of Regulations What goods?
1. Reporting potential threats and other security concerns Railway carriers Section 3 Any dangerous goods
2. Rail security coordinator Railway carriers Sections 5 and 6 Any dangerous goods
3. Rail security inspections Railway carriers Section 7 Dangerous goods for which a placard is required
4. Security plan (including risk assessment) Railway carriers and railway loaders Section 10 Security-sensitive dangerous goods (defined in Schedule 1)
5. Security plan training Railway carriers and railway loaders Sections 11 to 13 and 15 Security-sensitive dangerous goods (defined in Schedule 1)
6. Security awareness training Railway carriers and railway loaders Sections 14 and 15 Any dangerous goods

The Regulations include a list of exemptions to ensure that the requirements would not apply to specified shipments or situations that do not pose security concerns. Part 4 of the Regulations outlines these exemptions, and provides exemptions from certain parts or sections of the Regulations.

Regulatory and non-regulatory options considered

Transport Canada considered a number of options when developing a strategy to enhance the security of transporting dangerous goods, ranging from a regulatory approach for rail as well as road, to an exclusively voluntary approach focused on capacity-building activities with industry.

Options not chosen:

Based on an analysis of the options, an assessment of international standards and requirements and the level of risk within the sector, Transport Canada considers management-based regulations for railway carriers and railway loaders to be the most appropriate and effective option at this time. The approach being introduced is partially aligned with the United States HAZMAT security regime for rail (i.e. it is consistent with the basic United States security requirements, but not with the more stringent requirements), and is generally aligned with United Nations recommendations. It would facilitate the timelier implementation of a baseline security regime for the transportation of dangerous goods by rail, and takes into consideration the potentially significant costs to industry and Government that would result from regulating both the rail and trucking sectors. The Regulations are risk-based, and give industry the flexibility to adopt security practices that are tailored to their operations and proportionate to their risks.

Benefits and costs

A cost-benefit analysis has been conducted to assess the impact of the Regulations on stakeholders. The cost-benefit analysis identifies, quantifies and monetizes, where possible, the incremental costs and benefits of the security regulations for the transportation of dangerous goods by rail in Canada.

Timeframe: A 10-year period (2019–2028) was used to evaluate the impacts of these Regulations. A 7% discount rate was used to derive the present value of the option under consideration to a base year of 2019.

Stakeholders: The stakeholders that will be directly impacted by the Regulations are railway carriers that have possession of dangerous goods while they are in transport by railway vehicle on a main railway line; railway loaders, including any person that operates a facility, or any manufacturer or producer of dangerous goods that uses a facility, which is connected to a railway line where a railway vehicle is placed for the loading or unloading of dangerous goods; and their employees.

Baseline scenario: Many of the requirements are already being implemented by the rail industry. Companies that transport dangerous goods into the United States, those that are members of voluntary trusted trader programs like Canada’s Partners in Protection and the United States Customs-Trade Partnership Against Terrorism, and those that are signatories to the Railway Security Memorandum of Understanding with Transport Canada already have many of the regulatory security practices in place. The impact of the Regulations on those companies is expected to be minimal. The cost estimate is based on the assumption that 15% of stakeholders are already compliant with the regulatory requirements in the baseline scenario. Due to data limitations, a sensitivity analysis was conducted on this ratio.

Key data and assumptions:

Table 2: Estimated number of railway carriers, railway loaders and employees who are expected to require action to comply with the requirements
  Railway Carriers Railway Loaders Total
Number of railway carriers and railway loaders handling/ transporting dangerous goods 33 1 257 1 290
Non-small business 2 27 29
Small business 31 1 229 1 260
Total number of employees 25 420 13 724 39 144
Employees in non-small business 24 162 5 121 29 283
Employees in small business 1 258 8 603 9 861
Number of employees handling dangerous goods 7 626 2 664 10 290
Employees in non-small business 7 249 513 7 762
Employees in small business 377 2 151 2 528
Table 3: Estimated time (hours per year) to meet the regulatory requirements
Requirement Non-small Business Small Business
Developing a security plan 50 25
Reviewing and updating a security plan 15 7.5
Awareness training 1 1
Developing security plan training materials 15 15
Security plan training 1.5 1.5
Rail security coordinator 72 36
Reporting significant security concerns 20 5

Costs

The following costs have been included in the analysis: costs of developing, reviewing and updating security plans; costs associated with awareness training and security plan training; costs associated with additional requirements for railway carriers; and Government costs.

Costs of developing, reviewing and updating security plans

As shown in Table 2, it is estimated that 1 290 companies (33 railway carriers and 1 257 railway loaders) will be required to develop a security plan under the Regulations. Of the 1 290 companies, an estimated 1 260 are small businesses and 30 are medium and large businesses. It is assumed that, on average, each small business would take 25 hours and each non-small business (medium and large firms) would take 50 hours to develop a security plan that meets the regulatory requirements. These are one-time costs that will be incurred in the first year of the Regulations coming into force.

Railway carriers and railway loaders will be required to review and update their security plans, if necessary, once a year starting in year 2. It is assumed that this would take 7.5 hours for small businesses and 15 hours for medium and large businesses (annually, from year 2 to year 10).

Implementation costs would vary significantly among railway carriers and railway loaders, depending on the nature of the materials they transport, the size and the complexity of their operations, as well as the security practices they already have in place. The annual compliance cost per company could range from almost nothing (for railway carriers and railway loaders that already have the regulatory security practices in place) to thousands of dollars. As each security plan is unique, it is difficult to estimate the associated implementation costs without knowing the specific circumstances of each entity. It is expected that each company will make reasonable and cost-effective decisions to improve security.

Given the above estimates and an hourly wage rate of $51.95 (the average wage rate of middle management occupations in trades, transportation, production and utilities), the present value of the total estimated costs associated with developing and reviewing security plans over 10 years is $5,067,777 ($144,587 for railway carriers and $4,923,189 for railway loaders), which corresponds to an annualized value of $721,537.

Costs associated with security awareness training

It is expected that security awareness training will be added to each railway carrier’s or railway loader’s existing safety training program. It is also expected that training delivery costs will be minimal, as the Regulations do not prescribe the method of delivering training. Rather, railway carriers and railway loaders will be able to determine the most efficient and effective method of training for their organization (e.g. self-instruction, online program or classroom sessions). The costs of developing the awareness training program are expected to be minimal, given that Transport Canada plans to provide guidance materials, and there are a variety of existing training programs that can be leveraged (e.g. documents and programs from the United States and from industry associations).

It is estimated that awareness training would take one hour on average per employee, and 39 144 employees would be required to receive the training. Following initial training, railway carriers and railway loaders will be required to retrain their employees once every three years. Therefore, the associated costs will be carried in year 1 (initial training) and every three years thereafter (years 4, 7 and 10). Railway carriers and railway loaders will be required to keep a record of the names of the employees who have taken the training to demonstrate compliance: it is estimated that this would take one minute per employee in year 1, after which it is assumed that companies would integrate their security awareness training program into their safety training program.

Given an hourly wage rate of $28.49 (the average wage rate of transport and heavy equipment operation and related maintenance occupations), the present value of the total costs of awareness training over the 10-year period is estimated at $1,696,786 ($1,101,891 for railway carriers and $594,896 for railway loaders), corresponding to an annualized value of $241,584.

Costs associated with security plan training

Employers will also be required to ensure training is provided on the security plan and its implementation. It is estimated that it would take each company approximately 15 hours to develop their security plan training program (in year 1), given that training modules and guidance are readily available and Transport Canada intends to develop guidance materials. It is expected that stakeholders will use the least costly option to deliver their training (e.g. using their own facilities and equipment), therefore there should be no or minimal program delivery costs.

It is assumed that 50% of the 10 290 employees (Table 2) who handle dangerous goods would be required to take approximately 1.5 hours of security plan training in year 1 (initial training) and every three years thereafter (years 4, 7 and 10).

Given the above estimates and an hourly wage rate of $51.95 for developing the security plan (the average rate of middle management occupations in trades, transportation, production and utilities) and $28.49 for receiving training (the average rate of transport and heavy equipment operation and related maintenance occupations), the present value of the total costs associated with security plan training (developing the training program and receiving training) is $1,673,749 over the 10-year period ($522,744 to railway carriers and $1,151,005 for railway loaders), corresponding to an annualized value of $238,304.

Costs associated with additional requirements for railway carriers (reporting, rail security coordinator and security inspections)

Under the Regulations, railway companies will be required to have a rail security coordinator who coordinates security practices and procedures within their organization and acts as the principal contact with appropriate law enforcement and emergency response agencies, as well as the Minister of Transport. It is estimated that a large railway carrier’s rail security coordinator would require 72 hours per year and a small carrier’s rail security coordinator would require 36 hours per year to fulfill their duties. It is assumed that each carrier would need an average of 10 minutes to prepare and to submit the name of the coordinator and other relevant information to Transport Canada. Whenever the coordinator is replaced, the updated information will have to be submitted to Transport Canada; it is assumed that this would occur once every three years.

Railway carriers will also be required to report potential threats and security concerns to Transport Canada. It is expected that, on average, there would be 20 reports per large business annually and 5 reports per small business annually, and that it would take carriers approximately one hour to prepare and submit each report.

The Regulations will also require railway carriers to conduct visual security inspections of railway vehicles containing dangerous goods for which a placard is required. It is expected that there would be no or very minimal incremental costs for conducting security inspections, since most carriers already conduct pre-trip visual inspections for safety purposes under the Railway Safety Act.

Based on the above-mentioned estimates and an hourly wage rate of $51.95 (the average wage rate of middle management occupations in trades, transportation, production and utilities), the present value of the costs associated with reporting duties is estimated at $80,037 over 10 years, which corresponds to an annualized value of $11,396. The present value of the costs associated with the rail security coordinator is estimated at $549,134 over 10 years, which corresponds to an annualized value of $78,184.

Government costs

The Government’s costs will be driven by the need to dedicate an additional 8.5 full-time employees in years 1 to 10, to ensure that the Regulations will be supported by an effective and risk-based oversight regime. Costs include salaries, accommodation costs, travelling costs and training costs. Transport Canada expects that the Regulations will impose an additional $8.36 million (present value) on the Department over a 10-year period, which corresponds to an annualized value of $1.19 million.

Total costs

In summary, the present value of the total costs of the Regulations over a 10-year period is $17.43 million, including $2.40 million to railway carriers, $6.67 million to railway loaders, and $8.36 million to Transport Canada, which corresponds to an annualized value of $2.48 million.

Benefits

The Regulations are expected to have a positive impact on public security. They are expected to promote a more aware, alert, prepared and proactive regulated community that would be better able to detect, prevent, respond to and recover from terrorist incidents. The Regulations are intended to improve the industry’s resilience, minimizing the consequences should an incident occur (minimizing loss of life, property damage, environmental damage and reduced international trade flows).

The Regulations will better align Canada’s transportation of dangerous goods by rail security regime with international standards and practices. They will also enhance alignment of Canada’s dangerous goods security requirements with the United States’ hazardous materials requirements, and facilitate the cross-border movement of dangerous goods between the two countries.

As with the analysis of other security regulations, it is very difficult to quantify the associated benefits of the Regulations, given that both the probability and the impact (baseline and regulated option) are subjective and uncertain.

Table 4 provides the cost-benefit statement of the Regulations.

Table 4: Cost-benefit statement (Can$ 2017, PV 7%) footnote 4

A. Quantified impacts $ (PV)

Costs
 

Base Year
2019

Year
2022

Final
Year 2027

Total

Annualized Value

Total benefits: n/a
Railway carriers

$690,160

$75,361

$339,482

$2,398,393

$341,477
Railway loaders

$2,900,692

$381,363

$409,195

$6,669,089

$949,528
Industry — Total

$3,590,852

$456,723

$748,677

$9,067,483

$1,291,006
Government of Canada

$984,898

$861,075

$861,075

$8,362,177

$1,190,586
Total costs

$4,575,751

$1,317,799

$1,362,611

$17,429,660

$2,481,591

B. Qualitative impacts

Costs: n/a
Benefits:

Sensitivity analysis

A sensitivity analysis was conducted on the key variables that are uncertain. These are the number of regulatees in compliance (i.e. baseline compliance rate) in the baseline and the time expected to meet each requirement.

Baseline compliance rate: Sensitivity on the total costs to industry was conducted with two scenarios: (1) 0%, reflecting a scenario where no regulatees are in compliance in the baseline; and (2) 30%, to reflect a scenario where twice as many regulatees are in compliance in comparison to the central scenario of 15%.

Table 5: Sensitivity analysis on the baseline compliance rate
 

Baseline Compliance Rate
 

0%

15%

30%
Total costs to industry (PV, Can$ 2017)

$10,607,828

$9,067,483

$7,601,323

Time expected to meet each requirement: Two scenarios were considered to estimate total costs to industry given the different amount of time expected to meet each requirement: (1) 25% less time than the central case estimates is required to comply with each requirement; and (2) 25% more time is required.

Table 6: Sensitivity analysis on the time expected
 

Time Expected
 

− 25%

Central scenario (see Table 2)

+ 25%
Total costs to industry
(PV, Can$ 2017)		 $8,491,749 $9,067,483 $9,643,222

Distributional analysis

In total, the incremental industry costs of the Regulations are estimated to be $9.07 million over 10 years or $1.29 million annualized. The railway carriers and railway loaders are expected to incur approximately 28.47% and 71.53% of total industry costs, respectively.

Table 7: Distribution of total industry costs among affected stakeholders (Can$ 2017)

Affected stakeholders

Total PV over 10 years (2017 Canadian constant dollars)

%
Railway carriers $2,398,393 26.45%
Railway loaders $6,669,089 73.55%
Total $9,067,483 100.00%

More than half of the costs (55.89%) are due to the requirement of security plans (development, review and update). Approximately 18.71% of the costs are associated with awareness training. Approximately 18.46% of the costs are due to the requirement of security plan training (development of training materials and training). Approximately 6.06% of total costs are associated with the rail security coordinator requirement, and would be borne entirely by railway carriers. Approximately 0.88% of the costs are due to the requirement to report significant security concerns, and would be borne entirely by railway carriers. The distribution of total industry costs borne by differently affected stakeholders are presented in tables 8 and 9.

Table 8: Distribution of total industry costs by requirements

Item

Regulatory Requirement

Share of Total Industry Costs (%)
1. Security plans: development, review and update 55.89%
2. Awareness training 18.71%
3. Security plan training: development of training materials and training 18.46%
4. Rail security coordinator 6.06%
5. Reporting significant security concerns 0.88%
  Total 100.00%
Table 9: Distribution of total industry costs by requirements among stakeholders
 

Borne by Stakeholders

Railway
Carriers %

Railway
Loaders %

Total %
Security plans: development, review and update 2.85% 97.15% 100.00%
Awareness training
(including administrative burden)		 64.94% 35.06% 100.00%
Security plan training: development and training 31.23% 68.77% 100.00%
Rail security coordinator (including administrative burden) 100.00% 0.00% 100.00%
Security reporting 100.00% 0.00% 100.00%

“One-for-One” Rule

Transport Canada has considered the potential impact of the Transportation of Dangerous Goods by Rail Security Regulations on the administrative burden for businesses, and has determined that the “One-for-One” Rule applies. Specifically, two requirements will impose an additional administrative burden on railway carriers and railway loaders: the requirement for railway carriers and railway loaders to keep a record of the names of the employees who receive awareness training, and the requirement for railway carriers to provide the contact information of the rail security coordinator to Transport Canada.

It is assumed that companies will require one minute per employee to keep a record of awareness training in year 1, after which it is assumed that companies will integrate their security awareness training program into their safety training program, and each company would need an average of 10 minutes to prepare and submit the name of the rail security coordinator and other relevant information to Transport Canada.

Following the “One-for-One” Rule, a 7% discount rate and 10-year forecast period for the valuation were used. The price base year is in 2012 constant dollars. The present value base year for the valuation of impact under the Rule is 2012 (i.e. the incremental administrative costs were discounted back to 2012). The annualized value of the administrative burden costs over 10 years is estimated at $784 (IN) [or $1 per affected business] under the “One-for-One” Rule.

Small business lens

In order to enhance the security of the transportation of dangerous goods by rail and to strengthen the security of the rail supply chain, the Regulations will apply to all railway carriers and railway loaders, regardless of size. This will result in incremental compliance and administrative costs for all affected companies, including small businesses. However, the Regulations were designed to align compliance costs with underlying risks, and to give industry the flexibility to implement security practices that are commensurate with their individual circumstances, risk profiles and operational environments. It is expected that the risks identified and mitigated in the security plan of a large company with hundreds of employees, numerous distribution sites and a nationally integrated distribution network would be more complex and costly than the security plan of a smaller business with few employees and a purely local distribution network. Therefore, although the regulatory requirements will technically be the same for all businesses, compliance activities and associated costs are expected to be lower for small businesses.

Transport Canada considered adopting a more demanding approach by proposing security regulations for the transportation of dangerous goods by rail that are fully aligned with United States hazardous materials security regulations (the “initial option”). Under this option, additional requirements would have included compiling commodity data, conducting route analysis and selection, and providing location and shipping information to Transport Canada. However, preliminary consultations and analysis indicated that this approach might impose a burden that would be disproportionate to the security risks associated with transporting dangerous goods by rail. As a result, Transport Canada is introducing risk-based regulations that are partially aligned with United States regulatory requirements for rail (the “flexible option”), which will be less burdensome on small businesses.

The present value of the total costs to all small businesses (based on an estimated 31 railway carriers and 1 229 railway loaders) is estimated at $6.38 million over the 10-year period, compared to approximately $1.81 million in costs to the 29 medium and large businesses (2 railway carriers and 27 railway loaders). In annualized average terms, the Regulations will cost $2,921 per year per small railway carrier on average (compared to $193,897 per large railway carrier) and $665 per year per small railway loader (compared to $2,381 per large railway loader).

The total incremental compliance and administrative costs imposed on all small businesses are estimated to be $908,110 in annualized value. However, as the annualized value of the total costs to railway carriers and railway loaders is about $721 per small business, it is not expected that these costs would have a significant or detrimental impact on the operation of these companies.

As Table 10 shows, the initial option (i.e. additional requirements for railway carriers) would impose higher costs on small businesses (specifically the railway carriers), increasing the average cost per small business from $721 to $773 over the 10-year period. The increase would be for small railway carriers, as there would be no additional requirements for railway loaders under the initial option. All of the additional requirements are imposed on railway carriers under the initial option.

Table 10: Flexibility analysis of the initial and the flexible (targeted) options (constant year 2012 dollars, 2012 present value base year, 7% discount rate)
 

Flexible Option

Initial Option
Short description

Requirements:

  • Security awareness training for railway carriers and railway loaders;
  • Security plan for railway carriers and railway loaders;
  • Security plan training for railway carriers and railway loaders;
  • Security inspection for railway carriers;
  • Security coordinator for railway carriers; and
  • Security reporting for railway carriers.

Requirements:

  • Security awareness training for railway carriers and railway loaders;
  • Security plan for railway carriers and railway loaders;
  • Security plan training for railway carriers and railway loaders;
  • Security inspection for railway carriers;
  • Security coordinator for railway carriers; and
  • Security reporting for railway carriers.

Additional requirements for railway carriers:

  • Commodity data compilation;
  • Route analysis and selection; and
  • Providing location and shipping information to Transport Canada.
Number of small businesses impacted 1 260 1 260
 

Annualized Average ($2012)

Present Value
($2012)

Annualized
($2012)

Present Value
($2012)
Compliance costs

$907,719

$6,375,435

$973,473

$6,837,264
Administrative costs

$392

$2,752

$392

$2,752
Total costs

$908,110

$6,378,187

$973,864

$6,840,016
Average cost per small business

$721

$5,062

$773

$5,429
Risk considerations
  • Requiring the railway carriers to compile commodity data, conduct route analysis and selection may further reduce the security risks associated with transporting dangerous goods by rail in Canada. However, the additional requirements (required in the United States) may not be applicable in Canada because of the different geographical landscape and limited routing options.
  • Increased operational costs which may lead to lower compliance rate.
  • Preliminary consultations and analysis indicated that this approach might impose a burden that is disproportionate to the security risks associated with transporting dangerous goods by rail in Canada.

Consultation

The Regulations were developed using feedback and input from consultations with industry stakeholders, other government departments and departmental officials over the last several years, and comments received during the Canada Gazette, Part I, comment period.

Work on a strategy to enhance the security of the transportation of dangerous goods began in 2009, when Parliament amended the TDGA to provide new federal authorities respecting security. At that time, Transport Canada initiated discussions with industry through established stakeholder fora and bilateral meetings to ensure that the appropriate parties had an opportunity to participate in the risk assessment and policy development process.

Extensive preliminary consultations with the rail and trucking industries took place between November 2011 and February 2013. Those consulted included the Multi-Industry Association Committee on the Transportation of Dangerous Goods, footnote 5 the Federal-Provincial/Territorial Dangerous Goods Task Force, footnote 6 and the Transportation of Dangerous Goods General Policy Advisory Council. footnote 7 Through these committees, Transport Canada was able to reach out to industry associations, including the Railway Association of Canada, the Canadian Trucking Alliance (and the various provincial trucking member associations), the Chemistry Industry Association of Canada, the Canadian Association of Petroleum Producers, and the Canadian Fertilizer Institute.

Industry stakeholders and their associations expressed general support for enhancing the security of the transportation of dangerous goods through regulations. Key messages delivered by industry during preliminary consultations included the following:

Preliminary consultations included messaging from Transport Canada that the Regulations could apply to both the rail and road (trucking) sectors. However, since that time, the policy direction changed to include only rail. Transport Canada reengaged industry in the spring of 2015 to discuss this change, and to give industry the opportunity to review the proposed requirements. Briefings were held with the Railway Association of Canada (teleconference on March 5, 2015, and meeting on May 9, 2016), the Transportation of Dangerous Goods General Policy Advisory Council (teleconference on March 13, 2015, and meetings on May 28, 2015, and May 26, 2016), the Transportation of Dangerous Goods Federal-Provincial/Territorial Task Force (teleconference on March 20, 2015) and the Multi-Industry Association Committee on the Transportation of Dangerous Goods (teleconference on March 27, 2015, and meetings on May 27, 2015, November 17, 2015, and May 25, 2016). Industry stakeholders remained generally supportive of the regulatory approach and provided the following feedback:

Since 2010, Transport Canada has also consulted the United States Transportation Security Administration on this initiative through the Transportation Security Cooperation Group, to obtain background information and compare systems in terms of alignment.

Prepublication in the Canada Gazette, Part I

The proposed Regulations were published in the Canada Gazette, Part I, on June 24, 2017, followed by a 30-day public comment period. The 30-day comment period provided an opportunity for industry stakeholders and the general public to submit their comments/suggestions. Sixteen submissions were received from various transportation of dangerous goods companies and major industry associations. Comments received were taken into consideration in the development of the Regulations.

Industry stakeholders and their associations expressed general support for enhancing the security of the transportation of dangerous goods by rail through the Regulations. Support was expressed for Transport Canada’s mission to promote a safe, secure, efficient and environmentally responsible transportation system and the importance of security in the safe transportation of dangerous goods. Industry also supports Transport Canada’s effort to enhance alignment between Canadian and United States regulations that would facilitate the movement of dangerous goods by rail across the border. Moreover, industry has expressed support of the flexible approach adopted by the Regulations which provide the regulated entities with the flexibility to develop and implement security practices that are commensurate with their individual risk profiles and operational environments.

Industry also provided comments and suggestions in the following areas in terms of how to improve the proposed Regulations:

Transport Canada has responded to all submissions requiring answers or clarifications and has taken these comments and suggestions into account in the refinement of the regulatory package. Transport Canada has also done further analysis to address specific comments. For example, Transport Canada has revised the contact for reporting potential threats and other security concerns (for the railway carriers) from the Canadian Transport Emergency Centre (CANUTEC) to the Transport Canada Situation Centre in the consideration of their expertise in dealing with security incidents.

Regulatory cooperation and international alignment

The United Nations has developed Model Regulations to encourage the uniform development of national and international transportation of dangerous goods requirements. The Model Regulations are widely accepted internationally, and form the basis of several international agreements and national regulatory regimes, including in the United States. The Regulations are generally aligned with the recommended security provisions in the United Nations Model Regulations (section 1.4), which include security training for employees and security plans for high consequence dangerous goods, such as those explosives included in Class 1.1, 1.2, or 1.3.

The Regulations will introduce Canadian requirements that partially align with United States requirements for the transportation of dangerous goods by rail (Hazardous Materials Regulations — Title 49 of the Code of Federal Regulations [49 CFR], sections 172.700 to 172.704, 172.800 to 172.822, 174.9, 174.14 and Rail Transportation Security Regulations — 49 CFR, Part 1580). The Regulations are consistent with the basic HAZMAT security requirements for rail in the United States, but do not include the more stringent requirements, such as compiling commodity data, conducting route analysis and selection, providing a secure chain of custody and control, expediting movement, and providing location and shipping information to the Government. This approach will facilitate the timelier implementation of a baseline security regime for the transportation of dangerous goods by rail in Canada. Further analysis of the additional United States rail requirements will be necessary to determine whether they are applicable in the Canadian context and commensurate with risk (i.e. considering the Canadian geographical landscape and the limited rail system in Canada).

The Regulations are consistent with the objective of the Canada–United States Regulatory Cooperation Council, which is to better align Canada–United States regulatory approaches to make it easier for industry to do business on both sides of the border.

Transport Canada has also engaged federal partners with roles and responsibilities respecting the transportation of dangerous goods through the Transportation of Dangerous Goods Interdepartmental Working Group, to ensure coordination and to avoid duplicative or inconsistent regulatory requirements.

Rationale

Strategic risk assessments conducted by Government of Canada security experts have indicated that the transportation of dangerous goods by rail is vulnerable to misuse or sabotage by terrorists. An attack using dangerous goods is feasible, and the adverse impacts of a terrorist event could be significant. This level of risk supports the need to develop security regulations for the transportation of dangerous goods by rail, to strengthen the security of this sector and assist in protecting Canadians.

Moreover, Canada’s current regime is inconsistent with that of its largest trading partner, the United States. The regulatory requirements will allow Canada to better align its requirements with United States hazardous materials security requirements, which would facilitate the cross-border movement of dangerous goods by rail.

Based on an analysis of various options, stakeholder feedback, an assessment of international standards and requirements and the level of risk within the sector, Transport Canada considers the development of management-based regulations for railway carriers and railway loaders to be the most appropriate and effective course of action at this time. This approach would facilitate the timelier implementation of a baseline security regime for the transportation of dangerous goods by rail.

The Regulations are not expected to create any undue costs or burden for the rail industry. This is due, in part, to the fact that many operators already comply with the regulatory requirements (e.g. those that transport dangerous goods to the United States, those that participate in trusted trader programs [Canada’s Partners in Protection program and the United States Customs-Trade Partnership Against Terrorism], and those that are signatories to the Railway Security Memorandum of Understanding with Transport Canada). As well, the Regulations have been designed to be risk-based, which will give industry the flexibility to adopt security practices that are tailored to their operations and proportionate to their risk.

Implementation, enforcement and service standards

Transport Canada’s objective is to implement a fair and equitable compliance and enforcement regime for the Regulations, using a graduated approach that allows industry to take corrective actions before resorting to enforcement actions. However, where compliance is not achieved on a voluntary basis or where there are flagrant violations, enforcement action could be sought through judicial sanction (indictment or summary conviction) in accordance with paragraphs 33(2)(a) and (b) of the TDGA.

Transport Canada is ready to successfully implement, deliver and oversee the Regulations. The Department will use a national network of surface and intermodal security inspectors to oversee compliance with the Regulations, and is currently developing guidance and training programs to ensure the inspectors will be adequately prepared to oversee this new regime and facilitate industry compliance. The Department will work to coordinate the oversight regime with the rail safety and transportation of dangerous goods safety oversight regimes (e.g. by conducting joint safety and security inspections), to enhance efficiency and minimize the impact on railway carriers and railway loaders.

Inspectors will provide regulatory oversight to ensure compliance and identify any non-compliance with the Regulations. Inspectors will provide ongoing oversight, guidance and education to railway carriers and railway loaders, and will schedule inspections using a risk-based approach. Current risk methodology will be reviewed and elements will be incorporated to support, align and produce a custom security risk assessment methodology. Inspection frequency and scope will be determined by the outcome of the risk assessments. Inspections will be at determined intervals; however, inspectors will have the flexibility to conduct random and for-cause inspections, as deemed appropriate.

Transport Canada will continue its engagement with industry through established transportation of dangerous goods fora and the various industry associations. Transport Canada will also conduct education and awareness activities to support industry and to facilitate implementation and compliance, and will develop guidance materials, as required.

Finally, the coming-into-force dates of the Regulations will be staggered to give railway carriers and railway loaders sufficient time to implement the requirements and to facilitate compliance, in accordance with the schedule set out in Table 11.

Table 11: Staggered coming-into-force dates

Requirement

Who?

Length of Time
After Registration
Before Coming into Force
Reporting Railway carriers 1 month
Rail security coordinator Railway carriers 3 months
Security inspection Railway carriers 3 months
Security awareness training Railway carriers 9 months
Railway loaders 12 months
Security plan and risk assessment Railway carriers 9 months
Railway loaders 12 months
Security plan training Railway carriers 9 months
Railway loaders 12 months

Contact

Kim Benjamin
Director General
Intermodal Surface, Security and Emergency Preparedness
Transport Canada
Ottawa, Ontario
K1A 0N5
Telephone: 613‑949‑7778
Fax: 613‑993‑1714
Email: kim.benjamin@tc.gc.ca

Small Business Lens Checklist

1. Name of the sponsoring regulatory organization:

Transport Canada

2. Title of the regulatory proposal:

Transportation of Dangerous Goods by Rail Security Regulations

3. Is the checklist submitted with a RIAS for the Canada Gazette, Part I or Part II?

☐ Canada Gazette, Part I ☑ Canada Gazette, Part II

A. Small business regulatory design

I Communication and transparency Yes No N/A
1. Are the proposed Regulations or requirements easily understandable in everyday language? ☑ ☐ ☐
2. Is there a clear connection between the requirements and the purpose (or intent) of the proposed Regulations? ☑ ☐ ☐
The Regulations provide a means to enhance the security of the transportation of dangerous goods by rail and each section clearly outlines the six requirements, which are also generally aligned with the United States regime.
3. Will there be an implementation plan that includes communications and compliance promotion activities, that informs small business of a regulatory change and guides them on how to comply with it (e.g. information sessions, sample assessments, toolkits, Web sites)? ☑ ☐ ☐
Industry will be informed and compliance promotion activities will be provided, as required.
4. If new forms, reports or processes are introduced, are they consistent in appearance and format with other relevant government forms, reports or processes? ☐ ☐ ☑
No new forms, reports or processes will be introduced.
II Simplification and streamlining Yes No N/A
1. Will streamlined processes be put in place (e.g. through BizPaL, Canada Border Services Agency single window) to collect information from small businesses where possible? ☐ ☐ ☑
Information will not be collected.
2. Have opportunities to align with other obligations imposed on business by federal, provincial, municipal or international or multinational regulatory bodies been assessed? ☑ ☐ ☐
Opportunities to align with current inspection activities conducted by other directorates within Transport Canada are being explored to avoid unnecessary burden.
3. Has the impact of the proposed Regulations on international or interprovincial trade been assessed? ☑ ☐ ☐
The Regulations introduce Canadian requirements that generally align with international standards and best practices (e.g. the United Nations Model Regulations) and key United States regulatory requirements respecting the transportation of dangerous goods by rail (Hazardous Materials Regulations — Title 49 of the Code of Federal Regulations [49 CFR], sections 172.700 to 172.704, 172.800 to 172.822, 174.9, 174.14 and Rail Transportation Security Regulations — 49 CFR, Part 1580). The Regulations are expected to increase the level of confidence in the security of the Canadian rail transportation system, resulting in a positive impact on domestic and international trade.
4. If the data or information, other than personal information, required to comply with the proposed Regulations is already collected by another department or jurisdiction, will this information be obtained from that department or jurisdiction instead of requesting the same information from small businesses or other stakeholders? (The collection, retention, use, disclosure and disposal of personal information are all subject to the requirements of the Privacy Act. Any questions with respect to compliance with the Privacy Act should be referred to the department’s or agency’s ATIP office or legal services unit.) ☑ ☐ ☐
Any data or information required would be consistent with that of other modes in Transport Canada and can be obtained internally.
5. Will forms be pre-populated with information or data already available to the department to reduce the time and cost necessary to complete them? (Example: When a business completes an online application for a licence, upon entering an identifier or a name, the system pre-populates the application with the applicant’s personal particulars such as contact information, date, etc. when that information is already available to the department.) ☐ ☐ ☑
Businesses will not be required to complete any forms.
6. Will electronic reporting and data collection be used, including electronic validation and confirmation of receipt of reports where appropriate? ☐ ☐ ☑
Businesses will not be required to file reports.
7. Will reporting, if required by the proposed Regulations, be aligned with generally used business processes or international standards if possible? ☐ ☐ ☑
Reporting will not be required.
8. If additional forms are required, can they be streamlined with existing forms that must be completed for other government information requirements? ☐ ☐ ☑
Businesses will not be required to submit forms.
III Implementation, compliance and service standards Yes No N/A
1. Has consideration been given to small businesses in remote areas, with special consideration to those that do not have access to high-speed (broadband) Internet? ☑ ☐ ☐
Transport Canada can communicate with businesses via telephone and registered mail.
2. If regulatory authorizations (e.g. licences, permits or certifications) are introduced, will service standards addressing timeliness of decision making be developed that are inclusive of complaints about poor service? ☐ ☐ ☑
Regulatory authorizations will not be introduced.
3. Is there a clearly identified contact point or help desk for small businesses and other stakeholders? ☑ ☐ ☐
Questions can be addressed to Kim Benjamin, Director General, Intermodal Surface, Security and Emergency Preparedness, Transport Canada, Ottawa, Ontario K1A 0N5, telephone: 613‑949‑7778, fax: 613‑993‑1714, email: kim.benjamin@tc.gc.ca.
B. Regulatory flexibility analysis and reverse onus
IV Regulatory flexibility analysis Yes No N/A
1. Does the RIAS identify at least one flexible option that has lower compliance or administrative costs for small businesses in the small business lens section? Examples of flexible options to minimize costs are as follows:
  • Longer time periods to comply with the requirements, longer transition periods or temporary exemptions;
  • Performance-based standards;
  • Partial or complete exemptions from compliance, especially for firms that have good track records (legal advice should be sought when considering such an option);
  • Reduced compliance costs;
  • Reduced fees or other charges or penalties;
  • Use of market incentives;
  • A range of options to comply with requirements, including lower-cost options;
  • Simplified and less frequent reporting obligations and inspections; and
  • Licences granted on a permanent basis or renewed less frequently.
 ☑ ☐ ☐
The option chosen has the lowest compliance and administrative costs for small businesses. Transport Canada is proposing performance-based requirements that will provide regulated entities with the flexibility to develop and implement security practices that are commensurate with their individual risk profiles and operational environments. As well, Transport Canada plans to develop guidance materials that will ease implementation costs.
IV Regulatory flexibility analysis — Continued Yes No N/A
2. Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, quantified and monetized compliance and administrative costs for small businesses associated with the initial option assessed, as well as the flexible, lower-cost option? ☑ ☐ ☐
3. Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, a consideration of the risks associated with the flexible option? (Minimizing administrative or compliance costs for small business cannot be at the expense of greater health, security or safety or create environmental risks for Canadians.) ☐ ☑ ☐
Transport Canada could have taken a broader approach (initial option) by developing security regulations for the transportation of dangerous goods by rail under the Transportation of Dangerous Goods Act, 1992 that are fully aligned with United States hazardous materials security regulations. However, this option could impose a burden disproportionate to the security risk associated with railway company operations. Based on preliminary consultations, an analysis of all options, assessment of international standards and the level of risk within the sector, the recommendation is to develop regulations that are partially aligned with United States regulatory requirements for rail (flexible option). In addition, in order to ensure that the Regulations would not impose a significant burden on small businesses, the requirements provide regulated entities with the flexibility to develop and implement security practices that are commensurate with their individual circumstances, risk profiles and operational environments.
4. Does the RIAS include a summary of feedback provided by small business during consultations? ☑ ☐ ☐
The RIAS includes a summary of feedback provided by stakeholders, including small businesses.
V Reverse onus Yes No N/A
1. If the recommended option is not the lower-cost option for small business in terms of administrative or compliance costs, is a reasonable justification provided in the RIAS? ☐ ☐ ☑