12. Point-by-Point Analysis: Auditor General’s 2021 Report on Rail Safety

National Newswatch Article, March 1, 2021

Article Quote	TC Analysis
In the press conference, AG Karen Hogan called the Department’s failure to assess the effectiveness of Safety Management Systems “a big loophole.”	Audits of the effectiveness of railway companies’ safety management systems will start in September 2021. Transport Canada has been progressively developing and strengthening requirements for safety management systems: Established new Safety Management Systems Regulations in 2015; Extensive outreach with industry stakeholders in 2015/16 to explain new requirements and core concepts of safety culture; Completed audits of all railway companies’ safety management systems to monitor compliance with new regulations (2016-2020); and Developed a framework for measuring effectiveness of safety management systems in June 2020, which will be the basis for conducting effectiveness audits.
Transport Canada does not have the assurance it needs that federal railways have implemented adequate and effective safety management systems.	As of March 2020, Transport Canada has completed audits of all railway companies’ safety management systems in Canada. This includes 103 audits, conducted since 2016. These audits were conducted to determine whether federal railways have developed and implemented adequate safety management systems, which involves confirming whether each railway has documented and implemented a safety management system that meets the regulatory requirements. After confirming adequacy and compliance, the department is now prepared to audit effectiveness of the safety management systems. These effectiveness audits are scheduled to start in in September 2021.
Andrew Hayes, Interim Environmental Commissioner… found that Transport Canada still has not resolved problems identified in its 2011 audit. His language with reporters was more direct: “the window for a recurrence of a Lac-Mégantic-type disaster is still open.”	The 2020 report of the Commissioner of the Environment and Sustainable Development concluded that: “Overall, we found that since our 2011 audit of the transportation of dangerous products, Transport Canada had made some improvements in the areas we followed up on, but we also found that there was still important work to be done.” After the Lac-Mégantic tragedy, Transport Canada took immediate and long-term measures to address the gaps in our rail safety oversight framework. For example: In 2014 we established better support for first responders by requiring Emergency Response Assistance Plans for the transportation of dangerous goods; We held flammable liquids exercise with first responders; In May 2015, Transport Canada brought forward new technical requirements for thicker steel on tank cars carrying flammable liquids; and In 2016, we established stronger liability and compensation regulations, which require railway companies to carry a minimum level of insurance based on the type of dangerous goods that they carry.
Past AG findings, as well as recommendations by the Transportation Safety Board [TSB] and various parliamentary committees, were met for the most part with largely incremental actions on the part of Transport Canada.	Transport Canada has taken immediate and decisive action to improve oversight of rail safety in Canada, with more inspectors, better enforcement tools and stronger legislative authorities. For example, we increased the number of rail safety inspectors from 101 to 155 since 2013. In the last year alone, Transport Canada developed regulations requiring video recorders to be installed in locomotives, approved new rules to improve fatigue management, and ordered the industry to improve employee safety in yard operations.
The safety management system regime… sets the broad regulatory boundaries and outsources to industry the role of operationalizing and implementing them—a form of self-regulation.	Under the Railway Safety Act, Transport Canada is responsible for providing oversight of railway safety in Canada – this includes regulations, such as the Safety Management Systems Regulations. Established by Transport Canada, these regulations set out clear requirements for railway companies to have an effective system in place to identify and manage risks. This includes, for example, safety targets, a formal risk assessment process, and monitoring procedures.
…Transport Canada’s resources and capacities have been systematically squeezed, and SMS audits, essentially a bookkeeping exercise, increasingly replaced unannounced on-site inspections.	Since 2013, Transport Canada consistently increased its resources and capacity to undertake rail safety oversight. For example, the department increased the number of inspectors and auditors by 53% since 2013 – an increase from 101 inspectors and auditors in 2013 to 155 in 2020. The department has significantly increased its capacity for safety management system audits. In 2013, Transport Canada was conducting four audits per year, now we conduct approximately 25 audits per year.
Safety Management Systems have remained on the Transportation Safety Board’s 2020 Watchlist, since the list was first created more than a decade ago to highlight issues it deemed posed the greatest risk to transportation safety.	Transport Canada is committed to continuously improve our oversight regime, including in response to findings from the Auditor General and the Transportation Safety Board’s Watchlist. With respect to Safety Management Systems, the department has taken decisive actions to improve its oversight in this important area: Established the Safety Management Systems Regulations in 2015; Completed audits of all railway companies in Canada to confirm compliance with these regulations; Established a framework to measure effectiveness of safety management systems in 2020. Building on this progress, effectiveness audits will start in September 2021.
Fatigue management regulations require that work rest scheduling practices be compatible with the fatigue management science. A former TSB investigator I interviewed said companies have avoided re-examining their work-rest practices simply because of the costs involved, and because regulations allow them to do so.	In November 2020, Transport Canada approved updated Duty-Rest Rules, which establish fatigue management practices, aligned with the latest science in this area. The new rules establish shorter limits on duty periods, longer minimum rest periods, and new limits on the number of hours that can be worked in a week and per month.
…in general the corporate culture is predominately one of fear and discipline, which means existing whistleblower provisions are rarely used by employees for fear of recrimination.	Under the Safety Management Systems Regulations, railway companies are required to have procedures in place for employees to report contraventions and safety concerns, without fear of reprisal. Transport Canada conducts regular audits to ensure that these procedures are in place and confirms that employees are aware of them. Railway employees have several ways to identify safety concerns, including anonymous reporting lines, occupational health and safety committees, and contact information for both Transport Canada and the Transportation Safety Board.
There are still railway companies that aren’t conducting risk assessments before making operational changes. Moreover, there still seems to be an attitude of trying to justify why a risk assessment is not required by the regulation.	Under the Safety Management System Regulations, railway companies are required to notify Transport Canada before making operational changes. In addition, companies are required to provide the department with the risk assessments associated with the changes upon request. Clear criteria and process have been established when these assessments are required, such as circumstances when dangerous goods are involved, or if operating speeds have increased. If Transport Canada becomes aware that a company implemented an operational change where notification was not provided a non-compliance is issued. The penalty for not providing Transport Canada with notification of change is $125,000. The penalty for not completing a risk assessment associated with that change is $250,000.
The 2020 Transportation Safety Board Watchlist added the risk of unplanned or uncontrolled movement of railway equipment noting that of uncontrolled movements have increased significantly in recent years…	Transport Canada continues to strengthen rail safety since the tragic derailment in Lac-Mégantic, including strengthening train securement requirements to reduce the risk of uncontrolled movement of railway equipment. In 2015, Transport Canada approved an updated rule requiring additional physical defences to secure trains, including requirements for handbrakes to be applied on unattended trains; In April 2020, Transport Canada approved a new rule to ensure that effective safety procedures are applied to all trains that come to emergency stops on steep grades; In October 2020, Transport Canada announced new measures that require the rail industry to adopt new practices designed to prevent uncontrolled movement while conducting switching operations. Going forward, Transport Canada will continue revising the Railway Employee Qualification Standards Regulations to strengthen oversight requirements and address gaps related to training and experience of employees.
… safety management systems should be suspended, and resources focused on prescriptive regulation and conventional oversight.	The safety management systems are an important complement to Transport Canada’s conventional regulatory and oversight measures. For example, the safety management systems ensure that railway companies are incorporating the core concepts of safety culture into their operations, and are systematically identifying and addressing risks. Transport Canada enforces compliance with the safety management systems, and non-compliance is subject to monetary penalties. Maximum penalties are $250,000 for a corporation and $50,000 for an individual. We may impose them for each day of the contravention.

Article Quote

TC Analysis

In the press conference, AG Karen Hogan called the Department’s failure to assess the effectiveness of Safety Management Systems “a big loophole.”

Audits of the effectiveness of railway companies’ safety management systems will start in September 2021.

Transport Canada has been progressively developing and strengthening requirements for safety management systems:

Established new Safety Management Systems Regulations in 2015;
Extensive outreach with industry stakeholders in 2015/16 to explain new requirements and core concepts of safety culture;
Completed audits of all railway companies’ safety management systems to monitor compliance with new regulations (2016-2020); and
Developed a framework for measuring effectiveness of safety management systems in June 2020, which will be the basis for conducting effectiveness audits.

Transport Canada does not have the assurance it needs that federal railways have implemented adequate and effective safety management systems.

As of March 2020, Transport Canada has completed audits of all railway companies’ safety management systems in Canada. This includes 103 audits, conducted since 2016.

These audits were conducted to determine whether federal railways have developed and implemented adequate safety management systems, which involves confirming whether each railway has documented and implemented a safety management system that meets the regulatory requirements.

After confirming adequacy and compliance, the department is now prepared to audit effectiveness of the safety management systems. These effectiveness audits are scheduled to start in in September 2021.

Andrew Hayes, Interim Environmental Commissioner… found that Transport Canada still has not resolved problems identified in its 2011 audit. His language with reporters was more direct: “the window for a recurrence of a Lac-Mégantic-type disaster is still open.”

The 2020 report of the Commissioner of the Environment and Sustainable Development concluded that: “Overall, we found that since our 2011 audit of the transportation of dangerous products, Transport Canada had made some improvements in the areas we followed up on, but we also found that there was still important work to be done.”

After the Lac-Mégantic tragedy, Transport Canada took immediate and long-term measures to address the gaps in our rail safety oversight framework. For example:

In 2014 we established better support for first responders by requiring Emergency Response Assistance Plans for the transportation of dangerous goods;
We held flammable liquids exercise with first responders;
In May 2015, Transport Canada brought forward new technical requirements for thicker steel on tank cars carrying flammable liquids; and
In 2016, we established stronger liability and compensation regulations, which require railway companies to carry a minimum level of insurance based on the type of dangerous goods that they carry.

Past AG findings, as well as recommendations by the Transportation Safety Board [TSB] and various parliamentary committees, were met for the most part with largely incremental actions on the part of Transport Canada.

Transport Canada has taken immediate and decisive action to improve oversight of rail safety in Canada, with more inspectors, better enforcement tools and stronger legislative authorities. For example, we increased the number of rail safety inspectors from 101 to 155 since 2013.

In the last year alone, Transport Canada developed regulations requiring video recorders to be installed in locomotives, approved new rules to improve fatigue management, and ordered the industry to improve employee safety in yard operations.

The safety management system regime… sets the broad regulatory boundaries and outsources to industry the role of operationalizing and implementing them—a form of self-regulation.

Under the Railway Safety Act, Transport Canada is responsible for providing oversight of railway safety in Canada – this includes regulations, such as the Safety Management Systems Regulations.

Established by Transport Canada, these regulations set out clear requirements for railway companies to have an effective system in place to identify and manage risks. This includes, for example, safety targets, a formal risk assessment process, and monitoring procedures.

…Transport Canada’s resources and capacities have been systematically squeezed, and SMS audits, essentially a bookkeeping exercise, increasingly replaced unannounced on-site inspections.

Since 2013, Transport Canada consistently increased its resources and capacity to undertake rail safety oversight.

For example, the department increased the number of inspectors and auditors by 53% since 2013 – an increase from 101 inspectors and auditors in 2013 to 155 in 2020.

The department has significantly increased its capacity for safety management system audits. In 2013, Transport Canada was conducting four audits per year, now we conduct approximately 25 audits per year.

Safety Management Systems have remained on the Transportation Safety Board’s 2020 Watchlist, since the list was first created more than a decade ago to highlight issues it deemed posed the greatest risk to transportation safety.

Transport Canada is committed to continuously improve our oversight regime, including in response to findings from the Auditor General and the Transportation Safety Board’s Watchlist.

With respect to Safety Management Systems, the department has taken decisive actions to improve its oversight in this important area:

Established the Safety Management Systems Regulations in 2015;
Completed audits of all railway companies in Canada to confirm compliance with these regulations;
Established a framework to measure effectiveness of safety management systems in 2020.

Building on this progress, effectiveness audits will start in September 2021.

Fatigue management regulations require that work rest scheduling practices be compatible with the fatigue management science. A former TSB investigator I interviewed said companies have avoided re-examining their work-rest practices simply because of the costs involved, and because regulations allow them to do so.

In November 2020, Transport Canada approved updated Duty-Rest Rules, which establish fatigue management practices, aligned with the latest science in this area.

The new rules establish shorter limits on duty periods, longer minimum rest periods, and new limits on the number of hours that can be worked in a week and per month.

…in general the corporate culture is predominately one of fear and discipline, which means existing whistleblower provisions are rarely used by employees for fear of recrimination.

Under the Safety Management Systems Regulations, railway companies are required to have procedures in place for employees to report contraventions and safety concerns, without fear of reprisal. Transport Canada conducts regular audits to ensure that these procedures are in place and confirms that employees are aware of them.

Railway employees have several ways to identify safety concerns, including anonymous reporting lines, occupational health and safety committees, and contact information for both Transport Canada and the Transportation Safety Board.

There are still railway companies that aren’t conducting risk assessments before making operational changes. Moreover, there still seems to be an attitude of trying to justify why a risk assessment is not required by the regulation.

Under the Safety Management System Regulations, railway companies are required to notify Transport Canada before making operational changes. In addition, companies are required to provide the department with the risk assessments associated with the changes upon request. Clear criteria and process have been established when these assessments are required, such as circumstances when dangerous goods are involved, or if operating speeds have increased.

If Transport Canada becomes aware that a company implemented an operational change where notification was not provided a non-compliance is issued. The penalty for not providing Transport Canada with notification of change is $125,000. The penalty for not completing a risk assessment associated with that change is $250,000.

The 2020 Transportation Safety Board Watchlist added the risk of unplanned or uncontrolled movement of railway equipment noting that of uncontrolled movements have increased significantly in recent years…

Transport Canada continues to strengthen rail safety since the tragic derailment in Lac-Mégantic, including strengthening train securement requirements to reduce the risk of uncontrolled movement of railway equipment.

In 2015, Transport Canada approved an updated rule requiring additional physical defences to secure trains, including requirements for handbrakes to be applied on unattended trains;
In April 2020, Transport Canada approved a new rule to ensure that effective safety procedures are applied to all trains that come to emergency stops on steep grades;
In October 2020, Transport Canada announced new measures that require the rail industry to adopt new practices designed to prevent uncontrolled movement while conducting switching operations.

Going forward, Transport Canada will continue revising the Railway Employee Qualification Standards Regulations to strengthen oversight requirements and address gaps related to training and experience of employees.

… safety management systems should be suspended, and resources focused on prescriptive regulation and conventional oversight.

The safety management systems are an important complement to Transport Canada’s conventional regulatory and oversight measures. For example, the safety management systems ensure that railway companies are incorporating the core concepts of safety culture into their operations, and are systematically identifying and addressing risks.

Transport Canada enforces compliance with the safety management systems, and non-compliance is subject to monetary penalties. Maximum penalties are $250,000 for a corporation and $50,000 for an individual. We may impose them for each day of the contravention.

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12. Point-by-Point Analysis: Auditor General’s 2021 Report on Rail Safety - Another Groundhog Day