4. AG 2021 REPORT: PIC: OAG AUDIT ON RAIL SAFETY OVERSIGHT

Follow-up Audit on Rail Safety Oversight

LOCATION: NATIONAL

ISSUE: OFFICE OF THE AUDITOR GENERAL FOLLOW-UP AUDIT OF RAIL SAFETY

DATE: March 22, 2021

SUGGESTED RESPONSES

• I welcome the Auditor General’s follow-up audit on rail safety, which looked at whether Transport Canada had improved its oversight of railway companies since a previous audit in 2013.

• Since this initial audit, the department made significant improvements to its oversight regime. For example, we hired more inspectors, increased the number of annual inspections, and implemented speed restrictions for trains carrying dangerous goods.

• In the last year alone, we 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 Auditor General’s follow-up audit concluded that “Overall, Transport Canada made progress in addressing recommendations from our 2013 audit in the areas we followed-up on; however we also found that the department still had important improvements to make.”

• The department is already taking action to implement all of the Auditor General’s recommendations. For example, the department will launch consultations on strengthening safety management systems, and look to better measure the effectiveness of the oversight program.

If pressed on progress since Lac Mégantic:

• Our sympathies remain with the community and families of the 47 individuals who lost their lives as a result of the Lac-Mégantic tragedy. After this tragedy, Transport Canada took immediate and long-term measures to improve rail safety. For example, we:
  • Increased the number of inspectors who verify compliance with safety requirements;
  • Imposed speed limits on trains carrying dangerous goods in metropolitan areas; and
  • Developed requirements for thicker steel on rail cars carrying flammable liquids.

• Transport Canada continues to closely monitor the safety of rail operations in this region, and across Canada, and will not hesitate to take action in the event of non-compliance.

If pressed on whether the rail system is safe:

• Significant changes since the 2013 Lac-Mégantic tragedy have made a real difference in the performance of Transport Canada’s Rail Safety Program, with more inspectors, better enforcement tools and stronger legislative authorities.

• Although the Auditor General did not look at safety performance, the 2018 Railway Safety Act Review concluded that:  “The safety of the rail system has improved in the last 5 to 10 years… Due to a sustained focus on inspections, compliance and enforcement, as well as technological improvements and investments in rail infrastructure, main track derailments have been on the decrease.” Over the last five years, the number of fatalities resulting from railway operations decreased by 27%, and the number of accidents decreased by 12%.

If pressed on the effectiveness of rail safety oversight:

• The key critical finding of the follow-up audit is that Transport Canada could not show that its oversight activities translated into improved rail safety for Canadians.

• The follow-up audit acknowledges that, “assessing the effectiveness of the department’s oversight activities is complex”.

• Still, we will look at ways, for example, levels of compliance, to demonstrate that our inspections and oversight activities are making a difference. This is a critical part of our commitment to improving safety for all Canadians who live and work along rail lines.

Background information

On February 25, 2021, the Office of the Auditor General published its follow-up audit on Transport Canada’s oversight of rail safety, assessing the department’s progress toward implementing the recommendations from a previous audit on this topic in 2013.

Overall, the follow-up audit concluded that “Transport Canada made progress in addressing recommendations from our 2013 audit in the areas we followed-up on; however we also found that the department still had important improvements to make. The department strengthened its approach to planning and prioritizing activities to oversee rail safety and in following-up on companies’ plans and actions to address deficiencies noted in inspections.” In particular, the follow-up audit found that:

• Transport Canada was unable to demonstrate how its oversight activities have improved rail safety; and
• Transport Canada did not assess the effectiveness of the railways’ safety management systems.

To address these findings, the OAG made six recommendations, which the department has accepted. As part of the department’s commitment to continuous improvement, and in recognition of the important findings in the follow-up audit, action is already underway with respect to each recommendation (e.g. use of electronic audit documentation is now mandatory, and a database is being created to track safety management system audit findings).

The following tables summarize the 2013 Auditor General recommendations and status update, and then the 2021 follow-up recommendations and departmental action plan. Annex A sets out the full list of progress achieved since 2013.

Status Update: Implementation of Recommendations from 2013 Audit Report

Recommendation	Status Update
TC was not collecting risk information from railways	Established the Transportation Information Regulation (2015), which enables the department to collect risk and safety information to triage oversight and regulatory activities was updated to expand the data required from railways. The additional data received is now used for risk-based planning for signals and track. This data helps inform where risks are and which resources should be allocated to provide oversight.
Improvements were required to TC’s oversight of railways’ safety management systems	Repealed and replaced the Safety Management Systems Regulation in 2015, establishing clear expectations for building a safety culture (e.g. risk assessments, monitoring and reporting process). TC strengthened oversight practices, including: hired additional audit staff, and as of 2018, every region has an audit specialist; completed more audits from an average of 4 per year in 2013 to now an average of 25 per year in 2020; completed audits of all safety management system processes in all railways, as of June 2020; provided better training to staff to consistently apply the new regulations (new audit course established in 2019).
More analysis was required to better focus oversight on higher risk sites	Transport Canada completely redefined its risk based planning process. The program increased its risk based oversight from approximately 30% in 2014 to over 70% in 2020; TC increased the number of oversight staff from 101 in 2013 to 155 in 2020; As of 2018, each functional group has developed a systematic approach to risk-based planning that looks at data from multiple sources including: Data from the Transportation Safety Board; Inspection Data; and Data received from the railway companies.
Follow-up on inspection deficiencies was not timely	Transport Canada updated the rail safety inspection procedure to require follow-up after each inspection (2018). As of 2016, national railways must submit SMS corrective action plans within 30 days of receiving their final report while other railways must submit within 14 days.

      2021 Follow-Up Audit: Recommendations and Actions

Recommendation	TC’s actions to address the recommendations
TC should determine the extent to which its inspections and audits have improved the railway companies’ compliance with regulations that mitigate key safety risks.	Improve the ongoing measurement of the Performance Information Profile (Feb 2022) and conduct an evaluation to assess the impact of oversight activities on Rail Safety compliance (December 2022).
TC should improve guidance to railway companies so that safety data submissions are complete, reliable and timely.	Create guidelines to standardize data submissions from the railway companies (September 2021).
TC should integrate the findings from audits of safety management systems into and risk-based planning of oversight activities.	Update the risk-based business planning process to include audit results (April 2021).
TC should set standards for the timelines for railway companies to correct deficiencies identified in inspections and audits.	Develop standard timelines for final review of corrective measures (December 2021).
TC should improve data management for its safety management systems audits.	Ensure that audit results adhere to standards and audit documentation is complete (April 2021).
TC should assess the effectiveness of railways companies’ safety management systems’ processes.	Undertake program and regulatory action to assess the effectiveness of safety management systems’ processes and launch consultations in April 2022 on potential amendments to the Safety Management System Regulations.

Transport Canada is currently taking action to address all of the recommendations put forward in the follow-up audit. Specifically, Transport Canada is:

• taking a deep dive into the department’s overall Performance Information Profile, scheduled to begin March/Apr 2021;
• revising the risk-based planning process for the 2021-2022 oversight planning cycle to include audit findings;
• standardizing the approach for follow-up on SMS audit results; and
• implementing a framework for completing targeted effectiveness audits.