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Registration

SOR/2014-258 November 7, 2014

RAILWAY SAFETY ACT

Railway Operating Certificate Regulations

P.C. 2014-1248 November 6, 2014

His Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to section 17.9 (see footnote a) of the Railway Safety Act (see footnote b), makes the annexed Railway Operating Certificate Regulations.

RAILWAY OPERATING CERTIFICATE REGULATIONS

INTERPRETATION

Definition of “rule”

1. In these Regulations, “rule” means a rule that, under section 19 of the Railway Safety Act, has been approved by the Minister.

SUBMISSION OF AN APPLICATION

Email or registered mail

2. An application for the issuance or variation of a railway operating certificate must be submitted to the Minister by email or registered mail.

APPLICATION FOR THE ISSUANCE OF A RAILWAY OPERATING CERTIFICATE — RAILWAY COMPANY

Application of sections 4 and 5

3. Sections 4 and 5 apply in respect of an application for the issuance of a railway operating certificate authorizing a railway company to operate and maintain a railway.

Contents of an application

4. An application must contain all of the following:

  • (a) the applicant’s legal name;
  • (b) a description of the applicant’s railway by province and territory;
  • (c) a description of the applicant’s operations;
  • (d) a list of the rules that the applicant has in order to meet the conditions of issuance; and
  • (e) an attestation by the applicant’s chief executive officer or most senior officer that the application is complete and accurate and that the applicant
    • (i) has the human and financial resources to operate and maintain its railway at the highest level of safety, and
    • (ii) has or will have a safety management system that meets the requirements of the Railway Safety Management System Regulations.

Conditions of issuance

5. The conditions of issuance are as follows:

  • (a) the applicant has rules that reproduce the Canadian Rail Operating Rules or that provide an equivalent level of safety to them;
  • (b) the applicant has rules respecting the management of fatigue for operating employees;
  • (c) the applicant has rules respecting the medical fitness for duty of employees who hold positions that are critical to safe railway operations;
  • (d) the applicant has rules respecting employee qualifications;
  • (e) if the applicant’s operations involve the operation and maintenance of line works, the applicant has rules that set out minimum safety standards for track;
  • (f) if the applicant’s operations involve the transport of passengers, the applicant has rules respecting the safe handling of passengers and rules that set out minimum safety standards for
    • (i) passenger cars,
    • (ii) train brakes, and
    • (iii) locomotives;
  • (g) if the applicant’s operations involve the transport of freight, the applicant has rules that set out minimum safety standards for
    • (i) freight cars,
    • (ii) train brakes,
    • (iii) locomotives, and
    • (iv) retroreflective materials and their application on railway equipment; and
  • (h) the applicant has the human and financial resources to operate and maintain its railway at the highest level of safety.

APPLICATION FOR THE ISSUANCE OF A RAILWAY OPERATING CERTIFICATE — LOCAL RAILWAY COMPANY

Application of sections 7 and 8

6. Sections 7 and 8 apply in respect of an application for the issuance of a railway operating certificate authorizing a local railway company to operate railway equipment on a railway.

Contents of an application

7. (1) An application must contain all of the following:

  • (a) the applicant’s legal name;
  • (b) a description of the railways, by province and territory, on which the applicant will operate railway equipment;
  • (c) a description of the applicant’s operations;
  • (d) a list of the rules that the applicant has in order to meet the conditions of issuance; and
  • (e) an attestation by the applicant’s chief executive officer or most senior officer that the application is complete and accurate and that the applicant has the human and financial resources to operate railway equipment on a railway at the highest level of safety.

List of instruments

(2) The application must also contain a list of all the instruments — including agreements with railway companies, provincial laws and territorial laws — that contain safety requirements that apply to the operation of railway equipment by the applicant on the railways described in accordance with subsection (1). The list must

  • (a) be organized by instrument type; and
  • (b) describe each instrument and any requirements respecting
    • (i) the management of fatigue for operating employees,
    • (ii) the medical fitness for duty of employees who hold positions that are critical to the safe operation of railway equipment, and
    • (iii) employee qualifications.

Conditions of issuance

8. The conditions of issuance are as follows:

  • (a) the applicant has rules that reproduce the Canadian Rail Operating Rules or that provide an equivalent level of safety to them;
  • (b) if the applicant’s operations involve the transport of passengers, the applicant has rules respecting the safe handling of passengers and rules that set out minimum safety standards for
    • (i) passenger cars,
    • (ii) train brakes, and
    • (iii) locomotives;
  • (c) if the applicant’s operations involve the transport of freight, the applicant has rules that set out minimum safety standards for
    • (i) freight cars,
    • (ii) train brakes,
    • (iii) locomotives, and
    • (iv) retroreflective materials and their application on railway equipment; and
  • (d) the applicant has the human and financial resources to operate railway equipment on a railway at the highest level of safety.

APPLICATION FOR THE VARIATION OF A RAILWAY OPERATING CERTIFICATE

Contents of an application

9. An application for the variation of a railway operating certificate must contain all of the following:

  • (a) the applicant’s legal name;
  • (b) the certificate number;
  • (c) a description of the variation applied for and the reasons for it; and
  • (d) an attestation by the applicant’s chief executive officer or most senior officer that the application is complete and accurate and that the conditions of issuance for the certificate continue to be met.

COMING INTO FORCE

S.C. 2012, c. 7

10. These Regulations come into force on the day on which section 12 of the Safer Railways Act comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

While railway companies under federal jurisdiction are required to obtain a Certificate of Fitness (COF) from the Canadian Transportation Agency based on having adequate insurance to operate, there were no requirements to ensure that baseline safety standards are in place prior to companies beginning operation.

Background

Based on recommendations from the 2008 Railway Safety Act Review, the Railway Safety Act was amended on May 1, 2013. The amended Act includes several powers and regulatory authorities to further strengthen Transport Canada’s rail safety oversight and enforcement regime.

Among the new powers introduced in the Act is the authority for the Minister of Transport to issue all companies subject to the Railway Safety Act, which includes both railway companies (federally regulated companies) and local railway companies (companies, other than railway companies, that operate on federal tracks), a Railway Operating Certificate (ROC) on the condition that prescribed safety requirements have been met. The ROC-related provisions in the Railway Safety Act, including subsection 17.9(1), under which the Regulations were made, came into force concurrently through an order in council.

The ROC is a condition precedent to a railway company operating and maintaining a railway or a local railway company operating railway equipment on a railway. The Act also provides the Minister with the authority to suspend or cancel the ROC if the prescribed conditions of issuance cease to be met, if any provision of the Act or its instruments is contravened by a company, or if the company requests its suspension or cancellation.

Objectives

The objective of the Railway Operating Certificate Regulations is to establish baseline safety requirements that must be met before companies begin operations.

Description

The Railway Operating Certificate Regulations prescribe the contents of an application by a railway company and local railway company for a ROC, the conditions of issuance they must meet to be issued a ROC, and the contents of an application for a variance to a ROC. The Regulations apply to both new and existing companies. The Railway Safety Act provides existing companies with a two-year grace period to obtain a ROC. A new company requires a ROC prior to operating or maintaining a railway.

In the application, companies provide core company information (e.g. legal name, type and location of operations) and proof that the conditions of issuance have been or will be met — i.e. a list of all the rail safety rules, as filed by the company or approved by the Minister of Transport, that the company has or intends to have in place and that are or will be applicable to that company. The application also includes an attestation by the chief executive officer that the application is complete and accurate, that the railway has the human and financial resources to operate and maintain the railway at the highest level of safety, and, in the case of a railway company (but not a local railway company), that it has or will have a safety management system (SMS), as required by the Railway Safety Management System Regulations (SMS Regulations), in place.

The conditions of issuance for the ROC are the essential rail safety rule or rules that a company needs to follow so that the company’s operation is conducive to safe railway operations. Currently, the bulk of the federal rail safety regulatory regime comprises a series of rail safety rules, which carry the same force as a regulation, governing the safety of railway operations, equipment, infrastructure, and employees. Current railway companies and local railway companies have rules applicable to their operation in place. A new company needs to have those rules applicable to their operation in place before they start operating.

Finally, a term or condition may be placed on a company’s ROC. Under the Railway Safety Act, the company may apply for a variation to change or remove the term or condition. The Regulations prescribe the requirements regarding making such an application.

Consultation

In developing the Railway Operating Certificate Regulations, Transport Canada consulted with

  • the Canadian railway industry, including all railway companies under federal jurisdiction and the Railway Association of Canada;
  • labour organizations including, but not limited to, Unifor, the Teamsters Canada Rail Conference, the United Transportation Union, and the Brotherhood of Locomotive Engineers; and
  • representatives of provincial governments.

Industry has been aware of the proposed Railway Operating Certificate Regulations since they were discussed during the Railway Safety Act Review and became a recommendation in 2008.

In November 2013, stakeholders were consulted on this regulatory proposal and no major concerns were raised. In addition, a teleconference with the Advisory Council on Railway Safety’s Regulatory Development Working Group was held on December 6, 2013, and again no significant concerns were raised.

Issues deriving from the consultations included general application questions, terminology and program issues. Stakeholder comments were taken into account in the development and drafting of the proposed Regulations.

The proposed Railway Operating Certificate Regulations were published in Part I of the Canada Gazette on March 15, 2014, followed by a 30-day comment period. Two written responses were received from industry stakeholders. The responses were generally supportive, but some concerns were expressed about terminology and confidentiality of information in agreements, and a few changes to the proposed Regulations were recommended.

Stakeholders requested the removal of the term “highest level of safety” from the attestation and conditions of issuance. In their view, the term was ambiguous and premature, as it could duplicate requirements of forthcoming proposed amendments to the SMS Regulations. Transport Canada elected to retain the term, whose definition in the Railway Safety Act is not impacted by proposed amendments to the SMS Regulations, published in Part I of the Canada Gazette on July 5, 2014, and conducted follow-up consultations with key stakeholders in order to clarify its use to their satisfaction.

The Act defines the term “highest level of safety” as “lowest acceptable level of risk as demonstrated by a risk management analysis.” Although this term was formerly only used in relation to SMS, it may also be used independently in other contexts, such as the ROC. There is no connection or overlap between the ROC and SMS requirements aside from the chief executive officer’s attestation in the application for a ROC that a railway company has or will have an SMS. In the case of the ROC, what Transport Canada means by “highest level of safety” is that the company has, and will continue to have, sufficient (commensurate with the size, nature and complexity of its operations) human and financial resources to not only comply with applicable regulatory requirements, but also to identify, assess and successfully mitigate threats to safe railway operations. The company’s chief executive officer (CEO) or most senior level executive who possesses unique knowledge of company resources and operations is best able to make this determination and be comfortable attesting to such based on his or her own, internal risk management analysis, which does not need to be submitted to Transport Canada. For the issuance of a ROC, the attestation serves as proof of the associated condition of issuance. The attestation affirms the CEO’s commitment to meet paragraph 3(c) of the Railway Safety Act, which recognizes the responsibility of companies to demonstrate, by using safety management systems and other means at their disposal, that they continuously manage risks related to safety matters. The CEO will not be held personally liable based on the attestation since it is made at a particular date and time.

Stakeholders also expressed concern about sharing confidential details of agreements between local railway companies and host railway companies, which may be subject to access to information requests, and suggested replacing subsection 7(2) of the proposed Regulations with an attestation that an agreement is in place. Since the Department does not wish to obtain confidential proprietary or financial information contained within agreements, Transport Canada agreed to clarify the subsection to specify which provisions dealing with railway safety need to be described in the application for a ROC. The objective of this subsection is to obtain assurance that local railway companies (LRCs) have safety requirements in place for employee qualifications, medical fitness for duty, and fatigue management. Unlike railway companies, LRCs are not required to have rules respecting these three areas as conditions of issuance since employment-related matters of companies that are not federally regulated do not fall under federal jurisdiction. These safety-related requirements, which may be contained in provisions of agreements with host railway companies or of other instruments such as provincial legislation, ensure that a local railway company has the human and financial resources to operate railway equipment at the highest level of safety in accordance with paragraph 8(d) of the proposed Regulations.

Changes made to the proposed Regulations following the 30-day publication period in Part I of the Canada Gazette include the clarification of subsection 7(2) and the alignment of the definition of “rule” with the intent of the Regulations. Since the intent of the Regulations is to ensure that companies have essential rules and resources to operate safely before issuing a ROC authorizing them to commence operations, the definition of “rule” is limited to a rule that has been approved by the Minister under section 19 of the Act. Although a company may file formulated rules concurrently with the submission of an application for a ROC, Transport Canada will not issue a ROC until the rules have been approved as conditions of issuance.

“One-for-One” Rule

The “One-for-One” Rule applies to these Regulations with an annualized “IN” value of $221 and an “IN” of one regulatory title.

In order to ensure that railway companies and local railway companies meet an acceptable level of safety, the Regulations require them to obtain a ROC. Transport Canada estimates that 66 companies will need to complete a form and submit it to Transport Canada in order to obtain a ROC. It was estimated that the preparation and submission of the ROC would take approximately one hour for each company to complete, with time spent divided between clerical and managerial staff (90% and 10%, respectively). The weighted average wage rate per hour is estimated to be $30. Therefore, the total administrative burden on companies is estimated to have a present value of $1,553 over a 10-year period, which corresponds to an annualized value of $221 and an average increased cost per railway of $30.

There is no charge to companies to apply for a ROC.

Small business lens

The small business lens does not apply to this proposal. However, the Regulations are designed to ensure minimal administrative burden on both railway companies and local railway companies, and that disproportionate burden will not be carried by small businesses. Of the 66 companies impacted by the Regulations, Transport Canada estimates that 5 are small businesses. Flexibility has been provided in the Act for all businesses in that existing companies have been given two years to obtain their ROC.

Rationale

The Regulations are proportionate to the degree and type of risk presented by this issue. The coming into force of the Railway Operating Certificate Regulations not only meets the stated objective of ensuring railway companies and local railway companies meet baseline safety requirements prior to operating or maintaining a railway or operating railway equipment on a railway, but also supports Transport Canada’s compliance and enforcement efforts.

Currently, the Rail Safety Compliance and Enforcement Program monitors compliance with rail safety rules, regulations and the Railway Safety Act. Both railway companies and local railway companies must comply with the provisions that apply to them in those instruments. In the event of non-compliance, a railway safety inspector may issue a letter of non-compliance, which provides a company 14 days to address the non-compliance. Formerly, Transport Canada’s only option in cases of persistent non-compliance was prosecution.

The Railway Operating Certificate Regulations and associated legislative provisions expand Transport Canada’s enforcement continuum and provide the Minister of Transport with the ability to cancel or suspend a ROC, thereby prohibiting a company from operating in a case where there are significant safety concerns.

With the Railway Operating Certificate Regulations in force, Transport Canada can use the authority provided in the Railway Safety Act to suspend or cancel the ROC if the prescribed conditions for issuance are not met or in the face of any non-compliance with the Act or its instruments. As a matter of policy, Transport Canada would only cancel or suspend the ROC in extreme cases where there is company-wide or chronic non-compliance or where their operation poses a serious risk to safe railway operations. If a company, for example, does not comply with an emergency directive issued pursuant to section 33 of the Act, Transport Canada could suspend the company’s ROC; however, a company does have the right to appeal the suspension or cancellation by requesting a review by the Transportation Appeal Tribunal of Canada (TATC). Transport Canada’s decision to suspend or cancel a ROC will be risk-based, substantiated by evidence and subject to review by the TATC.

The Regulations will not place undue burden on companies subject to the Railway Safety Act. The application is brief and requires applicants to confirm compliance with a list of existing rail safety rules that apply to their respective operation. There are no anticipated undue impacts on other areas or sectors.

The anticipated benefit of the Regulations is improved rail safety that takes into account Canada’s economic well-being.

Implementation, enforcement and service standards

The Railway Safety Act provides existing companies with a two-year grace period to obtain a ROC. A new company requires a ROC prior to operating or maintaining a railway.

Transport Canada created a certificate issuance program to facilitate the processing of applications and to minimize the administrative burden on companies. The program includes support throughout the application process and the development of templates for companies to use. A company will submit its application for a ROC to Transport Canada’s Rail Safety Program, which, once satisfied that all applicable requirements have been met, will, on behalf of the Minister, issue a ROC to the company. This program and process have been designed to be quick and efficient and to avoid undue burden on applicants.

Contact

Any questions related to the Railway Operating Certificate Regulations should be directed to

Susan Archer
Director
Regulatory Affairs
Transport Canada
Telephone: 613-990-8690
Email: susan.archer@tc.gc.ca