Recommendation R14-05

Reassessment of the responses to Rail Safety Recommendation R14-05

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Auditing of safety management systems

Background

On 06 July 2013, shortly before 0100 Eastern Daylight Time, eastward Montreal, Maine & Atlantic Railway (MMA) freight train MMA-002, which had been parked unattended for the night on the main track at Nantes, Quebec, Mile 7.40 of the Sherbrooke Subdivision, started to roll. The train travelled about 7.2 miles, reaching a speed of 65 mph. At about 0115, while approaching the centre of the town of Lac-Mégantic, Quebec, 63 tank cars carrying petroleum crude oil, UN 1267, and 2 box cars derailed. As a result of the derailment, about 6 million litres of petroleum crude oil spilled. There were fires and explosions, which destroyed 40 buildings, 53 vehicles and the railway tracks at the west end of Megantic Yard. A total of 47 people were fatally injured, and there was environmental contamination of the downtown area, and the adjacent river and lake.

Transport Canada (TC) had identified a number of recurring problems at MMA. Due to MMA's weak safety culture and poorly implemented safety management system (SMS), the systemic causes of these problems were not being effectively analyzed and rectified. Regulatory audits assessing the effectiveness of the SMS processes should have uncovered this deficiency. However, the time between audits, their limited scope, and the lack of regulatory follow-up on audit findings meant that the regulator remained unaware of the extent of the weaknesses in MMA's SMS.

In its 2013 report on rail safety oversight, the Office of the Auditor General (OAG) concluded that TC did not have the assurance that federal railways have implemented adequate and effective SMS. The OAG recommended, among other things, that TC have its inspectors assess the quality and effectiveness of the railways' SMS.

In the spring of 2014, TC began the process of bringing into force two new regulations, the Railway Operating Certificate Regulations and the Railway Safety Administrative Monetary Penalty Regulations, that, when adopted, will strengthen the Minister's enforcement powers.

Furthermore, proposed new SMS Regulations, if adopted, will provide greater accountability for SMS implementation, and make it easier to assess a company's SMS against the regulatory requirements. With the adoption of the new regulations, TC will have a legal and conceptual framework to require SMS implementation, but equally important is how the regulator uses these tools and what action it takes in the coming years. It is crucial that TC follow up on its commitments relating to SMS audits, and on ensuring that railways have an SMS in place that is capable of identifying risks and managing them to prevent accidents.

Until Canada's railways make the cultural shift to SMS, and TC makes sure that they have effectively implemented SMS, the safety benefits from SMS will not be realized. Therefore, the Board recommended that:

The Department of Transport audit the safety management systems of railways in sufficient depth and frequency to confirm that the required processes are effective and that corrective actions are implemented to improve safety.
TSB Recommendation R14-05

Transport Canada's response to Recommendation R14-05 (October 2014)

TC will fully implement this recommendation.

Proposed Railway Operating Certificate Regulations were published in the Canada Gazette, Part I, on 15 March 2014. A target date of 01 April 2015 has been set by which these regulations will be brought into force. These proposed regulations provide for the suspension or cancellation of the Railway Operating Certificate for non-compliance with safety requirements or SMS Regulations.

TC also proposed changes to its Railway Safety Management Systems Regulations and published them in the Canada Gazette, Part I, on 05 July 2014. TC has plans to bring them into force in the fall of 2015. The proposed changes improve how railway companies develop, implement, and assess their SMS. These changes include more detailed requirements for each SMS component. For example, the risk assessment component now prescribes specific circumstances used to trigger a risk assessment; lists those elements to be included in each risk assessment; and includes a requirement that remedial action be taken to mitigate identified risks and the results be evaluated for effectiveness. Another SMS component specifies that railways continually evaluate their SMS procedures to ensure that they remain effective and prescribes elements to be included in the evaluation plan. Moreover, risk assessments supporting significant operational changes, at the request of the Minister, must be filed with TC. Beginning in the fall of 2015, each risk assessment will be subjected to a more rigorous review, and TC will follow up on any resulting risk mitigation measures. This risk information will be incorporated into industry risk profiles and used to adjust priorities for inspections and audits.

TC is in the process of bringing into force additional enforcement capabilities. The Railway Safety Administrative Monetary Penalties Regulations were published in the Canada Gazette, Part II, on 22 October 2014, and come into force 01 April 2015. These regulations introduce fines as an additional enforcement tool to improve railway safety. Under the authority of the Railway Safety Act, TC will be able to fine railways for contraventions of the Act, or regulations or rules made under the Act.

Because the revised regulations are more prescriptive than the original ones, TC will be able to more easily take regulatory action should a railway be in non-compliance with the regulations.

TC has reassessed the required number of inspections and audits. The number of planned inspections will remain relatively stable, while the number of planned audits will increase. Audits will now be completed on at least a three- to five-year cycle based on risk. In support of the revised auditing plan, additional auditors with specialized training will be recruited by June 2015. TC will be developing training for auditors on several key factors of the new SMS Regulations, including the revised audit requirements, more stringent follow-up procedures and the use of new enforcement provisions (including administrative monetary penalties), by summer 2015. TC is currently developing a standardized auditing tool (SMS Compliance Assessment Tool) to improve the quality and consistency of the audits, which should be completed by spring 2015. As well, TC has developed, and is implementing, a Management Action Plan to improve its oversight of railway safety, including SMS.

Regional risk information will be shared with relevant internal stakeholders and, beginning in 2016, new safety data from leading indicators will be incorporated into departmental systems to ensure the Department stays ahead of trends and relevant operational changes in the industry. A national review process to closely monitor all operators with compliance or ongoing safety issues has also been established.

These actions will support TC in conducting more frequent and thorough SMS audits. Audits will now involve more rigorous review and timely follow-up tied to enforceable penalties for non-compliance. However, TC does not intend to increase the scope of audits conducted every three- to five-years.

Board assessment of the response to Recommendation R14-05 (January 2015)

Transport Canada (TC) has accepted the recommendation and is bringing into force additional regulations and enforcement capabilities. The Railway Operating Certificate Regulations are planned to come into force on 01 April 2015. Revised SMS Regulations that better describe the processes that are to be included in a railway SMS are planned for the fall of 2015. These include explicit expectations that the effectiveness of those processes in advancing safety will be monitored by the railways and continually improved. In addition, the new Railway Safety Administrative Monetary Penalties Regulations, to come into force on 01 April 2015, will enable TC to more easily take enforcement action in the event of non-compliance with the SMS Regulations.

TC has modified its oversight regime to include minimum requirements regarding SMS audit frequency, and has developed plans to use data submitted by the railways to adjust its inspection and audit schedule as risks become better understood. TC is also hiring more auditors and strengthening its training programs. These actions may address many of the deficiencies that were noted in its inspection and audit programs.

TC has not committed to auditing every SMS component within a given time period. If a company does not do something to trigger a focussed audit, TC may conduct an audit only once every three- to five-years, based on risk. In such circumstances, the audit may be of very limited scope, which would not cover every component of a railway's SMS.

While significant progress has been made, TC has not yet demonstrated that it has put in place an effective oversight regime that ensures that all railways are audited with sufficient scope and at a frequency to confirm that the required processes are effective and that corrective actions are implemented to improve safety. As a result, deficiencies within a railway's SMS may not be identified and addressed in a timely manner.

Therefore, the Board assesses the response to Recommendation R14-05 as being Satisfactory in Part.

Response from the Railway Association of Canada to Recommendation R14-05 (February 2015)

Both CN and CP have a comprehensive safety management system (SMS) that has been audited by Transport Canada (TC) on several occasions. VIA has recently undergone a targeted SMS audit with TC. Although no non-compliances were highlighted, opportunities for improvement were identified, and corrective action plans are underway. Many shortline railways have been audited as well.

The Railway Association of Canada (RAC) has mandated that membership requires enhanced attention to improving safety culture within their organizations. It is well recognized that good safety culture ensures optimum performance of SMS. The RAC has delivered conferences and workshops to members. A new position was announced in January 2015 for an RAC Chief Safety Culture Officer, who will oversee a program for the industry governing related training, assessments, outreach, tools and association standards for members.

Transport Canada's response to Recommendation R14-05 (February 2015)

Transport Canada (TC) has committed to conducting thorough safety management system (SMS) audits of every SMS component for all railways under its jurisdiction on a three-to-five-year cycle or more frequently, if required. A risk-based approach will be used to determine whether a company that is on a three-to-five-year schedule should be audited sooner. This will ensure that audits have sufficient scope to ensure that deficiencies within a railway’s SMS are identified and addressed in a timely manner.

On 20 February 2015, new Railway Safety Management System Regulations, 2015 (SMS Regulations) were announced. The SMS Regulations require companies to develop and implement a formal framework that integrates safety into their day-to-day operations. The new SMS Regulations were published in the Canada Gazette, Part II, on 25 February 2015, and are effective on 01 April 2015.

Also, on 20 February 2015, TC proposed amendments to the Railway Safety Act to strengthen oversight, with a focus on communities, accountability, safety management systems and authorities. The amendments will give the Minister the power to order corrective measures if it is believed that a company is applying its SMS in a way that compromises railway safety. This new authority will encourage companies to more effectively manage the risks that exist in railway operations.

Board reassessment of the response to Recommendation R14-05 (March 2015)

The Board is encouraged that the Railway Association of Canada (RAC) has identified the need for enhanced attention to safety culture amongst its membership, and the Board anticipates a positive impact from the efforts of the new RAC Chief Safety Culture Officer.

As the railway industry continues to make progress towards improved safety culture, Transport Canada (TC) must demonstrate that its oversight regime will ensure that all railways are audited with sufficient scope and at a frequency to confirm that the required processes are effective and that corrective actions are being implemented.

The Board is pleased that TC has now made a clear commitment to auditing every component of a railway’s SMS on at least a three- to five-year cycle. New SMS Regulations come into effect on 01 April 2015, requiring railway companies to implement a formal framework that integrates safety into their day-to-day operations. In addition, proposed amendments to the Railway Safety Act will give the Minister the power to order corrective measures if it is believed that a company is applying its SMS in a way that compromises railway safety.

Therefore, the Board considers the response to Recommendation R14-05 to have Satisfactory Intent.

Transport Canada's response to Recommendation R14-05 (January 2016)

A three-phase transition plan has been established to help companies be aware of and progressively implement the new requirements of the SMS Regulations.

Phase I was conducted between April and October 2015. Initial inspections were conducted of all federally regulated railway companies to ensure that

  • Processes had been developed according to the 2015 safety management system (SMS) regulatory requirements for:
    • Designating an executive accountable for the railway company's SMS;
    • Notifying the Minister of, and furnishing upon request, related risk assessment documentation for:
      • Whenever a railway begins to transport dangerous goods or begins to transport dangerous goods different from those it already does,
      • Whenever a proposed change to its railway operations may affect the safety of the public or personnel or the protection of property or the environment
  • Railways were continuing to conduct risk assessments using their existing SMS processes while progressively transitioning to the new risk assessment requirements of the 2015 SMS Regulations.

All federally regulated railway companies were visited and at the same time, additional education and awareness regarding the requirements of the 2015 SMS Regulations was offered.

Phase II started immediately following the completion of Phase I. Targeted inspections are underway to ensure that all companies are compliant with the development of their SMS according to the regulatory requirements. Phase II is expected to be completed by 31 March 2016.

Phase III will begin as of April 2016 and will involve audits of company SMS. These audits will verify if companies are continuing to meet the requirements of the regulations and are striving to achieve the highest level of safety. Training and tools for Rail Safety Inspectors are being developed to support the conduct of these audits.

Response from the Railway Association of Canada to Recommendation R14-05 (January 2016)

Our Class I railways have a comprehensive safety management system (SMS) that has been audited by Transport Canada (TC) on several occasions. New SMS regulations came into effect on 01 April 2015 and all Railway Association of Canada (RAC) members have recently undergone targeted SMS inspections by TC. The RAC has mandated that membership requires enhanced attention to improving safety culture within their organizations. It is well recognized that good safety culture ensures optimum performance of SMS. The RAC delivered a number of conferences and workshops to members in 2015. A new position was established in January 2015 for an RAC Chief Safety Culture Officer, who oversees the program for the industry governing related training, assessments, outreach, tools and association standards for members.

Board reassessment of the response to Recommendation R14-05 (March 2016)

The Railway Association of Canada (RAC) has taken steps to enhance attention to improving safety culture within their organizations. The RAC delivered a number of conferences and workshops to members in 2015. A new position was established in January 2015 for an RAC Chief Safety Culture Officer, who oversees the program for the industry governing related training, assessments, outreach, tools and association standards for members.

Transport Canada (TC) established a three-phase plan to assist in implementing the new requirements of the SMS Regulations which came into effect on 01 April 2015. Between April and October 2015, initial inspections were conducted as part of Phase I to ensure the regulations were being acted upon, including the establishment of various processes. For Phase II, targeted inspections are being conducted to ensure that railway companies are developing their SMS according to regulations. Starting in April 2016, Phase III will involve auditing railway companies to verify if they are continuing to meet the requirements of the regulations and are striving to achieve the highest level of safety. In addition, training and tools for Rail Safety Inspectors are being developed to support the conduct of these audits.

The Board acknowledges that good progress has been made on TC's three-phase transition plan to help companies be aware of and progressively implement the new requirements of the SMS Regulations. However, it is not yet complete.

Therefore, the Board considers the response to Recommendation R14-05 to have Satisfactory Intent.

Next TSB action

The TSB will continue to monitor TC's progress on the implementation of the amended regulations, as well as enhanced enforcement activities, and improvements to its audit and inspections programs for railways.

This deficiency file is Active.