Economy

Opinion / Commentary

Little progress on rail safety in wake of Lac Mégantic

Are Canada's rail-safety regulators in the pocket of a regulation-averse industry?

By: Bruce Campbell Published on Thu Apr 14 2016

Transport Minister Marc Garneau said recently that rail safety is his number one priority. The federal budget pledged an extra $143 million over three years to, among other things, “support new and expanded activities to strengthen oversight and enforcement” of rail safety.

While this is a laudable step, fundamental problems with the rail regulatory regime remain. Toronto mayor John Tory and 17 counsellors raised some of these in a letter to the minister.

Not mentioned was the issue of regulatory capture, which gained widespread attention during the U.S. subprime mortgage crisis. It is generally accepted that a major cause of the crisis was that regulators were in the pocket of a regulation-averse industry.

Capture exists where regulation is systematically directed to benefit the private interest of the regulated industry at the expense of the public interest. Characteristically, industry is able to shape the regulations governing its operations. It regularly blocks or delays new regulations, and seeks to remove or dilute existing regulations deemed be adversely affecting profits.

There is considerable evidence that regulatory capture of the rail regulatory regime played a role in the 2013 Lac Mégantic rail disaster.
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Bruce Campbell is a visiting fellow at the University of Ottawa Faculty of Law, on leave from the Canadian Centre for Policy Alternatives. He received the 2015 Law Foundation of Ontario Community Leadership in Justice Fellowship.