Regulations Amending the Transportation of Dangerous Goods Regulations (Containers for Transport of Dangerous Goods by Rail): SOR/2019-75

Canada Gazette, Part II, Volume 153, Number 7

Registration
SOR/2019-75 March 26, 2019

TRANSPORTATION OF DANGEROUS GOODS ACT, 1992

P.C. 2019-214 March 25, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to section 27 ^{footnote a} of the Transportation of Dangerous Goods Act, 1992 ^{footnote b}, makes the annexed Regulations Amending the Transportation of Dangerous Goods Regulations (Containers for Transport of Dangerous Goods by Rail).

Regulations Amending the Transportation of Dangerous Goods Regulations (Containers for Transport of Dangerous Goods by Rail)

Amendments

1 The Table of Contents of Part 1 of the Transportation of Dangerous Goods Regulations ^{footnote 1} is amended by adding the following after the entry for section 1.3.2:

Interpretation of TP 14877 1.3.3

2 The portion of item 35 of the table to section 1.3.1 of the Regulations in column 2 is replaced by the following:

Item	Column 2 Safety Standard or Safety Requirement
35 (36)	Transport Canada Standard TP 14877E, "Containers for Transport of Dangerous Goods by Rail, a Transport Canada Standard", January 2018, published by the Department of Transport

3 Part 1 of the Regulations is amended by adding the following after section 1.3.2:

1.3.3 Interpretation of TP 14877

For the purposes of TP 14877, “the coming into force of this Standard” and “the date this standard comes into force” must be read as “the coming into force of section 1.3.3 of the Regulations”.

4 Section 1.34 of the Regulations is replaced by the following:

1.34 Class 3, Flammable Liquids, Flash Point Greater Than 60°C but Less Than or Equal to 93°C

Despite section 6.1 of the Act and section 4.2 of Part 4 (Dangerous Goods Safety Marks) of these Regulations, substances that have a flash point greater than 60°C but less than or equal to 93°C may be transported on a road vehicle, on a railway vehicle or on a vessel on a domestic voyage as Class 3, Flammable Liquids, Packing Group III. In that case, the requirements of these Regulations, except paragraph 7.2(1)(f) of Part 7 (Emergency Response Assistance Plan), that relate to flammable liquids that have a flash point less than or equal to 60°C must be complied with.

5 (1) The entry for section 5.1 in the Table of Contents of Part 5 of the Regulations is struck out.

(2) The heading before the entry for section 5.14.1 and the entries for sections 5.14.1 to 5.15.11 in the Table of Contents of Part 5 of the Regulations are struck out.

6 Section 5.1 of the Regulations is repealed.

7 Subsection 5.14(1.1) of the Regulations is repealed.

8 The heading before section 5.14.1 and sections 5.14.1 to 5.15.11 of the Regulations are repealed.

9 (1) The Table of Contents of Part 10 of the Regulations is amended by adding the following after the entry for section 10.1:

Railway Vehicle Reciprocity  10.1.1

(2) The Table of Contents of Part 10 of the Regulations is amended by adding the following after the entry for section 10.7:

Reporting 10.8

10 Part 10 of the Regulations is amended by adding the following after section 10.1:

10.1.1 Railway Vehicle Reciprocity

Despite the requirements of Part 5 (Means of Containment), a person may offer for transport, handle or transport dangerous goods by railway vehicle from a place in the United States to a place in Canada or from a place in the United States through Canada to a place outside Canada in accordance with the requirements of Parts 172, 173, 174, 179 and 180 of 49 CFR, except by tank car if the goods are Class 3, Flammable Liquids that are referred to in section 10.5.6 of TP 14877.

11 Subsection 10.7(5) of the Regulations is replaced by the following:

(5) This section does not apply if either the tank car or the other railway vehicle that was coupled is equipped with a cushioning device designed for a displacement of 15 cm (6 in.) or more in compression and capable of limiting the maximum coupler force to 4 448 kilonewtons (1,000,000 lbf) when impacted at 16.1 km/h (10 mph) by a railway vehicle having a gross mass of 99 790 kg (220,000 lb).

12 Part 10 of the Regulations is amended by adding the following after section 10.7:

10.8 Reporting

A consignor shall, on reasonable notice given by the Minister, provide the Minister with the following information:

• (a) the number of tank cars owned or leased by the consignor that meet the requirements of TP 14877 for TC117R tank cars;
• (b) the number of tank cars owned or leased by the consignor that meet the requirements of TP 14877 for TC117P tank cars;
• (c) the number of tank cars owned or leased by the consignor and used for importing, offering for transport or handling dangerous goods included in Class 3, Flammable Liquids, that meet the requirements of TP 14877 for Class 111 tank cars; and
• (d) the number of tank cars owned or leased by the consignor and used for importing, offering for transport or handling dangerous goods included in Class 3, Flammable Liquids, that meet the requirements of TP 14877 for enhanced Class 111 tank cars.

Coming into Force

13 These Regulations come into force on July 2, 2019.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Background

Dangerous goods are used in almost every facet of Canadians’ lives, from fuelling vehicles and providing home comfort, to manufacturing and industrial processes. Dangerous goods are also an important aspect of the Canadian economy, with an estimated 30 million shipments transported within Canada each year in which approximately 24% are transported by rail. Despite their importance to modern life and the economy, dangerous goods can be toxic, infectious, flammable, explosive, corrosive, combustible, radioactive, or pose other hazards. They can be harmful to people, property and the environment if they are not handled or transported properly.

In Canada, the transportation of dangerous goods is regulated under the Transportation of Dangerous Goods Act, 1992 (TDG Act), the Transportation of Dangerous Goods Regulations (TDGR) and standards incorporated by reference into the TDGR. To reduce safety risks during transport, the TDGR establish requirements to reduce the likelihood and consequences of unintended releases of dangerous goods. The TDGR include requirements related to every stage involved in the transportation of dangerous goods, such as handling, offering for transport, safety marks, means of containment, training, and emergency response assistance.

Prior to this amendment, the TDGR incorporated by reference the 2013 version of Containers for Transport of Dangerous Goods by Rail, which is a Transport Canada Standard (TP 14877). This standard sets the requirements for the design, handling, offering for transport, and transporting of dangerous goods by rail. The requirements pertain to the construction, modification, qualification, maintenance, and use of tank cars and ton containers in rail.

The TP 14877 Standard was updated in 2018 to reflect changes in tank car specifications to increase safety when transporting dangerous goods by rail and to better align with U.S. standards. The 2018 version of TP 14877 will be incorporated into the TDGR with this amendment.

Following the incident of Lac-Mégantic in 2013, TC issued three protective directions (PD) aimed at improving safety in the transportation of flammable liquids by rail through various requirements related to tank cars specifications. These protective directions are PD No. 34, PD No. 37, and PD No. 38. Protective directions are regulated under Part 13 of the TDGR.

Issues

This amendment will address three main issues with the current TP 14877.

I. Safety risk associated with non-normalized steel tank cars for the transportation of toxic inhalation hazard substances

Tank cars made of non-normalized steel used to ship toxic inhalation hazard (TIH) substances by rail present a risk to the safety of Canadians and to the natural and built environments. TIH substances are considered amongst the most dangerous goods permitted for transport, as they can be fatal at high concentrations and can spread easily in an area if released.

Non-normalized steel tank cars are more likely to form brittle fractures over time which increases the likelihood of ruptures in the event of an accident. In addition, non-normalized steel is more susceptible to brittle fractures when exposed to cold temperatures during winter. At this time, it is estimated that about 10% of the TIH tank cars used by shippers are made of non-normalized steel.

Newly built TIH tank cars must be designed in accordance with the interim TIH specifications (hereafter referred to as the “interim TIH tank cars”). Interim TIH tank cars feature safety enhancements like normalized steel, a combination of thicker inner shells and outer jackets to improve puncture resistance, full head shield and additional protection for the valves, fittings and nozzles used to load and unload the tank car. The current permitted service life of interim TIH tank cars (i.e. made with normalized steel) is 20 years, which is notably shorter than the standard 50-year service life newly constructed tank cars. The shorter service life creates a disincentive for Canadian shippers to replace their non-normalized tank car fleet with interim TIH tank cars.

II. Misalignment between Canada and the U.S.

An initiative under the Regulatory Cooperation Council (RCC) is harmonizing regulatory activities to support the reciprocal recognition of one-time movement approvals (OTMAs) and temporary or emergency certificates issued under the TDG Act to move non-conforming tank cars and means of containment by rail to a nearby location. Under TP 14877, the one-time movement must be for the purposes of cleaning, testing, repairing, dismantling or unloading containers that are not actively leaking and only when it is not possible or unsafe to remedy the non-conformance at the location where it was discovered. For example, OTMAs can be used for an overloaded tank car, a tank car with a defective interior lining or coating, a tank car with a defective interior heater coil. These approvals are issued in situations where it is determined that the movement of a leaking tank car or means of containment would provide greater safety than allowing it to remain in place.

Prior to this amendment, the OTMAs process for transporting dangerous goods by rail was not aligned between the Canada and the U.S. For example, in the U.S., shippers must apply for OTMAs for certain overloaded tank cars while in Canada, written approvals were not required, as long as the conditions set out in TP 14877 were met. This misalignment caused confusion, added burden to shippers as well as unintended consequences where overloaded tank cars posed a risk to safety.

III. Unconsolidated requirements

Following the devastating incident in Lac-Mégantic in July 2013, TC implemented a number of requirements to improve the safety of transporting dangerous goods by rail. These requirements were implemented through a combination of amendments to the TDGR, updates to TP 14877, and the adoption of several protective directions. As a result, these requirements were found in different sources, which made it more time consuming and confusing for regulatees who wished to consult the requirements. The table below includes the regulatory requirements implemented through the various instruments.

Table 1: Regulatory requirements related to transporting dangerous goods by rail

Regulatory Instrument	Summary of Requirements	Effective Date
Protective direction no. 34	Prohibits the transport of dangerous goods in certain Class 111 tank cars made of low-toughness steel when the bottom of the car is not continuously reinforced	April 23, 2014
TDGR, Part 5	Updated requirements for flammable liquids Adoption of new tank car specification, TC 117	May 1, 2015
Corrigendum	Contains minor corrections to TP 14877	June 2015
Protective direction no. 37	Requires top fitting protection for retrofitted TC-111 tank cars	November 1, 2016
Protective direction no. 38	Accelerates the phase-out of the enhanced TC-111 tank cars for crude oil service to November 1, 2016	July 26, 2016

Objectives

The amendments will incorporate by reference the 2018 edition of TP 14877. The updates made to TP 14877 seek to

• reduce the risks associated with the transportation of TIH substances by rail;
• facilitate cross-border trade of dangerous goods and increase safety through better alignment with U.S. and international standards, where appropriate;
• provide more flexibility to stakeholders on the transportation of dangerous goods by rail by allowing new technologies and practices; and
• consolidate and clarify the requirements to make it easier for stakeholders to retrieve and consult.

Description

Incorporation of the revised TP 14877 will require all rail carriers and consignors that import, handle, offer for transport or transport dangerous goods in a railway vehicle to implement all changes made in the 2018 edition of TP 14877. The requirements have been summarized and grouped under four categories.

1. Tank car safety

1.1 Normalized steel for TIH tank cars

The head and shell of tank cars transporting TIH substances will be required to be made of normalized steel. This requirement will take effect on July 2, 2021.

1.2 TIH tank standard

The interim TIH tank standard (referred in the U.S. as HM-246) will become the permanent standard. The service life of these cars will also be extended to 50 years which is consistent with the U.S.

1.3 Carbon steel thickness

The thickness of any new pressure tank car constructed using carbon steel of 483 to 558 MPa (70 000 to 81 000 psi) minimum tensile strength will be increased from 16 mm (5/8 inch) to 16.7 mm (21/32 inch).

1.4 Thermal blanket

A new requirement was added to the thermal protection systems for new Class 117 tank cars. The thermal protection system of newly built Class 117 tank cars must include at least a 12.7 mm (1/2 inch) thick ceramic fibre blanket.

1.5 Removal of expired equivalency certificate stencil markings

A new requirement was added for tank cars authorized for transport under an equivalency certificate. If the tank car meets all the requirements of the standard, the equivalency certificate stencil marking must be removed at the next tank qualification.

2. Alignment with other jurisdictions

2.1 One-time movement of non-conforming containers

The requirements for the one-time movement approvals for non-conforming tank cars and means of containment will be fully harmonized between the U.S. and Canada. Written notifications for the one-time movement of overloaded railway vehicles by weight will be required. Applicants may apply for written notification if

1. a tank car is found to be overloaded by weight in transport by 1 361 kg (3 000 lb) or less when measured on a weight-in-motion scale or 454 kg (1 000 lb) or less when measured on a static scale, as long as the outage is within regulatory limits; or
2. a railway vehicle other than a tank car carrying solid dangerous goods is found to be overloaded by weight in transport by 2 268 kg (5 000 lb) or less when measured by a scale.

Applicants will be required to submit the following information to TC to obtain written notifications:

1. Scale tickets;
2. Loading temperature and specific gravity of commodity at the loading temperature;
3. Specific gravity of commodity at appropriate reference temperature;
4. Capacity of the container and weight of the empty container;
5. Innage/outage table for the tank car. These tables assist shippers in determining the correct filling level as they are used to calculate the volume of goods loaded in a tank car by measuring the product level. The innage table indicates the volume in a tank at quarter-inch increments. The outage table indicates the volume out of a tank at quarter-inch increments; and
6. Any additional information that can be used to demonstrate that the tank car is not overloaded by volume.

The standard provides a number of situations in which the movement of certain non-conforming tank cars and other railway vehicles may be transported for the purposes of cleaning, repairing, testing, dismantling or unloading. Table 2 summarizes the changes made to the low-risk safety approvals to improve harmonization with the U.S. Hazardous Materials Regulations — Title 49 of the “Code of Federal Regulations” (49 CFR).

Table 2: Summary of changes to the low-risk safety approvals for the one-time movement of non-conforming containers

Situation	Change
Cleaned or residue railway vehicles	Expanded to include a non-dangerous goods railway vehicle and a clean hopper car. Hopper cars are types of cars in which commodities are released through its floor. They are often used for transporting grains, plastic pellets, cement, flour, sugar and various minerals.
Tank car with missing or damaged service equipment	Removed the exclusion of missing or damaged eduction pipes. Eduction pipes can be used for unloading the commodity in liquid form from the top of the tank. It is the pipe that runs from the valves to the tank. The valves can be used for loading or unloading liquids or for introducing or removing vapor from the tank.
Tank car with defective interior heater coils	Only applies to tank car with defective interior heater containing dangerous goods residue. Interior heaters are used to keep the commodities warm or to heat them to facilitate unloading. Removed interior heater closure (the cap or other type of closure used to close off the piping of the interior heater). Removed the condition that dangerous goods residue must be solidified.
Structurally damaged tank car	Expanded to include a tank car containing residual amounts of dangerous substances with structural damage that does not affect its product retention capability.

The wording was also modified to specify that the use of a one-time movement of non-conforming containers only applies to railway vehicles that were in conformance with the standard prior to the discovery of a non-conformity.

The section “Maintenance of Defective Tank Car Service Equipment in Transportation” was also renamed to “Low Risk Safety Approvals.”

2.2 TP 14877 special provisions

Schedule 1 provides the text of the special provisions that apply to various dangerous goods. If a special provision is listed in Column 6 in Schedule 2, the container type listed in the applicable special provision must be used. For example, in Schedule 2, Benzyl chloride (UN1738) has special provision no. 3 which states that it may be handled, offered for transport, or transported in a Class 105, 111, 112, 114, 115, 117, 120, or AAR 206W tank car, or a Class 106 or 110 ton container. Schedule 1 and Schedule 2 were modified to align with both the 19th edition of the United Nations (UN) Recommendations and the 49 CFR. For example, a new special provision (no. 87) was created for Sulphuric Acid (UN1831) to combine 4 existing special provisions specific to sulfuric acid, fuming containing 30% or more of free sulphur trioxide. Having these requirements organized together in one special provision improves the ease of use and aligns with the 49 CFR.

The previous standard had two entries for sulfuric acid that were based on the free sulphur trioxide content. With the addition of the new special provision, there would only be one entry for sulfuric acid, fuming which is consistent with the UN Model Regulations.

3. Incorporation of best practices

Updates were made to TP 14877 to improve alignment with best practices used by industry.

3.1 Stainless steel

Low carbon grade stainless steel varieties such as 304L and 316L are now permitted as an acceptable material of construction. Previously, these types of stainless steel were permitted in the U.S. but not in Canada, which caused confusion and extra burden for cross-border shipments.

3.2 Enhanced Class 111 tank car requirement

Shippers will be required to use an enhanced Class 111 tank car for transporting Packing Group I and II substances (excluding flammable liquids and TIH substances) if the car was built after October 1, 2015. This requirement applies to dangerous goods posing a medium to high danger (packing groups I and II). Prior to this amendment, shippers only needed to use an enhanced Class 111 tank car if it was built after January 15, 2015. An enhanced Class 111 tank car offers additional safety protection in the way of increased shell thickness, normalized steel, and top-fitting protection over conventional Class 111 tank cars.

3.3 Stub sill inspection

Attached to the underside of the tank, the stub sill is the structural member of the car’s underframe that connects the tank cars and is also the attachment point for the wheel sets. The interval for inspecting the stub sill was modified to account for mileage. An inspection will be required once every 10 years, or when the tank car reaches 200 000 miles or 500 000 miles. The mileage threshold depends on the design, build date and inspection date.

3.4 Manway nozzle

The manway is the circular opening located at the top of the tank car. It provides access to the tank for maintenance, inspection, and loading or unloading. The manway nozzle is the short tube projecting from the top of the tank car. Insulation requirements were modified to remove the need to insulate the manway nozzle so that insulation will only be needed for the tank shell and head. Since calculations for thermal protection and heat loss already account for discontinuities from the manway nozzle, it is not necessary to apply the insulation requirements to the manway nozzle.

When conducting tank pressure tests, the tank will only need to be filled to the top of the manway nozzle. The previous standard required that the tank be completely filled for tank pressure tests.

3.5 Hydrogen peroxide

A new special provision (no. 85) was added to Hydrogen Peroxide (UN2014/UN2015) to provide flexibility to railway shippers. With this new special provision, the grounding cables do not need to be electrically grounded and the electrical circuits do not need an additional path for the electrical current to return safely to the ground during loading and unloading, as long as fire safety measures have been taken to prevent the exposure of the dangerous goods to fire hazards, including sources of ignition, intense heat and flammable materials.

4. Clarification and consolidation of requirements

4.1 Consolidation

Before this amendment, stakeholders needed to consult multiple documents to determine the requirements for transporting dangerous goods by rail. The revised TP 14877 consolidates the requirements from

• Corrigendum — June 2015
• PD No. 34
• PD No. 37
• PD No. 38
• TDGR, Part 5

4.2 Reorganization of sections

A list of acceptable TC 117 equivalents was reorganized and moved to one section of TP 14877 to clarify that shippers can use specifications that exceed the safety requirements of TC 117.

The rail reporting requirements found in section 5.15.11 of the TDGR is moved to Part 10 of the TDGR to keep the rail requirements in Part 10.

A new section is added to Part 10 of the TDGR to consolidate and specify the rail container requirements for transporting flammable liquids as well as transporting dangerous goods from the U.S. into or through Canada. Previously, the various phase-out dates of tank cars for transporting specific flammable liquids were indicated in both the standard and the TDGR. For example, the requirement stating that “starting on May 1, 2025, a person must not import, offer for transport, handle or transport flammable liquids in packing groups I, II or III in a tank car unless the tank car is a TC 117R, TC 117 or TC 117P tank car” is repeated in both the standard and the TDGR. These requirements were removed from the TDGR and replaced with a reference to the TP 14877.

4.3 Inspections

Clarifications were made to the tank car inspections. For instance, the maximum tank car inspection interval is now specified compared to previously specifying only the minimum interval. Further details, such as checking the required markings for legibility and correctness, were also added to the visual inspection to help stakeholders carry out their visual inspections.

4.4 Definitions

A number of definitions were modified or added for clarity or to harmonize with the Association of American Railroads (AAR) and the U.S. Department of Transportation (DOT). For example, the 2013 version of TP 14877 had one definition of “closure.” The revised standard added “primary closure” and “secondary closure” to the list of definitions to better distinguish these closures. The definition of “Director” was also updated to specify the “Executive Director, Regulatory Frameworks and International Engagement.” Modifications were also made to the definitions of “check valve,” “crude oil,” “nozzle,” “one million mile fatigue life,” and “tank.”

4.5 References

References included in the 2018 edition of TP 14877 were updated. For instance, the reference to the 2013 version of the Field Manual of the Interchange Rules of the AAR was updated to the current 2016 version. References to the American Society for Testing and Materials (ASTM) and Canadian Standard Association (CSA) standards were also updated to incorporate the most recent editions.

4.6 Equivalency certificates

The list of equivalency certificates for tank cars authorized to exceed 119 295 kg but not to exceed 129 727 kg was updated to remove 12 equivalency certificates as they were no longer required.

Regulatory and non-regulatory options considered

Tank cars are built to the specifications dictated under the TDGR and associated standards. In Canada, dangerous goods must be transported in approved containers that are built to the appropriate standard(s).

A voluntary approach to adopting a new tank car standard was not considered to be a feasible option. Given the risks involved in transporting TIH substances, it was imperative that TC bring forward appropriate tank car specifications to protect public safety and the environment. In light of this, non-regulatory options were not considered to be effective in achieving the desired safety objectives of this amendment.

As part of its regulatory analysis, TC considered a longer implementation schedule to allow the U.S. to complete its adoption of normalized steel and allow stakeholders more time to build new tank cars. However, based on several factors such as Canada’s colder climate, an analysis of the current fleet of normalized steel tank cars, and the expectation of the U.S. government to follow in the same direction, it was determined that the implementation schedule strikes the right balance between the need to ensure public safety of TIH rail transport and providing adequate time to comply with the new requirements, as well as ensuring there are no potential supply interruptions due to a shortage of compliant tank cars.

Benefits and costs

A cost-benefit analysis was conducted for two updates related to TIH tank cars under TP 14877: the phase-out of non-normalized steel TIH tank cars, and the extension of service life of interim TIH tank cars from 20 to 50 years.

The benefits associated with the phase-out of non-normalized steel tank cars are estimated to be about $22.4M, and the costs about $17.9M. The benefits for the extension of the year limit are estimated to be about $187.3M. Together, the two updates are expected to yield net benefits of about $191.9M.

Analytical framework

The cost-benefit analysis assesses the incremental impacts using baseline and regulatory scenarios. The costs and benefits of the updates have been assessed in accordance with the Canadian Cost-Benefit Analysis Guide developed by the Treasury Board Secretariat (TBS). ^{footnote 2}

The timeframe of analysis covers the 2021–2068 period. This timeframe was adopted in order to appropriately capture the incremental impacts associated with the extension of service life. All benefits and costs are discounted to a base year of 2019 with a real discount rate of 7% in accordance with TBS guidance. All costs and benefits are expressed in 2017 Can$ unless otherwise indicated. ^{footnote 3}

A. Phase-out of non-normalized steel TIH tank cars

The update on the phase-out of non-normalized steel TIH tank cars is expected to yield net benefits of about $4.5M.

Cost

The phase-out of non-normalized steel TIH tank cars will result in costs to rail shippers of TIH substances for the replacement of non-normalized TIH tank cars. The total costs are estimated to be about $17.9M. There will be no incremental costs imposed on the government from this update.

Costs to rail shippers

The incremental costs associated with the phase-out of non-normalized steel TIH tank cars have been estimated for leased tank cars (90% of the total non-normalized fleet) and for owned tank cars (i.e. the remaining 10% of the fleet). The costs are broken down for three categories of TIH substances shipped by rail: anhydrous ammonia, chlorine, and others. ^{footnote 4}

The phase-out costs to rail shippers include the higher leasing costs of normalized steel units for tank car lessees, the costs of purchasing new normalized units net of the salvage value of non-normalized units for tank car owners, as well as the costs of repurposing non-normalized units so they can be used to transport other goods that will require lower or equal technical specifications.

Given a current stock of non-normalized steel TIH tank cars estimated at a total of 349 units and a linear rate of phase-out expected to occur in the baseline, the total incremental costs associated with the replacement of non-normalized tank cars are estimated to be about $17.86M. Table 3 presents the incremental costs of leasing, purchasing, and repurposing, by category of TIH substance.

Table 3: Total costs of phasing out non-normalized steel TIH tank cars

TIH substance	Leasing costs (cumulative over 2021–2035)	Purchasing coststable 3 note* (incurred in 2021)	Repurposing costs (incurred in 2021)	Total costs
Anhydrous ammonia	$3.28M	$658K	$287K	$4.23M
Chlorine	$5.57M	$1.12M	$490K	$7.18M
Others	$5.00M	$1.01M	$439K	$6.45M
Total	$13.85M	$2.79M	$1.22M	$17.86M
Table 3 Note Table 3 Note * The purchasing costs of normalized steel units are netted out of the salvage value of non-normalized steel units. Note: Totals may not add up due to rounding. Return to table 3 note * referrer

Benefit

The phase-out of non-normalized steel TIH tank cars will reduce the likelihood of a fracture to the head and shell of tank cars in case of accidents, thereby preventing potential leaks of TIH substances in the surrounding environment. Benefits from avoided impacts of TIH leaks have been estimated for rail shippers and for Canadians. In total, the benefits are estimated to be $22.45M.

Benefits to rail shippers

Rail shippers are expected to benefit from the phase-out by avoiding potential damages to property such as railroad rolling stock and equipment, track, signal systems, and railroad-related lading. ^{footnote 5} In addition, preventing leaks may also avoid closures of rail tracks since TIH releases can force rerouting of rail traffic over other tracks and can prolong the distance needed to ship freight, and may induce extra tolls for the use of alternate tracks. The benefits to rail shippers are estimated to be about $902K. Table 4 presents the benefits to rail shippers.

Table 4: Benefits to rail shippers (2017 Can$)

Type of benefit	Total benefits
Property damages (avoided)	$313.2K
Track out of service (avoided)	$588.7K
Total	$901.9K

Benefits to Canadians

There are a four types of benefits to Canadians from this update. First, reduced leaks may prevent human deaths and/or severe health problems from inhalation of toxic TIH vapours. ^{footnote 6} Second, it will reduce environmental damages. ^{footnote 7} Third, it will prevent evacuations of communities located near the tracks. Fourth, there will be avoided electric disruptions and road closures which will prevent temporary business closures and diversion of traffic. In total, the benefits to Canadians are estimated to be about $21.54M. Table 5 below presents the results estimated for each type of benefit.

Table 5: Benefits to Canadians (2017 Can$)

Type of benefit	Total benefits
Human health impacts (avoided)	$20.1M
Environmental damages (avoided)	$942K
Electric disruption and road closures (avoided)	$270.8K
Evacuation costs (avoided)	$270.7K
Total	$21.54M

Note: Totals may not add up due to rounding.

B. Extension of the year limit for the service life of interim TIH tank cars

The update on the extension of the year limit from 20 to 50 years is expected to yield net benefits of about $187.3M. These will be accrued by rail shippers from cost savings associated with a longer service life of interim TIH tank cars.

Benefits to rail shippers

The cost-benefit analysis on the extension of service life from 20 to 50 years reflects the difference between the costs of a given fleet of interim TIH tank cars under a 50-year limit (regulatory) and the costs of the same fleet under a 20-year limit (baseline). The costs considered in each scenario include those associated with the replacement, maintenance, and repurposing of interim TIH tank cars over a timeframe of 2021–2068.

Considering an existing stock of interim TIH tank cars estimated at 860 units, as well as an annual production of new units estimated at about 287 units over a 10-year period (2019–2028), the total benefits accrued to rail shippers are estimated to be about $187.3M, as shown in Table 6.

Table 6: Benefits to rail shippers from cost savings (Can$ 2017)

Type of costs	20-year time limit (Baseline)	50-year time limit (Regulatory)	Total benefits
Replacement (purchasing)table 6 note*	$203.80M	$1.25M	$202.6M
Maintenance	$8.63M	$29.85M	($21.22M)
Repurpose	$5.89M	0	$5.89M
Total	$218.3M	$31.1M	$187.3M
Table 6 Note Table 6 Note * Values for replacement costs under the baseline and regulatory scenarios are net of residual values. Note: Totals may not add up due to rounding. Return to table 6 note * referrer

Summary of benefits and cost

Transport Canada estimates that the update on the phase-out of non-normalized steel will impose costs to rail shippers of about $17.9M, compared to benefits to rail shippers of about $0.9M and benefits to Canadians of about $21.4M. The net benefits are expected to be about $4.5M. The update on the extension of service life of interim TIH tank cars is expected to yield benefits to rail shippers in terms of cost savings, mainly from avoided replacement costs of tank cars. The total benefits accrued to shippers are expected to be about $187.3M.

The benefit-cost ratio for the update on the phase-out of non-normalized steel TIH tank cars is 1.26. Since the benefit from the extension of service life of interim TIH tank cars is a cost saving, no benefit-cost ratio was estimated for this update.

Together, the two updates are expected to yield net benefits of about $191.9M, as shown in the Consolidated Cost-Benefit Statement.

Consolidated cost-benefit statement

Base year	Price year	Period of analysis	Discount rate			Sensitivity analysis Total net benefit — present value
						Lower bound	Upper bound
2019	Can$ 2017	2021–2068	7%			($133M)	$589M
			2021	2038	2068	Annualized value	Total PV
Cost-benefit statement
A. Normalized steel for TIH tank cars
Monetized benefits
Benefits to Canadians		Human health impacts (avoided)	$3,061,000	$10,770	0	$2,054,600	$20,060,000
		Environmental damages (avoided)	$143,000	$506	0	$96,500	$942,000
		Electric disruption and road closures (avoided)	$41,320	$145	0	$27,700	$270,800
		Evacuations (avoided)	$41,300	$145	0	$27,700	$270,700
Benefits to rail shippers of TIH substances		Property damages (avoided)	$47,790	$168	0	$32,100	$313,200
		Track out of service (avoided)	$89,820	$316	0	$60,300	$588,700
Total monetized benefits			$3,425,000	$12,050	0	$2,298,900	$22,450,000
Monetized costs
Costs to rail shippers of TIH substances		Leasing costs	$2,113,000	$7,433	0	$1,418,600	$13,850,000
		Purchasing costs	$2,790,000	0	0	$285,800	$2,790,000
		Repurposing costs	$1,216,000	0	0	$124,500	$1,216,000
Total monetized costs			$6,119,000	$7,433	0	$1,828,900	$17,856,000 Net
Net benefits			($2,694,000)	$4,617	0	$470,100	$4,589,400
B. Extension of year limit for the service life of interim TIH tank cars from 20 to 50 years.
Monetized benefits
Benefits to rail shippers of TIH substances and/or tank car owners		Cost savings	0	$16,150,000	($130,900)	$19,184,200	$187,300,000
Net benefits (A + B)						$19,655,400	$191,900,000

Note: Totals may not add up due to rounding.

Sensitivity analyses

Given the high level of uncertainty with regard to some data and assumptions, single and combined factor variance analyses were conducted. The results suggest that the net present value of the update on the phase-out of non-normalized steel TIH tank cars can vary between −$0.38M (net cost) and $824.5M, and the benefits from the extension of year limit can vary between $133M and $563M.

Distributional analyses

Business and consumer impacts: Given that the expected costs of phasing out non-normalized tank cars are more than offset by the expected cost savings accrued to shippers of TIH substances from the extension to the service life, together the two updates are not expected to impose undue financial costs to rail shippers. Similarly, no impacts on consumers are expected.

Regional impacts: Since anhydrous ammonia is mainly used as a fertilizer in crops, the shippers operating in the Prairies are expected to incur most of the compliance costs for replacing anhydrous ammonia tank cars. The distribution of costs for shippers of chlorine and other TIH substances is expected to be spread more evenly across regions.

“One-for-One” Rule

The “One-for-One” Rule will apply, as there is an administrative burden imposed on rail shippers from the written notifications required for the OTMAs of overloaded railway vehicles. This requirement is considered an “IN” under the “One-for-One” Rule.

The increase in administrative burden includes a total of 50 notifications per year, each taking about one hour to complete and submit. Assuming that in a single year, each notification will be submitted by a different business, the annualized costs of this administrative burden are estimated to be about $860, or $17 per business (in 2012 Can$).

Small business lens

The small business lens does not apply to this amendment, as none of the businesses that will be affected are small businesses. The amendment will therefore produce no costs for small businesses.

Consultation

The standard was developed through the TP 14877 Consultative Committee. Committee members were responsible for commenting and making recommendations on matters related to tank cars used in transporting dangerous goods by rail. The TP 14877 Consultative Committee comprised key stakeholders with extensive knowledge and expertise in various aspects of dangerous goods rail transportation. The Committee included stakeholders who are directly impacted by the standard and would bear the costs of any changes. Its members represent over 25 organizations who are either manufacturers of dangerous goods, shippers, tank car manufacturers, railroad associations, industry associations, the Canadian or the U.S. government.

On February 26, 2016, TC issued a public notice informing the public that it had started the process for updating TP 14877 and was seeking proposals for consideration in the development of the revised standard. This notice was sent to internal and external stakeholders and was posted on TC’s website. Thirty days were provided to the public to submit proposals. TC received 24 submissions from a mix of industry associations, manufacturers and government. On April 30, 2016, the Committee reviewed the comments which were organized into 51 proposals and provided feedback.

The Committee met in May, September and November of 2016 to discuss the development of the revised standard. The meetings took place in person and via telephone conference. These meetings were vital in drafting the standard as TC incorporated comments from the Committee into the final draft of the standard.

Upon completing the final draft of the standard, on March 31, 2017, Transport Canada issued another notice to internal and external stakeholders and posted on its website to share the contents of the draft standard and requested feedback. Stakeholders were given 30 days to provide comments. In addition, this notice was sent to the members of the Transportation of Dangerous Goods General Policy Advisory Council (GPAC) and the Federal-Provincial/Territorial Task Force on the Transportation of Dangerous Goods. Transport Canada received seven submissions from a mix of industry associations and manufacturers with the majority of the comments supporting the initiative.

The main issues raised during the consultation process were

• the mandatory use of normalized steel for tank cars transporting TIH substances; and
• the mandatory use of an enhanced Class 111 tank car for Packing Group I and II substances (excluding flammable liquids and TIH substance).

Some stakeholders did not support the normalized steel requirement and from a technical perspective did not agree with the merits of normalized steel. However, they acknowledged that both Canadian and U.S. governments were moving in this direction. TC originally proposed the mandatory use of normalized steel in the head and shell of tank cars used to transport TIH substances to take effect one year after the coming into force of this amendment. However, stakeholders expressed that it would be difficult for industry to comply with this timeline. Acknowledging these concerns, the requirements will come into force on July 2, 2021.

Canadian shippers raised concerns with regards to the phase-out of the legacy tank car TC 111 for dangerous goods in packing groups I and II (excluding flammable liquids and TIH substances). Stakeholders expressed that the phase-out causes undue burden for cross-border shipments. However, it is important to note that the Transportation Safety Board has repeatedly and openly raised concerns on the risks in using legacy TC 111 tank cars for the transportation of dangerous goods. It was originally proposed that Packing Group I and II substances (excluding flammable liquids and TIH substances) must be transported in enhanced Class 111 tank cars if they were built after January 15, 2015. However, as a result of the consultation process, TC provided stakeholders with additional time to adjust to the requirement. Acknowledging stakeholder concerns, Packing Group I and II substances (excluding flammable liquids and TIH substances) must now be transported in enhanced Class 111 tank cars if they were built after October 1, 2015.

At the start of the standard development, TC proposed to increase the rollover test speed from 9 mph to 12 mph for TIH top fitting protection which was based on findings from a study conducted on tank car top fittings protection. However, the Committee expressed concerns over increasing the requirement as they felt that there was a lack of evidence to suggest that the current rollover speed was inadequate. The Committee recommended that further study was needed prior to making a decision on increasing the speed. As a result, no changes to the rollover speed were made.

TC also proposed to revise the minimum test pressure requirements for dissolved gases. However, the Committee decided to postpone this proposal until the next standard update as this subject requires more study as well.

Regulatory cooperation

In developing the standard, TC held ongoing discussions with U.S. regulators to ensure regulations are harmonized where appropriate and to increase coordination between the two countries. For the most part, the proposed changes are consistent with the objective of the Canada–U.S. RCC, which is to improve Canada–U.S. regulatory approaches to make it easier for industry to do business for both countries. However, a few minor misalignments between the requirements of the two countries exist for transporting TIH commodities.

For instance, there will be a period of misalignment for phasing out non-normalized steel for TIH tank cars. Canada’s phase-out date is two years after the coming into force of this amendment. As indicated in the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) acceptance letter ^{footnote 8} to the AAR, the U.S. government is currently undergoing their review of phasing out normalized steel. TC expects that the U.S. implementation date will occur before Canada’s phase-out date. Despite a relatively short period of misalignment, both countries are heading in the same direction of prohibiting non-normalized steel tank cars for TIH transport.

Recognizing that Canada imports less than 1% of its anhydrous ammonia and chlorine and that only a small portion of the U.S. and Canadian fleet is non-normalized, this short period of misalignment is not expected to negatively impact cross-border movements of TIH commodities. In the event of the U.S. indefinitely delaying the phase-out of non-normalized tank cars, these cars could still be used to ship TIH commodities in Canada but they would not be able to continue in Canada beyond the first stop. They could also be used to service U.S. domestic shipments.

Another minor misalignment will exist with DOT 130/131 tank cars being permitted for TIH transport in the U.S., but not permitted in Canada. These tanks cars are more expensive to build as they have a wider operating test pressure range which allows for the carrying of an expanded range of products. This misalignment has negligible implications for cross-border transportation because currently, only a handful of these units are in service in the U.S. carriers and shippers will need to apply for equivalency certificates for travel within Canada. Since there are so few of these units, TC expects that the U.S. shippers could use them only for their domestic shipments. TC will monitor the growth of DOT 130/131, and if the DOT 130/131 becomes adopted more widely, TC is willing to revisit this issue to better align Canada–U.S. regulatory approaches to facilitate cross-border trade. In the meantime, equivalency certificates can be issued to accept these cars into Canada.

The United Nations develops Model Regulations to encourage the uniform development of national and international transportation of dangerous goods requirements. The Model Regulations are widely accepted internationally, and form the basis of several international agreements and national regulatory regimes (as well as that of the European Union). The list of special provisions were updated to reflect the 19th edition of the UN Model Recommendations.

Rationale

The TDGR required updating to reflect the changes made to the 2018 edition of TP 14877. Currently, the TDGR incorporates by reference the 2013 version of the standard. With this amendment the 2018 version of TP 14877 will be incorporated by reference.

This amendment will have a positive impact on Canadians, rail shippers and on trade, and is not expected to impose undue financial costs to rail shippers or consumers. The estimated net benefits are $191.9M.

Since there will be no change in compliance promotion, regulatory administration, inspection, and enforcement activities as a result of this amendment, the costs to Government from this amendment are negligible.

Tank car safety

Canadians will benefit from more stringent requirements for transporting TIH commodities by rail. TIH leaks can cause severe harm to the human health of nearby populations, to the infrastructure, as well as to the natural environment. In addition, leaks of TIH substances can force the evacuation of nearby residents and disrupt rail traffic for some time, which can temporarily harm economic activity. The replacement of non-normalized tank cars by normalized units will reduce the likelihood of a fracture thereby preventing potential leaks of TIH substances in the surrounding environment which provides a number of benefits to Canadians. These benefits are estimated to be $22.45M.

Prior to this amendment, the service life for using interim TIH tank cars was only 20 years compared to the standard 50-year service life prevailing in the U.S. The time limit of 20 years created a disincentive for Canadian shippers to renew their tank car fleets with newer models that have more reliable, cutting-edge specifications. In addition, research on TIH tank car design indicates that there is no viable design that would represent a significant improvement over the interim standard. This change is also consistent with the 49 CFR in which the interim TIH tank car standard was changed to the permanent standard on September 18, 2017. The extended service life of these tank cars will provide rail shippers with an estimated benefit of $187.3M.

Alignment with other jurisdictions

Railway shippers will benefit from having consistent requirements between Canada and the U.S. for OTMAs of overloaded tank cars. Although the requirements will be the same, the written submission process slightly differs as U.S. DOT has an electronic form while TC’s form is still under development. However, the U.S. DOT form will be accepted by TC. The written approval requirement will also provide TC with an opportunity to collect data on what commodities are being overloaded, who is overloading the tank cars, the frequency, and routes of overloaded tank cars. This data will help TC identify trends and take proactive measures to improve safety. Requiring written approvals for overloaded tank cars will also provide TC with a mechanism to control the flow of overloaded tank cars.

Exemption from prepublication

Following the publication of the standard, TC received strong stakeholder support for this amendment. Stakeholders indicated to TC that they have been appropriately and thoroughly consulted and were provided several opportunities for submitting comments and proposing updates to TP 14877. Industry communicated that they favour an expedited adoption of the standard as delays will cause unintended misalignment with the regulations in the U.S. Lastly, since standards are typically updated on a five-year basis, work on the next update will be starting in 2019. Without this adoption, much of the work that was completed by the TP 14877 Consultative Committee would need to be repeated if the 2018 edition has not come into force by then.

Implementation, enforcement and service standards

The proper implementation of regulatory amendments is a key aspect of the regulatory life cycle. Once regulatory amendments become law, the TDG Directorate develops new training and awareness material for inspectors and stakeholders. New regulatory requirements are disseminated using a communication network that is already well established. Some of the main tools used to implement regulatory changes are the following:

• TC’s webpages are updated on a regular basis with various communication products, as well as specific sections for awareness material (e.g. frequently asked questions, alerts, advisory notices and bulletins). Upon adoption of this amendment, notices and additional guidance material to help stakeholders comply with the requirements will be posted on the TC website.
• The TDG General Policy Advisory Council, composed of over 40 different industry associations, meets twice annually to discuss issues affecting stakeholders and advise the Minister of Transport. During these meetings, TC consults stakeholders and provides information and updates on regulatory amendments that are proposed or that have come into force. Industry is aware of this amendment to the TDGR.
• The Multi-Association Committee on TDG is a committee that provides a forum for industries to discuss questions of interest on the subject of the transport of dangerous goods. TC is invited to participate and provide clarification on regulatory and enforcement issues. This forum is also a good opportunity for the distribution of information about compliance with new regulatory requirements. Updated information about the proposed amendments will be provided to this committee.
• The TDG Newsletter is published semi-annually and is distributed to over 23 000 readers in Canada and abroad. It is available free of charge on the TDG website. Proposed regulatory amendments and updates are published in the TDG Newsletter regularly.

Compliance and enforcement

Compliance with the TDG Act and the TDGR is verified through inspections. These inspections are carried out across the country. The implementation objective is to update and enhance inspector training tools to ensure that oversight is undertaken by properly trained staff. This amendment is anticipated to have a neutral effect on TDG inspectors, as the number of inspections and the time required to conduct the inspections are not expected to change significantly. Information will be provided to them to keep them updated and aware of the new requirements.

Depending on the severity of the non-compliance and its associated level of risk, consequences for non-compliance can include a notice of infraction, detention of dangerous goods, fines up to $50,000 for a first offence and up to $100,000 for subsequent offences, and/or imprisonment of up to two years.

The coming-into-force date for the normalized steel requirement for TIH tank cars was delayed to two years after the coming into force of this amendment to give stakeholders sufficient time to adapt. The remaining changes will immediately come into force as outlined in Table 7.

Table 7: Mandatory compliance dates

Requirement	When does it come into effect?
Normalized steel for head and shell of tank cars transporting TIH substances	July 2, 2021
Enhanced Class 111 tank car for transporting Packing Group I and II substances (excluding flammable liquids and TIH substances)	July 2, 2019, but it only applies to cars built after October 1, 2015
All other changes, including the following: Interim TIH tank car standard changed to permanent TIH tank car standard. Service life of TIH interim tank car extended from 20 years to 50 years. Provisions for the one time movement of non-conforming containers presenting low safety risks.	July 2, 2019

Contact

Geneviève Sansoucy
Chief
Regulatory Development Division
Transportation of Dangerous Goods Directorate
Department of Transport
Place de Ville, Tower C
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Email: TC.TDGRegulatoryProposal-TMDPropositionReglementaire.TC@tc.gc.ca