Follow-up Audit on the Transportation of Dangerous Goods

Opening Statement to the Standing Committee on Public Accounts

Follow-up Audit on the Transportation of Dangerous Goods

(Report 1—2020 Fall Reports of the Commissioner of the Environment and Sustainable Development)

5 November 2020

Andrew Hayes
Deputy Auditor General of Canada
and Interim Commissioner of the Environment and Sustainable Development

Madam Chair, thank you for this opportunity to discuss our follow-up report on the transportation of dangerous goods, which was tabled in Parliament on October 27. Joining me today are Kim Leach, the principal responsible for the audit, and Francis Michaud, who was on the audit team.

Dangerous goods are solids, liquids, or gases that when spilled or released have the potential to harm the health of Canadians and other living organisms, property, or the environment. Examples include crude oil and petroleum products, toxic and explosive gases, flammable and infectious substances, radioactive materials, and corrosive chemicals. These goods play a key part in Canada’s economy and society. They are transported throughout Canada by rail, road, ship, air, and pipeline.

Spills and releases of dangerous goods can happen with any mode of transportation, and accidents can have tragic consequences. Therefore, these goods require special precautions to ensure their safe transportation.

It is the job of Transport Canada to monitor and enforce transporters’ compliance with laws and standards that are meant to ensure that dangerous goods are transported safely. It conducts inspections at rail, marine, road, and air facilities and buildings where dangerous goods are manufactured, stored, or received. Another of Transport Canada’s key oversight functions is reviewing and approving emergency response assistance plans prepared by companies transporting dangerous goods.

The Canada Energy Regulator, formerly the National Energy Board, plays a similar role by overseeing federally regulated oil and gas pipelines.

Our recent audit followed up on specific recommendations from the audits focusing on the transportation of dangerous goods that we completed in 2011 and 2015. The audit also focused on whether the organizations followed up with companies that had contravened regulations to ensure the companies returned to compliance, among other things.

Overall, we found that since our 2011 audit, Transport Canada had made some improvements in the areas we followed up on—for example, it strengthened some of its policies, procedures, systems, and guidance. However, Transport Canada has more progress to make to address the problems we identified in order to support the safe transportation of dangerous goods.

We found that the department still had not followed up to ensure that companies addressed the violations identified through inspections. For example, the department had not verified that companies took corrective action on 30% of the violations we looked at. In addition, the department had not given final approval to many emergency response assistance plans. These plans outline what is to be done to respond if dangerous goods that endanger, or could endanger, public safety are released while being handled or transported. These plans must demonstrate that specialized personnel and equipment are available in a timely manner to help first responders, such as firefighters. We found that approximately one quarter of the plans had not received final approval, some of which had interim approval for more than 10 years.

We also found that, although Transport Canada had developed and implemented a national risk-based system to prioritize its inspections, the underlying data was incomplete and outdated. For example, almost one third of the sites included in the national inspection plan for the 2018–19 fiscal year turned out to be closed, had moved, were duplicates, or may no longer have been involved in the transportation of dangerous goods.

In other words, at the time of our audit, Transport Canada did not have a clear picture of the community of companies it regulated or of the compliance status. As this committee knows, data quality has been a common theme in our performance audit reports across government. Good quality data is needed for good quality decisions.

We made 5 recommendations to Transport Canada, and the department agreed with all of them. In its responses, the department included specific timelines.

With respect to pipelines, we found that since 2015, the Canada Energy Regulator had largely implemented the 3 recommendations that we followed up on and improved its oversight of companies that build and operate pipelines. For example, it implemented an information management system to improve the tracking and documenting of its compliance oversight activities, and it improved its follow-ups to ensure that companies took corrective action to address non-compliance. We made some observations and a recommendation for the Canada Energy Regulator to improve the way it documents its analysis of how pipeline approval conditions have been satisfied by companies. The regulator agreed with this recommendation.

Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.