June 18: New Liability and Compensation Regime for Railways to Take Effect

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The new liability and compensation regime under the Safe and Accountable Rail Act will take effect on June 18, 2016. Under this regime, which is based on the “polluter pays” principle, federally regulated railways will be required to carry a mandatory minimum level of insurance, based on the type and volume of dangerous goods they carry, ranging from $25 million to $1 billion. The two middle insurance levels, $100 million and $250 million, are being phased in to give short line railways time to adjust. These levels will be fully implemented on June 18, 2017. The regime also establishes a supplementary compensation fund to cover any damages above the railways’ mandatory insurance level for accidents involving crude oil.