A piece of cardboard hung beside the railroad tracks in Lac-Mégantic, Que. In thick, black letters across the top, the word “TRAIN.” On each side of a skull-and-crossbones, the word “NO.”

It’s one of several that cropped up along the tracks in the wake of the July 6 disaster, declaring trains no longer welcome.

Clermont Lapointe hung one of those signs. Yet he said everyone recalls the role trains have always played in this community of 6,000.

Lac-Mégantic was built on the railway, a narrow artery of steel that was the lifeblood of this town for 130 years. And which, around 1 a.m. on July 6, brought 72 carloads of crude oil hurtling into its very heart, where a Montreal, Maine & Atlantic Railway train derailed and exploded, killing an estimated 47 people.

It’s hard, said Lapointe, to understand how something so rooted in the town’s history has left its core in ruins.

Canada, like Lac-Mégantic, grew up alongside the railroad. But where railways once were run under the watchful eye of federal inspectors, government regulators have stepped back in recent years, passing the responsibility for safety over to companies.

Rules changed to allow the country’s two biggest railways to hawk their less-used sections of rail, leading to the rise of dozens of short-line railroads, one of them the Montreal, Maine & Atlantic.

These changes went little noticed by most Canadians. Until Lac-Mégantic.

When E. Wayne Benedict started working on railways in 1988, it was normal to see federal regulators prowling the tracks, trains and yards.

“You could see active enforcement by Transport Canada regulators that were on the site, doing active inspections,” said Benedict. “They would actually ride trains to ensure compliance.”

By the time he left the industry to become a labour lawyer in 2003, there was a “dearth of regulatory action, to say the least,” he said. “You just virtually, very rarely if ever, saw the regulators on the railroad property.”

The Railway Safety Act, implemented in 1989, pushed responsibility onto companies for the safe operation of their railroads.

Transport Canada held that the changes reflected a “spirit of cooperation between industry and government” and a move away from a “fully prescriptive” regulatory approach to one that recognized railways’ obligation for safety, with the federal government maintaining overall responsibility for a safe national system.

Companies were to submit operating rules and safety plans to Transport Canada for approval and abide by federal Canadian Railroad Operating Rules.

Transport Canada’s role now is more that of an auditor than an independent enforcer, said Benedict, who argues that the system fails to protect the public interest.

“There’s an inherent conflict of interest when a profit-making company is vested with the decision-making power over all of the public interest in relation to safety, environment and economics,” he said. “Common sense says that they’re going to make the decision that’s going to have the least impact on their finances and profits.”

He pointed to a couple of examples.

In Calgary, during its massive floods less than two weeks before Lac-Mégantic, a Canadian Pacific bridge partly gave way and six cars — five of them containing petroleum products — slumped over the swollen river.

CP said it had inspected the bridge 18 times during the flood. It normally would have checked piers below the surface — where ultimately the problem lay — but couldn’t due to fast currents and murky water.

CEO Hunter Harrison said holding trains back until an underwater inspection could take place would have been “jeopardizing commerce.”

And then there’s Lac-Mégantic.

Investigators have months of work ahead of them to determine what went wrong.

Still, said Benedict, the train was left on a main track. A siding and derail were there, but federal rules don’t require companies to use them. Nor do federal rules dictate how many hand brakes must be used to provide a fail-safe, should other brakes fail. Companies may set out those numbers in their specific operating instructions, or they may not.

“That’s, in my mind, a failure of the regulatory regime,” said Benedict. “The travesty of this situation at Lac-Mégantic is that there were two fail-safes available at that location, the hand brakes being the first, but the derail being the second.”

The Railway Safety Act also opened the door to letting Canada’s two major carriers, CN and CP, start to sell off sections of track that weren’t profitable, in an era when railways were struggling financially. The 1996 Canada Transportation Act prompted a “mushrooming” of short lines.

CP sold off the MMA line through Lac-Mégantic in 1995. Rail World Inc., MMA’s parent company, acquired it in 2003.

University of Manitoba professor Barry Prentice said high wages and strict labour agreements at the major rail carriers pushed them to abandon short lines. Once smaller operators, free of the same forceful unions, took them over, many could turn profits again by operating more efficiently and with more flexibility.

If those changes hadn’t been made, some of those lines would have been abandoned outright, said Prentice, meaning more road traffic to haul goods.

“If we do abandon these lines, it’s almost impossible that we’ll ever see these lines back in operation again,” said Prentice.

But the short lines don’t have a great revenue base and struggle to maintain infrastructure, he said, often leaning on federal and provincial governments to help.

Mike Lowenger, vice president of operations and regulatory affairs at the Railway Association of Canada, said the Railway Safety Act made it easier to introduce new technologies to make operations safer.

Changes to the act in 1999 incorporated safety management systems (SMS), requiring companies to create a safety plan and leading regulators to rely more on auditing a railway’s performance rather than on detailed technical inspections.

The success of the SMS approach “depends on a partnering between industry and the regulator to better manage risks … and to continuously improve safety performance,” said the introduction to a 2007 rail safety review by Transport Canada.

Lowenger said safety management plans add another layer to federal rules.

“We don’t feel anything’s been diminished; we feel it’s been added to,” said Lowenger, pointing to the industry’s improved safety record.

Lowenger said profits don’t trump safety, even if extra precautions cost more money.

“Try the cost of an accident,” he said. “Accidents are expensive, PR is not good if you’re not a safe railway and shippers … if they don’t think your railway is safe, they won’t use you.

“When we say safety is No. 1, there’s a big rationale for that. It’s not just show anymore, it’s your business. If you’re not safe, you don’t have a business.”

Bob Ballantyne, former RAC president, said what’s often called deregulation of industry safety isn’t a “carte-blanche” for railways. Transport Canada can and does force new rules when needed, said Ballantyne, current president of the Canadian Industrial Transportation Association.

“The fallback position is the government’s got a really big hammer.”

Transport Canada used that hammer last week when it issued six emergency orders, following several urgent safety notices from the Transportation Safety Board on securing unattended trains.

Benedict calls it “creeping re-regulation,” an ad hoc series of reactive rules when what’s really needed is a discussion about Canada’s regulatory regime.

“Hard questions need to be asked,” said Benedict.

Rex Beatty, president of Teamsters Canada Rail Conference, concurred.

“Whenever these things happen, just the public outcry, people tend to react,” said Beatty. “But the reaction’s got to be for valid reasons and not just for appeasement.

“Without jumping on the railroads, I really think we should be sitting down and having a dialogue about how the railway operates.”

But in Lac-Mégantic, where thousands attended a memorial Saturday for victims of the train wreck, there are many who simply want the railway moved.

CBC reported that an official request was sent to the Canadian Transportation Agency to relocate the tracks to an industrial area on the edge of the town. A host of other communities are having similar discussions.

Some of the towns built on railways don’t trust them anymore.

Timeline: Railway regulation in Canada

1989: Railway Safety Act shifts responsibility for safety to companies, with Transport Canada auditing safety procedures and continuing to conduct some inspections.

1996: Canada Transportation Act spurs a major restructuring of large carriers, leading to a boom in smaller feeder railways. CN and CP are slashing workforces; CN’s is cut in half between 1993 and 1999, from 34,000 to 17,000.

1999: Railway Safety Act amended to include safety management systems — company-specific plans to ensure safety — which come into force in 2001.

2006: A slew of deadly rail accidents between 2002 and 2005 triggers a review of the act.

2008: Review report finds the act “fundamentally sound” but issues 56 recommendations to improve safety, such as financial penalties for non-compliance and requiring plans to show operations are environmentally sustainable. Standing Committee on Transport, Infrastructure and Communities also issues a report, adding 14 more recommendations.

2013: Amended Railway Safety Act comes into force May 1. Changes include whistleblower protection for employees who raise safety concerns, monetary penalties and increased judicial penalties, and requirements for safety-based operating certificates.