Share This Page

Railway in Quebec train to lose license

| Tuesday, Aug. 13, 2013, 10:18 p.m.

TORONTO — Canada's transportation agency said on Tuesday it will suspend the operating license of the U.S.-based rail company whose runaway oil train derailed and exploded in a Quebec town, killing 47 people.

The agency said it planned to take away the certificate of fitness for the Montreal, Maine & Atlantic Railway and its Canadian subsidiary, effective Aug. 20.

The transportation agency said it wasn't satisfied that the troubled company, which has filed for bankruptcy since the July 6 disaster, has demonstrated that its third-party liability insurance is adequate for ongoing operations.

The parked train, with 72 tankers of crude oil, was unattended when it began rolling and derailed in the center of Lac-Megantic. Several tankers exploded, destroying 40 buildings. The company has blamed the train's operator for failing to set enough hand brakes.

The agency said the disaster has raised questions about the growing use of rail transport for oil, including important ones regarding the adequacy of third-party liability insurance coverage to deal with catastrophic events, especially for smaller railways.

“This was not a decision made lightly, as it affects the economies of communities along the railway, employees of MMA and MMAC, as well as the shippers who depend on rail services,” Geoff Hare, the agency's chief executive, said in a statement.

Spokeswoman Jacqueline Bannister said the transportation agency could reconsider its decision if the railway demonstrates they have sufficient insurance. Bannister said the company provided some information to the agency, but they did not get all the information requested. She said they were looking to see if the railway was able to restore their insurance level to at least what existed prior to the derailment, but the railway failed to do so. MMA and MMAC were informed of the decision Tuesday morning before the public announcement, she said.

In the wake of the disaster, the regulator has announced plans to review the insurance coverage of federally regulated railways this fall, given sharp increase in shipments of crude oil in recent years.

\This year, more trains carrying crude will chug across North America than ever before — nearly 1,400 carloads a day. In 2009, there were just 31 carloads a day.

Bannister said they will consult with the railway and insurance industries during the review.

“We have to be satisfied that the insurance coverage is sufficient,” he said.

In its bankruptcy filings, the Canadian subsidiary said it only had $25 million in insurance coverage, while estimating the environmental cleanup alone will exceed $200 million. The railway and its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., also cited debts to more than 200 creditors following the disaster.

Messages left at the office of MMA chairman Ed Burkhardt were not immediately returned.

Lac-Megantic and the Quebec government have sent legal notices to the railway, demanding it reimburse the town nearly $8 million in environmental cleanup costs.

Pierre Arseneau, a union representative for MMA workers in Quebec, said he was disappointed the railway will lose its operating license next week, but he understands the importance of having sufficient insurance coverage. Arseneau, a member of the United Steelworkers, is concerned about the dozens of jobs at stake and hopes another operator will take over the railroad quickly.

Twenty-four of the railway's 75 employees in Quebec have already lost their jobs since the derailment, but Arseneau fears the impact of the suspension could reach well beyond MMA if a solution isn't found quickly. “It's also the whole economy of the region,” Arseneau said. “There are lots of companies that depend on the railroad.”

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.