Canada to shut down rail firm involved in Quebec town disaster

Tue Aug 13, 2013 1:23pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By David Ljunggren

OTTAWA (Reuters) - Canada will shut down the rail operator whose tanker train blew up in a Quebec town last month, killing 47 people, because the firm does not have enough insurance to pay clean-up costs and other damages, a government regulator said on Tuesday.

The Canadian Transportation Agency said it would suspend the operating license of Montreal, Maine and Atlantic Railway (MMA) and its Canadian subsidiary from August 20, to give the two firms "time to arrange for the orderly cessation of their operations in Canada."

MMA filed for bankruptcy protection in Canada and the United States last week after the July 6 derailment and crash of the runaway train laden with oil. The resulting explosions obliterated the center of lakeside Lac-Megantic, a small town in eastern Quebec close to the border with Maine.

In a court filing, the company said its insurance covered liabilities up to C$25 million ($24.2 million), while clean-up costs could exceed C$200 million.

MMA also faces a series of class-action lawsuits in Quebec and in the United States on behalf of the victims, as well as a notice of claim from a firm that is unable to ship from its Lac-Megantic production facilities.

An estimated 1.48 million U.S. gallons (5.6 million liters) of oil were spilled in the crash.

The Canadian Transportation Agency - an independent government body that oversees railway insurance - said it had contacted MMA and its Canadian subsidiary to ensure they continued to hold adequate third-party liability insurance.

But the agency was not satisfied with the response, said Geoff Hare, CTA's chief executive officer.   Continued...

First responders fight burning train cars after a train derailment and explosion in Lac-Megantic, Quebec in this file photo taken July 6, 2013 and provided by the Transportation Safety Board of Canada. REUTERS/Transportation Safety Board of Canada/Handout