Railway in Quebec disaster allowed to operate till October 1

Fri Aug 23, 2013 1:57pm EDT
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By Solarina Ho

TORONTO (Reuters) - The rail company whose oil tanker train blew up in a Quebec town last month, killing 47 people, will be allowed to continue operating through October 1 after providing insurance documentation demanded by Canadian authorities.

The Canadian Transportation Agency (CTA) said on Friday it would let Montreal, Maine and Atlantic Railway (MMA) and its Canadian subsidiary keep trains moving for now. Earlier this month it had ordered MMA to cease operations, saying the railway lacked adequate insurance.

On July 6, a runaway MMA train hauling tankers of crude oil derailed in the center of the little Quebec town of Lac-Megantic, and exploded in giant fireballs in what was North America's deadliest rail accident in two decades.

The center of Lac-Megantic was flattened and an estimated 1.5 million U.S. gallons (5.6 million liters) of oil were spilled.

The CTA ordered the railway on August 13 to halt operations as of August 20 because it did not have adequate insurance. The insurance that MMA had in force in July will not come close to meeting the costs of cleanup and restoration after the Lac-Megantic crash.

Last Friday, the CTA reversed that order, allowing MMA to operate through October 1 after the railway provided evidence of adequate third-party insurance. However, MMA still had to show by August 23 it had sufficient funds to cover the C$250,000 ($237,500) self-insured portion of its operations, or it would be shut down.

The CTA said on Friday that MMA had done that.

MMA, which operates rail lines in Quebec and Maine, filed for bankruptcy protection in Canada and the United States earlier this month. It said in a court filing that its insurance covered liabilities up to C$25 million, while clean-up costs after the crash could exceed C$200 million.   Continued...

Mourners walk the perimeter of the red zone as rescue workers line the streets following a memorial service to honour the victims of the train derailment in Lac Megantic, Quebec July 27, 2013. REUTERS/Christinne Muschi