Canada may spread oil-by-rail insurance burden, mulls special fund

Mon Sep 22, 2014 7:10pm EDT
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By Randall Palmer

OTTAWA (Reuters) - The Canadian government is looking at extending the insurance burden for crude-by-rail disasters beyond just railways and is weighing the idea of a special fund similar to one once set up for maritime oil spills, a government official said.

The potential policy move comes over a year after a runaway oil train exploded in Lac-Mégantic, Quebec, leveling the heart of the town and killing 47 people. The cleanup and reconstruction bill, now being covered by governments, is expected to be at least C$400 million ($360 million).

The country's Conservative government pledged last year to make railways carry more insurance to deal with such disasters, but is coming around to the idea that it is unrealistic for the industry to bear the entire cost, said the official, speaking on condition of anonymity as he was not authorized to speak publicly.

"It's not likely to be the railways alone," he said.

A representative for Transport Minister Lisa Raitt declined to comment on whether there would be a maritime-type fund set up but confirmed that she was looking to shippers in addition to railways for extra coverage.

"The taxpayer should not have to fund the cost of damages after an incident," said Raitt's press secretary, Jana Regimbal.

Railways and other groups have argued shippers and brokers should also have adequate insurance, and even then some say it may be necessary to set up a separate fund.

Montreal Maine & Atlantic Railway - the carrier responsible for the Lac-Mégantic crash - exhausted the C$25 million insurance that the government had required it to carry and swiftly went bankrupt.   Continued...