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Problems Compound For Rail Companies Shipping Crude Oil

by on August 12, 2013

$7 million dollars…that’s how much money the city of Lac-Megantic says it is currently owed by the railway that obliterated much of its downtown core last month, killing 47 people.

Railway Files for Bankruptcy Protection

With the projected cost of the cleanup reaching well into the tens of millions of dollars, and compensation for hundreds of individuals and business affected pushing the projected tally much higher, the railway turned to the courts to file for creditor protection last Thursday in Canada and in the U.S.

Quebec Superior Court Judge Martin Castonguay expressed sympathy for the townspeople of Lac-Megantic, and said,” I’m not impressed at all by the behaviour of MMA (Montreal, Maine, & Atlantic Railway,) and from the beginning of the process its behaviour has been lamentable.”

Judge Warns of “Judicial Anarchy” in the Wake of Rail Disaster

Justice Castonguay accepted the railway’s motion and said that without it, there would be “judicial anarchy” with multiple lawsuits happening in various jurisdictions as hundreds of individuals and businesses seek redress.

Judge Calls Railway’s Treatment of Employees “Scandalous”

The Judge decided that the victims of the rail disaster would be included as creditors and said company directors, although covered by the railway’s insurance policy, should at least pay their employees.

“I find it scandalous,” he said.

The railway’s employees were not notified of the company filing for bankruptcy protection; 13 were laid off after the disaster, and have not yet even received their severance or vacation pay.

Quebec Rail Disaster Prompts U.S. Investigation

An investigation prompted by the Quebec tragedy by the U.S. Federal Railroad Administration found that U.S. companies are shipping crude oil in unsafe rail cars that are often overloaded and can potentially contain corrosive, explosive, and flammable materials that are not fully identified on shipping manifests.

Unsafe Rail Cars, Poor Documentation

In the event of a rail accident, these documents are crucial for emergency crews who depend on their accuracy in order to assess the dangers that they face.

With the rail cargo lacking proper identification, tanker cars that fail to meet federal safety standards have been used to ship crude oil. It’s likely that some of it has been getting sent to Canada.

Lac-Megantic’s crude oil at the centre of its disaster originated in the U.S. A connection between the FRA’s disturbing findings and what happened in Quebec has yet to be determined.

Authorities Can Only Speculate

The FRA says that because of a lack of data that it “can only speculate” as to the number of crude oil shipments transported in unsafe tankers.

However, Canada’s Transportation Safety Board has already stated that the fire in Lac-Megantic appeared to be more intense than would normally be expected from the contents listed on the waybills. The TSB is also examining the tanker cars involved in the disaster, to determine if they were the right safety classification to be carrying their hazardous cargo.

“Risks on Rails”

A small Quebec community still left holding a multi-million dollar cleanup bill…unpaid railway employees…a railway company seeking creditor protection with millions and millions of dollars of damages likely at stake… unsafe rail cars…improperly identified shipments of crude…“Pipelines on Rails,” as the railways refer to themselves, increasing are demonstrating that they are not a cost – effective alternative to pipelines, but instead, an industry in dire need of a seismic overhaul in terms of equipment, infrastructure, and procedure.

Until that occurs, “Pipelines on Rails” could be more aptly called “Risks on Rails,” certainly for the people of Lac-Megantic, as well for the growing number of Canadians concerned about the safety of transporting increasing volumes of crude oil by rail through their communities.          


 Sources for this blog post include –

The Vancouver Sun, Friday, August 9, 2013 edition:

”Judge grants railway permission to go into creditor protection”

“Crude oil shipped in unsafe rail cars, U.S. agency claims”

  1. You like to pick on railways but the Costa Concordia disaster which claimed 32 lives and will cost 2 BILLION to clean up seems to have slipped by. I don’t see you condemning cruise ships and suggesting they be banned.

    • trainjane permalink

      Hello Mr. Pfefferle,

      The last time I checked, the Costa Concordia wasn’t carrying oil. I’m at a loss to understand your comparison of the cruise ship industry’s transporting of people to the railway’s handling of crude oil.

      The Quebec rail disaster has so far claimed a higher death toll as well.

      I don’t like to “pick on railways” as you put it. Quoting statements from such sources as respected court Justices is simply presenting the facts.

      If you and your railway friends don’t like the facts, maybe it’s time to change your approach.

      I would be more than happy to write about any positive, proactive measures that the railways consider making in lieu of this tragedy, going forward.

      Right now, the silence from Canada’s railway industry is deafening…

      • Andrew permalink

        CN & CP are controlled by Wall Street and Wall Street doesn’t care about any body!

        What’s needed is government policy that treats/funds rail the same way as road.

        • trainjane permalink

          There are plenty of publicly-traded companies that place value and priority on the quality of their relationship with resident stakeholders and environmental stewardship.

  2. Walter Pfefferle permalink

    best thing to do when people talk about things they know nothing about is to not reply. that is what they are doing.

    • Andrew permalink

      What happened in Megantic was tragic, but trainjane ignores all the years of back story of government transportation policy that is hostile to rail that lead to that very sad mess!

      • trainjane permalink

        Surely, Mr. Dawson, you know the perils contained in the word “assume.” So perhaps it would be prudent not to make personal assumptions about people you don’t know, me in this case. “Government transportation policy that is hostile to rail?” Go review some basic facts. The trend to deregulation in decades past by previous administrations is what has contributed to the current mess. Hostile? Go check out some recent Canadian political history about this little thing dubbed “The Sponsorship Scandal” which helped bring down and defeat a previous Federal government in an election. Go check out Via Rail’s role in that scandal.

        One of the best moves that PM Harper has made to date, in my books, is to eliminate corporate contributions to political parties. You might further want to check out who some of the previous major corporate contributors were to certain parties before this change was made. If anything, I’d say that the relationship, on this basis, was far more cosy than hostile…

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