Railway in Quebec Train Tragedy Loses License

Canada’s transportation agency is taking away 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 Tuesday it is suspending the certificate of fitness for the Montreal, Maine & Atlantic Railway and its Canadian subsidiary. The agency said it is not 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.

The license suspension is effective Aug. 20.

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

In its bankruptcy filings, the railway and its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., cited debts to more than 200 creditors following the disaster.

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.

The Canadian decision had no immediate effect across the border, because the severed rail line meant Maine shippers have had to reroute traffic.

The U.S. Surface Transportation Board could step in to appoint someone to operate the line if Montreal, Maine & Atlantic stops rail service or if the service deteriorates, said Nate Moulton, rail director for the Maine Department of Transportation.

But MM&A has already announced intentions to sell the rail line to another party to generate money to pay its debts, Moulton said.