Canadian Manufacturing

Lac-Megantic: rail firm has operations licence suspended over insurance questions

Canadian Transportation Agency suspended certificate of fitness for MMA, Canadian subsidiary

OTTAWA—The rail company involved in the Lac-Megantic, Que., disaster that killed an estimated 47 people has had its Canadian operations licence suspended less than a week after claiming bankruptcy.

In a statement issued Aug. 13, the Canadian Transportation Agency (CTA) said it suspended the certificate of fitness for Montreal, Maine & Atlantic Railway Ltd (MMA) and its wholly-owned subsidiary Montreal, Maine & Atlantic Canada Co. (MMAC) over insurance issues.

According to the CTA, the firm has not demonstrated that its “third party liability insurance is adequate for ongoing operations.”

“MMA and MMAC were given full and fair opportunity to demonstrate that they have secured adequate third party liability insurance coverage for their ongoing operations, which is a legislative requirement to operate a railway in Canada,” CTA chairman and CEO Geoff Hare said in a statement.

The decision to suspend the operations licence comes just days after the company filed for bankruptcy protection, claiming it was buried under financial burdens relating to the July 6 derailment that levelled a portion of tiny Lac-Megantic in eastern Quebec, claiming the lives of an estimated 47 people.

The suspension of MMA and its subsidiary’s certificate of fitness takes effect Aug. 20, giving the firm “time to arrange for the orderly cessation of (its) operations in Canada.”

The operations licence issued to MMA and MMAC permitted the former to operate a railway between the Canada-United States border near Quebec and New Brunswick, and the latter throughout eastern Quebec and on a Canadian Pacific (CP) Railway subdivision.

According to the CTA, the decision was made after it issued a letter to the firm July 10 requesting insurance and financial information.

“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,” Hare said.

“It would not be prudent, given the risks associated with rail operations, to permit MMA and MMAC to continue to operate without adequate insurance coverage.”

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