Canadian Manufacturing

Financial noose tightens around US firms at centre of Quebec rail disaster

by Andy Blatchford, The Canadian Press   

Canadian Manufacturing
Operations Supply Chain Energy Oil & Gas Transportation disaster justice Lac-Megantic Quebec rail

Hints Montreal, Maine & Atlantic Railway could close shop in wake of deadly derailment

MONTREAL—The financial noose has tightened around companies connected to the deadly Quebec derailment, with a hint that the Montreal, Maine & Atlantic Railway could close shop.

The Quebec government issued a lawyer’s letter demanding that the railway involved in the Lac-Megantic, Que., crash and two petroleum-logistics companies foot the entire bill to clean up the environmental mess, the latest in a series of legal threats since the disaster.

This was after the railway chairman had already told a Maine newspaper that he was considering whether the embattled MMA could survive.

The July 6 disaster, which killed an estimated 47 people, also released 5.7 million litres of crude oil into the air, soil and water, including about 100,000 litres that gushed into the nearby Chaudiere River.


“It’s perhaps the worst environmental catastrophe that Quebec has seen,” Environment Minister Yves-Francois Blanchet told a news conference in Lac-Megantic.

“There are still no words to describe what we feel, what we have experienced here.”

The companies named in the lawyer’s letter are Montreal, Maine & Atlantic Railway (MMA), and World Fuel Services Corp. and its subsidiary, Western Petroleum Company.

For all three, the legal troubles tied to the disaster are piling up.

Each of the firms are already facing several wrongful-death lawsuits in the United States, with both the embattled MMA and World Fuel Services also named in a proposed class-action suit.

The U.S. lawyer who filed the wrongful-death suits has said he expects to ask for millions of dollars in damages for each of his clients.

The total number of plaintiffs, he predicted, could eventually reach 20.

Last week, the town of Lac-Megantic sent MMA a legal notice calling on it to reimburse the municipality $4-million after the company allegedly failed in its duty to pay cleanup workers.

The municipality and the province picked up the tab when crews hired by the railway threatened to walk off the job if they weren’t paid.

They are now seeking a refund from the railway.

The Maine-based railway missed last week’s deadline, and the town has said it’s now speaking with lawyers to evaluate a possible lawsuit.

The railway, meanwhile, asked the town to wait until July 30 for its response to the legal notice.

MMA board member Yves Bourdon has said the municipality shouldn’t have been stuck with the bill.

When asked recently whether it was normal that Lac-Megantic should have to pay, he replied: “It should be our insurance.”

Blanchet insisted “it is out of the question” that Quebec taxpayers should be on the hook for the massive environmental mop-up and rehabilitation.

The work still doesn’t have an estimated overall price tag.

The environment minister said the province would have several possible legal options if the companies refuse to pay up, but he declined to discuss them.

Blanchet also indicated that he wouldn’t analyze the financial capacities of the companies, a job he said he would leave for the Justice Department.

The question, however, of how much the companies can afford to pay has led to concerns in Lac-Megantic.

Even MMA chairman Ed Burkhardt expressed doubt about the future of the company, according to recent comments he made to the Maine Sunday Telegram.

The newspaper reported that when asked whether the railway could survive, Burkhardt replied, “That’s part of what we are considering right now. I am not prepared to comment. Decisions haven’t been made yet.”

Burkhardt then added, “I can say this: It’s a real hill to climb.”

An official at MMA’s Maine office said company president Robert Grindrod would not be available for comment and referred all inquiries to Burkhardt, who also heads MMA’s major stockholder, the Illinois-based Rail World Inc.

Burkhardt did not return a message left at his office.

An employee at Western Petroleum Company said all media questions on the subject were being directed to World Fuel Services, which is headquartered in Miami.

“We are getting a translation of the order, so that we can review it,” said World Fuel Services spokeswoman Carmen Garcia, who declined to discuss its other legal troubles linked to the Lac-Megantic derailment.

“At this point, we’re not issuing any other further comments on any other legal proceedings.”

The devastating derailment prompted Ottawa to revamp some rules on train transport, following the advice of the federal Transportation Safety Board.

Railroad safety remains a major concern, particularly among mayors of other Quebec towns along the MMA line.

The Federation of Canadian Municipalities held a first conference call this week for its recently created rail-safety working group.

“We want to be able to work closely with the federal government,” Pauline Quinlan, mayor of the Quebec town of Bromont, said in an interview after the call.

“Our preoccupation is to make sure that the infrastructure is kept in good shape and that what is being transported is also transported in a safe way.”

During a recent meeting with federal Transport Minister Lisa Raitt, some Quebec mayors expressed concern about the integrity of rail infrastructure.

Quebec and the federal government have each promised $60-million for emergency assistance and longer-term reconstruction help for the town.

As for the environmental cleanup, Blanchet said he wanted to eliminate any doubts the work would continue without interruption.

“I can assure you that, starting now, there will be no more work stoppages.”

With a file from Jim Bronskill


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