Railway’s insurance coverage uncertain
Spinoff costs could add up from disaster
OTTAWA — Federal officials are uncertain about the limits of the Montreal, Maine and Atlantic Railway’s ongoing insurance coverage, prompting new questions about the company’s survival and whether Canadian taxpayers will be on the hook for rebuilding a Quebec town decimated by this month’s runaway train disaster.
“My first thought is the Department of Justice better get on this very quickly,” said Liberal transportation critic David McGuinty. “There have to be, of course, assessments, legal opinions rendered ASAP as to what extent the Canadian people are going to have to (pay).”
McGuinty said that numerous spinoff costs could emerge, on top of cleanup and rebuilding efforts from the disaster that claimed the lives of dozens of people. He said the department would need to assess whether it can recover those amounts from either the company or its insurance providers.
The Canadian Transportation Agency, an independent regulator and tribunal that is responsible for issuing certificates of fitness, based on insurance coverage, that allow railways to operate, said the company confirmed on Wednesday that it still had insurance for its operations as well as those of its subsidiary, MMAC. But an agency spokeswoman said it needed to review whether this insurance coverage was adequate.
“We are in the process now of doing an assessment, doing a review of the information, in order to confirm that they continue to have adequate insurance liability for their ongoing operations …” said Jacqueline Bannister, from the agency.
The company’s president, Ed Burkhardt, said last week that the railway’s insurance limits would be tested by the disaster. But he didn’t elaborate and couldn’t be reached for comment Thursday.
A Dublin-based insurance company, XL Group PLC, has confirmed it is among the insurers of the railway.
But Daniel Gardner, a Quebec law professor specializing in liability issues, suggested that legal action could take more than 15 years to resolve, likely requiring governments to pay for cleanup efforts in the meantime.
He also said that reaching financial agreements in response to the existing disaster could be more difficult than the recent BP Deepwater Horizon disaster in the Gulf of Mexico because of the size of the different companies involved. “The problem is MMA is not BP, so in terms of their assets, and in terms of their capacity to pay, we could in theory have a lawsuit, but I’m certain that, in practical terms, people won’t launch legal action if they realize that this company isn’t insured.”
McGuinty, an Ottawa-area MP, also said the federal government should consider updating plans for legislation to increase liability for companies that cause environmental disasters, by extending it — beyond pipelines, offshore spills and nuclear accidents — to include railway companies.
NDP transportation critic Olivia Chow told Postmedia News she planned to send out an official notice Thursday calling for the House of Commons transport committee to meet next week to review safety oversight and other related concerns that have been highlighted in recent audits.
She also said the govern- ment should immediately announce details of a support package, pledged by Prime Minister Stephen Harper for Lac-Mégantic, and then sort out details about compensation from companies afterward. “One way or another a support package has to be announced now,” said Chow, who represents a Toronto riding, “because certainly that municipality can’t do it and the Quebec government shouldn’t do it alone. The federal government, that has the responsibility for rail safety, should bear the responsibility.”
Will Amos, director of the Ecojustice law clinic at the University of Ottawa, said the accident has exposed weaknesses with existing regulations and legislation, noting authorities have restricted access to assess the extent of oil spilled into nearby waterways, as well as limited ability to ensure that polluters pay for the damage they cause.
“We need a full review of federal legislation regarding all forms of spill liability,” he said. “We need a comprehensive review and strengthening of those provisions because, at present, the Canadian taxpayer is not fully protected.”
Officials from the Justice Department and Transport Canada were not immediately able to comment.