Railway’s operating permit suspended over insurance
As of early next week, the Montreal, Maine & Atlantic Railway will no longer be allowed to do business in Canada.
The Canadian Transportation Agency announced Tuesday morning it has suspended the company’s operating licence, giving it until Aug. 20 to shut down its Canadian operations and send its remaining Quebec-based employees packing.
The federal agency found the railway — which owned the train that derailed in LacMégantic, Que., on July 6 — had not demonstrated that its third-party liability insurance is adequate for ongoing operations. MMA and its Canadian subsidiary (Montreal, Maine & Atlantic Canada Co.) both filed for creditor protection last week. The railway is facing a slew of legal problems in the wake of the disaster in the small town east of Montreal, not the least of which is the inadequacy of its insurance in the face of the ever-growing number of claims against it.
According to documents filed in Quebec Superior Court, the Canadian subsidiary has just under $18 million in assets and a $25-million liability insurance policy with XL Insurance Co. But the cleanup costs alone in Lac-Mégantic are expected to exceed $200 million.
The company “was 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,” said Geoff Hare, CEO of the Canadian Transportation Agency, in a release issued Tuesday morning.
“(The suspension) was not a decision made lightly, as it affects the economies of communities along the railway, employees of MMA ... as well as the shippers who depend on rail services.”
Hare said it would have been irresponsible to permit MMA to continue operating in Canada without proper insurance.
The railway laid off 19 of its 80 Quebec-based workers in mid-July, then five more a short time later. As of next week, the remaining employees will also be out of a job. On Tuesday, the union representing the workers said it would do everything in its power to ensure they are properly compensated.
“(The suspension) is something we were expecting,” said Richard Boudreault of the United Steelworkers union, known in Quebec as the Syndicat des metallos. “It’s clear we’ll support our members as they confront this challenge.
“We hope the company will pay the money it owes to each of these people. We don’t want any surprises.”
A call to MMA chairman Ed Burkhardt’s office was not returned on Tuesday.