MMA unsure if insurance coverage will be adequate for Lac-MÉgantic disaster
QUEBEC — Ed Burkhardt, the Chicago-based railway magnate whose global rail holdings include the Montreal, Maine & Atlantic Railway, said Thursday he cannot speculate on whether his company’s insurance coverage is adequate to cover the loss of lives and the destruction of the core of Lac-MÉgantic.
After the July 6 explosion and fire, when a runaway MMA train carrying crude oil derailed in the centre of the town of 6,000, the Canadian Transportation Agency called on the railway to provide up-to-date details of its insurance coverage and other information related to its continued operations.
The MMA asked for time to prepare its answers, Burkhardt said in a telephone interview from Chicago, and was given a July 17 deadline, which the company met.
Asked whether the transportation agency was reassured by the MMA’s answers, Burkhardt, who has been criticized for his frankness in answering reporters’ questions, replied, “Well, are they or anyone else confident?
“You can’t really be sure because you don’t know what the damages are,” he said.
“What insurance we have is what we have. That level of coverage had been previously approved ... by the CTA,” he added.
“That’s what we have.”
Some media have speculated the MMA has no insurance coverage.
“I’ve heard rumours that we have no insurance,” he said. “That’s absolutely untrue.”
Others have suggested the company could be forced into bankruptcy because of what Burkhardt terms “the disaster.”
“Our company was, I would say, reasonably solid leading up to this,” he explained. Since 2010, the railway has found a new, profitable cargo for its trains: carrying crude oil from North Dakota across Quebec to the Irving Oil refinery in Saint John, N.B.
“What happens for the future, I can make a hundred different projections and come up with a hundred different answers,” Burkhardt said, sidestepping the question.
“That’s not an easy question. Very crystal ball.
“So I’m not speculating. Right now we are trying to get operating again from Lac-MÉgantic, but that’s not going to happen.”
Tafisa Canada, which operates North America’s largest particleboard plant in Lac-MÉgantic, is also a major MMA customer.
Burkhardt said the MMA and Tafisa have worked out an alternate arrangement. The company trucks its output to Drummondville, where it is loaded on freight cars.
“That’s an answer for now,” he said. “But that’s not the long-term answer.”
Working around the accident scene, the MMA is trying to maintain separate operations in Quebec and in Maine.
“And I think we are being successful in doing that,” Burkhardt said.
Jacqueline Bannister, communications director for the CTA, said the agency is analyzing information provided by the MMA, to determine whether to maintain the MMA’s “certificate of fitness,” required for it to continue to operate.
Bannister said the MMA had previously provided its certificate of insurance, required to obtain a certificate of fitness, but whenever some major change affects a railway’s operations, “that may mean their liability insurance coverage is no longer adequate,” and the CTA asks to be informed.
“The agency is now beginning the process of reviewing the information, including any necessary followup with MMA, and any need to obtain further information as necessary in order to confirm that they continue to have adequate insurance liability coverage for the ongoing operations,” she said.
Asked whether the impact of the derailment and explosion might have an impact on the MMA’s continuing operations, Bannister said, “It would be premature for us to comment on that.”
Meanwhile, Daniel Gardner, a UniversitÉ Laval law professor specializing in liability issues, suggested the case could take more than 15 years to resolve, likely requiring governments to pay for clean up efforts in the meantime.
And a settlement could be more difficult than the recent BP Deepwater Horizon disaster in the Gulf of Mexico because “MMA is not BP,” he said.
In Ottawa, Liberal transportation critic David McGuinty, called on the Department of Justice to take up the case. “There have to be, of course, assessments, legal opinions rendered ASAP as to what extent the Canadian people are going to have to (pay),” he said.
McGuinty said that numerous spinoff costs could emerge, on top of clean up and rebuilding efforts from the disaster that claimed the lives of dozens of people.
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 government 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.”
Mike de Souza of Postmedia News contributed to this story.
