CP Rail denies responsibility in Lac-Megantic tragedy

theglobeandmail.com
June 11, 2015
By Eric Atkins

Canadian Pacific Railway Ltd. says it bears no responsibility for the Lac-Megantic oil train explosion, and will not pay into a fund that compensates families of the victims of the 2013 disaster.

CP will go before a Quebec Superior Court judge on Monday in Sherbrooke and argue it played no role in the fiery derailment of a Montreal, Maine and Atlantic Railway train that killed 47 people. CP will also argue the court has no jurisdiction over the proposed settlement, which is set to be approved by the judge overseeing MM&A’s insolvency proceeding.

 “While some parties would like to tie us to this terrible event, CP is not among those responsible for the incident as the train was not operated by CP employees or travelling on CP tracks, nor were our locomotives, rail cars or product involved in the derailment,” said Martin Cej, a CP spokesman. “We did not have custody or control of the train.”

The Calgary-based railway is the lone holdout on a list of 25 parties that have contributed a total of $431-million into a compensation fund for relatives of the 48 dead, including a firefighter who killed himself in the wake of the explosion that levelled much of the Quebec town.

CP hauled the oil train from the Bakken area in North Dakota to Montreal, where MM&A took control. The operator of the MM&A train, who is facing charges of criminal negligence causing death, allegedly left the train unattended before it rolled down a hill and into the town, where it derailed and blew up.

CP’s chief executive officer has been an outspoken critic of the tougher rules on oil shipping that followed the Lac-Megantic tragedy.

In an interview with The Globe and Mail in October, Hunter Harrison said railway regulators “overreacted.” He recently cast the railway as a reluctant shipper of oil, which has been a source of fast-growing revenue for the rail industry. The company’s board sought a legal opinion on its right to refuse to haul some dangerous goods, but determined the common carrier obligations leave it no choice.

“Lac-Megantic happened, in my view, because of one person’s behaviour, if I read the file right,” he said in the interview. “An individual did not set the brakes. And I think that we have overreacted and looked at a thousand different things about what we want to do with [regulations]. And you’re not going to write [regulations] that are going to stop behaviour.”

Oil broker World Fuel Services Corp., which sold the crude to Irving Oil Ltd.’s New Brunswick refinery, on Monday gave the fund a big boost by agreeing to pay $135-million. The negotiated payments give contributors a release from any current or future lawsuits or liabilities stemming from the tragedy.

As the oil’s owner, World Fuel is considered to have played a significant role in the explosions. CP, said one source who asked not to be named, is seen in a similar light.

Other companies that have paid include Irving Oil, ConocoPhillips Co. and makers of tank cars.

“You can never compensate the folks of Lac-Megantic in any way shape or form for what they’ve had to live through. But you’re trying to get them funds to move forward and get on with their lives in a timely manner,” said Andrew Adessky, of Montreal-based Richter Consulting, the court-appointed monitor for MM&A.

MM&A declared bankruptcy shortly after the disaster, and the settlement fund is being administered under the Companies’ Creditors Arrangement Act (CCAA).

Contributions to the fund are generally kept private, but Irving Oil issued a press release in March announcing its $75-million payment. “We fully support the establishment of the fund as an industry-wide response to the tragedy, which will provide substantial payments without further lengthy legal proceedings,” the Saint John-based company said.

Railways are under what’s known as a common carrier obligation, which means they have to haul whatever goods their customers require, and do not choose the route. Mr. Cej said CP had no choice but to carry the oil to Montreal, and it did not choose MM&A as the company to which it handed over control.

“CP firmly believes the victims of this terrible incident should be compensated. But we also believe that compensation must come from those responsible for the derailment, and this compensation fund should not be used to free those parties responsible for the derailment from future liability and legal action,” Mr. Cej said.

CP will argue on Monday the proceedings should not be taking place under the the auspices of the CCAA. If it succeeds, the entire compensation plan could be delayed or scrapped, and victims could be forced to file class-action lawsuits to win any compensation, a process that could take several years.

The fund was established as an alternative to various lawsuits. If CP’s motions are rejected on Monday, a judge on Wednesday is expected to approve the plan and the process then moves to the United States. If all goes well, Mr. Adessky said victims should begin to see some of the money by October or November.