Rail carrier loses operating license after Canada train blast

13 August 2013 20:53  [Source: ICIS news]

HOUSTON (ICIS)--The Canadian Transportation Agency (CTA) issued an order on Tuesday to suspend the operating license of the railroad company involved in last month’s fire and explosion that killed 47 people in Quebec.

The Montreal, Main & Atlantic Railway (MMA) train was stopped in Nantes when it later rolled downhill into Lac-Megantic, where it derailed and exploded on 6 July. It was carrying 100 tons of crude oil, also resulting in a spill in the Chaudiere River.

The CTA said it was not satisfied that US-based MMA and its Canadian subsidiary have adequately restored their third-party liability insurance coverage to the same level before the derailment, adding that they do not have the financial capacity to pay the self-insured portion.

The order suspends MMA’s certificate of fitness, effective on 20 August, giving the company and its subsidiary – Montreal, Main & Atlantic Canada (MMAC) – time to arrange for “orderly cessation” of their operations in Canada.

“This was not a decision made lightly, as it affects the economies of communities along the railway, employees of MMA and MMAC, as well as the shippers who depend on rail services,” said Geoff Hare, president and CEO of the CTA. “It would not be prudent, given the risks associated with rail operations, to permit MMA and MMAC to continue to operate without adequate insurance coverage.”

The derailment has raised concerns about liability insurance coverage that deal with catastrophic events.

The CTA said it will review the adequacy of insurance coverage requirements for the issuance of certificates of fitness, beginning this autumn.

Last week, MMA filed for creditor and bankruptcy protection in both Canada and the US, saying insurance will not cover claims from the accident.

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By: Tracy Dang
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