Ottawa, ON-– In an order issued today, the Canadian Transportation Agency suspended the certificate of fitness for Montreal, Maine & Atlantic Railway Ltd (MMA) and its wholly-owned subsidiary Montreal, Maine & Atlantic Canada Co. (MMAC), finding that the railways have not demonstrated that their third party liability insurance is adequate for ongoing operations.
According to the Canadian Transportation Agency, given the exceptional circumstances of the derailment in Lac-Mégantic, the Agency contacted MMA and MMAC seeking confirmation that they continued to hold adequate third party liability insurance coverage with respect to any continuing operations as stated in their certificate of fitness.
The Agency reviewed the companies’ insurance coverage and additional information they provided and “it is not satisfied that MMA and MMAC have adequately restored their third party liability insurance coverage to the same level as prior to the derailment at Lac-Mégantic, nor do they have the financial capacity to pay the self-insured portion.”
Order No. 2013-R-266 suspends Certificate of Fitness No. 02004-3 effective August 20, 2013, permitting MMA and MMAC time to arrange for the orderly cessation of their operations in Canada.
“MMA and MMAC were 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, Chair and CEO of the Canadian Transportation Agency.
“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. 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,” noted Hare.
The tragic derailment in Lac-Mégantic “has raised important questions regarding the adequacy of third party liability insurance coverage to deal with catastrophic events, especially for smaller railways. Increasing shipments of crude oil and other hazardous materials by rail highlight the need to determine how best to ensure that railways, small and large, have appropriate levels of third party liability coverage, including for possible catastrophic events such as Lac-Mégantic,” said the release.
Accordingly, this fall, the Agency said it will undertake a consultation and review of adequacy of insurance coverage requirements for the issuance of certificates of fitness required by federally-regulated railways.