Canadian Underwriter

Federal investigator discusses Lac-Mgantic at Engineering Insurance Conference

October 9, 2015   by Greg Meckbach, Associate Editor

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Pollution problems resulting from the 2013 fatal railway derailment in Lac-Mégantic, Quebec will persist for years, while officials with the railway company involved were “not exactly leaders” in safety management, a Transportation Safety Board of Canada official suggested to insurance professionals Thursday in Toronto.

An investigator for rail and pipelines talked about the Lac- Mégantic, Quebec derailment at the 42nd Annual Engineering Insurance Conference

Don Mustard, senior investigator for rail and pipelines at TSB, was one of the speakers at the 42nd Annual Engineering Insurance Conference, which is part of the Canadian Boiler & Machinery Underwriters Association (CB&MUA).

He discussed TSB’s findings from its investigation into the accident in Lac-Mégantic, which killed 47.

On July 5, 2013, a Montreal, Maine and Atlantic (MMA) Railway train hauling 72 tanker cars with crude oil was stopped for the night near near Nantes, about 180 kilometres south of Quebec City. About 1 a.m. the following morning, the unattended train started to move downhill, picked up speed and 63 tanker cars derailed in Lac-Mégantic.

“In this case, we had six million litres of product released, million of litres ended up in the river, ended up in the lake,” Mustard said at AEIC, held at the St. Andrew’s Club in the Sun Life Financial building in downtown Toronto. “We’re still going to be seeing for years, problems related to this particular release.”

The Canadian Press reported in July that a Quebec court approved a settlement fund of more than $400 million in connection with the derailment.

Of that, just under $200 million would go to both the Quebec government and the town of Lac-Mégantic for cleanup and other related costs, CP reported at the time.

Related: U.S. company announces settlement agreement in Lac-Mégantic, Que. train derailment

After the derailment, oil seeped into the soil and entered stormwater manholes, Canadian Consulting Engineer magazine reported earlier. Some of that oil reached both Lake Megantic and the Chaudière River.

“There was lots of benzene, lots of cancerous material in the product,” Mustard said Thursday at AEIC. “They moved the city centre because of some of the conditions in remediation.”

MMA was formed in 2003 when Rosemont, Ill.-based Rail World Inc. acquired the assets of Bangor and Aroostook Railroad. In the summer of 2013, a Quebec court granted MMA protection from creditors under the Companies’ Creditors Arrangement Act. That protected MMA from a cleanup order issued by Quebec’s Ministry of Sustainable Development, Environment, Wildlife and Parks.

MMA stated in court documents that it was insured by XL Insurance Company Ltd. That policy, which had a per-occurrence limit of US$25 million, covered evacuation expenses, fire suppression expenses, pollution clean-up expenses, bodily injury and property damage. MMA also said in court filing that it had an inland marine policy with Traveler’s Property and Casualty Company of America, covering property, rolling stock, track and repairs and business interruption. But MMA said in 2013 it had not received any indemnity either from Travelers or from XL, “notwithstanding claims presented.”

On June 18, the Safe and Accountable Rail Act, Bill C-52 was passed into law. Among other things, that law establishes “minimum mandatory insurance levels that are explicitly linked to risk,” Conservative MP Joe Preston told the House of Commons earlier this year.

Previously, federal law did require railway operators to be covered for third-party liability, third-party bodily injury or death, but each railway had its insurance coverage reviewed – on a case by case basis – by the Canadian Transportation Agency, which issues certificates of fitness.

Related: Senate committee wraps up hearings on bill imposing absolute liability for pipeline operators

Now, railways carrying “significant volumes of dangerous goods” require $1 billion in insurance limits, including coverage for the risk associated with a leak, pollution or contamination,” Preston, MP for Elgin-Middlesex-London, said on Parliament Hill last May.

MMA’s $25-million policy was “not nearly enough to cover the incredible magnitude of the resulting damage and loss of both life and property” after the Lac-Mégantic accident, Jeff Watson, parliamentary secretary to federal Transport Minister Lisa Raitt, told the House of Commons during a debate on Bill C-52.

TSB published its report, in August, 2014 on the investigation into the Lac-Mégantic. That report included 18 findings as to causes and contributing factors

One finding was that MMA’s “safety management system was missing key processes, and others were not being effectively used.” As a result, TSB stated MMA “did not have a fully functioning safety management system to effectively manage risk.”

MMA “had what one might call a less than ideal safety culture,” Mustard said Thursday. “They weren’t exactly leaders in that area.”

He added the company was reactive and not proactive.

“The company never assessed the risks of leaving a train carrying crude oil unattended, on a downhill grade, with no other precautions taken to prevent the train from running uncontrolled, other than the assumed correct application of the handbrakes,” Mustard said.

In addition to its 18 findings on causes, TSB also made 16 findings on risk.

“If equipment is left unattended without additional physical safety defences, there is an increased risk that it will run away, leading to an accident,” TSB stated in its investigation report on the Lac-Mégantic derailment.

The MMA train was operated by a locomotive engineering working alone.

Studies out of the United States suggest that two-person rail crews operate “as a cognitive team,” Mustard said Thursday at AEIC.

“Under normal operations, that’s okay but when you have an unexpected circumstance happening, then it really helps to have someone else to bounce your ideas against to try and figure things out,” Mustard said. “For instance, with train securement, it’s a lot easier to have one guy throwing the handbrakes and another guy holding the train with the equipment and testing to see that they’re working.”

With the Lac-Mégantic investigation, TSB found that single-person operation was a risk factor rather than a cause factor.

“Interestingly enough, when we looked at Montreal Maine and Atlantic’s operations on the whole, we realized they were so bad at what they were doing, it was really difficult for us to say with certainty that it would have done any better with two people than it would have been done with one,” Mustard said.

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