August 13, 2013

Maine railroad in crash shut out of Canada

The company loses its ability to run across the border because of inadequate liability insurance, which isn't a requirement in the U.S.

By Matt Byrne
Staff Writer

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This July 8, 2013 file photo provided by Surete du Quebec shows debris from a runaway train on Monday, July 8, 2013 in Lac-Megantic, Quebec, Canada. A runaway train derailed igniting tanker cars carrying crude oil early Saturday, July 6, killing 47 people. (AP Photo/Surete du Quebec, The Canadian Press)

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In this July 10, 2013 file photo, Rail World Inc. president Edward Burkhardt speaks to the media as he tours Lac-Megantic, Quebec. (AP Photo/The Canadian Press, Paul Chiasson)

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Although there is no federal requirement in the United States for railroad operators to carry liability insurance, all carriers likely have some coverage to protect themselves and the cargo of their customers, said Kevin Thompson, spokesman for the Federal Railroad Authority.

The only rail company that is required by federal law to carry insurance is quasi-public Amtrak, Thompson said, which carries $200 million in coverage per accident or incident.

There also is no state requirement for rail companies that operate on private tracks to carry insurance, said Nate Moulton, director of the Maine Department of Transportation rail program.

"We could pass rules, but we couldn't enforce it," Thompson said. "The federal rules take precedence."

Private rail lines that use tracks owned by the state must carry some insurance. About 320 miles of more than 500 miles of state-owned track are currently active, Moulton said.

The damage from the accident in Quebec blocked Montreal, Maine & Atlantic trains from traveling from Maine to other routes in Canada, curtailing its operations and cutting deeply into its revenues.

Five days ago, the company filed for bankruptcy court protection in both Maine and Quebec, a move made to give its owners time to find a buyer or reorganize its affairs so it could continue to operate, an attorney for MM&A said at the time.

Burkhardt, the company's chairman, said the company does not plan to appeal the ruling, and that it will make finding a buyer more difficult.

"Why would we (appeal)? What's the gain?" Burkhardt said. "We're looking at this is all we can say right now. We're not sure how we'll respond. We may just follow that order and shut down in Canada. It may not affect operations in the U.S."

Earlier, Burkhardt had said all essential rail services in Quebec, Maine and Vermont would continue, with the exception of trains running through Lac-Megantic itself.

The Canadian decision will likely interrupt the ability of at least one company, Tafisa, a Canadian producer of particle board, to ship its product out of the country, said Chalmers "Chop" Hardenbergh, editor of Atlantic Northeast Rails & Ports, a shipping trade publication. Tafisa's Lac-Megantic plant is the largest such facility in North America, according to its website.

Hardenbergh said Tafisa had planned to truck its products to other points on the MM&A line, but those plans could be interrupted now.

"We already know (MM&A) is not viable as it is now," Hardenbergh said. "This is just a stake in (the rail company's) heart, if it's not changed."


Matt Byrne can be reached at 791-6303, or at:

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