Category Archives: Explosion

The legal quagmire of Lac-Mégantic

Repost from The Montreal Gazette

Plans are finally taking shape for financial compensation of derailment victims

By Monique Beaudin, Gazette environment reporter April 20, 2014
The legal quagmire of Lac-Mégantic
The light fades over the Appalachian Mountains in Lac-Mégantic a couple of weeks after the train derailment in July 2013. Eight months later, plans for compensation are coming together. Photograph by: Allen McInnis , Montreal Gazette

Nine months after a runaway oil train derailed in Lac-Mégantic, killing 47 people and destroying a large chunk of the town, a plan for financially compensating disaster victims is taking shape.

Judges in Quebec and Maine have approved a joint cross-border process for victims of the accident to file claims against Montreal, Maine and Atlantic Railway and its Canadian operations, Montreal, Maine and Atlantic Canada. The two companies have been under bankruptcy protection since August.

Thousands of claims related to the derailment are expected to be filed against MMA. Public information meetings on the financial-claims process are to begin in Lac-Mégantic next week. Claims must be filed by the middle of June.

People who lost family members, homes and businesses have turned to Canadian and American courts for financial compensation, but the process has been slow. The estates of several of the 47 people killed on July 6 have filed wrongful-death lawsuits in the U.S. Lawyers have also begun proceedings to bring a class action in Quebec. Quebec has already ordered six companies to clean up and decontaminate the town, a move that is facing a legal challenge.

The American lawyer overseeing MMA’s U.S. bankruptcy proceedings himself admits figuring out how victims will be compensated is “quite complicated”.

One of the biggest questions is who has the money to pay for the accident — compensating victims and secured creditors, covering cleanup costs and paying damages that several companies are claiming as a result of the derailment.

MMA was sold in January to New York-based Railway Acquisitions Holdings, for $14.25 million, less than what it owes its secured creditors.

That leaves a $25-million insurance policy and the possibility of a settlement fund composed of contributions from several companies targeted by legal action after the accident, said Robert Keach, MMA’s U.S. Chapter 11 trustee.

Another possible source of financial compensation for victims could come from a lawsuit Keach filed against World Fuel Services, Western Petroleum and Petroleum Transport Solutions, the companies that arranged for the shipment of the crude oil on the train. Keach argued they were to blame for the accident since the oil had been mislabelled as being less volatile than it actually was.

New York-based lawyer Luc Despins is counsel to a victims’ committee made up of residents, the town of Lac-Mégantic and the Quebec government. The committee represents victims’ interests in MMA’s American bankruptcy proceedings, offering input on issues like the compensation process, he said.

Despins said the committee’s goal is to get as much money as possible to the Lac-Mégantic victims as quickly as possible. But, he cautioned, not all claims filed may be accepted.

“If someone agrees their house was worth $600,000 and they got the full $600,000 from their insurance company, and that’s their only claim, they should not be recovering twice, this is not a lottery,” he said. “They may have other claims, but as far as the house I gave as an example is concerned, they can’t recover twice.” The courts will decide who has a valid claim, Despins said.

LOGISTICS: WHAT’S NEXT FOR VICTIMS OF THE DISASTER

Victims of the accident have until June 13 at 5 p.m. to file a proof of claim against Montreal, Maine and Atlantic.

Public information meetings on the claims process are to be held in Lac-Mégantic between April 22 and May 5, and assistance will be provided to help people complete the claims forms, according to an order issued by Quebec Superior Court. Victims who do not file a claims form by June 13 will not be permitted to participate in the Canadian or U.S. bankruptcy proceedings or receive any payment made available in those proceedings.

Claims forms and information about the claims process are posted on the website of Montreal-based Richter Advisory Group, the company’s Canadian bankruptcy monitor, at www.richter.ca under “Insolvency Cases” or  http://bit.ly/mmamonitor.

LEGAL ACTIONS INVOLVING VICTIMS OF LAC-MÉGANTIC

A request has been filed to approve a class-action lawsuit in Quebec against MMA, World Fuel services, Irving Oil, Canadian Pacific, the federal government and others. More than 1,550 people have registered with the class action so far.

A committee of three Lac-Mégantic residents, a representative of the Quebec government and the town of Lac-Mégantic represents victims’ interests in MMA’s U.S. bankruptcy proceedings.

The estates of 19 people killed in the Lac-Mégantic train derailment filed wrongful-death lawsuits in Illinois, naming several defendants, including MMA, company chairman Edward Burkhardt, MMA’s parent company Rail World, and World Fuel Services, which arranged for the transportation of the crude oil on the train. All except two of those lawsuits have been withdrawn while American courts decide where they will be heard. A law firm representing the estates says it plans to appeal a recent decision from a U.S. federal judge ordering the cases transferred to Maine, where MMA’s bankruptcy proceedings are being held. One of the issues at play is the amount of money that could be awarded as damages. Illinois has no cap on such payments, while Maine limits them to $500,000 in wrongful-death cases.

POSSIBLE SOURCES OF FINANCIAL COMPENSATION

A $25-million insurance policy MMA has with XL Insurance. Many people and companies are interested in the insurance policy. They include:

– Victims of the Lac-Mégantic derailment, such as the families of people killed in the accident, those who were injured or those who suffered losses to their businesses or homes.

– CIT Group, a company that owned some of the locomotives and tank cars involved in the accident. CIT has said it plans to settle any claims against it from wrongful-death lawsuits tied to the derailment with the XL insurance policy.

– MMA chairman Edward Burkhardt, who has been named in several legal actions linked to the derailment, argued in U.S. bankruptcy court that he is covered by the policy.

Settlements from legal action taken by MMA’s bankruptcy trustee against World Fuel Services.

The creation of a settlement fund made up of financial contributions from companies that may be liable for the accident.

TIMELINE OF THE LEGAL FALLOUT

July 6, 2013: A 72-car oil train pulled by five locomotives unexpectedly rolls down railway tracks into the town of Lac-Mégantic. Most of the cars derail, leading to explosions and a fire that kills 47 people and destroys much of the downtown core. Nearly 6 million litres of crude oil spill in the accident.

July 15, 2013: Lac-Mégantic lawyer Daniel Larochelle and two other law firms file a request in Quebec Court to begin class action proceedings against MMA and 14 other companies and individuals.

July 22, 2013: Annick Roy files a wrongful-death lawsuit in Illinois court on behalf of the estate of Jean-Guy Veilleux and their daughter. Veilleux was killed July 6.

Aug. 7, 2013: MMA files for bankruptcy protection in Canada and the U.S.

Aug. 14, 2013: A total of 19 wrongful-death cases have been filed in Illinois court.

Aug. 22, 2013: The Quebec government announces the creation of a victims’ committee to represent Lac-Mégantic residents, the government and the town in the U.S. bankruptcy proceedings.

Jan 23, 2014: Bankruptcy judges in Canada and the U.S. approve the sale of MMA to Railway Acquisitions Holdings of New York for $14.25 million U.S.

Feb. 12, 2014: Lawyers for the proposed Quebec class action add Transport Canada to the list of more than 50 organizations and people it plans to sue.

Feb. 26, 2014: A joint Canada-U.S. bankruptcy meeting between creditors tries to speed up the pace of the claims process.

April 2014: The MMA sale to RAH is expected to be finalized.

June 13, 2014: This is the proposed deadline for victims and creditors to file claims against MMA in the Canadian and U.S. bankruptcy proceedings.

WHAT’S HAPPENING WITH MONTREAL, MAINE AND ATLANTIC

The railway company whose runaway oil train derailed in Lac-Mégantic on July 6, 2013. It is in the process of being sold to Railway Acquisition Holdings, a New York City -based company, for $14.25 million U.S. RAH plans to change the name of the company to Central Maine and Quebec Railway, and offer rail service on MMA’s 800 kilometres of tracks in the two countries.

RAH is acquiring two companies:

Montreal, Maine and Atlantic Railway

  • Parent company of Montreal, Maine and Atlantic Canada.
  • Operates a shortline railroad in Vermont and Maine.
  • Under Chapter 11 bankruptcy protection since August.

Montreal, Maine and Atlantic Canada

  • Railway operating in Quebec.
  • Under bankruptcy protection since August.
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All about Bakken Crude, by Guy Cooper, Martinez Gazette

Repost from The Martinez Gazette

Martinez Environmental Group: The oil, pick your poison

By Guy Cooper | April 20, 2014

Two types of North American crude will roll through our towns. There’s the Bakken crude fractured from the shale beds of North Dakota and the oil/tar sand derivatives rent from the wilds of Alberta, Canada. The former has the potential to vaporize you and your neighborhood.  The latter can slowly render your land and water and body uninhabitable.

It was Bakken crude that blew up the town of Lac-Mégantic, Quebec, last July, exploded and poisoned the wetlands of Aliceville, Ala., in November, and just missed annihilating the town of Casselton, N.D., in December. That’s just a sample.

Lac-Mégantic was the eye opener. An improperly equipped and under-staffed 70-car tanker train heading east from the oil fields of Dakota was left parked on the main line above the town with an incorrectly set brake. In the early morning hours, the train broke free and careened down the hill, derailing in the center of town. OK. A train derailment due to human error.  An unfortunate accident. One would expect a nasty oil spill and big clean up to follow.

That’s not what happened. The train exploded in concussive fireballs that flattened the downtown and instantly killed 47 people. Aerial images show an area the size of downtown Martinez reduced to rubble. Flaming oil flows poured like lava from the burning train into the nearby river and lake, cooling into an intractable underwater toxic waste deposit. It took four days just to extinguish the fires. Who knows how long it will take to clean up the mess. And, of course, 47 lives lost.  The town will never be the same.

That tragic episode got people’s attention. Crude oil is not supposed to explode. It was first thought an anomaly. Maybe the train crashed into tanks of propane. That was disproved. Then there were the pools of carcinogenic benzene fire crews found themselves slogging through. Not normal.

Well, it won’t happen again. Then it did, at Aliceville and Casselton.

What was this stuff that reacted in such an uncharacteristic way? People living beside the tracks wanted to know. Emergency responders wanted to know. Local officials and the Canadian and U.S. government agencies responsible for public safety, train regulation and hazardous materials handling sought answers. Investigations and regulatory hearings commenced. About the only people not publicly showing a lot of interest, besides issues of liability, were the companies responsible for the oil production, movement and refining. Accidents happen. Normal precautions were taken. Regulations were followed. We know what we’re doing. Let’s get the PR, lawyers and lobbyist guys on this.

In response, Grant Robertson of the Toronto Globe and Mail visited the Bakken oil fields. An oil worker invited him in and produced a mason jar of fresh-out-of-the-ground Bakken crude.  “Smells like gasoline, doesn’t it? Some guys around here pour it directly in their trucks.”  The local joke is if most crude looks like a pint of Guinness, Bakken looks like Miller Lite.

The Chemical Engineer, an industry source, reported the results of chemical analysis by Canada’s Transportation Safety Board (TSB) that largely corroborated Mr. Robertson’s hands-on experience. Flashpoint refers to the temperature at which the crude gives off enough vapor to ignite. The lower the flashpoint, the more explosive the crude. The TSB results indicated a flashpoint from Lac-Mégantic samples so low that the measuring machine could only show that it was less than -35 C. The report concluded that “It is apparent that the occurrence crude oil’s flashpoint is similar to that of unleaded gasoline.”

High vapor pressure was also found, another explosive indicator. As I understand it, vapor pressure suggests the combustible gas content of an oil. The refiner Tesoro reported in early 2013 a reading of 12 psi for Bakken. Marathon Oil reported readings of 9.7 and 8.75 between 2010 and 2013, then in 2014 (after the explosions of 2013, just saying …), reported a 5.94 result.  Analysts consider that low reading an aberration, but even that number is about twice the average of most crude oils.

This is the problem. The Lac-Mégantic train cargo was assigned a packing group III classification by the largely self-regulated oil producers based on an either missed or deliberately misleading evaluation of the real volatility. Fact is, the higher the classification number, the lower the cost of transport. Class III is considered low risk. A more realistic classification I or II would have required more train staffing, beefier cars, enhanced disaster planning and other safeguards.  In other words, there would have been someone else to double check on the brake and the train could not have been left unattended on the main line while the sole engineer went five miles away to a hotel for the night. A spot check of trucks transporting Bakken from the well-heads to rail-loading facilities found a similarly pervasive cargo mis-classification. The fact is, that left to their own devices, without adequate independent regulatory oversight, oil producers, transporters and refiners are invariably going to pick the lowest-cost strategy to bring their product to market. This is the current state of the surrounding industry we are entrusting with our safety. Not a good idea.

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DOT-111 – the ‘Soda Can’ of tank cars – Long wait for safety rules

Repost from WUWM Milwaukee Public Radio, NPR

The Long Wait On Safety Rules For The ‘Soda Can’ Of Rail Cars

By David Schaper, April 15, 2014
Safety advocates have been pressuring Canadian and U.S. officials to create new safety standards for tank cars and to make old DOT-111s like this one more puncture-resistant.   Nati Harnik AP

Freight trains roll through the Chicago suburb of Barrington, Ill., every day, many pulling older tank cars known as DOT-111s. They’re known as the “soda can” of rail cars, says village President Karen Darch, because their shells are so thin.

Many of the DOT-111s are full of heavy Canadian tar sands crude oil. Some carry ethanol. And more and more of them are loaded with light Bakken crude oil from North Dakota.

“The worry is that if there’s a derailment and the car is punctured, if any of the flammable materials in it … spills out and explodes, it will create a huge fire, as we saw last summer in Lac-Megantic,” Darch says.

The center of that small town in Quebec just north of the U.S. border was incinerated in July after an unattended oil train rolled downhill and derailed. More than 60 of the DOT-111s on that train exploded into flames, killing 47 people. Since then, safety advocates have been pressuring Canadian and U.S. officials to create new safety standards for tank cars and to make the old DOT-111s more puncture-resistant.

But the regulatory authorities have not acted yet — not even after three fiery derailments of oil trains since, all in rural areas in which no one was injured. Darch believes it’s only a matter of time before there is another.

“In towns like ours, it can derail blocks from a high school with 3,000 kids, right by houses, neighborhoods where people are sleeping in the middle of the night. And even with the best response, you’re going to have very catastrophic results,” she says.

And it’s not just those living near railroad tracks who are increasingly concerned.

“The regulatory uncertainty of not having regulations to build new cars to, or not having regulations to modify the current fleet, is starting to adversely impact my industry,” says Tom Simpson, president of the Railway Supply Institute, which represents rail car manufacturers.

Simpson says that since 2011, the industry has been building to a stronger standard on its own, making new tank cars more puncture-resistant. But some are recommending an even stronger standard than that — and there’s some disagreement between manufacturers, oil companies and the railroads over just how robust the new standard should be.

Manufacturers are becoming frustrated, he says.

“We are willing to build new cars to a tougher standard. We are willing to modify the current fleet to a tougher standard to continue to remove the risk of moving hazardous material by rail, but we would not take that step until we are certain that the steps we do take would be approved by the federal government,” Simpson says.

And that lack of momentum was the focus of a Senate subcommittee hearing on the topic last week. Republican Susan Collins of Maine tried to pin down Transportation Secretary Anthony Foxx on when the new tank car standards would be ready.

His target date, Foxx said, is “as soon as possible.”

“That’s a frustrating answer,” Collins said.

“I understand. It’s frustrating for me to give it to you,” Foxx said. “But I can promise you, senator, that we are working as hard as we can to get the rule done as quickly as we can.”

When pressed, Foxx says he hopes the new rule will be ready before the end of this year. But that vague response leaves industry groups, safety advocates and community leaders somewhere they don’t want to be: in oil tank car limbo.

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