CP Rail Subcontracted to MMA in Quebec Train Crash; Coverage an Issue

By Louise Egan | August 1, 2013

Canadian Pacific Railway, hired to transport oil from North Dakota to New Brunswick, subcontracted part of the job to the small railroad involved in the deadly crash in Lac-Megantic, Quebec, the company that chose the Canadian railroad said.

CP Rail, which had not until now been named in connection with the accident, subcontracted a section of the route to Montreal, Maine and Atlantic Railway (MMA), World Fuel Services said on Wednesday.

“We contracted with Canadian Pacific Railway on behalf of our crude oil marketing joint venture DPTS Marketing for the transportation of the tanker cars and crude oil from New Towne, North Dakota, to a customer in New Brunswick, Canada,” said Ira Birns, chief financial officer of World Fuel Services, on a conference call after the company reported earnings.

On its website, U.S.-based World Fuel Services says it is an “integrated provider of credit, finance, services, and logistics to the energy and transportation markets.”

A spokesman for CP Rail, Canada’s No. 2 railroad, declined to comment.

CP Rail’s indirect role could complicate determination of liabilities in the disaster. CP Rail said earlier this month that it was strengthening some of its operating safety rules in the aftermath of the Lac-Megantic crash.

The train derailed on July 6 in the small, tourist town of Lac-Megantic, where it exploded into a ball of fire, killing 47 people and destroying the town center. An estimated 36,000 barrels of oil spilled into the air, water and ground.

The Quebec government on Monday signed a legal order to force MMA and World Fuel Services to pay for the cleanup.

World Fuel Services has questioned the legality of the order.

MMA has said it does not have the funds and is in talks with its insurer.

“The issue is between us and our insurance company about when they are prepared to start to disperse funds for this effort,” MMA Chairman Ed Burkhardt said in an interview with a U.S. radio station on Monday.

MMA was required under Canadian rules to have “adequate” insurance, but the law does not stipulate a minimum amount of coverage.

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