MMA’s Canadian License Cancelled in Light of Lac-Mégantic Tragedy

A federal agency has announced to annul the license of railway whose train crashed in Lac-Mégantic last month, indirectly enforcing the company to cease its Canadian operations due to its lack of money or insurance to cover the damages from another crash. It was explained that the rules put in place by the Canadian Transportation Agency outline that a short-line railroad shall have the capacity of paying for damages from two incidents. However, the agency ruled on Tuesday that the Montreal, Maine & Atlantic Railway has now become inept to cover the cost of any other incident.

Last Thursday, a Quebec judge allowed creditor protection to MM&A after the railroad expressed that it has failed to pay for the cleanup and reconstruction of the small Quebec town, devastated by the derailment of an oil train on July 6. Court documents submitted for creditor protection show that the railroad’s insurance policy covered MM&A for third-party liabilities of up to $25-million. However, the minimum environmental cleanup cost in Lac-Mégantic was estimated to be around $200-million.

Hence, in light of MM&A facing a mounting amount of fine, along with the threat of two large lawsuits, the railroad’s financial resources were found to be insufficient by the Canadian Transportation Agency and no new insurance was purchased to cover future damages. In a statement, the federal agency said that the railroad failed to demonstrate that it had “restored [its] insurance level to what existed prior to the Lac-Mégantic derailment.”

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