The tragedy in Lac-Megantic, Que. offers a case study on the difficulty of enforcing corporate responsibility in the case of a major disaster.
On July 6 a parked train with 72 tanker cars of crude oil operated by Montreal, Maine & Atlantic Railway Ltd. (MMA) rolled down a hill and derailed in downtown Lac-Megantic. Many of the tanker cars ruptured and exploded in massive fireballs.
The disaster killed 47 people, devastated the town of 6,000 people's downtown and spilled millions of litres of crude oil into the environment.
MMA, a small U.S.-based rail company, filed for bankruptcy earlier this month. In its bankruptcy documents, the company said it only had $25 million in third-party liability insurance coverage, $67.9 million to $117.9 million in assets, and $48.1 million in debts and liabilities.
MMA estimated the cost of the clean up in Lac-Megantic to exceed $200 million. That doesn't include any potential damages which could be awarded to the victims in lawsuits against the company, if it is found to have been negligent.
The Quebec government is determined to ensure taxpayers aren't on the hook for millions of dollars which MMA can't afford to pay. So last week the province widened its net to include Canadian Pacific Railway and World Fuel Services Inc.
World Fuel Services had contracted CP Rail to deliver the tankers of crude oil from North Dakota to the Irving refinery in Saint John, N.B., according to the province's legal notice. CP Rail had subcontracted MMA to transport the tankers for a portion of the route, starting in Montreal.
Unlike MMA, CP Rail and World Fuel Services can afford to pay -both are profitable multinationals worth billions of dollars - they just don't want to.
On Thursday a CP Rail spokesperson said the company isn't legally liable and plans to appeal.
World Fuel Services has not commented on the expanded order. But in a July 30 press release World Fuel Services said it has doubts about the legality of the notice, which had already named one of the company's subsidiaries, and that MMA had assumed responsibility for the accident.
MMA was grossly underinsured to transport highly-volatile Bakken shale oil from North Dakota, and CP Rail and World Fuel Services will likely spend millions in lawyer fees to avoid legal liability.
So in the end it will likely be the taxpayers of Quebec and Canada -and the victims whose lives and livelihoods were shattered -who will bear the majority of the cost of the Lac-Megantic disaster.
Northern B.C. needs to learn the lesson offered by Lac-Megantic and ensure corporate responsibility is not optional when it comes to the proposed megaprojects in the region.
Pipelines, oil refineries, oil and LNG marine terminals, and mines have the potential to create thousands of jobs and generate billions of dollars in tax revenue. But they also have the potential to leave taxpayers with millions or billions of dollars in cleanup costs.
A lot can happen over the multi-decade operational life of these projects: companies get bought, projects get sold, market prices and demand fluctuate, projects get shut down because they are no longer profitable, companies go bankrupt, projects get spun off into subsidiaries, etc.
Just because a company or megaproject looks profitable, solvent and trustworthy today means nothing in the long term. Corporate fortunes, ownership and management change all the time.
In order to protect taxpayers, government approval of such projects should set enforceable, inflation-indexed minimum standards for insurance coverage. In addition, companies should be required to enter agreements which detail all the aspects of the project which they are legally responsible for -including the actions of subsidiaries, contractors, subcontractors, employees, clients, shippers, etc. and the final reclamation of the site.
While B.C. and Canada should remain open to considering new development, protecting the environment and taxpayers must come first.
--Associate news editor Arthur Williams, with files from The Canadian Press