Lawyers to argue dangers ignored in Canadian oil train disaster

WASHINGTON/TORONTO, June 9 Mon Jun 9, 2014 6:00am EDT

WASHINGTON/TORONTO, June 9 (Reuters) - Shippers wrongly moved explosive gas as part of a crude oil delivery that derailed and killed 47 people in a Canadian town last year, lawyers seeking to represent the devastated town in a class action lawsuit are expected to argue in a proceeding that starts on Monday.

Several tank cars exploded with surprising force when the cargo from North Dakota's Bakken energy patch jumped the tracks and detonated in downtown Lac Megantic, Quebec, last July.

Since that deadly mishap, U.S. officials have warned that Bakken fuel is more volatile than previously thought because of the presence of dangerous gas and have encouraged shippers to bleed off that gas before moving it on the rails.

But lawyers from the Toronto class action law firm Rochon Genova LLP will argue that oil companies were alert to Bakken fuel dangers well before the Lac Megantic tragedy, and failed to handle the fuel safely on the tracks.

Shippers and others in the supply chain "simply ignored the need to take any meaningful steps to properly test, warn, label or classify the oil," according to documents filed last week.

Those allegations have not been tested in court.

Rochon Genova will on Monday argue in the Quebec Superior Court that residents and others who suffered loss due to the accident should treated as a single group of claimants in a class-action.

Although the discovery process has yet to formally begin, police findings and industry paperwork already point to a haphazard shipping process, the law firm said.

For at least eight months before the accident, oil train cargo routinely arrived at the Irving Oil refinery labeled as the least-dangerous class of flammable liquid, and near-empty tankers returned to the field carrying a higher warning, according to a Quebec police report.

A month before the Lac Megantic disaster, an Irving Oil executive noted that fuel testing at the source "is almost non-existent," according to a company Power Point presentation seen by Reuters.

Irving Oil did not respond to a request for comment. Besides the refinery, the plaintiffs are suing other companies that they say handled the fuel, such as World Fuel Services Corp, which arranged the delivery.

World Fuel Services has argued in court filings that the rail disaster was chiefly a human error and nothing in the labeling, or packaging could have changed the outcome.

"While petitioners desire to find a solvent entity - any solvent entity - to compensate for their losses, their allegations simply cannot logically support pinning that liability on WFS," the firm's lawyers said in a filing.

Rochon Genova will also argue that officials at Transport Canada, the federal transportation authority, should answer for lax oversight before the accident. The arguments are expected to last for about two weeks.

The regulator did not immediately respond to a request for comment. (Additional reporting by Sandra Maler in Washington, editing by Ros Krasny and Nick Zieminski)

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