By David Ljunggren
OTTAWA Aug 22 Canada should force railways to
take out enough insurance to ensure they can cover damage caused
by major incidents, the Canadian Senate said on Thursday in a
report issued after last month's train disaster in Quebec, which
killed 47 people.
The recommendation was one of 13 in a report by the Senate's
energy, environment and natural resources committee on
transporting oil and gas by pipeline, rail and tanker. The
Senate is Canada's unelected upper house of Parliament.
A train operated by Montreal, Maine and Atlantic Railway
(MMA) derailed and blew up in the Quebec town of Lac-Megantic on
July 6, killing 47 and destroying the town's downtown.
Canada moved to shut down MMA last week, saying it did not
have enough insurance to pay for the cleanup costs. But it has
since said it will let the railway operate through early
The report said the federal transport ministry should "apply
appropriate minimum liability coverage thresholds" to ensure
rail companies can cover damage caused by a major incident.
MMA, which has filed for bankruptcy, said it has third party
liability insurance of C$25 million ($23.8 million). It says the
Lac-Megantic cleanup operation could cost more than C$200
Under federal regulations in Canada, there is no set minimum
or maximum amount of insurance coverage required for rail
operators. Coverage is based on a risk assessment carried out by
the insurance company and the railway.
"If they can't afford to actually have the correct amount of
liability then they shouldn't probably be in the business,"
committee Chairman Richard Neufeld told a news conference.
A spokeswoman for federal Transport Minister Lisa Raitt said
Raitt needs time to look at the report and consider its
The Senate, which started work on its report well before the
fatal crash, also called on the transport ministry to work with
the U.S. Department of Transportation to review the use of
DOT-111 oil tanker cars, which were involved in the Lac-Megantic
The cars are known to be vulnerable to leaks and deadly
Canada is the largest single exporter of energy to the
United States and shipments of oil by train in Canada have
soared in the last two years as energy companies turn to rail to
help overcome a lack of sufficient pipeline capacity.
The Senate committee called on the government to launch a
review of railway regulations, standards and industry practices.
Critics, pointing to the Quebec disaster and a series of
recent pipeline spills in Canada and the United States, complain
that neither rail nor pipelines are reliable enough. They also
say pipeline companies do not always reveal quickly that a spill
The committee urged the creation of a website with "detailed
information on spills and incidents for pipelines, tankers and
rail cars, such as the types of product released and, as soon as
possible, the cause of the incident".