By Richard Valdmanis and Phil Wahba
LAC-MEGANTIC, Quebec, July 12 The train
derailment that demolished the heart of a small Canadian town
last weekend will likely spur tougher regulations for rail-car
hand brakes, tanker cars and possibly train crew size, according
to one of the lead investigators of the crash.
"I am confident that this will be an investigation that
changes the industry," Canadian Transportation Safety Board
(TSB) investigator Glen Pilon told Reuters by phone on Friday.
The TSB makes safety recommendations to Transport Canada,
the federal government department that regulates the railway
industry. Analysts said the disaster, viewed as the worst rail
accident in North America in 24 years, is almost certainly going
to lead to new regulations that could add to the cost of
transporting oil by rail, a burgeoning business in both the
United States and Canada.
Police estimate 50 people were killed when the runaway train
of oil tanker cars jumped the tracks at the town of
Lac-Megantic, Quebec, and erupted into a wall of fire shortly
after 1 a.m. (0500 GMT) on Saturday.
The train - operated by the Montreal, Maine & Atlantic
Railway (MMA) - had been parked uphill from Lac-Megantic in the
neighboring municipality of Nantes.
MMA Chairman Edward Burkhardt has said he believes the
train's sole engineer did not apply enough hand brakes to keep
the train in place after its air brakes failed. Burkhardt said
he had been told that 11 hand brakes were set, but he could not
verify that number. The engineer could not be reached for
Pilon said the TSB was looking closely at whether the
engineer set a sufficient number of hand brakes. The engineer
spent roughly 30 minutes securing the train before leaving to
stay the night at a local hotel.
"It takes about three minutes to set each hand brake," Pilon
said. "We have evidence to support what we believe happened and
we are examining the cars, but many of them were destroyed in
Pilon said the TSB is also trying to find out why backup
systems such as the "dead-man pedal", which is meant to stop a
train automatically if it is not being manned, did not work.
"It was an older locomotive, so that may be part of it,"
Pilon said. He said the locomotive was a GE C30-7. That model
was built by a division of General Electric Co. GE could
not immediately confirm that engine was used in the train.
Canadian officials stressed the probe could take months,
with 30 TSB investigators working on it, including 20 on site.
TSB Chief Operating Officer Jean Laporte told reporters on
Friday that it was "out of the question" that trains would
operate in the area until investigators have finished their work
on the ground.
"At the TSB we hold by the theory that no accident is ever
caused by one thing, it's always a series of things," TSB
Chairwoman Wendy Tadros said. "It always involves the
organization and the way that they operate, so we have to look
deeply into that. It never comes down to one individual."
Ratings agency Moody's warned on Thursday that the accident
would limit the near-term growth of petroleum freight, raising
costs and tightening restrictions for North American producers.
"The Quebec derailment ... will inevitably lead to increased
U.S. and Canadian government scrutiny and permitting delays,
along with higher costs for shippers. These higher costs will be
credit negative for North American rail companies."
Coming under scrutiny is the class of cylindrical tank cars,
known as DOT-111s, that were used in the derailed train. DOT-111
tank cars have long been flagged by U.S. and Canadian
regulators, who have recommended that they be reinforced if they
"The likelihood is pretty overwhelming that there will be
some stricter regulations," said Stifel analyst Michael
Baudenstiel. "It poses a risk for the leasing companies that
they will have to spend capital to bring the older equipment up
to newer standards, or they may serve crude-on-rail less than
they are currently."
One of the biggest tank-car leasing companies is
Chicago-based Union Tank Car, a unit of The Marmon Group, which
is controlled by Warren Buffett's Berkshire Hathaway.
Other companies that lease rail cars include GATX Corp,
Trinity Industries Inc, GE and Wells Fargo & Co.
Matthew Troy, an analyst at Susquehanna Financial, said the
catastrophe could result in higher costs if companies have to
invest in more expensive equipment or insurance.
"Obviously, a tragic accident such as this will cause
regulators as well as the railroads themselves to take pause and
examine how exactly an accident like this can happen," he said.
At the same time, he stressed the accident is "not a game
changer", and many observers say it is too soon to say if the
disaster will quell the crude-by-rail boom.
MMA Railway is permitted to run its trains with only one
crew member, and Pilon said this policy is also being looked at
as a possible factor in the crash.
MMA's own safety requirements went "above and beyond"
Transport Canada regulations, TSB investigators have found, but
Pilon declined to give details. He said the company's track
record before the crash was not abnormal in the industry.
"We have had no issues with them that we haven't had with
other companies," he said.