Public attention has recently been drawn to several rail accidents and disasters in Canada. The Lac Megantic disaster in Quebec on July 6, 2013, marks a tragic day when a runaway train derailed in the centre of town, caught fire and exploded when the millions of litres of oil escaped. The derailment and explosion occurred in the middle of the small town and killed upwards of 47 people who were innocently going about their lives.
Another rail accident occurred in Ottawa on September 18, 2013 when six people lost their lives when the bus they were riding in collided with a train at a level crossing. There is some suggestion that the crossing was a recognized danger that had not been upgraded due to what was considered a staggering cost.
A further rail accident, though without loss of life, is reported to have occurred in Landis, Saskatchewan on September 25, 2013, when train cars derailed and oil spilled within 500 to 700 metres of the town. Lives of the people in town were in jeopardy, a local school closed.
These rail related stories, and the many others that occur over the course of the year have the present attention of the public. The increased use of rail to transport oil, and the potential for accidents, loss of life and damage to the environment raises serious questions about rail safety and how the rails are used in Canada. It is a broad debate that raises serious issues about the priorities of Canadians.
At Quinn Thiele Mineault Grodzki LLP, our firm is often confronted with disasters such as these rail accidents, from the perspective of involved parties and victims of these events. The victims are often irreparably scarred and wounded from the incident. They seek QTMG’s legal help to obtain compensation for their suffering and financial support in order to continue and maintain treatment.
In confronting the consequences of the injuries we see that Canadian Society, through parliament, makes choices about the kinds of risks that the public is required to assume so that trains can travel through the villages, towns, Cities throughout Canada. The risk of accident and exposure to the things on the trains is one risk. Another risk, is the risk of being left destitute and unable to be compensated for the injuries that are suffered.
Railways, like many big public utilities, are required to be licenced in Canada to operate. In relation to trains/railways it is federal licencing. Without a licence, the company may not operate a railway—which is not necessarily a good thing as railways are commonly recognized as being an integral aspect of the economy that provide jobs and prosperity to the people living near them.
Choices are made it the licencing process. One of those choices is deciding how much insurance a company is required to carry before a licence to operate is issued. The decision of “how much” insurance in effect is a choice over how much risk the public is required to bear in the event of a disaster. The Lac Megantic disaster is a prime example of the consequence of the choice coming home to roost. As was reflected in the news, the town had huge cleanup costs and the company was effectively insolvent with the exposure to those costs. The insurance that the company had in place, as required by the government to be licenced, turns out to likely be inadequate given the scope of the losses and damages caused by the accident. Ultimately, this means that some victims may not be compensated and the public will suffer the costs to clean up from the disaster as the company will be insolvent/bankrupt.
A point of debate is to decide what is the appropriate amount of insurance that a regulator / government should require of a company that wants to operate a railway? Presumably, the bigger the policy the more expensive the undertaking. The higher the over-head the less likely that a company will operate a railway which may have a negative economic effect on the area. Of course, the lower the policy, the greater the expense to the public in the event of a disaster and the greater the likelihood that personal victims will not be properly compensated.
For utilities like railways, is the answer that the companies should provide a base amount of insurance coverage and after that the government steps in to provide the balance of indemnification from the public purse? An argument can be made for this position when one looks at the value the public receives from the existence of railways as an economic engine and component of the economy.
In the wake of the recent train disasters provincial and federal governments are looking closely at the insurance requirements and making choices. Choices that affect us all.