Judge Gives Final Approval for $338 Million Oil Train Settlement

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David Sharp

PORTLAND, Maine (AP) — A U.S. bankruptcy judge Friday approved a $338 million settlement fund for victims of the fiery 2013 oil train derailment that claimed 47 lives in Quebec, clearing the way for payments to victims by year’s end.

Judge Peter Cary announced his approval after Canadian Pacific dropped its objection to the settlement plan and after a Canadian judge gave conditional approval Thursday. He praised attorneys for working together to get a substantial settlement in place as quickly as possible.

Barring any surprises, payments could be made to victims by the end of November or by year’s end at the latest, said Robert Keach, the U.S. bankruptcy trustee. About $83 million, or about $110 million in Canadian dollars, is being set aside to settle wrongful death claims.

“We don’t pretend to suggest that we made up for everything that happened. But within the limits of the civil system, this is substantial compensation for the victims and they deserve it,” Keach said.

A runaway train with 72 oil tankers derailed on July 6, 2013, in Lac Megantic, Quebec, setting off powerful explosions and causing fires that wiped out much of the downtown.

The disaster led to greater regulatory scrutiny of the use of trains to transport crude oil amid a production surge thanks to new technologies including hydraulic fracturing.

The judge described the devastation from the fires as “vast and complete.”

“My thoughts and good wishes go to the good town of Lac Megantic and the victims’ families,” Cary said after announcing he would sign the settlement.

After the fires were doused, the train’s operator, Maine-based Montreal, Maine & Atlantic, filed for bankruptcy, and the settlement fund is tied to those bankruptcy proceedings in the U.S. and Canada.

The fund, worth $446 million in Canadian dollars, was the product of negotiations with about two dozen companies with potential liability. In addition to settling wrongful death claims, money will be used to compensate government entities and others for destruction and environmental damage.

Canadian Pacific owned the track where the crude oil shipment originated and contended it bore no responsibility, since the train that derailed had a Montreal, Maine & Atlantic locomotive and crew and was operating on MMA rail.

But Keach argued Canadian Pacific bears some responsibility for failing to properly classify the Bakken region crude oil, which was as volatile as gasoline.

Canadian Pacific isn’t contributing to the settlement fund, and the railroad had contended the plan would have hampered its ability to defend itself from lawsuits, because the agreement provided legal immunity only to companies that do contribute.

But the altered amendment calls for a “judgment reduction provision” that would take into account the full settlement paid by others if Canadian Pacific is ordered to pay damages in the future.

“Although CP was not at fault in the derailment, we have been working with the trustee for a solution that protects CP interests and allows payments to be made to victims as soon as possible,” said Canadian Pacific spokesman Martin Cej.

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