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After deadly oil train wreck, change comes slowly for devastated city

by Index Investing News
July 8, 2023
in Property
Reading Time: 9 mins read
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Freight trains still rumble through Lac-Mégantic, Quebec, a daily reminder to its 5,750 residents of the accident that shattered a warm summer night, and their city, 10 years ago.

In the early hours of July 6, 2013, dozens of people were socializing at the Musi-Café bar, while others slept in their apartments nearby — unaware that a runaway freight train was barreling toward them at about 65 miles an hour, pulling 72 tank cars loaded with crude oil from North Dakota’s Bakken field. At about 1:15 a.m., the train derailed, causing a chain of explosions. Fire ripped through the bar and incinerated much of the city’s downtown, killing 47 people.

It was the deadliest rail accident in North America in nearly a century. A decade later, it’s become another lesson in the slow pace of safety improvements in the railroad industry.

An older design of tank cars known as DOT-111s, which ruptured that night in Quebec, still carry flammable goods in the US, despite plans by both countries to phase them out. When a Norfolk Southern Corp. train derailed in Ohio in February, three DOT-111s released hazardous materials, causing regulators to warn railways, again, about the risks of continuing to use them. 

In Lac-Mégantic, many residents want the strongest possible measure to prevent another accident — moving the rail line out of town. The Canadian and Quebec governments announced a plan in 2018 to build a rail bypass around the city, with an estimated cost of at least $302 million now. Yet no shovel has touched the ground. 

“Getting the train out of the city center is obvious,” said Julie Morin, the mayor. “It doesn’t make sense that it’s not done yet.”

The 8-mile bypass has been in limbo due to negotiations with landowners and environmental concerns. Yolande Boulet Boulanger, 85, is one of the property owners who’s fighting it: She would see her land split in two by the construction of a small canyon to accommodate the new line, and fears it will contaminate the water table. 

“The current rail is safer,” said Boulanger, whose 19-year-old grandson was killed when the train blew up. “You don’t fix a mistake with another mistake.”

Prime Minister Justin Trudeau, who attended the 10-year commemoration ceremony Thursday, said the construction of the bypass should start this fall. The Canadian government will take possession of the parcels of land needed on Aug. 1. 

“For me, it’s not even a question,” Trudeau said. “The tragedy and trauma that people are still experiencing every day with the train passing through town — we have to put an end to it. We’re also going to work very hard to improve rail safety in this country.”

Located 155 miles east of Montreal and only about 20 miles from northern Maine, Lac-Mégantic is in a part of Quebec known for its picturesque hills and lakes. Trains follow a long downward slope into the town, where the track curves. 

On that fateful night a decade ago, locomotive engineer Thomas Harding of the Montreal Maine and Atlantic Railway parked the train for the night in the nearby town of Nantes. A fire broke out on the front locomotive, setting off a series of events that caused the air brakes to fail, and Harding had not applied enough hand brakes to keep the train from rolling downhill. Harding and two other employees were charged with criminal negligence, but acquitted in 2018.

Accused of catastrophic negligence and faced with soaring liabilities, the railway filed for bankruptcy a month later and no longer exists. But the accident was also a wake-up call for regulators about the inadequacy of rules for tank cars that ferry crude oil and other flammable goods around the continent.

Lisa Raitt, who was named Canada’s transportation minister days after the disaster, made it her mission to ban the DOT-111s, which have a minimum steel thickness of just 7/16th of an inch and could, in her words, “burst open like a can of a soda.”  

“This was a confluence of mislabeling of highly flammable product in a crappy car with a guy who didn’t set the brakes in the middle of the night, and a slope that went through the middle of a downtown. You can’t write it,” said Raitt, who’s now a vice-chair of investment banking at CIBC Capital Markets. 

“Enough people in the system understood the fragility of the DOT-111 tank cars,” Raitt added. “You can see that one man not doing his job caused a chain reaction that has a lot of people involved in it.”

Canada has made other safety moves in response to the tragedy. It increased the number of inspections by 75%, made two-person crews mandatory for trains carrying dangerous goods and strengthened the rules around hand brakes, according to Nadine Ramadan, a spokesperson for Transport Minister Omar Alghabra. 

“It’s a good start, but it’s not enough,” Kathy Fox, chair of the Transportation Safety Board of Canada, said of the reforms. She’s calling for the implementation of automatic parking brakes on trains, among other changes. “We’re still very concerned that there needs to be more changes to prevent uncontrolled movements from happening.”

The rate of accidents in the industry has risen in recent years. But crashes that release hazardous materials remain rare in Canada — generally less than five per year — and have dropped sharply in the U.S. over the past 20 years, according to data from the TSB and the US Federal Railroad Administration.

Spokespeople for the Railway Association of Canada and the Association of American Railroads each said that 99.99% of carloads carrying hazardous materials reach their destination safely. 

“We are in an era of record safety performance for this industry,” AAR Chief Executive Officer Ian Jefferies said in an interview. “We are not where we want to be because, albeit fewer and fewer incidents, incidents continue to occur.”

The crash, and the risks that remain, have turned Lac-Mégantic residents such as Robert Bellefleur into activists.

The 68-year-old uses drones to collect data on trains being driven through the city by the line’s new owner, Calgary-based Canadian Pacific Kansas City. Some have more than 200 cars and carry hazardous materials such as propane gas, sodium chlorate and sulfuric acid, said Bellefleur, who is among those pushing for the construction of the bypass.

“If a train has a mechanical problem and comes down with such a monster, are we going to live July 2013 again?” he said. 

Canadian Pacific is poised to benefit from the bypass because it would be able to run trains much faster than the current limit of 10 mph within Lac-Mégantic.

“CPKC is dedicated to safely and efficiently delivering essential goods and services, and supporting economic growth in Quebec and throughout North America,” said spokesperson Stacy Patenaude. 

Some residents fear the railroad is bound to become more heavily used, especially with the company’s recent merger with Kansas City Southern.

The campaign for railway safety blends with Lac-Mégantic’s new normal.  

The city rebuilt a commercial street that was destroyed. The economy is strong, unemployment is low and home prices in the broader region have jumped, as they have in so many places in Quebec. Lac-Mégantic’s largest employer, wood panel manufacturer Tafisa Canada, is running at full speed.

In the place where the Musi-Café once stood, there’s now a memorial, with trees and benches and the words “Espace mémoire — 6 juillet 2013” carved into concrete. 

About 2,000 feet away, the new Musi-Café is open. It was one of the first businesses to rebuild after the inferno, and its owner sold it last year to entrepreneurs from the restaurant industry. “If the Musi-Café was to disappear, I think there would be a void in the community,” said Martin Lacombe, one of the new co-owners. 

The bar’s name will forever have a place in its history. But so, too, does the railroad, as an essential part of its economy, for better and for worse. 

“Lac-Mégantic was built around the railway line,” said Caroline Vallée, president of the region’s chamber of commerce. She hopes people will one day see the city for what it has become, and not for the horror it endured 10 years ago. “We are not just a tragedy.”

This story was originally published at bloomberg.com. Read it here.



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Tags: changeCitydeadlydevastatedOilslowlyTrainwreck
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