The bad news for the beleaguered trackside inhabitants of Lac Megantic, Quebec, continues to roll relentlessly downhill, just as the The Montreal, Maine & Atlantic Railway (MM&A) train did before it exploded in their town, incinerating more that forty of their citizens. After MM&A CEO Edward Burkhardt assured them that his railroad would pay for all the expenses of a cleanup, in the more or less immediate period after the crash(he took a few days to show up), his railroad has sought bankruptcy protection both in Canada and the US, and it has been revealed that it had only 25 million dollars in liability insurance. This is a fraction of what the ultimate cost will be to remediate the environmental disaster created by the wreck. Never mind making whole the families of the dead in Lac Megantic.
According the CBC, "Burkhardt said that the railway wishes to continue to work with municipal and provincial authorities 'on environmental remediation and cleanup as long as is necessary, and will do everything within its capacity to achieve completion of such goal.'"
Evidently this railroad’s capacity only extends as far as hiring lawyers, since it has welshed on its bills for the cleanup so far, leaving Lac Megantic and Quebec to step in to pay cleanup workers. And as we know, once the corporate lawyers start circling a disaster, the settlement will take years, not months.
Bewildered Canadians are wondering how this can be. On the CBC site, one reader said “Only $25 million in insurance! Why is it that I, as a car driver, am required to have liability insurance of at least $1 million and I am told by my insurer and have accepted for many years now to pay for $2 million in liability insurance when this rail company, hauling millions of dollars of hazardous material gets away with only $25 million in insurance? Something is amiss with how these rail companies operate and the governments that supposedly regulate them.”
Actually, nothing is amiss from the railroad carriers point of view. The descendants of the 19th century robber barons who ruled the rails and politicians of their day, set this situation up decades ago, in the negotiations that established Conrail, in the US northeast, out of the wreckage of the Penn Central collapse.
Conrail, and after the 1980 US Staggers act was passed, other Class 1 lines, were allowed to drop “money losing” branch lines, selling them to people like Edward Burkhardt. Class 2 and Class 3 categories of railroads bloomed. Defined by how much money these lines generate, legal and liability requirements are lessened, so it should be no surprise that the MM&A only needed 25 million in insurance coverage.
The Class 1 carriers now had the best of all worlds, profit wise. They could concentrate on pulling big loads between major population centers, with the loosely regulated and largely non-union shortlines feeding them traffic. If something like Lac Megantic happens, c’est la vie, all the tracks might be connected, but financially the big roads who have the deep pockets can walk away claiming no liability connection.
From a capitalist point of view, its quite brilliant really. Limited liability is considered essential to protect investors. The Economist magazine said of “limited liability” in 1999 that “ But by 1926 this paper had been converted, suggesting that the nameless inventor of the concept might earn “a place of honour with Watt, Stephenson and other pioneers of the industrial revolution”. By that standard the authors of the Staggers Act deserve similar accolades. But those living near railroad tracks might want to hold their applause.
As the lawyers go to work on Lac Megantic, the public relations arm of the railroad industry, in the person of “Railway Age” reporter Frank Wilner, lays down the tracks of the propaganda defense for continued crew reductions. The public was horrified to find out that a lone engineer was working the train that rolled into Lac Megantic, and the outcry has roused the rail unions that represent the engineers and conductors, the Brotherhood of Locomotive Engineers (BLET) and the United Transportation Union (UTU), to push for a legislative mandate for a two person crew.
Wilner will have none of it. He says “The Lac-Mégantic tragedy has prematurely reignited the crew debate. How it plays out and where—before Congress, the FRA, the negotiating table, or even the federal courts—cannot be foretold. Over time, the Lac-Mégantic tragedy and public fears in its wake will have a diminished impact on opinion leaders and decision makers, who will more properly focus on technological progress and economics. Unions historically can best serve the interests of their members through voluntary interest-based bargaining rather than having third parties—such as a labor-hostile Congress—make the decision.”
By premature debate, Wilner means that once Positive Train Control is implemented, the railroads would then have the upper hand in demanding a one person crew on freight trains. The Quebec disaster was an undesired derailment of the rollout of the railroad’s grand plans to further reduce labor costs. The case was to be made that with GPS, computers and PTC, the only job for the engineer will be to monitor the “automatic pilot”, freeing him or her up to do conductors work as well.
As always, the safety of the public thus lies in the hands of the workers on the job, represented in this case by the BLET and the UTU, whose record of internecine warfare for the ever-diminishing pool of jobs does not inspire confidence, as the scrappy activists of Railroad Workers United will tell you. An aroused rank and file, bolstered by the broader labor movement, will have to make the case to the public before another Quebec disaster visits a trackside community.