Wrongful death lawsuits, by-pass routes and first responder training – Issues relating to the transport of oil products by rail

Nineteen wrongful death lawsuits from the July 2013 train derailment and explosion in Lac-Mégantic, Quebec, Canada were transferred from U.S. District Court in Illinois to the U.S. District Court in Maine on March 21, 2014.

The Maine federal judge ordering the transfer found that these lawsuits were “related to” the Maine bankruptcy proceedings filed by Montreal Maine and Atlantic Railroad Ltd. (MMAR) one month after the accident. Presented with evidence of shared insurance between MMAR and some of the wrongful death defendants, the Court made the “limited finding that claims against certain of the defendants named therein are related to the Railway’s bankruptcy.”

Concerns about the safety of transporting oil by rail have increased following a number of recent accidents, including the Lac-Mégantic incident in which more than 40 died, a December 30, 2013 derailment of 21 tank cars in Casselton, North Dakota resulting in an explosion which required the evacuation of 1,400 people, and a November 8, 2013 derailment of more than 20 cars in a 90-car petroleum crude oil train near Aliceville, Alabama.

Approximately one-quarter of the nation’s rail traffic (about 40,000 cars) passes through Chicago on a daily basis, with some freight cars taking more than 24-hours to complete the transit through the city. With an increasing role in oil transport logistics, a 150-mile by-pass around Chicago has been suggested. The by-pass would require the laying of new track, raising the issue of funding. It would not be economically feasible for one railroad to fund the by-pass, and Chicago’s mayor’s recommendation to charge a fee for each rail car carrying hazardous materials was quickly criticized by railroad organizations.

On March 25, 2014, the Fire Chief of Casselton (North Dakota) Volunteer Fire Department testified before the Senate Homeland Security and Government Affairs Committee concerning his experience with the crude oil train derailment near the town. Chief Tim McLean expressed his gratitude for the training he received and the fire equipment purchased using federal homeland security grant dollars, and he emphasized the need to continue that funding. “Because of the growing oil industry and the likelihood that oil will continue to be shipped via rail, we must continue to train and plan for these types of incidents. Yes…the tanker cars will likely be improved and pipelines may be used more extensively, but that does not erase the fact that crude oil and other hazardous materials will continue to be shipped through our communities. Our responder community must be ready for that.”

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.