We could have done more to prevent Lac-Mégantic, says CEO

Ed Burkhardt, the embattled chairman of Montreal, Maine & Atlantic, admits his company could have done more to prevent the train derailment and explosions in Lac-Mégantic.

Montreal, Maine & Atlantic's insurers slow to pay for devastated Quebec town's cleanup

A Montreal, Maine & Atlantic train was transporting 72 cars of crude oil when it derailed and exploded in Lac-Mégantic on July 6. (CBC)

Ed Burkhardt, the embattled chairman of Montreal, Maine & Atlantic, admits his company could have done more to prevent the train derailment and explosions in Lac-Mégantic.

"I think fundamentally we were running a safe railway, but we sure blew it on that occasion," Burkhardt told CBC Radio's As It Happens in an interview Wednesday evening.

"We can always say, ‘Could we have done something differently, could we have done more?’ I suppose we could."

Provincial police believe the July 6 train derailment and explosions that levelled the downtown area of Lac-Mégantic and explosions killed 47 people. (CBC)

Over the course of the interview, he blamed the railway’s insurers for not paying cleanup costs promptly."It’s an issue involving [insurance company] XL and not us," he said.

MM&A hasn’t yet reimbursed the town of Lac-Mégantic for the millions it has already spent on cleanup operations because it simply can’t afford to, he said.

"We don’t have that kind of money," Burkhardt said.

He said non-disclosure agreements with MM&A’s insurance providers prevented him from saying how much the company is covered for, and when the money will arrive for Lac-Mégantic, but that he believed the insurance companies would eventually pay up. 

MM&A layoffs a sign of trouble

Recent layoffs by MM&A in Quebec have caused growing concern that the railway may declare bankruptcy before the cleanup is completed.

The company laid off 19 of its 75 Quebec workers on July 17. It laid off five more on July 30.

Burkhardt said the company was still operational, but couldn’t predict for how much longer.

"The issue about whether we’re going to declare bankruptcy is something that we haven’t decided. We have this under study, It’s a very complex issue. And it certainly involves the insurance coverage as part of it," he said.

"We’re functioning at a lower level than normal because our main line is blocked at Lac-Mégantic, so our business is down and we’ve had some cutbacks of workforce in order to have the employees match the business that we’re handling," he continued.

He said that the economic fallout of the July 6 train disaster had hurt his company badly.

"We’re all victims of what occurred. Our company has suffered very badly and that’s going to go on," he said, adding that he didn’t believe the damage sustained by the company and the damage sustained by Lac-Mégantic were at all similar.

Still, he said, the disaster could be the end of MM&A.

"This may cost us our company. This may cost us our investment, cost the employees their jobs, the customers in Quebec, in Maine their rail service," he said.

Burkhardt said he travelled to Lac-Mégantic in the wake of the July 6 disaster, but that he was "very unwelcome" and that his mission to meet the mayor to extend his condolences was unsuccessful.

"I wanted to meet with the mayor, I wanted to express my shock and dismay at what had happened, and solidarity with people there. I was not able to meet with her. I understand that, she’s a very busy lady," he said.

Asked whether he had any plans to return to Lac-Mégantic, he said "I don’t have any immediate plans to do so. I hope I will one day."

No clear promise on Lac-Mégantic cleanup

Burkhardt said his company responded to a lawyer’s letter asking it to pay for the cleanup operation in Lac-Mégantic — days after a formal lawyer's letter was sent by Lac-Mégantic Mayor Colette Roy-Laroche.

In an interview with Radio-Canada, Burkhardt blamed the insurance providers for not being prompt, adding that the company would be paying if it had the resources to do so.

"Our insurer has a legal problem that I’m not in a position to describe, as to when they will commence making payments and in what form those payments will be made," he said.

Roy-Laroche said last week that a letter of formal notice had been issued and that MM&A did not reply in the 48 hours provided.

Late on Wednesday, Quebec Environment Minister Yves-François Blanchet confirmed in a news release that they'd heard back from Montreal, Maine & Atlantic Canada, Montreal, Maine & Atlantic Railway Ltd., Western Petroleum Company and World Fuel Services.

However, the news release read, the companies did not clearly or firmly promise to abide by the conditions set out in the lawyer's letter.

The cleanup crews hired by MM&A after the July 6 disaster threatened earlier in the month to stop working if they weren’t paid the $4 million owed to them.

Roy-Laroche said yesterday at a news conference that MM&A now owes the town $8 million for the cleanup efforts already conducted by the crews.

She said the town fronted the cost of it in order to keep the process moving.

But when MM&A didn’t refund the town in a prompt manner, the mayor sent the lawyer’s letter asking to be refunded, as well as the company’s assurances that any further costs would be covered by them. MM&A was given 48 hours to respond.

When no response was received, the Quebec government made rare use of its executive powers by ordering the companies behind the Lac-Mégantic disaster to cover the cost of damages linked to the derailment and the ensuing environmental impact.

Quebec environment minister Blanchet said earlier this week that the railway companies are responsible for all costs relating to recovering the oil from the water and soil, preventing its spread and conducting a study of the environmental impact.

Burkhardt said he believed the insurance company would eventually pay, and that, "with the insurance money, we can obviously carry on this effort for a good long time."