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MMA Railway Faces Uncertain Future in Wake of Lac Megantic Disaster
07/10/2013   Reported By: Jay Field

Montreal, Maine & Atlantic Railway's chairman says the brakes on the runaway oil train that exploded in Lac Megantic, Quebec were not set properly. The railroad has now suspended the train's engineer without pay, pending an investigation, and local police have reportedly detained the man. Fifteen people are confirmed dead in the accident, with a total of 60 people reported as missing or unaccounted for. As Jay Field reports, the crash is a devastating development for a rail line that has struggled financially, since it began operating in the wake of the Bangor and Aroostook Railroad bankruptcy 10-and-a-half years ago.

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MMA Railway Faces Uncertain Future in Wake of Lac
Originally Aired: 7/10/2013 5:30 PM

Residents hurled jeers and insults at Ed Burkhardt, when the head of Montreal, Maine & Atlantic Railway's parent company finally arrived in Lac Megantic on Wednesday. Reporters, meantime, pressed the Rail World CEO on MMA's safety record in a press conference broadcast on the Canadian Broadcasting Corporation's Web site

Reporter: "Is your railway secure sir?"

Burkhardt: "You know, until last Saturday, I would have said, 'Yes.'"

In its 10-and-a-half in business, Burkhardt says the MMA has had only minor derailments on its tracks and in its rail yards.
"We've actually had, I think, quite a reasonable safety record up until Saturday," Burkhardt said. "And then we blew it all."

It's a devastating turn of events for a company that has been through lots of economic ups and downs in its short life. Shortly after the railroad launched in January of 2003, the orginal Great Northern Paper Company, which ran mills in Millinocket and East Millinocket, declared bankruptcy.

"And they were a major, major customer of the railroad, so that was a blow right out of the box," says Chop Hardenbergh, who edits the newsletter Atlantic Northeast Rails and Ports.

Hardenbergh says the company did okay, after a Canadian company bought the mills out of bankruptcy and reopened them. But Hardenbergh says the railroad ran into serious financial trouble, after the recession hit in 2008.

"If people aren't building houses, than they're not bringing forest products in from Canada. They're not shipping out forest products from the lumber mills in Maine," Hardenbergh says. "And they did take a big hit, which caused them to retrench. And they had to sell off all of the rail line north of Millinocket," - more or less making MMA a Millinocket to Montreal railroad.

Hardenbergh says the company was betting it could break even, or do slighly better on the rest of the lines, while it waited to the economy to turn around.

"While the economy hasn't picked up anywhere near to what they expected, this crude oil came out of absolutely nowhere in North Dakota, and has just done wonders for their traffic in the last year," Hardenbergh says.

But Saturday's accident is a potentially game-changing event that could make the company's future uncertain.

"The train that exploded in Lac Megantic was on a rail line that goes through Maine," Rep. Benjamin Chipman, of Portland, told House colleagues. Chipman sponsored a bill this spring - vetoed by Gov. Paul LePage - that would have studied the risks posed by the transporting tar sands oil through Maine by rail.

"This could have happened here. If it did, and if it was carrying tar sands oil, would we be prepared?" Chipman asked.

Chipman's comments this week on the House floor failed to persuade a two-thirds majority to override the governor's veto. But the accident in Quebec all but ensures that lawmakers will continue to scrutinize movement of tar sands oil through the state.

But increased attention from lawmakers is the least of MMA's problems right now. In the short term, it's unclear when MMA will be able to resume normal freight transport on its main rail line. Will Irving Oil be willing to continue receiving deliveries, by train, to its refinery in Saint John, New Brunswick?

And then, says Chop Hardenbergh, there are the all-but-certain lawsuits the company will be hit with by familes of those killed in the accident. "Can they survive as a company, facing a huge, huge cost?" he wonders.

In his press conference, Ed Burkhardt said he's already been on the phone with insurance companies, as MMA deals with the immediate fallout from the tragedy.


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