Reuters: Regulatory News: UPDATE 1-Canada to shut down rail firm involved in Quebec town disaster

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UPDATE 1-Canada to shut down rail firm involved in Quebec town disaster Aug 13th 2013, 15:46 Tue Aug 13, 2013 11:46am EDT OTTAWA Aug 13 (Reuters) - The rail firm involved in a tanker train disaster that killed 47 people in a Quebec town last month will be shut down because it does not have enough insurance to cover clean-up costs and other damages, a Canadian government agency said on Tuesday. The Canadian Transportation Agency said it would suspend the operating license of Montreal, Maine and Atlantic Railway (MMA) and its Canadian subsidiary from August 20 to give the firms "time to arrange for the orderly cessation of their operations in Canada". MMA filed for bankruptcy protection in Canada and the United States last week in the wake of the July 6 derailment and crash of a runaway train laden with oil. The resulting explosions and wall of fire obliterated the center of lakeside Lac-Megantic. In the filing, the company said its insurance covered liabilities up to C$25 million ($24.2 million), far too little to cover clean-up costs that could exceed C$200 million. The CTA - an independent government body that acts as an economic regulator - said it had contacted MMA and its Canadian MMAC subsidiary to ensure they continued to hold adequate third party liability insurance. But the agency was not satisfied with the response, said Geoff Hare, CTA's chief executive officer. "It would not be prudent, given the risks associated with rail operations, to permit MMA and MMAC to continue to operate without adequate insurance coverage," Hare said in a statement. A spokeswoman for MMA Chairman Ed Burkhardt said he was unaware of the agency's move.

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