Canadian Pacific Railway to refuse order to pay for Lac-Megantic

MONTREAL – Canadian Pacific says it holds no financial responsibility for the Lac-Megantic rail disaster and its rejecting a legal demand by the Quebec government that it help pay for the cleanup in the devastated town.

The railway announced Thursday that it will appeal the province’s legal order.

The news came one day after the provincial government added CPR (TSX:CP) to a list of defendants that it says are responsible for picking up the tab for the massive mop-up in Lac-Megantic, where a train derailed on July 6 and dumped millions of litres of crude oil into the environment.

“Canadian Pacific has reviewed the notice. As a matter of fact, and law, CP is not responsible for this cleanup,” railway spokesman Ed Greenberg said Thursday.

“CP will be appealing.”

That legal notice demands that the companies named follow a provincial law that holds businesses accountable for the financial impact of an environmental disaster.

Environment Minister Yves-Francois Blanchet, who signed the order, responded quickly Thursday to CPR’s position.

“I will leave it up to lawyers, but let’s be clear: under the law on environmental quality, the minister does not ask for, or suggest, compensation … he orders it,” Blanchet said in a statement.

“It’s not optional.”

The disaster killed 47 people and led to a mass evacuation in the community of 6,000. The derailment has since prompted a criminal investigation, several lawsuits, and concerns that locals may have to abandon Lac-Megantic’s oil-soaked downtown core.

In the legal notice, the province said CPR was the main contractor responsible for the fateful shipment that was supposed to transport crude from North Dakota oil fields to New Brunswick’s Irving refinery.

It handed off the train in Montreal to the smaller Montreal, Maine & Atlantic Railway Ltd., which then operated the tanker train that derailed in the heart of Lac-Megantic and set off a series of explosions.

MMA is already among the other companies on the legal notice, but the U.S.-based railway has said it can’t afford to pay and has requested bankruptcy protection.

In one court filing, MMA said its insurance coverage was $25 million and estimated the total cleanup cost would exceed $200 million.

On Wednesday, the Quebec government also added World Fuel Services Inc. to the legal notice. It’s a subsidiary of the petroleum-logistics firm World Fuel Services Corp., which was listed along with another of its branches, Western Petroleum Company, in the initial demand from the government.

The Miami-based World Fuel Services had bought the crude oil that was to be shipped to the refinery in St. John, N.B.

The Quebec government had given CPR and World Fuel Services 24 hours to respond to the legal order.