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Broken Rail Blamed for WV Derailment; Judge OKs $344M Settlement in Quebec Wreck

Federal regulators said last February's fiery oil train derailment in West Virginia was caused by a broken rail, and levied $25,000 fines against both CSX and Sperry Rail Service for failing to detect the flaw despite two separate inspections months before the accident.

Meanwhile, a federal bankruptcy court judge in Maine has approved a C$445 million ($344 million U.S.) settlement fund to compensate the victims of another derailment and explosion in Quebec in July 2013.

On Friday, the Federal Railroad Administration (FRA) said the Feb. 16 derailment and subsequent fire in Mount Carbon, WV, was caused by a vertical split head rail defect (see Shale DailyFeb. 17). CSX and its contractor, Sperry, missed the defect during at least two separate inspections of the rail line in December 2014 and January 2015.

According to the FRA, the broken rail was near the location of a previous broken rail that was discovered by one of its inspectors and repaired in May 2014.

"Broken rail is one of the leading causes of accidents," said FRA Acting Administrator Sarah Feinberg. "Railroads moving crude and other hazardous materials through and alongside communities bear significant and special responsibility. All railroads, not just CSX, must be more diligent when inspecting for internal rail flaws or when contracting out inspection work."

The derailment, which forced the temporary evacuation of 1,000 people in the area, involved a 109-car train loaded with crude oil from the Bakken Shale. Its final destination was an oil depot in Yorktown, VA. The FRA and CSX both said 27 cars derailed, with the railroad adding at the time of the incident that 19 cars exploded and burned, with some oil leaking into a tributary of the Kanawha River (see Shale Daily, Feb. 20).

Last month, more than 200 residents in the Mount Carbon area filed suit against CSX in Wayne County Circuit Court (see Shale DailySept. 10). It was unclear what impact Friday's announcement by the FRA would have on the litigation.

The FRA said previously that speed was not a factor in the crash. The train was traveling 33 miles per hour at the time of the incident; the speed limit on that section of track is 50 miles per hour.

During Friday's announcement, the FRA said it will release a safety advisory urging "closer and more detailed inspections where defects and flaws are suspected, and stronger training for rail inspection vehicle operators." The agency said it will also look into possibly setting rail-head wear standards, and to require that railroads either slow their trains or replace a rail under certain conditions deemed a safety risk.

CSX has also promised to require its internal rail flaw operators "review previous inspection data alongside real-time data in order to assist in identifying conditions and flaws that have changed or worsened between inspections," the FRA said.

In U.S. Bankruptcy Court for the District of Maine on Friday, Judge Peter Cary approved a C$445 million settlement for the July 6, 2013, derailment and explosion of a train loaded with Bakken crude in Lac-Megantic, Quebec (see Shale DailyJuly 9, 2013). The settlement total includes C$111.2 million ($85.9 million U.S.) to compensate the families of the 48 victims who died from the incident.

Robert Keach -- who serves as trustee for the railway that involved in the incident, the now-defunct Montreal, Maine & Atlantic Railway (MMA) -- told NGI's Shale Daily that the agreement paves the way for MMA's liquidation. He added that Canadian Pacific (CP) Railway has agreed to withdraw its objections to the settlement and dismiss its appeals.

"They're still not paying money yet, and we'll continue to sue CP after this is done," Keach said Friday. "What they did was essentially get out of the way of the distribution of the funds.

"Hopefully this will go a little way toward compensating those people for what happened. Obviously, no amount of money is going to ultimately do that, but at least this well help."

CP has argued that it should not be held responsible for the disaster because it did not involve its tracks, rail cars, products or employees. But CP spokesman Martin Cej told the Canadian Press on Friday that the railroad "has always supported the immediate payment of compensation to victims by those responsible for the incident.

"And although CP was not at fault in the derailment...the company has been working with the trustee on a solution that protects CP's interests while allowing compensation to be paid to the victims as soon as possible."

Cary also released several oil and gas companies from any liability for damages and wrongful death claims. They include ConocoPhillips, Halcon Resources Corp., Marathon Oil Co., Oasis Petroleum Inc., QEP Resources Inc., Shell Oil Co. and Whiting Petroleum Corp.

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