Judge approves $338M for Quebec train derailment victims

A U.S. bankruptcy judge on Friday approved a $338 million settlement fund for victims of the fiery 2013 oil train derailment that claimed 47 lives in Quebec, clearing the way for payments to victims by year's end.

Judge Peter Cary announced his approval after Canadian Pacific dropped its objection and after a Canadian judge gave conditional approval Thursday.

Barring any surprises, payments could be made to victims by the end of November or by year's end at the latest, said Robert Keach, a U.S. bankruptcy trustee. About $83 million will be used to settle wrongful death claims.

"We don't pretend to suggest that we made up for everything that happened. But within the limits of the civil system, this is substantial compensation for the victims, and they deserve it," Keach said after the brief hearing.

A runaway train with 72 oil tankers derailed on July 6, 2013, in Lac-Mégantic, Quebec, setting off powerful explosions and causing raging fires that wiped out much of the town's center.

Canadian officials were initially surprised by the size of the blast but later discovered that the oil carried by the train had been mislabeled as being less explosive than it actually was.

In addition to the deaths and destruction of much of the small town, the spilled oil presented environmental risks. Testing by Quebec group La Société Pour Vaincre la Pollution in the months after the derailment showed extremely elevated levels of toxic chemicals and carcinogens in the area around the crash site. It also showed significant amounts of oil sludge at the bottom of the nearby Chaudière River and the lake the town is named after.

Robert Bellefleur, a member of a Lac-Mégantic-based coalition that promotes rail safety, welcomed the judge's approval.

"It's good news for people who were hit hard, who lost loved ones, homes, businesses," said Bellefleur, who knew many of the victims. "It will provide comfort and maybe enable people to get back on their feet and live a more normal life, but without ever forgetting what happened."

But Raymond Lafontaine, who lost his son, two daughters-in-law and one of his employees in the tragedy, said victims aren't getting a fair share.

"The judge said OK today? Well that's welcome. But the victims will get very little because the city will get its cut, the governments will get their cut, and the lawyers will get theirs. Millions. They will all fill their pockets. And the victims will get very little," he said.

The train’s operator, Maine-based Montreal, Maine & Atlantic, filed for bankruptcy, and the settlement fund is part of those bankruptcy proceedings in the U.S. and Canada.

The $338 million settlement fund came about after negotiations with about two dozen companies with potential liability. In addition to settling wrongful death claims, the money will go to injured victims, property damage claimants and government entities.

The judge praised attorneys Friday for working together to get a settlement in place as quickly as possible for a community where the devastation was "vast and complete." 

"My thoughts and good wishes go to the good town of Lac-Mégantic and the victims' families," Cary said.

Canadian Pacific — which mislabeled the oil — had fought the settlement, saying it shouldn't be asked to contribute because it bore no responsibility and arguing the settlement would have hampered its ability to defend itself from lawsuits by providing legal immunity only to contributors.

Keach argued Canadian Pacific bears some responsibility for failing to properly classify the volatility of the Bakken region crude oil. The crude was as volatile as gasoline, contributing to the severity of the fire, he said.

The amended settlement plan calls for a "judgment reduction provision" that allowed Canadian Pacific to drop its opposition, but Canadian Pacific still isn't contributing to the settlement.

A Canadian Pacific spokesman said the railroad is pleased that victims will be compensated. The railroad simply wanted to protect its legal interests — not delay payments from responsible parties to those who were harmed, said spokesman Martin Cej.

The settlement isn't the end of the legal cases related to the disaster.

Wrongful death lawsuits were on hold while the settlement was sorted out. Now Canadian Pacific could be sued in several jurisdictions, and there's also a separate criminal case pending against several workers who are charged with criminal negligence causing death.

Two years after the disaster, the U.S. Federal Railroad Administration set a new rule mandating that hand brakes and other safety features be set and checked when a train carrying volatile material is parked and left unattended — as was the case in Lac-Mégantic. Critics viewed the rule as too little, too late.

Al Jazeera and The Associated Press