The Lac-Mégantic disaster, New Brunswick, and Irving companies: an interview with Bruce Campbell

Written by Susan O'Donnell on April 22, 2019

Bruce Campbell. Photo by Ben Welland.

The Lac-Mégantic rail disaster and an Irving company, NB Southern Railway, were together in the same CBC news story last week as a court case wound up in Saint John.

This week author Bruce Campbell will be in New Brunswick to launch his new book: The Lac-Mégantic Rail Disaster: Public Betrayal, Justice Denied. Campbell’s book analyzes the history of the complex relationships linking railways, the oil industry, a government regulatory system captured by industry, and the devastation of a rural town in Quebec on July 6, 2013.

Campbell, an adjunct professor in Environmental Studies at York University and senior fellow at the Ryerson University Centre for Free Expression, is a former executive director of the Canadian Centre for Policy Alternatives, one of Canada’s leading independent think-tanks, and the author of three major reports on the Lac-Mégantic rail disaster.

The NB Media Co-op is co-hosting Campbell’s visit to Edmundston, Fredericton and Saint John with the RAVEN project. Editorial board member Susan O’Donnell interviewed Campbell in Ottawa by email over the Easter weekend. Given the recent news about the NB Southern Railway court case, the interview focused on exploring the relationships between the Lac-Mégantic disaster, New Brunswick, and Irving companies.

NBMC: The investigation into the Lac-Mégantic disaster triggered legal charges against Irving Oil, and the NB Southern Railway, a subsidiary of J.D. Irving. What were the charges and outcomes?

Campbell: Following the Lac-Mégantic disaster, Irving Oil, as importer of the fateful shipment of Bakken shale oil from North Dakota, was charged with 34 counts of violating the Transportation of Dangerous Goods Act: 14,000 tank cars of crude oil were hauled on its behalf from November 2012 to July 6, 2013 [one-third went through Lac-Mégantic]. Irving Oil, after lengthy negotiations, pleaded guilty to all counts in October 2017, paying $4 million — $400,000 in penalties and a $3.6 million contribution to support safety research on the transportation of dangerous goods.

Irving Oil was also a defendant in civil suits [wrongful death, class-action], contributing $75 million to the settlement in these cases. The federal government also contributed $75 million. CP is the lone defendant that refused to settle and is still in court.

The Montreal, Maine and Atlantic Railway was carrying the shipment imported by Irving Oil that derailed in Lac-Mégantic. A different railway, the Irving-owned NB Southern Railway, was scheduled to haul this shipment the last leg of the journey to Saint John.

NB Southern was charged in 2018 with incidents related to hauling dangerous goods on this route stemming from 2012 up until the day before the disaster: 24 counts of violating the transportation of dangerous goods act — 12 counts for failing to create proper shipping documentation and 12 counts for having unqualified personnel offering dangerous goods (crude oil) for transport. The danger was to people living in New Brunswick.

It initially pled not guilty but on April 18, 2019 reached a plea agreement with federal prosecutors, pleading guilty to two counts of failing to properly document crude oil tank cargo and paying $50,000: $10,000 in penalties and $40,000 in payments to support safety improvements in the transportation of dangerous goods.

The Lac-Mégantic Citizens Coalition is reportedly very disappointed with the plea agreement; both the low fine and other monetary payments, and the fact that it was reached with the NB Southern Railway pleading guilty to just two of the 24 counts with which it was charged.

NBMC: Railways have a long history in New Brunswick. Your book describes how railway deregulation led to job losses as well as fewer safety protocols for the workers who kept their jobs. Could you explain this process?

Campbell: One deregulation landmark was the privatization of CN in 1995 and the freeing of its [and CP’s] historic commitment to the Canadian Federation, allowing them to sell off or tear up “unprofitable” lines.

Hunter Harrison, the CEO of CN, revolutionized the operation of railways with his so-called “precision railroading.” His approach was simple: run fewer and longer trains, eliminate unprofitable lines, slash jobs. The effect of the latter was to increase pressure on those remaining to work longer hours, often under increasingly unsafe conditions. Harrison’s cutting of services produced such a multitude of complaints from customers that the government launched a commission of inquiry.

Harrison created a “culture of intimidation” that was a major departure from the employer-employee relationship that had characterized the industry. The number of union grievances tripled during his tenure and the number sent to arbitration was five times the level at CP (at this time).

Harrison came out of retirement [from CN] to take over the reins of CP in 2012, applying the same formula with the same consequences: strikes, firings, disciplinary actions, union grievances and arbitrations, etc. but as before his formula was great for short-term profits and shareholder value.

The combination of Harrison’s influence and the role of Wall Street have extended this cost-cutting approach to major railways in North America with similar adverse safety risks.

It was under Harrison that CP was contracted by Irving Oil to haul the Bakken shale oil from North Dakota to Saint John. CP sub-contracted the rail transit through Lac-Mégantic to the Montreal, Maine and Atlantic Railway.

The Irving group of companies are privately-held; and thus the NB Southern Railway is not subject to the same short-term stock market pressure. I do not know its history. However, charges of violations of the Transportation of Dangerous Goods Act suggest shortcuts were taken.

NBMC: In your book you refer to the regulatory capture of railways. Could you explain what this means, and are there any links to New Brunswick and the NB Southern Railway.

Campbell: Regulatory capture is a central theme in my book which documents the power relationship between the government regulator and the railway industry: the erosion of the regulator’s countervailing power. This relationship also exists with the petroleum industry.

Regulatory capture embodies a fundamental conflict between the obligation of government to protect the health and safety of its citizens and the interests of corporations to maximize shareholder value. The result of regulatory capture is a weakened, under resourced, dysfunctional and compliant regulator less and less able to carry out its primary obligation to protect the public.

I document a series of policy, statutory and regulatory decisions by successive governments beginning the mid-1980s: mutually reinforcing policies of deregulation, privatization and austerity, which systematically eroded safety protections.

It ceded to industry enormous power to shape regulations and laws, to write the rules; to block, reverse, delay, and dilute to the point where the companies were in effect regulating themselves.

The power of the railway companies in this regard is expressed collectively through its lobby organization, the Railway Association of Canada, or companies engaging individually with the regulator, Transport Canada. CN and CP are dominant players. The much smaller NB Southern Railway is one of 60 members of the Railway Association, and as such benefits from the industry’s collective efforts.

NBMC: The federal Transport minister Marc Garneau was in Moncton last week announcing new rail transit regulations. Will the federal regulations implemented since the disaster address the problems you identified?

Campbell: A flurry of safety measures were introduced after the disaster including: prohibiting single person crew operations; new inspector enforcement powers; eliminating the least safe tank car models and developing strengthened car design; new insurance requirements; speed restrictions and identifying key routes and accompanying safety requirements.

However, major safety gaps remain: problems with the new tank car design demonstrated in several derailments where these tank cars spilled their contents; inadequate measures to reduce the volatility of oil being transported; overly long and heavy trains causing a deterioration of (inadequately inspected) tracks; unsafe fatigue management practices by companies; ongoing problems with train securement and a dearth of measures to prevent train runways including remote control monitoring systems and advanced electro-pneumatic [ECP] braking systems; still problematic emergency preparedness provisions; lack of transparency and public access to information; still far from adequate resources to conduct regulatory oversight.

Underlying these problems, there has been no serious realignment of the regulator-industry power relationship. Regulatory capture remains largely in place.

Thus, the window remains open for history to repeat itself; and this at a time of record volumes of oil being transported by rail, where train runaways [uncontrolled movements] since Lac-Mégantic have increased, and where accidents with trains carrying dangerous goods increased 25% between 2016 and 2018.

Bruce Campbell will be speaking about his new book in Edmundston (Tuesday, April 23); Fredericton (April 24); online (April 25); and Saint John (Friday, April 26). Everyone is invited to join him during his public events for a discussion on “Rail transit and safety for jobs, communities and the environment” – details are posted on the NB Media Co-op calendar and the NB Media Co-op Facebook page events. The Fredericton event is the opening act of the Mayworks Festival. Click here for the full schedule.

Susan O’Donnell is a board member of the NB Media Co-op and the primary investigator of the RAVEN project at the University of New Brunswick.

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