A (Freight) Rail Line Runs Through It - Cities Take Notice

Call it the Lac-Mégantic effect - the July 6 conflagration that leveled the downtown, killing 47 people, has implications for all jurisdictions where oil and freight trains run. Cities must recognize that rail insurance policies are woefully lacking.

2 minute read

January 14, 2014, 6:00 AM PST

By Irvin Dawid


Train Tracks Los Angeles

Ben Javelina / flickr

When it comes to transporting hazardous material, rail has an advantage, perhaps more burden than blessing, over all other modes that pose significant risks for jurisdictions where the tracks are located.

Rail is the safest mode to transport these materials, which include a growing amount of crude oil and oil products. So safe that "(t)hey have a legal 'common carrier' obligation to haul cargoes that barge and truck lines can turn down," writes Betsy Morris. This testimony (page 2 of 21) in 2008 on behalf of the Secretary of Transportation elaborates on that obligation.

How safe is rail in transporting hazardous material? Curtis Tate of McClatchy's Washington Bureau explains in this Sacramento Bee article about California's preparation's to handle the more explosive Bakken crude.

The rail industry and its Washington regulators insist that railroads have a good safety record. The Association of American Railroads, an industry group, says 99.997 percent of hazardous materials shipped by rail reach their destination without incident. The Federal Railroad Administration, which oversees the nation's rail network, said 2012 was the industry's safest year on record.

The railroads are also liable for these hazardous shipments, and therein lies the problem. "There is not currently enough available coverage in the commercial insurance market anywhere in the world to cover the worst-case scenario," says James Beardsley, global rail practice leader for Marsh & McLennan Cos.' insurance brokerage unit.

Recently, “municipal leaders from Illinois, Vermont, Maine and New Brunswick toured Lac-Mégantic to assess risk to their own communities," writes Morris. "How does any community in America look at a cost like that and realistically think it can be covered? There's just no way," proclaimed Karen Darch, president of the village of Barrington, Ill.

As for who is paying the tab at Lac-Mégantic, where the clean-up cost alone is estimated at $200 million, Morris writes, "The train's operator, the Montreal, Maine & Atlantic Railway Ltd., had liability insurance of $25 million. That is about standard for a line of its size. The railroad has filed for bankruptcy protection. So far, the Canadian and provincial governments are picking up the steadily growing tab."

As bad as the devastation to Lac-Mégantic was, it was not a 'worst-case' scenario, as difficult as that may be to imagine.

"Your worst nightmare" is sabotage of a train carrying a toxic substance in a heavily populated area, says Says E. Hunter Harrison, chief executive of Canadian Pacific. "The estimates of the lives and the damage—I don't even want to repeat what it would be."

Wednesday, January 8, 2014 in The Wall Street Journal

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Green vintage Chicago streetcar from the 1940s parked at the Illinois Railroad Museum in 1988.

Chicago’s Ghost Rails

Just beneath the surface of the modern city lie the remnants of its expansive early 20th-century streetcar system.

July 13, 2025 - WTTV

Aerial view of downtown San Antonio, Texas at night with rotating Tower of the Americas in foreground.

San Antonio and Austin are Fusing Into one Massive Megaregion

The region spanning the two central Texas cities is growing fast, posing challenges for local infrastructure and water supplies.

July 3, 2025 - Governing

White park shuttles with large Zion logo on side and red rock cliffs in background in Zion National Park.

Since Zion's Shuttles Went Electric “The Smog is Gone”

Visitors to Zion National Park can enjoy the canyon via the nation’s first fully electric park shuttle system.

2 hours ago - Reasons to Be Cheerful

Chart of federal transportation funding comparing Biden and Trump administration spending.

Trump Distributing DOT Safety Funds at 1/10 Rate of Biden

Funds for Safe Streets and other transportation safety and equity programs are being held up by administrative reviews and conflicts with the Trump administration’s priorities.

3 hours ago - Transportation for America

Close-up on yellow and black TAXI sign on top of beige car in central Munich, Germany.

German Cities Subsidize Taxis for Women Amid Wave of Violence

Free or low-cost taxi rides can help women navigate cities more safely, but critics say the programs don't address the root causes of violence against women.

4 hours ago - Bloomberg