US judge OKs $446 million settlement for victims of Lac-Megantic disaster

LAC-MEGANTIC, Que. — Lac-Megantic resident Robert Bellefleur has welcomed a U.S. bankruptcy judge's approval of a $446-million settlement fund for victims of the deadly oil-train derailment in 2013.

"It's good news for people who were hit hard, who lost loved ones, homes, businesses," says Bellefleur, who knew about 25 of the 47 victims, including his cousin's son, his daughter's two babysitters and his contractor.

"It's very good news. It doesn't replace lives. 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 Bellefleur, a member of a Lac-Megantic-based coalition that promotes rail safety, said the state of the rail track in the town, which he called a determining factor in the tragedy, still has not been addressed.

Judge Peter Cary announced his decision in Portland, Maine, on Friday after Canadian Pacific (TSX:CP) dropped its objection to the settlement plan and after a Canadian judge gave conditional approval Thursday.

The settlement was the result of negotiations with about two dozen companies.

Barring any surprises, payments could be made to victims of the disaster by year's end, said Robert Keach, the bankruptcy trustee. About $110 million Cdn is being set aside to settle wrongful death claims.

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

A runaway train with 72 oil tankers derailed in Lac-Megantic on July 6, 2013, setting off powerful explosions and causing fires that wiped out much of the downtown.

Raymond Lafontaine, who lost his son, two daughters-in-law and one of his employees in the tragedy, said in an interview Friday it is "inconceivable" it has taken this long for the fund to be accepted.

"I am a victim and I am heading to spend the winter down south because I can't stand to live here right now," he said. "We know that the victims were ignored 200 per cent, we had rights to nothing.

"Talking to the lawyers, it seems I could get about $5,000 to have lost my three kids.

"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."

On Friday, the judge described the devastation from the fires as "vast and complete."

"My thoughts and good wishes go to the good town of Lac-Megantic and the victims' families," Cary said after announcing he would sign the settlement.

After the fires were doused, the train's operator, Maine-based Montreal, Maine and Atlantic, filed for bankruptcy. The settlement fund is tied to those bankruptcy proceedings in the United States and Canada.

The fund was the product of negotiations with about two dozen companies with potential liability. In addition to settling wrongful death claims, money will be used to compensate government entities and others for destruction and environmental damage.

Canadian Pacific owned the track where the crude oil shipment originated and contended it bore no responsibility, since the train that derailed had a Montreal, Maine and Atlantic locomotive and crew and was operating on MMA rail.

But Keach argued Canadian Pacific bears some responsibility for failing to properly classify the Bakken region crude oil, which was as volatile as gasoline.

Canadian Pacific isn't contributing to the settlement fund, and the railroad had contended the plan would have hampered its ability to defend itself from lawsuits, because the agreement provided legal immunity only to companies that do contribute.

But the altered amendment calls for a "judgment reduction provision" that would take into account the full settlement paid by others if Canadian Pacific is ordered to pay damages in the future.

"Although CP was not at fault in the derailment, we have been working with the trustee for a solution that protects CP interests and allows payments to be made to victims as soon as possible," said Canadian Pacific spokesman Martin Cej.

The Canadian Press

Story updated 17:22 on Oct. 9.