(NEWS CENTER) -- The Canadian Transportation Agency said Tuesday that it has suspended the certificate of fitness for Montreal, Maine and Atlantic Railway (MMA), meaning that the railroad will not be allowed to operate in Canada after August 20.
The government said it was making the move because MMA no longer has enough third party liability insurance after the deadly train derailment in Lac Megantic, Quebec.
The move comes just days after MMA filed for chapter 11 bankruptcy protection in the U.S. The company said it has creditors in the hundreds and faces several lawsuits in connection with the Lac Megantic disaster.
According to the Federal Railroad Administration, freight rail operators do not have to carry liability insurance in the U.S. Amtrak must maintain a total minimum liability coverage for claims through insurance and self-insurance of at least $200 million per incident.
Maine Department of Transportation Commissioner David Bernhardt said that he was told MMA does have liability insurance in the U.S. He did not know how much, but he is concerned that the company may not have the financial capacity to recover its business.
Bernhardt said Maine has been in frequent contact with federal officials in the U.S. and Canada, and that right now, shippers are using alternate routes through Maine. Should MMA have to shut down, Maine would work with the federal government to find someone to operate MMA's line. "We need to look at the long term, and the fact is we need this East-West connection," Bernhardt said.