Exploring Potential Compensation Scenarios: Fire due to Railway Operations

Exploring Potential Compensation Scenarios:

Fire Due to Railway Operations

Since 2016, we monitor railway accidents across Canada. These conditions need to be present for us to start preparing for potential activation and compensation:

  1. Was crude oil involved?
  2. Has the accident occurred on a federally regulated railway?

In the case of the 2021 Lytton, British Columbia (BC) fire, it was unclear if the fire started due to railway operations. Also, while the fire started close to a federal railway, no crude oil was involved. This means that we could not be activated to provide compensation.

However, we still wanted to look into this further. For instance, we wanted to understand how any fire started due to rail operations could activate the Fund and the compensation we provide to victims.

Background about Lytton fire

On June 30, 2021, a fire started near Lytton. A Canadian Pacific Railway Company (CP)[1] owned freight train was operated by Canadian National Railway Company (CN) on CN tracks. The train, carrying coal, was in operation at the suspected fire’s origin. The fire spread quickly due to hot and dry conditions and high winds. Around 250 residents, including members of the Lytton First Nation, were evacuated. The majority of Lytton’s downtown area was destroyed, and two people died. In 2022, Catastrophe Indices and Quantification Inc. (CatIQ) estimated insured damage to $102 million[2].

Some claimed that the fire was caused by this train. The Transportation Safety Board of Canada (TSB) investigated to determine if that was the case.

TSB investigation summary

The TSB concluded that there was no connection between the railway operations and the fire.

The full report is available here.

The fire remains under investigation by British Columbia Wildfire Service (BCWS). The Royal Canadian Mounted Police (RCMP) are determining if a criminal investigation is necessary.

Takeaways for our team

While this accident will not activate the Fund, there are some takeaways to improve our preparedness.

In the event of a rail disaster, we will have to deploy resources to receive, assess and pay claims, and to be represented in court as needed. We have developed an action plan which covers the various dimensions of our preparedness and we have been implementing it over the past five years.

However, we need to understand and prepare for all potential accident scenarios, such as damage caused by fire from railway operations.

  • For more examples of these scenarios, see the TSB backgrounder here.

Also, as part of our legal preparedness, we follow lawsuits on railway operation liability and their related damage. This helps us capture legal issues at stake that would still be relevant in an accident covered by our regime. In this case, a class action lawsuit was started by some Lytton residents in 2021. We will follow the outcomes of this lawsuit.

[1] On June 30, 2021, the company name was Canadian Pacific Railway Company (CP). It has since been renamed CPKC.

[2] Insurance Bureau of Canada, “Insured Losses in Lytton, BC, Increase to $102 Million.” 13 January 2022 (https://www.ibc.ca/news-insights/news/insured-losses-in-lytton-bc-increase-to-102-million