Student blog post: "Death by Deregulation" by Sandrine Haentjens

Guest post by Sandrine Haentjens (undergraduate student).

Sandrine was a student in CRM 3310: Corporate and White Collar Crime during the winter 2019 semester. This blog is a summary of the term paper she wrote on the Lac-Mégantic rail disaster, which killed 47 people and spilled thousands of litres of crude oil into the town’s lake. For Sandrine this disaster is a clear example of a corporate crime, one that demands immediate social, political and academic scrutiny.

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Death by Deregulation

Why do we think about violence and crime in particular ways? Why, when we look at examples of corporate crime or corporate violence, are offences by the powerful not seen in same light as street crimes? When I looked at the Lac-Mégantic rail disaster, I was directly confronted by these questions - a devastating act not seen as a crime but instead largely as an accident. How is this possible? Why has this not received more serious social, political and academic attention?  From my perspective, part of the answer to these questions lies within the architecture of the corporation as an autonomous individual, and are easily understood when considering the immense power that corporations possess. Ultimately, due to the state’s economic inclination to collaborate with and promote corporations rather than police them, corporate self-regulation allows corporations to circumvent regulation with virtually no regulatory oversight or intervention. Despite the common understanding of their inherent good, when left to their own devices, corporations often disregard laws and the common good and instead seek profit maximization through any means necessary.

Just after 1 A.M on July 6th, 2013, an unattended runaway train carrying 7.7 million litres of petroleum crude oil sped uncontrollably into the town of Lac-Mégantic. The train derailed and exploded, killing 47 people and destroying the downtown core. The devastation was immense, with millions of litres of oil spilled, and 2000 people evacuated from their homes. What was not immediately apparent at the time was that the Lac-Mégantic tragedy was far more than just a terrible accident. Rather, it was the result of routine decision making within the corporate context, the contributing factors of which can be traced back decades prior to the incident when governments started to embrace neoliberal ideals, particularly as it relates to the championing of private enterprise.

The two primary actors in the incident were Montreal, Maine & Atlantic (MMA), a railway company based in Canada and the U.S., and Transport Canada, a government funded regulatory agency. The period preceding the Lac-Mégantic rail disaster was characterized by regulatory failure in many forms, namely Transport Canada’s regulatory oversight of MMA and MMA’s compliance (or lack thereof) to regulation. The regulation of corporations typically takes the form of a collaborative relationship between regulator and corporation, with restrictions on corporate behaviour being extremely rare. A clear conflict of interest exists however, as regulatory agencies and corporations routinely interact to determine the appropriate level and nature of regulatory activity. This violates the very purpose of regulation, as in the case of Transport Canada and MMA, direct and overt collaboration involves the regulator in the corporation’s activity.

Considering the different facets of regulation, the question emerges: why was MMA able to disregard Transport Canada’s repeated warnings to improve rail safety? On one hand, Transport Canada may have lacked the power to impose sanctions due to weak legislation. After all, regulatory intervention rarely exceeds a warning letter, and is at most imposed in the form of a civil penalty or fine. In the case of MMA, eight warning letters were sent concerning a single issue (regarding the security of their trains) prior to the incident with no formal follow-up or sanctions implemented. On the other hand, Transport Canada may lack the capacity and desire to exercise the authority it does possess because of an incentive to assist corporations in their operations rather than sanction them. The most likely contributing factors towards the Lac-Mégantic disaster were a combination of the two.

The question thus becomes, could improvements to corporate regulation really solve the problem, or is the problem rooted in the structure of the corporation itself? Many levels to this question exist. On a macro level, the corporation’s position within neoliberal society comes into question. If the free-market economy favours corporate self-regulation but contradicts itself by engaging in a symbiotic relationship with corporations, could regulation ever actually be effective? On another level, the criminogenic nature of the corporation is an obvious hurdle to successful regulation. Premised on profit maximization, corporations such as MMA strategically evade regulation by engaging in routine decision-making that takes calculated risks. This leads to the structural issue, regulatory failure. What should be a relationship of authority and accountability has instead taken the form of a collaborative relationship based on compromise, non-compliance and non-enforcement.

In brief, the Lac-Mégantic rail disaster is undoubtedly a corporate crime. This is not surprising. The largest contributing factor to the disaster is the fact that the fate of a train carrying 7.7 million litres of volatile oil was left in the hands of a corporation with the goal of maximizing profit by any means necessary, and a regulatory agency designed with the purpose of supporting business activities. This combination is a recipe for non-enforcement and non-compliance, and explains why thousands of corporate crimes occur every year. The destruction of Lac-Mégantic’s community was not an accident, nor was it simply a disaster waiting to happen; the events leading up to the incident were the result of routine decision making, and the disaster itself was simply an externality.