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Dozens of tanker cars similar to the model used for the train that crashed in Lac-Megantic, Que., are parked on Monday, July 16, on the train's line near Farnham, Que. Photo by Les Perreaux

Les Perreaux/The Globe and Mail

One of Canada's most prominent business families has become entangled in an investigation of the Lac-Mégantic, Que., derailment after federal investigators seized records from the Irving Oil headquarters in New Brunswick.

Inspectors from Transport Canada executed a search warrant on Wednesday on the company's Saint John facility in an ongoing investigation of the accident, which killed 47 people last July. The train was hauling crude oil to Irving's refinery when it crashed, causing massive explosions that destroyed several downtown blocks.

A Globe and Mail investigation has documented how oil from the Bakken formation, which straddles North Dakota and parts of Saskatchewan and Manitoba, is much more explosive and corrosive than regulators and the industry thought, and that warning signs about the oil were ignored. On Thursday, Transport Minister Lisa Raitt told The Globe that Ottawa will implement new safety and testing measures for shipping crude oil by rail.

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Court documents filed in support of the search warrant indicate Irving is under investigation to determine whether it followed safety and security rules for importing dangerous goods and whether those goods were accompanied by proper documentation.

The Transportation Safety Board said this fall that the oil that exploded in Lac-Mégantic was more volatile than the paperwork for the train suggested. Federal regulations say that when dangerous goods are brought into Canada, domestic importers are responsible for ensuring safety rules are followed. Penalties for contravening the Transportation of Dangerous Goods Act are up to two years in prison or $50,000 for a first offence.

A spokeswoman for Irving confirmed the company had received requests from government investigators about their operations. "We continue to fully co-operate with them, complying with all requests for information. Operations remain normal," Samantha Robinson wrote in an e-mail.

Irving Oil, a private New Brunswick company owned by the Irving family, operates Canada's largest refinery, with a capacity to process up to 320,000 barrels of crude daily. In recent years, it has been a major buyer of Bakken oil from North Dakota, which is prized for its light qualities and sometimes discounted prices.

Irving buys most of its Bakken crude from intermediaries such as Miami-based World Fuel Services Inc. and Massachusetts-based Global Partners LP. Both World Fuel and Global Partners buy the oil from North Dakota producers and contract railways to transport it across North America. World Fuel sends Bakken crude to New Brunswick via three separate railways and Global ships the oil on rails to Albany, where it is loaded on to tanker ships that travel to the port of Saint John.

World Fuel Services is the company that purchased the oil, arranged transport and sold it to Irving. The company has not been served with search documents. A spokesman said World Fuel has provided extensive documentation to Transport Canada, including additional documents that are beyond what the department has asked for, to assist the investigation.

The court documents contain new revelations about how Irving dealt with the crude oil it was importing by rail in the months before the Lac-Mégantic crash. According to the documents, Irving regularly received oil tank cars from Montreal, Maine & Atlantic Railway with paperwork that suggested the oil was not particularly volatile. However, the company returned the empty tank cars to the shipper with a different, more volatile classification for the residual oil inside them.

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The court documents do not detail who was responsible for changes to the paperwork.

The court records also offer insight into the scope of the Transport Canada investigation of the Lac-Mégantic accident. At least nine departmental officials are investigating possible violations of federal regulations, and another four RCMP officers are assigned to help Transport Canada with its work, according to the documents.

In an interview with The Globe and Mail last month, Irving Oil chief executive officer Paul Browning said the company was working with federal regulators "to make sure that we understand the new regulations" that call for crude oil to be tested before and after it is transported through Canada.

"So this is really a question of what we are doing to ensure that hazardous materials that get moved by rail are increasingly getting safer and safer over time. So what we're doing is working with the rail industry and regulators to make sure that we're all learning the lessons from Lac-Megantic, and other opportunities to learn. We're making sure we're supporting them in implementing new regulations and procedures to respond to those learnings," Mr. Browning said.

With a report from Rheal Séguin.

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