Omnitrax refuses to provide grounds for breaking contract

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This article was published 01/08/2017 (3001 days ago), so information in it may no longer be current.

OTTAWA — Omnitrax is refusing to explain what grounds it has to turn its back on a 2008 contract that provided millions of taxpayer dollars in exchange for keeping its rail line running to Churchill.

On Monday, the company said it no longer felt an obligation to follow the agreement because of the May 23 flooding that damaged the line, as well as government changes to how the town’s port is used.

Two weeks ago, the company said it wouldn’t pay to repair the line because it was “not economically viable.” Since then, Ottawa has insisted Omnitrax has a contractual obligation to keep the rail line running under a 2008 agreement that saw the feds and Manitoba each contribute $20 million for repairs along the line.

The Free Press has obtained the 43-page contract, as well as prior agreements dating back to Omnitrax’s 1997 takeover. When asked Tuesday to specify which line in any contract allows Omnitrax to reneg on its duty to keep the line running, the company responded 20 minutes later and refused to explain.

“Omnitrax is not in a position to provide comment beyond the statement offered on this issue yesterday,” wrote a spokeswoman with Toronto public-relations firm Edelman, which is handling Omnitrax’s media requests.

The 2008 agreement says Omnitrax has “full responsibility for the operation, maintenance and repair” of the rail line through to 2018, and that Canada can seek reimbursement (though only 10 per cent by 2017) if the company chooses to “reduce, discontinue or substantially abandon” either the rail line or port.

On June 9, the company declared a force majeure, a contract term for when an unforeseen event such as a natural disaster or a war absolves a company of its responsibilities, but the Free Press has learned the 2008 agreement has no such clause.

A force majeure clause exists in the 2012 terms for a three-year fund to keep Churchill’s port running, but not in the 2008 funding agreement for the railway, nor the 1997 contract that transferred the port to Omnitrax.

Elden Boon, head of the Hudson Bay Route Association, said Omnitrax’s refusal to explain its contractual obligations fits a pattern of asking for public money without answering the pubilc’s questions.

“I find it unbecoming that an American company in our country here is operating the way they are,” said Boon, whose group advocates for increasing traffic along the line.

Since the rail line flooded — some 10 weeks ago as of Wednesday — the group has met with provincial ministers and corporations, asked an expert about examining the rail bed and corresponded with Ottawa. Boon said Omnitrax seems to be the only stakeholder he can’t reach.

“It’s just a real frustrating thing. It’s clear that Omnitrax doesn’t want to be involved in running this railway anymore,” he said.

Asked to respond to that criticism, Omnitrax claimed it’s busy getting the rail line back in service.

“We’re focused on what is most important to the people of Churchill at the moment: working with government to return safe and reliable service,” their spokeswoman said.

dylan.robertson@freepress.mb.ca