Omnitrax rejects feds’ pressure to fix line

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This article was published 01/08/2017 (3000 days ago), so information in it may no longer be current.

OTTAWA — Omnitrax is pushing back against Ottawa’s insistence that the company ensure the flooded rail line to Churchill remains operational.

The company suggested Monday that government meddling and extreme weather absolved any obligation to repair the Hudson Bay Railway, which became inoperable in late May after heavy flooding washed out numerous bridges.

On July 18, Omnitrax said it would cost $20 million to $60 million to repair the track, which the company deemed “not economically viable.” Yet Ottawa insists the Denver-based company is obliged to maintain rail service.

In 2008, Ottawa, the Manitoba government and Omnitrax pledged $20 million each to repair longstanding issues along the line between The Pas and Churchill. A 2013 assessment showed the repairs sped up passenger trains by 39 per cent and freight trips by a quarter.

The 2008 contract, obtained under freedom-of-information laws, states Omnitrax “shall assume full responsibility for the operation, maintenance and repair” of the rail line until October 2018. It states Ottawa is entitled to have the funding returned if the company “proposes to significantly reduce, discontinue or abandon” the rail line or port. 

Prime Minister Justin Trudeau doubled down over the weekend, telling reporters Saturday that he’s “looking at all options” to enforce the 2008 contract.

“Omnitrax has legal obligations to clean up and to repair the tracks,” Trudeau said.

But the contract also says incidents such as floods exempt Omnitrax from its obligations, for as long as “reasonable required to adjust for the effects” of a natural disaster.

On Monday, Omnitrax told the Free Press that too much has changed since the 2008 contract.

“Circumstances relevant to that agreement have fundamentally and adversely changed in ways not contemplated at the time,” the company wrote, citing three issues.

Omnitrax pointed to the federal government’s 2012 decision to dissolve the Canadian Wheat Board, which controlled the sale of grain and amounted for most of the Port of Churchill’s shipping traffic. (Ottawa had pledged $4.1 million in 2012 to keep the port operating.)

The company also cited the province’s 2015 dismantling of the Churchill Gateway Development Corporation (CGDC), which marketed the port and tried enticing foreign shipments with limited success.

It also blamed this spring’s unprecedented floods, which it suggested amounted to a force majeure. The term refers to contract clauses that absolve liability for extraordinary events, such as a war, flood or riot. The company first used the term in a June 9 statement 

Omnitrax’s comments will likely further antagonize residents of Churchill, whose grocery bills have soared despite federal and provincial subsidies. On July 20, gas prices jumped 30 per cent overnight, but Omnitrax reversed the price hike within hours, saying it was a mistake.

In a Monday statement, Churchill Mayor Michael Spence said Ottawa needs to back up its words with action before the fall freeze. “Governments need to force that or step in, as time is of the essence.” 

Former federal cabinet minister Lloyd Axworthy, who was part of the CGDC, says the importance of an Arctic port “is being missed in the tic-tac-toe of who’s responsible for what.”

Two separate First Nations groups have asked to take over the rail line, which Axworthy said would be an act of reconciliation.

“It’s important to be positive about this and not get into legal wrangles,” he said. “I look from the outside and I just think, opportunity lost.”

dylan.robertson@freepress.mb.ca