Ottawa takes action on Churchill

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This article was published 08/09/2017 (2952 days ago), so information in it may no longer be current.

OTTAWA — The federal government has appointed a high-profile lawyer to negotiate a possible takeover of the damaged rail line to Churchill, in a last-ditch effort to repair it before the winter.

Winnipeg South Centre MP Jim Carr announced Friday Ottawa has hired Wayne Wouters to negotiate a possible takeover of the rail line from its owner, Denver-based Omnitrax, which has refused to pay for the estimated $43.5-million repair because it’s “not economically viable.”

Wouters, a Toronto lawyer, was appointed head of the public service by the previous Conservative government. He had worked decades in federal departments responsible for mines, corporate grants and finance.

The move appears to be the first federal acknowledgement of Omnitrax’s refusal to pay to repair the rail line, which was knocked out of service May 23 due to heavy flooding. Friday’s statement again referenced a 2008 funding agreement in which Omnitrax pledged to maintain service until 2029, but laid out steps in the likely event the company doesn’t repair the line.

In that case, Wouters would facilitate transferring it to a new owner — on the condition Omnitrax accepts “a reasonable price taking into account (its) obligations.”

The statement also said Ottawa would consider ponying up “interim funding to enable restoration of rail service” — if it’s a fair deal.

Omnitrax Canada president Merv Tweed took that as the Liberals agreeing to pick up the tab. “We are pleased that the government of Canada has agreed to repair the line,” he wrote Friday.

Churchill Mayor Mike Spence was also pleased when he was told Thursday about Wouter’s role: “It’s a step in the right direction, that’s for sure. There’s such an opportunity to turn things around.”

A source familiar with the negotiations said the ball is in Ottawa’s court, with limited time remaining.

“They’ve waited until the last possible moment to take a decision on whether or not they want to repair the line,” said the source, who was not authorized to speak with media. “Now the question is what price is reasonable, and they need to decide.”

The source claimed Omnitrax is only seeking the value of the parts.

“Nobody is making off like a bandit. Omnitrax has lost money for 20 years, and it’s losing money now.”

A thorough engineering report by AECOM Canada, released to the public this week, says repairs must start immediately in order to get the line operational before the ground freezes in November. A source said the report cost at least $1 million to compile, with engineers diving under bridges to take samples and helicopters assessing the damage.

“Time is of the essence here, and quick action from all partners is needed now,” Carr said Friday. He was not available for interview this week.

Assembly of Manitoba Chiefs Grand Chief Arlen Dumas, who leads a First Nations group vying to take over the rail line, said he’s optimistic there would be shovels going into the ground before it’s too late.

“The government’s been supportive but bureaucrats, who have personalized this, have been counterproductive,” he said.

Dumas signed an agreement Aug. 28 on behalf of Missinippi Rail with the One North group, a consortium of communities along the line co-led by Spence that has also asked to take over the rail line.

Dumas and other sources said it was the Prime Minister’s Office that orchestrated the collaboration between the two groups, because it would prevent a legal showdown if Ottawa had to pick one of them and Omnitrax was worried about upsetting communities along the rail line by only having buy-in from Missinippi (whose owners don’t live along the rail line).

Omnitrax said it’s using the Missinippi deal inked May 31 as a template, and a source familiar with the issues said the two sides have met through the summer to negotiate the details.

“Our mutual agreement is waiting only for federal government support,” wrote Tweed.

Spence said details on how the two groups would form a deal was still under consideration.

In Friday’s statement, the government said it would only transfer the line to an owner who had “support from First Nations and other communities along the route,” as well as a business plan to keep the rail line operational.

Spence said both partners are more than willing to do so.

“This has been tough; this has been really difficult. You’ve got a community that is very resilient,” he said. “We’ve always been up for the challenge.”

The statement also said Ottawa will support the provincial government in “service restoration and go-forward operations.”

Provincial Infrastructure Minister Ron Schuler repeated his government’s previous statements that anything rail-related is a federal responsibility. He noted the province recently pledged $500 million for Churchill’s health, education and infrastructure.“With each level of government doing its own part, we remain hopeful that the long-term future and prosperity of both Churchill and the communities served by the rail line can be secured,” Schuler wrote.

NDP MLA Tom Lindsey called Friday’s move “an important first step in providing real support that the people of Churchill have needed for over a year,” referencing job loses caused by the port’s near-closure.

“What is needed now is a provincial partner. Premier Pallister needs to stop passing the buck and come to the table with real supports for the people of Churchill.”

Ottawa wouldn’t say whether negotiations are planned during the weekend. The source familiar with the negotiations said Ottawa needs to decide within days.

“The federal government is either going to posture and try to find the bad guy, or they’re going to fix it,” the source said.

dylan.robertson@freepress.mb.ca