November 12, 2018

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Rail repairs to start soon: Omnitrax

Company refuses to clarify cost or timeline for Churchill work

John Woods / The Canadian Press</p><p>Churchill has been without its railway link since sections of the Hudson Bay Railway were washed out after a flood last May. Omnitrax says the repairs to the Churchill line will start this month.</p></p>

John Woods / The Canadian Press

Churchill has been without its railway link since sections of the Hudson Bay Railway were washed out after a flood last May. Omnitrax says the repairs to the Churchill line will start this month.

OTTAWA — Omnitrax says it will start repairs on its railway to Churchill this month, while those aiming to take over the railway and port claim those negotiations have stalled as the Denver-based company tries limiting any future liability once it pulls out of Manitoba.

The Canadian Transportation Agency ruled in June that Omnitrax had to start repairs along the Hudson Bay Railway as of July 3, 2018, after a May 2017 flood washed out sections of the track between Gillam and Churchill, severing the lone year-round land link to the northern Manitoba community.

As part of the tribunal’s ruling, the CTA compelled Omnitrax to file monthly progress reports on restoring railway service “as expeditiously as possible.” The Free Press obtained the company’s first Aug. 1 filing.

Omnitrax says it’s made progress in soliciting four “reputable and experienced contractors” to repair the line, including a July 12 and 13 site visit. It noted bids would be due Aug. 3, and said engineering firm AECOM expects “that mobilization to the site will be commenced” by Sept. 1 — “assuming funding is available.”

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OTTAWA — Omnitrax says it will start repairs on its railway to Churchill this month, while those aiming to take over the railway and port claim those negotiations have stalled as the Denver-based company tries limiting any future liability once it pulls out of Manitoba.

The Canadian Transportation Agency ruled in June that Omnitrax had to start repairs along the Hudson Bay Railway as of July 3, 2018, after a May 2017 flood washed out sections of the track between Gillam and Churchill, severing the lone year-round land link to the northern Manitoba community.

As part of the tribunal’s ruling, the CTA compelled Omnitrax to file monthly progress reports on restoring railway service "as expeditiously as possible." The Free Press obtained the company’s first Aug. 1 filing.

Omnitrax says it’s made progress in soliciting four "reputable and experienced contractors" to repair the line, including a July 12 and 13 site visit. It noted bids would be due Aug. 3, and said engineering firm AECOM expects "that mobilization to the site will be commenced" by Sept. 1 — "assuming funding is available."

It is unclear whether the CTA will accept Omnitrax’s argument the repairs are contingent on funding from Ottawa or another corporation.

The original CTA ruling said Omnitrax had to find some way to finance the repairs, or put it up for sale at a government-mandated price.

The submission also notes Omnitrax had AECOM inspect the track June 11 and 12 "to determine if there were any substantive changes" since the winter freeze.

But the report does not say what the firm found.

Omnitrax refused Tuesday to clarify whether AECOM’s original estimate last fall — a $43.5-million repair that would take 60 days — has changed in either cost or timeline.

The company has also had AECOM run a private-bidding process, meaning those tendering details are only available to select companies.

The submission says Omnitrax is confident repairs will start "as quickly as reasonably possible" and service can restored by this coming winter — which the federal government has promised will happen.

But the company noted final repairs, to would allow heavier freight shipments, may have to wait until spring 2019.

The submission was written on letterhead of the Hudson Bay Railway Co., which acknowledged HBRC is "an Omnitrax Canada-managed company" and included an Omnitrax logo. That’s despite the Denver-based parent company arguing multiple times the two are separate entities, and Omnitrax should not be held liable for its destitute Manitoba subsidiary.

Meanwhile, Ottawa is still facilitating talks aimed at transferring the railway and port to northern Manitoba groups with the help of Toronto financier Fairfax Financial.

Numerous sources — none of whom represent Omnitrax’s point of view —claim those negotiations have hinged for almost a month on the company’s reluctance to guarantee any unforeseen liabilities. Omnitrax declined to comment on those claims.

The sources allege Ottawa and the buying group want the company to pledge it will pay millions of dollars if there is any unexpected liability that dates back to when Omnitrax still held the assets.

That would include things like mould at the port, defective parts in either the tank farm or railway, or a lawsuit involving Omnitrax’s management of those assets.

The sources, who were not authorized to speak on the record, said that in return, Ottawa has discussed a settlement that would see Omnitrax not earn any money for its railway, port or tank farm — but allow the company to walk away from existing and potential litigation, such as an ongoing $18.8-million federal suit and a possible $20-million suit from the province.

In the meantime, Omnitrax has asked the Federal Court of Appeal to toss the CTA ruling, while saying it intends to comply with it unless a judge cancels the order.

The company argued federal transportation law does not necessarily mean a binary choice between either repairing a railway or getting rid of it, and that the company has the right to hold onto the asset until it has enough cash to fix it.

The provincial NDP had launched the CTA complaint last fall, after lawyers told the Free Press that Omnitrax was likely breaching federal law.

The Manitoba party recently filed a response to Omnitrax’s request for an appeal, arguing it would be "absurd" for the court to allow the company to keep the railway but not fix it, because doing so would "render the level-of-service provisions meaningless."

dylan.robertson@freepress.mb.ca

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