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Ottawa threatens suit for Hudson Bay rail line repairs

Line's U.S. owner 'has not met its obligations,' minister says

Port of Churchill
The Port of Churchill in 2015. (CNS Canada photo by Jade Markus)

The federal government says the owner of the Hudson Bay Railway has 30 days to get the washed-out line repaired and running or will face a lawsuit for breach of contract.

Natural Resources Minister Jim Carr, the MP for the Manitoba riding of Winnipeg South Centre, said in a statement Friday that U.S. rail operator OmniTrax is “responsible for restoring service to the affected communities” along the rail line to Churchill, Man. and “has not met its obligations.”

Transport Canada has served OmniTrax a notice of default of its agreement with the federal government, demanding that the U.S. company “complete all railway repairs and resume rail service within 30 days.”

Rail service to Churchill has been offline since May 23 when, according to OmniTrax, high water made the track “impassable.”

Severe flooding and washout conditions led OmniTrax’s Canadian arm to indefinitely suspend service on the Hudson Bay Railway from Amery, northeast of Gillam, Man., to Churchill starting in June. The line was not expected to resume operations before the winter season, the company said.

OmniTrax at the time said the track bed was washed away in 19 locations, five bridges were “visibly damaged” and another 30 bridges and 600 culverts would need to be further assessed.

The company later said repairs would cost as much as US$60 million and it wasn’t prepared to pay without government assistance.

The government last month said it was “deeply concerned” OmniTrax hadn’t yet started repairs on the line, and was instead prepared to “facilitate discussion for the transfer of the rail line to a new owner and will work with that new owner to restore rail service.”

OmniTrax since 1997 has owned the government-owned port facility at Churchill and the former Canadian National Railway (CN) rail line leading to it from The Pas, Man.

The federal government last month reiterated its 2008 agreement with OmniTrax calls for federal financial support to the Hudson Bay Railway — for which OmniTrax, in return, was to maintain and operate rail service through to Churchill until 2029.

Carr on Friday announced a “significant breakthrough towards an agreement between Missinippi Rail and One North to create a unified group as a potential buyer” for the rail line. The two First Nations consortia had stepped forward separately earlier this year as potential buyers.

The government’s appointed chief negotiator, lawyer Wayne Wouters, is expected to continue to facilitate discussions between all parties, including with the new partnership group, Carr said.

The port and rail line, built in the 1930s, have long been considered a vital link for Canada’s North, taking food, equipment and containers to Churchill for distribution to points further north via Hudson Bay.

From a grain export perspective, routing grain out of certain areas of Saskatchewan and Manitoba through the Port of Churchill instead of Thunder Bay is believed to shave up to three days off voyages to some ports in Western Europe.

The port’s grain handle, however, has declined in the five years since the deregulation of its main customer, the Canadian Wheat Board. OmniTrax shut down the port’s operations and laid off its staff before the 2016 grain shipping season.

The port’s ice-limited shipping season, typically July through October, has been a benefactor of global warming in recent years, but warmer weather also makes the rail line, much of which is built on permafrost, less stable. — AGCanada.com Network

 

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