The federal transportation regulator has ruled that Omnitrax Canada has waived its responsibility to repair the railway to the northern port of Churchill, Manitoba, and must resume track operations “as quickly as possible”.
The Canadian Transportation Agency has ordered Omnitrax to begin repairs on the Hudson’s Bay Railroad by July 3 and file monthly progress reports from August until that the work is completed. The railroad is the only land link from the south to Churchill and other remote northern communities, where prices soared as goods had to be flown in.
Wednesday’s decision came after a complaint was filed by the provincial New Democratic Party last year. A copy of the agency’s findings was sent to CBC News on Thursday evening.
The regulator determined that Omnitrax had a public obligation to restore service and was not entitled to more than a “reasonable pause” in operation due to the unplanned flooding that closed the track in the spring of 2017.
The Canadian Transportation Agency says the Denver-based company should have taken reasonable steps to repair the line by November 2017 – the admittedly “ambitious” timeline originally proposed by the engineering firm, AECOM, that Omnitrax hired to assess the damage.
The regulator said Omnitrax would only have been relieved of its repair duties if it had gone through the federal waiver process in advance.
In its rationale, the Transportation Agency considered a 2017 ruling that Canadian Pacific Railway could not be permanently relieved of its obligation to provide rail service after a 2014 fire damaged the Marpole Bridge bridge near Vancouver. The railroad company chose not to repair the bridge due to high costs.
Omnitrax can appeal this week’s verdict within 30 days if the company wishes to challenge the decision.
The company plans to announce its position early next week, an official said.
Repair estimate of $40M to $60M
Omnitrax officials flatly refused to repair the tracks, saying the company could not afford the cost – estimated at $40-60 million – and that the lifeline of the transport should be treated as a public service. since the railway line is no longer commercially viable.
They claimed the flooding was a “force majeure” event, an exceptional circumstance that reduces the company’s contractual obligations.
The Canadian Transportation Agency, however, rejected the NDP’s demand that Omnitrax establish a $3 million compensation fund for the community, citing a lack of evidence.
Omnitrax had wanted the NDP’s claim to the transit agency dismissed on a number of grounds and argued that the political party had no standing to complain about the lack of rail service to Churchill.
The provincial government initially did not support the NDP’s candidacy, describing the complaint as a form of “grandstanding” and “media preparation”.
NDP Chief Wab Kinew said the provincial government, with its many employees and resources, should have demanded action.
“They gave up. They said there was nothing we could do,” he said. “We stood up for the people of Churchill.”
The sale of the railway is underway
The regulator’s decision may be moot, however, as Omnitrax has reached a tentative agreement to sell the railroad, along with the port of Churchill, to a consortium of northern communities. The deal, which would leave responsibility for repairs to the new owners, is expected to be finalized next month.
But if Omnitrax doesn’t relinquish the asset in time, its appeal will reach a federal court which could decide to award damages to the community, Kinew said.
He called on the provincial government to help him, especially if a legal battle ensued.
When asked if his party would continue in the face of potential legal costs, Kinew said, “We’re going to continue to stand up and follow this through to conclusion.”
The provincial government declined to comment on Friday and instead directed questions to the federal government, since the railways are a federal responsibility. Transport Canada said it had long held the view that Omnitrax was obligated to repair the line.
Churchill Mayor Mike Spence told CBC Manitoba Radio Midi Friday that the regulator’s decision does not affect the consortium’s plans to buy the railroad.
“Once we’ve done that, it’s on to prosperity.”
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